Thursday, December 14, 2006

Infosys and the Nasdaq-100: More than 15 minutes?

When the Nasdaq opens on Monday 18th December, Infosys Technologies Ltd., India's second-biggest IT services firm, will make history by becoming the first Indian company to enter the prestigious Nasdaq-100.

Infosys became the first Indian company to trade on the Nasdaq Stock Market in 1999. In May 2005, it raised $1.07 billion in the U.S. and Japan by selling 16 million American depositary receipts on behalf of local stockholders.

Infosys executives and directors, including CEO Nandan Nilekani, Chairman N.R. Narayana Murthy and Chief Operating Officer S. Gopalakrishnan sold 5.16 million shares in that offer, raising almost $346 million. Infosys previously sold $256 million of American depositary receipts in July 2003.

The move to enter the Nasdaq-100 will see Infosys convert as much as $1.5 billion of stock to 30 million American depositary receipts. Infosys is seeking to enter the Nasdaq-100 Index to attract funds tracking the U.S. benchmark index. The sale will increase the number of ADRs, currently valued at $51.66, to about 19% of Infosys' shares outstanding from 14%.

This is not the first time the spotlight has been on those entering – and exiting – the Nasdaq 100. As the dotcom bubble grew in 2000, companies that had their ’15 minutes of fame’ in the top 100 included Inktomi, 3Com, Palm and BroadVision.

And how about controversial pharmaceutical manufacturer ImClone, the company at the heart of the Martha Stewart insider trading case? It dropped out of the Nasdaq-100 in 2001 after it failed to get FDA approval for its drug research.

The Nasdaq-100 has always been a measure of which industry is making the biggest waves. A powerful indicator of trends, the Nasdaq-100 Index is composed of the 100 largest non-financial domestic and international stocks on the Nasdaq Stock Market. It was created in January 1985 when it was launched along with the Nasdaq Financial-100 Index, the 100 largest financial stocks on Nasdaq.

The Nasdaq-100 is re-ranked each year in December. All 100 securities in the Index are among the top eligible securities by market cap based on closing prices as of October 31, and the publicly reported total outstanding shares as of November 30.

On a cumulative price return basis, the Nasdaq-100 Index has risen over 1238.0% since inception, and it has outperformed several major domestic and international stock indexes for the ten-year period ended November 30, 2005.

For Infosys, the time is now to solidify its place as a major global stock and raise its profile internationally.

"This is one more step in our global journey," Nandan Nilekani, the chief executive officer of Infosys, told reporters in Mumbai.

But for India, Infosys’ entry into the US elite means much more, summarised by V. Balakrishnan, Infosys’ Chief Financial Officer, who said:

"This is significant for Infosys and the country. It shows India has come of age and the world is recognising India's growth.”

Infosys will join Nasdaq-100 veteran Level 3 Communications and newcomer Vertex Pharmaceuticals when the index is reshuffled next Monday.

Thursday, December 07, 2006

The IndusView Publication, Volume 2, Issue 15

India’s retail story has just begun

The Indian retail market worth $250 billion is expected to grow at a compounded rate of 30%, in the next five years. It is fast becoming an area of growing interest among global retail companies. Wal-Mart Stores Inc., the world’s largest retailer, recently announced a joint venture with Bharti Enterprises, the parent company of Bharti Airtel Ltd, the largest mobile telecom service provider in the country. See our ‘News Makers’ section for details on Wal-Mart and Bharti Enterprises’ retail foray announcement.

The agreement is expected to catalyze the growth of “organised retail” in India, which will require investments of about $60 billion by 2010, according to estimates from Department of Industrial Promotion and Policy, Ministry of Commerce & Industry, Government of India. The segment growing at the rate of 25%-30% a year is expected to see its share in the total Indian retail market grow to 15%-20% in the next decade from the current 2%. India’s real-estate sector is expected to benefit from the retail boom as we discussed in the Special Report of Volume 2 | Issue 12 of our publication.

