THE DERRICK: 20th Edition (30 August-04September2011) Health Ministry wants FDI safeguards to keep drug prices low

"Because a thing seems difficult for you, do not think it impossible for anyone to accomplish."
Policy allowing full FDI in pharmaceutical sector is under review following fears about the impact of takeovers on drug industry Worried that the trend of multinational companies taking over Indian pharmaceutical firms will undermine the government's efforts at making the generic version of drugs available at affordable prices, the Health Ministry wants safeguards to be built into the Foreign Direct Investment process. India today allows 100 per cent FDI in the pharmaceutical sector, but the policy is being reviewed in the wake of fears about the impact of brownfield' investments whereby foreign companies merely take over an already existing Indian company on the future of the Indian drug industry. As many as 61 drugs worth $80 billion are likely to go off patent in the U.S. between 2011 and 2013, making it possible for Indian companies to produce cheaper generic versions. But the Health Ministry fears the takeover of these domestic companies by MNCs would lead to essential medicines becoming costlier, thus impacting public health programmes, including the universal immunisation programme. Keeping in view the need to exercise a certain degree of supervision over takeovers, the Ministry has recommended that prior approval of the Foreign Investment Promotion Board (FIPB) be made mandatory. And while they are not asking for a lowering of the permissible FDI, sources in the Ministry told that steps should be taken to channel foreign investment to green-field projects. Major takeovers Between 2006 and 2010, six major Indian companies have been taken over by MNCs, including Matrix Lab by Mylan, Dabur Pharma by Fresenius Kabi, Ranbaxy Labs by Daiichi Sankyo, Shanta Biotech (Sanofi Aventis), Orchid Chemicals (Hospira) and Piramal Healthcare (Abbott). Since 2001, when 100 per cent FDI was allowed in the sector, only 10 per cent of foreign investment has gone to green-field ventures. The takeovers and mergers by multinational pharmaceutical companies of perhaps the most important Indian generic companies with the technological capacity to produce medicines and vaccines for the developing world are, in the long run, likely to impact the focus of what Indian companies produce and for whom. The MNC takeover of generic manufacturers will further orient them away from the developing country markets, thus reducing the availability of drugs in low-income countries in the future, she argues. Indian companies merged or taken over are unlikely to produce low-cost generic drugs that will compete with their parent companies patented or brand-name medicines. A high-level committee, headed by Planning Commission member Arun Maira, has already been looking into all aspects of the FDI policy relevant to the pharmaceutical sector. At the Union government's request, Ernst & Young is also conducting a study on the impact of the recent takeover of Indian pharmaceutical companies, and its report is likely to be placed before the Economic Advisory Council to the Prime Minister.

INSIDE THIS ISSUE:

CORPORATE watch ECONOMY watch INDUSTRY watch FACT OF WEEK INTERVIEW ZARGONOMICS COLUMNIST JOB watch ENTREPRENEUR

THE DERRICK

CORPORATE WATCH
RBI LAYS PITCH FOR CORP BANK ENTRY
For the first time since bank nationalization in 1969, the ground has been cleared for corporate houses to own banks. The Reserve Bank of India (RBI) on 29th aug announced draft guidelines for new banking licences, first promised during the Union budget in February 2010.The RBI move is being seen as positive for corporate houses like the Tatas, AV Birla Group and Mahindra & Mahindra, which have for long evinced interest in owning banks. However, groups with over 10% of their revenue coming from real estate, construction or stock broking and also those which do not have a 10-year track record would not make the grade. A company hoping to make the cut is also expected to infuse Rs 500 crore upfront. Among other stringent guidelines. Qualifying for a licence would require corporates to undergo large-scale restructuring of their financial service business. Corporates must create a non-operating holding company (NOHC) which will promote the bank and will have to be listed within two years. Although the draft rules have been unveiled, licences will be accepted only after the government enacts legislation empowering RBI to regulate conglomerates. The central bank has said while granting licences it will ask enforcement authorities whether any of the aspirants was being investigated for violation of laws.

SINGAPORE AILINES ALL SET TO INTRODUCE LOW COST CARRIER

Facing stiff competition from low fare air-carriers, Singapore Airlines is all set to introduce a low cost carrier soon. It will be used in the short, medium and long haul routes. They are clear on the idea that the airline would not compromise on "quality" and "service". On their India operations, he said the airline planned to introduce bigger aircraft and also increase frequency. Admitting that their costs were marginally higher than private airlines, he claimed Singapore Airlines provides quality service, particularly for a passenger who has to connect another international flight.

MARUTI RESUMES OUTPUT MANESAR WITH TEMPS

Two days after production at Maruti Suzuki's Manesar factory came to a halt following a standoff between the management and workers over the signing of a bond of good conduct, the company on 31st aug resumed production at the plant with the production of the first Swift. The company had over the last two days begun laying the groundwork for resumption of work in the press, weld and paint shops that are highly automated in nature.So far, Maruti has suffered a loss of production of around 2,400 cars and a revenue loss of Rs120 crore over Monday and Tuesday. It had suffered a revenue loss of Rs720 crore and a production loss of 12,600 cars during the 13 day labour strike in June that was the precursor to the current unrest.While workers who have not signed the bond are not being allowed to enter the factory, the company has also suspended or terminated the services of around 49 workers.

