1.

Kolkata has highest mobile, PC

penetration among students
Kolkata has emerged as the metropolitan city with the highest number of students using the internet
for information access, as well as the highest mobile and personal computer penetration among
students, according to a survey conducted by India’s largest IT solutions provider, Tata Consultancy
Services.

Around 90 per cent of students have mobile phones and 76 per cent have a home PC, beating the
national average.

This is among the largest youth surveys in India, and was conducted across 14,000 high school
children between 12-18 years of age in 12 cities during 2008-09.

The survey says Kolkata leads the pack in the usage of Wikipedia (31 per cent) for information
sourcing. Again, among all metros, Kolkata tops the preference for banking and financial services (20
per cent).

The survey shows ‘The Web 2.0 Generation’ are digital natives, who are highly technology savvy,
global in terms of aspirations and outlook, as well as increasingly optimistic about India’s economic
future.

“Nearly one out of 10 people on the planet are under 25 years old and living in India. That is the
significance of India’s next generation and what they do, think and aspire to hold insights for all those
who aim to engage with this Web 2.0 Generation,” said S Ramadorai, CEO and MD, TCS.

The TCS Generation Web 2.0 survey confirms that today’s students are shifting their academic and
social life online and embracing the world as true digital natives. This societal trend has important
implications for parents, educators, policy makers and future employers, as well as companies and
brands that want to sell to tomorrow’s generation, the survey pointed out.

The TCS Generation Web 2.0 survey, conducted for the first time in 2008-09, highlights that over 80
per cent of urban school children have access to mobile phones, find time for the internet alongside
school, classes and extracurricular activities, and are starting to embrace Web 2.0 tools like blogs and
social networking sites.

Ranbaxy to set up drug making unit

Indicating that the ownership change has not altered the growth plans of Ranbaxy, the country’s
largest drug maker has secured an approval from the Himachal Pradesh government to build a
new drug manufacturing facility in Baddi.

The new facility, meant to augment Ranbaxy’s production capacity to serve domestic business, is
to come up before March 2010. This is the first new manufacturing project since Japan’s Daiichi
Sankyo became its major shareholder last year. Company sources declined to provide details of
the project but said it is “well on track to qualify for tax benefits”. The estimated cost of the
project is known to be around Rs 40 crore.

While the Baddi project is to augment domestic supplies, Ranbaxy’s Mohali pharma SEZ project,
also in the process of execution, is meant for exports. “Our SEZ Greenfield project at Mohali is
progressing as per schedule and will augment our already significant manufacturing capability
when complete. The product and volume plan would be to try and maximize financial benefit”, a
company official said.

Ranbaxy’s domestic drug manufacturing facilities are located at Dewas (Madhya Pradesh),
Paonta Sahib (Himachal Pradesh), New Delhi, Jejuri (Maharashtra), Goa, and Mohali and Toansa
(Punjab). The Paonta Sahib and Dewas facilities are under the regulatory scrutiny of the United
States Food and Drugs Administration and products from these facilities are not allowed to be
marketed in the United States. The company is in the process of complying with US regulations
and hopes to resolve the problem soon.

3. ONGC gets nod to partner L N Mittal

for Kazakh venture
The government has given ONGC its approval to partner Lakshmi N Mittal for buying 25 per
cent stake in Kazakhstan’s prospective Satpayev oilfield in the Caspian Sea.

ONGC Mittal Energy Ltd (OMEL), the joint venture of ONGC’s overseas arm ONGC Videsh
Ltd (OVL) and Mittal Investment Sarl, plans to invest $400 million in the Satpayev oil field,
official source said. The Cabinet Committee on Economic Affairs last evening gave OVL its
approval to invest its share of $204 million in the oilfield.

OMEL will pay $26 million as signing amount to the Kazakhstan government for 25 per cent
stake in Satpayev field. Besides, the partners will also pay $80 million as one-time assignment
fee, they said.

Over and above these, the two have committed a minimum exploration investment of $165
million and an additional optional exploration expenditure of $235 million.

Satpayev is situated in a highly prospective region of North Caspian Sea and in proximity with at
least four fields. A peak output of 287,000 barrels per day is envisaged from the 256 million
tonnes of reserves in the field.

Kazakh national oil firm, KazMunaiGas, will be the operator of the field, holding remaining 75
per cent stake.

OVL, the overseas arm of state-run ONGC, and Mittal Investment Sarl are equal partners in
OMEL.
Ruias-owned Essar Oil today announced acquisition of 50 per cent stake in a 4 million-tonne oil
refinery in Kenya. The company acquired 50 per cent stake of western energy majors Shell BP
and Chevron in Kenya Petroleum Refineries Ltd, Essar said.

4. Infosys gets CISF cover

The home ministry has selected 10 corporate houses, including Wipro, IBM and TCS, to provide
them Central Industrial Security Force (CISF) cover, in view of the threat perception and
vulnerability of these corporate entities. While Infosys on Friday became the first private sector
establishment in India to be provided security cover by the elite security force, cover to the rest of
the corporate houses will be provided in a phased manner, asenior CISF official said.

At least 79 corporate houses, including Reliance, Tata and Oberois, had earlier approached the
Centre seeking CISF security cover for their installations. Other business houses and vital
organisations that will get CISF security cover include Reliance, Essar, Jindal, Electronic City
(Bangalore) and the Bombay Stock Exchange, CISF InspectorGeneral R K Mishra told Business
Standard .

CISF is planning to deploy 79 jawans for guarding Electronic City, which houses most of the elite
IT companies in Bangalore, and about 71 personnel for Wipro’s Sarajapur Road campus. In total,
CISF expects the number of personnel deployed in manning these establishments won’t be more
than 1,000. The cost incurred for the deployed of personnel in these companies and
establishments will be borne by the business houses concerned.

Infosys will spend Rs 1 lakh per day towards the expenses of the 101 CISF personnel, including
salary, medical expenses and boarding. In total, the company will spend Rs 3.6 crore per annum
towards CISF cover in its Electronic City campus. Infosys Chairman NR Narayana Murthy said
that the security cover, coupled with the company’s private security guards, has made the
company the “most secured corporate houses in the country”.

5. US economy: contraction slows as

recovery beckons
The worst US economic slump since the Great Depression abated in the second quarter as
government spending programs started to kick in, while the deepest retrenchment by consumers
since 1980 augured a muted recovery.

Gross domestic product shrank at a better-than-forecast 1 per cent annual pace after a 6.4 per cent
drop the prior three months, Commerce Department figures showed on Friday in Washington. A
survey of purchasing managers showed separately that business contracted less than estimated
this month.

Stabilisation in homebuilding and the liquidation of unsold goods sets the stage for gains in GDP
starting this quarter, analysts said. At the same time, rising unemployment and weakening Stocks
Government spending rose at a 5.6 per cent pace last quarter, the most since 2003, as President
Barack Obama’s $787 billion stimulus program began to take effect. The funds are aimed at
helping states retain workers, financing infrastructure projects and reducing tax payments.

GDP has fallen four straight quarters, the longest ever.

Consumer spending, which accounts for about 70 per cent of the economy, fell at a 1.2 per cent
pace following a 0.6 per cent increase in the prior quarter. It was forecast to drop 0.5 per cent,
according to the survey median. Purchases slid 2 per cent since the peak at the end of 2007 — the
most since a2.4 per cent decline in the 1980 recession. “It’s important to put it in perspective,”
Christina Romer, who chairs the White House Council of Economic Advisers, said in a
Bloomberg Television interview. “We are seeing some sign the consumer is stabilising and, of
course, the tax cut that was included in the recovery act I think is going to help consumers feel
more confident.” The IMF, in an annual review of the US economic outlook, today said it
anticipates a “gradual” recovery.

The Labour Department reported separately on Friday that employment costs — a measure that
includes wages, salaries and benefits — rose 1.8 per cent in the second quarter from a year
before, the smallest gain in figures dating to 1982.

The dollar and the yen declined versus the euro after a government report showed the US
economy shrank less than economists forecast, reducing the demand for the currencies as a
refuge.

The Swedish krona advanced against the euro to the strongest level since December after a
government report showed the economic contraction in the Scandinavian country slowed in the
second quarter. The US currency headed for a fifth month of declines against the pound, its
longest run in five years, after a UK survey showed consumer confidence held at the highest level
since April 2008.

6. US Bill to restrict OTC derivatives

holdings
US financial regulators would gain the power to restrict holdings of over-thecounter derivatives
under legislation to be crafted in the coming months, the chairmen of two House of
Representatives committees said on Thursday.

Barney Frank of the Financial Services Committee and Collin Peterson, of the Agriculture
Committee, said anti-speculation provisions would be part of legislation to bring the $450 trillion
OTC derivatives market under federal regulation.

The bill would also clamps down on a type of derivative called credit default swaps (CDS), which
have been blamed for magnifying global economic distress by spreading losses from bets on risky
mortgages and other debt.

The swaps are used to insure against debt defaults and speculate on borrower’s credit quality. A
key question for the derivatives bill is whether to ban outright “naked” CDS, where the trader or
investor does not hold the underlying asset being insured.

An alternative is requiring regulators to monitor CDS trading and restrict the size of holdings —
position limits — by dealers and large investors. “We will have in the bill, I believe, full authority
to SEC and CFTC to impose limits, both overall position limits and (trading) time outs,” said
Frank, referring to the Securities and Exchange Commission and the Commodity Futures Trading
Commission. The SEC polices stock markets and the CFTC oversees futures markets. The
agencies would split the workload of handling OTC derivatives under the legislative outline by
Frank and Peterson. Frank said his committee would begin work on the bill after the August
recess and he hoped for a floor vote this year.

7. Buffett posts $1 bn profit

Warren Buffett’s Berkshire Hathaway Inc earned a $1 billion paper profit from an investment it
agreed to make in Chinese carmaker BYD Co less than a year ago.

The automaker has jumped fivefold in Hong Kong trading since the deal was announced on
September 27, helped by Buffett’s investment and rising demand for fuel-efficient vehicles.
Three days earlier Berkshire agreed to an investment in Goldman Sachs Group Inc that has since
generated a paper profit of about $2 billion.

“When Warren Buffett says the sun shines out of somebody’s backside, it’s worth paying
attention,” said Guy Spier, principal at New York-based hedge fund Aquamarine Funds LLC,
who owns Berkshire shares and has researched BYD. Buffett is “betting on the jockey in this
case,” Spier said, referring to BYD’s Chief Executive Officer Wang Chuanfu. Berkshire’s
MidAmerican Energy Holdings Co unit agreed to buy 225 million new shares of BYD for HK$8
apiece. That stock now has a market value of HK$9.66 billion ($1.25 billion), based on today’s
closing price. Buffett will pay HK$1.8 billion.

BYD plans to sell shares on the mainland to help fund the development of its auto business. The
company intends to offer as many as 100 million yuandenominated shares in Shenzhen, it said in
a July 16 statement.

In May, the automaker agreed to explore cooperation with Volkswagen AG in areas including
hybrid cars and lithium-battery powered electric vehicles. The company will also work with
Buffett’s MidAmerican on the development of rapid-charge batteries for storing power from wind
and solar generation, MidAmerican Chairman David Sokol said in September.

Goldman Sachs turned to Buffett after the global credit crunch forced Lehman Brothers Holdings
Inc into bankruptcy. Berkshire agreed to buy $5 billion in preferred shares paying 10 per cent
interest and took options to buy $5 billion of shares at $115 apiece. Goldman closed at $162.42 in
New York Stock Exchange composite trading on Thursday.

8. Can RBI’s forecasts be trusted?

The RBI governor, Dr Subbarao, recently announced that he was seeking discussion and perhaps
even criticism from within his organisation. This is definitely newsworthy and Dr Subbarao
should be applauded for taking this initiative. The RBI is perhaps the last of the feudal
organisations in India (along with all the political parties) and this attempt at an entry into the
20th century is laudable. I wish Dr Subbarao luck; having worked on two RBI committees a
decade apart (in 1997 and 2006, under the chairmanship of former Deputy Governor and atrue-
blue RBI man Mr Tarapore) I can say with some experience that the RBI does not take lightly to
anti-feudal forces.

No sooner had Dr Subbarao made his plea for dissension than the empire struck back. In its
quarterly review on Tuesday, July 21, the RBI viewed the economy in a dour manner (why so
serious?). It kept tight monetary policy tight (highest real interest rates in the world if one uses
the GDP deflator) and warned of impending inflationary dangers. Believing full throttle in this
gloomy stagflation outlook, the RBI lowered the forecast for GDP growth for 2009/10 from 7.5-8
per cent (made in January 2009) to 6 per cent. Correspondingly, it raised its forecast for WPI
inflation in March next year from 3per cent to 5 per cent ( see table ). These pronouncements are
put into focus by noting three facts. First, internationally, India is the only economy that is
lowering its GDP forecast, while most are debating not that GDP will be higher in 2009, but how
much higher. Second, while all expect inflation to be higher than zero inflation, there is no central
banker of a nonbanana republic (that I know) who is forecasting this high inflation.

The third fact is perhaps the most damning. The table shows the past forecasts and the errors on
both. Note that it is nobody’s contention that the forecast errors should be zero. That would be
like forecasting the past. What is desirable is that the forecasts have a randomness to them such
that over time the errors add up to zero. Unfortunately, nothing of the sort occurs with RBI
forecasts. Very consistently, the RBI underestimates GDP growth by about 1 to 1.5 per cent — it
gloriously missed the entire growth acceleration between 2004 and 2007. In May 2004, the
growth forecast for 2004/5 was 8.1 per cent, but in October it got lowered by 2 percentage points.
Which means that the RBI was expecting GDP growth (in October 2004) to average only 4 per
cent for the next two quarters! It turned out to be twice that rate.

In 2008, perhaps the RBI noted its erroneous ways and started forecasting higher GDP growth for
the great crisis year of 2008/9. At the peak of the crisis (July 2008), it forecast GDP growth of 8
per cent. A month later, year-on-year industrial production was reported to be negative — the
very first negative number in the developing world, suggesting that the great Indian slowdown of
2008 was almost entirely a home-grown affair (note that the world collapsed a full three months
after the Indian collapse and after Lehman in September).

The inflation forecasts are no better, and in many respects shockingly worse. (That this might
have something to do with the deeply flawed quantity theory of money model that the RBI uses
has been commented upon ad nauseum in these columns.) The data are from quarterly reports of
the RBI. In end January 2009, which is two months before the target of the forecast (March
2009), the RBI’s considered assessment was that year-on-year WPI inflation would be 3 per cent.
At that time, the WPI index was 229.6 and the March 2008 WPI figure was 225.5. A 3 per cent
year-on-year increase would mean an index level of 232.3 in March 2009. Which means that in
just two months the RBI was expecting the index to rise by 1.2 per cent or close to 7 per cent at
an annual rate. (If seasonal factors are incorporated into the exercise, which they should, but
which the RBI adamantly refuses to incorporate into its thinking, the “performance” would be
worse.) This when the world was rightfully talking of the genuine possibility of a second great
depression worldwide.

Maybe the RBI will be right this time; and maybe only the RBI will be right and the rest of the
world wrong. Maybe. It is equally possible that we need to assess the RBI forecasts by a different
yardstick, namely not research but ideology. Consider for amoment that the RBI belongs to a
strict monetarist school and only looks at the quantity of money supply. Consider also that as a
central banker it believes in always erring with tightness. Consider also that its ideology prevents
it from being open-minded about different explanations for economic phenomena. If so, then the
RBI will act exactly as it has acted.

9. DIPLOMATIC SMILE Nirupama Rao

takes over as Foreign Secretary
NEW INNINGS: Nirupama Rao, a 1973-batch IFS officer, has taken over as the new foreign
secretary of India, succeeding Shivshankar Menon. Rao, 58, is the second woman after Chokila
Iyer to hold the post and will have a tenure of 17 months, said a top foreign ministry official.
Prior to her assignment, Rao was the ambassador to China REUTERS

10. Testing time for GMAT in India

Acrucial test to gain admission in business schools in the US has seen a fall in aspirants for the
first time in five years. Applications for the graduate management admission test (GMAT),
administered by the Graduate Management Admission Council (GMAC), have dipped 9 per cent
from around 6,260 in 2008 to 5,700 in 2009.

In each of the preceding four years, the number of applicants had grown 30 per cent. A top
GMAC functionary said this was because of the worldwide economic slowdown. “When an
economy slows down, initially people go back to school. But as recession stabilises, people are
less likely to give up their jobs. Rather than taking up full-time studies, they enroll for weekend
and part-time programmes,” said Dave Wilson, president and CEO, GMAC.

Wilson said that another reason for the decline in the number of tests taken so far was the
depreciating rupee. When the currency depreciates against the US dollar, it makes a
dollardenominated purchase more expensive in local currency. Thus, tuition and fees for MBA
programmes have gone up as the rupee has depreciated vis-à-vis the dollar.