While global companies like Wal-Mart are lining up to grab a share of the pie, domestic companies such as Pantaloon Retail (India) Ltd, country’s leading retail company with more than 100 stores in 30 cities and Shoppers’ Stop, the largest retail stores chain in India have taken the lead in showcasing modern retail to the Indian consumer.

They are followed by India’s largest industrial conglomerate Tata Group with its subsidiary Trent Ltd that operates Westside, one of India's leading chains of retail stores for garments; Reliance Industries Ltd., India's most valuable firm with a market value of $37.2 billion and diversified Aditya Birla Group have made their retail forays respectively. While the early movers will have an advantage, the opportunities in the market are big enough to accommodate others who follow.

Indo-China trade: $40 billion opportunity

The recent visit of the Chinese President Hu Jintao to India was an expected one when viewed against the backdrop of the investment opportunities of about $150 billion in India in the next 10 years in infrastructure development, power, upgrading ports and railways.

President Hu Jintao’s visit is expected to open avenues to more than double the bilateral trade between the two countries by 2010 from $20 billion last year. The two Asian economies that were until recently seen as rivals are now turning a new leaf. As a first step in this direction, India and China had opened the trade route from Nathula Pass in Sikkim, the north-eastern border state, earlier this year.

Further, the two economies which have since long served as an important market for the developed countries will continue to increase their influence in the Global arena. The combined GDP of the two countries is expected to increase five-fold to $16 trillion per year by 2020 and share in the world GDP rise to 17% from the current 7%, according to CLSA the Asian securities brokerage division of Crédit Agricole SA, the largest banking group in France.

Economic Reforms spur FDI and industrial growth

The economic reforms that were initiated by the Government of India more than a decade back are now paying dividends. This is reflected in the increased investor confidence and growth in the Indian economy at more than 9% in the quarter ended September 30, 2006, as per estimates by the Central Statistical Organisation, responsible for coordination of statistical activities in the country.

This is the sixth quarter out of the past seven that GDP growth has exceeded 8% and was among the strongest increases the country has ever recorded. The economic reforms that included the delicensing of most industries, deregulation of industries earlier monopolized by the public sector, liberalisation of foreign trade through a steady reduction in tariffs, and freeing up of the foreign investment limits in nearly all industries have shown progressive results.

The industrial growth of India touched a decade-high of almost 11% during the first six months (April 2006 to September 2006) of the current financial year compared to 8.5% in the same period last year. Although India is known for its prowess in services, its manufacturing sector grew by 12% in April-September 2006, compared with 9.5% during the same period of last year. This growth is coming out of India’s domestic enterprise and makes the same stronger for scaling global opportunities. The increased foreign direct investment (FDI) inflow will compliment the same.

Investors’ search for investment opportunities that yield exponential returns continues to be on the rise and India’s appetite for attracting incremental investments year-on-year, probably explains the record $4.4 billion FDI received during April-September 2006. The growing trend is expected to continue as the country will attract FDI worth more than $12 billion in 2006-07 as compared to $7.7 billion the previous year, according to government estimates.

This is significant as, not only is the figure twice that of the same period last year, it is the highest recorded FDI in India during any six-month period.

Thursday, November 09, 2006

India's First Internet IPO: Info Edge's

The listing of shares in Info Edge known for its job portal will make history on Nov. 24 for a number of reasons. It will be the first Indian Internet firm to list exclusively on an Indian exchange. Investor demand for each available share exceeded availability by 55 times, during the pre-Initial Public Offering (IPO) auction process, which ran from Oct. 30 to Nov. 2.

Its IPO will be keenly followed by rivals information portal and matrimonial site, which are planning their own stock listings.

