Anticipating weakening demand from the US market, coupled with pricing and margin pressures in the fourth quarter of the current financial year, Infosys Technologies will look at slashing variable pay-out to its employees. "Infosys has a variable pay structure that has been created to link individual employee compensation to the company’s performance. This variable pay structure is dependent on company, unit and individual performance," an Infosys spokesperson said, adding that depending on the variable component, employees can either benefit if the performance of the company exceeds targets or could get impacted if the performance is below expectations. Infosys raised its rupee revenue forecast for FY09 but lowered its dollar revenue guidance for the second time this financial year. For the first time, India's second-largest IT services provider witnessed its sequential dollar revenues fall 3.7 per cent. Moreover, while 30 new clients were added by Infosys and its subsidiaries during the quarter, the total number of clients fell to 583 from 586 in the quarter ended September of FY09.

Box office collections in the October to December 2008 quarter have shattered the myth that the fortunes of the film industry are linked to the overall business cycle. Buoyant ticket sales during the quarter have firmly established that there is no correlation between the two and viewers will turn up to watch a good film, no matter how severe the economic crisis. Data complied by a score of distributors, analysts and trade portals shows that the 40 or so films released during the quarter ended December 31 did gross collections of about Rs 680 crore. This is nearly 70 per cent of the overall collections done by the 130-odd Hindi films released during the entire 12 months of 2008. Trade analysts say that the average occupancy of multiplexes and single-screen theatres also improved in the October-December 2008 quarter. "The average occupancy across theatres stood at about 60-65 per cent on any weekday," says a Mumbai-based film trade analyst. This is a vast improvement over the previous months when occupancy had fallen to about 40 per cent. The good run at the box office continued in January as about half-a-dozen new Hindi films released during the month generated nearly Rs 52-55 crore of collections, 10-12 per cent more than the comparable period last year. Now all eyes are set on films like Farhan Akhtar's Luck By Chance, Shah Rukh Khan's Billu Barber, Abhay Deol's Dev D and Abhishek Bachchan's Delhi6 — big budget films aided by high decibel marketing campaigns set for release in February.

Petroleum Minister Murli Deora today said the government is working on granting tax incentives for companies on production of natural gas from oil blocks awarded to them. Deora said the Petroleum Ministry is trying to get a seven-year tax holiday on gas production from oil blocks that would be awarded to bidding firms under the soon-to-be- commenced New Exploration Licensing Policy (NELP) VIII. "It is very important that companies get tax incentives on gas. We are working with the Finance Ministry and the Revenue Department for a tax holiday on gas," Deora told reporters here. Under the NELP Policy, potential bidders for oil blocks have been assured of a seven-year tax holiday on crude oil from the beginning of commercial production. Income-tax authorities have not allowed the same relief on gas production due to the lack of specific inclusion of the term "Natural Gas" in the Income-Tax Act. "I hope the benefit is also extended to NELP VII parties," Deora said. On the free market pricing of fuel or APM (Administered Pricing Mechanism) dismantling, the oil minister said, "It will take time. We are still not prepared for dismantling the price regime."

Making an impassioned plea for help, apex auto industry body Society of Indian Automobile Manufacturers (SIAM) has said, over Rs 1,20,000 crore investment could be at risk, putting millions of jobs at stake if the government support is not forthcoming. Although the auto industry has partially benefited from the government's stimulus packages, SIAM Director General Dilip Chenoy told PTI that over 65 per cent problems faced by industry remained unresolved, specially issues like lower interest rates for vehicle financing and repossession by financial institutions on loan defaults. "Yes," Chenoy said when asked if the government does not come to rescue, would the over Rs 120,000 crore investments made in the Indian auto sector could go down the drain? He said between 2007 and 2011, the Indian auto industry was to witness investments to the tune of Rs 80,000 crore, which would have almost doubled the total investment made in the sector so far to about Rs 1,20,000 crore. "If you see what has happened in the past two years and going forward the next two years around Rs 80,000 crore of invested has been announced in this sector," he said, adding Rs 40,000 crore has already been invested and the balance Rs 40,000 crore was in the process of being invested. The investments will double employment in the automotive sector to direct employment of about 7.50 lakh to 10 lakh jobs by March 2011 and indirect employment would be around a crore, he added.

Firming up plans to acquire 51 per cent stake in scam-tainted Satyam Computer Services, industrialist B K Modi-controlled Spice Group is sending a team to start negotiations. The team will meet Sebi officials on Monday and Satyam’s new board during the week to convey its intention to acquire the stake through an auction process. Separately, the country’s largest diversified business group Hindujas has also expressed its intention to acquire controlling stake in the IT company. "We have firmed up our plans to acquire a majority stake in Satyam and a team from the group will meet Sebi officials on Monday to discuss the issue. We will request the regulator to auction shares of the company and stress that the proceeds should be pumped back into the company’s operations," Spice Corporation Chairman B K Modi told Business Standard. "We will seek an auction process. Apart from being transparent, it will also help in roping in the highest bidder," he added. The group was planning to acquire the stake through Spice Innovation, its New Delhi-based holding company, and was ready to shell around Rs 2,000 crore (around $400 million).

The government may revive a proposal limiting the number of Ultra Mega Power Projects (UMPPs) awarded per developer. “We need to give a thought to the desirability and the feasibility to limit the number of UMPPs per bidder,” said Jairam Ramesh, minister of state for commerce and power. UMPPs are the centre-piece of the government’s attempts to add over 50,000 Mw of power generation capacity through 13 such ultra mega projects that will come up through competitive bidding by private power developers. Much of this is expected to come up over the twelfth Plan starting 2012. Ramesh’s statement comes days after Reliance Power emerged as the lowest bidder (at Rs 1.77 per unit) for the 4,000 Mw Tilaiya Ultra Mega Power Project (UMPP) in Jharkhand. With this, Reliance Power has bagged three of the four large power projects that the government has put up for bids so far. Reliance Power has also bagged the UMPPs in Sasan, Madhya Pradesh and Krishnapatnam in Andhra Pradesh, leaving the industry worrying about the government committing a huge chunk of power capacity to a single developer. Tata Power won the fourth project, in Mundra, Gujarat. A proposal to impose a limit was made about a year back but was turned down by an Empowered Group of Ministers (EGoM) in November 2007 in the interests of increasing competition. Instead, the EGoM recommended putting stringent performance guarantee mechanisms in place to ensure companies do not overstretch themselves to bag UMPPs.

Reliance Power has bagged the Tilaiya ultra mega power project (UMPP) in Jharkhand by offering to supply power at Rs 1.77 per unit — the lowest price quoted by the four companies in the fray. The next best bid for the Rs 16,000-18,000-crore project came from government owned NTPC, which offered to supply power from the pithead coal project at Rs 2.39 per unit. There were two other bidders — Jindal Steel and Power which offered to supply power at Rs 2.69 per unit and Sterlite Industries which bid the highest at Rs 2.97 per unit. The fifth company shortlisted to bid, Lanco Infratech, partnership with Genting Power International, withdrew at the last minute, according to an official of the Power Finance Corporation (PFC), which is the nodal agency for the ultra mega power projects. Lanco said that bankers to its partner, Genting Power, withdrew support for the project at the last moment, forcing them to withdraw their bid. This is the third UMPP won by the Anil Ambani group company, after Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh. Eleven companies had originally qualified to bid for the Tilaiya UMPP but the global financial meltdown and the subsequent credit crunch saw many companies opt out of the bid. These included the likes of Tata Power and Larsen & Toubro. Analysts described Reliance’s winning bid as “very aggressive,” citing the huge gap between the lowest bid (Rs 1.77 per unit) and the second best bid (NTPC’s Rs 2.39 per unit). The bid was however much higher than the Rs 1.19 per unit that the company bid for the comparable project at Sasan.

The six-member government-appointed board of scandal-hit Satyam Computer Services today appointed investment banks Goldman Sachs and Avendus to explore various strategic options for the company, which include identifying strategic investors and obtaining expressions of interest from them in a fair and transparent manner.  The board also appointed management consultancy Boston Consulting Group to support the directors and the Satyam leadership team. BCG will appoint a three-member team for the assignment and will not charge anything for its services. In a related development, Price Waterhouse said it has suspended S Gopalakrishnan and Srinivas Talluri, who had audited Satyam’s accounts, following allegations of collusion in the fraud. Price Waterhouse’s assurance leader, Thomas Mathew, too stepped down, though he will remain a partner in the firm.

For the first time since its inception in 2006, the Board of Approval on special economic zones (SEZs) in its next meeting in March will take up a proposal from a developer to merge these tax-free industrial enclaves for exports. The Adani group has sought the board’s approval to merge its three SEZs at Mundra in Gujarat. The merger will result in lesser expenses on infrastructure, utilities and administration. Faced with a liquidity crunch, other developers too are expected to come to the board with a similar proposal. Reliance Industries-promoted Navi Mumbai SEZ Pvt Ltd is also planning to merge its notified zones in the Navi Mumbai area. “We were given five different land parcels; hence, we had to notify them separately," said a company source. An RIL spokesperson declined to comment. The three adjacent Adani SEZs are situated near the Mundra Port which too has been promoted by the group. While two of these are multi-product zones, the third is a power SEZ. The combined area of the three SEZs is well over 6,000 hectares.

US, the markets began the week on a positive note. The mid-cap segment was the underperformer of the session, while banking and technology outperformed. The benchmark indices gained over 3 per cent at close. However, the traded volumes were lower compared to the previous session, which is a negative indicator for a Monday. The market breadth was positive as the BSE & NSE combined advance decline ratio was 1,858:1,714. The capitalisation of the breadth was also positive as the BSE & NSE combined figures were Rs 9,250 crore: Rs 1,901 crore. The indices have closed in the upper end of the intra-day band and accompanied by mildly positive market internals. These are bullish indicators and can be partly attributed to the pre-expiry short covering. The market breadth indicates a lack of buying conviction on advances. The intra-day range specified at the 2,750/2,600 was overcome. The coming session is likely to witness a range of 2,835 on advances and 2,700 on declines. The bullish pivot for the session will be at 2,740, above which the bulls will get stronger. Below the 2710, the bears may attempt to push markets downwards.

Bharat Oman Refinery (BORL) today said its joint venture partner Oman Oil has refused to raise stake in the company for its ongoing Rs 10,000-crore refinery project in Bina, Madhya Pradesh. BORL said it is aggressively scouting for a new partner and hopes to complete this process by March. BORL was promoted by BPCL and Oman Oil as an equal joint venture. Both the companies have invested Rs 75 crore each in the company so far. However, Oman Oil, though still a partner in the JV, has decided against investing further in the project citing inordinate delays in obtaining various clearances as the reason. BORL has already shelved its plan to go public to mop up Rs 2,000 crore, which was slated to open in March 2008. Earlier, the company had also negotiated with Hindustan Petroleum Corporation (HPCL). The company is setting up a 6-million-tonne refinery in Bina. "The Oman Oil management has told us that they will not raise stake in the company. So we are holding discussions with various companies and will finalise the partner by March. But we will hold our stake around 50 per cent and are confident to start commercial production by December," U N Joshi, managing director, BORL, told Business Standard after briefing the state government about the progress of the project.

In the face of Satyam episode and allegations of financial irregularities in Nagarjuna Finance, an industry body today alleged that independent directors on company boards are being subjected to "undue harassment". The PHD Chamber said that it is concerned over "the treatment and undue harassment of independent directors by the authorities and the police, without even establishing whether the director was directly connected to any default or whether there were acts which were beyond his control". Eminent lawyer and Chairman of the PHD Chamber Corporate Affairs Committee Lalit Bhasin cited the example of J M Financial Chairman Nimesh Kampani "being subjected to undue harassment".

Anil Ambani Group firm Reliance Power today bagged its third 4,000 Mw Ultra Mega Power Project (UMPP), at Tilaiya, in Jharkhand. "Reliance Power has bagged the 4,000-Mw Ultra Mega Power Project at Tilaiya in Jharkhand," a source said. The Reliance bid for the project was Rs 1.77 per unit. Five companies including NTPC, Reliance Power, Lanco Infratech, Jindal Power and Sterlite Energy, of the 11 pre-qualified bidders, were in the fray for the project. The financial bids for the project were opened today. A high-level committee, which includes state representatives from Bihar and Jharkhand, selected the developer. The financial and technical bids for the coal-based thermal power project were invited on December 29 and the final financial bids were to be opened within 15 days.

Infosys Technologies has placed around 5 per cent of its global workforce under the scanner. The move, which is being seen as an offshoot of the global financial meltdown, is expected to affect over 5,000 of the 100,000-plus employees on the company’s rolls. It is learnt that Infosys, the country’s second-largest information technology services provider, has told its senior managers (project managers, senior and group project managers, delivery managers) to give the lowest performance rating (4 on a scale of 1-4) to the 'underperforming' 5 per cent as a part of the company's consolidated relative ranking (CRR). Though rock-bottom rankings are not unknown in the company, this is the first time that Infosys has made it mandatory. CRR is decided based on the employee’s appraisals which is done twice a year. "The recommendations have already been submitted this month," a senior project manager working with Infosys told Business Standard on the condition of anonymity.

India, have been affected by a family of network worms which goes by the name conficker (also called kido or downadup). The problem has been compounded since the worm keeps on mutating with new variants and a large number of companies and small and medium businesses have not yet fixed their machines with an emergency patch-up (MS08-067) provided by Microsoft in October 2008 as well as this month. Anti-virus company F-Secure estimates that 15 million machines have been infected till date, making it the worst outbreak of its kind since a worm called Slammer in 2003. The worm, according to Microsoft, infects computers across a network by exploiting a vulnerable spot in the Windows server service (SVCHOST.EXE) which could allow remote code execution when file sharing is enabled. Depending on the specific variant (said to have numerous variants), it may also spread via removable drives (USB sticks for instance) and by exploiting weak passwords (password, 12345 and qwerty etc). It disables several important system services (including email) and security products and downloads arbitrary files (making it difficult to detect). Even the US Computer Emergency Readiness Team has cautioned that "...disabling AutoRun on Microsoft Windows systems can help prevent the spread of malicious code. However, Microsoft's guidelines for disabling AutoRun are not fully effective, which could be considered vulnerability."

As expected, the pace of growth at ICICI Bank is clearly moderating. The bank managed to just about grow its net profit –up 4 per cent y-o-y to Rs 1,270 crore-- in the December 2008 quarter, though it was driven more by strong treasury income---35 per cent of operating profits –and lower operating expenses, down 17 per cent y-o-y, rather than the core business of lending. The loan book actually contracted last quarter, falling 4 per cent sequentially, with the bank consciously going easy on relatively higher-yielding retail loans, which now account for 54 per cent of the total loan book compared with about 63 per cent a year back.

The six-member government-appointed board to the scandal-hit Satyam Computer Services today appointed Goldman Sachs and Avendus as investment bankers to advise the company on the way forward and explore various strategic options that include identifying strategic investors, obtaining expressions of interest and ensuring a fair and transparent approach to the entire process. In related developments, Price Waterhouse said it has suspended the two tainted auditors -- S Gopalakrishnan and T Srinivas -- following allegations of colluding in the Satyam fraud case. The bail petition of the duo, along with that of Ramalinga Raju and former CFO Srinivas Vadlamani, will come up for hearing on January 29.

Sagging fuel prices caused Reliance Industries’ net to fall almost 10 per cent, robust demand for mobile telephony boosted Bharti Airtel’s net a quarter and currency derivative losses blew a Rs 806-crore hole in the books of Ranbaxy Laboratories during the October-December 2008 quarter. Reliance Industries is India’s most valuable company, Bharti is the largest operator of mobile telecommunication services and Ranbaxy the largest pharmaceutical company by sales. The results, declared today, reflect global and local business trends.

Contrary to the claims of former Satyam Computer Services Chairman B Ramalinga Raju that there were 53,000 associates in the company, only 40,000 exist on the rolls. Raju made this confession to the Andhra government's Criminal Investigation Department (CID) during the four-day police custody, which ended today, public prosecutors Ajay Kumar and Gangaraju Prasad told the Nampally court today. The prosecutors made these disclosures as part of their request to the court to extend police custody of Raju brothers and former chief financial officer Srinivas Vadlamani by two days. The court, however, extended custody by a day. Raju also admitted to fudging accounts, manipulating records, transferring shares and conducting of fraudulent transactions in other people's names (benami transactions), according to the public prosecutors. They added that the four days given for custodial interrogation was not enough as some time was lost for breakfast, lunch and medical examinations of the accused. As a result, the interrogation — monitored by a closed circuit TV — remained inconclusive, which is why they needed an extension of custody.

Representatives of four multinational banks met the newly-installed six-member board at Satyam Computer Services today to discuss the feasibility of extending loans to keep the troubled company’s business afloat, according to sources privy to the development. The six-member board — comprising HDFC Chairman Deepak Parekh, former Nasscom President Kiran Karnik, former Sebi member C Achuthan, CII chief mentor Tarun Das, renowned chartered accountant TN Manoharan and LIC nominee Suryakant Balakrishnan — met here today for the third time after it was constituted January 12. The board meeting has been extended to January 23. Though the minutes of the meeting were not disclosed, the board is likely to come out with a decision on the appointment of a new chief executive officer and a chief financial officer tomorrow. “The board has started filtering the 40 applications that it received for the company' CEO post,” sources said. Several attempts made to contact the board members on the developments have not been fruitful.

Zandu Pharmaceutical Works today said its consolidated net profit for the third quarter ended December 31, 2008 grew 31.45 per cent at Rs 7.23 crore as compared to Rs 5.50 crore in December quarter last financial year. Consolidated total income rose to Rs 58.36 crore in the quarter under review from Rs 56.31 crore last year. For the nine-month period ended December 31, 2008, Zandu registered a net profit of Rs 17.10 crore, a 4 per cent growth over corresponding period a year ago. It had a net profit of Rs 16.43 crore in the same period last fiscal. However, on a standalone basis, the company posted a net profit of Rs 5.44 crore, a 13.92 per cent decline when compared to Rs 6.32 crore of last year. Shares of Zandu Pharmaceutical Works closed at Rs 5,895, up 0.15 per cent on the BSE today.

In an attempt to clear its name following allegations of account manipulation by a "bear cartel", education solutions provider Educomp Solutions has also selected an innovative way of advertising, besides filing a police complaint. It is using AdWords, a Google advertising option on the internet that allows users who spot these ads to click on a link that opens a page on Educomp’s website containing clarifications addressing the allegations about the company that were circulated by emails earlier this week. When people search on Google using one of the advertiser’s keywords, the ad may appear next to the search results. These ads also appear on websites of newspapers and other media. “This is one way of countering the malicious rumours spread by people with vested interests. We are reaching out to the public not to advertise our product but only to give them information and present them with facts," said an Educomp spokesperson when asked about the AdWords campaign. The company has, however, sought action against those spreading these rumours and said it will approach the Securities and Exchange Board of India (Sebi) tomorrow.

State-owned transmission utility PowerGrid Corporation today said it has completed 202-km long transmission line from Pul-e-Khumri to Kabul in Afghanistan. "PowerGrid has completed the 202 km long 220 KV Double Circuit Transmission Pul-e-Khumri to Kabul," a company statement said. The project has been funded by the government of India under the assistance programme to Afghanistan. PowerGrid recently commissioned the Ranchi-Sipat transmission line enhancing power transfer to 3,000 Mw between eastern and western regions. With this achievement, total inter-regional power transfer capacity of National Grid has been enhanced to 18,700 Mw from the existing level of 17,000 Mw. Power Grid plans to enhance the capacity of National Grid to more than 37,000 Mw by the end of 11th Five-Year Plan at an investment of Rs 55,000 crore.

Institutional shareholders such as Life Insurance Corporation of India (LIC) and ICICI Prudential Life Insurance are supporting engineering behemoth Larsen & Toubro’s move to acquire troubled software exporter Satyam. As the first step, L&T is expected to present a revival proposal before the newly-constituted board of Satyam soon, said informed sources. On Wednesday, L&T convened its board meeting to discuss its nuclear foray and chances of buying Satyam. The board member representing LIC, a major shareholder of L&T, also attended the meeting. However, an L&T spokesperson said Satyam was not on the agenda today. A source, however, said, “L&T is looking to submit a revival proposal for Satyam, highlighting the credibility of the brand �Larsen & Toubro’. Traditionally, L&T is an employee-friendly company and that will help retain the Satyam employees. The company's financial strength will also help Satyam raise funds for its working capital.” LIC holds 4.34 per cent in Satyam. After the software company's share price fell in January, the government-owned insurer raised its holdings 1.43 per cent through open market purchases. In almost the same period, L&T Finance also bought 4 per cent stake in the firm. The Sensex opened with a negative gap of 200 points at 8,901. The index tried to recover but could only manage to touch a high of 9,051. Thereafter, the index exhibited range-bound movement for most of the trading day. Heavy selling towards the end of the day saw the index slide to a low of 8,735. The Sensex finally ended with a loss of 321 points at 8,779. The Metal, Power and Bankex indices dropped around 4% each to 4,698, 1,733 and 4,645, respectively. The Oil & Gas index shed 3.8% at 5,642. The market breadth was fairly negative - out of 2,493 stocks traded, 1,669 declined, 720 advanced and the rest were unchanged today. Sterlite slumped 8% to Rs 237. HDFC plunged 7.5% to Rs 1,372, and Tata Power shed 7.3% at Rs 714. ICICI Bank tumbled over 7% to Rs 369. Grasim dropped 6% to Rs 1,141. Reliance Infrastructure slipped 5.7% to Rs 520. Reliance and Bharti Airtel declined over 5% each to Rs 1,119 and Rs 584, respectively. Ranbaxy and DLF shed around 4.5% each at Rs 204 and Rs 181, respectively. Tata Motors dropped 4% to Rs 140. Reliance Communications, Wipro and BHEL were down around 3.5% each at Rs 170, Rs 220 and Rs 1,352, respectively.

Ericsson AB will slash about 5,000 jobs as part of its cost cutting initiatives even as it reported a substantial fall in net income for the fourth quarter ended December 31, 2008. The Swedish company's net income declined 31 per cent to 3.89 billion kronor for the fourth quarter. It had a net income of 5.6 billion kronor in the same period a year ago. "Cost reductions will be achieved through reduction of the number of consultants and other temporary staff, consolidation of R&D sites and layoffs. These activities will result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden, primarily in Stockholm," Ericsson said in a statement today. Meanwhile, the firm has posted a 23 per cent growth in net sales to 67 billion kronor in the quarter under review. It had reported net sales worth 54.5 billion kronor in the year-ago period. "We have had a solid performance in 2008... In the present environment, we will continue to reduce costs, across all parts of the company at the same pace as in 2008 with restructuring charges of six to seven billion kronor, targeting annual savings of 10 billion kronor from the second half of 2010," Ericsson President and Chief Executive Officer Carl-Henric Svanberg said. For the full year ended December 2008, Ericsson's net income declined by 48 per cent to 11.3 billion kronor.

Two weeks later, the Satyam saga can be broken down into four distinct elements. Each requires a different set of responses. For instance, how the regulators and investigating agencies need to deal with the fraud has little or nothing to do with the tasks of the new board of directors. This article outlines the four issues and suggests what actions we require for each. The first is the criminal behaviour of the promoter, B Ramalinga Raju, and his accomplices who have committed a mammoth fraud on the listed corporation and its shareholders and, according to newspaper reports, siphoned off thousands of crores of rupees out of Satyam to finance sundry property-related ventures in Maytas and possibly other family-held companies. What should we expect in the Raju et al fraud issue? The most important is for the government and its agencies to demonstrate that this will not be another example of under-enforcement. If Raju and his co-conspirators have defrauded the company, as it seems they have, they must very quickly receive maximal civil and criminal punishment. Investors will not tolerate yet another case of Indian investigative and legal procrastination, especially for a crime of this scale. They won’t put up with needless turf battles between the ministry of corporate affairs, Sebi, Andhra police, Serious Frauds Investigation Office and CID. These agencies had better cooperate — perhaps for the first time in their history — and bring the criminal(s) to book double-quick. The press needs to be hawk-like on this one. There will be those in high places who won’t want the truth to come out, especially on the land deals. We must exert enough pressure to ensure that such worthies can’t muzzle the investigations and delay the findings.

The second relates to Satyam’s auditors. Who did the company’s internal audit de facto report to — the CFO or directly to the audit committee of the board of directors? Did the internal auditors detect serious irregularities in financial controls and the financial reporting processes? If so, what did they do with their findings? We also have to examine the role of the statutory auditors, Price Waterhouse, which did the Indian GAAP audit as well as the audit according to International Financial Reporting Standards (IFRS). Are Raju’s confessions in his January 7, 2009 letter true? Was there, in fact, a hole in the cash and bank balance of Rs 5,040 crore as on September 30, 2008? If so, why was it not detected? Was there, as Raju confessed, a Rs 588 crore over-statement of revenues and net income for the quarter ended September 30, 2008? Was such a fraud occurring quarter on quarter, as Raju suggests? If so, how did it escape scrutiny? In short, was the statutory auditor, especially its signing partner, Srinivas Talluri, sleeping on the bridge of the ship? And were these errors of omission, or connivance?

