Sunday, December 30, 2007

Rupee to continue rise against the dollar in 2008

The Indian rupee, that has appreciated about 12% against the dollar in 2007, will continue to rise against the dollar in 2008 but move in the 38-41 band to a dollar.After nearly three decades, the rupee has appreciated 12% against the greenback and about 6% against a basket of six major world currencies belonging to the US, the UK, Japan, Euroland, China and Hong Kong. The rupee began the calendar year 2007 at Rs44.26 a dollar.


2007: A year of big deals

It has been a year of frenzied deal-making. From mega public floats such as the DLF Ltd’s domestic initial public offer (IPO) and and ICICI Bank Ltd’s mega overseas offering, Indian companies raised resources to fund its breakneck pace of growth in 2007. Huge amounts were raised both from the domestic and international bond and equity markets. New avenues such as the qualified institutional placement (QIP) route gained in importance, while convertible offerings were also a hit. The amounts raised in 2007 have been higher than in the preceding years except for domestic bonds, while the number of deals done have also been higher, except for overseas equity offers and domestic bonds. Foreign investment banking firms topped the league tables in five out of six categories, including managing domestic bond issues and QIPs.


Fourteen executives in fray for top PFC job

Fourteen executives from NTPC, BHEL, NHPC and other state-run enterprises are in the race for the top post of Power Finance Corporation, the country's prime lender in power sector which went public early this year. Those in the fray include three Power Finance Corp (PFC) officials believed to be among the front-runners for the post of the company's chairman and managing director, as the present Chief VK Garg retires on July 31 next year.

The Economic Times
NTPC, BHEL, NHPCarticleshow/2657482.cms

Finland Inc targets Indian markets to boost growth

After the big rush from the US and Europe, it’s the turn of Finnish industry to set sights on India to widen its global reach. Driven by innovative products and technologies, a clutch of small- and medium-sized Finnish companies have drawn up plans to step up their India exposure. The idea is to cash in on their advancements in R&D to increase revenues and profits using India as the key base.

The Economic Times

Kejriwal powers Temasek-Merrill deal

India may still be in the initial years of experiencing the financial might of global private equity (PE) and sovereign wealth funds, but Indian brainpower has started making its presence felt in large PE deals abroad. The latest big budget PE deal announced early this week— $6.2 billion stake purchase in Merrill Lynch, the world’s largest brokerage firm, led by Singapore-based Temasek, has an Indian connection. Manish Kejriwal, who heads the India office of Temasek, led the Merrill Lynch deal, which is seen as a bailout for the brokerage firm after the subprime crisis hit most of the bulge-bracket US finance majors.

The Economic Times

Fashion giants step up sourcing from India

International fashion brands such as Nautica, Puma, Marks Spencer and Espirit have stepped up their local sourcing as they expand their presence in the domestic market. With advantages of higher profits, lesser lead time and competitive price points, these brands are now shedding their inhibition towards local sourcing. Nautica, the sportswear brand introduced by VF-Arvind Brands in India, plans to source locally the core or standard products that are non-seasonal. Puma too plans to take its local sourcing of apparel to the maximum extent possible for the domestic stores next year.

The Economic Times

It's US Vs Russia over $40 bn India market

The United States is gearing up to battle Russia and Europe for sales of billions of dollars in jet fighters, cargo aircraft and other arms to India. US officials regard sales to India, with a potential $40 billion arms market including missile-defense systems, as a way to cement strategic ties and boost bilateral military cooperation as a hedge against China's growing clout.

Express India

Forbes List: India does it again

After billionaires and household names like Ambanis and Mittals, it is the turn of little-known microfinance institutions from India to hit the pages of famed magazine Forbes, which has named seven such entities in the list of world's top 50 -- highest for a country. In its first ever list of World's Top 50 Microfinance Institutions, the US business magazine has named Kolkata, West Bengal-based Bandhan at the second position.

The Financial Express

India Inc sells record shares in '07

Indian Companies sold shares worth a record 451.37 billion rupees in 2007 through public issues, with real estate Companies dominating the initial public offer (IPOs) route, a primary market monitoring firm said on Wednesday. The amount raised in 2007 was 83 per cent higher than last year's mobilisation of 246.79 billion rupees, Prime Database said in a statement.

The Financial Express

World's top IPO - $8-bn; India's total - $8.3-bn

Indian bourses saw over eight billion dollars worth of initial public offers in 2007, but this is just a shade higher than the world's single-largest IPO that was brought by a Russian company, latest data show. The worldwide IPO activity raised a record capital of 255 billion dollars till November in 2007, including 8.3 billion dollars on Indian bourses, according to data compiled by international consultancy firm Ernst and Young. India was the fifth largest market in terms of number of IPOs and seventh largest in terms of the proceeds for the year, E&Y said.

The Financial Express

Thursday, December 27, 2007

Land Rover & Jaguar Deal to Mark Indian Auto Sector’s First Billion Dollar Acquisition

The Indian automotive sector is under-going a fundamental shift as companies set out to unlock the benefits of global scale of operations, propelled by ambitions to gain in-roads into the premium league by acquiring state-of-the-art engineering platforms, future proof technology masterpieces and iconic brands patronized by a niche customer segment.