At IndusView, we know’s founder and CEO Sanjeev Bhikchandani well (Sanjeev, fellow IndusView board director Rishi Sahai and I were featured in the Red Herring magazine in June this year). Back then, the Red Herring reported the Bombay Stock Exchange’s benchmark Sensex broke a record 12,000-point high. Recently, it broke 13,000 points for the first time.

Any concerns about the Indian market’s receptiveness to Internet businesses should, by now, have been silenced. That's one reason why opted for an Indian listing in contrast to Sify Ltd and Rediff.Com India Ltd, which trade on the NASDAQ.

Its shares had been priced in the band of Rs. 290 ($6.50) and Rs. 320 ($7.20) a share. Info Edge plans to sell 5.32 million shares, nearly a fifth of its equity base. At the top end of the price band, it will raise about Rs. 170 crore ($38 million), valuing the firm at about $190 million, half that of US-listed Rediff and Sify which have been public since June 2000 and Oct. 1999 respectively.

In the year ending March 2006, Info Edge reported revenue of Rs. 841 million ($19 million) and a net income of Rs. 133 million ($3 million).

Info Edge, via its job portal, is capitalising on the general growth of the Internet in India. A recent report from IAMAI-IMRB estimated that the country was now home to 25 million regular users of the Internet, set to grow to 43 million by March 2008.

VC Attraction

Few things excite venture capitalists more than the possibility of investing at a low price in a company with global disruptive potential that offers an exponential return. Internet start-ups offer one of the best options for high-growth, capital efficient and exitable investments. As India’s Internet user base grows at 25% each year, more Internet companies are being formed to target the online market. Consequently, more funds are being set up to invest in such companies.

After a lull between 2000 and 2004, early-stage companies received venture capital investments worth $482 million across 52 deals last year. This year, investors have taken greater risks by investing money in very early stage companies.

Consequently, they have invested a similar amount as last year in twice the number of companies. In the first six months of 2006, that resulted in $240 million invested in 49 companies in sectors such as online classifieds and travel, mobile and mobile value-added services companies, gaming and telecoms.

Silicon Valley Spearhead

Not surprisingly, Silicon Valley based VC firms are taking the lead. At last count, 44 US-based VCs announced plans to set up India-based funds of an average fund size of $100 million. If successful, that would imply about $4.4 billion in new investment capital would be available for venture investments in India over the next five to six years. That’s more than twice the $2.03 billion total in venture capital and private equity investments in India in 2005.

Taking Indian Purchasing Power Parity (PPP) into consideration, that would be equal to $22 billion worth of investment capital in the US.

Info Edge was Kleiner Perkins Caufield and Byers’ first investment in India. It invested about $5.5 million in May this year along with Sherpalo Ventures, backed by early Google, Inc. investor Ram Shriram. ICICI Venture also owns a stake in Info Edge. It had invested Rs. 7.29 crore ($1.64 million) in 2000.

Recently, Silicon Valley-based VC fund Sequoia Capital merged its India operations with VC Fund WestBridge Capital Partners based in Bangalore. The new merged entity is now called Sequoia Capital India.

Sequoia joins other Silicon Valley funds such as Norwest Venture Partners, Matrix Partners, Benchmark Capital, Draper Fisher Jurvetson, and Greylock Partners that have expanded their presence in India recently.

The Job Ahead

But it’s still going to be an uphill struggle to quickly and efficiently find skills in a country as big as India to fill the gaps opened by these kinds of opportunities. For Info Edge, diversification into other areas – such as online property site and matrimonial site, was a challenge.

While Info Edge’s book building of demand for its IPO has undoubtedly been a success, the true success will lie in a sustained share price and strong after-market support in the weeks after its listing. While diversification helps de-risk its business, a small dip in its core job market business could still have a significant impact on

That does seem unlikely, however. A recent study conducted by the Confederation of Indian Industry (CII) has revealed that human resource (HR) is the biggest challenge faced by India Inc., particularly at the managerial, production and marketing levels due to the widening demand-supply gap.

