INFRASTRUCTURE WINNER IN BUDGET 2009-10

In the Indian Financial Budget announcement for the fiscal year 2009-10, the first budget since the Indian National Congress led United Progressive Alliance (UPA) government won its second consecutive term to power in May this year, the infrastructure sector emerged winner as it was accorded top priority by the Indian Finance Minister.

This reinforces the government’s commitment to augment the antiquated infrastructure of the country, vital to achieve a Gross Domestic Product (GDP) growth of 9% per annum from the current 6.7%. The lack of adequate infrastructure is responsible for pushing back India’s GDP growth by about 2% annually, according to estimates.

The minster responded to an urgent demand for new infrastructure, announcing that 9% of the country’s GDP will be spent on infrastructure by 2014, from the current 5%. Estimates suggest that a third of this investment will come from private companies, paving the way for unprecedented investment opportunity under Public Private Partnership (PPP) model.

“However, the Finance Minister missed this opportunity to address sectoral reforms and liberalization in Foreign Direct Investment (FDI) norms, falling short of the investors’ expectations who sent the Sensex, the benchmark index of the Bombay Stock Exchange down 870 points to 14,043.40 (5.83%) on Monday, the level that it was at in the month of May. The minister further disappointed by not being explicit on the aspect of disinvestment of the Public Sector Undertakings (PSUs).” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, the India-focused cross-border advisory firm.

“India's challenge is not only to augment its antiquated infrastructure, but also to build new infrastructure to keep up with its $1 trillion economy and the aspirations of its 1.2 billion population that grows by 16 million people each year”

“The government’s spotlight on Infrastructure Development heralds the importance it attaches to the sector as a means to counter the prevailing economic woes.” added Rangar

Recognising that good infrastructure are a vital pre-requisite to build a strong nation, infrastructure development had been accorded key priority for the 11th Five-Year-Plan for the years 2007-2012 and the 12th plan period 2012-2017 with projected investment requirement of $500 billion and $1.5 trillion respectively by the Prime Minister's Committee on Infrastructure.

“These initiatives pale when compared to China that spends about 11% of its GDP for infrastructure development, indicative of the scope and extent of scaling up needed in infrastructure development in India to match global standards.” added Rangar

“The Interim Budget for the financial year 2009-10 announced in February by the Finance Minister of the ruling United Progressive Alliance (UPA), focused on infrastructure development, easing of Foreign Direct Investments (FDIs) norms and economic stimulus packages announced last year, had set the ground for how the alliance was approaching the General Elections that took place in May.” said Rangar

The minister was way short of taking the initiative further as various sectors including, pharmaceutical, retail, telecommunication, aviation, insurance, among others keenly awaited reforms to facilitate higher foreign investments. These sectors collectively have the potential to attract more $200 billion worth of investments over a period of five to ten years.


Indian Telecom: Scope of Growth & Investment

“India’s mobile telecommunication services sector has defied the economic recession. The incumbent mobile telecommunication service providers collectively add more than 10 million new subscribers a month, which is more than the population of Finland, home country of largest mobile handset manufacturer Nokia Corp., taking the country’s total tally of wireless subscribers to 400 million.” explains Rangar

To ensure quality service to match the growing subscriber base and achieve the target of 45% tele-density, the telecom sector is estimated to need about $73 billion during the next five years.

The world's fastest-growing mobile telecom services market estimated to reach a subscriber base of more than one billion by 2014, exposes the growth potential in investments that the sector can attract from aspiring global mobile telecom service providers.


Pharmaceutical Sector: Prescription for M&As

The Indian Pharmaceutical sector is positioning itself to be among the top five centres of global innovation as the Department of Pharmaceuticals (DoP), Government of India outlined its roadmap for the sector up to the year 2020 (Vision 2020). It foresees investments of about $2 billion annually, under the public-private partnership model.

“This spells out the scope of growth for global pharmaceutical companies and can fuel the next wave of mergers and acquisitions (M&As) in a market where consumer spending on healthcare increased to 7% in 2007 from 4% of the Gross Domestic Product (GDP) in 1995 and is expected to rise to 13% of GDP by 2015.” says Rangar

India also offers the benefits of low cost research and development (R&D), a domain in which it is estimated to capture about 10%-20% share of the world’s R&D business by 2020 from less than 1% currently.

Expansion by global pharmaceutical companies in to emerging markets like India becomes imperative as about $103 billion worth of patented drugs will go off patent in the next few years.


Retail Sector

“The retail sector in India is witnessing a huge revamp as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Easing regulations in the sector would help bring the benefits of organised retail to customers.” said Rangar

The overall retail market is expected to grow to more than $1 trillion from $262 billion by 2016, with organised retail at $165 billion, according to the Investment commission of India.