The outcome of the bidding war which will be known by the end of the week for Jaguar and Land Rover, the U.K. based iconic marques owned by Ford Motor Company, the U.S. based world’s third largest automaker, for an estimated price of approximately $2 billion, which features Tata Motors Ltd, India’s biggest automobile company, and Mahindra & Mahindra Ltd, tractor & utility vehicle manufacturer is symbolic of the evolving Indian businesses making a mark in the global market place.

Tata Motor’s parent company Tata Group, with revenue of $55 billion and equivalent to about 5.5% of the country's GDP, is not new to such inorganic growth that has eased the group’s access to new markets, product categories, technology and world-class brands. Tata Motors' international footprint includes Tata Daewoo Commercial Vehicle in South Korea; Hispano Carrocera S.A., a bus and coach manufacturer in Spain in which the company has a 21% stake; a joint venture with Marcopolo, the Brazil-based body-manufacturer of buses and coaches; and a joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market pickup vehicles in that country.

Tata Motors that has been facing critical reviews concerning quality and reliability with its passenger cars ‘Indica’, the small car that it marketed badged as CityRover as per tie-up with British automaker MG Rover in Europe, with the two cult luxury brands Land Rover and Jaguar in its armory will see itself take the first steps in to the un-explored premium segment and graduate to state-of-the-art engineering expertise from a combined workforce of 20,000.

With the deal expected to go to the Indian conglomerate, the moment will be historic as it will mark the automotive sector’s entry into the elite billion dollar acquisitions club.

The sector has already exhibited growing merger & acquisition (M&A) deals worth more than $633 million from 20 deals so far this year, i.e. surpassing the value of deals done by the sector in the whole of last year at $517 from 23 deals.

The other reason why Jaguar-Land Rover deal will be significant is that it will further reinforce the prominence of the Indo-U.K. merger & acquisitions deal activity which has already seen the country’s two of the largest deals – the acquisition of Hutchison Essar Ltd India’s second largest GSM mobile service provider by the U.K.’s Vodafone Group Plc and the acquisition of the U.K.’s largest steel maker Corus Group Plc by India’s Tata Steel Ltd.

Key to such billion dollar acquisitions is the management of the post acquisition integration costs. As skepticism looms large among industry analysts with regards to the loss making Ford’s marques - Jaguar and Land Rover, one company I would bet on being able to get the integration cost down is Tata Group. It is a company that has been brilliant in execution pretty much so far.

Of the $46 billion worth of cross-border M&A deals so far this year, the U.K. contributed to about 40% of all overseas acquisitions by Indian companies (Outbound) in deal value and about 83% of the deals clinched by overseas companies in India (Inbound).

Tata Group has been active in the U.K. market for long. The group had previously acquired U.K.’s top steel maker Corus Group Plc after intense rounds of auction proceedings with rival Brazilian steel company, Companhia Siderurgica Nacional (CSN). Prior to that, the group had acquired U.K.-based Tetley Group, then the world’s largest manufacturer of tea, for $407 million in February 2000. The group has already spent more than $15 billion to fulfill its inorganic growth strategies and the acquisition of Land Rover and Jaguar will likely be the second most expensive buy for the group after Corus.

The investments by India Inc. in Britain during the fiscal year 2006-07 has created 5,130 jobs, second to the U.S., according to the U.K.’s Department of Trade and Industry. In terms of the number of new projects, India has been ranked third with 69 new projects, after 540 new projects of the U.S. and 95 new projects of France.

Indian investment in the U.K. had gone up 111% to 76 projects, creating almost 4,000 jobs during 2005-06. The Indian investment has contributed $67 million (£33 million) to the London economy in 2006-07, according to Think London, an agency promoting investment into the city.

Wednesday, December 26, 2007

60 car launches planned through 2008

On offer would be everything from haute hatchbacks and green tech hybrids to adrenalin-dripping super premium luxe models. Not to mention the world’s cheapest automobile, the Rs 1 lakh people’s car from Tata Motors. As usual, the biggest action will be in the small car market where global best-sellers will rub shoulders with locally-developed tarmac scorchers. Maruti Suzuki will kick off the action with its Splash and A-Star concept, though the latter would be a predominantly export model. In the premium hatchback category, the Swift, Getz, U-VA troika will face competition from the likes of the Skoda Fabia and the Fiat Grande Punto, though all eyes would definitely be on the Rs 1-lakh car.

The Economic Times

Hunt begins for a new chief of Air India

Government has began search for a new head of National Aviation Company of India Ltd, which runs the merged Air India, almost three months ahead of the end of incumbent chairman and managing director V Thulasidas' tenure. The CMD would oversee all activities of the company, which has about 33,000 employees and operates 140 aircraft, besides being in the process of inducting about 111 more planes over the next four years.

The Economic Times

$120-150bn needed by 2012 in energy sector

India’s current level of energy consumption is very low. For the year 2004 – 05, the total annual energy consumption for India is estimated at 572 Mtoe (million tons oil equivalent) and the per capita consumption at 531 kgoe (kilograms oil equivalent). With a target GDP growth rate of 8-10% and an estimated energy elasticity of 0.80, energy requirement is expected to grow at 6.4-8.0%. This would mean a five-fold increased in India’s energy requirement over the next 25 years.