With multinationals grabbing Indian CXOs and Indian firms expanding their operations overseas through acquisitions or setting up new facilities, the problem of getting the right people for management, production, marketing and research posts has become an uphill task, thanks to the growing demand for the same set of people by many firms.

Competition Grows

More threatening to, there are a number of competitors such as, owned by Monster, Inc. and, owned by Bennett, Coleman & Co. Ltd, publisher of India’s largest newspapers The Times of India and The Economic Times. They’re already looking for a piece of the market – and there are certain to be even more aggressive now that everyone’s focused on the IPO. Info Edge’s combined revenue leapt 86% last year – who wouldn’t want a piece of that?

Given the spectacular investor enthusiasm for’s equity, it seems likely that it will attract long-term support beyond the flurry of speculative investment.

We’ll be staying in touch with Sanjeev and monitoring the situation closely, particularly on November 24, when the shares are listed.

The world has just witnessed a landmark moment in India’s commercial history. In fact, with the Sensex breaking its previous record and Info Edge’s IPO book-building process complete, we’ve witnessed two in as many weeks.

Bundeep Singh Rangar
Corporate Website:
Corporate Publication:

Thursday, November 02, 2006

The IndusView Publication, Volume 2, Issue 13

India – UK M&A: The Empire Strikes Back

Indian companies will likely spend more than $10 billion on acquisitions in Europe this year, accounting for almost 90% of their total overseas acquisitions. Europe’s diversity makes it a tough market to crack by organic means alone so Indian firms have taken the acquisition route. They spent $2.68 billion during the first half of 2006 on 32 acquisitions of European firms, i.e. two thirds of the $4 billion spent by Indian companies on 85 overseas acquisitions.

Trade between India and Europe is expected to multiply five times to $100 billion by 2010 from current level of $20 billion, according to industry estimates. Propelling this growth is increasing merger and acquisition activity between companies in the two regions.

The most favored acquisition and investment targets are U.K. companies, helped by a common English language, similar accounting and legal systems and relatively flexible U.K. labor laws. Indian companies invested about $2 billion in the U.K. last financial year, more than twice the previous year. As a clear sign of trend-reversal, it surpassed the investment made by British companies in India.

That figure does not include the latest and largest ever acquisition by an Indian firm: the purchase by India’s Tata Steel Ltd of the U.K.’s top steel maker Corus Group Plc, a company more than three times its size for $8 billion.

Tata Steel’s parent namesake company Tata Sons Ltd, with revenue of $22 billion and equivalent to about 2.8% of the country's GDP, will lead the M&A league table with its acquisition of Corus Group Plc. The Tata Group had previously acquired the U.K.-based Tetley Group, then the world’s largest manufacturer of tea, for $407 million in February 2000.

The Corus acquisition will give Tata Steel the size and scale to be globally competitive in a consolidating steel industry. Tata Steel will become the world's fifth largest steel producer with a capacity of about 26 million tons and combined sales of $24.4 billion.

India - U.K. Trade: The Corridor Widens

The growing bilateral trade between the U.K. and India became clear this year when the two countries emerged as the third largest overseas investors in each other. There has been almost three-fold increase in the number of projects announced by Indian companies in the U.K. in first six months of 2006. The number of U.K. projects financed by Indian companies doubled to 76 creating 1,449 new jobs. The number of Indian companies that started U.K. operations grew by 23% last year.

To add to that, more than 500 Indian companies have a presence in London, of which 30 companies have listed shares on the London Stock Exchange. That’s greater than the total number of Indian companies listed on the New York Stock Exchange (NYSE) and NASDAQ combined.

Such progressive trends prompted the third annual summit between the Indian Prime Minister Manmohan Singh and the Prime Minister of U.K. Tony Blair in London on October 10, 2006. Government and trade bodies can do more, however, to encourage bilateral business.