JEWELLERY TOP ONLINE EXPORT FROM INDIA ON eBay

Sales by Indian exporters on eBay grew 85 per cent year-on-year in value terms. In the e-commerce marketplace, India was the second fastest growing country in the Asia-Pacific region behind South Korea. According to the figures from the Asian Exporters' Index, a report based on internal eBay data, jewellery was the biggest export out of India on the site in value terms. Next came handicrafts, which included carpets and rugs. Buyers from 189 countries bought items from Indian sellers on eBay. Over 7,300 Indian sellers have traded internationally in the last 12 months. Mr Chandranath Som, Director, Federation of Indian Export Organizations

(FIEO), present on the occasion, said ecommerce from India was expected to record a growth of 47 per cent and touch $10.3 billion by the end of 2011. In 2010, net commerce from India was worth around $7 billion.

ONGC SHARE SALE MAY OPEN ON SEPT 20 or 27

State-owned Oil and Natural Gas Corp's (ONGC) much-delayed Rs 12,000 crore follow-on public offer (FPO) may open on September 20 or 27. ONGC board approved the red herring prospectus (RHP) on 29th aug, which will be filed as per the instructions of the government. The RHP is likely to be filed with market regulator SEBI on September 5. Keeping the strong fundamentals of ONGC in view, chairman and MD, AK Hazarika is pretty confident about the response from the investors.On August 29, ONGC's board approved the RHP after incorporating the company's financial results for the April-June quarter. The government plans to sell 5%, or 427.8 million shares, through the FPO.The government had in January appointed Citigroup, Nomura Holdings, Bank of America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley to manage ONGC's share sale. Following the FPO, the government's stake in ONGC will come down to 69.1%.

SBI GROUPSS EFFICIENCY FALLS, OTHER BANKS ON A HIGH

Indias largest lender, State Bank of India and its associates fell behind other banks operating in India in efficiency in 2010-11, with a fall in both profit per employee and return on assets, compared to the previous year. Profitability in terms of return on assets of all scheduled commercial banks at the aggregate level improved during 2010-11. All bank groups witnessed an increase in return on assets during 2010-11, except State Bank of India and its associates, which witnessed a decline in return on assets.SBI, which had recorded a 99 per cent per cent dip in net profit in the fourth quarter ending March 31, saw its profitability per employee down to Rs 3, 85,000 in 2010-2011, against Rs 4, 46,000 in 2009-2010. According to RBI, the return on assets also fell on a standalone basis to 0.71 per cent in FY11 from 0.88 per cent in the year before. The bank also has to provide nearly Rs 8,000 crore from its capital reserve for pension, which led to a fall in the banks capital adequacy ratio. The burden on account of provisions has continued in the current financial year. The public sector bank had to make a provision for loan loss and investment depreciation in the first quarter ending June, which led to a fall of 46 per cent in its net profits in the first quarter of FY12. On a comparative basis, profit per employee for ICICI Bank, the largest private sector lender in India, increased to Rs 10,00,000 for 2010-2011, against Rs 9,00,000 in the previous year. Its return on assets rose to 1.35 per cent from 1.13 per cent. Punjab National Bank, the second largest lender in the public sector space, has also seen an increase in its profit per employee to Rs 8,30,000 from Rs 7,30,000 during the reporting period. The data also shows the capital adequacy ratio of all banks declined during FY11.

HUL, TATA FIRM STAR BAZAAR IN JOINT CSR ACTIVITY

Consumer goods major Hindustan Unilever (HUL) has tied up with the Tata Group retail arm Star Bazaar to promote education among the underprivileged children. The campaign started on August 29 and lasts till September 21 in 13 Star Bazaar stores across seven cities. One of the key endeavours as part of the Unilever's sustainable living plan is to motivate consumers to take the small achievable actions that add up to a big difference. The India's Favourite campaign helps to further this cause of increasing the awareness among consumers and helping them to contribute to an important social cause. The initiative will offer consumers attractive discounts on specific HUL brands--Brooke Bond Red Label, Kissan, Knorr, Kwality Wall's, Clear, Dove, Vaseline, Axe, Surf and Vim. Five percent of the sales proceeds from of this consumer initiative will be donated to the Smile Foundation, Parikrma and Thozhamai, which work in the area of education for the underprivileged children. Customer would also be given an opportunity to win a weekly grand prize by participating in the 'Vote for India's Favorite Brand contest that will be run at the Star Bazaar stores.HUL and Star Baazar are committed to promoting this campaign every year and will seek to continuously increase consumer awareness on social issues.