Global pharma MNCs find China tough

Colleen Cheng and Angel Chen, Chinese marketing executives in their 30s, should be the ideal customers for US and European drugmakers. So far, they are a tough sell. Glued to their cell phones at an expensive Beijing restaurant, the working moms would fit in at any cafe in New York or London with their fluent English and stylish clothing. They spend hundreds of dollars monthly on herbs, acupuncture and supplements. What they don’t buy are Western pharmaceuticals, like Johnson & Johnson’s cold medicine Sudafed and Sanofi-Aventis’s sleeping pill Ambien.

The Economic Times

India set to mint money for neighbours

During the second half of British rule, till 1928, India would get its currency notes printed at UK's Thomas De La Rue Giori, one of the world's largest financial printers then. Some 80 years down the line, India is exploring the possibility of minting money for some of its neighbours, and that too, on a regular basis. The Indian government has recently received requests from undisclosed neighbouring countries to print their currency notes.

The Economic Times

Mukesh trails Anil in creating wealth for investors

Mukesh Ambani, the richest Indian and head of market leader Reliance Industries Ltd, was not the leading wealth creator for small investors in 2007 but was pipped for the top spot by younger brother Anil. A comparison of cumulative share price gains for the listed companies from the two groups puts the surge for Mukesh Ambani group at 153 per cent, as against about 232 per cent for the Anil Dhirubhai Ambani Group (ADAG).

The Economic Times

FIIs on year-end selling spree

Retail investors are now emerging as important players in the equity markets, supporting BSE sensex to remain in the range of 19,000 to 20,000 points, despite foreign institutional investors (FIIs) preferring to sell out. In the last four trading sessions since December 17, FIIs have sold equity worth $1.28 billion (Rs 5,156 crore). But the sensitive index fell by just 441 points during this period to close at 19,162 on Friday as retail investors lent support.

The Economic Times

Sixth good year too much to ask for

Emerging stock markets have had five very good years. But don’t bank on them enjoying a sixth. A combination of tighter credit conditions and rising domestic inflation will make life much tougher for many developing countries in 2008. The two biggest emerging markets—China and India—have more downside potential than upside. One of the few candidates to outperform in the year ahead is South Korea.


India has lessons for UK in PSU pension reforms

The UK can actually learn some lessons from India, at least in one area of financial sector reforms —the politically sensitive area of pension reforms for govern-ment employees. Despite heavy political odds, the Indian government has been successful in laying down a system which entails shifting from defined benefits (DB) to a defined contribution (DC) system.

The Financial Express

Clipping the dragon’s wings

Americans may well be delighted by new figures that show China’s GDP is 40% smaller than previously thought. Has the devious Beijing government been massaging the numbers, as communist planners are wont to do? Hardly. China’s GDP in yuan terms remains unchanged. What has happened is that the World Bank has changed the calculations it uses to make international comparisons of the size of economies.

The Financial Express

Toyota announces plan to sell 9.85 mn vehicles in 2008

Toyota, in a neck-and-neck race that could dethrone General Motors as the world's top automaker this year, said today it plans to sell 9.85 million vehicles globally in 2008. Toyota also said it plans to produce 9.95 million vehicles worldwide during the same year, up 5% from this year -- the same percentage jump for the automaker's global sales.

The Financial Express

Tuesday, December 25, 2007

Bharti eyes Big Apple as starter for retail feast

Bharti Enterprises, slated to start its retail business in the first quarter next year, may acquire Big Apple — the Delhi-based supermarket chain with 65 stores. Bharti’s acquisition blueprint in the retail sector may be a replay of its telecom business, where the group built up a pan-India mobile presence by acquiring telcos such as JT Mobile in Karnataka and Andhra Pradesh, Skycell in Chennai and Hexacom in Rajasthan.

The Economic Times

Argentum to infuse Rs 500 cr in Daewoo facility

Argentum Motors, the present owners of the erstwhile Daewoo Motors's India unit in Greater Noida, will infuse Rs 500 crore to modernise the facility over the next 18 months as it gears up to host global commercial vehicle maker Daimler for the latter's proposed LCV roll out.

The Economic Times

Merrill Lynch may pick 20% stake in Sharekhan

Private equity(PE) investor Citigroup Venture Capital (CVC) is diluting a part of its 75% stake in brokerage firm Sharekhan. Financial services major Merrill Lynch is said to be the front-runner to pick a minority stake even as other PE firms, including Baring Private Equity, are believed to be in the race. The industry buzz is that the deal for 20% stake is valued at around Rs 300 crore. However, a source close to Sharekhan said CVC is looking to dilute its stake only by 10% and the deal value is close to $50 million or Rs 200 crore.

The Economic Times

QVC to invest $200 mn in new, existing realty projects

India’s first venture capital-funded real estate company, QVC Realty Pvt. Ltd, plans to invest $150-200 million (Rs594-792 crore) in 2008 in new and existing projects. The Bangalore-based company, which had raised $100 million of venture capital funding in April this year from IL&FS Investment Managers Ltd (IIML), has already committed $80 million to date.