While Indian industries such as information technology, pharmaceuticals and engineering have received significant investments, there are sectors such as infrastructure, energy and real estate that offer investment opportunities to the extent of $150 billion, $73 billion and $50 billion respectively over the next five years.

Further, if Indian companies could simultaneously list shares on both the Bombay and London Stock Exchanges, for example, access to capital and investment opportunities would be better for both sides. It could make London to India what Hong Kong is to China.

Stock Market: Growth Factored In

With corporate India currently announcing its results for the second quarter of the current fiscal year, investor apprehensions about the valuation of public companies seem to have been put to rest and their confidence strengthened.

The top five Indian IT services companies, namely Tata Consultancy Services, Infosys Technologies, Wipro Ltd, Satyam Computer Services and HCL Technologies produced strong quarterly numbers, better than what analysts predicted. The companies reported an average growth of 39% in revenue and 41% in net income during the second quarter ended September 2006.

Growth expectations are reflected in India’s IT stocks. Take India’s top four IT services companies: TCS, Wipro, Infosys and Cognizant Technology Solutions. They have combined annual revenue of $11 billion and an aggregate market capitalization of $73 billion. That dwarfs the top five U.S. companies Accenture, Amdocs Ltd, Computer Sciences Corporation and Electronic Data Systems Corporation and Europe’s biggest IT services company CapGemini put together, which have total annual revenue of $67 billion and a combined market cap of $65 billion.

This growth is not limited to the tier-1 IT companies only. Some of the mid-size IT services companies are displaying similar growth. We discuss these results in detail in our Special Report.

India’s growth is spread beyond the IT industry. Reliance Industries Ltd, a diversified manufacturing company which makes products ranging from chemicals to textiles to become India's most valuable firm with a market cap of $37 billion, grew better-than-expected 37% in sales and 9% in net income during the quarter. ICICI Bank, India’s largest private sector bank, reported a 30% surge in profit. Grasim Industries Ltd, one of the country’s largest cement producers, doubled its profit in the second quarter. Ranbaxy Laboratories Ltd, India’s largest pharmaceuticals company by sales, increased its profit by more than six times and sales by 26%. Cipla Ltd, the second largest drug-maker, registered 47% growth in its profit.

During the first quarter ended June 2006, the companies included in the Bombay Stock Exchange’s benchmark index Sensex, grew about 25% in profit and about 30% in sales compared with the same quarter previous year.

A clear consequence of this growth, buoyed by increasing M&A activity, is that India’s mid-sized companies are becoming large cap stocks. And the existing large ones are becoming truly global.

Bundeep Singh Rangar
Chairman, IndusView

Wednesday, September 13, 2006

Why India? Why Now?

Fast becoming Europe's "Mr. India", Bundeep Singh Rangar co-founded IndusView Advisors with friends Manish Gupta and Rishi Sahai. Now, he is set to launch a $100 million plus Europe-India Investment Fund called Amaya Venture.

When will India build its first venture-funded billion dollar company ? Are investor expectations inflated? How can European companies better exploit the India opportunity? Mr. Rangar talks to InnovationBlog about Indian investment, politics, opportunity and growth.

Bundeep Singh Rangar, IndusView and Amaya Venture (Q2, 2006)

Bundeep Singh Rangar

Friday, July 14, 2006

India 3rd Largest Investor in the UK

Indian investments in UK to continue
India Infoline News Service / Mumbai Jul 06, 2006 13:32

India focused corporate advisory firm IndusView, says, the enormous growth in Indian investment in the UK, announced by UK Trade and Investment, will continue to grow in the years ahead.

The enormous growth in Indian investment in the UK, announced by UK Trade and Investment, will continue to grow in the years ahead. UK companies, however, are increasingly missing out on investment and growth opportunities in India, says India focused corporate advisory firm IndusView.