BATA INDIA APPOINTS RAJEEV GOPALAKRISHNAN AS NEW MANAGING DIRECTOR

Footwear and accessories maker Bata India has appointed Rajeev Gopalakrishnan as the company's new Managing Director with effect from October 1, 2011. Gopalakrishnan will take over from Marcelo Villgran, who has been promoted to the position of Group Managing Director to look after the business of the entire region in the 'Bata Emerging Markets'. Marcelo Villagran, therefore, will be resigning from his current position as the Managing Director of the company with effect from September 30, 2011. Gopalakrishnan has been working with Villagran for the past seven months to ensure continuity and smooth transition for achieving the business plans of Bata India as well as that of Bata Shoe Organization (BSO). He has been the Managing Director of Bata Thailand and Bata Bangladesh.

ESOPs COULD BE GOOD CORPORATE GOVERNANCE TOOL

Doling out employee stock options (ESOPs) could help improve the relationship between a company's employees and its management, leading to better corporate governance. In a report titled, 'Governance Matters', the firm said that share options provide an additional incentive for executives to manage their organization effectively and efficiently, thereby increasing share prices. Large companies usually give their employees part ownership in the form of equity stock options. These are sometimes included in an employee's annual package or given as a performance-linked incentive. Share options usually align a manager's goals with those of the shareholders and this helps overcome the problem of operation between ownership and control, since executives in effect become the owner. Globally, there are various codes which underline the provisions for management of stock options. The intention of stock options is to avoid a conflict of interest between shareholders' wealth maximization and the personal objective of the manager. It is time the practice of corporate governance is taken more seriously, with more and more voluntary provisions made mandatory. In 2009, the Corporate Affairs Ministry had come out with Voluntary Corporate Governance Guidelines for companies. The guidelines prescribe the norms regarding representation of independent directors on a companies' board, selection of auditors and CSR initiatives, besides other things. Some of these provisions are also included in the Companies Bill, 2009, which is expected to be passed soon by Parliament.

TATAs READY FOR BEGAL 'if no hostilities'

The Tatas would not make any further investment in West Bengal unless it becomes certain that there is no hostility against them in the state. Chairman Ratan Tata feels the need for satisfying themselves that there is no hostility towards them. They do have old investments in West Bengal but refused to comment anything about the new investments and said that they will go by the rising opportunities. Ratan Tata feels that industries were long ignored in this part of the country.

THE DERRICK

ECONOMY WATCH
PRESIDENT CALLS FOR MSME-FARMER LINKAGES
President Pratibha Patil has urged micro, small and medium enterprises (MSMEs) to create linkages with the agricultural sector in service, research and manufacturing segments for mutual prosperity. Improved agricultural inputsseeds, fertilisers and machinery to post-harvest value addition and marketing were highlighted as possible areas of linkages Speaking at the National Award function of the ministry of MSMEs here, Patil stressed the need for MSME brand to survive and excel in the competitive market. She wanted the entrepreneurs to look at product and market diversification as key tools for growth. The ongoing National Manufacturing Competitiveness Programme (NMCP) will address the technological and marketing requirements of the sector, she hoped. MSME minister Virbhadra Singh listed out the government initiatives meant to turn MSME sector more competitive and efficient. According to Singh, NMCP has several components such as "lean manufacturing", "design clinics", "quality control" etc to turn MSMEs globally competitive. Ministry also proposes to create a Technology Acquisition Fund.

SERVICES INDUSTRY IN U.S PROBABLY GREW AT SLOWEST PACE SINCE JAN 2010
Service industries in the U.S. probably expanded in August at the slowest pace in more than a year, adding to concern the recovery is losing steam, economists said before a report this week. The Institute for Supply Managements non-manufacturing index fell to 51 last month, the lowest since January 2010, from 52.7 in July, according to the median of 59 forecasts in a Bloomberg News survey ahead of the Sept. 6 release. A reading of 50 is the dividing line between expansion and contraction. A Sept. 8 report from the Commerce Department may show the trade deficit shrank from the highest level since October 2008. The recovery risks stalling without a pickup among the non- manufacturing industries that account for about 90 percent of the economy. A stagnant labour market and bleaker business and consumer sentiment may require more effort from President Barack Obama and Federal Reserve Chairman Ben S. Bernanke to spur growth.

BUSINESS CONFIDENCE LEVELS HAVE DIPPED

Major industry bodies have come out with reports indicating a decline in business confidence levels and have called upon the RBI to cut interest rates to boost sagging industry. The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII) have in their separate reports expressed concern over the global economic downturn and the U.S. fiscal position and the European debt overhang which in addition to the domestic factors were generating uncertainty about the economic outlook. The FICCI business confidence index (BCI) was at the lowest level in the last two years, while the CII quarterly BCI showed a decline by 8.9 points. Both the exercises were carried out in August. The CII, however, said expectations for the second quarter indicated a modest recovery, while FICCI forecast a further slowdown in gross domestic product (GDP) growth rate during the third and fourth quarters based on U.S. and India GDP growth correlation. According to CII, most firms do not plan to increase investment plans and FICCI maintained that corporate saw a significant downward pressure on profit margins, affected by high interest rates and input prices. The CII held high interest rate and high raw material cost as the two top business concerns and FICCI pointed to the 11 times increase in interest rate by the RBI and said the tightening monetary policy had resulted in sharp slowdown in industrial growth and had also impacted consumer demand.