India, the Chennai-based automobile company of the US giant, said today that it has raised prices of all its models, except the Ikon, by as much as Rs 25,000 due to a strong surge in import costs recently. The upward revision in prices were brought into effect from the first of this month. Accordingly, prices of the Fiesta sedan were hiked by Rs 5,000-10,000, whereas prices of the Fusion were increased by Rs 15,000. The Endeavour sports utility vehicle (SUV) saw a jump of Rs 25,000. However, Ford decided not to increase the prices of its entry-level sedan, the Ikon, as the latest version of the car was recently launched and has got good response from the market. It has appointed actor Sunil Shetty as the brand ambassador for the Endeavour SUV. Nigel E Wark, executive director (sales and marketing), Ford India, said, “There has been an increase in the exchange rate where there has been a severe depreciation in the value of the Indian currency against the dollar.” “Besides, auto component makers have also jacked up prices even though input prices have dropped in recent months. This has led to the increase in our prices,” he further added. According to a company official, the Endeavour SUV has an import content of about 70 per cent, while the Fiesta and Fusion models have about 20-30 per cent imported content. A falling rupee against other foreign currencies has made imports very expensive. Ford is the latest company among other car makers such as Toyota Kirloskar, Hyundai Motor and Honda Siel to have announced an increase in prices.

Bharti Airtel today reported 38.35% surge in consolidated, as per Indian GAAP, net profit at Rs 1,976.41 crore for the third quarter ended December 31, 2008, when compared with Rs 1,428.56 crore in the corresponding quarter a year ago. According to a release issued by the company to the BSE today, the group's total income increased by 38% to Rs 9,688.50 crore from Rs 7,017.95 crore in Q3FY08.

Pantaloon Retail India, a part of Future group, today reported a 5.97 per cent rise in its net profit at Rs 33.54 crore for the second quarter ended December 31, 2008, as compared to Rs 31.65 crore in the corresponding quarter last year. The company's financial year ends on June 30. Total income for the reporting quarter grew by 24.35 per cent to Rs 1,527.20 crore from Rs 1,228.07 crore. The company shares were settled at Rs.162, up marginally.

Barclays Plc, the UK bank that turned down government funding last year, declined for a seventh straight day in London trading on speculation that it may be forced to take more writedowns and be nationalised. Barclays fell as much as 35 per cent, the biggest drop in at least two decades, and was down 20 per cent at 58.3 pence as of 12:30 pm The shares have lost 62 per cent this month, valuing the company at £4.9 billion ($6.5 billion). London-based Lloyds Banking Group Plc fell as much as 26 per cent on Wednesday. “There is genuine fear from shareholders, who see a real risk of nationalisation,” said Simon Maughan, an analyst at MF Global Securities Ltd who has a “sell” rating on Barclays. “The whole rest of the world, operating in the same business as Barclays, has seen significant losses. There is talk that Barclays will bring its results forward to prove its case. Bring it on.” Barclays said January 16 its pretax profit will beat the average analyst estimate of £5.3 billion. The London-based bank said it had a net credit writedowns of £2.1 billion for the first nine months of 2008 and opted out of the UK’s £50 billion plan to recapitalise banks. Edinburgh-based Royal Bank of Scotland Group Plc forecast a 2008 loss of £28 billion Jan. 19 as the government said it would increase its stake to 70 per cent.

Wipro today reported 17.4 per cent increase in net profit to Rs 1,004 crore for the third quarter ended December 31, 2008, as against a net of Rs 854 crore for the corresponding quarter of last fiscal. Revenues were up 25 per cent to Rs 6,618 crore. The flagship IT services business showed an year on year growth of 31 per cent to Rs 5,079 crore, marginally above its guidance. However, the company has stated that its fourth quarter revenue from IT services will be dropping to $1045 million from the third quarter revenues of $1126 million. Azim Premji, chairman of Wipro, commenting on the results said : "We are living in tough times; the macro-economic challenges are significant and impacting businesses across segments. However, recessions do not last, resilient companies do. I am confident Wiproites are resilient to withstand the near term challenges posed by an uncertain environment and come out stronger than ever." The operating profit showed a growth of 26 per cent YoY as it added 31 new clients during the third quarter.  Wipro made a one-time provision in respect of receivables of a large customer which impacted its margins by 60 basis points. Excluding this one-time impact, it was  able to expand margins by 10 basis points. Added Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro : "The IT services revenues were ahead of the guidance as measured in exchange rates prevailing as on September 30, 2008. Our price realization improved sequentially in constant currency through higher productivity, while absorbing impact of lower working days during the quarter. We improved our offshore mix and significantly increased our mix of revenues from Fixed Price Projects."

The new board of Satyam Computer Services today confirmed it received buyout proposals from both Indian and foreign firms besides a favourable response from banks for credit to meet the company's cash requirements. “All I can say, we have been approached by potential buyers”, board member Tarun Das told the media here. He added the board will also discuss a proposal to seek government guarantee on loans to be taken by the Hyderabad-based software services firm to meet its cash requirements. The firm needs cash to pay salary for it’s over 50,000 employees, both in India and abroad, and also to meet other monthly expenses. The board, which will meet for the third time on January 22 and 23, will also discuss the appointment of a new chief executive officer (CEO) and chief financial officer (CFO) for Satyam, according to Das -- also the chief mentor of the Confederation of Indian Industry (CII). With a financial bailout ruled out by the government, highly-placed sources aver that the new board well recognises that it's the potential liabilities that could arise from the 12 class-action suits that are acting as a major deterrent to potential buyers. major deterrent to potential buyers.

Against the backdrop of its diplomatic offensive against Pakistan, India today put its military might on show with the test-firing of the latest variant of the BrahMos missile at Pokhran in Rajasthan. However, Defence Minister A K Antony said the test was “pre-planned and not directed against any country”. The Defence Research and Development Organisation (DRDO) officials were quoted as saying the Army tested the nuclear-capable missile, which has a 290-km range. BrahMos missile production is a joint collaboration between the DRDO and Russia’s Federal State Unitary Enterprise NPO Mashinostroyenia (NPOM). The Army has one regiment equipped with the BrahMos missiles, but they are different from the version tested today.

The principal promoters of Balaji Telefilms, actor Jeetendra (Kapoor), his wife Shobha, daughter Ekta and son Tushar, have decided not to buy Star India’s 26 per cent stake in the television software company because of the sharp erosion in its share price. In August 2008, the Kapoors had agreed to buy the Star stake at Rs 190 per share by January 18. This would have raised their stake in Balaji Telefilms from 40 to 66 per cent. However, in the last few months, the Balaji Telefilms stock has fallen to less than a third — it closed at Rs 58.50 on the Bombay Stock Exchange on Monday. At Rs 190 apiece, the Kapoors need Rs 322 crore to buy the 26 per cent Star stake. As the current value of the stake is Rs 99 crore, the family has decided not to exercise the option. Balaji Telefilms is best known for its soap operas like Kyunki Saas Bhi Kabhi Bahu Thi and Kahani Ghar Ghar Ki. Star India had brought 26 per cent of the company in 2004 when it was making serials exclusively for Star’s general entertainment channels. Last year, the two decided to part ways and the Kapoors were given the option to buy the Star stake. Star India, on its part, seems to be in no hurry to offload its Balaji Telefilms stock. “We are not in hurry, because we consider it a good investment,” said Star India Chief Executive Officer Uday Shankar. Star India had bought the shares at Rs 90 each. Investment banking sources said Star is now likely to sell its shares to private equity firms. The sources also said that whatever price Star is offered, the Kapoors have the right to match it. However, Star officials said there was no such clause agreement between the two partners.

The integration of national carriers Air India and Indian Airlines, which were merged in 2007, has hit a major roadblock with regard to the setting up of a common reservation platform for inventory sales. This will delay the completion of the merger process by at least another 12-15 months. Raghu Menon, CMD of National Aviation Company of India (Nacil), had said last year that more than 70 per cent of the merger process would be completed by the end of FY09. The carriers currently have distinct platforms powered by IT service providers Unisys (Air India) and IBM (Indian Airlines). Getting onto a common platform is one of the key requirements for integration which would give them a common airline code — AI, apart from an effective management of inventory and network planning. Last year, Nacil had floated a tender for an IT service provider and the shortlisted companies included -- EDS and Amadeus. Of the two, EDS had been chosen as the lowest bidder. According to sources in the company, EDS has now gone back to Nacil and asked for the contract period (the period within which the new system needs to be set up) to be extended to 15 months, while the tender specified the period as 9 months from the award of the contract.

Tata Motors, which is announcing its results January 30, is likely to end 2008-09 with around Rs 500 crore less cash mainly because sales of commercial vehicles, which account for about 60 per cent of its revenues, have dropped sharply. As a result, the company is reportedly reconsidering a three-year Rs 10,000-crore capital expenditure plan and faces potential problems raising money to pay for the Jaguar and Land Rover buys. Cash flow, which Bloomberg defines as net profit less dividend added to depreciation, is expected to be Rs 37.6 per share, according to estimates by six analysts on the financial news agency's records. Given that Tata Motors has roughly 450 million primary shares in 2008-09, it is likely to have an estimated cash flow of Rs 1,692 crore in the fiscal. But Bloomberg’s data shows an average of Rs 2,186.8 crore of cash flow for 2007-08, around Rs 500 crore higher than this year’s average estimate. “The economic slowdown has affected the demand for commercial vehicles,” said an analyst with a foreign brokerage who declined to be identified. “This has brought down the company's cash flow,” he added.

Sebi panel wants mandatory disclosure of pledged shares, higher margin on warrants conversion. India Inc’s promoters may find the going tough on pledging shares and converting warrants if stock market regulator Securities and Exchange Board of India (Sebi) accepts the primary capital market advisory committee’s recommendations. The suggestions, made at a meeting today, will be considered by the Sebi board shortly. The committee said that promoters will have to make mandatory disclosures when they raise finances by pledging their shares. This is because lenders ask promoters to pay additional margins when the value of the shares pledged as collateral falls. Lenders sell these shares in the market if promoters fail to pay margins — a common trend in a rapidly falling market. This can have a cascading impact on the stock price, the committee observed. A source close to the committee said when promoters pledge their shares, they generally pledge their voting rights. “Investors have a right to know whether the owners of the company continue to remain owners,” the source said, adding this is the only way to protect the interests of minority shareholders. Market players, however, said such a disclosure in today’s market may lead to selling pressure in the shares of companies where promoters have pledged shares. Promoters of at least 150 companies are understood to have raised funds by pledging their shares, the most prominent being former Satyam Chairman Ramalinga Raju who pledged his entire stake to lenders, who dumped the shares in the market when Raju failed to pay margins.

India, one feared, we would now see an extension of that bailout principle with the use of government funds to support a private company whose promoters had cooked up his company’s accounts. One even began wondering why so much noise was created over the nationalisation of sick textile mills in the late 1960s. The argument then was that the nationalisation of textile mills would prevent job losses. The same argument was now being used by Kamal Nath to bail out Satyam! Nothing seemed to have changed, except that nobody cried foul.

The government today expanded serious fraud investigation office (SFIO) probe by including Maytas Infra and Maytas Properties - the two companies run by sons of B Ramalinga Raju, who had earlier confessed to manipulating the accounts of Satyam Computer Services. SFIO, which was earlier asked to look into the accounts of Satyam after registrar of companies (RoC) submitted its report, will be given three months to submit its report. The decision comes after SFIO investigators, an interdisciplinary agency formed to unravel complex corporate fraud, had established �nexus’ between Satyam and the two Maytas firms. “To uncover the facts relating to the events in Satyam, it is necessary to obtain information, records, books and papers from the above two companies,” Prem Chand Gupta, minister for corporate affairs, told reporters outside his office. However, Gupta refused to provide details of the nexus between Satyam and two firms. Satyam had proposed to fully acquire Maytas Infra and Maytas Properties for a total consideration of $1.6 billion (or Rs 7,914 crore) on December 16. But it was called off after shareholders vehemently opposed it. When asked whether the boards of two Maytas firms will be superseded like it was done in Satyam, Gupta said, “SFIO would undertake extensive investigation into the two (Maytas) companies. We will take action based on the information available”

Satyam Computer Services improperly used a valuation of Maytas Properties done by Ernst & Young for its merger with the disgraced information technology company, the professional services firm has alleged. In the minutes of the December 16 meeting of the Satyam board, ex-CFO Srinivas Vadlamani, now in jail, had said that Ernst & Young had valued the closely-held Maytas Properties at Rs 6,523 crore, though Satyam had agreed to acquire it for Rs 6,410 crore. Ernst & Young now said its valuation of Maytas Properties was for a proposed share transaction involving the existing shareholders of the company — the family of Satyam founder S Ramalinga Raju. “We were not given to understand by any party, explicitly or implicitly, during the valuation exercise about Satyam’s plans to acquire Maytas Properties,” an Ernst & Young spokesperson informed Business Standard by e-mail. Actually, the spokesperson added, Ernst & Young was engaged by a law firm and not by Satyam for this valuation, which is mandatory for such a transaction, according to the guidelines laid down by the Reserve Bank of India. “This valuation was done only to comply with RBI's regulatory requirements and our engagement letter and valuation report clearly and unequivocally state this,” she added. S R Batliboi is Ernst & Young's audit arm. Satyam and Maytas Properties officials were not available for comment. In December, Satyam had to call off the merger of Maytas Properties and Maytas Infrastructure, companies controlled by Raju's family, with itself after shareholders raised strong objections about the transaction. Earlier this month, Raju had disclosed that the transaction was meant to cover a hole of over Rs 5,000 crore in the company’s books. Some experts Business Standard spoke to said the use of the valuation report for the merger could be construed as a breach of contract. Also, the valuation done for such a purpose is different from that done with the perspective of selling to a buyer.

The group has made a third entry into mobile telephony. Is its pricing a calculated gamble for cheap additional spectrum? When Mukesh Ambani, the head of Reliance Industries, was making a high-decibel entry into mobile telephony based on the CDMA platform six years ago, he gave several interviews recounting how his father, the redoubtable Dhirubhai, provided the guiding principle for the business. In a customary heart-to-heart evening chat with his elder son, Dhirubhai said mobile telephony would take off only if a short how-are-you call cost less than a postcard, whose price was 15 paise.

That charted the course for Reliance Infocomm’s Monsoon Hungama. Opening on July 2, 2003, it offered a mobile phone for Rs 501, including Rs 100 worth of free talk time, and redefined the pricing and tariff structure in the business. Until then, if you wanted a mobile phone, the handset alone cost about Rs 2,000 and more, the connection was extra. Now, Dhirubhai’s younger son, Anil Ambani, is going a step ahead. Having received the group’s telecom business in the June 2005 settlement with his brother and consolidated it as Reliance Communications, Ambani has taken the company’s focus back to GSM and launched a new pre-paid service that can be bought for just Rs 25 and will be valid for three months, one-eighth of the cheapest offer by anyone else. The connection will come with five to 10 minutes of free talk time (depending on the circle) every day, which works out to 450 to 900 free minutes in the three-month period.

A businessman I met at an industry body gathering a few years ago narrated this distinction between giving a bribe and paying �speed money’. “A bribe is payment to a government officer for doing something he should not do and speed money is payment for doing something he should.” The discussion was to do with logistics in general and the specific challenges of clearing goods through the log-jammed ports. I tried arguing, for a moment, about the greater good about not doling out speed money to keep the system clean and transparent. I gave up when I heard a senior customs official present at the gathering acknowledge that speed money had to change hands, if you did not want your products to rot at the docks or your importers to dishonour a time-bound consignment. A week ago, the World Bank in Washington out of the blue announced it was banning IT services major Wipro from doing business with it for four years for “providing improper benefits to Bank staff”. Turned out Wipro had offered New York Stock Exchange listed American Depository Receipt (ADR) stock to the World Bank, “through the bank’s chief information officer and staff.”

Wockhardt, which is facing a cash crunch to repay its liabilities, has started retrenching workforce in Europe, citing the ongoing global economic downturn. Wockhardt UK, one of the top ten generic drug makers and the second largest hospital generics supplier in the UK, has axed 18 jobs, including 15 permanent employees, at its Wrexham manufacturing facility, a British daily reported today. Wockhardt earns over 54 per cent of its Rs 2,650-crore revenues from Europe, where it acquired facilities in the UK, Ireland, France and Germany. It employs about 6,000 people worldwide and of this, 1,500 are in Europe. The facility employs about 330 employees. "Our customers in the US are unable to get finance to buy our products and when they pull the plug, it has a direct impact on our business," Sirjwan Singh, managing director of Wockhardt UK, was quoted as saying in the Evening Leader daily. An e-mail sent to Wockhardt chairman Habil Khorakiwala did not elicit any response. Its spokesperson said the company could respond only by tomorrow. Meanwhile, Wockhardt has said an extra ordinary general meeting of the company today approved to raise Rs 500 crore through the issue of redeemable preference shares. The funds are for the redemption of FCCBs and for general corporate purpose, said a company release. Wockhardt has to repay FCCBs amounting to $110 million, which is due for maturity in October 2009. Crash of capital markets a few months ago also forced the Group to a much-publicised initial public offer to raise about Rs 800 crore for expanding its hospital network. The company also informed the stock exchanges to submit audited financial results for the entire financial year ended December 31, 2008 only by on or before March 31, this year.

Indian contract research and manufacturing companies (Crams) such as Divis Laboratories, Jubilant Organosys, Piramal Healthcare, Biocon and Dishman Pharma may to benefit from the global slowdown as MNCs step up outsourcing to cut costs. These players, which reported over 37 per cent growth in revenues from Crams business in the second quarter of this financial year, may post over 30 per cent growth in the coming years. The softening of input prices imported from China, which spiralled during Olympics, will also help these companies improve their operating margins, said an analysis by Reliance Money. India is an attractive destination for global companies for cost-effectiveness without compromising on quality, as drug development and manufacturing can be done in India at 40 per cent of the expenses in the US and Europe. India’s total CRO market in 2007 was about $323 million and is expected to grow at around 49 per cent CAGR up to 2010, according to a study by PricewaterhouseCoopers (PWC).

Accentuating the growing cash crisis in real estate, Unitech Ltd, India’s second-largest listed realty company, has rolled over almost Rs 500 crore out of Rs 900 crore that it borrowed through the fixed maturity plans (FMPs) of about half a dozen mutual funds. Under an agreement with the mutual funds, Unitech has repaid nearly Rs 400 crore and is rolling over the remainder for three months at 14 per cent interest, significantly higher than, say, 6 per cent for a 10-year government paper, but lower than the 16 per cent at which Unitech originally borrowed the money, mutual fund industry sources said. Under the restructuring plan, none of the mutual funds have released any of the company’s collateral. The company has raised around Rs 1,400 crore from FMPs. Of this, around Rs 900 crore was slated to mature on January 19. The company has paid the Rs 400-odd crore through a combination of internal accruals and fresh credit limits from banks, sources said. The rest of the FMP borrowings (that is, Rs 500 crore) will mature in 12 to 14 months. On why mutual funds have agreed for a three-month rollover, a senior fund manager said, “Based on our assessment, the situation will improve substantially in this period since the credit situation has started improving. Secondly, cash flow would also improve.” Unitech CEO Sanjay Chandra declined to comment. Unitech’s stock has been battered for most of 2008 owing to its heavy debt obligations. The share price dropped to Rs 31.10 on January 16, 2009 against a 52-week high of Rs 546 on January 2, 2008.  The company is carrying debt of around Rs 8,350 crore on its books against a market capitalisation of Rs 5,050 crore. It has already restructured loans worth Rs 1,000 crore from public sector banks.

Even as the buzz around Vivel Paul's candidature as CEO is still doing the rounds at Satyam Computer Services, insiders say the government is considering a person who was an integral part of the company till three months ago. The name of Venkatesh Roddam, former CEO of Satyam's BPO subsidiary Nipuna, is being seriously considered, since Paul is not keen to return to India, according to highly-placed sources. The search for a CEO has been following founder Ramalinga Raju's disclosures of financial fraud January 7 and his subsequent arrest. Roddam, who is taking a break from corporate life and lives in Hyderabad, said: "I'm not too sure what is happening. I am getting calls from close friends and relatives who are asking me about this." Roddam did not, however, offer a direct reply when he was asked if he was interested in the post but suggested he was not averse to it either. "It is a fantastic company to work with. It's an interesting and challenging role. They have a competent board now, to provide all kinds of support," said Roddam who worked for Nipuna for about three years. Last week, Business Standard reported that the government had exhorted the new board, whose six members it has nominated, to look within the company or identify a person who knew Satyam’s operations well, for the post of CEO and CFO. Roddam was reportedly a natural choice because of his association with Satyam and Raju, who had recruited him directly. Roddam is an MBA and has spent 18 of his 21-year professional career in financial services and banking in India and overseas. Before joining Nipuna as CEO, Roddam worked with Deutsche Bank for almost nine years based in Frankfurt.

Tata Consultancy Services (TCS), the country’s largest IT services provider, has plans to freeze its lateral hiring, or recruitment of experienced hands. The company, which expects to take a final call on its hiring strategy next month, also says the next year’s salary hike would be in single digit per cent range. TCS, however, has assured it will honour its commitment on hiring 24,800 people during financial year 2009-10. Ajoy Mukherjee, vice-president and head-global human resources, TCS, said: “We have almost frozen our lateral hiring. We have been very controlled about the numbers that we take from here. The focus is on trainees as from cost management perspective this will balance out.” He said that surprises are coming on a daily basis and one should be prepared for it. Last quarter, the company had spoken about a hiring mix of 60:40 for trainees and laterals respectively. For 2009-10, TCS has already made campus offers of 24,800 and the company says that it will honour all the commitments. For FY09, the company has a target of hiring 30,000-35,000, of which 30,430 are already on board. “Campus hiring is done at least a year in advance and we were not expecting the situation to be this bad,” he adds.

There is no doubt that India needs to invest huge amount of money towards creation of new infrastructure, given that lack of quality infrastructure has proved to be a stumbling block for the country not reaching its optimum growth rates. Even in these challenging times, the government’s stimulus packages focus on increasing infrastructure spending, as it would help sustain higher growth rates, and would create employment opportunities. That India is estimated to spend around $450 billion on infrastructure in the eleventh five-year plan (an increase of 2.3 times from the tenth five-year plan), itself speaks of the opportunities therein. Since the increased outlay is beyond the means of the government (30 per cent expected to come from private sector), this would herald growth opportunities for companies that execute projects, as well as those who finance such projects. Infrastructure Development Finance Company (IDFC), a leading player in the infrastructure finance segment with expertise in project financing, should benefit immensely from the same. At the macro level, the declining interest rates are also positive developments for the industry as well as IDFC. Simultaneously, IDFC has also diversified into less capital intensive but capital market oriented businesses like asset management, equity broking and investment banking to garner near-term visibility in the revenue streams.

The magic touch of Akshay Kumar seen in the phenomenal success of Singh is Kiing is apparently missing in his latest film Chandni Chowk to China, which the critics have predicted to be a damp squib at the box office. The film distributed by Warner Brothers' got average bookings of around 70 per cent over the weekend, compared to full houses associated with blockbusters. The storyline revolves around the Great Wall of China and is a comedy, shot at exotic locales in China. Utpal Acharya, vice-president, programming and distribution, Inox Leisure, says that after the initial burst, bookings did not go as expected. "Expectations were definitely high for the film. But even the paid previews had only 75 to 80 per cent occupancy. The first show had 55-60 per cent occupancy, but that might soon settle down to 65 - 70 per cent. Compared to films like Dostana, for which we had impromptu special screenings that ran house-full despite being unannounced, this is not a very encouraging performance." "The paid preview was only 55 per cent full and Friday was similar. The weekend won't go beyond 70 per cent and I am very disappointed," says Devang Sampat, senior vice-president of Cinemax India, which runs a bevy of screens across the country.

Tata Motors, India’s largest commercial vehicles maker, may seek to roll over a part of the Rs 9,200-crore bridge loan it took to buy the Jaguar, Land Rover brands of cars in June from Ford Motor Company, say analysts. The company is still short of over Rs 4500 crore to refinance the debt which is due before June 2 this year. “The company may ask for a rollover of debt after repaying it partly,” said S Ramnath, director, research at Mumbai- based brokerage IDFC-SSKI. “It would eventually increase the interest cost burden of the company,” he said. The company had planned to raise the fund for refinancing through three routes. It planned to raise about Rs 4200 crore through rights issues which it managed after the issue devolved on underwriters in October as the stock prices were tumbling globally following the economic crisis. The company also planned to raise around Rs 3000 crore through selling certain investment of the company. A Tata Motors spokesperson said that so far it had raised Rs 545 crore through this route which includes Rs 485 crore by selling the stake of Tata Steel to a group company. Another divestment that the company made is of the stake that it held in the unlisted entity Tata Teleservices which fetched it around Rs 60 crore. The company did not disclose its plans on further divestments According to the company’s last annual report, it had investments in group’s listed entities such as Automobile Corporation of Goa, Tata Steel, and Tata Steel CCPS.