India is the third largest investor in U.K. according to the ‘U.K. Inward Investment 2005-06’ report by UK Trade & Investment (UKTI). The report shows the number of UK projects financed by Indian companies doubled to 76, with Indian investment up 111%, creating 1,449 new jobs. As a clear sign of trend-reversal, the amount of money invested in the U.K. by Indian companies had topped the investment made by British companies in India for the last financial year.

India had already overtaken China, and was running neck and neck with Japan, based on the performance of the first three quarters of the fiscal year, The league tables are calculated on the basis of total direct investment and number of jobs created as a result.

More than 430 Indian companies are already based in London. The number of Indian companies that started U.K. operations grew by 23% last year.

"India has historic ties to Britain. Both countries have similar legal, accounting, finance and judicial systems,” said IndusView’s Chairman Bundeep Singh Rangar. “The English language and Parliamentary democracy are as Indian as they are English. It should surprise no one that Indian companies now invest so heavily in the UK. There is a truly dynamic and exciting relationship between Indian and UK business.”

IT remains the dominant sector for Indian investment. India now has two companies in the UK top 40 IT companies and is expected to have at least one in the top 25 within the next five years. In the last year there was also strong growth in pharmaceuticals and engineering. Looking forward, IndusView predicts cross-border deals in telecoms, software, animation, media, automotive, engineering and professional services firms to increase in the next fiscal year.

The U.K. is not only the U.K. where India Investors are putting their money. Netherlands is another destination for Indian overseas investors. About $244 million of Indian investments were approved for the Netherlands during the first nine months of the financial year 2005-06.

“Britain needs to keep its competitive edge vis-à-vis other European countries when it comes to its business relationship with India. European companies are moving aggressively to capitalise on India’s economic growth. The U.K. government cannot afford to sit idly by if it wants Britain to remain a global economic force,” said Rangar.

At present a number of key Indian companies are growing overseas and focusing on the UK. India is no longer simply a destination for labour solutions and outsourcing. The shift is toward outward expansion is a sign of increased economic confidence of the world’s second-fastest growing economy.

With the Indian economic juggernaut gathering greater momentum, now is the time for Britain’s companies to participate and grow. Today’s announcement is indicative of a changing global economic reality.

“Our clients are from across sectors including retail, financial services, software, telecoms services all want to be in India yesterday. But gaining access has been a historical problem for British business. The U.K. government and U.K.’s companies need to be more focused on how to address that market, because the wealth of opportunities that are present today are not going to be there much longer.”

The UK Government could be more focused on addressing the Indian market, creating a unified point of entry for British businesses.

Bundeep Singh Rangar

Thursday, March 09, 2006

The Indus View Publication, Volume 2 Issue 2

If the stock market were a bellwether for the economy, one word would describe India’s economy: “sizzling.”

The Mumbai Stock Exchange Sensitive index, or Sensex, crossed the psychologically important level of 10,000 for the first time in the history of Indian stock market. Moreover, it held it’s ground.

Hot Economy
The economy continues to grow as higher wages spur spending. India's middle class has tripled to 300 million, or about a third of the population, in the past two decades. The National Council for Applied Economic Research qualifies such people as those earning between $4,545 and $23,000 a year. Bank loans to companies and individuals rose 32 percent in the six months ended Sept. 30, the biggest increase since the central bank started collecting data in 1971.

The trend toward offshoring of software development continues unabated. An emerging $1.25 billion market is predicted for development of animation at $950 million and gaming software at $300 million in four year's time. That's according to NASSCOM, the trade body for India's 900 IT companies.

Personal computer sales in India registered a growth of 36% at 2.3 million units during the first half of the current fiscal year ending March 2006. That led the Manufacturers Association of Information Technology (MAIT), the representative body of computer manufacturing companies, to revise its annual projections to 4.7 million units from 4.25 million, for this fiscal year.