EUROPE CANT TAX INDIAN DEPOSITS IN SWISS BANKS: CDBT

India cannot have a treaty with Switzerland under which the deposits of Indians in Swiss banks would be taxed by the European nation, says the Central Board of Direct Taxes (CBDT). According to a recent BBC report, the deal could see between 3 billion pounds and 6 billion pounds a year being handed to HMRC (Her Majesty's Revenue and Customs) by the Swiss authorities. The agreement is a part of the HMRC's latest efforts to track down and tax money hidden in offshore bank accounts. Pointing out that developed nations in Europe are facing problems, the CBDT official said, "Issues of advanced countries are different. Their economies are in slowdown mode. They need revenues and their priority is tax."

IMF SAID TO OPPOSE PUSH FOR GREEK COLLATERAL

The International Monetary Fund opposes European plans to force Greece to put up collateral in its second rescue. The use of collateral, a concession to win Finlands backing for 109 billion euros ($155 billion) of loans pledged by euro leaders in July, would deny the IMF priority creditor status and violates Greek bondholders' rights. Summit agreement Collateral was one element of the second Greek package set up on July 21. Also at that summit, euro leaders agreed to give the main rescue fund, the 440 billion-euro European Financial Stability Facility, the power to offer precautionary credit lines, recapitalise banks and buy bonds in the secondary market. Initial market gains dissipated, leading the European Central Bank to start buying Italian and Spanish bonds on Aug. 8. Europe's relations with the IMF, contributor of a third of the bailout money so far, have worsened as the crisis drags on. Trans-Atlantic miscommunication complicated Greece's payout in July, and officials from emerging economies such as Brazil have questioned the fund's exposure to Europe. Negotiations on the issue continue September 5 with visits by European Union President Herman Van Rompuy to Helsinki and Berlin, and Sept. 6 with a meeting of the Finnish, Dutch and German finance ministers in Berlin. Throughout August, AAA rated Finland was at center stage with its pursuit of collateral, the product of a June coalition accord by new Prime Minister Jyrki Katainen after an election marked by an anti-bailout backlash.

IMPROVING FARM PRODUCTS SUPPLY TO ARREST PRICE RISE

The government is trying to improve supply of some critical farm products which will help moderate the doubledigit food inflation in coming weeks. Food inflation has reached double digit which is a matter of concern. Definitely there is a seasonal factor, but apart from that seasonal factor, there are supply constraints in some critical agricultural products which we shall have to remove. The monetary policy the Reserve Bank has adopted will have impact but will take some time to have full impact on the demand management and in the short and medium term we are trying to improve the supply so that the moderating influence of inflation is felt in the coming week.

EXPERTS DEBATE ROLE OF PLAN PANEL

Experts are debating the role of the Planning Commission as an advisory body, if the recommendations of the committee headed by Prime Minister's economic advisor C Rangarajan are adopted. While many feel the role of the Plan Panel, which is actively involved in allocating resources for Plan expenditure, should change amid the new dynamics in the economy, others fear it is a ploy to reduce the importance of the body set up by a cabinet resolution under Prime Minister Jawaharlal Nehru. FICCI Secretary General Rajiv Kumar said since private investment was now much larger than the government expenditure, states should focus much more on inviting private capital than preparing presentation for the Planning Commission. Rajiv Kumar said that as an advisory body, the Commission should be given a status to coordinate between different governments departments so they do not remain in silos. But former minister of state for planning Y K Alagh finds the report to be designed to erode the role of the bodies such as the Commission. At the central level, the Planning Commission may be responsible, for the sake of convenience and domain knowledge, for guiding the overall development priorities of the government, setting of outcome targets and review of performance of departments. The ministry of finance may be responsible for guiding the fiscal policy, preparation of Budget and financial decisions.

US JOB GROWTH STAGNATES IN UNEMPLOYMENT RATE HOLDS AT 9.1%

AUGUST

AS

UNEMPLOYMENT

AS

Job growth in the US unexpectedly stagnated in August, adding to the pressure on Federal Reserve Chairman Ben S Bernanke and President Barack Obama to rouse an economy that's at risk of stalling two years after the last recession ended. Payrolls were unchanged, the weakest reading since September 2010, the Labor Department said yesterday in Washington. The median forecast in a Bloomberg News survey called for a gain of 68,000. The jobless rate held at 9.1 per cent. The Standard & Poor's 500 Index fell 2.5 per cent to close at 1,173.97 in New York yesterday. Ten-year Treasury yields sank to 1.99 per cent at 4:34 pm in New York from 2.13 per cent late on 1 September. The dollar extended its longest rally since January. OPTIONS LIMITED Still, Obama's options will be limited by opposition to increased spending from Republicans in Congress. Even if the president announces a bold job creation plan, the chances of it getting through Congress are not very large. Political infighting over the budget and mounting fear of a default in Europe caused the S&P 500 to plummet 17 per cent from July 22 to Aug. 8, prompting companies and consumers to cut back. The lack of hiring is one reason Bernanke last week said the central bank still has tools available to stimulate growth.