Allah Rakha Rahman has put India on the global entertainment map. He has just won the Golden Globe in the best original score category for Slumdog Millionaire. And, in spite of his calm demeanour, finds it hard to digest that he actually won the award. The truth is that the Golden Globe has for the first time come to India. It is the second most prestigious award in filmdom after the Oscars. The award clearly establishes that Rahman, 42, has been accepted globally. The musician, who began playing instruments when he was as young as four, has been contributing to his brand of music to listeners and audiences abroad. He has done musicals for Broadway productions including Bombay Dreams and Lord of the Rings, has composed music for Nokia and scored hit singles like Pray For Me, Brother for the UN and One Love, a tribute to the Taj Mahal. Rahman has experimented not just with his music, but also the manner in which it should be heard.

Software giant Microsoft is looking to trim its workforce across various divisions and could announce the plans next week, says a media report. The Wall Street Journal has reported that Microsoft is seriously exploring significant work force reductions that could be announced as early as next week. Quoting people familiar with its plans, the daily said, the company is "considering layoffs across its various divisions, a rare occurrence for the world's largest software company". However, the report quoting one of these people added that the "plans for the cutbacks are still in flux and Microsoft could end up finding alternative methods of reining in costs". The Wall Street Journal pointed out that the number of potential job reductions could not be learned. "But they are likely to be far less than the 15,000 positions that have been rumored in recent weeks, a figure that would amount to more than 16 per cent of Microsoft's global work force," the report said attributing to people familiar with the matter.Earlier this month, the UK-based The Times had reported that Microsoft is "preparing to announce the first wide scale layoffs in its 32-year history, with up to 15,000 jobs at risk, according to some predictions".

Vivek Paul, former vice-chairman of Wipro and CEO of its global IT business, has emerged as the front runner for the post of CEO of Satyam Computer Services. To sweeten the package, sources close to the development said that Paul was being offered a 5 per cent stock option in addition to an attractive remuneration. Sources said the new board and the government want a person who understands the clients and the market closely for the top post, for which Paul was considered. It is, however, not clear whether he will be interested. He does not want to come back to India as he is involved with raising some funds in the US.  Paul, who reportedly resigned from Wipro due to differences with Chairman Azim Premji, may not accept the offer since he likes to work independently. “With the government calling the shots here, in addition to a top-heavy board, he may not want to dirty his hands,” said a very senior industry player. “He surely must have been offered the post, but so would have other prominent IT and non-IT people. It’s a prestigous role. If one can sweeten the deal like offering a stake, they could make it worth his while,” said the CEO of an IT company and added: “But I do not think Paul would take up the role, especially since anyway, he was the highest paid employee at Wipro”. The buzz about Paul grew stronger since he recently quit as partner at TPG Capital, one of the world’s leading private equity investment firms. Paul was not reachable for comments.

India’s largest IT services provider Tata Consultancy Services. The company recorded a net profit (consolidated Indian GAAP) of Rs 1,362 crore for the quarter ended December 31, 2008 -- up a mere 2.68 per cent over the corresponding quarter figures of Rs 1,327 crore in FY07. Net profit was higher by Rs 41.53 crore due to lower depreciation charges. Revenues at Rs 7,277 crore were up 24.13 per cent over the corresponding quarter figures of Rs 5,923 crore. The rupee had fallen almost 11 per cent against the US dollar in this period. Sequentially, net profit in rupee terms was up 4.65 per cent and revenue up 7.10 per cent. However, slowing business growth was evident from the fact that in US GAAP terms, the company’s revenues at $1,483 billion were flat year-on-year (y-o-y), but fell 5.8 per cent quarter on quarter (Q-o-Q). This was primarily because TCS deals with other currencies like the Euro, British pound —both of which fell against the US dollar and decreased its earnings. Hence, its net income, too, at $276 million was lower 18.0 per cent Y-o-Y while it fell 3.5 per cent Q-o-Q. IT companies earn in dollars and spend in rupees. TCS suffered a forex loss of Rs 251 crore. The revenue performance of Infosys was better in dollar terms (US GAAP). Its third-quarter revenue rose 8 per cent YoY, but fell 3.7 per cent QoQ. The IT bellwether had lowered its revenue forecast in dollar terms for fiscal 2009 while it marginally upped its revenue forecast in rupee terms for FY09. TCS, on its part, does not give guidance. The company’s EPS stood at Rs 13.92, and it declared a quarterly dividend of Rs 3 per share —its 18th consecutive quarterly dividend.

The battered Satyam Computer today got some respite and surged as much as 40 per cent in early morning trade on the Bombay Stock Exchange after the government appointed three more directors to salvage the tainted firm. Satyam Computer opened firm on the BSE and then rallied further to witness an intra-day high of Rs 28.40, a jump of 39.90 per cent from its previous closing price. Similarly, on the National Stock Exchange, the scrip opened at Rs 21, touched an intra-day high of Rs 28.40, a rise of 39.90 per cent from its last close.

Acquisitions by a former group company Satyam Infoway in 2000-01 and the promoters’ announcement of a buyback in December last year are key issues that have caught the attention of the Securities and Exchange Board of India (Sebi) team that is inspecting financial irregularities in Satyam Computer Services. Official sources said the 2000-01 acquisitions — notably the high-profile purchase of web portal India World Communications from Rajesh Jain for Rs 499 crore — by Satyam Infoway could mark the start of the company siphoning funds overseas under the guise of acquiring companies.

Sources said the purchases coincided with the eight-year period for which the data has been fudged. The inspection report by the Serious Fraud Investigation Office and Sebi will be handed over to the enforcement directorate under the finance ministry to investigate the parking of funds overseas. Sebi will also investigate how the promoters announced a buyback when they knew there were no reserves to pay for it. Sources said the announcement could have been a ruse to stabilise prices so that institutions could exit before former Chairman Ramalinga Raju admitted financial irregularities January 7, a move that amounts to insider trading. Also under the scanner are institutions that sold after the buyback was announced. Bulk and block deal data from the National Stock Exchange and the Bombay Stock Exchange show that the entities concerned are Infrastructure Financing and Leasing Service (IL&FS) Trust Company Ltd and foreign institution investors like Swiss Finance Corporation (Mauritius) Ltd, Morgan Stanley Mauritius Ltd, Fidelity Management and Research Company, Aberdeen International Indian Opportunities Fund, Mauritius, Aberdeen Asset Managers Ltd, the Boston Company Asset Management LLC and JP Morgan Fleming Asset Management. The acquisition of India World Communications – an all-cash deal for a portal that ran popular websites such as Khel.com, Khoj.com and Samachar.com — has raised particular interest because of its valuation. India World at the time had a capital of Rs 20 lakh, so at Rs 499 crore for the buyout, each Rs 10 share was valued at a staggering Rs 2,500, said a source close to investigation. The certificate of fairness of valuation for the transaction was provided by Ernst & Young.

A three-member board, appointed by the government this morning to lead Satyam Computer Services, will get down to business tomorrow when it meets in Hyderabad, even as some key institutional shareholders demanded they be kept informed of all decisions the new board takes. In related developments, the Andhra Pradesh Criminal Investigation Department raided the homes and offices of Satyam’s directors, including those of dislodged interim CEO Ram Mynampati. Meanwhile, the company’s former Chief Financial Officer (CFO) Srinivas Vadlamani joined his colleagues former Chairman Ramalinga Raju and former Managing Director Rama Raju at Chanchalguda jail, after he was remanded to judicial custody till January 23. A Securities and Exchange Board of India (Sebi) team also quizzed Mynampati for the third consecutive day. HDFC Chairman Deepak Parekh, who is tipped to chair Satyam’s board, told reporters that the board will meet tomorrow in Hyderabad. The other two members nominated by the government are Kiran Karnik, former president of the IT industry body the National Association of Software and Services Companies (Nasscom), and C Achuthan, former presiding officer of the Securities Appellate Tribunal (SAT). Sources said that all the three members would be meeting tonight to have informal discussions before the formal one tomorrow. The informal meeting is expected to chart out the modalities for tomorrow’s crucial board meeting and the way forward, sources said. Seven more members will be inducted shortly after the three board members meet and discuss the issue. Sources familiar with the developments, however, said the process is proving tricky, given that some of the eligible candidates are connected with other IT companies, raising issues of the conflict of interest. The sources, however, added that government-owned Life Insurance Corporation, which holds over 4 per cent, will be asked to nominate a board member. At a crowded press conference in the capital today Prem Chand Gupta, minister for corporate affairs, said the three-member board will have powers to appoint new auditors for the company and can name a new management, just like a normal board elected by the shareholders of a company. The new board will also decide whether to seek the government’s help in terms of financial assistance, Gupta said. This is important in the context of Mynampati’s statement earlier this week that Satyam’s financial situation is precarious.The appointment of three nominee-directors came within 48 hours of the government obtaining a favourable order from the Company Law Board (CLB) tribunal to supersede the earlier board and have its own nominees.

As the markets were attempting a break-out last week, it had to deal with major negative news in form of the Satyam fiasco. The Nifty, which made a promising start, faced resistance at 3,150, the upper-end of bollinger bands as mentioned last week. From a high of 3,147, the Nifty slipped to a low of 2,810, down 337 points from the week’s high, on the back of deep cuts in Satyam, realty, metals, energy and telecom stocks. Interestingly, other IT stocks saw selective buying interest. The Nifty finally ended with a significant loss of 5.7 per cent (174 points) at 2,873. From near an upside break-out, the index is now nearing a downside break point, with support at 2,835. A sustained stay below the 2,835 level is likely to trigger an accelerated down move. Bollinger bands have now narrowed down to a range of 3,135 to 2,835. While the short-term trend is still up, as the short-term (20-days) moving average at 2,985 continues to remain above the mid-term (50-days) moving average at 2,866. However, the unfolding Satyam story and corporate earnings are likely to dictate the terms going forward. The probability of a downside break-out seems more likely than that of an upside break-out. Hence, one can assume that the index is likely to meet stiff resistance around the 3,135-3,150 levels in case of an upmove. This week, the Nifty is likely to face resistance around the 3,000-3,040-3,080 levels, while support on the downside could be around 2,745-2,705-2,665. In case of a downside break-out, the Nifty may test either its quarterly or yearly support levels as mentioned last week. As per fibonacci calculations, 2009 could see the index move in a broad range of 1,400 to 5,500. In between, support could be around the 2,050 level, while resistance around the 3,800 to 4,500 levels. The quarterly chart, for the January to March period, indicates a range of 1,900 to 4,050. While the monthly chart, indicates resistance around 3,165-3,230-3,300, support on the downside is likely around 2,750-2,690-2,625. The BSE Sensex, slipped 5.5 per cent (552 points) to 9,406. The index moved in a range of 1,219 points, from a high of 10,470, the index tumbled to a low of 9,251.

Mukesh Ambani’s Reliance Retail is understood to be exploring ways to supply its private labels in food and groceries to kirana stores and small retailers in the country. A separate entity, most likely to be named Reliance Foods, will carry out the private label business. The move is expected to give high retail exposure to its products in innumerable kirana stores in the country, without having to spend much on advertising and marketing expenses apart from generating business volumes. When contacted, Reliance Retail spokesperson said: “As a policy, we do not comment on speculation.”

In a recent reshuffle at the company, Reliance Fresh head Gunender Kapur was made head of private labels business in the company, sources close to the development said. “We have plans in this direction. Once, we entirely cater to the demands of our stores, we can certainly look at supplying them to other retailers since we have required infrastructure, process and systems in place. But before that, we should completely cater to our own stores,” said a source in the company. Sources said that after launching private labels in food and groceries, Reliance Retail is also expected to launch soaps, detergents, cosmetics and non-FMCG products under its private labels segment with a new brand name. The company’s flagship chain Reliance Fresh sells staples and food items under Reliance Select and Reliance Value brands, dairy products under �Dairy Pure’ brand. Kishore Biyani’s Future Group, too, also have plans to sell its private labels to stores outside the group and it has already carried out pilot studies for this venture and is expected to start the business soon. Future Logistics, the logistics arm of the group, also has plans to foray into wholesale distribution of products such as food, apparel, grocery to organised retail chains in the country, which is expected to start from this month. Nearly 30 months ago, Reliance Industries announced an ambitious plans to invest Rs 25,000 crore to expand its stores in the country to take the advantage of organised retail in the country. Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores by 2010, but due to a delay in delivery of properties, economic downturn and demand slump the company had to scale back its expansion plans. Reliance Retail runs over 850 stores, which include stores for food and grocery, consumer durables, beauty and wellness, jewellery, footwear, among others. Its formats such as apparel chain Reliance Trends, beauty and wellness format Reliance Wellness, consumer durable chain Reliance Digital have private labels or are in the process of launching private labels.

Petronet LNG Ltd, the nation's largest liquefied natural gas importer, will resume normal gas supplies by Thursday after it advanced restart of its Dahej terminal in Gujarat to ensure gas reaches critical industries. Petronet had on January 7 shut down its Dahej LNG terminal to hook up new facilities that would double import capacity to 10 million tonnes. The restart of the terminal was scheduled on January 13, but the company restarted the terminal on January 9. The company advanced the restart after natural gas production from ONGC's Western Offshore field was shut due to a strike by the state-run firm's executives. "In the first 12 hours from resuming operations at 1800 hours on January 9, Petronet supplied seven million standard cubic meter of gas. From the next day, the supplies went up to 18 million standard cubic metres per day," he said. The strike by the oil executives has resulted in a shutdown of ONGC's South Bassein and its satellite fields in the Western Offshore and privately operated Panna Mukta and Tapti Fields. South Bassein produces 30.5 mmscmd and Panna Mukta and Tapti another 15-16 mmscmd. The official said since the terminal was originally scheduled to be shut from January 7-12, it had scheduled arrival of new LNG cargoes from January 15 and once they come the gas supplies from Dahej would rise to 24.7 mmscmd. "We are currently supplying gas that we had in our tanks before the shutdown happened. By tomorrow, we would be able to start at the normal rate but it all depends on the evacuation of the fuel by gas transporter GAIL," he said. Dahej is connected to both GAIL and Gujarat State Petroleum Corp's pipeline networks but for the gas to reach critical consumers in power and fertiliser sector, the state-run firm GAIL has to make its pipeline fully ready to receive the gas. GAIL's main trunk pipeline, connecting the gas sources in the west to consumption centres in the north, had been shut to the officers strike in the company and is now being revived. It is likely to reach its full capacity this evening or tomorrow.

Satyam Computer Services’ founder and Chairman B Ramalinga Raju’s claim of not selling shares in last eight years may not be enough to protect him from the offence of insider trading, say legal experts, citing willful default on shares pledged with lenders. The charge, if proved, could land Raju behind bars for 10 years. “Pledge will amount to dealing in securities,” said Anoop Narayanan, partner, Majmudar & Co, a Mumbai-based law firm. “A willful default of the obligations to the lender resulting in the implied sale of the pledged securities to satisfy the debt will amount to insider trading,” he said. The entire 8.27 per cent promoter stake owned by Raju and his family was pledged against the money they had borrowed. On January 6, a day before Raju’s revelations, Satyam disclosed to the Bombay Stock Exchange (BSE) that IL&FS Trust, as a trustee of lenders, had sold about 24.5 million shares of the company, amounting to about 3.64 per cent of the promoters’ stake. These shares were sold between December 23 and January 5. Earlier on January 2, the company had informed the National Stock Exchange (NSE) of the sale of 3.14 per cent of the pledged promoters’ stake by the lenders. According to another legal expert, violation of insider trading regulations cover “sell” or “buy” and not “pledge” of shares. Strictly speaking, “pledge” of shares is outside the regulation of insider trading. It means that the person is free to pledge his share notwithstanding insider trading regulations. However, there is another word i.e. “deal”.

However much one may want to avoid saying it, the truth is that a crisis stares publicly-held joint stock capitalism in the face. Take away auditors, and the stock market’s existence becomes shaky. Take away the rating agencies, and the bond market collapses, along with a great many other things as 2008 showed us. Take away independent directors, and the thesis of corporate governance protecting minority interests falls down. And the truth is that you don’t need to take any of these away; they are in place but not doing their job, so the crisis is here anyway. The argument becomes stronger because Satyam did (or seemed to do) everything by the book. It had a stellar crew of independent directors—the dean of the Indian School of Business, a professor from the Harvard Business School, a former cabinet secretary, and a former director of the Indian Institute of Technology in Delhi. You couldn’t have asked for more or better. Yet all of them were clueless, as their board chairman has now admitted. Satyam also had as statutory auditor perhaps the best and oldest auditing firm in the country, and a global giant to boot. Yet, it failed to spot the simple fact that Rs 5,000 crore were missing. And Satyam was listed in New York—where they don’t accept every wannabe that comes along. So if this is the truth about a company that has the best independent directors, the best auditor, and acceptance of its credentials in New York, one thing becomes clear: those supposed safeguards aren’t safeguards at all.

The real estate index dropped 38 per cent during the day mainly on speculation that a key DLF official was exiting the company and partly on fears that realty balance sheets may not reflect the correct land bank position. The stock price of DLF, the country’s largest property company, touched an all-time low of Rs 145 in morning trade on rumours that CFO Ramesh Sanka had sold 100,000 shares from his employee stock option (Esop) portfolio and put in his papers. The stock ended the day at Rs 217.60, over 7 per cent down over Wednesday’s close of Rs 234.60, after the CFO clarified that he had sold shares for personal reasons but still held a major chunk of Esops, and denied that he had resigned. The BSE Realty Index, which fell 24 per cent in intra-day trading, ended the day at 1864.09 points, 5.15 per cent down from Wednesday’s close with stocks of Ansal Infrastructure, Anant Raj Industries and Peninsula Land falling 10.34, 9.94 and 9.52 per cent, respectively. On fears of false valuations, Singh said: “We carry the land book at cost price. It has never been revalued. The land acquired by my grandfather or father still carries the same price on our balance sheet. Indians are good entrepreneurs and they make money on every opportunity. It is for them to make money.”

The current management of scam-hit Satyam Computer Services, which on Thursday said it is not confident of meeting the salaries of its employees for January, is understood to be toying with the idea of retrenching anywhere between 6,000 and 10,000 staff (associates as the company prefers to call them). Satyam claims to have slightly over 50,000 associates. However, employees who sought anonymity say that actually 47,000 people are working with Satyam’s flagship IT services business. The employees’ claim is based on the information given in the company’s intranet portal. Prior to the company’s disgraced former chairman, B Ramalinga Raju’s, admission on Wednesday to a falsified balance sheet, Satyam was believed to have enough cash ($1.15 billion, which, according to Raju’s letter, is now non-existent) to pay its employees for eight-nine months, even assuming it did not get any additional revenues, according to an Edelweiss Securities report. But now the situation is very different. A Satyam spokesperson termed any talk of retrenching employees as a “speculation by vested interests”. However, mid- and senior-level employees (on condition of anonymity) explained that the first to be affected are the 6,000-odd employees across all its centres who are on the bench, and who were expecting to get into projects once the impact of the slowdown starts fading away. The sources also noted that freshers and junior employees — who have completed less than two years at Satyam — might be spared the axe. A senior project manager at Satyam said: “The freshers are required to give a minimum of two-year bank guarantee worth Rs 2 lakh to the company, which ensures they cannot be axed or resign prior to the two years.” In many cases, freshers were encouraged to take loans for bank guarantees from the State Bank of India on the behest of Satyam. “I had taken a loan of Rs 2 lakh from SBI on a monthly instalment of Rs 2,500, which is deducted from my salary. If I am given the pink slip, then the bank guarantee would have to be paid by the company that does not even have working capital. So, I guess I am safe,” said a seven-month-old Satyam employee.

Police arrest Ramalinga Raju & brother; govt supersedes Satyam board. The law finally caught up with Satyam’s former chairman Ramalinga Raju and his brother Rama Raju, who were arrested by the Andhra Pradesh Police late tonight, even as the government superseded the company’s board and said it will appoint 10 nominee-directors. Rama Raju was the managing director of Satyam and both the brothers were arrested under Sections 120 B, 409, 420 and 471 of the Indian Penal Code for the accounting fraud, considered the biggest scandal in India’s corporate history. The charges range from criminal conspiracy to breach of trust and forgery and the punishment can be up to 10 years of imprisonment and fine. The arrests were made after the Criminal Investigation Department (CID) of the police launched an investigation into the scandal after the state government finally gave the go-ahead today. Police sources said Srinivas Vadalamani, Satyam’s CFO, may also be arrested tomorrow. He could not be found at his Tarnaka residence though his family members were there. Sources said that the police will seek custody for at least 14 days when the brothers are produced before a magistrate. Earlier in the evening, the government’s action to supersede the board was the first such action against a large company. The new board will have its first meeting within seven days and will have wide-ranging powers, including that of appointing new auditors and management for the company. “The current board of Satyam has failed to do what it was supposed to do,” said Minister of Corporate Affairs Prem Chand Gupta at a crowded press conference, which was delayed by more than two hours. The list of the nominee-directors will be finalised shortly, Gupta said. Since the present three-member board will have no locus standi, tomorrow’s board meeting, led by interim CEO Ram Mynampati, stands cancelled. The government’s crackdown comes after the regulatory agencies launched a frontal attack on the company during the day, triggering panic selling in the stock, which plunged over 40 per cent on the Bombay Stock Exchange (BSE). Ramalinga Raju, whose January 7 revelations of financial irregularities to the stock exchanges sparked off the crisis, was scheduled to meet officials of the Securities and Exchange Board of India’s (Sebi’s) investigating team at 4 p m tomorrow, his lawyer S Bharath Kumar said. The meeting was supposed to be held at Satyam’s My Home office in Hitec City, but Sebi will now have to depend on the police for interrogating him. Meanwhile, Sebi Chairman C B Bhave told reporters in Mumbai that the regulator will not file a case against Raju till the investigation is complete. “Raju’s letter itself isn’t enough to put him in front of a magistrate,” he said. Bhave said the regulator is in touch with the US Securities and Exchange Commission (Satyam is listed on New York Stock Exchange, which has suspended trading in the American Depository Receipt) and requested investors to treat the Satyam episode as a one-off case. A Sebi team first visited Raju’s Jubilee House residence but found it locked. Raju is believed to be staying at a guest house belonging to the Byrraju Foundation at Kompally on the outskirts of Hyderabad. That the regulatory noose is tightening around what was once touted as India’s fourth largest software services firm was evident from Gupta’s statement earlier in the day that the government has seized the company’s books of accounts.

A day after Satyam Computer Services’ Founder and Chairman B Ramalinga Raju made his sensational disclosures about fudging the company’s accounts for “several years”, government and regulatory bodies stepped in even as class action suits were filed by American Depository Receipt (ADR) holders in the US for damages that could cost the company millions of dollars. The Securities and Exchange Board of India (Sebi) officials visited the Hyderabad headquarters this morning and the Reserve Bank said it would blacklist Satyam’s statutory auditors Price Waterhouse from its auditors’ panel for government-owned banks and non-banking finance companies. The crisis also saw heads roll today with CFO Srinivas Vadlamani putting in his papers and former independent director Mendu Rammohan Rao stepping down as dean of the Hyderabad-based Indian School of Business. Rao had chaired a mid-December board meeting that had approved a controversial decision for Satyam to invest nearly Rs 8,000 crore in two promoter-related companies, which was withdrawn following strong shareholder protest. He resigned soon afterwards, together with four other directors. Meanwhile, the ministry of corporate affairs (MCA) has asked Sebi to scrutinise the accounts of eight subsidiaries of Satyam. A report is expected in the next three working days. The data will include any exposure that international branches of Indian banks have with the company and related parties.

Satyam founder B Ramalinga Raju’s revelations of accounting fraud are giving sleepless nights to small investors in the East and West Godavari districts of Andhra Pradesh. Investors in West Godavari, Raju’s native district, had bought shares of the company through loans and using their savings of many years. Through the period of enviable growth the company showed, the investments multiplied. “Many companies have invested in Satyam as well as in Maytas Infra and Maytas Properties (the two companies owned by the Raju family which Satyam proposed to acquire for $1.6 billion) especially from Eluru, Tadepalligudem, Bhimavaram, Tanuku, Palakollu, Narasapuram and Jangareddigudem towns in the two coastal districts through stock-broking firms believing them to give huge returns,” a stock broker told Business Standard, on the condition of anonymity. According to information available with the stock-broking firms, traditional investors in the East Godavari district trade anywhere between Rs 100 crore and Rs 120 crore every day. “Of this, Satyam’s share would be about 5 per cent (buying and selling of 50 million shares). With Satyam’s share price plummeting to about 80 per cent yesterday, investors who bought the company’s shares lost about Rs 3.5 crore on a single day, while those who invested between Rs 10 crore and Rs 12 crore and held the stock, lost Rs 7-9 crore. Together, they lost over Rs 10 crore in Satyam yesterday,” the stock broker said. A worried P Veerabhadra Raju, who owns 5 acres of mango and cashew groves in East Godavari, said, “We never expected the Satyam stock would nosedive for all the wrong reasons.