Spiralling rentals hit retail boom

First came political misgivings and then street protests by small-store owners across the country, who were afraid they would be put out of business by the deep pockets and discounting powers of the retail chains. But that perhaps didn’t worry Indian tycoons as much as the surge in rentals and space shortages they are now battling in a bid to open thousands of stores and change the way the subcontinent shops.


Indian chip design firms acquiring for scale, R&D

Indian information technology companies, such as Wipro Ltd, Sasken Communication Technologies Ltd and MindTree Consulting Ltd, which offer chip-design services, are in an acquisitive mode to consolidate their position in the global market. In the last two years, these firms have together made five acquisitions totalling Rs502 crore, mainly to broaden their customer base and intellectual property (IP) assets.


Rupee is BRIC’s second fastest growing currency

The rupee has become the second most appreciating currency against the dollar among BRIC currencies, with a surge of 11% in 2007, says an analysis. While all the four BRIC countries — Brazil, Russia, India and China — have seen a sharp rise in their currencies against the dollar, the pace of rupee appreciation is only next to the Brazilian currency since the beginning of this year.


Indo-France talks to be wide ranging during Sarkozy visit

Foreign Minister Bernard Kouchner put a positive spin on French ties with India on 24 December ahead of a visit next month by President Nicolas Sarkozy but admitted no deals would be signed. “After these four days, I feel that we are very close to each other. You will see that my president will precise a lot of common ground,” he told reporters in English. “We have a lot to achieve together,” Kouchner said.


It's the right time to be in India: Mashelkar

With the advent of research and development in private sector, India is witnessing a positive trend with its talents returning back to the country, Raghunath Mashelkar President Indian National Science Academy said. "It's the right time to be in India," the leading scientist told reporters here. India is becoming a global R&D platform with more than 300 companies setting up their centres here. This has opened up opportunities for the young students who need not leave the country for better jobs, he said. In last three years 30,000 scientists and researchers have returned to India to be absorbed in various organisations, Mashelkar said quoting NASCOM at INSA's 73rd General Body Meeting.

The Indian Express

Indian revenues to touch $1 bn in '07: IBM

IT major IBM on Saturday said it expects revenue from Indian operations to touch USD 1 billion by the end of December, growing at a rate of 39 per cent currently. "We expect our revenues to reach USD one billion by the end of this calendar year up from 700 million in 2006 driven by strong factors. In the first three quarters of the current financial, the company's revenue has grown by over 39 per cent," IBM Vice President (Financial Management) Jesse Green said here.

The Indian Express

Maruti eyes 1 mn sales by 2010, bigger role in Suzuki’s global operations

‘We want to make small cars exclusively in India for export to Europe; our R&D has shown huge potential with contributions to Swift & Concept A-Star’….As for my main targets for the future, firstly, we will stay focused on the goal of achieving 1 million sales by 2010. This will require capacity expansion and upgradation of manufacturing facilities, for which we have already announced an investment of Rs 9,000 crore. The expansion of our sales and service network is underway for the 1 million target.

The Indian Express

Western ports draw huge pvt funds to meet NMDP targets

States along the west coast that have been aggressive in attracting private investment for developing ports and shipyards along their coastlines also seem to have clocked the maximum progress in implementing the Ministry of Shipping’s Rs 55,000-crore National Maritime Development Programme (NMDP).

The Indian Express

Friday, December 21, 2007

Valuation conundrums

With the year coming to a happy end, action is getting geared up for the next year. And the valuations question raises its head again. “Is the market overvalued?”, the million dollar question once again makes the rounds. There is no doubt the Indian market is expensive. The price to earnings ratio is now around 26 times trailing earnings and the long-term average has been around 15-17 times. The price to book value is now more than 6 times, and clearly the highest ever. But then these ratios should be looked at in perspective, says optimists.

The Financial Express

Tatas India’s second most valued group

Leading conglomerate Tata group has retained its position as India’s second most-valued and the only corporate house after Mukesh Ambani group with a market value of over Rs 3 trillion, despite the Anil Ambani group hitting this milestone in intra-day trades twice. Tatas are the biggest corporate house among the three in terms of the number of Companies listed on the bourses. Besides, Tata group also has the lowest average promoter holding among the three leading business groups, while Anil Ambani group has the highest. The cumulative market value of all the 30 listed firms of Tata group currently stands at Rs 3,04,473 crore, based on their BSE share prices at the close of the market on Friday.

The Financial Express

The uncomfortable rise of the rupee

India, it is fair to say, is not yet reconciled to the new-found strength of its currency. One poor wretch, pressed against the car window at a Delhi traffic light, tries to change a dollar bill she presumably cadged off a tourist. She wants Rs 50 for it. Alas, the dollar now fetches less than Rs 40(see left-hand chart). India’s currency has strengthened by about 15% against the greenback in the past year and by over 10%, on an inflation-adjusted, trade-weighted basis, since August 2006. The rupee’s rise may be less dramatic than that of the Philippine peso, Brazilian real or Turkish lira. But it is uncomfortable nonetheless.