CABINET TO PROVIDE POWER SUBSIDY TO DOMESTIC CONSUMERS

A week after the 22% hike in power tariff, Delhi government today formally took a decision to provide a subsidy of Rs 1 per unit to domestic consumers whose monthly consumption of electricity does not exceed 200 units. The decision to extend the subsidy was taken to insulate the common man from the hike. The government has been providing the subsidy for the last five years and it had lapsed in March this year. As per the new rates announced by DERC, a domestic consumer will be charged Rs 3 per unit for first 200 units of power instead of the current Rs 2.45.The rate for per unit of power has been increased to Rs 4.80 from the current Rs 3.95 per unit for usage between next 200 units to 400 units while Rs 5.70 per unit will be charged instead of current Rs 4.65 for usage beyond 400 unit. Sources said the issue of a proposal seeking hike in salaries of Delhi ministers and MLAs by up to 300% also figured in the cabinet meeting as the Home Ministry has expressed reservations over certain provisions in it.

ECONOMIC WOES COULD HIT INDIAN FESTIVE SPENDING

India's retailers look set for a tough annual religious festival season traditionally a time for exuberant spending as high inflation and interest rates force consumers to tighten their belts. The season, which began with the end of the Muslim holy month of Ramadan on August 31, and ends with the Hindu festival of lights, Diwali, in late October, is seen as a lucky time for big purchases from cars and property to gold.But analysts warn that expenditures could be curtailed this year as the country's economy slows under the brunt of nearly a dozen interest rate hikes in 18 months, aimed at taming nine percent plus Inflation.

LAMY TO SEEK INDIAS SUPPORT FOR DOHA TRADE TALKS

The World Trade Organisations (WTO) Director-General Pascal Lamy, on a two-day visit to India starting on Monday, will seek the countrys help in bridging the gaps on Doha trade negotiations, ahead of a key ministerial meeting in Geneva in December. The WTO chief is expected to meet Prime Minister Manmohan Singh. Besides bilateral talks with Commerce and Industry Minister Anand Sharma, Mr. Lamy would hold consultations with different industry chambers, an official said. The Doha round of negotiations, launched in 2001, is aimed at liberalising the global trade. However, wide differences persist among the developed and developing countries on the level of market opening and protection to their domestic constituents, like industry and farmer.

THE DERRICK

INDUSTRY WATCH
OIL INDIA MULLS DIVERSIFICATION INTO GAS
State-run Navaratna oil explorer Oil India is chalking out an expansion and diversification strategy that could also include an entry into the city gas distribution space. The company is considering entering the gas transportation market, since it already has expertise in laying pipelines and transporting gas through pipelines. With respect to overseas exploration ventures, the company plans to focus its efforts on fields that have already been discovered. Earlier, the company had set aside 40 per cent of its surplus funds for exploration initiatives. Now, that figure has risen to 52 per cent. Oil India also intends to improve recovery from existing oilfields. It is already engaged in increasing the productivity of mature oilfields by inducting new technologies and company has begun horizontal drilling in some fields to enhance recovery. Nevertheless, the diversification strategy will be conservative, with OIL sticking to areas in which it has some expertise.

AUTO PART INDUSTRY GROWTH TO SLOW DOWN AT 12-15% IN FY 12

Indian auto component industry is expecting a slowdown in growth to 12-15% in 2011-12 from over 34% in the previous fiscal according to Automotive Component Manufacturers Association of India. The industry is likely to see an investment of about USD 3 billion during the fiscal to enhance capacities across the country. The first quarter of 2011-12 witnessed some slowdown in vehicle consumption in India and this seems to suggest the growth in the auto component industry in the current fiscal will be in the range of 12-15%.The component industry had witnessed a growth of 34.2% in last fiscal, taking its total turnover to USD 39.9 billion (about Rs 1, 82,127 crore). The exports also grew at a very healthy rate of 54% to USD 5.2 billion (last fiscal). Looking at the US and Europe, this rate is also expected to come down to around 20-25%.The auto component industry had spent USD 2-2.25 billion on several greenfield and brownfield capacity addition projects in 2010-11. The imports of components rose by over 30% in last fiscal.

INDIA TO JOIN HANDS WITH ARGENTINA FOR SILO TECHNOLOGY

After it was found that millions of tons of food grain were lost because of rotting in Indian warehouses for the lack of proper technologies, the government had decided to take some step. India will be joining hands with Argentina for developing a new technology for warehousing and also to be able to access the existing ones in the South American nation.