Auditing firm Price Waterhouse is likely to face a reprimand from the Reserve Bank of India for its alleged involvement in the accounting fiasco of Satyam Computer Services. Source close to the development said a meeting to this effect would be held shortly. “Prima facie, we have decided to blacklist the firm and send the order to the Institute of Chartered Accountants of India (ICAI), who recommend the firms for empanelment for the audit of banks and non-banking finance companies (NBFCs)”, a source said. However, the RBI will wait for the formal investigation report of the Securities and Exchange Board of India (Sebi) and the Registrar of Companies (RoC0, before issuing a final blacklisting order. Meanwhile, it may send a word of caution to the foreign and private sector banks who may be considering Price Waterhouse as auditor. “It is their independent decision, unlike in the case of public-sector banks. As regulator, we can warn them at best, “ the official said. The sources further said the central bank’s work would be easier if the firm gets blacklisted globally as it managed the Satyam accounts both by the Indian method and the US GAAP method. These accounts formed the basis for pricing, listing and issuing of American depository receipts by the IT firm in the overseas markets. Thus, it amounts to duping international investors too. RBI will most likely not wait for the ICAI probe, which usually takes a long time, but will act on the Sebi and Roc reports. If issued, this will be the second blacklisting order against the firm. The RBI is still awaiting ICAI’s investigation report on Price Waterhouse’s alleged involvement in overstating the losses of the erstwhile Global Trust Bank in 2003-04. The regulator had barred the firm from the audits of banks and NBFCs for three years following the case.

PricewaterhouseCoopers (PwC), an advisory and consulting firm whose sister company audited the accounts of Hyderabad-based Satyam Computer Services, has a chequered past with Indian tax authorities, having admitted its “mistake” in at least two cases of tax evasion. The Income Tax department as well as the service tax department had detected tax evasions by Price Waterhouse, the audit firm. PwC had to settle the cases with both the departments after it admitted to making the mistake and paid the dues -- with interest and penalty. “The question is not the amount of evasion, but the fact a top accounting firm, which provides tax advisory and audits the accounts, had involved in tax evasion is a matter of concern,” said a revenue department official. The first case relates to writing back of gratuity provision and not paying tax liable on the same. The tax loss in this case was Rs 9.13 lakh. Basically, any expenditure towards providing for gratuity is allowed as tax deduction under the Income Tax rules. However, when the same deducted amount was not utilised and written back, it would be counted as income and tax is payable on the same. PwC, according to revenue department, did not enter the written back amount in the tax return for 2000-01 and therefore paid less tax. The department had imposed 300 per cent fine on the said tax amount, which PwC had contested in the Appellate Tribunal. The Tribunal had lowered the penalty to 100 per cent of the tax amount. In April 2007, PricewaterhouseCoopers had petitioned the department for compounding of offences for filing incomplete income-tax return for 2000-01. When the department was contemplating to initiate further legal proceedings against the firm, PwC, in order to avoid any litigation and buy peace, moved an application for compounding offences, which means acceptance of offence and willingness to pay fine to avoid any legal prosecution.

The government today ordered probe into eight companies that are related to Satyam Computer Services for their possible role in inflating the profits of the Hyderabad-based software services firm. Experts have cited transaction with related companies — subsidiaries of Satyam or companies owned or promoted by the Raju family — could be one possibility for overstating the profits and revenues. And the move by the ministry could be to probe this link. "We are taking a co-ordinated action with the involvement of all departments," said Prem Chand Gupta, minister of corporate affairs, which regulates companies in India. These companies are —Maytas Properties, Maytas Infra, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, CA Satyam AS and Satyam Venture Engineering Services. The inspection of these eight companies will be done under Section 209A of the Companies Act which provide powers to the government and the Sebi to inspect the books of accounts without giving prior notice to a company. Also the inspecting officer has the power to call for any relevant document and summon officials. The minister also denied reports that the ministry has recommended arrest of Ramalinga Raju, the promoter of Satyam, adding that they have only sought assistance from the Andhra government for investigations. The minister also held a meeting in the morning which was attended by the heads of the department of corporate affairs, secretary (law), secretary (finance) along with ICAI president and a representative of the Securities and Exchange Board of India (Sebi) to chalk out a strategy so that a co-ordinated action can be taken against Satyam, its promoters and auditors.

Close to 100 CEOs and senior company executives, including Price Waterhouse -- one of the big five auditing firms under attack for its alleged role in the Satyam episode -- will be brainstorming corporate governance issues at the CII breakfast meeting here tomorrow. Corporate accountability, ethics and transparency became the biggest casualties of a multi-billion dollar Satyam fraud. Harinderjeet Singh, partner in the Price Waterhouse will be among the honchos taking lessons on corporate governance at the Confederation of Indian Industry meeting. Executive Vice-Chairman and Managing Director of Kotak Mahindra Bank Uday Kotak will be the main speaker at the meeting that has subjects like compliance, trust and fostering a culture of good governance on the agenda.

With a big questions mark on its cash position and a minimum outgo on salary estimated at Rs 500 crore a month, Satyam may lay off over 10,000 employees next month, says a recruitment firm. "It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth told PTI. Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December. Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000. The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.

Despite the current global recession, the Indian machine tool industry hopes to generate business enquiries worth Rs 6,000 crore at the forthcoming Indian machine tool exhibition, IMTEX 2009 scheduled to be held here from January 22 to 28. The Indian Machine Tool Manufacturers’ Association (IMTMA), which is organising this mega event for the second time in Bangalore and 14th time in all, believes that the economic revival will happen sometime middle of this year. “The machine tool industry will survive this phase with the government and the industry taking policy changing decisions and corrective measures with the larger picture of the industry in focus,” N K Dhand, President, IMTMA said. He told reporters, here today, the machine tool industry will survive and grow despite a 5 per cent cancellation in orders from the prospective customers in the automobile and auto components sector. The industry, which had been growing at an average 30 per cent over the last five years, is likely to remain flat during the current financial year, he said.

The machine tool industry registered a turnover of Rs 7,600 crore in 2007-08, about 22 per cent over the previous year. Of this, metalworking machine tools is Rs 2,100 crore, accessories for mac-hine tools is Rs 1,500 crore and the remaining Rs 4,000 crore is from cutting tools and tooling systems. The industry size including unorganised players could be of the order of Rs 17,000 crore. IMTEX 2009 is billed as largest exhibition of machine tools and manufacturing solutions in South & South East Asia. It is being held at Bangalore International Exhibition Centre (BIEC) on Tumkur Road. IMTMA is also holding as a concurrent fair, Tooltech 2009 — the 11th international exhibition of cutting tools and tooling technology systems. This apex b2b event will feature the most modern metal-cutting machine tools and manufacturing solutions from across the globe, IMTEX 2009 and Tooltech 2009 seeks to reactivate the industry enthusiasm and reinforce the feel good factor against all odds of the market slowdown.

The fact that Satyam's reputed auditors kept quiet while it cooked its books is reminiscent of the Enron-Andersen days. Two things strike you when you meet Ramalinga Raju. One, it’s difficult to find a more soft-spoken Indian CEO — so soft-spoken that it’s often difficult to hear what he says. And two, he opens up only when you ask him about corporate governance issues. The moment you switch to any other topic related to Satyam, the answers are mostly in monosyllables. I remember one such meeting when Raju bored me to death talking in details about how Satyam believes that better corporate governance enhances business results and helps the company deliver higher value to all its stakeholders. He also referred to the two Golden Peacock awards for excellence in corporate governance that Satyam won and how such awards provide greater encouragement to continue improving the company’s corporate governance practices in future. But as his startling statement on Thursday showed, Raju was more interested in improving his skills in cooking Satyam’s books rather than corporate governance practices. The scale of the fraud and manipulation in the financial statements of the company is mind-boggling, and one cannot but be amazed by Raju’s skills in lying through his teeth at the brief meeting I had with him.

The stock of Satyam Computer Services may be removed from the Sensex, the 30-stock benchmark index of the Bombay Stock Exchange (BSE), after the company’s Chairman and founder Ramalinga Raju today revealed manipulation of its accounts. While a BSE spokesperson refused to comment, brokers said the stock would hold little interest for investors following this episode. The BSE considers listed history, trading frequency, final rank, market capitalisation weightage, industry/sector representation and track record while selecting Sensex constituents. “There is a churn in the index after every market boom. So, it is likely that this stock is left out of the Sensex at the next review,” said Gaurav Dua, head of research at Sharekhan. The BSE Index Committee does a periodic review of the Sensex constituents. Shares of Satyam Computers fell 77.69 per cent to close at Rs 39.95 a share in Wednesday’s trading session, taking its market capitalisation down to Rs 2,692 crore. Meanwhile, even as the drama over Raju’s revelations and resignation unfolded on Wednesday, key brokerages were quick to drop the stock from their coverage. Several domestic as well as foreign broking houses such as Religare Hichens Harrison, India Infoline, Emkay Global Financial Services and Credit Suisse have suspended coverage of Satyam, citing that the “current financials of the company cannot be relied upon”. Raju today said the company’s profits had been inflated over the last several years. “As such, we are unable to issue any further investment advice on Satyam and suspend our coverage of the stock,” said Credit Suisse, which had an underperform rating on the share earlier. Religare Hichens Harrison has gone a step further to say that this development would make Satyam unattractive for any competitor or a private equity player to take over the company.

The Institute of Chartered Accountants of India (ICAI) has initiated investigation into the role played by Price Waterhouse — the statutory auditor for the Hyderabad-based software services firm Satyam Computer Services — on a �suo motto’ basis ie based on information available in the public domain. The institute, which regulates the chartered accounting profession in India, has powers to revoke the practicing licence of its members in addition to a maximum fine of Rs 5 lakh. "It is a very serious issue and we are examining it on a high priority and strict action would be taken against auditors if found guilty," said ICAI President Ved Jain. If found guilty of professional misconduct, the auditors stand to lose their practice licences," he added. Under IPC, any person party to a fraud or cheating can be convicted and can be booked under the Companies Act and the Chartered Accountants Act. "In case of negligence by the chartered accountant, ICAI has the provision of invoking a severe penalty such as withdrawing the practice licence from a few months to lifetime," Jain added. The ICAI disciplinary committee has the right to suspend the membership and withdraw the licence. It can also levy a fine of up to Rs 5 lakh depending on the gravity of the misdeed. For the moment, the disciplinary committee of ICAI would collect facts and information to nail down the auditors (Price Waterhouse in this case) involved in the financial fraud before sending a showcause notice to Satyam.

Sixteen years after the stock market scam orchestrated by Harshad S Mehta, the custodian has put up eight apartments in a complex called Madhuli, which is occupied by his family in upscale Worli, for sale. The custodian, appointed under the special law to deal with cases related to the 1992 scam, has called for bids by February 4. The Mehta family owned nine apartments in the Madhuli Housing Cooperative Society, but one of them (flat number 31), which belongs to Rasila S Mehta, the stock broker’s mother, is not up for sale. Harshad Mehta’s family consists of four brothers, their wives, children and his mother. The nine flats were merged and redesigned to accommodate the joint family. Madhuli was among the most prized possessions of Harshad Mehta, who had come to be known as the Big Bull, and is said to have included a billiards room, a mini theatre and a mini golf course. When Business Standard visited some of the apartments on the third floor this afternoon, the billiards table was in the main hall, covered with dust and a cloth. The sofas looked worn out and the paint was peeling from the wall. Some domestic helps were busy cleaning the apartments. The guards at the entrance, who wanted to know if we had come from a bank, said that the intercom connections to the two floors occupied by the Mehtas were not working. When contacted on his mobile phone, Sudhir S Mehta, who is part-owner of an apartment on the fourth floor, said: “My brother (Ashwin S Mehta) deals with the issue.” He, however, did not provide any contact details, saying he was in a meeting.

In one of the darkest days in India’s corporate history, Satyam Computer Services Founder and Chairman B Ramalinga Raju resigned after saying he falsified earnings and assets. The revelation comes soon after Raju was forced to reverse a decision to invest almost Rs 8,000 crore in two other promoter-owned infrastructure and property companies mid-December, following strong shareholder protests. The company has been in crisis since, after four independent directors resigned from Satyam’s board as a result of widespread criticism of their role in the decision. Today’s disclosures, however, prompted a collapse in the stock of India’s fourth-largest software services company. Satyam, whose name means “the truth” in Sanskrit, plunged a record 78 per cent on the Bombay Stock Exchange (BSE), dragging down the Sensitive Index in a scandal described as “horrifying” by Securities and Exchange Board of India (Sebi) Chairman C B Bhave. The National Stock Exchange has excluded Satyam, which has received several prominent awards for corporate governance in the past, from the Nifty 50 and S&P CNX 500 with effect from January 12.

Tata Power Company (TPC), the largest private sector power player in the country, plans to divest part of its stake in group companies Tata Teleservices (TTSL) and Tata Teleservices (Maharashtra) (TTML) to raise about Rs 2,000 crore for funding its ongoing projects, said informed sources. The company is looking to sell stake after the promoter, Tata Sons, dropped its preferential warrants conversion plan, which would have fetched Rs 1,900 crore to the company. For funding the projects under implementation, Tata Power needs about Rs 24,000 crore in the next four years. The game plan is to raise Rs 18,000 crore through debt and the balance Rs 6,000 crore as equity. According to the data compiled by Capitaline, the unlisted firm TTSL has over 6,100 million equity shares at a face value of Rs 10 each as on March 2007. TPC's 711.4 million shares, as on March 2008, in TTSL would constitute 11.66 per cent of its equity base. In accordance with the valuation done for the DoCoMo deal, the stake could fetch $1.2 billion (around Rs 6,000 crore) for TPC. Japanese telecom operator NTT DoCoMo had picked up 26 per cent stake in TTSL for $2.7 billion (around Rs 13,500 crore). TPC has about 13.73 crore shares in TTML that constitute 7.24 per cent of the total equity. At the current share price of Rs 22.40, TPC could raise over Rs 300 crore from the stake sale. An e-mail response from Tata Power said that the company did not want to comment on rumours and market speculations. “Tata Sons has not exercised its option to convert the 1,03,89,00 warrants issued to it into equity shares. Tata Power has alternative arrangements to raise funds for its capex required,” added the spokesperson. "The stake sale will be finalised only after consulting the promoter firm. If Tata Sons agrees to buy it, the fund raising will be smoother. Otherwise, TPC will have to find a suitable buyer after negotiations," said the source. In the company’s presentation to investors in July 2008, TPC mentioned that it would raise fund through disinvestment of various holdings or assets and equity dilution through warrants, preferential issue and/ or rights if required. The company is looking to raise overseas loans through external credit agencies and multilateral agencies such as ADB, IFC.

Reliance Industries (RIL), the largest private company in the country, has decided to stop gasoline supplies to Iran after fulfilling all contractual obligations. This follows a letter written by eight US Congressmen to that country's Export-Import Bank (Exim Bank) asking it to immediately suspend all financial assistance to RIL until the company agrees to stop selling gasoline to Iran. The Exim Bank has provided two separate loan guarantees worth $900 million, including a $400-million loan by JPMorgan in August. The loan was for funding RIL's expansion programme. Sources in the know said the decision will not impact RIL's business as the quantity of supplies was not substantial. The company has diverted supplies to other regions, including Europe and the US. When contacted, an RIL spokesperson said, "As a corporate policy and to maintain business confidentiality, we don’t comment on specific transactions." The letter written by the eight Congressmen said that RIL, being a major supplier of gasoline to Iran, is detrimental to the national security interests of the US and the loan is in direct collision with its foreign policy on Iran. The four-page letter was signed by Congressmen Brad Sherman, Mark Steven Kirk, Howard L Berman, Edward R Royce, Steve Israel, Steven R Rothman, Ron Klein and Gary Ackerman. Of these, while Berman is chairman of the powerful House Committee of Foreign Relations, Sherman, Ackerman, Klein and Royce are its members. Israel and Rothman are members of the House Appropriations Committee.

Public sector banks are expected to reduce their lending rates further next month. “We have not asked banks to lower rates just yet. We are waiting for all of them to complete one round of cuts and we will then take up the issue. But the next round should be in February,” said a senior government official. At present, the benchmark prime lending rate of public sector banks ranges between 12 and 13.25 per cent. Some banks, like Punjab National Bank, have cut the benchmark rate three times, and others, like State Bank of India, twice — once in November and then earlier this month.

Bereft of conventional first-mover advantages, Dish TV is striving to stay ahead with depth and width. It is time to monetise both, and then some. There is a new mirth, laced with a hint of snigger, pervading the Dish TV office in Film City, the one in Noida, on the outskirts of Delhi. It has been there ever since TAM Media research, the agency that measures television viewership, said the channel share of Zee Interactive 999 was higher than that of CNN-IBN, CNN, UTVi, NewsX, and a few niche channels. The four mentioned here are well-known news channels, while 999 is the default channel of Dish TV, an interactive one that tells the users how to use the service and also works as a programme guide. Dish TV, the direct-to-home broadcast vehicle of Subhash Chandra’s Zee Network, is sufficiently enthused by the TAM data to think of monetising 999. “We will go out and sell air time on it,” says Salil Kapoor, the company’s chief operating officer, who became a recognised face in his earlier avatars as the head of sales for consumer goods major Samsung Electronics India and before that as the head of marketing for Samsung’s rival, LG. This is among a torrent of new revenue streams that Dish hopes to open. For some reason, DTH services prefer the moniker, Active, for their value-added channels — which air things other than the usual television programmes, such as, gaming, education, virtual pilgrimage, and so on. But Dish, in addition to the others, has ICICI Active. It is a co-branded channel that tells you all about ICICI Bank, the country’s second-largest lender after State Bank of India, and its services, including an EMI (equated monthly instalments) tracker.

Even as private airport developers in Delhi and elsewhere struggle to find money for their projects, Kolkata’s Netaji Subhas Chandra Bose International Airport has begun work on a Rs 1,942.51-crore modernisation exercise that will enhance its capacity five-fold to 24 million passengers per annum, and, allow the ultra-large A380 aircraft to land and take off from its tarmac. The time-frame for the first phase of the project is a little over two years. Once the upgrade and expansion plan is executed, the integrated airport will be able to handle up to 7,520 passengers per hour, up from the current 2,850 people it can manage. It will then overtake the Bangalore airport in capacity and be next in size only to the airports at Mumbai and Delhi. The modernisation project is being undertaken by the Airports Authority of India (AAI), after the Left parties said that Kolkata airport will not be allowed to be privatised like the airports in Mumbai, Delhi, Bangalore and Hyderabad.

Incidentally, the investment in the Kolkata airport will be less than that of Bangalore at Rs 2,470 crore and Hyderabad at Rs 2,500 crore. But in terms of peak-hour passenger capacity, Hyderabad can handle 3,200 people while Bangalore can handle 3,000 passengers compared to Kolkata’s proposed 7,520 passengers per hour. In the first phase, the second runway will be extended to 3,200 meters and 11 additional parking bays for aircraft will be constructed. There are 36 bays currently. Also on the cards is a new control tower, a technical block and a multi-layer car park for 1,400 cars. Both the runways will also be able to handle the world’s biggest passenger aircraft, the Airbus A380, and additional apron suitable for parking a 23 �C’ type of aircraft. The new integrated passenger terminal will have world-class steel and glass structure with modern passenger facilities like passenger boarding bridges with Visual Docking System to guide pilots to align aircrafts with the aerobridges, central air-conditioning, escalator and baggage conveyor system in the arrival as well as the departure hall. “The interiors of the airport will reflect the local heritage brought alive through paintings, motifs, and murals. The design for the airport, in fact, has won the merit award for un-built project of 2008 from the American Institute of Architects, Hong Kong chapter,” said an AAI official. RMJM, Hong Kong Limited, part of the London-based group and the eighth largest architecture firm in the world, has been roped in as one of the consultants for the project. Sikka Associates Architects are its Indian partner. Another reputed international consultant, Aeroports du paris internationale, too, is working on the project being planned as one of the major gateway airports to South-East Asia. In the second and third phases, the existing international and domestic terminals will be revamped and made contiguous. While the latter two phases figure in the master plan, AAI will take a final call depending on the demand as well as the success of the first phase.

Facing the threat of a hostile takeover by a domestic or overseas company, including private equity firms, Satyam Computer Services’ management and some of its institutional investors are exploring a merger with another software company. The company is reportedly in talks with Delhi-based HCL Technologies and Bangalore-based MindTree. HCL, with whom discussions are on for a cash-less merger, seems to be the front-runner, investment banking sources said. India’s third-largest software services company has been under pressure after institutional shareholders, especially overseas ones, forced it to reverse a decision to invest almost Rs 8,000 crore in two promoter-owned companies mid-December. Four independent directors resigned thereafter, after facing criticism for agreeing to a decision that was widely perceived as damaging to the company’s interests. The company’s share price has fallen 21.3 per cent since December 15, the day before the crisis broke. Investment banking sources said a merger of Satyam and HCL would create India’s largest software company with a combined market capitalisation of Rs 20,200 crore (Satyam: Rs 12,000 crore; HCL: Rs 8,200 crore), which would enhance its valuation. Satyam promoters’ stake has come down to little over 5 per cent, after some institutional investors sold promoters’ shares pledged with them to make good margin calls when the stock price started falling. As a result, several investors think the company is vulnerable because it has cash reserves of over Rs 5,500 crore. The  promoters’ holding in HCL Technologies, which has completed the acquisition of UK-based Axon for $658 million, is around 67 per cent.

Veteran industrialist Y K Hamied-led Cipla has edged out Daiichi-Sankyo-owned Ranbaxy Laboratories as the largest player in the domestic pharmaceutical market in the January-November period, according to data compiled by ORG-IMS. Cipla regained its numero uno position in the Rs 33,000-crore domestic retail market with 5.32 per cent market share, marginally ahead of Ranbaxy, which had 5.08 per cent share. ORG-IMS tracks sales of pharmaceutical drugs in India on a monthly-basis through over 3,000 stockists and 6,000 doctors. Currently, Cipla sells 1,085 brands for various diseases in India, way ahead of 729 drugs sold by Ranbaxy, according to informed trade sources. Cipla overtook Ranbaxy and GlaxoSmithKline India (GSK) to become the largest pharmaceutical company in the domestic market for the first time in May 2007. Thereafter, it was a close battle between Ranbaxy and Cipla. In October this year, Ranbaxy said it has regained its number-one position during the moving quarter of January to August 2008, as well as for the entire Q2 period with 5.08 per cent market share. Number of products, scale of operations with over 2,500 medical representatives, market reach and focus on high-value products help both companies dominate domestic drug sales, said analysts. “Both companies are aggressively marketing high-value drugs for lifestyle diseases as well as drugs for anti-infection. Both also have well spread out large marketing teams and systems,” noted Sarabjit Kaur Nagra, vice-president, research with Angel Broking. Interestingly, neither Ranbaxy nor Cipla own any top-selling drug brands in India and except for Ranbaxy’s Mox, none of their brands figure among the over Rs 100-crore turnover brands. According to ORG-IMS market reflections, cough and cold syrup Corex of Pfizer is the leader followed by Voveran — the flagship pain-killer drug of Novartis India. Trade sources said Ranbaxy’s leading five brands — amoxycillin antibiotic Mox (Rs 109.3 crore), mutivitamin Revital (Rs 88 crore), cephalexin brand Sporidex (Rs 82.1 crore), ciprofloxacin brand Cifran (Rs 76.9 crore) and cardiovascular drug Lipitor’s copy cat Storvas (Rs 72.8 crore), together contributed Rs 429 crore for the 12-month period ended November 2008.

As the demand for a grand stimulus gathers steam, the government is targeting an investment of Rs 1,00,000 crore in the infrastructure sector within the next two years. To bankroll the plan, the government may ask Infrastructure Investment Finance Company Ltd (IIFCL) to put together a corpus of over Rs 40,000 crore. With companies and business houses in a financial bind, this scheme aims to take up infrastructure projects under public-private partnership with minimal private investment. Under the proposed formula, a private sector company can start an infrastructure project with just 15 per cent of the required capital and the balance will be provided by government-owned agencies. Most infrastructure projects are financed three parts by debt and one part by equity. In case the promoter is unable to put together the entire equity capital, IIFCL will offer quasi equity of up to 10 per cent of the project cost. This will bring down the private promoter’s contribution down from 25 per cent to 15 per cent. Apart from quasi equity, IIFCL will refinance up to 60 per cent the banks which lend to such projects. IIFCL, which has already been mandated to raise Rs 10,000 crore in tax-free bonds, will be permitted to mobilise another Rs 30,000 crore through the same route, the sources said. This will take the total to Rs 40,000 crore. The scheme is awaiting the approval of the Central Board of Direct Taxes for tax exemption to the subscribers. In addition, the government needs to provide a sovereign guarantee to the bonds. Both the approvals are expected shortly, the sources said.

Faced with a severe downturn at home, several US universities have now turned to India to sell their executive education programmes. A team of professors from nine universities, including The Ohio State University, George Washington University and Northeastern University, is currently in the country to meet top companies for this purpose. Some of the companies this team plans to meet are Siemens India, RPG Enterprises, GlaxoSmithkline, Mphasis and Infosys Technologies. “Our university has lost corporate clients to the slowdown. We are in India to build a relationship with the companies here,” said Professor Sumit Kundu, faculty director of E-MBA and coordinator (department of management and international business), Florida International University. In the past, executive education programmes have been a good source of revenue for universities in the US. In some cases, their contribution to the annual revenue was as high as 40 per cent. Until some months back, companies in the US used to fully reimburse the students who went for such programmes. Thanks to the meltdown, the same companies have now decided to slash the subsidy by 50 per cent and more. As a result, there are few takers for these programmes. “Certainly, revenue is suffering,” said Kundu. India, to be sure, could be a good hunting ground for these universities as there is a shortage of executive education programmes in Indian business schools. Though there are over 1,500 business schools in India, only the Indian Institutes of Management and other quality B-schools offer such programmes. In contrast, around 500 universities in the US run executive education programmes. “This serves as an opportunity for us to reach out to the business education market in India,” said V Kanti Prasad, Dean and Bostrom Professor of Entrepreneurship and Innovation, University of Wisconsin, Milwaukee.