To top it off, India added a record 4.5 million new mobile phone subscribers in December 2005 following the abolition of charges for incoming calls by many operators. Analysts predict new phone subscribers will surpass 5 million new accounts per month at some point this year, on par or in excess of the absolute growth in China. India added about 30 million new telephone users during the year 2005, the highest addition to date in any single year. About 4.9 million users were added in December 2005 alone, of which 4.5 million were mobile phone users, taking the total telecom subscriber base to 125 million. The tele-density has gone up to 11.43% compared to 8.6% in December 2004

Stock Index
India's key “Sensex” stock index will probably climb for a fifth straight year in 2006 as listed companies' earnings improve and overseas investors pump more money in to the countries stock market.

The move to 10,00 from 9,000 in just 48 days, raises the question as to whether such a sharp rise is justified.

That question, however, has been posed ever since the Sensex touched the mark of 7,000 on June 20, 2005.

Valuation Concerns
Some analysts have expressed concern about the “stretched valuations” - the notion that the current price to equity ratio of 18.36 for the Sensex makes its stocks more expensive than other emerging markets. Morgan Stanley’s MSCI Emerging Markets Index is currently trading at 14.5 times, cheaper than Sensex. It is interesting to note that while the Sensex moved from 9390 on January 02, 2006 to 10,000 on January 06, 2006, the P/E ratio of the Sensex came down from 18.60 to 18.36 as the earnings growth in the quarter ending December 2005 was factored in.

Citigroup Inc. rated Indian shares as “overvalued” last month and forecast the Sensex to slide in 2006 as earnings growth slows. Merrill Lynch & Co.'s New York-based strategists termed India as the most expensive emerging market in November 2005 and recommended investors to sell Indian stocks cautioning about the possibility of fund inflow getting slow. The fact is, however, that the net foreign funds flow of $805.10 million in January 2006, and $550.40 million in the first five trading days of February 2006, were the main drivers for the Sensex to reach 10,000. The Indian market attracted a record $10.6 billion of funds from foreign investors in 2005, second only to Taiwan in Asia, excluding Japan. The local funds also have collected more than $2 billion in the month January 2006 alone through their new fund offers (NFOs).

Foreign Investors
Overseas investors have bought $572.2 million worth of shares this year, according to the latest figures from the Securities & Exchange Board of India.

India is seen to be a liquidity driven market now with the rise in capital markets being a function of India’s fast growing economy, the world’s second fastest – and rising corporate earnings.

India's $665 billion economy is growing at a pace that is second only to China among the world's 20 largest economies. The Gross Domestic Product (GDP) growth rate was 8% from a year earlier in the quarter ended September 30, 2005 and is estimated to grow by 8.1% for the fiscal year 2005-06 ending March 2006 compared with 7.5% in the previous fiscal year. On the corporate earnings side, a study of 200 stocks done by Kotak Securities showed an average of 23% earnings growth in the quarter to December 2005. Expectations are even higher, as Indian companies have scaled up their capabilities and enhanced their efficiencies. The scale of corporate expansions was reflected in the Bank loans to companies and individuals that rose 32% in the six months ended Sept. 2005, the biggest increase since 1971. The economic reform process continues - the government recently opened the retail sector for foreign direct investment, albeit with restrictions.

Correction or Justification
Many analysts now expect a correction in the market. Macro-level changes such as a sharp increase in oil prices or a regional conflict notwithstanding, there is little reason for the Indian markets falling much below these levels. The upside, on the other hand, may also be limited and it’s unlikely to generate the 40% return seen in 2005. This does mean, however, that if the market keeps the pace with the earnings growth - a 15%-20% year-on-year growth - is well justified.

Bundeep Singh Rangar
Chairman, IndusView


Deal Watch
January 2005 was the month of media, in terms of M&A deals as well as public issues. Jagaran Prakashan, the publisher of India’s largest Hindi news paper, Multiplex chain Inox Leisure and FM Radio company Entertainment Network (India) Ltd entered the primary market to raise capital. A consortium of three companies including Malaysian broadcaster Astro and Indian TV news broadcaster New Delhi Television (NDTV) bought Radio Today that runs FM radio channel under brand name Red FM.