SBI GROUPS EFFICIENCY FALLS, OTHER BANKS ON A HIGH

Indias largest lender, State Bank of India and its associates fell behind other banks operating in India in efficiency in 2010-11, with a fall in both profit per employee and return on assets, compared to the previous year. Profitability in terms of return on assets of all scheduled commercial banks at the aggregate level improved during 2010-11. All bank groups witnessed an increase in return on assets during 2010-11, except State Bank of India and its associates, which witnessed a decline in return on assets.SBI, which had recorded a 99 per cent per cent dip in net profit in the fourth quarter ending March 31, saw its profitability per employee down to Rs 3, 85,000 in 2010-2011, against Rs 4, 46,000 in 2009-2010. According to RBI, the return on assets also fell on a standalone basis to 0.71 per cent in FY11 from 0.88 per cent in the year before. The bank also has to provide nearly Rs 8,000 crore from its capital reserve for pension, which led to a fall in the banks capital adequacy ratio. The burden on account of provisions has continued in the current financial year. The public sector bank had to make a provision for loan loss and investment depreciation in the first quarter

ending June, which led to a fall of 46 per cent in its net profits in the first quarter of FY12. On a comparative basis, profit per employee for ICICI Bank, the largest private sector lender in India, increased to Rs 10,00,000 for 2010-2011, against Rs 9,00,000 in the previous year. Its return on assets rose to 1.35 per cent from 1.13 per cent. Punjab National Bank, the second largest lender in the public sector space, has also seen an increase in its profit per employee to Rs 8,30,000 from Rs 7,30,000 during the reporting period. The data also shows the capital adequacy ratio of all banks declined during FY11.

4% GROWTH TARGET FOR AGRI, RELATED SECTORS IN 12TH PLAN

The Planning Commission is going to stick to the growth target of 4% for the 11th Five Year Plan in agriculture and related sectors in the 12th Five Year Plan (2012-2017) as well. As a result of bad years for the sector in the 11th Five Year Plan (2007-2012) due to poor monsoon, agriculture and related sectors could not achieve the set target for the period. In the 11th Five Year Plan, the target rate of growth for agriculture (and related sectors) was 4% but have managed a 3.2% growth (in the first four years), which is considerably better than the target set during the 10th Five Year Plan. The union government was holding discussions with the private sector on modernization of storage facilities through public-private partnership (PPP) model. Ministers have to decide on exports of vegetables and other products and there is no cap for exports on onions alone.

TEXTILE MILLS SEEK BAIL-OUT PACKAGE, DUTY CUT ON MAN-MADE FIBRES

The Southern India Mills Association (SIMA) has sought the intervention of the Prime Minister to hasten the formulation of a stimulus package to save the textile mills. It also wanted the Government to slash the duties on man-made fibre to provide the domestic synthetic mills a level playing field with countries such as China. The industry has been battling a plethora of problems such as rising raw material cost, power and labour shortage, surging interest rates and lopsided Government policies. The spinning mill sector alone had lost over Rs 15,000 crore in five months. Recalling the requests made by SIMA earlier to the Prime Minister, various ministries and the RBI, the demand for a two-year moratorium on repayment of all loans and interest payments, including those mills that had gone for restructuring or had availed themselves of similar facilities during global recession in 2008 and 2009, apart from conversion of eroded working capital into long term loans, reduction in margin money etc. been made.

WIND POWER GETS Rs 1,500 cr FDI

The wind energy sector has attracted foreign direct investment of Rs 1,510 crore over the past three years. In the renewable energy sector, wind energy has emerged as the fastest growing category. An investment of about Rs 1,510 crore has been received as FDI in the wind energy sector during the last three years and the current year (up to June 2011). The Government allows 100 per cent FDI in the renewable energy generation and distribution projects including wind energy, subject to provisions of the Electricity Act 2003. A total wind power capacity of 14,723 MW has already been installed up to July 2011 in various States. Of this 42 per cent capacity has been installed in Tamil Nadu. A target of 9,000 MW wind power capacity addition has been fixed for the 11th Five-Year Plan. Out of this, 7,629 MW capacity has already been set up and the balance is expected in the remaining period of the current financial year. Besides existing policy enablers under the Electricity Act, the other key initiatives taken in the recent past to attract foreign investment in wind energy include introduction of a generation-based incentive scheme for wind power projects which do not avail themselves of accelerated growth of depreciation.

INDIAN BANK LAUNCHES e-TREASURY SERVICE

Public sector Indian Bank has launched e-Treasury service combining the domestic and foreign exchange trading on a common software package. The package analyses profitability, risk and costing aspects from different markets, Indian Bank Chairman and Managing Director T M Bhasin said unveiling the new corporate office. The new building has been constructed at the cost of Rs 70 crore and all departments of the bank have been moved from the older office to new corporate building. The new building was built in 'trilobular shape' resembling the logo of the bank and the formal inauguration of the corporate building would be done at a later date.