Andrew Mellon. That’s the answer ratings agency ICRA’s economic advisor, Saumitra Chaudhuri, gives to those who compare the current US recession with the Great Depression. Mellon’s only formula, says Chaudhuri, was �Liquidate labour, liquidate stocks, liquidate the farmers and liquidate real estate.’ As a result, there was precious little the US government really did and, when Roosevelt assumed presidency a few years into the Depression, no US bank was functioning — “compare this with now, when, because of the Fed’s aggressive action, no bank has downed shutters … where’s the comparison — it’s like comparing 9/11 with the World War!” That done, Chaudhuri argues that the current contraction in the US should be over within the next two quarters — 2009 in the US, then, could end either flat or with marginal growth, and ditto for the EU and Japan. In terms of the numbers, his logic is simple — if you include the next two quarters, that’ll be six consecutive quarters of contraction, something that’s never happened before. “Keep in mind that, by and large, US companies are in decent shape; the bond markets have begun to move and spreads between Aaa’s and Libor are falling; Libor itself is falling … essentially, credit markets have begun to move because of the huge funds infusion by the Fed.”

Pepsico India Holding need not divest 49 per cent equity in bottling firms to Indian companies, with the government today exempting it from the obligation following change in foreign direct investment (FDI) rules for the food processing sector. The exemption also prepares the ground for infusion of Rs 250 crore ($50 million) FDI by the beverages major in India. The decision was taken by the Cabinet Committee of Economic Affairs as 100 per cent FDI in the food processing sector is now allowed in the country. Earlier, when Coca Cola and Pepsico came to India they were asked to mandatorily offload 49 per cent stake in bottling firms to Indian cos in due course. This way Pepsico will bring in $50 million into the country, Science and Technology Minister Kapil Sibal told reporters after the meeting.

State-run IndianOil Corporation plans to set up the country's second hydrogen fuel-dispensing station in the vicinity of the Commonwealth Games Village before 2010 for catering to more than 100 government vehicles to be used for demonstrating the usefulness of the fuel. "We have sent a proposal to (the) Delhi Government for land in the vicinity of (the) 'Commonwealth Games Village' for setting up a hydrogen fuel station. This would be used for dispensing fuel to more than 100 vehicles to be used for the mega event," Executive Director (Research and Development) IndianOil Corporation R K Malhotra told. Malhotra said the Delhi Government had asked IOC to identify land for setting up a hydrogen fuel-dispensing station. "We proposed to them to allocate land in the vicinity of the Commonwealth Games Village. We are awaiting their response," she said. "Since the Commonwealth Games will showcase India's ability to organise such mega events, the government also wants to use hydrogen fuel-compatible vehicles during the event for demonstrating its environment concerns. Therefore, such a station in the vicinity of the 'Games Village' would serve the purpose," he  said. The station will dispense a mix of hydrogen and CNG in the ratio of 20:80. In the initial phase, IndianOil is targeting CNG vehicle which can be run on hydrogen fuel mix with a little modification.

Close on the heels of Kingfisher and Jet Airways announcing basic fare cuts of around 40 per cent, national carrier Air India has decided to slash the same by 35-82 per cent across all sectors. With this cut, the total fare in any given sector would come down by at least 25 per cent. Today, JetLite also announced a fare cut of around 40 per cent across all sectors, while low-cost carrier SpiceJet launched a special advance booking at Rs 99 basic fare. SpiceJet’s offer, which will be there till June 2009, means up to 80 per cent cut in basic fare and a 25 per cent cut in total fare. “Following the gradual reduction in the price of ATF, Air India was the first airline to pass on the benefit to passengers with a reduction in fuel surcharge in early December. Passengers will thus benefit for the second time with a reduction announced by the airline, this time with deeper cuts,” said an Air India statement.

Satyam to focus on IT, BPO, chairman tells staff; TR Prasad to stay. Stung by the investor outrage over its aborted proposal to buy two promoter-related firms, Satyam Computer Services Chairman B Ramalinga Raju told employees that the company would stick to information technology and business process outsourcing and that the company’s customers “continue to show a high level of trust in Satyam”. In an email, Raju said: “While the idea that we could diversify into an unrelated business was rejected by our investors, it was formed with the belief that doing so would not imperil our leadership in our core business or lessen our commitment to it, and that all stakeholders would benefit.” He added: “Satyam did not — and does not now — intend to retreat from IT and BPO services in any way, and going forward, Satyam will focus exclusively on these markets.” Satyam has 52,865 employees on its rolls and 650 clients worldwide. Breaking his silence over the embarrassing developments of the past fortnight, Raju reiterated that the board arrived at its decision to invest almost Rs 8,000 crore in Maytas Infra and Maytas Properties by following all the required processes and procedures. There was, he wrote, “spirited discussion among members”, their vote to approve the motion was unanimous. The company’s share rose 8.3 per cent on Tuesday to Rs 160.60 on the Bombay Stock Exchange, compared with the previous day’s close of Rs 148.25. Raju said that Satyam had also been in contact with many of its investors, and the company had taken key steps to regain their confidence. These included strengthening the board by changing its size and composition and engaging DSP Merrill Lynch to provide strategic advice and options. The board will meet on January 10 to consider these options and to chart a course of action to boost stakeholder confidence.

I T firms’ decision to hire fewer students this year has hit Masters of Technology (M Tech) students at the Indian Institutes of Technology (IITs) hard. The IITs say only 25 to 40 per cent of the M Tech students have been placed so far in contrast to last year when most IITs had achieved around 90 per cent placements by this time. IT firms are the largest employers of M Tech students. The IITs on their part are telling students to take up higher studies or join start-ups. Some are also considering extending the placement period, which began in the first week of December, to April 2009. The placement figures so far have been from their 23rd day of placements. “We have around 450 M Tech students of which only 20 per cent have been placed so far. A few IT companies declined to visit the campus given the current financial meltdown,” said P K Jain, placement director, IIT Roorkee. Wipro Technologies, which used to recruit around 50 students on an average from IIT Roorkee, has declined to visit the campus this year. The institute is in talks with Patni Computer Systems and Satyam Computer Services for campus visit.

This year, Tata Consultancy Services (TCS) hired only 13 students against 36 last year and Infosys Technologies only four against seven last year. International Business Machines Corporation (IBM) also lowered recruiting, hiring just nine students this year against 12 students last year. IIT Guwahati says it has not heard from TCS and Wipro. “We are facing problems placing M Tech students. Big IT firms that used to frequent our campus have not shown up,” said an official. The institute has registered around 30 per cent placements for its M Tech students and 80 per cent for B Tech students.

Suresh Tendulkar is not a pessimist when it comes to the economic situation. Indeed, he is almost sanguine about the outlook for growth — 7 per cent this financial year, give or take half a percentage point, and even better next year, possibly 7 per cent plus. This contrasts quite sharply with other forecasts (like those by Citigroup and Goldman Sachs) which have tended to drop the number for next year to between 5.5 and 6 per cent, if not lower. Tendulkar succeeded C Rangarajan four months ago as chairman of the Prime Minister’s economic advisory council, of which he has been a member since 2005. The council itself is in the midst of revising its growth forecast for this year, which it had placed in August at an optimistic 7.7 per cent. The new number will be out in late January, Tendulkar says. “We have had many downturns since 1991; the one at the end of the 1990s was of a higher order. People now say this one is worse, but that will be a self-fulfilling prophecy. I don’t share the pessimism that this downturn is worse than the previous ones,” he said. Tendulkar argues that the sustainable rate of growth for the Indian economy is not the 8.8 per cent average of the past five years, but something in the region of 7 to 7.5 per cent. From that perspective, he does not think the economy faces a massive crisis. The main problem that he sees today is the psychological factor, which is over and above the real issues confronting the economy. People are talking themselves into a self-fulfilling crisis, especially the larger companies. This, then, manifests itself in reduced consumption demand, lower investment and bankers stopping to lend.

“The fear that this is the worst crisis we have faced is irrational, because the fundamentals are quite sound,” he argues. He goes on to list the healthy state of bank finances, the absence of a sub-prime housing problem as in the US, comfortable foreign exchange reserves, a stable foreign exchange rate after a downward adjustment, the end to substantial FII outflows, more than adequate food reserves amidst another good crop year and much lower oil prices.

Realty, infrastructure groups lead race to the bottom. India’s richest business houses would like to forget 2008 in a hurry. The market capitalisation of the top 20 business houses fell a whopping 65 per cent (Rs 16.73 lakh crore) over the previous year, courtesy the mayhem in the stock markets, performing far worse than the Bombay Stock Exchange’s benchmark Sensex (down 52.5 per cent) and the broadbased BSE-500 index (down 58.3 per cent). Predictably, the credit risk that began with the housing bubble has hurt real estate stocks the most. So no surprises that Ramesh Chandra, the biggest value creator in the bull markets, saw the market value of Unitech, his flagship realty firm, decline 92.2 per cent in one year, the most among the largest business groups by market capitalisation (m-cap). DLF is the other real estate firm to figure in the losers’ list with its m-cap eroding 74 per cent. The K P Singh-promoted firm ranks fourth in the list of firms that saw the biggest percentage fall in their m-cap. The sharp decline in metal prices hit the OP Jindal group hard, with a value erosion of 75.81 per cent in 2008. The market cap of four major steel and steel products firms in the group — Jindal Saw, Jindal Steel & Power, JSL and JSW Steel — fell 80 to 88 per cent.

Institutional investors in Satyam Computer Services, outraged by the management’s attempt to buy out two companies promoted by Chairman B Ramalinga Raju’s sons, appear to be holding on in the hope that the value of the stock would rise if a strategic buyer emerged on the scene. With the promoters’ stake now believed to be down to just 4 per cent, it is inevitable that there will be a change in the management, investment bankers and analysts say. They point out that institutional investors would not mind an exit if they got a good price. Moreover, four independent directors have resigned over the past few days, further hurting the credibility of the management. According to a Bloomberg report, Aberdeen Asset Management, possibly now the largest shareholder in Satyam with a stake of just over 5 per cent, said on Tuesday it was open to the idea of an investor picking up a stake in the outsourcer with a view to bring in new management to protect shareholders’ interest. However, a UBS report pointed out that a hostile management change could destroy value in the near term. While some institutional investors are hoping for a change in the management with a strategic buyer coming in, some have cautioned that it might be better if the existing management continued for some time so that the business is not disrupted and engineers working on critical assignments for clients are not disturbed. “Every option, whether it’s a PE buyout or an acquisition by an IT major, has its pros and cons,“ said a fund manager not wishing to be identified, adding that "it’s difficult to say which option will work best for the company".

In a step towards settlement of a six-year-long family dispute, Bajaj Group Chairman Rahul Bajaj has purchased over four crore shares representing 29 per cent stake in sugar major Bajaj Hindusthan for Rs 265.67 crore through open market transactions. Rahul has bought 3,98,89,840 shares at an average traded price of Rs 64.34 in Bajaj Hindusthan, aggregating to 256.66 crore, as per the data available on the block deal counter of the Bombay Stock Exchange (BSE). Besides, in a bulk deal on BSE, Rahul Bajaj has further acquired 14,00,540 shares in Bajaj Hindusthan at a price of Rs 64.34 each, aggregating over Rs 9.01 crore. As per the BSE data, Rahul Bajaj has bought 3.46 crore shares from Bachhraj & Co and 51.93 lakh shares from Jamnalal Sons in two block deals. Post acquisition, Rahul has acquired over 4.1 crore shares representing 29.2 per cent stake in the sugar major by way of inter-se-transfer of shares among the promoters through market transactions. Last week, in a notice to the stock exchanges, Bajaj Hindusthan had said Rahul Bajaj would buy 29 per cent stake in the company and would transfer the acquired shares, along with 0.21 per cent already held by Rahul as well as the holdings of six other family members amounting to 29.62 per cent, to his brother Shishir. Post transfer of shares, Shishir would have 32.47 per cent stake in Bajaj Hindusthan. Shares of Bajaj Hindusthan were trading at Rs 72.40, up 9.53 per cent in the afternoon trade on the BSE.

Aurobindo Pharma has got final approval for two of its Abbreviated New Drug Applications (ANDAs)  - Stavudine capsules and Stavudine oral solutions - from US Food and Drug Administration (USFDA), a company release said. These drugs  fall under the Anti-Retroviral (ARV) segment and will be used for treatment of HIV. Aurobindo now has 62 final and 24 tentative ANDA approvals from USFDA.

At a time when most companies feel that exports in 2009 will decline, leading utility vehicles (UV) maker Mahindra & Mahindra (M&M) is targeting 20 per cent of sales from overseas markets for its new Xylo that is slated for launch on January 12, 2009. The company is planning three more launches during the year and has lined up the launch of an all-new sports utility vehicle (SUV) platform for mid-2010. “We will launch this yet-to-be-named SUV first in India and we plan to take it to the US market later,” informed Pawan Goenka, president, automotive sector, M&M. As for the Xylo, M&M will start exporting it to South Africa within two to three months of its launch and, subsequently, to the Association of Southeast Asian Nations (ASEAN) countries. “The left-hand drive version of the Xylo would come in around a year and then we plan to take it to countries like Brazil, Chile, countries of West Asia, and some of the African countries including Egypt,” Goenka said. Exports would be an important component of Xylo sales. “The Xylo, however, has not been designed for the US at all. We are mid-way into product development for a brand new SUV platform that will be launched in India in the second half of 2010 and will be eventually exported to the US,” he added. This, then, will be M&M’s second launch in the US market, after the Scorpio, which is scheduled to enter the US markets in end of 2009. “The downturn is perhaps one of the best times to launch new products as it creates a buzz around it. The current slowdown in the global economy will not deter our launches,” Goenka claimed.

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are set to have some serious competition. Reliance Money, controlled by the Anil Dhirubhai Ambani Group, and Financial Technologies India Ltd (FTIL), which operates one of the world’s largest exchange networks, are exploring the option of setting up their own equity exchanges. Sources familiar with the developments said both companies see enormous scope in this space since only 5 per cent of Indian households invest in equities compared to the international average of up to 50 per cent.

The scope for a new exchange can be seen from the rapidly growing business of equity derivatives, which are basically instruments whose value is at least partly derived from one or more underlying equities. The NSE enjoys a virtual monopoly in equity derivatives with daily average volumes at Rs 10,000 crore in the spot segment. In comparison, the BSE has daily average volume of just Rs 4,000 crore. The NSE’s daily average volume in derivative segment is Rs 40,000 crore. Given NSE’s virtual monopoly, sources said, there is scope for a third — or even a fourth — stock exchange. Reliance Money is a prominent player in commodities after picking up 10 per cent in the National Multi Commodity Exchange (NMCE). The company wants to increase its holding to 26 per cent shortly. Reliance Money’s spot exchange for agriculture commodities is also expected to start trading next month. NMCE has applied to the Securities and Exchange Board of India (Sebi) to set up a currency futures exchange. An equity exchange fits into the company’s overall strategy, the sources said. When contacted, Sudeep Bandyopadhyay, chief executive officer of Reliance Money, said: “We are not looking at the equity segment right now, but given an opportunity we will certainly look at setting up an exchange for small and medium enterprises.” The FTIL group has interests in a currency futures exchange, commodity futures, power exchange and spot exchange for agricultural commodities and plans to set up an exchange for SMEs. It has set up exchanges overseas also.

Satyam’s cup of woes is brimming over, with three more independent directors resigning today, which has brought down the board strength to 6 from 10. Their resignations follow widespread criticism of their role after Satyam called off a deal, announced mid-December, to invest approximately Rs 8,000 crore ($1.6 billion) in two promoter-owned companies Maytas Infra and Maytas Properties. The proposals were scrapped following strong protests from institutional shareholders. Mangalam Srinivasan was first independent director to resign on December 25 owning moral responsibility. She was joined today by Krishna G Palepu, Vinod K Dham and M Rammohan Rao. This means Satyam is now left with only two independent directors — T R Prasad and V S Raju. The four executive directors are B Ramalinga Raju, founder and chairman; B Rama Raju, managing director; Ram Mynampati, president; and V Srinivas, chief financial officer. None of the directors who resigned today were available for comment. Rao, who is the dean of the Indian School of Business, and Palepu have been quiet throughout, Dham has been talking about asking for all relevant information from the management. Analysts, however, feel the board meeting, rescheduled last week from today to January 10, would lose some credibility with the resignation of the independent directors. It is believed that after the World Bank announced that it had banned Satyam from doing any offshore work with it for eight years on allegations of data theft, some senior company executives were planning to approach the independent directors with a proposal to set up a management committee that would have a big say in running the company. With the resignation of four of the six independent directors, that plan can’t go through now. Despite this, Satyam’s shares rose 9.4 per cent on Monday to Rs 148.25 on the Bombay Stock Exchange (Rs 135.5 on Friday), after the fourth-largest Indian software service provider stated it would consider more options to improve shareholder value and strengthen corporate governance. Commenting on the resignation of Dham and Palepu, B Ramalinga Raju merely said: “We would like to thank them for their valuable contributions while serving our board.”

FXLabs Studios, a Hyderabad-based game developer for PCs and video game consoles, has partnered Eros International Plc, a distributor of Bollywood film content in the UK, US and Europe, to launch the country’s first 3D PC action game based on a Bollywood movie. Developed on the Bollywood film �Ghajini’ starring Aamir Khan, �Ghajini - The Game’ will be distributed by Eros International in both Indian and international markets.

�Ghajini’, a third person action game, recreated movie locations and scenes in the 3D world so as to provide the gamers with the actual movie sets to make the game playing experience as authentic and adventurous as the movie. The players get a first hand experience of the main protagonist and character Sanjay, played by Aamir Khan, and experience the challenges and trails faced by him.

“Aamir Khan has taken a keen interest during the development of the game. The actor has lent his voice and has also enacted certain �moves’ to bring in authenticity for the action sequences in the game,” FXLabs stated in a press release on Monday.

He did not live in the city but New Delhi’s society ladies courted him nevertheless — the bearded, Sufi-like painter whose bright, flat-coloured canvases and strangely evocative animals and gods may have initially jarred their sensibilities — and he was a hostess’s delight with his mystic ways. He might sing, he might dance, he might extend an invitation to his family hotel in Dalhousie…or he might even paint.

The board of a widely held company is a fiduciary of the general body of shareholders and not only of some select constituent group of shareholders. Therefore, while considering path-breaking diversifications that entail unprecedented cash outlay on acquisition of controlling interest in target companies held by conflicted stakeholders, the general body of shareholders of such a company would legitimately expect its board to be mindful of the following considerations:  

Irrespective of how compelling the business case may be in the bona fide judgement of the board, the valuation and price of the proposed mega buy-sell transaction, in the minds of the general body of shareholders, remain questionable. Indeed, the wider the disparity between the shareholding of the conflicted stakeholders in the company and the target companies, the more questionable would be the transaction and its price. And, unless the proposal is made subject to shareholders’ approval, a lurking apprehension would persist that the transaction was so structured as to side-step the shareholders’ vote thereon. The harm a mega buy-sell transaction involving conflicted counterparties can do to a widely-held well-run company’s reputation can hardly be underestimated.

Similar conflict-related issues would arise if a split-up of any large business house involving multiple widely-held and closely-held companies was structured as buy-sell transaction(s) between the splitting promoter group. Though, in such a split-up, the acquiring co-promoter group would end up having to pay cash consideration to (instead of receiving it from) the widely held company that is the seller counterpart. Indeed, it should come as no surprise that splits amongst some of the largest split business houses have been structured as de-mergers that entail the approval of the wider body of shareholders, and not as mega buy-sell transactions. Though, structuring them as buy-sell transactions could have been one way of structuring the split. <>

Jamnagar (Gujarat) because of the adverse economic environment, a commerce ministry official said. The proposal was to set up a 16-20-million-metric-tonne-a-year petrochemical refinery at an investment of Rs 15,000 crore, one of the largest SEZ proposals, according to information available on the company’s website. The Essar SEZ had received “formal approval”, a second-stage approval that means the project had land in its possession (an earlier stage is when SEZs receive “in-principle approval”, when their plans are approved but the land has not been acquired). Essar did not respond to an email questionnaire asking why it had withdrawn and seeking details of its alternative plans. The development comes soon after India’s largest realtor, DLF Ltd withdrew a “notified” SEZ in Delhi owing to doubts about its financial viability. Notification, which is the final approval for any SEZ application, makes the zone eligible for tax benefits under the SEZ Act of 2005. Essar’s project was, however, already facing a controversy over the declaration of land. In August this year Essar had requested the Board of Approval (BoA), an inter-ministerial approval body for these tax-free enclaves, to reduce the area of the SEZ to about a fifth of the originally proposed 1,125 hectare. Essar also wanted the zone re-classified from its original multi-product classification to one for petrochemicals and petroleum. The department of revenue, which has a representative on the BoA, said the zone did not have the land in its possession and wanted to know how the zone received formal approval in these circumstances.

In another bid to mobilise funds for the cash-strapped realty major Unitech, promoter Ramesh Chandra and his family are in talks with leading Indian and global steel giants to sell their 25 per cent stake in Bhubaneswar-headquartered Orissa Sponge Iron & Steel Ltd. Investment banks said the Chandras, who bought the stake sometime in 2006 and 2007, are in talks with Korean steel giant Posco, which is implementing a 12-million-tonne project — one of the largest in India’s steel industry — in the state, and Delhi-based Bhushan Steel, which owns 6 per cent in the firm. “The company is also in talks with two global giants and two domestic companies,” sources said. A Posco spokesman said he had no information about the transaction and Bhushan Steel Managing Director Neeraj Singhal denied that the company was negotiating with the Chandras. “It is an investment decision. They are not interested in staying invested because steel prices are expected to be under pressure,” he added. The Chandras are expecting to close the deal at an enterprise value of around Rs 2,000 crore, which means they expect Rs 500 crore for their stake. The move is part of a series of measures Unitech, India’s second-largest realty company is taking to raise funds and reduce debt of Rs 8,000 crore.

In a move that can well send out a signal to the industry about the state of affairs in the captive delivery centres of global banking giants in India, Wipro Technologies has announced to acquire Citi Technology Services for $127 million (around Rs 609 crore) in an all cash deal. Citi Technology Services is the captive delivery centre of IT services and solutions centre of Citigroup in India. This is Citigroup's second India-based asset that is being sold out to one of its service providers. The company had recently sold its captive BPO arm, Citigroup Global Services, to TCS for about $505 million. While acquiring Citi Technology Services along with its 1,650-odd employees working across its four delivery centres in Mumbai and Chennai, Wipro has managed to get a revenue commitment of about $500 million over the next six years, what Citi's Global Technology Head Jagdish Rao termed as 'minimum commitment' to the buyer. Citi Technology Services, which started operations in India in 2004, has reported a revenue of $53 million in calendar year 2007 and the company is expecting to up it to $80 million in 2008.

Pyramid Saimira Theatre, the Chennai-based entertainment firm, was in the limelight Tuesday after it announced it was the victim of a forgery and the stock was frozen at circuit filer of 10 per cent on the Bombay and National Stock Exchanges for the second day in a row. In an early morning statement, the company confirmed it had received a letter from the stock market regulator, Securities and Exchange Board of India (Sebi), asking its chairman PS Saminathan to make an open offer to buy 20 per cent in the company at Rs 250 a share. A couple of hours later, Pyramid called a press conference to say Sebi’s letter was forged and that the company planned to launch a formal complaint with the Central Bureau of Investigation (CBI). Meanwhile, Sebi issued a statement saying it had not issued any such letter to the company as has been widely reported in the media. “It appears that the letter is being circulated with ulterior motives,” the statement said. n a release in the evening, Sebi said it was investigating the matter including the origin of the letter. “Sebi is also separately inquiring into the dealing in the scrip following the press reports, including alleged violation of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,” the statement said.

The Reserve Bank of India has started a review of the non-performing asset (NPA) or bad loan classification norms to ease the flow of credit to corporate groups. The move follows a reference from the government and is aimed at relaxing the norms temporarily to enable companies to access funds during the economic downturn that is putting pressure on cash flows and repayment capabilities. The review has been sought by the finance ministry following appeals from various industries such as steel, textiles and gems and jewellery. Current guidelines mandate that any loan that remains overdue for 90 days is classified an NPA. Many industry groups have demanded lengthening the non-payment period to 180 days.  Sources close to the development, however, said the central bank is internally opposed to the suggestion because relaxing bad loan classification norms would take the Indian banking system below the global benchmark. Instead, the central bank is looking at the possibility of reworking the borrower classification norms. Under current guidelines, a bank considers the account of an entire business group as non-performing if any of the loans sanctioned to a group company turns an NPA. This affects the funds flow to group companies.