The Financial Express

Doha pact: India dares US on anti-dumping

While conceding that the earliest conclusion of the six-year-old Doha Round negotiations at the WTO would only be in 2009-10, India on Thursday, however, threatened that it would not support any agreement in the multilateral talks which allows “zeroing”, a US-backed rule which allows imposition of higher anti-dumping duties. India is backed by at least 15 other countries that all have said zeroing would help US enhance its protectionist tendencies. Anti-dumping duty is imposed by an importing country when it is found that the normal price of a product in the exporting country is higher that its export price. The duty imposed depends on damage suffered by the domestic industry due to the imported product.

The Financial Express

Retail cos look on the fair side of hiring

Some of the biggest players in the organised retail turf are looking up to the fairer sex, especially when it comes to dealing with killer attrition blues. Reliance Retail, Future Group, Shopper’s Stop and RPG Retail are experimenting with a host of hiring models to improve the ratio of fairer sex in their workforce.

The Economic Times

Cisco to ramp up talent pool for business roles

It has been a year since Cisco announced that India will be its globalisation centre east. As part of the drive, the networking major is now planning to ramp up its corporate function resources in the next two years. This is apart from growing its engineering and development staff in the company’s main offshore destination.

The Economic Times

HP India to tie up with institutes to retain talent

Hewlett Packard India is betting on educational initiatives and tie-ups as a way to retain talent in the company. The IT major is looking for tie-ups for short- and long-term courses in technical and business areas for its employees with institutions like IIM, XLRI, Symbiosis and T A Pai Management Institute, according to HP India HR director Zarir Batliwala.

The Economic Times


China property boom falters, but crash unlikely

High prices, rising interest rates and a government drive to cool speculation are dampening the market. Many Chinese bought property several years ago partly because of talk that preparations for the 2008 Beijing Olympics would boost prices in the capital and other cities — so now that the Olympics are near, some fear a crash may be looming

The Economic Times

Indian and Chinese firms go shopping for Western companies

It appears that Tata’s purchase of the Anglo-Dutch steel company Corus at the start of this year at $11.3 billion dollars, has given a boost to Asian companies to go for shopping of companies in the Western world. The deal has been ranked sixth best deal of the World in 2007 by Time magazine.The Tata’s acquisition of Corus reverses the trend of western companies acquiring firms of Asia. The hunger of Tata for acquisitions in the Western world is just the beginning. The trend is increasing with each passing day. Latest in series is the Jaguar and Land Rover brands of the car making company Ford, of Britain. Tata is going to acquire the two car brands and unit produce these cars at an expense in excess one billion pounds. Several other companies like Hindalco have also gone for outright purchases of Western companies.

Meri News

M&As were toast of season for India Inc in 2007

India's corporate honchos spent a considerable time and energy this year at deal tables and executed over thousand transactions involving sale or purchase of equity stakes in their companies. On an average, every single day of 2007 saw about three deals being announced. This included a total of 1,047 merger and acquisitions as well as private equity deals for a total value of $68.32 billion (about Rs 2,75,000 crore).

The Economic Times

India Inc signs deals worth $68.32 b in 2007

India Inc was on a shopping spree in 2007, striking deals including merger and acquisition (M&A) and private equity investment worth $68.32 billion against $28.16 billion last year, a rise of 142.61 per cent, according Grant Thornton’s Dealtracker It was $18.35 billion in 2005. The average Indian M&A deal size was close to $77 million, while the average Indian PE deal size was around $44 million in 2007. Corporate India signed 661 M&A deals valued $51.17 billion in 2007 against 480 deals worth $20.30 billion in 2006.

The Hindu Business Line

Saturday, July 28, 2007

The IndusView Publication - Vol 3, Issue 9

Infosys: Floating with the Tide

Under normal circumstances, the hedge against currency fluctuations by Infosys Technologies Ltd., would have worked just fine. The appreciation of the rupee versus the dollar in the past quarter, however, has been so significant that Infosys, India’s second largest information technology services exporter, had to lower its revenue and earnings guidance for 2007-08 in rupee terms even as it increased its guidance for both revenue and earnings per share (EPS) in dollar terms.

For the first quarter ended June 2007, the negative impact of rupee appreciation on its revenue has been estimated at 7.9%, and the company could post sequentially flat revenue only because the impact of rupee appreciation was offset by volume growth and improvement in billing rates. Improved utilisation and better pricing, however, couldn’t completely offset the dent in EBIDTA margin, which declined by 300 basis points (bps) to 28.7% in the quarter of April-June 2007.

Infosys had no option but to float with the tide as the Indian currency gained 6.8% against the dollar during the April-June 2007 quarter. Going forward, however, Infosys and Indian IT companies in general are not headed for any serious trouble as the demand outlook for these companies continue to be robust. Even in the first quarter of this fiscal, Infosys has added 35 new clients, and won three large deals worth more than $50 million each. By the end of the current fiscal, Infosys will be have about 100,000 employees as it plans to add 26,000 employees during 2007-08.