IT MAJORS SUCH AS INFOSYS, TCS, WIPRO, HCL, MPHASIS ARE SHIFTING CASH TO BANK FDs ON ACCOUNT OF THE GROWING ECONOMIC UNCERTAINTIES
IT majors are shifting more of their cash reserves into bank fixed deposits (FDs) on account of the growing economic uncertainties and the higher returns that these deposits are giving. IT companies typically invest their cash reserves in liquid mutual funds; bank FDs, deposits with corporations and government securities. FDs now yield rates around 100-200 basis points higher than liquid mutual funds, thanks to the series of bank interest rate increases since March last year. As on June 30, 2011, Infosys had Rs 14,799 crore in bank FDs, or about 87.5% of its total cash and cash equivalents of Rs 16,916 crore. Just Rs 29 crore was in liquid MFs. On March 31, 2010, when the rate hike cycle began, Infosys had Rs 9,092 crore in FDs and Rs 9,901 crore in liquid MFs. Infosys CFO V Balakrishnan said the transfer of funds into bank FDs is on account of the better returns the instrument is offering as compared to liquid mutual funds. Mutual funds and FDs make the largest components of cash reserves of Infosys. TCS stated in its 2010-11 annual report that it has increased its investments in FDs from Rs 3,531.3 crore in March 2010 to Rs 6,061.7 crore as on March 2011. Simultaneously the country's largest IT exporter reduced its exposure in mutual funds from Rs 2,459.4 crore in March 2010 to Rs 343.2 crore in March 2011. "This was in line with the company's strategy for optimum utilization of surplus cash," the report said. Analysts say that in difficult times bank FDs, particularly those of public sector banks (PSBs), are considered the best bets. A majority of the FDs (over 60%) by the IT biggies are deposited in PSBs such as State Bank of India and Punjab National Bank. Canara Bank is reported to have received about 14,000 crore worth of FDs from Wipro. But this could not be confirmed. However leading private sector banks like ICICI Bank and HDFC Bank are also receiving significant amounts of FDs.

Comparison between Darjeeling teas and others unfair, says industry

Ahead of another round of wage talks scheduled for Sunday, the tea industry has cautioned that any unsustainable increase in wages may trigger another round of closures for some of the tea estates which have only recently resumed operations. In a note prepared by the Consultative Committee of Plantation Associations (CCPA), the apex industry body, it has been pointed out that any attempt to try and equate the positions of the Dooars and Terai tea industry with that of Darjeeling would be disastrous. Cost of production The CCPA said that the cost of production in the plains of Dooars and Terai at around Rs.110/kg, left very thin margins since average price realisations were low for these teas. The average price of Darjeeling tea between January and August was Rs.17 higher against the average increase of Rs.4 a kg mustered by the teas from the plains. In 2010, Darjeeling tea prices stood at Rs.310 a kg against Rs.104 for teas from Dooars and Terai. The unions, the CCPA said, still wanted to start negotiation at Rs.90 per day citing Darjeeling which effectively translates to a Rs.23 increase over their present level of daily wages of Rs.67. This would lead to an Rs.15 increase in per kg cost of production.

THE DERRICK

FACTS OF THE WEEK

1. Making its re-entry into India, French auto major PSA Peugeot Citroen (PPC) on Thursday signed a Memorandum of Understanding (MoU) with the Gujarat Government to set up an integrated manufacturing facility at an investment of Rs 4,000crore at Sanand. 2. Further enhancing the portfolio of its luxury cars in India, Mercedes-Benz has introduced the advanced version of its flagship C-Class sedan even as the German auto major plans to launch new products in the next two months. 3. Tata Motors reported a 2.84 per cent decline in total sales during August 2011, to 64,078 units with sales of its small car Nano falling by 85 per cent during the month. 4. Wind power company Suzlon Energy is planning a $1.3 billion project in regional South Australia to power 2.25 lakh homes a year, reports PTI from Melbourne. 5. Renewing its focus on the Indian laptop market, LG Electronics on Wednesday announced its entry into the fast-growing notebook business with a range of new products. Equipped with several innovative features, the stylish new notebook range is priced between Rs.26,000 and Rs.66,780. 6. Famed XLRI School of Business and Human Resources may teach Anna Hazare's anti-corruption movement as a case study to its students within the next few months. 7. Gold gained Rs. 385 to touch Rs. 27,915 per 10 grams in the bullion market. 8. Luxury car-maker Skoda Auto India on Wednesday launched the petrol version of its mid-level premium sedan Laura RS priced at Rs. 15,99,069 (ex-showroom Maharashtra). 9. Small Industries Development Bank of India (SIDBI), the apex financial institution for the micro, small and medium enterprises (MSMEs), will launch two schemes: Growth Capital and Equity assistance for MSMEs (GEMs), to provide equity / quasi-equity to MSMEs and Flexible Assistance for Capital Expenditure (FACE) with multiple repayment schedules. 10. Anil Ambani-owned Reliance Capital has signed a memorandum of understanding (MoU) with Japan-based Nippon Life Insurance for collaboration opportunities, including strategic partnership, across all Reliance Capital promoted financial services businesses. 11. Bajaj Auto launched Boxer 150cc in Tamil Nadu. New Boxer 150cc, positioned as the Bharat Bike', was a part of the company's strategy of providing relevant differentiated products to meet the needs of a variety of consumers. The vehicle was designed as an SUV on two wheels' to specifically meet customers' requirements. 12. The wind energy sector has attracted foreign direct investment of Rs 1,510crore over the past three years. 13. Sudarshan Venu (22), son of Venu Srinivasan, Chairman & Managing Director of Sundaram Clayton Limited (SCL) and TVS Motor Company Limited has joined the company as new MD and chairman.