If the borrower classification norm is done away with, only the group company that has defaulted will be denied fresh loans. Sources said, a final decision on the issue will be taken after banks declare their third quarter results. RBI has already started a review of loans to steel, textile and aviation companies. Banks are already showing signs of increasing delinquency levels with gross non-performing assets of the listed banks rising 10 per cent or by Rs 4,755 crore for the quarter ending September 2008.

The board of Unitech Ltd, the country’s second largest realty company, has approved a plan to raise Rs 5,000 crore through debt and equity issues and will convene an extraordinary general meeting on January 19, 2009 for shareholder approval. Sanjay Chandra, Unitech managing director, said today’s proposal was a flexible enabling provision. “The company could raise these resources through private placement, public issues on overseas stock exchanges, non convertible bonds, foreign currency convertible bonds or a combination of these,” he added.  Declining to discuss details, Chandra said the company intends to use the funds to reduce its debt of over Rs 8,000 crore.  The company has also already decided to raise around Rs 4,000 crore by divesting some of its assets such as hotels, commercial real estate and institutional land. Discussions are on with buyers, including private equity firms and strategic investors, and the company expects to close these transactions in January. It may be recalled that the company planned to raise Rs 4,000 crore in January 2008 at around Rs 400 a share through a private placement. The deal was called off when the Indian stock market crashed on January 21-22 and investors decided to pull out. At the current market price of Rs 45 per share, Unitech’s total market capitalisation is just Rs 7,500 crore. If the company decides to raise equity of Rs 5,000 crore, the promoters’ stake would be significantly diluted, said a banker on condition of anonymity.

Kishore Biyani, the retail baron, seems ready to smoke the peace pipe with suppliers with whom he has been at loggerheads for the past few months. The move comes at a time when some of his recently launched private-label product categories are outselling those of multinational rivals such as Nestle. The founder of Future Group of retail chains including Food Bazaar and Pantaloon recently launched a series of in-house value-for-money consumer products to compete with Hindustan Unilever, Reckitt Benckiser and other fast moving consumer goods (FMCG). Now, he said, he isn’t interested in becoming the leader in the product categories he has launched. "We want to be number two brand in each category. We can't replace a national brand," said Biyani, who has also authored a book titled It Happened in India.

The retailer has warred with suppliers including multinational companies to improve margins. Earlier this month, Biyani urged rival retailers to join hands with him to challenge the might of Unilever, Britannia and other FMCG companies in seeking higher margin. Biyani’s Future group reportedly has sparred with global confectionary major Cadbury Schweppes by asking all its stores across formats, particularly outlets of Big Bazaar and Food Bazaar retail chains, to remove the multinational company’s products from the shelves as Cadbury was offering better deals to global retailers than to modern retailers of Indian origin. Biyani has launched several products in foods, cosmetics, consumer durables, apparel and electronics. Sales of some of these products have outstripped those of suppliers. For instance the Future group produced tetra-pack milk brand “Sach” has garnered 1/3 of tetrapack milk sales, making it the market leader since its test-trial launch three weeks ago in select stores, according to Future Group Consumer Director Damodar Mall.

Two Bills introduced in Parliament on the insurance sector riled the Left parties so much that they came to blows with the government on the floor of the Rajya Sabha. The Bill, introduced in the Rajya Sabha today, proposes to amend the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999, and the General Insurance Business (Nationalisation) Act, 1972. When the Bill was tabled, angry Left members stormed the well of the House and tried to snatch the copy of the Bill from Minister of State For Finance Pawan Bansal. External Affairs Minister Pranab Mukherjee had to stand protectively before the minister to prevent CPI(M) members from grabbing the papers. In the Lok Sabha, the Left pressed for a division (voting) at the introduction of the Life Insurance Corporation (Amendment) Bill, which seeks to increase the equity base of the government-owned insurance company to Rs 100 crore. The Bharatiya Janata Party did not join the fracas in either House but sought to divert attention by protesting against Minority Affairs Minister AR Antulay, indirectly helping the government table the Bills. There is no chance of the Bills being passed in this session of Parliament and they were referred to the standing committee, where the Left parties can voice their opposition.

The Insurance Laws (Amendment) Bill, 2008, has been delayed for four years and represents a significant step forward in economic reform (see table). As long as the Left parties were supporting the government, the United Progressive Alliance (UPA) was unable to persuade them to permit this measure.

The day the Left withdrew support to the UPA on July 8, the then finance minister P Chidambaram had said the government would press ahead with the Bill.

The CPI (M), the largest of the Left parties, termed the move “criminal”.

“We had been able to insulate ourselves because we didn’t allow global speculative capital to do the damage. Now we are throwing open a crucial financial sector, insurance, to foreign capital. Global financial institutions are facing shortage of capital for their survival,” said Sitaram Yechury, CPI(M) leader in the Rajya Sabha.

“The government is planning to hand over additional 23 per cent of Indian capital to these companies. Using the hard-earned money of common Indians, the UPA government wants to bail out foreign companies. This is a criminal act and totally unacceptable,” he added.

Turning down Civil Aviation Minister Praful Patel’s plea for a fare cut, full service carrier Kingfisher Airlines today said that at present there was no case for reducing air fare. Other airlines like SpiceJet and IndiGo also said that after the recent round of cuts in fuel surcharge, customers should not expect further benefits in the short term, though there would be some advance purchase packages in January. “The sharp and continuous rise in aviation turbine fuel prices earlier in the year has left a lasting impact on the bottom lines of the airline companies, leading to an accumulation of huge outstandings and liabilities with oil companies. As such, keeping in mind that the cash flow needs to settle these accumulated liabilities, there is currently no case for reduction in fares,” said an official spokesperson for Kingfisher. “However, once the government brings ATF under the declared goods category, the airline will immediately and significantly reduce fares,” he added. Last week, hours after Patel requested to airlines to cut fares and pass on the benefits of fuel price decrease to passengers, Kingfisher had announced that a decision on fares would be taken on December 20. However, no decision was taken that day. “With sales having improved by 10-15 per cent this month compared to the last few months, no airline will be in a hurry to cut fares,” said Mohit Srivastava, head of online sales, Makemytrip.

Britain's biggest trade union, which wants the government to provide help by Christmas, as Tata has injected more cash into the company. Tony Woodley, joint general secretary of Unite, said that there was little reason for the British government not to act now that Tata Motors had injected more cash. Jaguar Land Rover, which employs 15,000 people in Britain, was reported to have received "tens of millions" from Tata Motors, which will stave off an immediate cashflow crisis. Woodley told The Times: "I'm delighted that Tata has put more financing into the company. It is obviously right that they do so, having bought it only nine months ago. "I would now be extremely surprised if the Government did not give financial support to the company as well  and I would be very surprised if it wasn't this side of Christmas. I would be disappointed if there was not confirmation of the availability of a loan or credit guarantees at least," he said. Reports, however, said that despite Woodley's optimism, a state bailout is unlikely to come before Christmas. "As far as we are concerned, the situation is little changed from how it was last Friday night. I'm not expecting it [a government support package] this side of Christmas, but then we are not fully in control of this, it is the Government," Mark Foster, a Jaguar Land Rover spokesman, said. Tata Motors, which bought Jaguar Land Rover from Ford in March for USD 2.3 billion, borrowed USD 3 billion to finance the acquisition and to step up production of its low-cost Nano model.

The Union government today filed a fresh affidavit in the Bombay High Court, which is hearing a dispute over supply of gas from Krishna Godavari (KG) basin, stating that any sale price less than $ 4.2 per mmBtu is not compatible with decisions taken by a ministerial panel.  The affidavit also states that selling price should be determined based on arm’s length concept- where transaction is conducted purely on commercial terms. Further, it stated the formula under which the price is determined have to be mandatorily approved by the Government of India prior to the sale of gas.

The government in the affidavit said if the interim stay on sale of gas from KG basin is vacated, the allocation will be based on the gas allocation policy laid out by empowered group of ministers (EGoM).  As per the allocation policy, fertiliser plants will have the first claim followed by idle power plants and city gas distribution in that order. The Bombay High Court on Tuesday had asked the Government of India counsel to file a fresh affidavit making a categorical statement on the pricing of gas and explaining why gas pricing is binding on all. The price of gas is the most contentious issue in the court battle. Mukesh Ambani-controlled Reliance Industries (RIL) and Anil Ambani's Reliance Natural Resources (RNRL) are involved in a legal battle over the gas supply master agreement, whereby RIL is to supply natural gas to RNRL for its power plants.

The government of India, which has been made a party to the case, says it can regulate the contract between RIL and RNRL. But RNRL is opposed to the government determining the price, claiming that its entitled to the gas at a much lower price of $ 2.34 per million British thermal unit (mBtu). The government official, who filed an affidavit in the RIL-RNRL gas supply dispute between the Ambani brothers, was today asked by the Bombay High Court to remain present on November 27.  During the case proceedings today, RNRL's senior counsel Ram Jethmalani said that he wanted to cross-examine the official from the Petroleum Ministry, Under Secretary, S M Sundaram. The division bench of Justice JN Patel and KK Tated said RNRL will have to apply for an application seeking permission to cross examine the ministry official.

The Kapoor family of Balaji Telefilms, known best for its television soap operas, is unlikely to buy the 26 per cent stake held by the Rupert Murdoch-promoted Star group in the company after the sharp erosion in the share price of the company. In August this year, the Kapoors (actor Jeetendra, his wife Shobha, daughter Ekta and son Tushar) had agreed to buy the Star stake at Rs 190 per share. In the last few months, the Balaji Telefilms stock has fallen to almost a third. It closed at Rs 66 on the Bombay Stock Exchange today.  “The promoters of Balaji Telefilms are entitled to purchase these shares. It was not a binding obligation, only an option. We may allow the option to expire,” said a source close to the development. He, however, refused to comment whether the Kapoors would be interested to renegotiate the price: “These things are open-ended and it is too early to comment.”  At Rs 190 apiece, the Kapoors need to shell out Rs 322 crore for the 25.99 per cent stake. The agreement expires on January 18, 2009. “After the due date, Star is free to sell in the open market but not to Balaji Telefilms’ rivals,” the source said.

Star had bought into Balaji Telefilms a few years back, when it was making programmes exclusively for the Star general entertainment channels. Once the exclusivity ended, Star decided to sell its stake. As the Kapoors hold 40 per cent in the company, they decided to buy the shares held by Star and thwart any possibility of a takeover. If somebody else buys the Star stake, it will have to come out with a 20 per cent open offer to comply with the takeover regulations of the Securities & Exchange Board of India. Thus, some experts said, Star could parcel out its stake to more than one buyer. When asked if the Kapoors have the first right of refusal at every price level, the source said: “I presume so.”  However, Star cannot transfer the rights and covenants it currently enjoys under the agreement. “These covenants are not transferrable. Also, It does not make an economic sense to buy at such a high price when the current market is below Rs 70 per share,” the source said. Balaji Telefilms CEO R Karthik refused to comment on the issue. At the current price, the company’s total market capitalisation is Rs 430 crore and the 40 per cent of its promoters is worth Rs 172 crore. “In case the Kapoors decide to buy these shares at 190 per share, they will incur huge losses as investors are not willing to buy at that price,” the source added.

Days after NTT DoCoMo of Japan announced that it will buy 26 per cent in Tata Teleservices for $2.7 billion, NRI businessman C Sivasankaran has decided to put on the block his eight per cent stake in the company. Informed sources said that Temasek Holdings, too, may sell a part of its 9.9 per cent stake in the closely-held telecom services operator. A Temasek spokesperson said: “It is inappropriate for Temasek to comment on market speculation.” However, Sivasankaran confirmed that he was prepared to exit from Tata Teleservices. Sources following the deal said that there was a possibility of DoCoMo raising its stake in the company from 26 per cent. NTT DoCoMo President and CEO Ryuji Yamada said: “We have agreed to acquire 26 per cent stake in Tata Teleservices. However, there is no intention to raise the stake from the present levels at the moment”. Huge profits await Sivasankaran if he gets the same valuation as was paid by DoCoMo. He had bought into Tata Teleservices for Rs 1,200 crore in 2006 and stands to make as much as Rs 4,021 crore from the sale. Temasek had paid Rs 1,500 crore for 9.9 per cent in the company, also in 2006. Sivasankaran has been a key investor in the Indian telecom space and has also operated telecom services in the country, though always with the strategy of cashing out at a hefty premium.

November 16, the big date for Common Admission Test (CAT) aspirants is now just a day away. A good CAT score will enable stude-nts to make the cut into the second round of interviews for a shot at one of the 2,000 seats available at the Indian Institutes of Management (IIMs) and close to 12,000 seats at 114 other management institutes. Nearly 2.5 lakh students, including 25,000 from Bangalore will appear for the exam across 23 cities in the country. Bangalore alone has 24 examination centres this year. Neeraj Dwivedi, chairman of Admissions at IIM Indore said that the IIMs were working on offering the exam online from next year which would make it probably the last CAT to be conducted in a written exam format. This year a new IIM at Shillong called RGIIM will have an intake of 60 students. “We have told our students to expect the unexpected,” said Ajay Arora, Bangalore-based director of TIME, which is a CAT coaching institute.

He said in the recent years, the number of questions had seen reduction and that students had been trained on various possibilities. CAT 2007 had 75 quest-ions where an analysis by coaching institute Career Launcher showed that stude-nts had found Data Interpretation (DI), with a mix of calculations and logic to be on the easier side. Data Sufficiency in its old format reappeared in CAT after a span of three years, more so in two different sections. Students say they would not want a repeat of last year where quantitative ability (QA) proved to be difficult. In verbal ability (VA), the number of reading comprehension (RC) passages were more than CAT 2005, though they were not as lengthy.  The analysis showed that even though CAT 2007 did not pose any surprise, pattern wise, with the number of questions remaining 75 as last year, the level of difficulty had increased by a notch or two.

’s second-largest information technlogy services provider, Infosys Technologies, has issued letters to its employees stating they could opt for a one-year sabbatical to engage themselves in philanthropic activities. They would continue to draw 50 per cent of their salary during the period. Infosys crossed the 100,000-employee mark in India in the quarter ended September 30, 2008.

The company said that while the move may have coincided with the global financial turmoil and slowing growth rates of IT firms, it should be perceived as a pure voluntary act by employees who are prompted by altruistic motives and inspired by the example of its chairman and chief mentor, NR Narayana Murthy. The employees, an internal memo said, need to be on the company rolls for at least two consecutive years before they are eligible for the offer and a panel comprising senior members of the Infosys leadership team will decide each case. “This policy will promote volunteerism among employees and we believe that the value and benefits arising from it will have an impact on community, the employees and ultimately, the company,” it said.

Sources said that the policy came into force only a few days back and the company is working out the finer points like whether the employees will be given any salary or emolument during the sabbatical. However, it is understood that the company is planning to pay some amount of the salary, while the rest the employees can earn from the NGO they are working for. An Infosys spokesperson confirmed the development: “We introduced this policy almost two months back, which allows the employees to go on up to one year of sabbatical to engage in philanthropic activities. All the employees have been communicated the policy internally.” When asked how much the employees will be paid during that time, the spokesperson said they will be given 50 per cent of the salary, while the other half will be given by the respective NGOs they work with.

With no new television content being shot in Mumbai due to the ongoing strike by television industry workers, entertainment channels like Star Plus, Sony TV, Zee TV and others started airing the re-runs of old serials and shows from tonight. At least 55-60 TV shows including serials and reality shows have suffered as a result of this strike and there are no new episodes of these shows, sources said. In a joint press meet organised here by the leading entertainment channels, Punit Goenka, chief executive, Zee TV, said that all entertainment channels have been 'forced' to take this step as they are caught between the demands of the workers’ federation and the content producers. "...We were waiting for the workers and producers to resolve the issue by November 9. Unfortunately, that has not happened...," Goenka said.

Broadcasters present at the press meet included recently launched channels like Colors, NDTV Imagine, 9X, apart from Star TV, Zee TV and Sony TV. While Sameer Nair, head of NDTV Imagine, termed the situation "unfair" and "arbitrary", Uday Shankar, CEO, Star TV, said that they were in touch with all their advertisers and the associations. According to experts, this move is likely to help some of the new channels like 9X, Colors and NDTV Imagine gain new viewership as a number of existing loyal viewers of Star Plus, Zee TV and Sony TV may actually switch to these newer channels to sample their content. "Re-runs of shows will not affect the advertisers as they never buy the airtime on shows. Ad-spots are related to cost-per-rating-points delivered by the channels’ viewership. Therefore, as long as these channels can guarantee healthy ratings, it does not matter whether new or re-runs of old serials are being aired," a senior media planner said.

Despite tough market conditions, consumer goods companies are either increasing or maintaining last financial year’s advertising and branding (A&B) spends on the back of good Diwali sales this year. Most companies had increased their A&B spends in FY09 to counter a dip in consumer sentiment, and had introduced many new products. The results were good, with firms clocking up to 50 per cent growth in sales this festive season over the year-ago period.Taking the cue, LG Electronics has planned a 15 per cent increase in its A&B spend for FY10, whereas Samsung has maintained its budget of 4.5 per cent of its overall revenues. Godrej Consumer Appliances has also decided to stick to allocating 5 per cent of its revenues to A&B. In absolute numbers, this would imply an increase in A&B spends of both the companies as they have predicted a double-digit growth in their revenues.

Nowadays, marketers are also reaching out to consumers directly. This explains their participation in product demos, exhibitions, trade shows, road shows and retail activation with better displays at the Point of Sales (POS) and Point of Purchase (POP) and creating live ambience in the dealer showrooms. They are also stepping up their investments in research and development, after-sales service and expanding their presence to smaller cities as they look at maintaining their growth forecasts in spite of the slowdown in the markets.

Wockhardt has launched Midazolam injection in the United States, the company informed Bombay Stock Exchange. The company had received the US Food and Drug Administration approval for marketing this injection, used for treating acute insomnia and anxiety. The total market for Midazolam injections in the US is estimated at $56 million. The injections are manufactured at the company’s plant in Waluj, Maharashtra.

State-run Indian Oil Corporation (IOC) has asked the Forward Markets Commission (FMC) to allow the company to hedge its refinery margins and end products such as petrol and diesel.

The country's largest refiner is also holding talks with the Multi-Commodity Exchange (MCX) to provide it with a platform to hedge refinery margins and end products. At present, MCX provides a platform to oil exploration and marketing companies to hedge volumes for crude oil only. "The purpose of hedging refinery margins is that you are assured of a particular level. As a refining company, we are more concerned about the refinery margins and our interest is to protect the same," said an IOC official. While exploration and production (E&P) companies are constantly exposed to the risk of fluctuations in oil prices, refiners and oil marketing companies (OMCs) are concerned about protecting their spread between crude oil and refined products (gasoline, diesel, naphtha, etc).

According to IOC, it has so far hedged anywhere between 5 and 10 million barrels of crude oil in 2007-08. It imports about 260 million barrels and it hedges less than 5 per cent of the same. S V Narasimhan, director (finance), IOC, said, "The market has been very unstable in the past few months and thus we are not very aggressive on hedging. We are waiting for oil prices to stabilise and then we may take a position." IOC earned $6.36 on refining every barrel of oil in the second quarter of this financial year as against $8.44 gross refinery margin in the same period last year. In a trading activity, when an organisation hedges its portfolio, it is primarily taking positions in the future market and operating within a pre-defined band of possible loss or gain. On the one hand, this feature could help the player achieve certainty of future cash flows, while on the other it could also eliminate the possibility of gaining from any favourable market movements.

In order to plug redemptions, ICICI Prudential Mutual Fund has increased the exit load on some of its fixed maturity plan (FMP) schemes for prospective investors from two per cent to as much as five per cent. Most debt fund managers, industry sources said, are likely to similarly increase the exit load on their FMPs in order to stem mass withdrawals in the future. “We have done this to ensure that only genuine long term investors are attracted to our scheme and existing investors are protected,” ICICI Prudential Managing Director and CEO Nimesh Shah said. According to existing regulations of the Securities & Exchange Board of India, fund houses cannot charge more than six per cent to investors who want to exit before the maturity of the scheme. Most of them had opted for an exit load of 2 per cent. The market regulator is also mulling steps to block exits from FMPs.

The move follows the heavy redemption pressure on the debt portfolios of mutual funds in October. The average assets under management (AAUM) of FMPs stood at Rs 1,27,080 crore at October-end, down Rs 10,718 crore since September. Over 25 per cent of the entire AAUM of mutual funds lie in FMPs. According to another top debt fund manager, a high exit load can be effective in covering losses whenever there is mass withdrawal in any scheme. “Five per cent is enough for a fund manager to ensure that existing investors do not bear the brunt if he has to sell some debt papers at a discount in case of redemptions,” he added.

Around 24 companies visited Indian Institute of Management, Ahmedabad (IIM-A), on “Day Zero” of summer placements. The institute remains tight-lipped about summer placements till the procedure is over but sources close to the process say there has been no dearth of offers made to the first-year students of Post Graduate Programme (PGP). While the banking and financial services sector made its presence felt, recruiters from other sectors like FMCG (fast moving consumer goods), manufacturing, consulting, marketing, trading, services, retail, media, infrastructure and operations were more upbeat.

The students will be placed with the companies for a two-month internship programme starting April 2009. These internships later get converted into job offers, called pre-placement offers. “Around 24 companies came to the campus today for summer placements. The actual number of students placed and the salaries offered can only be revealed on November 18, when the summer placements are over,” said a second-year PGP student. Besides inviting smaller private equity players and wealth management firms, the institute this time ensured that more sectors were represented as it expected a few leading domestic and international companies to falter in offering placements. “IIM-Ahmedabad has a large and diverse pool of recruiters and therefore the status of a few firms is unlikely to impact the opportunities that IIM-A students can expect from our placement process,” IIM-A had earlier said about the impact of the global meltdown on placements.

ValueLabs, a Hyderabad-based software development, testing and knowledge process outsourcing (KPO) company, is planning to set up its second facility in the city at an investment of Rs 150 crore. ValueLabs currently has two facilities – a 175,000-sft centre in Hyderabad employing 1,420 and the other in Kuala Lumpur in Malaysia housing 40 professional. “We are in the initial stages of discussion with the state government for allotment of 10 acre of land in an SEZ near Hyderabad and expect a positive response in the next few weeks. We plan to start work on the facility within two and a half months of allotment,” Arjun Rao, chief executive officer of ValueLabs, told Business Standard. Rao said the first phase of the new facility will involve an investment of Rs 100 crore and would accommodate 750 employees upon completion in the next two years. “The 500,000-sft facility will be fully operational in the next four years employing 5,000, two-thirds of which will be catering to new businesses,” he said. The zero-debt company would fund the expansion partly through debt and the rest through internal accruals.

The company has also acquired 30 acres in Pune’s upcoming IT hub Hinjewadi and had already received necessary approvals from the Maharashtra government for setting up its centre there. “We believe that our current and proposed facilities in Hyderabad will meet our requirements for the next three to four years. We plan to take the Pune project forward after three years from now,” Rao said. ValueLabs headcount will go up to 7,000 when its Pune facility is ready. The company had also secured a licence to operate in Dubai’s IT cluster – Dubai Internet City – and recently opened its sales office there, which besides acting as the primary engine of growth in the Gulf Co-operative Council countries will also serve as the springboard into the central Asian and African markets. Rao said the company saw a huge traction in energy and telecom sectors in West Asia and expects to clinch five clients in the region to offer them custom application development, maintenance solutions and remote infrastructure management services. “We expect West Asia to contribute 10 per cent to our revenues in the next one year,” he added.

is expected to ask the United States to come up with a $200 billion fund for emerging economies to counteract the reversal of private capital flows, at a meeting of heads of state and governments of the Group of 20 Nations (G-20) at Washington this Saturday. The country may also propose the creation of an Asian Investment Bank to act as a new multilateral agency to lend money to developing countries for their investment needs. In response to the global concerns arising out of the continuing financial crisis, President George Bush has invited world leaders including Prime Minister Manmohan Singh to the meeting.

Regulatory reforms, capital flows and the international financial architecture are expected to top the agenda. Much of the ground work for this summit was done at a meeting of G-20 finance ministers and central bank governors at Sao Paulo last week. Prime Minister Singh left for Washington on Thursday evening. The Indian delegation includes Finance Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia. In a statement prior to taking off for Washington, Prime Minister Singh said he would campaign for a greater say for developing countries in the global financial system: “I will put forward our views on the need for greater inclusivity in the international financial system, the need to ensure that the growth prospects of the developing countries do not suffer and the need to avoid protectionist tendencies.”

as a major developing economy which is integrating into the world has a vital stake in the stability of the international economic and financial system, Singh said and added that the “fundamentals of the Indian economy are strong.” It is likely that the summit, which includes countries like the United Kingdom, China, Japan and Australia among others, will see a general declaration at the end. A group within the G-20 may also be set up to prepare a specific set of recommendations, which will be subsequently taken up at another summit. Japan, China, Australia and the UK have already sounded out India for participating in a smaller group of “like-minded” countries to deal with the issues arising out of the summit.