Global Outlook: Vinod Dham
What are the trends to watch out for in the year 2006? Tech pioneer Vinod Dham believes that WiMax will emerge as the new public utility.

India Outlook: IDC Top 10 Predictions
India will continue to be the fastest-growing domestic IT market in the AP region in 2006, forecasted IDC in its recent report on the Indian IT market. It has also predicted that 2006 would be the year of digital home revolution in India.

New Opportunities: Animation & Gaming
Animation & Gaming is an opportunity worth $1.25 billion for India. This is the conclusion of the latest report on Animation and Gaming industry in India by NASSCOM, 900-member industry body representative of India's information technology companies.

TMT Radar
NASSCOM has launched National Skill Registry (NSR), the first initiative of its kind in the world, to create a nation-wide database of Indian Information Technology (IT) professionals. It will help the companies to hire professionals with a clean record to ensure data security. Under the scheme, resume of the professional opting to register with NSR will be verified by NASSCOM at the time of registry, so that a company willing to hire the person will not have to do the exercise on its own.

Policy Watch
Several Indian states are competing against each other to offer more and more incentives to IT companies to attract new projects of IT companies. Kerala has allotted 50 acres of land to Infosys in the new Special Economic Zone (SEZ) in the state capital of Thiruvanantpuram. And of course, the race between Karnataka vs Andhra Pradesh continues, as Andhra Pradesh government is considering promoting 7-8 SEZs exclusively for IT and It Enabled Services.

Corporate Monitor
Hardware manufacturing is gaining pace in India. Dell Computers, the largest computer maker of the world is considering to set up a manufacturing unit in India. SemIndia, a company formed by non-resident Indian IT professionals turned entrepreneurs that announced setting up a chip-plant by partnering with AMD, has announced another project of Assembly-Test-Mark-Pack (ATMP) plant in India, with $75 million investment in the first phase. The trend of Indian telecom companies outsourcing their network operations got stronger with Hutch-Essar selecting Nokia for maintaining their GSM mobile network in a $350 million deal.

Sector Focus: Resurging FM Radio
The FM Radio market in India is set to explode from 22 FM stations in 12 cities to 300 stations in 91 cities across the country. The Government of India has just concluded the five rounds of bidding for 10-year FM Radio licenses. The Indus View estimates that the market of FM Radio in India will grow to $125 million in 2010 from $25 million in 2005.

Sector Focus: Q3 Financial Results of IT Sector
The top-4 companies of the IT sector maintained a high growth in the third quarter. While Tata Consultancy Services (TCS) and Infosys Technologies posted results in line with market expectations, Wipro and Satyam Computer Services came with outstanding numbers way ahead of what analysts had predicted.

Company Watch: HCL Technologies
Moving from the status of “distant fifth” largest IT company to a member of “the big league of Top-5” IT companies of India seems to be the immediate target of HCL Technologies. It recently won a $330 million outsourcing deal from the top UK consumer-electronics retailer DSG international Plc, which is claimed to be the largest outsourcing deal for any Indian IT company.

People Watch: Azim Premji
The man who transformed the Wipro from a small vegetable oil company to $1.35 billion IT company had to come back to the driving seat of the company last August at the age when people opt for a retired life. After the exit of Wipro Vice-chairman and CEO Vivek Paul, Chairman Azim Premji resumed the role of executive head again, though without officially becoming the CEO. And the latest financial results of Wipro tell us why he is one of the most admired persons of the Indian IT industry.

Market Watch: Sensex Surpasses Highs of 2005; Crosses 10,000 in February
Sensex, the benchmark index of the Bombay Stock Exchange (BSE), reached the 10,000 mark for the first time on February 06, 2006 after playing hide and seek with this mark in the last week of January. Even at these high levels, the buying support from the Foreign Institutional Investors (FIIs) continues as earlier.

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