“When the rupee declines against the dollar, it becomes much more expensive to attend an MBA
programme overseas. Many candidates will either decide against attending such programs or will
defer their decision to attend until there is either a recovery in the rupee or they accumulate more
savings,” said he. Of late, there has been areversal of this trend. The rupee has appreciated 1.70
per cent between January (Rs 48.76) and July 2009 (Rs 47.93).

Prominent Indian B-schools, including the Indian Institute of Management, Ahmedabad, and
Indian School of Business (ISB), evaluate GMAT scores for their one-year management
programmes. ISB was the topmost Indian B-school where Indian students sent scores to in 2008.
All told, around 852 management education programmes in India use GMAT scores.

11. Dabur forays into premium skincare

mkt
Leading Ayurvedic and natural health care firm, Dabur India, has forayed into the premium
skincare market by launching a new product range and has targeted 8 per cent market share in the
next eight months.

The product range — Dabur Uveda skincare expert from Ayurveda, has critical herbal extracts
derived from a blend of authentic ayurvedic ingredients, Dabur India’s Vice President, Personal
care,Vikas Mittal said. Dabur expects to generate 8 per cent market share in the next six to eight
months, Mittal said.

“We are expecting a good revenue from these products in the next fiscal as well. We have plans
to introduce some new products for both men and women in the near future,” he said. The range
consist of complete fairness cream, 2 in 1 moisturiser, moisturising face wash and clarifying face
wash.

12. GM likely to back RHJ offer for Opel

General Motors’ Opel unit may be forced into bankruptcy should the US auto maker and the
German government fail to agree on a buyer, according to three people close to the trust that
controls the division.

The trust’s five-member board doesn’t back an offer by Magna International Inc, the Canadian
parts maker preferred by Germany, said the people, who asked not to be identified because the
talks are private. They said the officials favor a bid from investor RHJ International SA or
pushing Opel into insolvency.

“We wouldn’t be doing all these negotiations if we wanted to liquidate Opel,” said Chris Preuss,
a GM spokesman. “We simply cannot move forward on the bid presented by Magna, a bid that is
substantially out of line with the memorandum of understanding the government endorsed, and
we’re working with Magna to get the bid to alevel that can be executed.” Magna, whose offer is
backed by financing from Russia’s OAO Sberbank, has made promises to its partner on assets
that were never in the original agreement with GM, said one of the people close to the trust.

13. Beijing Auto to buy 40% of Daimler

joint venture
Beijing Automotive Industry Holding Corp will pay 700 million to 800 million yuan ($103-$117
million) for a 40 per cent stake in Fujian Motor Industry Group’s 50-50 commercial vehicle
venture with Daimler AG in southeast China, an official newspaper said on Saturday.

Daimler’s 34 per cent stake and China Motor Co’s 16 per cent stake will remain unchanged.

The venture, Fujian Daimler Automotive, was established in June 2007 with annual production
capacity of 40,000 units.

Earlier this year, Daimler also reached agreement with Beijing Auto’s subsidiary Beiqi Foton to
make heavy-duty trucks.

14. UNKNOWN QUANTITY

Towards the end of our conversation director Ram Gopal Varma remarks drearily, “Nothing
disturbs me after RGV Ki Aag. ”I’m stumped. “I said, nothing disturbs me after

Another horror film? “No, this is not a horror film,” groans Varma, adding, “Horror films, by
definition, surprisingly, will ensure that the audience uses its imagination. “That’s why,” he adds,
“it is called Agyaat , meaning ‘the unknown’.” The story of his new film, says Varma, came to
him while he was shooting Jungle ,a hostage drama starring Fardeen Khan and Urmila
Matondkar. The film was well received by audiences and critics alike, especially since it came at
a time when (now slain) sandalwood smuggler Veerapan was on the run. “Just walking into the
jungles, you see, was scary. Why? Because you realise that you’re shifting away from the
structured atmosphere that exists in the cities and metros to something wild, into the unknown,”
he explains thoughtfully.

That’s how Agyaat was born. Every time Varma went on long walks in the jungle of Bandipur
Forest Reserve in Karnataka — where Jungle was shot — he imagined it as the setting of
Agyaat .“I realised then that if I wanted to create a scary film, all the elements for the film were
in this setting. Every branch, every leaf had a life of its own, and it could be scary to just imagine
that something unknown was watching you all the time,” he people bashed up and ripped apart
and it happens all the time.” How did he deal with the failure of RGV Ki Aag ,his most ambitious
project that was reduced to a pathetic joke and declared the biggest dud in Bollywood? “Within a
week of the film’s release I had started shooting for Phoonk ,so it wasn’t a big deal.
 15. Los Angeles screenplay bank eyes
Bollywood
Script P.I.M.P (Pipeline Into Motion Pictures), one of Los Angeles’s largest story bank for
screenplays, is eyeing Bollywood.

Chadwick Clough, CEO and founder of Script P.I.M.P, said that he had been running a successful
script writing competition in the US for the last nine years, which had grown into one of the
largest story banks for screenplays in Los Angeles.

“Over 80 of the writers I have discovered have signed agents and managers, five scripts have
been produced into Hollywood feature films and the winner of last year’s competition was
recently signed by Warner Bros to write the movie He-Man,” he said.

“So I knew there is a demand for a competition/company like ours and that screen writing in
India is maturing to the quality and discipline of international films,” he said.

Script P.I.M.P has joined hands with ‘ScriptWalla’, a script writing workshop started by well-
known script writer Kamlesh Pandey and Ben Rekhi from Hollywood.

“We are still sorting out the workflow between Script P.I.M.P and ScriptWalla. I am excited
about the possibilities of bringing what I have learnt and done into a new market,” he said. He
said like ‘ScriptWalla’, Script P.I.M.P had similar beginnings as awriter’s workshop before it
grew into a competition.

Script P.I.M.P has joined hands with ‘ScriptWalla’, a script writing workshop started by Kamlesh
Pandey and Ben Rekhi

16. Tata close to signing aid deal with UK

After year-long negotiations, Tata Motors edged closer to signing a financial aid package with the
British government for its struggling UK subsidiary Jaguar Land Rover, a media report today
said.

Tata wants the government to underwrite a £170 million commercial loan to secure the short-term
survival of Jaguar Land Rover but baulked at the conditions the government originally set.

Executives from Tata and Jaguar Land Rover met officials from Lord Peter Mandelsons business
department on Friday to discuss the agreement. Tatas advisors are still going through each clause
but no substantive areas of disagreement remain, the report said.

In May, it successfully completed the refinancing of the $3 billion (£1.8 billion) bridging loan it
had taken out to buy Jaguar Land Rover from Ford in 2008. Moreover, the drastic decline in
vehicle sales in India has eased.

Simultaneously, separate talks were on between the government and JLR about providing
guarantees to the £340 million loan offered by the European Investment Bank. This proposed
loan is designed to help JLR adopt more fuel-efficient technologies and is not tied to its short-
term survival.

17. Essar buys 50% stake in Kenyan

refinery

MARKING its foray into the overseas refining market, Essar Energy Overseas, a group company
of the diversified Essar Group, has completed the acquisition of a 50% stake in Kenya Petroleum
Refineries (KPRL) for an undisclosed amount. KPRL runs a 4 million metric tonne per annum
(MMTPA) refinery in Mombasa, Kenya. The stake was bought from global majors like Shell, BP
and Chevron, who have been associated with the refinery for the past 50 years. The Essar group
company will now invest another $450 million to upgrade the refinery.
The agreement to acquire the stake in the refinery was announced in January last year. The
Kenyan government will continue to hold the remaining 50% stake. This acquisition is a step
towards the Essar group’s vision of reaching a global refining capacity of 1 million barrels per
day. The Ruias-owned Essar Group currently operates 2.8 lakh barrels per day (bpd) refinery in
India. The company is in the process of expanding this to 3.2 lakh bpd by 2010 and to 7 lakh bpd
by 2011.
Commenting on the acquisition, Essar Group chairman Shashi Ruia said: “This is an excellent
addition to our oil assets and fits well with the group’s strategy of building and becoming a
global oil and gas player. This will further enhance our presence in the growing African market.”

When queried on the reasons for the transaction taking 18 months to complete, Prashant Ruia,
chief executive, Essar Group, through a conference call from Kenya, told ET, “Kenya went
through its elections which delayed the process. We look forward to working with the Kenyan
government and making KPRL a global market leader.” The Kenyan government executed its
pre-exemption rights in favour of the Essar Group for consideration of $2 million.
The Mombassa refinery is the only refinery in eastern Africa and produces gasoline, diesel,
kerosene fuel oil and liquefied petroleum gas (LPG). In that context, Essar Oil CEO Naresh
Nayyar said, “With this acquisition, Essar expects to play a major and vital role in the African oil
and gas markets. Demand for petroleum products in KPRL’s markets is estimated at 5 mmtpa.
Going forward we would foray into oil retailing in this sub-continent.”
The Essar Oil stock gained 4%, or Rs 5.65, on BSE on Friday, to close at Rs 151 over the
previous day’s close. The stock has gained 8% in the past week.

18. US, Switzerland reach deal on UBS tax

dispute
THE US and Switzerland reached an agreement in principle to settle a Justice Department
lawsuit against UBS seeking the names of 52,000 account holders, a lawyer told a federal judge
in Miami. A settlement may be submitted in writing on August 7, Justice Department attorney
Stuart Gibson said on a telephone conference call. No details of the accord were provided.
The Internal Revenue Service seeks the data because it suspects American account holders may
have evaded taxes. Switzerland called the case a threat to its sovereignty and said an adverse
ruling by Gold could force UBS to violate criminal laws protecting bank secrecy. The Justice
Department said a settlement must force UBS to provide data to the IRS on a ‘significant
number’ of account holders.
The settlement will avert a twoday evidentiary hearing that Gold planned to begin on August 3.
The US sued UBS on February 19, a day after the largest Swiss bank by assets agreed to pay
$780 million to defer prosecution for helping wealthy Americans evade taxes. UBS agreed to an
unprecedented breach of Swiss secrecy laws by giving the Internal Revenue Service data on
more than 250 accounts.
UBS, based in Zurich, avoided prosecution by admitting it helped taxpayers hide money in
Swiss accounts to dodge paying US taxes. UBS admitted that from 2000 to 2007, its Swiss
private bankers helped wealthy Americans evade US taxes by setting up sham offshore
companies in tax havens. UBS said it created misleading forms saying those offshore companies,
not taxpayers, were the beneficial owners. — Bloomberg

19. Making SPACE

COMMERCIAL office space is showing slow but steady signs of recovery. In fact, many
companies have been shifting to alternative, cheaper locations due to the cost advantage they
offer. Moreover with adequate supply expected to come up in 2009 and 2010 in various cities,
the commercial office market stands poised for growth. So which are the ideal locations to invest
in commercial office spaces and which should be given a skip?
Manish Aggarwal, executive director, Investment Services, Cushman & Wakefield (C&W)
India says investment in commercial space requires multiple considerations as the risks are
greater and so are the returns. “Purchase should be done in consultation with experienced parties
where due diligence such as legal, demand-supply and other studies can be undertaken to
minimise losses. Broadly speaking, the best spaces to invest are either occupied or pre-leased
space. Most cities have close to double digit vacancy levels and so the risks of buying
unoccupied or non pre-leased space can be very high.”
Developers feel commercial real estate transactions, considered a key indicator of economic
activity, are showing first signs of stability after a drastic fall during the early part of this year.
“Companies that could not afford rentals earlier in Central Business Districts (CBD) or Suburban
Business Districts (SBD) of metros have now started looking for space. Deals for fresh
expansions have also started which is a very positive sign,” feels Rohit Malhotra, CEO, Realtech.

The trend right now is that companies in expansion mode are looking at relocating to cheaper
commercial office locations, says Rajeev Rai, V-P, corporate, Assotech. “In the CBD areas of
major cities, where there is no or negligible supply of fresh commercial spaces, rentals will
continue to rise steadily. On the other hand, in the extended/peripheral business districts of these
cities, rentals are expected to remain stable with significant upcoming supply. So investors
looking for large format offices or reduction in costs, should opt for peripheral business
districts.”
Some, however, are of the view that commercial supply and demand balancing is expected to
take more time with the first quarter of 2010 seeing improvements. “The demand for commercial
real estate, particularly office space and retail space, will start improving in 6-8 months. It is
expected that all industries will be on track in six months and this will benefit the commercial
office market as well,” says Ajay Midha, V-P, commercial, Raheja Developers. Mr Midha feels
that Tier I cities and satellite towns such as Noida, Gurgaon, Pune, and Mohali will always be the
best choice for investors and companies.
But there have been significant advantages for companies not just in price negotiations but in
other aspects as well. Along with the benefit of lower rentals, companies now have more
innovative construction models and schemes to choose from. Options such as Build-to-Suit,
mixed-use developments and assured returns to tenants have all been doled out to woo buyers
and tenants.
But do exercise some caution before opting for space only on the basis of cost effective rentals.
Aspects such as the right developer, building specifications, design formats, connectivity and
physical infrastructure, need to be considered. Moreover, even though significant supply is
coming up in most cities, one needs to consider not just the upcoming supply but also the
existing supply, current vacancy rates in the particular micro market, along with tenant profile
and location advantage, sums up Mr Aggarwal of C&W.

20. RISK-RETURN RELATIONSHIP

Should ratings be sole criterion to make investment decisions?

IT WAS the retirement party of Rakesh Chopra when his ex-boss, who had been specially
invited, took him aside for a piece of advice. “Chopra, don’t repeat the mistake I committed.
Consequent to my retirement three years back, I invested my entire savings in mutual funds and
stocks. When the need arose last year for funding my wife’s prolonged illness and my son’s
tuition fees abroad, I was in for some harsh reality check. The market value of my investments
had halved and I had to book losses to generate cash. I strongly advise you to put your funds in
AAA rated bonds, post office schemes and fixed deposits of PSU banks only post retirement,”
said his ex-boss. These words kept on ringing in Chopra’s mind when he sat down the next
morning to plan his portfolio with an investment adviser. He planned to explore putting money in
those star-rated companies. But first lets introduce you to one concept: credit rating.

CREDIT RATING

It is an independent opinion on the relative ability and willingness of a borrower to meet the
maturing debt obligations in a timely manner. The rating scale starts with AAA (lowest credit
risk) and ends at D (default grade, highest credit risk). Going by the normal yardstick, one should
always go for the best. So, should all the investors invest only in AAA rated issues? To fathom
this paradigm, we have to understand the riskreturn relationship.
RISK-RETURN & RISK AVERSION

Generally, AAA rated issuers/issues offer lower coupon rates i.e. the return for the investor is
less as compared to issues rated lower. As one moves down the rating scale, the benchmark
interest rates increase. Why so? It is because of the relationship between risk and return —
higher the risk, greater has to be the expected return on that investment and vice versa. An
investor hoping for higher returns has to embrace the risks that are attached to it.
That brings us to another factor — risk aversion. Risk aversion means that, in general,
investors tend to choose a less risky alternative when choice exists that will allow for the same
degree of benefit. Higher the risk aversion, lower is the risk tolerance. From the perspective of
financial markets, investors scout for either similar return for lower risk or similar risk for a
larger return.
Most investors are risk averse. But how does an investor decide how much risk to be taken? In
reality, there is nothing like optimal risk-return trade off. It is often a derivative of various factors
like time horizon, liquidity, and some investor specific circumstances.

WHAT TO LOOK FOR

Having viewed the investment decisions from this perspective, can we now say that credit rating
should be the sole criteria for investment decisions? The answer is clearly no. Credit rating has to
be necessarily seen as one of the inputs for informed decision making by investors. For someone
in the high tax bracket, AA rated tax free municipal bonds might be an attractive investment
option as compared to AAA rated corporate bonds. To investors like life insurance companies,
matching their assets and liabilities is paramount. Based on their own actuarial inputs, they could
be more inclined towards longer tenure debt as compared to say, commercial banks. However, in
the process, they could be required to look at lower rating categories. It would be incorrect to say
that they have gambled by not investing in only the AAA rated issues. Depending upon their
own underlying objective of investment decision, they try to strike a proper balance between risk
and return. In case of banks, if the entire lending is to AAA rated clients only, one can assume
the kind of impact it could have on their yield since such borrowers typically get the funds at
rates much lower than the bank PLR.
The risk-return trade off is extendable to equities as an asset class also. The relative safety of
investing in blue chips may not result in highest returns. In case of IPOs also, the IPO grading is
an opinion on the relative fundamentals of the company. The investor decision is guided to a
large extent by the valuation and risk tolerance. Even a highly graded IPO can fail to enthuse
investors if the valuation is too high.
Credit rating is a culmination of analysis covering various factors like industry, management,
business, financial and project risks. The analysis not only looks at the past performance, but the
projected operations also. As such, it does involve certain set of assumptions to arrive at the
future estimates.
In the dynamic world of business, assumptions can go wrong at times and the projected
performance could be lower than projected. Depending upon the changed credit profile and
outlook, ratings can potentially change. Hence, an investor needs to juxtapose the resultant
changes against investment criterion.
 So, returning to our example, Chopra needs to look at the risk-return trade off as also a proper
asset allocation. As they say, there are no free lunches in this world!