With a net worth of $20.8 billion, Mukesh Ambani has replaced Lakshmi Niwas Mittal as the richest Indian on earth, Forbes said in its annual rich list for the country. Mittal, who had held the top position for four years, has moved to the second position with a net worth of $20.5 billion, followed by Anil Ambani ($12.5 billion), Sunil Mittal ($7.9 billion) and realtor Kushal Pal Singh ($7.8 billion).

The stock market meltdown in the last one year and the depreciation in the rupee against the dollar have knocked off the combined net worth of the 40 richest Indians by 60 per cent, the magazine said. Their total wealth is now $139 billion, down from $351 billion just a year ago, according to the Forbes India Rich List. “These are painful times for India’s tycoons. The country’s once soaring stock market fell 48 per cent the past year, the rupee depreciated 24 per cent against the dollar, and GDP growth is expected to slow by at least a percentage point, in part owing to double-digit inflation,” Forbes Asia said in a statement.

While all 40 tycoons listed last year were billionaires, only 27 have 10-figure net worths now. A net worth of $760 million was needed to make it to the list this year, $840 million less than last year. While Vijay Mallya and Gautam Thapar have fallen off the list, there are four new names in it: West Asian retailer Micky Jagtiani, Bollywood film producer Hemant Shah, Yusuf Hamied of Cipla and Hero Group patriarch Brijmohan Lall Munjal  The wealth erosion was across the board as on an average 33 of the 34 people that returned to the list this year have become poorer by at least 20 per cent, Forbes said. “Only one fortune from last year’s ranks increased, that of brothers Malvinder and Shivinder Singh, who sold their 34 per cent stake in Ranbaxy Laboratories to Japan’s Daiichi Sankyo at a hefty premium to its current stock price. They added $550 million to their combined wealth,” it added.

NTT DoCoMo of Japan today said it will buy 26 per cent in Tata Teleservices Ltd for approximately Rs 13,070 crore ($2.7 billion), valuing the closely-held mobile services operator at Rs 50,269 crore ($10.38 billion) and each of its 25 million subscribers in 20 circles at Rs 19,334. Of the 26 per cent stake, DoCoMo will buy six per cent from Tata Sons and other group companies and the remaining 20 per cent will be new shares issued by Tata Teleservices. In accordance with the takeover regulations of the Securities and Exchange Board of India (Sebi), DoCoMo, along with Tata Sons, will make an open offer for 20 per cent in Tata Teleservices Maharashtra Ltd, which operates services in Maharasthra and Mumbai and has five million subscribers, in which Tata Teleservices holds 37.7 per cent. Together, the two companies have a 9.3 per cent share of the Indian mobile market. With over 53 million customers, DoCoMo is one of the world’s largest mobile services companies. Out of this, 46 million are FOMA subscribers, the brand name for the world’s first 3G mobile service based on W-CDMA technology. The company hogged the spotlight in 1999 when it launched i-Mode, the first mobile Internet service, challenging the domination of the personal computer. It was also the first to launch a handset with “wallet transactions” (meaning it can be used as a credit card). Tata Teleservices operates CDMA-based services and has a licence to operate GSM services, for which it has already recieved spectrum in many circles. It reported a loss of Rs 1,813 crore in 2007-08, down from Rs 2,062 crore the previous year. A DoCoMo spokesperson in Tokyo said the company will have the right to appoint three directors on the Tata Teleservices board.

The valuation paid by DoCoMo shows the buoyancy in the Indian telecom market, notwithstanding the global economic meltdown. In 2006, Sivasankaran had paid Rs 1,200 crore for 8 per cent in Tata Teleservices, giving it a per subscriber valuation of Rs 15,000. In the same year, Temasek paid about Rs 1,500 crore for 9.9 per cent in the company at a somewhat similar subscriber valuation (see table). The price that Tata Teleservices has received is attractive when compared with the per subscriber market capitalisation of companies like Bharti Airtel and Reliance Communications, which have seen their stocks battered in the market. The per subscriber market capitalisation of the country’s largest private sector telecom player, Bharti Airtel, is Rs 14,977, and that of Reliance Communication is Rs 7,420, based on today’s market capitalisation. It has also paid much lower than Telekom Malaysia which picked up a 15 per cent stake in Idea Cellular, which has a near similar subscriber base, at a per subscriber value of Rs 23,152, in July this year. However, DoCoMo has paid much lower than Vodafone, which picked up 67 per cent in Hutchison-Essar Ltd in 2006 for an enterprise value of $18.8 billion (Rs 80,840 crore). It paid a staggering Rs 32,336 per subscriber to acquire the stake.

The Punjab government is setting up a Knowledge City in Mohali, which will include an estimated Rs 300 crore campus for the Indian School of Business (ISB), two institutes for Science and Education and Nanotechnology, and a Biotechnology Incubator. The total project cost is pegged at Rs 1,200-1,300 crore, and is expected to be operational by 2012. For the second ISB campus in Mohali (the first one in Hyderabad cost around Rs 200 crore), the Punjab government is leasing 70 acres of land for 99 years at Re 1 per acre annually.

Besides, four founder supporters of ISB — Analjit Singh, CMD of Max India, Rakesh Bharti Mittal, VCMD of Bharti Enterprises, Sunil Kant Munjal, MD & CEO of Hero Corporate Service, and Atul Punj, chairman of the Punj Lloyd Group — will invest Rs 50 crore each, totalling Rs 200 crore. The ISB Board, on its part, will invest the remaining Rs 100 crore.  The campus will have 280 seats for its Post Graduate Programme (PGP) and several short-duration executive education programmes, which will accommodate around 750 professionals. The academic sessions at the campus will commence from 2012. The ISB faculty will teach on both campuses and all standards and the admission process will be centralised. It will have a permanent faculty of 15-20 professors, while there will also be visiting faculty from the Hyderabad campus. The faculty may be hired in Mohali and some from Hyderabad.

"There will also be two-way video conferencing lectures between the two campuses,” M Rammohan Rao, dean, ISB, told mediapersons here. The ISB campus will have four �centres of excellence’ offering specialisations in the PGP. These specialist institutes are Max India Institute of Healthcare Management, Bharti Institute of Public Policy, BML Munjal Institute of Manufacturing and Operation Excellence and Punj Lloyd Institute of Physical Infrastructure Management. “These institutes are a part of the ISB campus in Mohali. The founder members will have no influence over the operations of the institute and will only give their inputs for faculty hiring and the curriculum design,” added Rao. ISB’s existing associate schools — the Wharton School and Kellogg School of Management — will support the Mohali campus in the latter’s academic programmes. Commenting on alliances with new international schools, Rao said that they might look for new alliances in future.

B-schools’ summer placement figures indicate that the economic slowdown has not yet cast a shadow on their campuses. It is not only the premier Indian Institutes of Management (IIMs) but also most other B-schools that have maintained last year’s figures. In some cases, they have even registered a rise of over 25 per cent in top and average stipends. For instance, at the Delhi-based Indian Institute of Foreign Trade (IIFT), the highest offer so far has been made for a stipend of Rs 1,00,000 against Rs 80,000 last year. The institute has also seen a 52 per cent increase in its average salary figures — from Rs 25,000 last year to Rs 38,000 this year.

The Ghaziabad-based Institute of Management Technology (IMT), too, recorded a 33 per cent jump in its stipend level this year at Rs 80,000, against Rs 60,000 last year. The institute has 10 international placements so far and has placed around 80 per cent of its students.

"We have had good response for summer placements and our policy of reaching out to companies from various sectors is paying off well,” said Professor Sanjeev Parashar, chairman (placements), at IMT Ghaziabad. At the Faculty of Management Studies (FMS), six students received the highest domestic package of Rs 50,000 a month and three received the highest international package of $1,500 a month (around Rs 1,40,000 for two months).

The institute saw 100 per cent placements for the summer internship this year, with 40 new companies on the campus. Last year, Coca Cola and Microsoft had offered the highest domestic stipend of Rs 50,000. “The summer placements went as anticipated but there was a change in the focus of the companies. We had more marketing and FMCG companies than before. Also, many consultants came this year,” said Professor Madhu Vij, corporate relations and placement advisor, FMS. Mumbai-based Jamnalal Bajaj Institute of Management Studies recorded its highest domestic stipend of Rs 1,00,000, the same as last year. Companies that participated in the summer placements include major FMCG companies like Hindustan Unilever, Procter & Gamble and PepsiCo, which recruited students for marketing, corporate finance and treasury.

SAP India, the business software solutions company with operations in Bangalore, has said it expects to meet its employee headcount target of 7,000 by 2010 despite global economic slowdown. The company will go ahead with its commitment of $1 billion investment in India by 2010. So far, SAP has invested a little over $25 million to build phase I & II of SAP Labs India campus. The company currently has close to 5,200 employees in India including 4,000 in its R&D division, SAP Labs. “We are comfortable with 4,000- 5,000 employees for SAP Labs. We will leverage scalability for new product development,” said Peter Zencke, member of executive board, SAP AG. He said the company would invest the $1 billion for new technology, Service-oriented architecture (SOA), infrastructure and new designs. On concerns about the company’s lackluster performance in the US in this quarter, officials said markets like India had made up for it by notching up high growth rates. “We have recorded a growth of 46 per cent in Software Revenue (in non-GAAP constant currency) in the third quarter of 2008, which is our highest in India so far,” said Ranjan Das, president and CEO, SAP Indian subcontinent, on the occasion of SAP TechEd 2008, its business and technical conference.

Das said the company has entered into an enterprise agreement with the Mahindra Group for consolidation of its systems. The partnership will see SAP and Mahindra Group work together in standardising human resources, employee sevices, administration, finance, procurement and analytics under the SAP technology platform. The company has also announced wider availablility of its remote learning offerings in the Asia Pacific region, claiming savings of upto 70 per cent compared to SAP Instructor-Led Training (ILT). Since its launch in India in 2007, 4,000 certificates have been issued. The courses are currently available in India, Singapore, Malaysia, Thailand, Philippines, Indonesia, Pakistan, China and Australia with expected rollout in Vietnam, Latin America, West Asia, Western Europe and select African countries by March 2009. SAP AG has unveiled the �SAP enhancement package 4’, its latest set of innovations for the flagship enterprise resource planning (ERP) application. It has also announced its plans to resell CA Inc’s Wily Introscope solution as �SAP Extended Diagnostics by CA Wily’, an application performance management solution that helps web applications and web services meet goals.

The crash in commodity prices is hurting companies as many are carrying huge inventories of raw material, and in some cases, finished goods made with raw material bought at higher prices. This is especially true for oil refiners. Typically, oil refiners take 8-10 weeks to purchase, processes and sell the products at retail outlets. But crude prices have come down from $147 a barrel to $62 a barrel. This is hurting pure refiners like Reliance Industries and Essar Oil, who are being forced to sell the petroleum products at cheaper prices, as they export much of their produce. Falling prices of petrochemical products have also caught many downstream units on the wrong foot. A leading paint-maker conceded that the company stuck with raw material of petrochemical and natural products, whose prices have crashed 30-50 per cent from their peaks. Some anticipated the fall, and took corrective steps.  “We took a conscious call and started reducing production in the last quarter as we anticipated demand to slow down by 10-15 per cent,’’ said OP Lohia, CEO, Indo Rama. Prices of petrochemical intermediates have fallen by 50 per cent. The aluminum and steel industry have also been hurt by the commodity crash. Steel companies are carrying three times inventory than they usually do.

But where it is hurting companies the most is the inventory-carrying costs of raw materials bought at higher prices, while finished goods prices have fallen sharply. The inventory-carrying cost (interest) is Rs 500 a tonne, estimates a steel maker. Many steel-makers in India, who don’t have their mines, are caught in this trap. Take chrome ore, from which is derived ferrochrome, a key input for making stainless steel. Orissa Minerals Corporation (OMC), a PSU which mines and sells chrome ore, has reduced prices of the ore by 40 per cent last quarter but finished product (ferrochrome) prices have fallen by 50-60 per cent.  “Ferrochrome prices have fallen further by 10-15 per cent since then. Prices are fixed every quarter and OMC does not have the flexibility to reduce rates. The ferocity with which input prices have fallen is unimaginable. We are stuck with inventory and raw material in the pipeline and that’s what is killing us,’’ said Arvind Parakh, director for strategy and business development, Jindal Stainless.

The country’s largest power generation company, National Thermal Power Corporation’s (NTPC), move to foray into cement making in a joint venture has aroused interest among the domestic cement players. NTPC last week said that it has invited expressions of interest (EoI) from companies to partner the state-owned company in setting up four plants to manufacture cement using fly ash generated from its power stations.  North-based Shree Cements, which has plans to set up a grinding unit in a joint venture with NTPC, has already submitted an EoI. H M Bangur, chairman and managing director, Shree Cements, told Business Standard, “We are definitely interested in such a venture and we are far ahead in discussion with NTPC.” Though the model of the JV is not known, it is learnt that along with supplying fly ash at a pre-determined price, NTPC will pump in investments too in the cement company’s units. “The location of our grinding unit, which will have a capacity of around 1 million tonnes per annum, could be in Haryana, Uttar Pradesh or Rajasthan, close to Delhi’s Badarpur unit of NTPC,” said Bangur, who is also the president of Cement Manufacturers’ Association. “We will supply clinker and NTPC will provide fly ash,” he added.

Bharti Wal-Mart, a wholesale operator for serving grocery and retail chains, today said it has no plans to hold back its 'B2B' (business-to-business) operations in India despite the current market slowdown. "We are not putting our plans (for launching our cash and carry stores) on hold despite market instability. We are fully committed to our long term investments for India," Bharti Wal-Mart Managing Director and CEO Raj Jain told reporters here today. Bharti Wal-Mart is a joint venture between Bharti Enterprises and US retail giant Wal-Mart. The joint venture, which is for wholesale cash-and-carry and back-end supply chain management operations in India, is scheduled to open its first store in Punjab in the first quarter of the next fiscal. "We will be opening our first store in Punjab between April and June," Jain said. At present, the company is in the process of building stores in Amritsar, Jalandhar and Ludhiana. A typical cash-and-carry store will occupy 50,000-100,000 sq feet and sell a wide range of fruits and vegetables, groceries, footwear, clothing and other general merchandise. As per the plans, the joint venture would open 15 stores in next seven years and employ 5,000 people over next seven years.

A study by Credit Suisse estimated a month back that capital expenditure for a clutch of 34 projects with an investment of about $190 billion (around Rs 9.16 lakh crore) faced a 19-month delay on an average. The consequent cost overrun, it reckoned, would be about 30 per cent. The environment has only worsened since then — slowing growth and a serious liquidity crisis has hurt confidence. As a result, if Indian companies have one more reason to defer expansion plans — in addition to problems in acquiring land, permissions, money or inputs — it is lack of demand.

True, Indian companies’ capacity expansion plans do not match those of ArcelorMittal’s — the world’s largest steel maker is believed to be pulling back from its eight-year $35-billion expansion plan. But projects planned and under execution over the past couple of years are estimated at $1.5 trillion (around Rs 72 lakh crore). Some of that now looks to be in jeopardy. Few companies are admitting this publicly, but JSW Steel, for instance, has pared investment in West Bengal to Rs 4,000 crore from Rs 10,000 crore. Also, as Seshagiri Rao, finance director, said: “We are six months ahead of schedule for the expansion from 7 million tonne to 10 million tonne at Vijayanagar, but we intend to stay with the original deadline of September 2010. That is hardly surprising when JSW is not confident of running even a 7 million tonne plant at full capacity and has yet to start production at the new lines. In fact, it has cut production by 20 per cent. Down south, Venu Srinivasan, chairman & managing director, TVS Motors, was forthright when he said last week that TVS would be scaling back capital expenditure this year from the planned Rs 100 crore to Rs 40 crore. The Tata Motors management was more guarded when it said  recently that it would review capital expenditure plans and may scale back capacity expansion. Last week,  the company lowered commercial vehicle production targets at three of its plants.

Tata Steel, however, is expected to go ahead with the plant at Kalinganagar, where it is setting up a 6 million tonne facility. And Vinod Dasari, COO at Ashok Leyland, confirmed that the 50,000 unit commercial vehicle plant in Uttarakhand will be up and running by  March 2010. According to Mahesh Vyas, MD and CEO at CMIE: “Projects that have taken off and nearing completion are unlikely to be stalled. However, those that are still on the drawing board could be put on the backburner given the uncertainty about the state of the financial crisis.” Vyas added that so far only a couple of smaller projects that had been announced have been shelved.

But with debt turning expensive, even some on-going projects could be delayed. Reliance Industries is believed to be taking it easy with the Special Economic Zone(SEZ)  in Haryana because it anticipates less demand for such space. Cautious about order inflows into engineering firms from the industrial sector and private sector projects that have yet to achieve financial closure, an HSBC report noted that  “projects where solid progress has not been made run the risk of getting delayed”.  Already, the sequential rise in the order books for a set of engineering companies was just  7 per cent in the September 2008 quarter over the June quarter  though on a y-o-y basis, order inflows were up a strong 40 per cent.  However, Subir Gokarn, chief economist at S&P, Asia Pacific, pointed out that the machinery and equipment segment of the IIP has been slowing for about a year now. “Some amount of the slowdown in capital expenditure, we believe, would have happened even without  the tight liquidity current situation," he said, adding, "However, now that the recovery could take longer  than anticipated, more projects can be expected to be pulled back.”  Already, as DD Rathi, President, Grasim, observes, demand for cement looks like it could come off. “While it’s early days, the slowdown in housing and more capacity coming on stream could mean more supply than demand,” he said, adding that “ those cement projects that haven’t made too much progress, could be put on hold.”

Private carrier Jet Airways is believed to have struck a deal last week with west Asian investment agency Mubadala Development Company for a funding of Rs 1,000 crore. The instrument of funding, however, has yet to be formalised. Mubadala is wholly owned by the government of Emirates of Abu Dhabi. The tenure of the loan, the interest rate and other details were not immediately available.

Mubadala owns Abu Dhabi Aircaft Technologies, which provides aviation technical services to carriers (Kingfisher Airlines is a client). The agency has also bought 35 per cent in aircraft manufacturer Piaggio Aero Industries. Mubadala also came into the limelight for buying 5 per cent in Ferrari. The deal comes at a time when the aviation industry is facing its worst crises and accessing funds is becoming a major challenge. Aviation experts said the money Jet has raised is sufficient for the airline to continue to fly for at least another year. Jet Airways had announced a loss of Rs 384 crore for the second quarter of this fiscal. The airline is also struggling with overdues to the state-owned oil marketers, airport authorities and operators. Jet’s outstanding to the oil firms is Rs 1,057 crore. It has also ordered 10 Boeing 777-300ERs, for which it needs Rs 4,000 crore, say experts.Jet CEO Wolfgang Prock Schaeur was travelling and did not reply to a text message.

With a market share of around 30 per cent, Jet recently tied up with its main rival Kingfisher Airlines, under which it will cut costs by sharing ground-handling facilities, and pilots, and rationalise routes. The airline has been looking at ways to raise funds, including an aborted rights issue, private placement and by approaching banks in India. Negotiations with a south Indian bank came close to a culmination. “For the two largest private carriers in India — Jet Airways and Kingfisher Airlines — another six months will be the most crucial and the major concern for both will be raising working capital,” said Kapil Kaul, CEO, Centre for Asia Pacific Aviation, India and West Asia. “Both airlines need at least Rs 2,000 crore to survive a softer third quarter and a harsh fourth quarter,” Kaul added. “Getting private funding is good news because what is important for airlines is to get dedicated investors who can be committed for a longer period rather than speculative investors,” said Mark Martin, senior advisor, aviation, KPMG.

The Foreign Investment Promotion Board (FIPB) has clarified that foreign joint ventures in the construction and development business will not be allowed to sell undeveloped land they acquire for projects. The ambit of this clarification includes foreign joint ventures in housing, commercial premises, townships, resorts, educational institutions, and city and regional townships. The decision was taken by the FIPB last month when it rejected a proposal by Keppel-Puravankara Development Pvt Ltd (KPDL) — in which Singapore-based Keppel Land Ltd holds 51 per cent — wanted to sell 1.5 acres out of a 62-acre plot it had acquired to develop an integrated township in Bangalore. Keppel Land is the property arm of the Keppel Group, which has its core business in offshore and marine infrastructure and property development. KPDL had proposed that since the entire project did not materialise, the company would sell “undeveloped land” of 1.5 acres at the market price at which it had acquired it from Purvankara Projects Ltd. KPDL had contended that there were no restrictions on such sales under Karnataka’s land laws. The company also argued that since it had offered Purvankara Projects the option of buying the land at the same price, it was not driven by profit motive. Bangalore-based Purvankara group is one of south India’s leading real estate developers and is developing over 18.78 million square feet of space and has operations in Kochi, Chennai, Coimbatore and Colombo. The move is significant because several large Indian retail developers have tied up with international housing development companies to execute projects in the country. Apart from Dubai-based Emaar Properties, which has a venture with Delhi-based MGF, DLF has set up a joint venture with the UAE-based Nakheel group to build two townships for $10 billion. Pegasus Realty, based in West Asia, has tied up with Indian partners at various locations and Citigroup Property Investors had tied up with Pune-based Gera Developers for city-based projects. In its deliberations at the FIPB meeting, the Department of Industrial Policy and Promotion (DIPP) said the proposal could not be supported because guidelines under Press Note 2 of 2005 say joint ventures in housing and development do not entail sale of undeveloped land.

Ending widespread speculation, the Securities and Exchange Board of India (Sebi) today confirmed that it will make early withdrawals from Fixed Maturity Plans (FMPs) tougher, a move that is expected to solve mutual funds’ liquidity problems. At present, investors can exit FMPs by paying 2 per cent of the net asset value (NAV) at any point of time. Sebi sources confirmed that new FMP schemes will have clauses that make withdrawals before maturity difficult. Market experts said this would imply that the new FMPs will have to be listed on the stock exchanges. This is because it is mandatory that schemes without exit options have to be listed. And investors who wish to exit will do so by selling their units at a discount.  FMPs faced severe redemption pressures in October, a month which saw the Bombay Stock Exchange’s benchmark Sensex fall a record 23 per cent. According to October-end data, the average assets under management (AAUM) of FMPs stood at Rs 127,080 crore, down Rs 10,718 crore in a single month. Over 25 per cent of the entire AAUM of the mutual fund industry is in this one product. “Fund houses will benefit from this move because they will not have to bear the brunt of redemption pressures,” said a fund manager. Sebi had sought FMP data from fund houses last month on their investment and redemption patterns. There are also expectations that the market regulator would limit exposure to a single sector. Earlier, there was news that some funds were forced to roll over their schemes because some companies, especially in the realty and non-banking financial companies (NBFCs), had defaulted on their commitments.  According to fund managers, Sebi is seeking to put a regulatory framework in place for these products. Investors said such a move could make FMPs unattractive because it will make them less liquid. In the past three years, FMPs were doing fairly well because the interest rate was on the rise. Some schemes were even offering up to 12 per cent last month.

Foreign institutional investors (FIIs) such as Morgan Stanley, Merrill Lynch and Citigroup have sold off their holdings in Anil Ambani-promoted Reliance Infrastructure (R-Infra) after the company opened a buyback offer in March this year. Morgan Stanley is the latest FII to sell its stake (4.18 per cent) to the company in the September quarter, said sources in the know. After the company began the Rs 800-crore buyback in early March, the FIIs' total holdings in it have fallen to 16.89 per cent until September 2008 from 20.87 per cent in December 2007. The company is cautious about the pullback of FIIs, even though it happens to most firms, especially after the economic downturn. These FIIs sold off their stakes partly to the company and the remaining in the open market. Whenever FIIs sold shares heavily, the company held back the buyback for restricting the stock fall. As the situation is slightly improving, R-Infra is looking to increase the buyback since the share price is around Rs 600, which is considerably lower than the expectation of the company," the spokesperson added. Since the shares shot up by 16.28 per cent last week, the existing FIIs in the company, including Bank of New York and Natixis, are regaining confidence and continue holding their stakes, sources added. Bank of New York has a 2.58 per cent stake, though it sold off about 5 lakh shares in the second quarter, when FIIs were exiting the domestic market in panic. Natixis holds 1.49 per cent stake in R-Infra, according to the information available on the Bombay Stock Exchange. Merrill Lynch and Citigroup had exited by selling off their 1.37 per cent and 1.51 per cent stakes, respectively, in the June quarter. With the buyback, the promoters' stake in the company, formerly known as Reliance Energy, has increased to 36.83 per cent from 34.68 per cent. According to the earlier plan, the company wanted to buy back 50 lakh-plus shares at a price not exceeding Rs 1,600 a share, aggregating to Rs 800.06 crore, to raise the promoters’ stake in the company.

Equity and commodity prices surged across the world after China announced a $586-billion stimulus package that may spur economic growth in that country, the world’s third largest economy, and help avert a global recession.  Indian stocks rose the most in more than a week, led by metals and mining stocks, and the Bombay Stock Exchange (BSE) benchmark Sensitive Index (Sensex) advanced 571.87, or 5.7 per cent, to close at 10,536.16. This was in tune with the rest of the world markets.