Outsourcing: Europe on the Move

The robust demand for the IT industry can be gauged from the fact that the total value of new outsourcing contracts in €40 million-plus bracket increased by 78% in the first half of 2007 compared with the same period last year, according to a report by outsourcing advisory firm TPI Inc. With this increased activity, Europe now accounts for more than half (54%) of new outsourcing contracts signed globally compared with 32% share registered in the previous year.

The new figures carry two important messages with regard to the Indian IT services companies. First, they naturally benefit from the trend among European companies to opt for more outsourcing. Second, increased Euro-earnings would de-risk the Indian IT companies from the volatility in the rupee-dollar exchange rate. While Indian companies have made serious attempts to penetrate the European market in the past, the U.S. market account for a majority of their earnings. With increased receptiveness in Europe, they clearly need to increase their European presence. Going forward, we can see increased merger and acquisition activities by Indian IT firms in the European market, aimed at obtaining geographical reach and customer access.

Europe is Top FDI in India

The European Union is one the largest trade and investment partners of India. The EU is India’s largest source of foreign direct investment (FDI) and accounted for 25.3% of total FDI inflows between August 1991 and December 2006. Similarly, the country’s exports to the EU stood at $23.8 billion in the eleven months from April 2006 to February 2007 and accounted for 21% of its total exports. India’s imports from the EU during the same period stood at $24 billion and accounted for 15% of its total imports, as highlighted by India’s Finance Minister P. Chidambaram at the India Europe Investment Forum in London in the last week of June 2007.

While these figures look encouraging at the first glance, the flip side of the same tells us that the despite all the excitement around the India story, the country ranks much lower in the list of EU’s preferred FDI destinations than one would have anticipated. India received only 0.3% of the EU’s worldwide investments and ranked 18th in the list of EU’s preferred FDI destinations. Clearly, that leaves a large scope for increasing the FDI inflow from Europe to India.

Bundeep Singh Rangar
Chairman, IndusView

Saturday, June 09, 2007

The IndusView Publication - Volume 3, Issue 7

Indian Airspace: More Planes, Fewer Names

Market dynamics can create strange bedfellows. Kingfisher Airlines, a subsidiary of UB Group, India's largest alcoholic spirits manufacturer is looking to acquire Deccan Aviation, India’s top low-cost carrier to become India’s largest airline with a 34% market share. The transaction will bring together two contrasting companies. Kingfisher, run by Vijay Mallya, India’s flamboyant entrepreneur often compared with the U.K.’s Richard Branson and Air Deccan founded by Capt. G. R. Gopinath, a former Indian Army Officer who popularized low-cost air travel in India.

The merger follows the recent acquisition of Air Sahara by Jet Airways, until now, India’s largest private sector airline with a 32% market share, and the merger of two state owned carriers Air India and Indian – to create the National Aviation Company of India (NACIL).

The wave of airline consolidation we first predicted in Vol3 | Issue 5 clearly continues.

Wireless Telecoms: Size Matters

Consolidation also continues in the wireless sector, evident from the expected merger of Idea Cellular Ltd owned by Aditya Birla Group, one of India's largest diversified conglomerates, with Spice Telecom, which is 49% owned by South East Asia’s second largest phone company Telekom Malaysia Bhd.

Idea Cellular and Spice Telecom will have a combined subscriber base of 17.3 million in 11 circles making it the fifth largest mobile operator, surpassing Tata Teleservices Ltd, part of the Tata group, India's largest private sector business group.

The world’s fastest growing mobile phone market, which is expected to more than double to 348 million subscribers by 2010 has undergone consolidation worth more than $12 billion in transaction value so far this year compared with $2 billion last year. The most significant deal has been the acquisition of Hutchison Essar Ltd, second largest GSM mobile service provider, by the U.K.’s Vodafone Group Plc.

Real Estate: Billion Dollar Opportunities

General Electric Company (GE), the world’s second largest company by market value, is boosting its commitment to India’s real estate market by allocating $2 billion for real estate projects such as townships, special economic zones (SEZs), information technology (IT) parks, retail and residential developments.

Industry experts forecast demand, precipitated by India’s burgeoning Information Technology (IT) industry, for as many as 80 million housing units over the next 15 years and 200 million square feet in office space in the next five years.

More insight into India’s property market can be gotten from the Company Watch section of this issue where we’ve profiled DLF Ltd, India’s largest real estate developer slated to have the country’s largest initial public offering (IPO) when it lists $3 billion worth of new shares this month.

Bundeep Singh Rangar
Chairman, IndusView

Thursday, May 24, 2007

The IndusView Publication - Volume 3, Issue 6

Genpact IPO on NYSE

Genpact Ltd, India’s largest Business Process Outsourcing firm is expected to reach a market capitalization of about $3 billion, when it lists on the New York Stock Exchange later this year. That valuation is based on that of its peers, WNS (Holdings) Ltd and ExlService Holdings, which have already listed on U.S. exchanges.

The public offering will provide a healthy return to its principal investors, Oak Hill and General Atlantic, which invested $800 million for a 60% stake in the company two years ago. The remaining 40% is held by General Electric, which started Genpact as an in-house offshore facility 10 years ago.