21. Mind the GAPS

BY the time you read this, the new Reserve Bank of India (RBI) norms that enforce a third-factor
identification for all online credit/debit card transactions will be already applicable. As a
cardholder, you will no longer be able to make online purchases or payments if you haven’t
registered yourself for an additional security layer with your partner bank.
This is what bankers has to say on the subject: “Verified by VISA or MasterCard SecureCode
only provides an extra layer of security. In case, wrong password is entered as part of this extra
authentication, bank informs e-commerce merchant and if merchant still goes ahead with the
transaction, it becomes merchant’s liability. On the other hand, if the password is correct and
even if customer disputes the transaction, it is still a customer’s liability.”
Stumped! To help you with all such concerns and questions, here’s a ready reckoner on what
does the new security layer implies for you as a cardholder.

FIRST THINGS FIRST

On the face of it, the move is a welcome one. It will ensure you as customer have a third factor
authentication which until now was not readily available on the plastic and thus reduce the
chance of an online fraud. “From the cardholders’ perspective, another layer of protection gives a
lot more comfort in terms of security for the online transactions using credit/debit cards . Though
it will also mean you may have to go through another step to complete your transaction online
but doing that is always better than to deal with a fraud and face the risk of losing your hard
earned money,” says Basant Shroff, associate director, financial services — advisory services,
Ernst & Young. As per RBI figures, Indian banks lost out on almost Rs 37 crore in 12,959 credit
card fraud cases reported last year.
Some banks, in fact, have gone a step ahead creating the security wall. For instance, while
generating 6-digit PIN as an additional security layer at ICICI Bank, you are also asked to type a
message, known as personal assurance message (PAM). This PAM is known only to you. “When
you type your credit card number on the merchant’s website, it will take you to the bank’s
website to complete the transaction, where you need to type in the PIN,” explains a ICICI Bank
spokesperson.

The new guidelines also make it compulsory for banks to intimate the customers via an online
alert system for any transactions exceeding Rs 5,000 on their card. Though most of the banks
send text message on transactions above Rs 5,000, banking experts feel the day is not far when
you will be given the leeway to zero-in on the amount you feel above which you should receive
an alert.
READ THE FINEPRINT

• If you are an American Express cardholder, make sure you don’t share your address at retail
shops, food joints
• If correct password is entered as part of extra authentication, even if you dispute the
transaction, it is still your liability

• Register only those cards which you use frequently for online purchases

• Banks can charge you for the new security layer service in future. Right now, it is free of cost

22. BRITNEY SPEARS to open restaurant

IN LOS ANGELES
POP princess Britney Spears is set to splash out on a new soul food restaurant in Los Angeles
which she wants her father to run. The ‘Toxic’ singer is keen for her father Jamie Spears, who
was made co-conservator of her personal and professional affairs following her public
breakdown last year, to run the new eatery.
“Britney just wanted to give him something useful as a sign of her appreciation. After all their
ups and downs she knows he’s always got her best interests at heart,” a source said. Spears who
opened her ill-fated New York restaurant Nyla in 2002 plans to serve soul food at the Los
Angeles eatery. Soul food is popular in the southern states of US and includes dishes such as
fried chicken, barbecued ribs, black eyed peas and sweet potato. Earlier this month, it was
revealed Jamie wants a judge to review the conditions of the conservatorship agreement when
the singer’s ‘Circus’ world tour concludes in November. “Jamie can’t ask the judge to end it-just
to review it. The judge then decides if Britney should regain control of her life,” the source said.
Jamie thinks that the singer, who currently has shared custody of her two children with ex-
husband Kevin Federline, Sean Preston, three, and twoyear-old Jayden James, is now strong
enough to look after herself.

23. Magsaysay award for social activist

Deep Joshi

SOCIAL activist Deep Joshi, who has done pioneering work for ‘development of rural
communities’, was named along with five others for the prestigious Ramon Magsaysay Award
for 2009, considered as Asia’s equivalent of the Nobel Prize.
Joshi is being recognised for “his vision and leadership in bringing professionalism to the NGO
movement in India, by effectively combining ‘head’ and ‘heart’ in the transformative
development of rural communities,” the Board of Trustees of the Ramon Magsaysay Award
Foundation said in a press statement from its headquarters in Manila.
A masters in engineering from the Massachusetts Institute of Technology (MIT) and a
Masters in Management from the Sloan School, MIT, Joshi worked with the Systems Research
Institute, the Ford Foundation and has nearly 30 years of experience in the field of rural
development and livelihood promotion. He also advises the Government on poverty alleviation
strategies.
Joshi was the co-founder of Professional Assistance for Development Action (PRADAN) and
now works as an independent consultant for the NGO which works for rural poor, promoting
self-help groups, developing locally suitable economic activities, mobilising finances and
introducing systems to improve livelihoods of rural people.

24. Essar eyes merger with Dhabi in

Uganda

THE Ruias-owned Essar Group is looking at merging its telecom licence for Uganda with the
Dhabi Group’s operations in that country. The Essar Group will hold a majority stake in the
merged entity, valued at $310 million, a person familiar with the development told ET. The
UAE-based Dhabi Group is an investment firm led by the Abu Dhabi royal family.
In Congo too, the Ruias are negotiating for a majority stake in the Dhabi Group’s telecom arm,
Warid Telecom Congo, valued at around $70 million, said another person tracking the
discussions. With investment in these two businesses of the Dhabi Group, Essar’s telecom
footprint in South Africa will expand to three countries — Kenya, Uganda and Congo. Essar
already offers telecom services in Kenya under the ‘Yu’ brand. The Essar Group, last month,
said it was in exclusive talks to invest in the Dhabi Group’s telecom operations in Africa.
While the Essar Group bagged the licence for Uganda earlier this year, Dhabi Group company
Warid Telecom Uganda has been operational in that country since February 2008 with a
subscriber base of 1.6 million. “Warid Uganda’s enterprise valuation is $310 million and a 51%
stake will come for nearly $190 million, including a control premium,” said the source.
Essar Group had outlined a $200-million investment when it bagged the licence for Uganda.
“A large part of that will now be used for buying into Warid Uganda. It will give Essar
immediate access to over 1.5 million users and a share in one of the fastest growing operators in
the region,” said the source. An Essar Group spokesperson declined to comment. Teledensity in
Uganda is around 30%, indicating a market with potential. It has five telecom operators — MTN
Uganda, Zain Uganda, Uganda Telecom, Orange Uganda and Warid Telecom. Reliance
Communications (RCOM) also has licences in Uganda through Anupam Global Soft, a firm it
acquired in February last year. Anupam Global Soft has the licence to offer mobile, fixedline,
internet, Wi-Max and Wi-Fi services in Uganda.

25. Danny Denzongpa’s co acquires

Assam’s Rhino Breweries

BOLLYWOOD’S illustrious gangster Danny Denzongpa is bolstering his beer story in eastern
India. Denzongpa-owned Yuksom Breweries has acquired Rhino Breweries in Assam in a move
thwarting industry leader United Breweries’ (UB) plans for a bigger play in North East (NE)
markets, said sources.
This summer, Denzongpa quietly acquired Rhino Agencies, as his nearly three-decade-old
Sikkimese brewing company scripted its first takeover to defend the core markets where it sells
beers, such as Dansberg, Hit and He-Man.
Yuksom is learnt to have paid over Rs 40 crore for the brewery that started operations only two
months back.
In 2007, UB had signed a technical consultancy and licence agreement with Guwahati-based
Rhino Agencies to etch its manufacturing footprint in the rapidly growing NE market.
Denzongpa, who has starred in over 150 films including several memorable roles opposite
Amitabh Bachchan, is showing the first signs of aggression, possibly to defend his home turf,
after dabbling in the brewing industry from 1982 onwards.
Denzongpa, who made a big screen comeback in a re-invented avatar this year, has
characteristically kept his cards close to his chest while systematically building the NE market
and even training his focus overseas with brews, such as Himalayan Blue and Yeti.
Yuksom, which has three breweries in Sikkim, Orissa and Assam, sells over three million cases
making it one of the few independent survivors in an industry carved up between UB and
SABMiller. It must be mentioned that UB is already well entrenched in West Bengal and had
significantly raised its presence in Orissa last year.

26. Google’s Schmidt logs out of Apple

GOOGLE chief executive officer Eric Schmidt is resigning from Apple board, aiming to quell
anti-trust concerns about intensifying competition between the two companies.
Schmidt’s effectiveness as a director is “significantly diminished” as he needs to recuse himself
from meetings because of potential conflicts of interest, Apple CEO Steve Jobs said in a
company statement on Monday. The resignation was a mutual decision, Jobs said.
Google has expanded into computer and mobile-phone software, increasingly staking out
Apple’s turf. Schmidt’s move signals a reversal from his stance three months ago, when he said
he had no plans to resign amid speculation that his overlap on Apple’s board violated US anti-
trust rules.
“Google and Apple are responding to government pressure,” said Shaw Wu, an analyst at
Kaufman Bros in San Francisco. He recommends investors buy Apple shares. “The new
administration has raised potential anti-trust concerns and that’s the key difference between now
and May.”
Google is developing a computer operating system based on its Chrome Web browser,
competing with software from companies, including Apple. Google’s Android mobilephone
operating system also competes with Apple’s iPhone software.
Apple, based in Cupertino, California, rose $2.69 to $166.08 in Nasdaq Stock Market trading at
9:57 a.m. New York time. Google, in Mountain View, California, advanced $7.16 to $450.21.

INTERLOCKING BOARDS

Apple spokesman Steve Dowling and Google spokesman Adam Kovacevich didn’t immediately
return calls and e-mails seeking comment.
The US Federal Trade Commission began examining whether the companies are breaking anti-
trust law by sharing board members, a person familiar with the investigation said in May. The
 FTC was looking at whether the interlocking boards could hurt competition in markets such as
mobile-phone software and services, the person said.

27. Wipro’s consumer care biz logs hefty

growth
The first quarter of the financial year 2009-10 was exceptional for Wipro’s consumer care
business. Santoor, its flagship soap brand, which contributed close to Rs 850 crore in 2008-09 to
the company’s coffers, became the number one brand in South India in its category.

Wipro’s Consumer Care &Lighting business offers a range of toiletries, wellness products, baby
care products, lighting solutions and office furniture. It accounts for close to 9 per cent of the
group top line of around Rs 25,000 crore, majorly derived from software exports and IT products.

The share has been gradually increasing. Four years earlier, it was just 5.7 per cent. The share is
expected to go up in the coming years, as Wipro is aggressively looking to bring in a premium
range of products from Singapore-based Unza, a personal care firm which it acquired during 2007
for around Rs 900 crore.

Nearly half the Rs 2,500 crore top line comes from its two main soap brands, Santoor and
Chandrika. Another Rs 800 crore comes from Unza, from Malaysia, Singapore, Vietnam,
Indonesia, China and the West Asian markets. The rest is accounted for by a few of Wipro’s
wellness and baby care products, the lighting and furniture business. The lighting business is
starting to make an impact, driven by a ‘Green Buildings’ strategy.

After Santoor became the number one soap brand in South India, the next step would be to aim at
the rest of India (the brand’s national market share is just 8 per cent). The Rs 8,000-crore Indian
toilet soap market is dominated by Hindustan Unilever; two of its brands, Lifebuoy and Lux, hold
the top two positions. Wipro is working through pricing-led strategy to come closer to them. “We
have a long way to go,” says Vineet Agrawal, president of Wipro Consumer Care and Lighting
(WCCL).

28. L&T bags Rs 5,300-crore Bombay High revival

order
Larsen and Toubro (L&T), the engineering and construction behemoth, plans to raise about $600
million (approximately Rs 2,800 crore) through the qualified nstitutional placement (QIP) route.
The QIP issue would be completed within 12 months, the company said in a notice to its
shareholders.

The board will consider a special resolution in its annual general meeting (AGM) on August 28
for raising funds not exceeding $600 million, or Rs 2,800 crore, by private placement of shares
with qualified institutional buyers.

The project will replace the former BHN Platform, and will create additional facilities for gas
processing from future platforms

29. Dettol tops ‘green brands’ list

Dettol, followed by Tata Indicom, Infosys, Taj Hotels and Resorts, Wipro, Microsoft, Reva,
Maruti, Colgate and Lifebuoy are the top 10 ‘green brands’ in India, according to a recent
research, titled ‘The ImagePower Green Brands’.

“Our study shows Indian consumers are concerned about the environment and would love to
spend more on green products but don’t know how to, because of limited choice, limited
distribution and limited labelling. This implies a huge latent opportunity for brands to tap into the
power of green and create greater relevance for consumers,” says Lulu Raghavan, Country
Director (India), Landor.

The study was conducted by WPP agencies Cohn & Wolfe, Landor Associates and Penn, Schoen
& Berland Associates (PSB), as well as the independent strategy consulting firm, Esty
Environmental Partners, across seven countries — the US, UK, China, Brazil, India, Germany
and France.

The study was conducted online, with consumers above the age of 18 years between May 4and
June 10. It has a margin of error of 3.6 per cent, both ways. For Brazil, India and China, the
research was limited to tier-I cities.

Consumers from all seven countries believe that green products cost more than comparable non-
green ones, and also indicate they plan to spend more money on green products in the coming
year. China, India and Brazil showed significant support for additional spending. As many as 73
per cent of Chinese consumers say they will spend more, 78 per cent of Indians say so, too, and
so do 73 per cent of Brazilians. The percentage of respondents who indicate willingness to spend
30 per cent or more on green ranges from 8 percent (UK) to 38 percent (Brazil).

30. Jackson song writing royalties sound

sweet to music investors
Michael Jackson, the Grateful Dead and “The Sound of Music” are finding new fans in pension
funds, private equity and banks convinced that old hits will play on as technology expands the
way people use music.

Competition is increasing for music publishing catalogs and the income they generate from
stores, radio and Web play, ads and movies. Last month KKR & Co, the private-equity firm run
by Henry Kravis and George Roberts, bought a majority stake in Bertelsmann AG’s music-rights
unit.

Publishing isn’t risk free, said Donald Passman, an entertainment attorney with Gang, Tyre,
Ramer & Brown Inc in Beverly Hills, California. The health of the music industry, falling retail
sales and smaller ad budgets contributed to a 40 per cent to 50 per cent drop in the value of
publishers in the past five years, he said.

KKR agreed to pay ¤250 million ($347 million) for the stake in Bertelsmann’s musicrights unit,
said two people with knowledge of the situation.

The group clinched its first deal last month, buying Los Angeles-based Crosstown, owner of an
8,000-song catalog that includes Ricky Martin’s “Livin’ La Vida Loca” and Sheryl Crow’s “All I
Wanna Do.” The seller was the investment arm of Minneapolis-based grain processor Cargill Inc.

31. Emami Biotech to set up biofuel

project in Ethiopia
Emami Biotech, a part of the Rs 2,000-crore Emami Group, will invest Rs 400 crore in a
plantation project over five years in Oromia in Ethiopia. The company will engage in plantation
of biofuel crops (jatropha) and other edible and non-edible oil seeds on 100,000 acres allotted to
Emami Biotech by the Oromia Investment Commission.

Once completed, the project will be able to churn out 100,000 tonnes of crude biofuel or edible
oil per annum. While the biofuel will be exported to India for producing biodiesel, the edible oil
produced in Ethiopia will be used for local consumption. The commercial plantation work has
already begun on the land, which has been offered to Emami Biotech on a 45-year renewable
lease. It had engaged Mott McDonald for conducting a feasibility study for the project.

Another Emami Group Director Manish Goenka said: “We chose Ethiopia for investment
because of availability of labour, contiguous land, congenial business environment and stable law
& order situation. Besides catering to our domestic needs, the Ethiopian project has a huge
potential for the global export market.” Emami Biotech is also planning to develop two edible oil
plants in Gujarat and Tamil Nadu.

32. Daiichi wins court battle against

Mylan, Matrix
Japanese drug major Daiichi Sankyo said today a US Court has ruled in its favour in a patent
litigation related to the anti-hypertensive drug, Benicar, against Mylan Inc and its Indian
subsidiary, Matrix Laboratories.

“...US District Court in New Jersey has issued a decision in our US patent litigation against
Mylan, upholding the validity of our patent covering the Benicar, Benicar HCT and Azor
products,” Daiichi Sankyo said in astatement. The company had initiated the process of litigation
against Mylan and Matrix in response to the Abbreviated New Drug Application (ANDA) filed
by Mylan with the US health regulator, Food and Drug Administration (FDA), last year, seeking
its nod to market generic versions of those products.