Aviation Sector

India’s aviation sector presents investment opportunities of $110 billion envisaged up to 2020 $80 billion in new aircraft and $30 billion in development of airport infrastructure. The investments will be needed to cater for approximately 300 million passengers that are expected to be airborne by 2020, according to estimates.

“With such sectoral growth indicators, the need of the hour was to take existing initiatives to the next level of implementation and completion, with enough scope of ramping up and innovation. To that extent, the finance minister would have helped by being more generous and explicit in his policy initiatives.” said Rangar

CLEARING THE FDI HIGHWAY

The Government of India has yet again unfolded the red carpet to Foreign Investments by augmenting its Foreign Direct Investment (FDI) guidelines to provide the much needed capital injection to cash-starved sectors, such as retail, real estate & infrastructure, telecommunication, among others, that need capital infusion of more than $600 billion over a period of five to 10 years.

The new guidelines state that foreign holdings in a company with majority control of Indians will not be treated as indirect foreign investment in any downstream subsidiary, thus expanding investment opportunities for global investors seeking to be a part of the growth story of the world’s second fastest growing economy.

The easing of FDI norms fall in line with other growth initiatives and stimulus packages announced by the government last year, which have started showing revival trends in key sectors like steel, cement, automobile, food and beverages and fast moving consumer goods (FMCG).

The cement sector grew 10% in December 2008 as compared to November and the year on year increase of 11%. Steel declined steadily through September, October and November last year. The sector recovered in December 2008 and January 2009 touching the May 2008 figure of 22.86 metric tonnes when the sectoral growth rate was 4.1%. The automobile sector grew too, with the January 2009 figures in the passenger vehicles sales showing a 32% rise over December 2008 and commercial vehicles at 23% over a similar time frame. FMCGs and food & beverages have recorded a year on year growth of 26.4% and 28% respectively for the quarter ended December 31, 2008. Such growth trends across sectors send assuring signals of economic revival and corresponding profitable investments for investors.

WHAT SLOWDOWN? INDIA NO 1 HIRING DESTINATION

India ranks at the top amongst 33 countries with most favourable fourth-quarter hiring plans. It is followed by Costa Rica, Peru, Singapore, Taiwan, Colombia, Romania, Poland, Argentina, Australia and South Africa, all of which have reported a positive employment outlook...

The Economic Times

UK'S BOOTS TIES UP WITH RELIANCE RETAIL

World’s leading pharma and beauty retailer, Boots Company, has signed a Bharti-Wal-Mart type agreement with Reliance Retail (RRL) to enter India’s health and wellness market. The two have decided to get into an equal joint venture for wholesale business and plan to operate front-end stores through a franchisee agreement.

The Economic Times

PROFIT-FOCUSED INFOSYS NOW LOOKS TO GROWTH

In a significant change of strategy, India’s second largest software services firm Infosys Technologies Ltd has said it will focus on growth, even if this means lower profitability — a reflection of a tougher business environment where Indian software firms are finding it harder to grow, and a contrarian play for a company that has sometimes walked away from deals that would have meant lower profitability.

MINT

Job market in India to remain positive: Manpower

The release of Manpower Employment Outlook Survey has revealed that job market in India is expected to remain positive yet cautious in the third quarter of 2008. Of the 32 countries and territories surveyed globally this quarter, employer hiring intentions continue to be robust in India with an overall Net Employment Outlook of +45%.

Indiainfoline
http://www.indiainfoline.com/news/
innernews.asp?storyId=70001&lmn=1

Red Fort Capital’s Rs 2,700-crore plan for real estate

Private equity firm Red Fort Capital plans to invest about Rs 2,700 crore in real estate by 2009, including acquisition of 2,500 acres of land in over 20 cities across the country.

The Financial Express
http://www.financialexpress.com/news/
Red-Fort-Capitals-Rs-2-700crore-plan-for-real-estate/266018/

India could attract $20 bn investment in 2008

The year 2007 is clearly the year that saw the rise of private equity funds. According to those tracking the industry, $13 billion (which is approximately Rs 55,000 crore) was invested in Indian markets in 2007. Simply put, a relatively new segment of investors have entered the scene and have pumped in Rs 55,000 crore into Indian companies. Ask any investment banker, and he will call the year 2007 a watershed year as all mandates for fund raising were completed and he is on track to receive a hefty bonus.

The Economic Times
http://economictimes.indiatimes.com/Market_Analysis/
Experts_forecast_20_bn_investment_in_2008/
articleshow/2661127.cms

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
http://economictimes.indiatimes.com/News_by_Industry/
Bharti_eyes_Big_Apple_as_starter_for_retail_feast/
articleshow/2646207.cms

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.

Mint
http://www.livemint.com/2007/12/23235111/
Spiralling-rentals-hit-retail.html

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
http://economictimes.indiatimes.com/News/News_By_Industry/Jobs/
Retail_cos_look_on_the_fair_side_of_hiring/articleshow/2638856.cms