IT: A $100 Billion Industry

India’s information technology (IT) and IT-enabled Services (ITeS) industry will be worth $100 billion by 2011 from about $48 billion in 2006, according to a report by IDC India, the Indian affiliate of Massachusetts-based market research firm IDC. The report suggests that the Indian IT industry will register a compound annual growth rate (CAGR) of 18% during these five years.

The estimate, however, seems conservative considering the 31% growth rate marked by the Indian IT industry in 2006. The industry, which has grown more than 30% annually for the past four years, according to the National Association of Software and Service Companies (NASSCOM), the industry body representing more than 1,100 Indian IT companies.

The IDC report suggested rising domestic sales, previously a weak segment. IDC forecasts IT & ITeS sales in India will grow at a CAGR of 20% to $41 billion in 2011 from $17 billion in 2006.

Indian Contenders

Indian companies are apparently better positioned to challenge the global blue-chip companies. Rating agency Standard & Poor’s (S&P) annual ‘Global Challengers List’ included eight Indian companies out of the 300 firms listed from 37 countries, compared with four companies from China. The list that identifies mid-size public listed companies exhibiting the strongest growth characteristics includes ACC Ltd., one of the oldest manufacturer of cement and ready mix concrete; Hotel Leela Venture Ltd, an Indian hotel company that owns four deluxe hotel in the cities of Mumbai, Bangalore, Kovalam and Goa; Jain Irrigation Systems Ltd, the country’s largest manufacturer of irrigation systems, pipes and fittings; Lakshmi Machine Works Ltd, one of the world’s leading manufacturers of textile spinning machinery; Marico Industries, one of the leading FMCG companies; Titan Industries, the world's sixth largest wrist watch manufacturer and part of the Tata Group, India's largest private sector business group; The Indian Hotels Company Ltd, a part of the Tata Group that operates Taj Hotels chain of luxury hotels.

Oil Tips a Perfect Balance

If India could discard its oil import bill, it will reach a perfect trade balance. During the fiscal year 2006-07, India's exports grew by 24% to reach at $125 billion, while non-oil imports increased to $124 billion from $99.5 billion during the same period. Its trade deficit, however, widened to $57 billion from $40 billion only due to the crude oil imports bill that rose by the same amount, i.e. $57 billion in 2006-07 from $44 billion in the previous year.

With the Indian economy estimated to grow at the rate of 8%-10% per annum in the coming years, the oil import bill will only increase as demand for energy rises to 200 Giga Watts by 2012 from the current installed capacity of 125 Giga Watts. It makes a clear case for large investments in alternative energy sources such as wind energy, nuclear energy and solar energy. Wind energy has added about 6,000 megawatts of power supply in the past five years, and it is estimated to create additional capacity of about 8,500 megawatts by 2012.

Large oil and gas discoveries announced by Reliance Industries Ltd., country's most valuable firm with a market value of $37.2 billion and Cairn India Ltd, subsidiary of Edinburgh, Scotland based Cairn Energy Plc strengthen India’s efforts to reduce dependence on oil imports.

Bundeep Singh Rangar
Chairman, IndusView

Wednesday, May 02, 2007

Links for 2/5

US and India discuss nuclear deal
BBC Online
Senior US State Department official Nicholas Burns is to go to India later this month to try to finalise a landmark nuclear fuel treaty.

India taps into wind power
BBC Online
The industrial area of Bhiwandi, about an hour's drive from Mumbai (Bombay) is a prime example of just how voracious India's demand for energy is.

More life in a liberalised market
Financial Times
Late last year, drivers on Mumbai’s congested roads were greeted with an unusual sight: billboards exhorting them to take out health insurance for diabetes.

Recording may have held clue to Air India bombing
A secret recording of Sikh militants just days before the 1985 Air India bombing may have warned of a pending terror attack, a Canadian inquiry was told on Tuesday, but police could not agree about the usefulness of the evidence.

India's exports grows 23 percent to top $124 bn
Monsters and Critics
India's exports grew 23.88 percent during the fiscal year ended March 31 to touch $124.63 billion, against $100.61 billion in the previous year, trade data released Tuesday said.

Monday, April 30, 2007

Links for 30/4

Solar loans light up rural India
BBC Online
More than 100,000 people in rural India have benefited from an innovative loan scheme that helps families buy home solar power systems, the UN has said.

Air India-Indian merger to take two years
Monsters and Critics
The formalities of the merger between Air India and Indian will take nearly two years to be completed, says V. Thulasidas, chairperson and managing director of Air India here.

India’s ICICI Bank to raise $5bn

Financial Times Alphaville
India’s ICICI Bank is to raise Rs200bn ($5bn) by selling new shares this year as the country’s largest private-sector lender prepares for an increase in investment by domestic companies of “historic” proportions. In what will be by far the largest share issuance by an Indian company, ICICI will raise three-quarters of the new capital through an American depositary receipt issue, with the remainder raised in India.

India ICICI Bank Q4 Net Below Expectations

India's second-largest lender, ICICI Bank (ICBK.BO: Quote, Profile , Research), lagged forecasts with a 4.4 percent rise in quarterly profits due partly to soaring provisions, and the bank said it would raise $5 billion in a sale of new shares.