33. Sun Pharma settles patent dispute

with Astra Zeneca
Sun Pharmaceutical Industries has settled a patent dispute with MedImmune, a unit of drug major
Astra Zeneca, to dismiss an ongoing litigation in a US District Court. This was on patent rights of
Ethyol (amifostine), adrug used to reduce toxicities associated with chemotherapy and radiation
in head and neck cancers.

Under the agreement, MedImmune has granted Sun Pharma a licence to certain patents,
permitting Sun Pharma to continue marketing its generic version of Ethyol in the US.

Sun Pharma had got US Food and Drug Administration (USFDA) approval for the drug in March
2008 and had launched the product ‘at risk’ in the US market. This followed a marketing
application to market a generic version of amifostine for injection, challenging the patent. Ethyol
has annual sales of approximately $80 million in the US.

Medimmune had filed a suit in the District Court of Maryland against Sun Pharma, following
challenge to its patents. Sun Pharma, being the first-to-file an Abbreviated New Drug Application
(ANDA) for generic Ethyol with a para IV certified patent challenge, has a 180-day marketing
exclusivity in the US market.

Sun Pharma’s product is being sold in the US by its marketing partner, Caraco Pharmaceutical
Laboratories.

34. India may move WTO to protest drug

seizures
The government is planning to approach the dispute settlement body of the World Trade
Organization (WTO) against frequent seizure of Indian medicines at various European ports.

While the seizures were carried out on charges of alleged violation of intellectual property rights
(IPR), India’s attempt will be to prove that the consignments were not meant for European
markets, but were on transit towards its final destinations in Africa and South America and hence
involve no IPR violation.

The ministry’s move comes in the backdrop of increased non-tariff barriers being faced by the
domestic pharmaceuticals industry in its pursuit to go global. For instance, the commerce
ministry is engaged in talks with its Libyan counterpart to amend a notification issued by that
country, barring medicine imports from all countries except the European Union members and
North America.

Officials said an Indian delegation would reach Libya to ensure that domestic drug manufacturers
were able to continue their presence in the Libyan market.

Similarly, the Department of Pharmaceuticals has started negotiations with Nigerian drug
regulators to ensure smooth flow of Indian low-cost medicines to that country. Indian drug
exports to Nigeria, the ninth biggest destination for Indian medicines, had recently come under
cloud after Nigerian authorities seized fake medicines that were marketed under “made in India”
labels in that country.

The department’s attempt is to collaborate with the Nigerian government to set up a drug testing
(bio-equivalance centre that proves the safety and efficacy of a generic medicine) centre in that
country.

35. TCS, Wipro in race for $522 Mn rail deal

-report
MUMBAI, Aug 3 (Reuters) - Indian technology firms including Tata Consultancy Services
(TCS.BO) and Wipro (WIPR.BO) are in pursuit of up to 25 billion rupees ($522 million)
outsourcing contract from Indian Railways, the Economic Times said.

State-owned Indian Railways plans to procure a human resources management system and other
modules for integrating and automating its payroll, accounting and pension functions, the
newspaper said on Monday.

Indian Railways also plans to outsource its train scheduling and management system, in a deal
valued at around 4.5 billion rupees, the paper said.

TCS, Wipro and Mahindra Satyam (SATY.BO) are also bidding for this project, it said. ($1=47.9
rupees) (Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)

36. Mars, Nestle interested in chocolate

maker Gu - FT

LONDON, Aug 3 (Reuters) - Food groups Nestle (NESN.VX) and Mars are among the
companies interested in London-based chocolate dessert maker Gu, which has been put up for
sale by its founders, the Financial Times reported.

The paper, which did not cite sources, said private equity firms including Langholm Capital were
interested in the company, whose asking price is 30-40 million pounds ($50-$65 million).
Cavendish Corporate Finance, which is advising Gu, sent details to interested parties last month
and aims to complete a sale by autumn, the paper added.

Gu has increased sales by an average of 66 percent a year since it was founded six years ago, the
paper said. A Nestle spokesman declined to comment, while Mars, Gu and Langholm could not
be reached for comment. ($1=.6045 British pound)

37. 5 reasons why airline strike went bust

It began with a bang and ended in a whimper.
On Friday, July 31 India's private airlines dropped a bombshell. They demanded a bailout
package from the government, failing which they would suspend operations 'indefinitely'. But
less than 48 hours after their militant call, the proposed August 18 strike fizzled out and turned
into a public relations nightmare for the airline body.
All the bluster seemed to have vanished into thin air, even though some of the demands of the
industry like excessive tax on aviation turbine fuel, high airport costs, etc -- are legitimate.
First, the government knew it was on firm ground given the fact that even the bailout package for
a state-owned airline -- Air India -- was being met with extreme opposition by the public.
Patel, however, disapproved of their earlier decision to suspend flight operations, saying causing
inconvenience to passengers was 'not acceptable'.
Maintaining that Air India was also not getting a bailout package, Patel said, "The government is
the owner and we have to do whatever is necessary. After all, it is our own airline. But to say that
even Air India is getting money from the government exchequer, will not be correct."
Second, the Federation of India Airlines did not handle the entire episode correctly. A, there was
the unilateral decision to go on a one-day strike on August 18. B, there was the threat of
suspending operation indefinitely. C, all this was done without really estimating if all members
of the FIA were united in this cause or not. D, there was no back-up plan to counter what would
the private airlines do if the government adopted a no-nonsense, uncompromising stance --
which it did.

Never before had a private industry body in India threatened the government with a nationwide
strike if it was not bailed out of its financial problems. What should have come as a blow to the
solar plexus of the government with the important airline sector being crippled because of the
strike, in effect turned out to be a case of a self-goal.
The airlines realised that their threat had backfired majorly. To salvage some pride after
retreating in face the government hardline, they said they did not want to threaten or blackmail
the government and the public, but just wanted to appraise the government of the debilitating
problems they faced and wanted rationalisation of high ATF costs and airport charges.
The basic price of the jet fuel in Mumbai, the nation's busiest airport, was Rs 24.02 per litre.
Freight and other cost add Rs 3.68 to the price while excise duty contributed Rs 2.28 a litre.
Third, there is a distinct lack of unity in the airline federation. The smaller, leaner airlines seem
to be doing a much better job at their business, than the bigger full-service airlines are managing
to do. So, while Kingfisher and Jet Airways played the belligerent role and led the 'strike,' the
low-cost airlines thought they were falling into a trap. As a result, first Indigo and then SpiceJet
decided to drop out of the proposed August 18 strike.

Fourth, even as the airlines made a case for a bailout, arm-twisting the government for a bailout,
many aviation experts, including Capt. G R Gopinath (father of the budget airline in India), said
that there was no need for a bailout package, as the 'private airlines are themselves to blame for
their losses.'
Fifth, most experts feel that the strike threat was all a matter of timing and opportunism. With the
government readying to bail Air India out, the private airlines thought that they too could
wrangle a similar package for themselves. Or, they might manage to stop the bailout for Air
India.

38. IIM-A to set up seamless campus in

Hyd
The Nizam of B-schools will make its presence felt in Hyderabad. Indian Institute of
Management, Ahmedabad (IIM-A) and the Andhra Pradesh government have informally agreed
to set up a ‘seamless campus’ on the outskirts of Hyderabad.
A team of senior officials from the AP government visited IIM-A campus recently. “The
Andhra government approached us and proposed that IIM-A should set up a satellite centre
there. We are seriously considering the proposal. The first few years of the centre will be for
executive training programme. Later, we may offer regular MBA programmes. But, the final
decision will be taken by the IIM board, which will meet in September to discuss the proposal,”
said IIM-A director Samir Barua.
“A seamless IIM-A campus would be an extension of the Ahmedabad campus and not a new
one. This way, the human resources development ministry will also have no objection as it need
not give any financial aid,” said sources.

39. Project Youngistan: Who is the next

superstar?
Mumbai: Bollywood’s failure to throw up a single superstar in the last nine years—since Hrithik
Roshan made a splash with his debut Kaho Na Pyar Hai in 2000—has trade pundits worried.
Besides him, it’s only the four old warhorses—the Khan trio and Akshay Kumar who debuted
between 1988 and 1992—who are still in demand consistently. Together, they and Hrithik still
make up the top five in Bollywood.
So what really happened in the last decade? Yes, Bollywood has thrown up Abhishek
Bachchan and John Abraham. The two have unquestionable talent—and several hits—but have
been far too inconsistent to belong to the superstar bracket.
It’s not that Bollywood has not come up with any talent between the top five and the next two.
The names of Shahid Kapoor, Emraan Hashmi, Ranbir Kapoor, Neil Nitin Mukesh, Imran Khan,
Farhan Akhtar (as actor) and Adhyanan Suman are bandied about when people talk of the future.
 But a staggering Rs 300 crore has been lost on the recent flops, including Luck By Chance,
Saawariya, Jashnn, Victory, Love Story 2050, Kidnap and Luck, which some of these actors
have delivered.
Trade consultant Amod Mehra is of the firm opinion that Ranbir will turn the tide six months
down the line though the reality, as far as Bollywood’s young ’uns goes, reads differently.
Ranbir does have Rs 200 crore riding on him. Dad Rishi Kapoor says he has no dates to spare till
2011. He is also the most in-demand actor of the younger generation with a reported fee of Rs 5
crore a film and has projects lined up with Aditya Chopra, Karan Johar, Imtiaz Ali, Prakash Jha,
Raj Kumar Santoshi, Sajid Nadiadwala and Farooque Rattonsey. But, in all fairness, Ranbir has
given one superdud, Saawariya, and one average,
Bachna Ae Haseeno. He needs to deliver a couple of back-to-back blockbusters to scale the
heights achieved by someone like Hrithik.
Imran, the second blueblooded kid on the block, has had one superhit—Jaane Tu Ya Jaane Na—
that was made for a modest Rs 18 crore and earned Rs 80 crore from ticket and satellite sales.
Overnight, he was hailed as the future. But Imran’s next two films—Kidnap and Luck—lost an
estimated Rs 60 crore.
Neil has had one flop, Johnny Gaddar, and one hit, New York. He apparently comes with a Rs
2.5 crore fee and will be seen next in Madhur Bhandarkar’s Jail. “He has promise,’’ Bhandarkar
says to all those who care to listen. But no one yet is talking of his journey to superstardom.
Ditto for the others. Adhyanan has had two releases, Raaz-2 (a hit) and Jashnn (a failure).
Harman Baweja, who has around Rs 30 crore riding on him and is the leading man of Ashutosh
Gowarikar’s What’s Your Rashee, is severely handicapped by the fact that he has had two flops
(Love Story 2050 and Victory). “Rs 80 crore was lost between these two films,’’ a trade insider
said.

40. HUL losing share in paste, shampoo

mkt
New Delhi: Smaller players like Dabur and CavinKare have started chipping away share from
fast moving consumer goods (FMCG) biggie Hindustan Unilever (HUL) in the oral care and hair
care market. In the soaps market, too, HUL has been losing its grip.
During the first quarter (April-June) this year, HUL lost share in both volume and value terms
in the fast growing shampoo market. While Dabur increased its share and now occupies 7.3% of
the market, HUL’s share with brands like Sunsilk dipped to 50% (51.5%) and in value terms to
45.4% (46.5%) during the quarter. Procter & Gamble (Head & Shoulders and Pantene) also
increased share marginally, while CavinKare (Nyle and Chik brands) maintained its share,
according to AC Nielsen data.
The shampoo market is driven by Re 1 packs, with over 90% of the rural market dominated by
sachets. In cities, sachets account for about 40% of total sales. Small packs have helped in
increasing penetration in rural areas where pricing plays a major role. Cavin-Kare is more of a
regional player, and is active in the south, while Dabur leverages Vatika on the ‘natural’ plank.
A similar trend is visible in the toothpaste market, with both Dabur and Colgate Palmolive
upping their market share to 13.1% and 51.9% respectively, while HUL’s share dipped from
25% to 23.1%. Its value market share dipped to 28% during the quarter from 29.6% in Q1 2008,
while Dabur’s share increased to 10% (9.3%) and Colgate-Palmolive’s share to 49.5% (47.7%).
The penetration in the toothpaste market is quite low, around 50%. Industry experts say that
thanks to awareness and affluence in rural areas, there is a surge in demand with consumers
graduating from ‘datum’ to toothpaste.

41. L&T, Travelers to part ways

ENGINEERING major Larsen & Toubro has confirmed that it is not pursuing its partnership
with US insurer Travelers and will now go it alone in the non-life business.
Confirming the break-up, L&T chief financial officer Y M Deosthalee said: “If at all we get
into this business we will be doing it on our own.” He said the company was evaluating
opportunities and would arrive at a decision in a few months.
Travelers’ caution appears to stem from the uncertainties in the global economy coupled with
the cut throat competition in the nonlife market. The competition is reflected in the continuing
losses among private life insurers even after 10 years of business. Yet India continues to be a
major draw for multinational non-life companies. Last year, Insurance Australia Group agreed to
invest Rs 540cr (including premium) to acquire a 26% stake in a yet-to-be-formed subsidiary
between SBI and IAG for non-life insurance. However, SBI’s entry into non-life is expected to
be a game changer, given its distribution reach and retail relationships that are amenable for sale
of the two largest segment of non-life — motor and health. For Travellers, meanwhile, the search
is on for another partner.
The company’s India representative Shrirang Samant refused to comment on the issue. In
response to an email query, Travelers said it would not like to comment. Jaydeep Roy, a senior
executive with Tata AIG General Insurance who was recruited for the JV, will now be working
with L&T on the nonlife business. L&T has often indicated its ambitions in financial services.
Although it has deep pockets to fund a life insurance venture, the company has chosen to focus
on non-life. It could be due to L&T’s relationship with corporates and its large engineering
contracts favour lead generation for non-life business. Secondly, state-owned LIC is the single
largest investor in L&T with a 17% stake.

42. Now, watch box-office hits on your

high-end mobile phone
THE next time you want to watch a movie, just reach out for your mobile phone. Leading mobile
phone vendors such as Nokia, Samsung and Spice Mobile, are increasingly planning to bundle
some of the top box-office grossers in their hi-end multimedia handsets. What’s more, the
handset vendors are even exploring options to roll out a mobile movie store in India where a
consumer will be able to buy or rent some of the latest flicks. Mobile movies is also turning out
to be an emerging distribution platform for frontline production studios like Yash Raj Films and
Sony Pictures.
Nokia — which was one of the first vendors in India to bundle a fulllength movie, Sholay, in
two N Series handsets way back in end-2007 — recently launched a promo scheme called
‘Ntheatre’. Compatible with the N Series handsets, Ntheatre is a movie library with an
assortment of blockbusters like Spiderman, Da Vinci Code, Charlie’s Angels, Jab We Met and
Om Shanti Om.
Samsung Mobile country head Sunil Dutt said the trend of bundling movies will further gain
steam with new handsets sporting larger screens and nearly 32 GB memory capacity.
Incidentally, Samsung Mobile has just launched ‘Samsung Movies’ in Europe where consumers
can own or rent a movie for the mobile phone. Similar model could also be replicated in India.
Yash Raj Films (YRF) is in various stages of discussion to distribute films through mobile
handsets. Asked whether the company could look at a revenue model to watch a movie or its
premiere, YRF’s VP (marketing & communications) Rafiq Gangjee said: “All options would be
a possibility. Obviously, the most economically viable would be adopted as and when we do get
into this space.” On the Hollywood front, Sony Pictures India MD Kercy Daruwala added:
“When we contacted Sony’s top executives, it was learnt that Sony is also planning to exploit
this right of showing films on the mobile platform in India.”