Stocks also rose all over Europe and the US index futures went up sharply. Emerging-market stocks jumped the most this month with the MSCI Emerging Markets Index rising 3.5 per cent. China’s CSI 300 stock index surged the most in seven weeks, gaining 7.4 per cent. China plans “fast and heavy-handed investment” in housing aand infrastructure to lift growth from a five-year low, the State Council said yesterday. China is India’s third-largest trading partner after the European Union and the US, with bilateral trade of about $37 billion.

The speculation that the package will boost demand from the second-largest oil consumer also pushed crude oil and copper prices as much as 5 per cent higher. Rubber, edible oil, precious metals and other base metals all rebounded from the downtrend in the past few months. Analysts said commodity prices have risen after a fortnight. Earlier, increases were due to profit-taking by bear operators, but this time real buying is taking place. Apart from the Chinese package, the other favourable factor is the easier liquidity situation. There is also wide expectation that more such measures may be announced before the G-20 meeting this weekend. The rupee also rose to the highest level in more than a month on speculation that China’s spending plan would boost investor confidence in Asian economies. The rupee advanced 0.6 per cent to 47.38 a dollar at close on Monday.

Larsen & Toubro, the engineering and construction giant, on Monday said it has bagged Rs 2,460-crore order from Mumbai Metropolitan Region Development Authority (MMRDA) for constructing the monorail project in the city. The company in association with Malaysia-based Scomi Engineering would build the 20-km monorail in 30 months. The consortium would design, construct, install, test and commission the first monorail project in the country.  Another consortium of Reliance Infrastructure and Hitachi were also in the race, but in final run their bid has been rejected due to the longer timeframe. Monorail is an urban transport system where the cars or rolling stocks move on a single beam in an elevated corridor. The Monorail is a quiet system with sleek exteriors, and air-conditioned cars, adding to commuter comfort.  The project would be executed on a fast-track basis as it requires a small foot print and minimal demolition of buildings, L&T said in press release. The monorail would connect Gadge Maharaj Chowk to Wadala, a distance of 11 km, and Wadala to Chembur via Mahul, a distance of nine km. There would be 18 stations. The monorail would ease congestion and would provide interconnectivity between Western suburban railway stations — Mahalaxmi and Lower Parel — to Central railway stations like Currey Road, Dadar and Wadala. L&T’s partner in the project, Scomi Engineering, is one of the world’s top three monorail manufacturers with the latest monorail electro-mechanical systems and rolling stock. In the September ended quarter, L&T had a Rs 63,000 crore order backlog.

Goldman Sachs on Monday cut its India growth estimate to 6.7 per cent from 9 per cent in the year ending March 2009 due to the knock-on effects of the global financial crisis. “The larger-than-expected shock to the financial sector over the past couple of months and its knock-on effects on both domestic and external demand are responsible for our lower growth projections,” the investment bank said in a note.  It also cut its growth projection for the 2009-10 to 5.8 per cent from 7.0 per cent on concerns that the negative global financial stocks would continue to slow activities across the board.  “We now see further risks to the downside as problems in the financial sector feed through to the real sector,” Goldman said.

Analysts at the bank also pointed out that the government will not be able to counter a worsening financial scenario with more measures, as its balances are already stretched. But growth rates are expected to bottom out at a quarterly pace of 5.0 per cent in the April-June quarter of the next fiscal year starting April, supported by the monetary policy stimuli, prospects of a good agricultural crop, lower commodity prices, and infrastructure spending.

The Andhra Pradesh government has decided to restructure the equity pattern of the Krishna-Godavari Gas Network (KGGNL) to include Reliance Gas Corporation (RGC), a subsidiary of Reliance Industries, as a majority partner of the consortium. KGGNL, a special purpose vehicle set up for the development of the natural gas network in the state, is a joint venture of Infrastructure Corporation of AP (Incap), Gujarat State Petroleum Corporation (GSPC) and Infrastructure Development Finance Corporation (IDFC). It was constituted in September 2006 to develop a network of pipelines to distribute natural gas from the Krishna-Godavari basin to all the districts in the state. According to the restructured equity pattern, RGC will hold 67 per cent, while the state government, GSPC and IDFC will have 11 per cent stake each. At present, IDFC has 48 per cent stake, AP and GSPC have 26 per cent holding each. The state Cabinet, which met here on Monday, approved the proposal to restructure the equity pattern. The original equity base of KGGNL stood at Rs 100 crore. However, an Incap top executive told Business Standard that there would be a substantial increase in equity following the induction of RGC, the details of which were now being worked out. According to Union Information Minister A Ramnarayana Reddy, the state government has decided to make RGC a consortium partner as it is the only company, which can start supplying gas immediately. RGC has struck huge gas reserves in the K-G basin.

Pipe producer, Maharashtra Seamless has bagged an order from ONGC worth Rs 757 crore for supply of seamless casing pipes. With this, the total order book position would stand increased to Rs 1,370 crore. The delivery under this contract would commence immediately and would be spread over the next 15 months. The revenues would be accrued accordingly.

Putting pressure on the Orissa government for mines, ArcelorMittal, the largest steel maker of the world, today stated that it will submit the detailed project report (DPR) for its 12 million tonne, Rs 40,000 crore greenfield steel project in Keonjhar of Orissa after its name is recommended for prospecting license (PL) for mines. “We will submit the DPR for Keonjhar project after our name is recommended for mines,” Sanak Mishra, chief executive officer (CEO), India greenfield projects, Arcelor-Mittal said. Mishra said, we have already commissioned the DPR. The statement assumes importance as the company is yet to submit the DPR to the Orissa government even though it stated in July this year that the DPR has been finalised and will be submitted to the state government. Talking to the media after meeting the chief minister Naveen Patnaik in the state secretariat, Vijay Bhatnagar, CEO, India, Arcelor-Mittal said, despite the global financial meltdown, its long term India strategy remains intact. However, there will be adjustment in the short term strategy without scaling down the investment in the greenfield projects in the country. “As far as the long term strategy in India is concerned, it is intact but in the short run we have to adjust. The investment will be phased instead of being scaled down,” said Bhatnagar. Regarding the progress of the Orissa project, he said, there are about 1,400 acres of forest land within the site for which permission for diversion is required.

Tata Motors, the country's largest automobile maker, will shut the commercial vehicles plants in Pune and Lucknow for six days this month due to diminishing demand. In a statement issued today, the company said the Lucknow plant will see a block closure from November 10-15 to adjust production to demand. The Pune plant will also be closed for six days starting November 21. The passenger car plant will, however, operate as usual. There will be no wage cut for employees during this period and the off days will be counted as paid leave, a company spokesperson said. The decision comes just two days after Tata Motors announced a 'block closure' at its Jamshedpur plant where it makes tippers, multi-axle heavy trucks and tractor-trailers. "As has been seen in the month of October 2008 across the industry, unavailability of finance, coupled with high interest rates, is forcing customers to postpone purchases. Different segments of the automobile industry have been impacted at different levels. This will call for appropriate action from Tata Motors, from time to time, to match production with demand and avoid unnecessary build-up of inventory in the company or with the company's dealers," said a company release. The company's Lucknow plant is one of its youngest production facilities among all the Tata Motors locations. The plant rolls out commercial vehicles and is specialised in the designing and manufacturing of a range of buses which includes low-floor, CNG, RE buses and also specialises in manufacturing high capacity bus system (HCBS) buses. Apart from the Indica, Indigo, Safari and Sumo passenger vehicles, the Pune plant makes light, medium and heavy commercial vehicles also. The facility employs more than 10,000-12,000 workers. Chennai-based Ashok Leyland had yesterday said that it will keep its manufacturing facilities open for production for only three days in a week. The move is expected to help the Hinduja group flagship company to cut down its high inventory considerably, which had piled up due to falling demand.

Bharat Sanchar Nigam Ltd today said the proposal relating to its public offer through divesting 10% of its stake is with the Centre and is likely to get delayed due to the subdued capital market. "The BSNL board had cleared the IPO plan of about 10% and we have forwarded it to the government. It is now with them to decide on the matter," BSNL Chairman and Managing Director Kuldeep Goyal told reporters here today at a launch function of BSNL datacard for voice and data service. He, however, said under the present market conditions it was unlikely that government would take forward the issue now.  The BSNL unions were also opposing the proposed IPO. The Centre has also deferred IPO launches of other PSUs like NHPC Ltd due to bearish trend in the primary and secondary capital markets.  Goyal said due to financial crisis, BSNL was also reducing the investment plans for the current fiscal. "Due to financial crisis, we plan to invest around Rs 14,000-Rs 15,000 cr during the current fiscal as against Rs 18,000 cr envisaged earlier," he said. Goyal also said the company was also not hopeful of any rise from the previous year's revenue of Rs 38,000 cr during the current fiscal. Asked about 3G rollout plans, Goyal said the services would be launched in north and eastern states by early 2009.

The Northcot Farm here is abuzz with activities as Tata Motors has begun the construction work for relocation of its mother plant of Nano car from Singur in West Bengal. A visit to the plant site reveals that pillars for the construction of plant's boundary wall have been fixed and hectic preparations are underway to build the main plant building. Gujarat Chief Minister Narendra Modi and Tata Group Chairman Ratan Tata had signed a Memorandum of Understanding (MoU) on October 7 for relocation of the Rs 2,000 crore mother plant. Hectic activity was witnessed at the Nano plant site today as several teams of architects, engineers and contractors continued with their site inspection and masonry related jobs, respectively. The work of laying underground cables for broadband connectivity was also in progress near the site. The roads leading to Northcot Farm had many roadside boards welcoming Nano to its new home. The state government has also initiated survey of widening of roads leading to the site from Sanand-Viramgam Highway. Tata Motors has roped in its leading private shareholder, Shapoorji Pallonji & Com (SPCL) for construction of the Nano plant on 1,100 acres of land, which once belonged to Anand Agiculture University.    

Sajjan Jindal-controlled JSW Steel will cut production by 20 per cent starting this month in the wake of the current market turmoil.  According to a company release, JSW will utilise the time for general maintenance of its facilities. The company plans to rationalise its product-mix as well.  At the end of September, JSW was carrying an inventory of 2 lakh tonnes compared to a production of 3.5 lakh tonnes a month. Moreover, there was some inventory build-up in October as well. Industry sources said that the normal inventory level for the steel industry is of seven days, which has now increased to three weeks. In tandem, prices have crashed over the last 2-3 months. Hot rolled coil, which was selling at $1,200-1,250 a tonne is now at $600-700 a tonne. At present, JSW has a production capacity of four million tonnes at Vijaynagar and another one million tonne capacity at Salem. By December, capacity at its Vijaynagar facility will go up to seven million tonnes. In October, the company posted a five per cent growth in crude steel production over the same period last year, the company said in a filing to the BSE. The total steel production stood at 3.38 lakh tonnes for the company. Shares in JSW Steel closed at Rs 302, down 10.49 per cent. JSW Steel belongs to JSW Group, part of the $8 billion OP Jindal Group.

The government and Reserve Bank of India are working on measures that include relaxing norms for non-performing assets (NPAs or sticky loans) and prudential lending to kick-start key infrastructure projects. The broad idea is to stimulate the economy that is likely to grow slower this year after two years of 9 per cent growth. Forecasts for this year put growth at 8 per cent, owing to the global liquidity crunch and demand slowdown. The six core sector industries, however, grew 5.8 per cent in September, after a sluggish 2.7 per cent in August. To this end, RBI is considering a special exemption from NPA norms to infrastructure projects that have been delayed by more than two years. Earlier, projects for which completion was delayed up to one year were exempt from NPA provisioning by banks. This was extended up to two years in May this year, but only for projects delayed due to court cases. Infrastructure companies have been demanding that delays on the ground should not be counted as NPAs because interest was being regularly paid on these loans. Also, once these loans are designated NPAs, banks cannot provide these companies with fresh loans for other infrastructure projects. Banks currently have to provide for losses due to NPAs from 10 per cent of the loan amount in the first year, going up to 100 per cent by the fifth year. “The relaxation from NPA provisioning is likely to be on a case-to-case basis for projects delayed by more than two years,” said a finance ministry official. Several large infrastructure projects have been impacted either because of litigation or lack of assured gas supply. For instance, the 1,015 Mw Nagarjuna Power project in Karnataka with an investment of Rs 5,440 crore is caught in a legal dispute over land acquisition. The government may also relax prudential lending norms for the infrastructure sector by increasing bank exposure limits for such projects.  Currently, credit exposure to a single borrower is capped at 15 per cent of a bank’s capital. This exposure can be extended up to 20 per cent provided the additional credit is for infrastructure projects. Credit exposure to borrowers belonging to a group may exceed the exposure norm of 40 per cent of a bank’s capital by an additional 10 per cent (i.e. up to 50 per cent), again provided the additional credit is for infrastructure projects.

With most companies either retrenching or freezing recruitment plans, human resources (HR) personnel across sectors are a worried lot. Recruitment-related HR executives are being moved to other HR functions like training and development and other day-to-day HR functions, or being taken on contract. If things worsen, there could also be layoffs.  A Sudarsan, vice-president, sales and marketing, Expertus HR (a wholly-owned subsidiary of US based Expertus Inc), admits: “There will be layoffs in the near future, and companies will increase temporary staff. Meanwhile, I don’t forsee any hikes for HR executives.”  Moreover, the mix of contractual employees in the HR team across various sectors is expected to increase. Vodafone, for instance, has 25 per cent of its HR staff on a contract basis. Companies like Wipro, Infosys, TCS and iGate, too, have a mix of contractual employees in their HR team. Nandita Gurjar, Senior vice-president and group head, HR, at Infosys Technologies, confirmed that the company has some employees in the HR teams who work on contract basis. She, however, declined to divulge the numbers. “Yes, we have some employees who are on contract, but about the numbers, I have no idea,” she said. Infosys has about 300 people in their HR department. Srinivas Kandula, global head, HR, iGate Corporation, said: “We have about 30 people in our HR team who are on contract basis, but they mostly search job portals and source resumes etc. Because there is not much of career growth for such activities, we prefer contractual employees.”

EDS (bought over by HP) and MphasiS (now a subsidiary of EDS), too, have rationalised their HR department functions. Several real estate players like DLF and Unitech, too, have reduced their HR staff and stalled recruitment for the present. Some subsidiaries of ICICI Bank are also said to have cut their HR staff. Rakesh Malik, practice leader for globalisation and business transformation practice at Hewitt Associates (HR consultancy), concurs: “Companies might shrink the number of recruitment-related executives in future. But, so far, I haven’t seen any layoffs with our clients.  In fact, in slowdown times when companies feel the compelling need to become more aggressive about quality, other functions of HR like performance management, planning and evaluation become more important. Learning and development programmes become significant. Compensation and retention activities become priority that requires more strategic services of HR.”  Sampath Shetty, vice-president, TeamLease Services, explains: “When recruitment slows down, operations HR is the first area to bear the brunt. But strategic HR becomes more important. Operations people are getting into training for other strategic HR functions.” Of them, temporary executives are the first to be hurt. “Contract renewal period has shrunk from 1 year to 3 months,” adds Shetty. In effect, the role of managed staff services (wherein the HR staff working for companies are on the payrolls of the placement agencies and not employees of the companies) and recruitment process outsourcing (RPO) is expected to gain traction. Managed staff services will benefit the most as more companies will go for managed staffing, which gives companies staff at variable cost as and when required. “We have seen a 10 per cent increase in demand for temporary staff in the last one-and-a-half month. The demand is expected to double in the next one year,” adds Sudarsan. But managed staff companies are also experiencing the ripples of the slow down. “Companies are asking to reduce management fees (fees paid to managed staff companies on managed staff) by 50 per cent,” Sudarsan informs. Most companies have started reducing management fees, others are forced as a result.

Stung by growing accusations, especially from the Left, that the government sold spectrum for second-generation (2G) licences cheaply, Union Minister for Communications and IT A Raja has directed the Telecom Commission to revise licence terms for new telecom operators. The Commission, which will hold a meeting on Tuesday, is looking at imposing a promoter lock-in of three to five years for the eight new licence-holders. The moratorium will be imposed on promoters who have more than 10 per cent equity in the telecom company and whose net worth has been considered by the government when it issued the licences. Promoters, however, will be allowed to bring in a new partner by expanding the company’s equity. New operators said they would be forced to seek court intervention since a lock-in would violate the licence agreement signed with the government. The agreement does not have a clause prohibiting a promoter from selling equity.  “You can’t just change the licence conditions whenever you feel like. We will surely challenge any decision by the government to prohibit the sale of promoter equity,” said the director of a leading new all-India licence holder. Raja has come under fierce attack for selling scarce 2G spectrum for a song and allowing companies like Unitech Wireless and Swan Telecom to make a windfall by selling equity in their companies at huge valuations. A statement from the Left yesterday said the manner in which 2G spectrum was allocated is a big financial scam because the government has lost over Rs 60,000 crore in revenues. Realtor Unitech paid around Rs 1,650 crore for an all-India licence in 22 circles and sold 60 per cent in the telecom venture to Norway-based Telenor for an enterprise value of Rs 11,620 crore, nearly six times the value paid for the spectrum.

General entertainment channels like Star, Sony, Zee, NDTV Imagine, 9X and Colors have directed their programming teams to begin repeat telecasts even on prime-time beginning November 10, causing panic among advertisers and media-buying companies.  Repeat shows on prime-time television will mean a 25 to 30 per cent decline in viewership, and media planners will have to re-plan advertising slots and rates.

Today's decision by broadcasters to allow repeat telecasts is the result of a shortage of fresh content for serials following an inconclusive meeting today called to resolve a two-month-old dispute between production houses and Federation of Western India Cine Employees (FWICE). The federation has been demanding wage increases and better working conditions for its employees, which include cinematographers stage-setters and cameramen. The FWICE has held a couple of meetings with production houses like the Film and Television Producers Guild to resolve the differences before as well.  "We had a conference call with the producers. They have not reached any consensus with the federation. So, in interest of all the channels, we have decided to repeat the programmes Monday, November 10 onwards," said Keertan Adyanthaya, EVP and M, Star Plus. Broadcasters, on their part, have decided to stop paying commission for fresh episodes to put pressure on both parties to resolve the issue soon. "A drop in viewership will create a strong position for advertisers to ask for rate cuts, which becomes more compelling in economic slowdown," added Mona Jain, India head, Strategic Investments, India Media Exchange. "If the dispute is prolonged for more than a week, it will be a lose-lose situation for all. Broadcasters might lose advertisers, or advertisers won't pay the same rates for the repeats or advertisers will postpone their advertising on the channels," said Chandradeep Mitra, president and head, Mudra MAX.

Barack Obama's electrifying presidential acceptance speech in Chicago in the US, widely lauded all over the globe, was partly written by a Liberal Democrat tax lobbyist in a London flat in Notting Hill. Obama's speech to hundreds of thousands of supporters in Chicago on Tuesday night was one of the most widely-watched and repeated political addresses in recent history. According to 'The Daily Telegraph', parts of the speech were crafted by Jacob Rigg, 27, a volunteer adviser to the Obama campaign, in his flat in Notting Hill, west London. Rigg works for 'The Society of Trust and Estate Practitioners', which lobbies and advises on tax issues.  Rigg said the inspiration for the Chicago speech was the most celebrated piece of oratory in American history, Abraham Lincoln's 1863 address at Gettysburg. Lincoln's speech, made two years before the end of the American Civil War, spoke of the "unfinished work" and the "great task remaining" of building a democratic republic. In his speech, Obama had said: "The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America — I have never been more hopeful than I am tonight that we will get there. I promise you — we as a people will get there.” Having worked in Washington as a lobbyist, Rigg has links with some of Obama's Senate staff, the report said. Working from home in his own time, Rigg was involved in writing the President-elect's speech, contributing via phone, e-mail and video conferences. Rigg said he had also drafted a significant speech the world will never hear, the one that Obama would have given if he had lost the election, according to the daily. Meanwhile, copies of major American newspapers announcing the historic victory of Barack Obama are now being auctioned on e-Bay for a price ranging between a few dollars to more than a hundred, as they could become a collectors’ item. The papers containing the results were snapped up fast on November 5 and it was perhaps a rare occasion that by mid-morning, most of the papers had been sold out. Among the papers, 20 copies of the New York Times are being offered for more than $255 and a single copy up to $75. Those seeking to bid are being assured that they are first hand copies with some warning them to beware of fakes. The Washington Post has got bids up to $50 for one copy. A bundle of 50 Los Angeles Times victory edition are being offered for $1,800 one copy for up to $25. Other papers too were being auctioned and bringing bids several times the cover price.

The Reserve Bank of India (RBI) will provide foreign exchange liquidity to foreign branches and subsidiaries of Indian banks through currency swaps. The central bank will also consider easing banks' requirement to buy government debt in specific cases to free up cash to fund the currency swaps and will consider any specific relaxation of Statutory Liquidity Ratio (SLR) requirements for this purpose. RBI will offer currency swaps maturing in up to three months. The swaps will be priced using domestic and overseas money-market rates and the dollar-rupee reference rate published daily by the central bank. RBI said central banks across the world have taken action to ease the liquidity situation through measures such as inter-central bank swap lines, collateralised lending and forex swaps, in response to the unfolding events relating to the global turmoil and its impact on international money markets. Explaining the implications of the decision, a State Bank of India (SBI) official said banks that are unable to get credit from foreign banks can now tap the RBI window. This will help Indian banks with an overseas presence to tide over the liquidity crisis. The official, however, said SBI is not facing such problems because it has surplus dollars. However, other bankers said the move is, at best, a temporary relief. Banks have to return the dollars to RBI in three months. This means they will have to either arrange another line of dollar credit or reduce the size of the overseas book, generating surplus dollars. “We will be back to square one in three months unless of course the liquidity situation overseas improves,” a banker said. There is no mention of how much banks can draw under the swap facility, but RBI is likely to set bank-wise limits on drawals. The limit may be linked to the size of banks’ overseas books. Apart from SBI, the other banks that have a sizeable overseas presence are Bank of Baroda, Bank of India, ICICI Bank and Axis Bank. Owing to the financial crisis, Indian banks have changed their business strategies for overseas branches to protect them from any downside risks. In some cases, they have bought dollars in the domestic market and sent them to their overseas branches to meet business requirements.

The country's largest lender, State Bank of India (SBI), has decided to reduce its prime lending rate (PLR) 75 basis points, effective November 10, SBI Chairman OP Bhatt said here today. The bank is also examining the possibility of reducing its deposit rates 50 basis points. "We are also examining a cut in home loan rates by half a per cent. This is bound to happen because 80 to 90 per cent of the housing loans in India are taken by the low- and mid-income sectors. Even a 25 per cent fluctuation in home loan EMIs makes a huge difference for them. There could be corrections in the real estate prices as well, which could spur demand for home loans in the coming months," Bhatt added. The bank has increased its market share in the home loans market from 17.25 per cent in March to 18 per cent in September. "Over the last two months our deposits have been growing at Rs 1,000 crore a day and we have not stopped lending to any sector. We are yet to decide the time for reducing deposit rates, but we are examining it," said Bhatt, adding that the bank's credit-deposit ratio is 74 per cent at present. Commenting on liquidity, he said there is going to be some pressure next month when the busy season starts and government borrowings increase.

A day after auto major Tata Motors announced a three-day shutdown of the Jamshedpur plant, Hinduja flagship company Ashok Leyland today said it will restrict production activity to only three days a week at its plants until December to downsize the high inventory. The company has been facing problems of inadequate funding and high interest costs, due to which the demand for medium- and heavy-duty commercial vehicles has been hit. "Taking into account the inventory in pipeline and the suppressed market demand, Ashok Leyland has decided to moderate the production plan for the next two months. This decision has also been partially influenced by problems encountered by suppliers as a result of power shortage in some parts of the country," the company said in a release issued here. Meanwhile, its sales have halved to 3,397 units in October as against 6,825 units sold in the corresponding month of the previous year. A major part of the sales loss is from the medium and heavy goods carrying segment (heavy trucks), which showed a decline of 60 per cent during the month, with sales of 1,950 units compared with 4,861 units in the year-ago period. Analysts suggest that the outlook for the commercial vehicle segment for the rest of the year looks bleak as major banks and financial institutions are yet to pass on the benefit of the interest rate cut to the customer, which was announced by the Reserve Bank of India recently. Meanwhile, the Chennai-based commercial vehicle manufacturer reported a 50 per cent drop in sales during October sales at 3,397 units as compared to 6,825 units a year ago.

The government has proposed extensive changes in the guidelines for foreign direct investment (FDI) that could impact a range of industries such as telecom, infrastructure, real estate and broadcasting. The changes include such measures as including investments by non-resident entities in sectoral limits, removing foreign institutional investment (FII) towards calculating sectoral equity limits with caveats and withdrawing key norms in Press Notes 3(1997) and 9 (1999) on 100 per cent foreign holding companies and their downstream investments. These proposals were part of a note prepared by the commerce ministry and discussed by the Cabinet committee today. They are aimed at liberalising the FDI regime not only to attract more foreign investment against the background of a global liquidity crisis but to standardise procedures across various sectors. FDI inflow touched $17.1 billion between April and September this year, a 137 per cent growth over $7.2 billion in the same period last year. The relaxations will apply to those sectors that have composite limits (FDI plus FII) and for which there are no separate statutes or rules that specifically govern FDI. If the new norms are cleared, companies will get six months to comply.