Cairn India appoints UK-based JP Kenny to build 800 mln usd pipeline
Cairn India has hired UK-based JP Kenny to construct an 800 mln usd crude pipeline to evacuate crude from its Barmer fields in Rajasthan, the Economic Times reported.

India's "breadbasket" aims to be new IT hotspot

Fed up with traffic snarls and scarred roads, a software engineer in India's flagship IT hub of Bangalore took to the streets in protest last year -doodling on his laptop while trotting along on a bullock-cart.

Citi, Lehman lead race for India's IFCI stake: paper
Citigroup (C.N: Quote, Profile , Research) and Lehman Brothers (LEH.N: Quote, Profile , Research) are leading the race to acquire a 26 percent strategic stake in Indian long-term lender IFCI Ltd. (IFCI.BO: Quote, Profile , Research), the Hindustan Times reported on Monday.

Indians turn deaf ear to warning on troubles for economy
The Times Online
India was in celebratory mood last week as it became the twelfth country to pass the trillion-dollar mark in terms of gross domestic product. It was not quite so ready to listen to lurking concerns about the stability of one of the world’s fastest-growing economies . . . a case, perhaps, of not letting the bad news get in the way of a good news story.

Tuesday, April 24, 2007

Links for 24/4

India commercial rocket takes off
BBC Online
India's first commercial rocket has been launched into space.

India predicts further rapid growth
Financial Times
The Reserve Bank of India is expected on Tuesday to use its annual policy statement to predict another year of exceptionally rapid growth, but also to signal its determination to stamp out signs of overheating in the Indian economy.

Vedanta to spend $1.37 billion on India's Sesa Goa
India-focused miner Vedanta Resources Plc (VED.L: Quote, Profile , Research) said on Tuesday it planned to buy a 71 per cent stake in Indian iron ore exporter Sesa Goa Ltd for $1.37 billion, having already struck a deal to buy 51 per cent.

India's FIPB defers decision on Vodafone's Hutch-Essar deal again
India’s Foreign Investment Promotion Board has once again deferred a decision on Vodafone's proposed acquisition of Hutch-Essar from Hutchison Telecommunication International Ltd and the board will now meet on April 27, the Business Standard reported.

LVMH to take 20 per cent in India's Hidesign
France's LVMH Moet Hennessy Louis Vuitton is in talks to buy 20 percent in Indian leather goods maker Hidesign, the Economic Times said on Tuesday.

Reserve Bank of India keeps key rates unchanged
The Reserve Bank of India (RBI) kept key short-term borrowing rates unchanged as it seeks to keep economic growth on track despite inflation running well above its comfort zone.

Lehman may invest up to $300 million in Indian Special Economic Zone

Lehman Brothers may invest up to 300 mln usd in two tranches in a Bangalore-based research and development Special Economic Zone (SEZ), the Economic Times reported, citing unnamed sources.

India signs energy deal
Times Online
Japan has signed a deal to help India fight global warming as the two countries look ahead to working together after the Kyoto Protocol expires in 2012.

India offers best 'no risk investment'
Asstez News
Those looking to invest in property beyond Europe may not have considered India, but now, according to Hena Kishore, a property consultant for Sternon, they should.

Thursday, April 19, 2007

Links for 19/4

India's Essar buys Minnesota Steel for 100 million dollars
Monsters and Critics
India's Essar Steel has signed an agreement to buy US-based Minnesota Steel LLC for 100 million dollars in the second overseas acquisition by the Indian steelmaker this week, news reports said Thursday.

US concerned India stance on nuclear energy could jeopardise deal
ABC Money
The United States expressed concern over the progress of negotiations for a nuclear energy deal with India as New Delhi wants key clauses rewritten, the Financial Times reported, quoting a senior US official.

India's MGF, Dubai's Emaar group buy Singapore's RSH
Monsters and Critics
Indian real estate major MGF group and Dubai-based Emaar Properties have acquired a majority stake in Singapore-based retailer RSH Ltd, officials and reports said Thursday.

AIG unit likely to buy stake in India's Avasarala Tech for $20 million
American International Group's (AIG) private equity arm AIG Global Investments is set to buy a minority stake in India's Avasarala Technologies for 20 mln usd, reported the Economic Times, citing Avasarala.

Indian auto firms eye global markets
BBC Online
The drive across Kancheepuram's sprawling paddyfields, through rural villages and past small Hindu temples, does little to prepare for the lush greenery at the end of the dusty, single-track road.

Race to expand Delhi's Metro
Financial Times
Across Delhi metal signs are sprouting up to mark the spots where new metro stations will emerge.

BAE in discussions with Indian partners for army vehicle contract
The Business
BAE systems, the British defence giant, is in discussions with Indian partners to produce a new generation of armoured vehicles for the Indian army.

India's steel production set to triple by 2015 as demand booms
ABC Money
India said Wednesday it has raised its forecast for steel production, which it expects will expand threefold by 2015 as companies raise output to take advantage of surging domestic and overseas demand.