43. Indian auto hits Korean hurdle

INDIA’S largest exporter of cars is worried about competition from its Korean parent. Incredible
as it may sound, the prospect of a free trade agreement (FTA) between the European Union (EU)
and South Korea is sending shudders through the Chennai headquarters of Hyundai Motor India
(HMI).
The proposed trade pact will allow Korean carmakers such as Hyundai, Kia and GMDAT to
ship their cars to Europe without paying the 10% duty levied on imports, threatening to erode the
competitive advantage enjoyed by Indian carmakers in their largest export market.
Hyundai’s i10 and i20 and Maruti Suzuki’s A-Star are in huge demand in EU, after the UK,
Germany, Spain, Austria, France and Italy started offering cash incentives of € 1000-3000 to buy
fuel-efficient cars.
Indeed, the 10% duty does cover Indian automakers too, but a government incentive helps
them offset the costs by 3.5%.
HMI, which exports half the cars it makes in India, and most of them (over 55%) to Europe,
has already asked the Indian government to take steps to protect its interests. “The government
needs to act fast to take some decisions on car exports. A 6.5% import duty that Indian
carmakers face in Europe will make it virtually impossible to compete with Korea,” said HMI
managing director and chief executive HS Lheem.
Mr Lheem’s sharp reaction is not without reason. Tax benefit for the Korean parent and its
subsidiary Kia Motors in Europe could render HMI’s business model unviable. While the parent
firm doesn’t offer competing models in the European market, Kia sells two hatchbacks—Picanto
and Cee’d—pitted against HMI’s i10 and i20.
No cost advantage for Hyundai

HMI thinks any price difference between its products and Korean imports could adversely affect
its sales in Europe. HMI said it did not enjoy any huge cost advantage in India. The cost
advantage on account of low labour costs translate into a price difference of only 2-3%, said a
company executive. Indian manufacturers are also troubled by the inefficient tax structure, which
increases the cost by 10-12%. “There are various local taxes on inputs that have a cascading
effect.
Infrastructure bottlenecks also add additional cost, which offsets the cost advantage on account
of cheaper labour,” said Price Waterhouse auto analyst Abdul Majeed. HMI’s exports jumped
27% to 66,500 cars in Q1 on the back of large orders from Europe.
 44. Indian diamond traders find a friend in
China
IT’S not yet clear if China can lead the world out of recession, but the Asian giant is certainly
helping Indian diamond traders out of the woods.
A number of Indian firms are busy setting up diamond processing units and retail outlets across
China as they bet on Asian markets to more than make up for the sharp drop in demand from
what were traditionally the largest consumers—the US, Europe and Japan.
“Indian and non-resident Indian diamond businessmen are setting up retail shops in Shanghai,
Beijing and urban areas of southern China,” says Pravin Sankar Pandya, chairman of Diamond
India Ltd, an amalgamation of 58 Indian diamond merchants. According to him, the demand for
polished diamonds from China and other oriental markets such as Taiwan, Korea, Singapore and
Hong Kong will be on a par with the US in another five years.
The United States is the world’s largest diamond market. However, it saw a decline in imports
of polished diamonds by almost 25.72% to $966.7 million in December 2008. On an annual
basis, there was a 4.8% increase in import of polished diamonds as compared to 2007 but there
was a clear weakening after September, when the recession started. Israel is the leading exporter
of polished diamonds to the US, followed by India.
India exported polished diamonds worth $4.66 billion during April-June 2009, almost 5%
lower than the yearago figure, according to data published by Gem & Jewellery Export
Promotion Council, the apex body of the country’s diamond industry.
To sell diamonds in China, a company must set up processing units in that country, points out
Sumit Shah, managing director of Renaissance Jewellery. Nobody is complaining though. Like
India, the country offers cheap labour. And unlike India, it has modern processing equipment.

India to still retain edge

Those who have set up shop there include Shrenuj & Co, Gitanjali Group and Sheetal Group.
While Shrenuj & Co and Gitanjali Group have exclusive retail stores, Sheetal Group follows a
distribution model to sell its diamonds.
Thousands of diamond polishers in India lost their jobs last year as the sudden fall in demand
due to the global slowdown forced manufacturers across the world to slash production. De Beers,
the world’s largest diamond company, cut production by almost 90% in the first phase of
recession.
But now there is a severe manpower shortage. The sacked workers who were forced to shift to
other sectors like farming, textiles and embroidery are refusing to come back on account of job
uncertainty and volatile markets, says Mr Mehta. Surat alone is facing shortage of around one
lakh skilled workers.
Merchants say India should follow China in offering incentives that help the industry come out
of the slump. “China is directly sourcing raw material (rough diamonds) from Angola and other
countries. India, too, should set up such a mechanism for the domestic diamond processors,” says
Navin Mehta, former president of Mumbai Diamond Merchants Association. “Also, the Chinese
government has designed loan packages at softer rates for the diamond industry, which boosted
the sector during the slowdown,” he adds.
Despite all this, it is unlikely that China can challenge India’s dominance in the trade, says
Mehul Choksi, chairman of India’s largest jewellery maker, Gitanjali Group, which has set up
processing units as well as retail stores in China. “Indian workers can handle more complicated
products than their Chinese peers. Chinese workers need a high quality rough, whereas Indians
can do wonders even out of a substandard rough,” he says.
The global demand slump has forced one-fourth of the 160 diamond jewellery manufacturers
in the zone to shut shop. The zone has now requested the government to allow the exporters to
sell their goods domestically with minimal duty for at least a year, so that manufacturers can
retain their workers.

45. Barclays to boost India headcount to

4,000
BRITISH bank Barclays will increase the number of jobs it outsources to India to 4,000 by the
end of the current year from 2,700 now. The group is also looking to invest more in its domestic
banking business in the country.
Barclays’ domestic business includes retail and commercial banking, investment banking,
wealth and technology. In India, the group already has around a million customers.
Early this year, the GRCB business was making a loss of half-amillion pounds a day. In its
global results, the group has said that the impairment charges in GRCB business have increased
to £213 million from £66 million in emerging markets. “It mainly reflects weakening
delinquency trends, primarily across India and the UAE due to the deteriorating credit
environments and portfolio maturation, especially across the retail sector,” the group said on
Monday.
Globally, the group has posted profits before tax of £2.9 billion for the first half of 2009, up
by 8% from previous year. When asked about the rationalisation of branches on the NBFC,
where it currently has over 100 branches, Mr Seegers said: “Yes. I think the way we think about
is there was a slowdown in the Indian economy. Our strategy hasn’t changed. We will continue
to develop that business. But we will be doing that in a wiser and prudent way.”

46. China owns up Nigerian fake drugs

cargo
CHINA has promised action against its pharmaceutical companies involved in shipping fake
drugs to Nigeria with ‘Made in India’ labels. The Chinese authorities have admitted the
shipments confiscated by the Nigerian government had originated from China and the
manufacturers involved need to be punished, a commerce department official has said.
“The Chinese government has communicated to us that the pharmaceutical companies involved
in the fake drugs case were indeed from their country. It has also promised that suitable action
will be taken against these companies for selling fake drugs and tarnishing the name of another
country,” a commerce ministry official told ET on the condition of anonymity.
Nigeria’s drug regulatory authority, the National Agency for Food and Drug Administration
and Control (Nafdac), had confiscated a large consignment of fake anti-malarial generic drugs
with ‘Made in India’ tags shipped
from China in May. The cartons had
labels bearing the names and addresses of Chinese manufacturers. According to Nafdac, had the
drugs not been seized, as many as 6,42,000 adults could have been affected.
Following the incident, India had put pressure on the Chinese government to act against the
rogue companies. Since Africa is an important market for the Indian pharmaceutical industry—
accounting for about 15% of India’s total drugs exports worth Rs 30,000 crore every year—it
cannot afford to get a bad name in the continent.
“It is important that the Chinese government takes strong action against the errant companies
so that others think twice before doing something similar,” the official added.
India sent a delegation to Africa last month to meet regulatory authorities there and discuss
quality norms related to packaging and stamping to clamp down on supply of fake drugs.

47. Yakult Danone ropes in Kajol

Bollywood actor Kajol Devgan and Yakult Danone India MD Kiyoshi Oike at a press conference
in Mumbai on Tuesday. Yakult Danone India has named Devgan as its brand ambassador for
promoting its probiotic health drink Yakult in the Indian market. Yakult Danone India is a 50:50
joint venture between Yakult Honsha of Japan and Groupe Danone of France

48. Harbinger backs Sterlite in Asarco

acquisition
Sterlite Industries, the flagship firm of London-listed Vedanta, may get the support of rival bidder
Harbinger Capital Partners in its takeover plan for the bankrupt US copper mining firm, Asarco.
Harbinger has decided to withdraw from the race, informing the bankruptcy court that its plan to
restructure Asarco should not be considered.

Harbinger had given a $500 million takeover offer to the US bankruptcy court at Corpus Christi
in May, countering the bids of Sterlite and Grupo Mexico, the estranged parent of Asarco.

Harbinger, which has support from Citigroup Global Markets Inc, earlier extended its support to
Asarco in the fight against Grupo Mexico and the environmental suits. Asarco, which owns three
copper mines in Arizona, was sued for $1.6 billion due in an environmental clean-up suit.

According to court documents, Citigroup and Harbinger together comprise Asarco’s largest
bondholders and their support is crucial for Sterlite, said industry experts.

The Indian copper producer had offered $1.1 billion in cash and about $600 million of senior
secured notes, payable over nine years, to Asarco. In a counter bid, Grupo had offered $1.3
billion in cash and a $250 million fully committed loan to regain control of Asarco.

A couple of days earlier, Vedanta chief executive M S Mehta said in London that the company
has “no immediate plans” to raise the bid it made to acquire Asarco. “Our bid reflects the current
market conditions,” he added.

49. R-Infra bags Rs 11k-crore Mumbai Metro-II

 project
Reliance Infrastructure (R-Infra) has been awarded the Rs 11,000-crore Mumbai MetroII project
on a Build Operate Transfer (BOT) basis. The project is for a concession period of 35 years, with
an extension clause of another 10 years, the company said in a statement today. The project will
achieve financial closure in nine months.

The company had earlier been awarded the Mumbai Metro-I (Versova-Andheri-Ghatkopar
corridor) and Delhi Airport Express Line projects.

Scheduled to be operational by 2015, Mumbai Metro-II would provide a link between Navi
Mumbai and the western suburbs, connecting Charkop in the north to Bandra and then to
Mankhurd in the east. The total length of the project is 32 km, with 27 stations en-route.

The project has been awarded by the Mumbai Metropolitan Region Development Authority
through an international competitive bidding process. R-Infra won the project as part of a
consortium, which included SNC Lavolin Inc, Canada and Reliance Communications.

The Mumbai Metro-II will provide a link between Navi Mumbai and the western suburbs and
will ease the burden on the local trains

50. Hexaware CEO banks on ‘ownership

model’
PR Chandrasekar says he didn’t know Hexaware “that well” before he joined, but decided to take
up the challenge to see how he could work in a different set-up. The initial doubt was
understandable, as he was coming from Wipro, heading the IT giant’s $3 billion businesses in the
US and Europe.

There were other reasons: Hexaware, a mid-cap IT firm, was still recovering from the $20-25
million provisioning it had to make for losses on exotic forex transactions.

A year after joining, the ViceChairman and CEO of Hexaware can look back with some
satisfaction. The firm’s second quarter results for calendar year 2009 beat market estimates, with
its net profit jumping four times to Rs 39.5 crore from Rs 9.5 crore on a year-on-year basis and
doubling on a sequential basis. The company managed to go above its revenue expectation for the
quarter. “I think we have improved on all the parameters. The growth margins are up and so are
the operating margins,” he said.

Chandrasekar is the second outsider-CEO after Rusi Brij, of acompany which was founded by
Atul Nishar in 1989. Nishar is now the Executive Chairman and Chandrasekar said he was happy
that “Atul has given me afree hand to run the show.” The CEO hasn’t given the founder reason to
complain. The challenges were many. For example, the manpower utilisation rate, at 63.7 per
cent, wasn’t sustainable. Chandrasekar has now brought that up to 75 per cent by, among other
things, putting some employees on a virtual bench (no work and so, no pay) and consolidating
many of the centres.

Chandrasekar said Hexaware was pursuing 10-12 deals along with Caliber Point, its BPO unit.
“Caliber Point operated as an island. Today it is integrated with Hexaware. Now we have
abusiness technology outsourcing story, rather than just aBPO. This is not an easy transition. But
that is happening now,” Chandrasekar said.

“One of the reasons for verticalisation and my most important intent was to create ownership.
Ownership that makes the person think, how do I grow this account,” said Chandrasekar. With
this set-up, each vertical head is accountable for the profit & loss of his unit. The idea was to
make them run a business of their own, which also makes them take tough decisions on
investment.

51. SBI, Tata Motors among tax defaulters

India’s largest state-owned bank, SBI, automobile giant Tata Motors and oil major Indian Oil
Corporation, besides Sahara India and its promoter Subroto Roy, figure in the list of top 100 tax
defaulters in the country.

Disclosing the list of defaulters in the Rajya Sabha today, the Minister of State for Finance S S
Palanimanickam said in a written reply that top 100 tax defaulters owed to the exchequer a
whopping Rs 1.41 lakh crore — more than three times the amount the government spends on the
National Rural Employment Guarantee Scheme annually.

According to the list, disgraced stud farm owner Hassan Ali Khan tops the list of tax defaulters,
with an outstanding arrear of more than Rs 50,000 crore.

While SBI owes Rs 333.6 crore in taxes, Tata Motors and Indian Oil Corporation have to pay Rs
206.5 crore and Rs 210.3 crore, respectively, to the treasury.

52. FDCI announces Van Heusen Men’s

week
Men’s fashion will no longer be the neglected child of the Indian fashion world. While women’s
fashion has almost two events every year, men’s fashion shows are showcased on the periphery.
All this will soon change with the announcement of the Van Heusen Men’s Week by Fashion
Design Council of India (FDCI) in September this year.

Men’s shirt brand Van Heusen will be the title sponsor of the event which will showcase 15
collections and 40 designers with their stalls in the exhibition area. Shital Mehta COO, Van
Heusen says, “Being associated with this event differentiates us from other brands. The kind of
PR and newsworthiness of the event helps.” Mehta is not only looking at the immediate future but
also at the long-term survival of a brand like Van Heusen. He says, “The future competitors for
Van Heusen will be lifestyle brands and not just other apparel brands.” According to industry
estimates the men’s apparel market is growing at 15 per cent every year and is likely to clock this
rate of growth for the next five years at least. Despite this impressive growth, the lack of marquee
designer names for amen’s week may hamper the kind of publicity the event can generate.

53. Yum! Restaurants to launch Mexican

chain Taco Bell
US-based fast food restaurants brands operator Yum! Restaurants is planning to introduce its
Mexican speciality chain Taco Bell in India with the first restaurant planned to start in Bangalore
in October.

Yum! Restaurants, which operates brands like Pizza Hut and KFC, is looking to tap the young
consumer segment with Taco Bell’s Mexican offerings as part of its effort to increase its footprint
in the estimated $1billion Indian fast food market.

He said the company would be introducing Taco Bell as a new concept for the young India
foodies and test the market before undertaking an expansion of the brand.

The Louisville (Kentucky)based company operates over 5,600 Taco Bell restaurants in the US,
which specialises in Mexican items like burritos and quesdillos. Yum! Restaurants currently runs
50 KFC and 110 Pizza Hut restaurants in India.

54. New inflation data series to

downgrade food inflation
The new Wholesale Price Index (WPI) series with a revised base of 2004-05, an updated product
portfolio and increased data points will understate food inflation, as the weight accorded to
primary articles will see a significant decrease from the current 22.02 per cent to around 10 per
cent.

The new series, expected to be out by October, will see asignificant increase in the weightage for
the manufactured products category to around 80 per cent from the current 63.75 per cent.
Therefore, the point to point inflation rate derived from this index on a year-on year basis will be
driven by wholesale prices of manufactured products rather than commodities like rice, cereals,
pulses and wheat, which form apart of the essential consumption basket.

Many economists feel the current WPI series, with a base of 1993-94, already understates food
inflation. This has come to the fore since the headline inflation rate as measured by WPI has
displayed a consistent downward trend since November 2008, moving into the negative domain
in May 2009, though food inflation continued to be in the range of 7-10 per cent.

Moreover, the divergence between WPI and CPI-based inflation also reached historic levels, with
CPI inflation at near double-digit levels and WPI inflation at sub-zero. This was also due to the
lesser weightage given to food items in the WPI, though the CPI has around 50 per cent
representation of food items in its index.

Economists argue that an understatement of food inflation in the major inflation indicators will
mislead the direction in which prices are moving; however, it will not have any major effect on
the formulation of monetary policies. “If the weight of primary articles do go down, then the
divergence between CPI and WPI will continue and might increase further. The WPIbased
inflation rate, which is followed more widely than CPI, would of course be a little misleading for
the common people. However, as increase in food prices is related to supply side problems and
monetary policy generally pertains to the demand side, there should not be any major effect on
the policy making front,” said Subhada Rao, chief economist with YES Bank.

The weights in the respective data series are calculated by the share of specific sectors in the
growth rate or gross domestic product (GDP) figures. The contribution of agriculture in the GDP
has been on the decline and, therefore, the weight of food products in inflation indices are also
going down. “The changes are made in accordance with the contribution of different sectors to
the GDP figures. The share of agriculture has been going down. The idea is that the effect of an
item on the inflation rate is in accordance to its contribution to GDP. The weight of food items in
CPI will also see a drop as the base is revised,” said Pronab Sen, chief statistician of India.

Agriculture contributed around 32 per cent to the GDP in 1990-91; its share went down to 20 per
cent in 2005-06 and now stands at around 16 per cent. The trend continues and as the GDP base
is also set to be revised, the share of agriculture is expected to contract further.

The weight of the primary article category was reduced by around 10 percentage points to 22 per
cent when the base of the series was revised from 1981-82 to 199394, as the manufacturing sector
started making a major contribution to growth.

The weight accorded to primary articles will see a significant decrease from 22.02% to 10%

To be out by October, it reflects weight of components in GDP

55. A portal in the works for developing

nations to share food problems
“When the world economy was hit by the food crisis last year, most countries took decisions that
were against the principles of economics. Exports were banned by countries like India and China
at a time when they should have allowed farmers to take advantage of higher international prices.
Instead, countries did panic buying and fuelled international prices. The requisite information to
help policy making was either not available or was not utilised,” said Suresh Babu, senior
research fellow at IFPRI.

India, for instance, banned the export of non-basmati rice last year. In 2007, it banned the export
of wheat. Similar restrictions were imposed in other countries. Babu agrees that the measures
adopted were successful to a large extent but claims that it was not rational. “We did not give a
stable policy to farmers,” he said.

“The policymakers across these countries can exchange their ideas and help each other come up
with a more informed decision for tackling food problems,” said Babu.

“Though a lot of information is available in the public domain, we would do research on the
missing information and streamline the information to facilitate decision making,” he added.

AJAY MODI New Delhi, 5 August The International Food Policy Research Institute (IFPRI) has
brought together 20 countries, including China, Brazil and India, through a portal where food and
agricultural policy makers will exchange their food-related problems and the measures adopted to
tackle them.

The purpose is to strengthen the ability of policymakers in the developing world to respond
quickly and adequately to dynamic developments in the world food system.

The portal will contain information regarding food crisis response on its 20 partner countries
(mostly in SubSaharan Africa, but also in Asia and Latin America and the Caribbean). The policy
information portal has been established to provide comprehensive and detailed information
country-by-country on food policy developments. It is looking to bring more countries together
on this platform.

The initiative is a part of an IFPRI’s project called “World Food Crisis”, which aims at improving
food security for the poor in developing countries and increasing resilience of their food systems
against future crises. The project will build a global research-based monitoring and
capacitystrengthening device for successful identification and implementation of the appropriate
policy actions in response to the food crisis. All of these actions come together at the country
level, where the ownership and final accountability for implementation rests.

The purpose of the portal is to strengthen the ability of policymakers to respond quickly and
adequately to developments in the world food system
56. Flying on empty
Private airlines, who called off their strike threat after the government contemplated action,
continue to argue they backed down because they didn’t want to inconvenience passengers, but
maintain that their reasons for striking remain as valid today — avery high aviation turbine fuel
price and high airport charges in the country. Much of this is untrue, and what the larger airlines
are not saying is that there was a split in the Federation of Indian Airlines — under whose aegis
the strike threat was announced —with the budget carriers unwilling to go along with the larger
full-service carriers who, incidentally, also offer low-fare services.Indeed, just how justified the
airline grievances are is best brought out by the sharp contrast in the performance levels of the
two sets of airlines.

First, not everyone in the aviation business is making losses (see graphic) — it is the full-service
carriers who are losing the most. Kingfisher lost Rs 243 crore in the latest quarter ending June
2009, Jet Airways lost Rs 225 crore while budget carrier SpiceJet made Rs 26 crore of profits.
Indeed, as compared to the same period a year ago, Jet’s revenue’s are down 18 per cent while
SpiceJet’s are up 15 per cent.

Interestingly, this has taken place while aviation turbine fuel prices in India, though much higher
than those internationally, have fallen by almost half — from Rs 71,028 per kilolitre in Delhi in
August 2008 to Rs 36,992 in August 2009. While this happened, Kingfisher’s revenues fell
slightly, from Rs 1,398 crore in the quarter ended June 2008 to Rs 1,314 crore in the quarter
ended June 2009; its losses rose from Rs 158 crore to Rs 243 crore in the same period. In the case
of Jet Airways, while revenues fell 18 per cent, its profits of Rs 143 crore turned into losses of Rs
225 crore. SpiceJet’s revenues rose and its losses of Rs 129 crore in the June 2008 quarter got
transformed into profits of Rs 26 crore. None of this jells with the argument often made by
private airline companies — that since aviation fuel comprises around 40 per cent of costs,
India’s higher aviation fuel costs are the reason for their losses. Also, airlines like Jet earn around
53 per cent of their revenues from international operations — all international flights get aviation
fuel at international prices! In other words, it is difficult to argue that fuel prices are as critical as
the airlines make them out to be — it is even more difficult to argue that the airlines were not
aware of the differential between Indian and global prices, either when they first entered or when
they began their expansion spree.

Of course fuel costs matter, but what matters more is how efficiently the airlines are managing
other costs; if the plane is flying anyway, are they getting the maximum number of passengers
they can, and so on. Once again, this is where the budget carriers score over their full-service
counterparts. Air India has a passenger load factor (PLF) of 67.9 per cent, Jet Airways’ is around
the same and Kingfisher’s is 72 per cent — SpiceJet, however, is 77.3, GoAir 85,1 and IndiGo
81.6 per cent (all figures for June 2009). That is, the budget airlines are getting in more
passengers per flight. Since they have lower costs of flying, this means their costs per passenger
seat are much lower than those of the full-service airline.

Even more than the passenger load factor, what matters is the number of passengers being flown.
At a time when the market has not expanded as fast as the airlines originally expected, what
matters is the market share of each airline. Once again, it is the budget carriers that are doing
better. The number of passengers flying on Jet Airways rose from 5.96 lakh in January 2009 to
6.12 lakh in June, but its market share has fallen from 17.9 per cent to 16.6 per cent; Kingfisher’s
fell from 27.6 per cent to 24.4 per cent; SpiceJet’s market share has risen from 11.8 per cent to
12.8 per cent and GoAir’s from 2.4 to 5.4 per cent — IndiGo’s share has remained constant at
around 13.6 per cent. As a result, SpiceJet’s PLF rose from 68.3 per cent to 77.3 per cent,
GoAir’s from 64 to 85.1 per cent and IndiGo’s from 72.2 to 81.6 per cent. PLFs for Air India
rose, but by less, from 60.2 per cent to 67.9 per cent, from 64.8 per cent to 67.8 per cent for Jet
Airways and from 64 per cent to 72 per cent for Kingfisher.

As a result, SpiceJet has added 20 more flights in existing routes and leveraged the fuel price
reduction by cutting fares by around 30 per cent to 40 per cent. SpiceJet has bought three new
aircraft this year and there is no change in its original delivery schedule. Jet Airways, on the other
hand, has cut capacity by 20 per cent and deferred eight aircraft deliveries. Kingfisher has
deferred the delivery of 32 aircraft and reduced capacity by 26 per cent.

The other bogey, of high airport charges, is not fully true either. Airport charges went up in India
after privatisation of major airports, but they’re still lower than those in comparable countries.
Typical charges for a Boeing 747 on an international flight are around Rs 277,000 in Delhi and
Mumbai — this is higher than Dubai’s Rs 188,000 but lower than Changi’s Rs 337,000 and
Incheon’s Rs 406,000. A study by TRL which indexes airport charges to 2005 levels shows that
the hike in airport charges in India is among the lowest in the world The good news here is that
full service carriers are planning to expand their low-cost services. The problem here, though, is
that offering lower fares is not the same thing as having low-cost operations. Will Jet Konnect,
for instance, pay its employees the same salaries that low-cost carriers do and will it remove
service trollies which add to the fuel-burn in an aircraft?

Airline losses have more to do with their business models than the price of aviation fuel, says
SSuurraaj jeeeet tD Daas sG Guuppt taa

57. Tax websites give CAs a run for return

money
This year, Praveen Jain, a software professional in Bangalore, did not have to make his annual tax
trip to Kolkata. Even after e-filing came into vogue, Jain, like many of his family members, used
to go to his native place near Kolkata to submit the signed copy of his ITR-V, the
acknowledgement of e-filing, at the local income-tax (I-T) office.

Not this year, though. Thanks to a number of tax preparation portals that have come up, and the
decision of the government to allow tax payers opting for e-filing to send asigned
acknowledgement to the income-tax processing centre in Bangalore, Jain filed his returns on the
evening of July 31, the due date for submission of IT returns. On top of that, he prepared his
returns on his own with the help of a tax preparation portal instead of a chartered accountant.

As tax filing in India gets digitised, and rules get simplified, most of the floating population now
prefers e-filing. This has given rise to a number of tax preparation websites, such as, TaxSpanner,
eLagaan, Taxsmile, Taxshax, Taxonline and myITreturn. Riding on the burgeoning tax payer
base, these websites are offering innovative services.

The government simplified e-filing this year. As soon as atax payer (one who does not have a
digital signature) uploads his returns on the incometax website, he can download the
acknowledgement and take aprint. The I-T website also sends the acknowledgement to the email
address of the tax payer. The tax payer needs to sign the acknowledgement and send it to a
designated post box number meant for the central processing centre (CPC), by normal post. Once
the CPC gets the acknowledgement, it will send an email confirming the receipt. The
acknowledgement should reach the I-T office within 30 days of the e-filing.

Tax preparation using automated tools is a relatively new concept in India as the government
allowed e-filing only in 2007-08. Till then, one had to go to a chartered accountant and pay Rs
200-1,500.

After e-filing was introduced, the initial response was not very encouraging, as one was still
required to go to the I-T office to deposit the money. After the decision of the government to set
up a CPC in Bangalore in partnership with Infosys Technologies for processing all e-filings from
across India, it has caught on, although the I-T department is yet to come out with an official
figure on this. In turn, this has thrown up a business opportunity of about Rs 2,000 crore, the
amount that some 35 million tax payers spend every year for getting their tax returns prepared by
chartered accountants.

Most portals that offer tax preparation services use standard tools which automate the process of
tax preparation. This minimises errors (chartered accountants generally engage trainee associates
who do it manually).

58. Secretive about cybercrime

We proclaim we are the outsourcing capital of the world. Most of the world’s data passes in some
form through our virtual borders. But we as a nation rarely file cybercrime complaints with the
police, who we perceive are not equipped to handle technology crime. We enacted an IT Act in
the year 2000 but yet only have a handful of judgments from our legal ecosystem which have
applied sections of the IT Act.

Conventional crime is localised and deterministic. But technology has changed all of this. Last
year just one man, Jerome Kerviel, who worked for Société Générale Bank, caused it a loss of 5
billion Euros. Without technology, you would need dozens of people to commit a fraud of such
magnitude. This fraud went on for years as it is very easy to backdate entries on a computer. Even
today nobody really knows what techniques Kerviel used to hack the bank’s computer system.
The worst part is that we will never know.

How many Kerviels are out there even today, nobody really knows. For instance, it’s been
months and we still have no idea of the extent of loss at Satyam and we may never know.

Earlier, whenever a conventional fraud happened in an organisation, nobody ran to inform the
audit committee or the board. After Satyam, technology crimes have become a corporate
governance issue, and rightly so. At the first whiff of conventional fraud it is easy to get a grip on
its magnitude. With the advent of technology, it has become very difficult to even understand the
nature of the fraud. What does the management of a company do if it finds that a fraud has taken
place? For months, it is unlikely to have an idea about the extent of the fraud.

Should they report this to the audit committee or the board? They must, because if they do not,
the board could be held guilty of collusion with the criminal. We have to bear in mind that the
CEO/CFO has to sign a document every quarter which talks of material loss to the company. The
company must also file a complaint with the police that a crime has been committed. The police
in India are not adequately trained to investigate technology fraud (there may be exceptions in a
couple of cities such as Mumbai) and the company must bring in outside forensics experts not
only to investigate but also to make sure that all the evidence is sanitised so it can be used in
court. If the court throws out the evidence on the ground that it is contaminated, charges could be
filed against the company for doing acover-up job. I have yet to see our police force understand
the science of evidence gathering in a technology crime.

Finally, does the organisation report the cybercrime to the stock exchanges or the regulators?
How will it quantify the extent of the damage? The fraud could turn out to be ared herring. The
biggest problem is that the suspect is likely to turn around and say that whatever he did had the
sanction of the management. Thus every company must have firewalls in place to make sure that
the blame remains at a certain level. Everyone should not be singed.

Technology crimes raise more issues than we have answers for. Nobody really knows how
companies should respond to such a complex situation. After Satyam, companies are reacting to
corporate governance but more out fright. Regulators must get together to set up a procedure that
everyone must follow when it comes to reporting of fraud in the greater interests of transparency
and corporate governance.

Governance involves public money and public interest. It is important that safeguards, processes,
firewalls and a counter-strategy are put in place in anticipation.

59. Buffett picks Sokol to run NetJets,

fuels speculation
Berkshire Hathaway Inc named David Sokol to run its money-losing NetJets Inc airplane-sharing
unit, adding to speculation he may one day lead the investment and holding company built by
billionaire Warren Buffett.

Sokol was tapped by Buffett to replace Richard Santulli on an interim basis as chief executive
officer of the Woodbridge, New Jersey-based airplane-rental unit, according to astatement
yesterday. Sokol, 52, is chairman of Berkshire’s energy business.

Buffett, Berkshire’s leader since the 1960s, is monitoring candidates to succeed him in overseeing
businesses from candy and furniture to energy and insurance. The potential successors all work
for Omaha, Nebraska-based Berkshire, and picking one is the board’s most important job,
Buffett, 78, has said.

Tony Nicely, the head of Berkshire’s Geico Corp car insurance business, and Ajit Jain, who runs
a unit that sells reinsurance, are also on media lists of potential successors. Santulli had also been
included on some lists.

“It’s big news,” said Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha,” of
yesterday’s announcement that Sokol would take over for now. “That kind of tells you everything
you need to know about where the company is headed.” Berkshire made its first foray into the
energy business with the agreement in 1999 to buy MidAmerican for about $9 billion in cash and
assumed debt. The firm’s largest individual shareholder before the deal had been Buffett’s
Omaha neighbour, Walter Scott.

Sokol, the CEO of the business at the time, in 2008 yielded the post to his second-incommand,
Gregory Abel, saying that working as the MidAmerican’s chairman would allow him to focus
more on finding acquisitions. Scott, Sokol and Abel retain minority interests in MidAmerican.

BYD started selling the F3 DM, the world’s first mass- produced plug-in hybrid, in December
and is working with MidAmerican on the development of rapid-charge batteries for storing power
from wind and solar generation, Sokol said in September.

60. Citi plans to sell 20 finance businesses

Citigroup plans to sell 20 businesses in consumer finance area, many of them located in Europe,
its CEO Vikram Pandit said in an interview with Singapore’s

He said the move was due to the shift in the consumer finance market where “there is less
funding availability and they are probably less robust as businesses.” Pandit also said that the
group’s capital position following the completion of the exchange of preferred shares for
common equity in July, reflected an “incredible financial strength.” “On the completion of our
exchange offer, we had 12.7 per cent tier 1 capital and more than 9 per cent tier 1 common
capital,” Pandit said during his recent trip to Singapore.

The New York-based bank has said in July investors have agreed to swap $32.8 billion of
preferred securities for common stock, and the US government, which will officially take a 34 per
cent equity at the bank and become its largest shareholder, will swap $25 billion.

The US third-largest lender conducted the offers after heavy credit losses and writedowns
prompted a series of bailouts, including a $45 billion injection of taxpayer funds from the
Troubled Asset Relief Program.

Citigroup reported a quarterly profit of $4.28 billion, compared to a year-earlier loss of $2.5
billion. However the second quarter was boosted by $6.7 billion gain from the sale of its Smith
Barney brokerage.

Without that one-off gain the lender would have reported a $3.7 billion loss. “We’ve done a
pretty good job in the first two quarters of this year,” Pandit said. “But we got there after a lot of
hard work last year. We reduced our assets by almost 25 per cent. We reduced our risk by alot
more than that number. And we cut about $16 billion ayear in expenses.” The new, restructured
Citi will have three main lines of business of roughly equal size, which are a consumer bank, a
securities bank, which will include investment banking operation, and a financial service for
business.

The third largest lender in the US conducted the offers after heavy credit losses and writedowns
prompted a series of bailouts, including a $45 billion injection of taxpayer funds from the
Troubled Asset Relief Program

61. Clinton to address IIT alumni meet

Former US President Bill Clinton will address over 3,000 alumni of the Indian Institute of
Technology at a global conference here in October.

Clinton, 42nd President of the United States and founder of the William J Clinton Foundation,
would speak about innovative ways to address challenges and opportunities in areas of education,
energy, climate change and public health at the Seventh Annual ‘PanIIT Global Conference
2009’ on technology and innovation.

The theme of the conference, being held from October 9-11, is ‘Entrepreneurship and Innovation
in a Global Economy’. The conference would bring together a diverse group of thought leaders
from industry, academia and government, including IIT alumni, to address challenges and
opportunities in key industries such as alternative energy, healthcare, digital infrastructure and
climate change, it said.

“The conference theme is aligned with the goals of the William J Clinton Foundation and the
Clinton Global Initiative in bringing together a community of global leaders and private citizens
in identifying and implementing innovative solutions for the world’s most pressing challenges,” a
PanIIT statement said.

Other key speakers at the conference include US President Barack Obama’s Chief Technology
Officer Aneesh Chopra, Indian Ambassador to the US Meera Shankar, Caterpillar Inc Chairman
and CEO James Owens, India’s National Knowledge Commission Chairman Sam Pitroda and
Suzlon Energy Chairman Tulsi Tanti.

62. Aircel shortlists four firms for tower

sale
Cellular firm Aircel, 74 per cent of which is owned by Malaysia’s Maxis, has shortlisted four
firms — including American Tower and Bharti Infratel — to conduct due diligence as it looks to
sell part or all of its tower holdings, sources with knowledge of the deal said.

Aircel, which is India’s No 7 mobile operator and owns about 12,000 towers, values the asset at
between $1 billion and $1.6 billion.

The company is looking to offload 51 per cent to 100 per cent of its tower business, the sources
added.

Tower operators Crown Castle and Tata-Quippo are the other two suitors who would inspect
Aircel’s books, starting next week.

A spokeswoman for the company, when contacted said: “These are all speculations.” Bharti
Enterprises, the parent of Bharti Infratel, also declined to comment.

As new telecom companies start operations in the country, the world’s fastestgrowing mobile
phone market, they are looking to save on costs by sourcing infrastructure, including mobile
masts, from existing telecom firms and independent tower companies.

Existing operators are selling stakes in tower units in order to raise funds for the expansion of the
tower business and growth of core operations.

Standard Chartered, Nomura and Rothschild are advising Aircel in the deal, they said, adding that
GTL Infrastructure, Reliance Infratel and at least one private-equity firm had shown interest in
the towers.

India’s number 2 mobile operator Reliance Communications’ Reliance Infratel tower unit
recently said it hopes to secure $2 billion over 10 years by leasing its infrastructure to Etisalat’s
India telecom venture.

New York-listed American Tower is looking to expand in the country and earlier this year bought
an independent tower operator, Xcel Telecom.

Top mobile operator Bharti Airtel, number 3 Vodafone Essar and number 5 Idea Cellular have
together formed the biggest independent tower company, which owns more than 100,000 towers.

Separately, Bharti Airtel’s tower unit Bharti Infratel has raised $1.35 billion by selling stakes to
private-equity firms.

India’s No 7 mobile operator Aircel owns about 12,000 towers, values the asset at between $1

American Tower, Bharti Infratel, Tower operators Crown Castle and Tata-Quippo are selected for
intended tower sale
 63. Tata DOCOMO starts GSM service

Union Minister of State for Communications and Information Technology Gurudas Kamat with
Femina Miss India World 2009 and brand ambassador Pooja Chopra during the launch of Tata
DOCOMO services for the Maharashtra circle, in Mumbai on Thursday

64. Hiranandani eyes tie-up with Maha

Real estate developer Hiranandani Constructions is looking to enter the affordable housing
segment and may enter into a public-private partnership (PPP) with the Maharashtra government
for the same, a top company official said. PTI

The C K Birla-controlled Hindustan Motors (HM) is preparing to launch the Lancer Evolution X
(also known as Evo 10) in the Indian market by the end of the current financial year. The car will
be initially sold in the local market through the completely built unit (CBU) route (direct import),
with plans of having a completely or semi-knocked down operation some time after the launch.

65. IFC to spend 135 million in VW Pune

plant
The World Bank’s private sector lending arm International Finance Corp (IFC) said it would
invest ¤135 million in Volkswagen India’s plant in Pune to help generate jobs.

“IFC ... has agreed to invest ¤135 million in Volkswagen India Pvt Ltd to help the company set
up an integrated car manufacturing plant in Pune, India, that will help create jobs locally,” it said
in a statement.

The construction of the Indian manufacturing unit of Europe’s largest car maker, Volkswagen
AG started in 2007 and the parent German auto maker has already invested about ¤245 million in
the project. The plant will have an initial capacity of 110,000 units a year, and Volkswagen India
will target the local small- to compactcar segments, IFC said.

IFC said ¤60 million will be paid from its own account and a syndicated loan of ¤75 million will
be arranged from Societe Generale, Bank of Mitsubishi, DBS Bank and Fortis Bank.

66. Coca Cola’s latest campaign will be

launched online before mass media
Coca Cola India is launching its latest campaign for Sprite, the second-largest selling carbonated
drink in India, on the Internet. This is the first time the cola major is breaking a campaign for one
of its brands online, giving the electronic medium a miss.

The digital campaign will be launched in partnership with In.com on August 8 and will be
preceded by an online contest that will run for a day on August 7.

“In a psychological sense, launching the campaign online is a big, big, big move,” says Srinivas
Murthy, general manager (Flavors), Coca-Cola India. The company is known to have advertising
and marketing budgets of close to 30-35 per cent of its overall revenues.

In the two days that the campaign is being aired online, Coca Cola expects close to 4 million
views. In.com has a daily traffic of 9-10 million users online and the company has ensured that it
gets a minimum of 2 million flashes (views) and is also running other activities to drive traffic to
its site.

FMCG companies in India spend approximately 1-3 per cent of the overall budgets on the digital
medium as compared to 10 per cent in countries like the US and the UK. However, with growing
broadband usage and rising internetenabled mobile phones in India, marketers are now looking at
increasing their digital spends.

FMCG companies like Hindustan Unilever, Proctor & Gamble, Cadbury’s and Tata Tea have
already increased their digital ad budgets up to 8-10 per cent for individual brands.

Fridge Mein Jayega Bade Kaam Ayega for the 1.25-litre fridge pack. For instance, the online
contest will bring in interactivity as internet users view eight seconds of the Sprite commercial
and will have to complete the rest. The first six participants who guess the ending would win
Nokia multimedia phones.

Besides digital and electronic, the campaign — which is conceptualised by Ajay Gahlaut, group
creative director, Ogilvy & Mather, Delhi and directed by Shoojit Sircar from Rising Sun Films
— will also use the outdoor, out-of-home, on-ground activations and radio and print as it builds
on the message Fridge Mein Jayega Bade Kaam Ayega .The total duration of the campaign will
be eight weeks.
67. SKorean firms to win greater access to
India
Hyundai Motor Co, LG Electronics Inc and other South Korean companies will get greater access
to India’s 1.2 billion people in a trade deal to be signed tomorrow.

Import duties on 85 per cent of Korean goods, including auto parts and electronics, will be cut or
phased out over the next decade, Korea’s trade ministry said today. Commerce Minister Anand
Sharma and his South Korean counterpart Kim Jong Hoon will sign the agreement in Seoul, said
Choi Kyong Lim, the official overseeing trade agreements, said today in Seoul.
India’s $1.2-trillion economy grew 5.8 per cent in the January-March quarter, brushing off the
slowdown that has dragged Korea into recession. Singapore’s exports to India excluding oil
products more than doubled in the two years after they signed a similar accord in 2005, according
to Indian commerce ministry data.

Bilateral trade between India and South Korea rose 39 per cent last year to $15.6 billion. South
Korea exported $3.6 billion worth of goods to India, and imported $1.6 billion in the first six
months of this year.

India’s growth puts more money into the hands of consumers in a country where almost 30 per
cent of the population is under 15 years of age. Younger people tend to spend more on vehicles,
phones and other consumer goods.

India will eliminate or reduce tariffs on 85 percent of South Korean exports over 10 years,
Korea’s trade ministry said. These will include auto parts, tankers, electronic goods, machinery
parts and synthetic rubber.

South Korea’s cuts will cover about 90 per cent of Indian exports, including polycarbonates,
leather, industrial diamonds, gasoline and corn for livestock.

Hyundai, which operates an auto plant near Chennai, sold 244,030 vehicles in the country in the
year ended March 31. The largest South Korean automaker gets 55 per cent of sales from
emerging markets including India and China, where car demand has withstood the global
slowdown.

LG Electronics, the world’s third-largest maker of LCD televisions, also has plants in India to
make consumer appliances and personal computer monitors.

68. Building brands Indian-style

Love Aaj Kal was the latest Hindi film release this weekend. It is another love story from the
Bollywood stable. However, its promotion is interesting. Instead of using one standard visual
across billboards, the film has used eight stills. This is surely a reflection of progress in vinyl
printing technology — you no longer need quantities to get a cost benefit. It’s also a reflection of
innovation —a creative cut-through device to make the film stand out. However, digging deeper,
it also reflects the emergence of Indian branding into film promotion. The concept of having a
standardised visual design in a very western concept of bringing unity; the eastern concept is
actually keeping the spirit the same, while being flexible in form.

Not surprisingly, brand building and advertising principles in the two parts of the world are
different. It’s hard to think of a western brand running two distinctly different-looking campaigns
for a brand almost concurrently like Vodafone does in India. For value-added services, there is
the famous ‘zoozoo’ campaign on air; for service — ‘happy to help’ — the ‘girl and dog’
commercials. The commonality is the spirit of being ‘warm, endearing, charming’ and the logo at
the end. For a culture comfortable with symbols and forms, this would be sending two different
‘images’ for the same brand.

Cadbury Dairy Milk’s ‘Real taste of life’ campaign of the early 1990s is today part of branding
folklore. It’s often seen as both a ‘re-positioning’ and abrand ‘re-invention’ exercise. While the
re-positioning is perhaps true — the marketer was attempting to make it relevant to a newer
audience — the ‘re-invention’ is true only from the western point of view. For the easterner, it
was just a case of making the soul of the brand ‘child-like happiness’ relevant to anew audience.
While the audience expanded, the spirit was the same and is perhaps still the same, even today.

The key to global campaigns transferred from one market to another has always been transfer of
formats. In the print medium, it’s often about where the logo has to be placed, what colours have
to be used and what typefaces and fonts. In the audio-visual medium, it’s often the case of
sticking to similar stories and definitely having the same base line. This has been the means of
building brand unity. Many global brands —McDonalds, Coke, Dove, Colgate — have been built
by using such standardisation techniques and models. The same principles have often been
adhered to by Indian (and eastern) marketers as much as marketing and brand thinking have
emerged from the experienced and evolved West. However, this has resulted in brands with
global presence ie being present in many markets but with variable equities in each of those
markets. Perhaps, restriction by form — symbols — limits the strengthening of equity at the local
level.

Philip Kotler defines brand as a ‘name, term, sign, symbol, design, or a combination of them,
intended to identify the goods or services of one combination of them, intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of
competitors’. Clearly in the subtext of this definition, the form takes precedence over the soul! As
the centre of gravity of marketing moves eastwards and marketing becomes more and more
localised, it may be worthwhile to revisit definitions and see the ‘name, term, sign, symbol…’ to
be a summation of a soul, spirit and values of a brand rather than the starting point. The
differentiation and the consumer connect comes from the soul and spirit rather than just the
symbols. This may sound semantic but the difference is important to note. The soul should take
precedence over the form! This will enable brands to get liberated from forms and structures and
become more holistic entities, the way many iconic brands unconsciously have managed to take
shape in the East. It allows brands to take cultural nuances into account and connect more
strongly across individual localised markets. This could mean baselines can change, colours can
change and so too can execution elements. Brands unfettered this way could actually become
‘truly’ global.

69. Young investors wary of jumping into

market lows
Young investors may accept the argument that those who begin investing when stocks are cheap
end up with more retirement money, but after the turmoil of the past year, some find it hard to put
their money in the market.

Asset managers and analysts say that those who invest in rock-bottom stocks of a bear market
will see share values rise for decades.

But many in their 20s and early 30s are not buying rosy projections, due to immediate financial
pressures and exposure to the longest recession since the 1930s Great Depression.

The trend has some worrisome long-term implications. Stock brokers may find themselves
largely shut out of a big customer base, and demand for equities will likely be crimped as
investors favour safer havens, hurting the stock market’s prospects. It’s also unclear whether
these young investors will have accumulated enough to fund their retirements when the time
comes.

Corbacho is no stranger to markets. At age 13 he invested his birthday money and a matching
donation from his father, $1,000 in total, in tech stocks only to feel the sting when the internet
bubble burst.

He carried the lesson with him in early 2008, after seeing signs of economic trouble as an intern
at a Boston investment bank. He put the majority of his stock investments, which had reached
about $5,000, into a certificate of deposit instead.

Corbacho doesn’t plan returning to stocks for a few years after graduation and is instead focusing
on saving.

The recent market collapse has made holding cash for immediate expenses far more attractive to
young people than investing, said Rodger Smith, managing director of Connecticut consulting
firm Greenwich Associates.

The early exposure to such dramatic declines could restrain many from investing aggressively
when they are older and have accumulated more money to put into the market, some say.

Asset managers, financial advisers and investors agree that young people will emerge from the
financial crisis more educated, and more cautious, about managing their money.

Corbacho said his generation should not expect to accumulate sudden wealth like some in the
past.

Assets in US retirement plans fell 22 per cent in 2008 or nearly $4 trillion, with almost 75 per
cent of the drop in the second half of 2008, the Investment Company Institute found.

70. News Corp may charge for web news;

blasts Amazon
News Corp, which is trying to stem newspaper revenue declines, could charge for access to its
news websites by the middle of next year, and might break off its relationship with Amazon.com
Inc’s Kindle e-reader if it cannot get better terms.

Rupert Murdoch, chief executive of the global media empire, said on Thursday that he is unhappy
with the Kindle’s control of relationships with newspaper subscribers, and might seek a better
deal with rival e-reader maker Sony Corp.

Amazon officials did not return calls seeking comment.

Murdoch’s comments come after News Corp, whose properties include The Wall Street Journal,
cable programmers, local TV stations and movie studios, reported a 10.7 per cent drop in
quarterly revenue to $7.67 billion, which was in line with expectations, according to Reuters
Estimates.

It forecast operating revenue for fiscal 2010, which ends next June, would rise in the high single
digits on 4 per cent revenue growth.

Murdoch said the worst might be over. But another fight looms: persuading millions of people to
pay for news on the internet when most get it for free.

He did not provide details on a conference call with reporters and analysts, but said that he wants
to make people pay for access to his news websites by the middle of the 2010 fiscal year, which
ends next June.

71. Music firms see revival in a flash

THE Indian music industry, caught in the blues of digital piracy, is turning to the millions of
earphone-wielding teenagers found in the country’s metro trains and city buses, to go rocking
again. Top recording companies TSeries, Saregama and Times Music will soon be selling music
on memory cards and pen drives used in mobile handsets and computers, with the hope that at
least a part of this young brigade glued to iPods and smart phones embrace legal music.
This may turn out to be a stopgap mode of selling digital music in the country till a time
Internet connections are fast enough for consumers to adopt online downloads, prevalent in the
West.
The target market is huge. According to a mobile phone maker, nine out of every 10 cellphones
sold in the country have a slot for memory card that support music uploads.

Pricing holds key to success

THE music industry is desperately looking to revive its fortunes after seeing its earnings from
sale of compact discs and cassettes slip 14% to an estimated Rs 630 crore in 2008, mostly due to
the lack of effective anti-piracy laws and poor enforcement of existing ones.
Saregama will launch music on microchips by this month-end and pre-loaded pen drives by
Diwali. TSeries will join in next month when it releases the music of the Akshay Kumar and
Sanjay Dutt-starrer Blue on pen drives and microchips, along with CDs and cassettes. “Here on,
music for all big movies will be launched in this form in addition to CDs and cassettes,” said
Bhushan Kumar, managing director of the Delhibased recording firm.
While T-Series will initially source memory cards and load them itself, Saregama plans to team
up with hardware importers and manufacturers to bundle music into mobile memory cards and
pen drives. The music will be in MP3 format.
The key to its success will be pricing. Companies said they are still working on it. According to
industry insiders, they may be looking at selling mobile cards with bundled music in the range of
Rs 450-550. Pen drives, which can be plugged onto the computer or even car stereo systems, will
cost Rs 700-750.
This may discourage many people from tuning in though. The problem is, Indians can now
load the music of their choice on their phone cards and iPods from any mobile store by paying
just Rs 50, said Savio D’Souza, general secretary of the Indian Music Industry (IMI), an
association representing Indian and foreign music labels.
Many people get their music free from the Internet. Also, pirated MP3 format music CDs
containing up to 200 songs are available for Rs 50-100 in the grey market.
Companies will not be able to make their offering much cheaper though, given that branded
mobile cards and pen drives with 1 GB (gigabyte) capacity—that can hold 200 songs—cost at
least Rs 700. They are available for Rs 200-400 in the grey market.
Experts feel that the initiative will succeed only if anti-piracy drive too picks up. The
government on Tuesday moved a bill in the Lok Sabha to amend the fivedecade-old Copyright
Act that promises to make piracy a punishable offence with up to two years imprisonment.
This is why some recording firms such as Tips have decided to wait and watch before taking a
decision. Tips may launch similar products to sell music once other companies test the market,
its managing director Kumar Taurani said.
But given the ever-growing number of mobile phone users in the country, the early birds are
optimistic. “Just as there is a consumer for music CDs, there is a consumer for pre-loaded micro
chips and pen drives,” said Times Music CEO Adarsh Gupta.
The Indian music industry, which was pegged at Rs 670 crore through sale of CDs and
cassettes in 2004, grew to Rs 730 crore by 2007 before declining to Rs 630 crore last year,
according to a PwC report that also said digital music will drive the growth of the industry,
growing its share from 16% to 60% by 2013.

72. Essar Steel to buy Shree Precoated

assets, long-term debt for Rs 600 cr

THE Ruias-owned Essar Steel on Tuesday agreed to acquire the fixed assets and long-term
liabilities of Mumbaibased Shree Precoated Steels for a little more than Rs 600 crore, a move
that could signal the return of consolidation in the Indian steel industry and also give Essar Steel
a major presence in the high-value steel-making category.
Although Essar Steel didn’t elaborate on the financial size of the deal, people close to the
development said it is in the range of Rs 600-Rs 650 crore. Under the agreement, Shree
Precoated, an unlisted firm controlled by the Ajmera group, will transfer its assets including the
colour coating line, the cold rolling mill, the galvanising line and pickling line. Essar Steel will
also take over the outstanding long-term debt of Shree Precoated Steel, which is currently at
about Rs 175 crore, said people familiar with the development.
The acquisition will give Essar Steel a 2 million tonne capacity in cold rolled steel making, a
high-value category in steel making that sells at a premium of more than Rs 6,000 per tonne,
over the base grade category — hot rolled coils. CR steel and galvanised steel are used for
highend applications in automobiles, consumer goods and in constructions and are typically
insulated from extreme fluctuations.
While the base grade category saw prices more than halve to Rs 26,000 per tonne in the initial
months of recession, prices of CR steel fell by just about 10-15% in the same period.
Global consulting giant Ernst & Young were the financial advisors to the deal which, industry
executives say, could prompt a return of the consolidation wave seen five years back. “With
companies focusing solely on core operations, divestment of non-core units is gaining,” said the
senior executive of a large steel company that competes with Essar Steel. “Many companies had
entered steel making when steel prices were firm. Now, with costcutting becoming top priority,
such companies want to sell off these steel businesses.”
The Mumbai-based Ajmera group’s main area of operations is real estate. Shree Precoated
Steels had earlier been sought after by the Jindals of the JSW group in 2000, when the Jindals
were finalising plans to increase their presence in galvanised steel near Mumbai, to export to
premium markets such as Europe and the US. However, the talks with the Jindals fell through
due to differences on valuations, and JSW, subsequently, strengthened its cold rolled steel
operations in Vasind and Tarapur.
OP Gandhi, CFO, Ajmera Group said: “The funds realised would be used for new business
purposes like steel trading and service centre for steel products.” For the fiscal year ended March
2008, Shree Precoated Steels had sales of around Rs 1,940 crore. Subsequently, the company has
undergone a substantial reorganisation through a rather complicated scheme of demerger. The
Shree Precoated plant location at Ranjangaon is strategic as it is home to auto companies and is
considered to be one of the largest steel consuming centres in India.

73. Pepsi to fizz up business, nears $8-b

bottling deal

PEPSICO, the world’s second-largest soda maker, is close to an agreement to buy Pepsi Bottling
Group and PepsiAmericas for about $7.8 billion, said people familiar with the matter.
PepsiCo is offering $36.50 a share for Pepsi Bottling and $28.50 a share for Pepsi-Americas,
half in cash and half in stock, based on the July 31 closing price of Pepsi-Co, according to the
people, who declined to be identified because the talks are private. PepsiCo originally offered
about $6 billion in April for its two biggest bottlers, a bid they both rejected.
The takeovers would give Purchase, New York-based PepsiCo control of about 80% of its
North American beverage market, enabling chief executive officer Indra Nooyi to cut hundreds
of millions of dollars in annual costs and simplify negotiations with retailers such as Wal-Mart
Stores.
The parties have sparred over how much the maker of Pepsi-Cola could expect to save. Pepsi
Bottling said in June that the transactions could bring as much as $850 million in annual savings,
compared with PepsiCo’s estimate of at least $200 million.
PepsiCo and bigger rival Coca-Cola sell beverage concentrate and syrup to licensed bottlers,
which add water and other ingredients, put the mixture in bottles and cans, and sell it. In 1999,
PepsiCo followed Coca-Cola’s lead by spinning off its capital-intensive bottling operations to
create Somers, New York-based Pepsi Bottling. — Bloomberg
 74. Tatas look to buy out AIG in life
insurance JV

THE Tata Group is preparing to buy out US insurer AIG from the life JV, Tata AIG Life
Insurance. The local partner is believed to be doing a valuation of the life company.
The possibility of Tatas buying AIG’s stake gathered steam in the aftermath of the global
financial slowdown that resulted in AIG suffering huge losses. The bailout that followed resulted
in the US government becoming the largest shareholder in AIG.
Initially, there were indications that AIG would sell its Asian life insurance business. Earlier
this year, US’ Metlife, UK’s Prudential and French insurer Axa had shown interest in buying
parts of AIG’s life insurance business. But this could have caused regulatory problems in India,
as all three multinationals have a presence here through JVs.
More recently, the US government decided that it would get AIG to repay part of the bailout
money by selling shares in its Asian business under AIA, an arm of AIG, through an initial
public offer.
When contacted, a Tata spokesperson said: “We do not wish to comment on such speculation.”
According to an AIG official, given AIA’s positioning as an Asian insurer, presence in the
Indian market would be crucial. Indeed, AIG insiders pointed out that despite the financial crisis,
AIG was quick in infusing money into the Indian life insurance JV.
A chief executive with another life JV company said that AIG’s plans for life insurance are yet
to emerge. “It’s not clear which part of the life insurance business they are going to retain and
fund through an IPO and which are the pieces they are looking to sell,” he said. But what is clear
is that AIG plans to continue in the non-life business where it has a strong position in the market.

But if AIA were to be carved out, there would be a change in shareholding that would give
Tatas the option to re-examine the partnership. There are indications that things may not be the
same at Tata AIG Life Insurance. For instance, the company has, for the first time, hired a non-
AIG person as CEO when it appointed Suresh Mahalingam. Mr Mahalingam was with HDFC
Standard Life as head of marketing before he moved to Tata AIG as chief operating officer.
All the three earlier CEOs — George Oommen, Ian Watts and Trevor Bull — were AIG
executives. Secondly, AIG has renamed most of its Asian businesses as AIA, but has kept India
out of the rebranding exercise.

75. Crisis won’t upset US dominance

THE American economy has been battered by the present financial crisis. It could take several
years for it to get back to normal. Some commentators and political leaders have suggested this
could be the beginning of the end of America’s dominance of the global economy.
Wrong, says historian Niall Feguson. In an article in the Harvard Business Review (July-
August 2009), Ferguson argues that, while America’s financial sector may be end up weaker,
American dominance of the global economy is likely to continue.
 Ferguson is an unabashed Americophile and something of an icon to the neo-conservatives in
the US. He is the author of a book, Colossus, in which he argued that America’s problem is not
that it is imperialist but that it does not take its imperial role seriously enough.
Those who contend that the present crisis will be a huge setback for the US put forward several
reasons:

• The US economy could take several years to come back to normal. Meanwhile, rivals like
China will power ahead.

• America’s national debt is set to explode and this will limit its future growth.

• The US dollar will lose its status as the reserve currency in the near future.

• The American financial system will soon be a pale shadow of what it has been.
The IMF expects the US economy to shrink by 2.6% in 2009. Recovery will be slow in coming
— in 2010, the US economy is projected to grow by just 0.8%. Many think this could alter the
race between the US and its principal economic rival, China, to China’s advantage.
In 2007, Goldman Sachs had forecast that China’s GDP would equal that of the US in nominal
terms by 2027. If the US economy suffers low to zero growth over the next four years while
China grows by 6%, one would think that China could catch up with the US even earlier.
Not really. Ferguson points out that, going by the IMF’s forecast (of April 2009), US growth
rate will be lower than the growth rate of 2007 by 4.6 percentage points. But that of China would
be lower by 6.3 percentage points. So, the present crisis could mean that China won’t catch up
with the US until much later than forecast earlier, say, 2040. The crisis will have stretched out
America’s dominance instead of abbreviating it. (The IMF’s July forecast raised the growth
forecast for China in 2009 but growth will still be 5.5 percentage points lower than in 2007).
Indeed, there is no dearth of conspiracy theorists who believe the US is interested in
prolonging the crisis — and may have even engineered it — knowing that its principal rivals,
especially China, would be severely impacted. China has used its double-digit economic growth
rate to contain discontent. A decline of five percentage points or so in its growth rate risks
fuelling serious disaffection within the country.
AMERICA’S public debt is set to rise sharply following the resort to a fiscal stimulus as a
means of reviving the economy. The federal deficit is expected to exceed 12% of GDP in 2009.
Federal debt is expected to rise from 89% of GDP in 2009 to 101% of GDP in 2019, even on the
optimistic assumption that the US economic growth rises to over 4% by 2011.
India’s combined debt to GDP ratio of the Centre and the states was 73% last March. The
consolidated fiscal deficit is expected to be around 12% of GDP in 2009-10. We worry, despite
the fact that we can count on a long-term growth rate of 8% and we know that a growth rate of
this order renders the fiscal problem self-correcting. Surely, the US should have a problem given
its lower growth potential?
There are differences in the two situations. The US is still regarded as a safe haven by investors
whereas confidence about the Indian economy is nowhere as strong. More importantly, the dollar
is the reserve currency and even America’s rivals prefer to invest overwhelmingly in dollars.
This gives the US enormous borrowing potential. It can simply print dollars which others will
gladly pick up.
For all the talk of the dollar losing its primacy, no alternative is in sight. Indeed, the present
crisis has underscored the inherent attractiveness of the dollar. The dollar rallied in the face of
bad news about the US economy and has defied predictions of a steep decline since.
As Ferguson notes, there are practical obstacles to switching to the Special Drawing Rights
issued by the IMF. A senior Chinese mandarin summed up the situation very well earlier this
year: “Except for US Treasuries, what can you hold? Gold? You don’t hold Japanese
government bonds or UK bonds… We hate you guys….but there is nothing much we can do.”
Because the problems of the US economy hurt the rest of the world, the US appears set to
retain its primacy in the world economy. The dollar will remain the dominant currency and the
world resigned to financing America’s deficits. If there is a question mark, it is over the future of
the American banking system.
For the US banking system to regain its vitality, the US government will have to assume
control of the top banks at least for some time, organise the disposal of banks’ toxic assets, put in
place rules that rein in high leverage in the banking system and get a lot tougher with executive
pay in banking. But the Obama administration has so far lacked the will take such decisive steps.

This undermines the chances of an early recovery in the US economy and hence the world
economy. But for the reasons mentioned above, it does not pose a threat to America’s dominance
of the world economy. When the US catches a flu, the rest of the world goes down with
pneumonia and the US ends up looking stronger.

76. GSK eyes buys to double revenue

GLAXOSMITHKLINE Consumer Healthcare (GSKCH) is ready to shift into the top gear in
India. The Rs 2,000-crore healthcare company is planning aggressive acquisitions and rapid
movement into new product categories, helping it double turnover to Rs 4,000 crore. “We are
closing in on our target of doubling our business in four years. As part of this plan that we made
two years back, we aim to touch a turnover of Rs 4,000 crore in the next two years,” Zubair
Ahmed, managing director, GSKCH, told ET.
To achieve the target, a strategic acquisition is definitely one of the options that the company is
looking at. Though Mr Ahmed declined to comment on the details of the impending acquisitions,
he stressed on the importance of growing the business fast.
The acquisition of Crocin — an OTC paracetamol brand — had helped GSKCH thwart
competition from Calpol in 1996 and at the same time, helped it ease itself into the analgesic
market. Today, with significant market share in OTC segment with brands such as Crocin and
Eno, it doesn’t come as a surprise that Mr Ahmed is waiting for the right opportunity and the
right moment to make a bid. GSKCH is also planning to make a foray into new product
categories where it doesn’t have a presence yet. “Every six weeks, we will have a new product,”
Mr Ahmed said.
Also, GSKCH’s ad spend has been increasingly going up, even during the economic
slowdown. Mr Ahmed said after Hindustan Unilever and Procter & Gamble — two of the
country’s largest FMCG firms — GSKCH is now the third-largest spender on advertising.
According to Mr Ahmed, brand Horlicks accounts for about 65% of GSKCH’s total revenues.

77. Fox buys Khan rights for Rs 90 cr

FOLLOWING the stupendous success of Slumdog Millionaire, Fox Star Studios — a pan-
Asian joint venture between Twentieth Century Fox and Star — has bagged the worldwide rights
of My Name is Khan, Dharma Productions and Red Chillies’ next venture, for a reported sum of
Rs 80-90 crore.
Fox Star Studios will finance and distribute the Karan Johar-directed My Name is Khan,
starring Shah Rukh Khan and Kajol, which is expected to release in early-2010. According to
industry trackers, the deal is said to have been struck for 15 years, and covers all rights except
music, which has been bagged by Sony Music.
Leveraging on parent News Corp’s global presence, Fox Searchlight Pictures will release the
film in the US, while Twentieth Century Fox International will distribute the film outside India
and the US.
Fox Star CEO Vijay Singh confirmed that the film will have a global, multi-lingual release,
though details on number of prints and marketing activity plans are not yet ready. “We have
access to markets worldwide. When the homevideo is ready, we will have the strength of 20th
Century Fox. Basically, we see a seamless transition of one entity working on it,” he said.
For Karan Johar, it was important to find a partner who was like-minded, had a similar vision
and the capability to take the Indian cinema to international markets. “I am happy that audiences
unfamiliar with these films will get a chance to see what the Indian cinema has to offer to the
world,” he said. My Name is Khanexamines how the life of a Muslim from India (SRK) living in
San Francisco embarks on a remarkable journey across the US, inspiring people and inviting
debate, creating an accidental revolution.

78. Turner laps up Amar Chitra Katha

REMEMBER Amar Chitra Katha, the comic books? Some of those stories will now debut, in
animated form, on Cartoon Network and Pogo — the kids channels of broadcaster Turner
International. The broadcaster has acquired rights of some Amar Chitra Katha stories from
Mumbai-based ACK Media for a 26-episode series and two 70-minute films.
Officials from both ACK Media and Turner International India declined to comment on the
deal size, although sources in the broadcasting industry estimated that kids animation content is
generally acquired for Rs 12-20 lakh for a 30-minute slot. Film content comes at over Rs 50
lakh, but this varies based to the strength of the content, the broadcaster’s reach and the duration
of the deal. Turner has acquired perpetual rights for the films and seven years for the series in the
Indian sub-continent. ACK is free to exploit rights for other markets. ACK has similar plans for
Tinkle magazines.
Amar Chitra Katha is the 35th Indian animation title acquired by Turner over the past decade.
Monica Tata, V-P and deputy GM, entertainment networks (South Asia), Turner International
India, said: “Amar Chitra Katha has entertained many generations. So we feel it was a great idea
to bring alive those amazing stories, which most adults have grown up with. Initially, we have
tied up with ACK for three properties, which will go on air next year.” Cartoon Network is
Turner’s global animation channel, while Pogo is an wholly-Indian channel. India is the only
country where the broadcaster has a separate channel. Pogo recently launched a science-based
live action show FAQ.
ACK Media is a two-yearold start-up founded by Samir Patil, also the founder of Vertex
Software, which was acquired by NTT Data Corporation of Japan two years ago. He started the
company with the acquisition of Amar Chitra Katha and Tinkle titles from India Book House and
later acquired a controlling stake in Chennai-based Karadi Tales. ACK will produce the three
properties for Turner. It will do the pre-production work in-house, along with Cartoon Network
and plans to outsource the production work to other studios.

79. Bank of China to invest $1.5 bln in rail

company -report
BEIJING, Aug 7 (Reuters) - Bank of China (3988.HK) may invest almost 10 billion yuan ($1.5
billion) to buy a minority stake in a railway company that is building a high-speed rail link
between Beijing and Shanghai, stated media reported on Friday.

Bank of China Group Investment Ltd, the bank's investment arm, will acquire a nearly 8 percent
stake in Beijing-Shanghai High-Speed Railway Corp from China Railway Investment Corp, a
unit of the railway ministry which is the majority owner of the high-speed rail company, the
China Daily said.

The Chinese government is considering floating key assets of its three major railway operators to
help bankroll a massive expansion of its railway system, state media have previously reported.

China plans to spend an estimated 350 billion euros ($502.4 billion) on railway construction,
expansion and upgrades over the next three years.

At least part of the Beijing-Shanghai express railway, a 1,318-km line between the country's
capital and its financial hub, is expected to be injected into the listing vehicle. ($1=6.831 Yuan)
(Reporting by Simon Rabinovitch and Wang Lan; Editing by Chris Lewis)