THE DERRICK

INTERVIEW
Q&A: Suresh Mahadevan & Gautam Chhaochharia, UBS Securities 'Indian markets to pick up by November-December' Vishal Chhabria & Sheetal Agarwal

Suresh Mahadevan, MD and Head of India Equities and Gautam Chhaochharia, ED and Head of India Mid-cap research, UBS Securities India express their views on global as well as Indian markets. In an interview with Vishal Chhabria and Sheetal Agarwal they say that markets may remain under pressure in the near term, but look attractive from a longer term horizon. Edited excerpts: What are the chances of a double-dip in the US? And, what is your view on Indian markets? Suresh Mahadevan (SM): Globally, we do not think we are going to enter a double dip recession. Specifically coming back to India I think clearly the biggest risk from the equity market perspective is flows. I think the big risk in the immediate short term is some of the FIIs panicking and getting out of India. But at the same time if you are taking a slightly longer term view this is a fantastic opportunity not to buy the market but to buy specific stocks. In the short term there could be further weakness primarily due to global factors that typically affects sentiment and liquidity. I think some of these developments may help India because if global commodity prices do come down that is better for us our inflation will come down and the tightening will stop. The corporates will be in a much better mindset to start the investments again. So there are some positives in it for India.

How low do you see the markets going to? SM: It is always very difficult to predict that because markets overreact on both sides of the mean. The world is a much better place than it was in 2008. Maybe we can go to 10-11 times earnings and that is not fair value that is just overreaction. So, at 11 times earnings, Nifty will be close to 4,400 levels and Sensex could fall to 14,300 levels. Thus, markets can correct by another 10 per cent in the worst case scenario, in my view. At the global level there has been a clear rush for getting into safe heavens, how do you see things unfolding over there? SM: UBS global view is not very drastic and we are not calling for a double dip. However, I think it is very likely that the emerging markets will perform better over developed markets. Because the growth is higher, the balance sheets are in better shape and also valuations are attractive vis--vis growth.

Within Asia also we are following the same logic and we are over-weight on India and China markets and we are underweight on markets such as Korea and Taiwan which are a lot more dependent on exports. I also think there is one important thing which maybe people are missing that the tightening cycle has pretty much run its course in India. We may see one more hike but my sense is that we are at the top end of that cycle which also bodes well for equities. I think from these levels you should get good returns if you are taking a medium term view but the problem is that today you buy at 16,500 levels markets may correct further to 14,000 given stock markets over react. However, the weakness wont be a prolonged one. Gautam: Compared to 2009, we are already two years ahead, in two years earnings pace has gone up a lot for India. We cant compare at same 9,000 levels for Indian markets. If u compare 2008 and 2011, how do you think India has changed from an investment perspective? SM: If u look at cumulative flows it is very clear that more and more people are looking at India. However, the last 2 years have been a little bit disappointing, particularly, on the reform and policy fronts. But having said that I think India will grow despite all this. Of course, we will have our cycles. Even in 2009 we grow at only 6.8 per cent. But that is still a good number. Gautam: So they have experienced that. On the way down in 2009 and on the way up they experienced and saw on mere numbers the Indian economy and markets both did much better than the global markets. That has definitely happened. The only worry has been on the political side, which again is very difficult to predict. On the global level do you see QE3 coming? And what kind of support do you see the governments extending? SM: I dont think liquidity will dry up. I think policy makers across the world are very clearly making sure ample liquidity is available whether its keeping interest rates very low or whatever way. I think the issue is how bad it gets. We are forecasting a 1.8 per cent GDP growth for US and 3.3 per cent global growth. How much more downside is to that. I think sentiment and liquidity are global things and however much we can say India is a consumption driven economy the reality is we need capital. I think that global sentiment will impact flows. You mentioned about the interest rates peaking out and global commodity prices are coming down. How do you see things shaping up from there? SM: What is very clear to us is inflation is a real problem here. I do think its something that the RBI is quite committed to bringing it down to more reasonable numbers. Maybe its not a sub 5 per cent levels because of structural reasons like supply side constraints. I think it needs to come a lot lower than current levels to around 6 per cent level. Global commodities are related to that in the sense that petrol is almost market linked and diesel price hikes are being passed on. So to that extent, if global commodity prices do soften, then I think RBI maybe more inclined to pause. Our own estimate is 77.5% inflation by March 2012. I also think come Jan 2012 the base effect will start working favorably. How does India compare with other Emerging markets in terms of growth rates and valuations? SM: India has always commanded a higher multiple partly because we have a higher ROE and higher earnings growth. So clearly we will be on the higher side when it comes to valuations. But, I think India as opposed to some of the other countries which are either dependent on one sector or have more state owned companies, India is a story of private entrepreneurship across well diversified sectors. A higher entrepreneurship component leads to higher returns, thus boosting valuations. The most pessimist investor on India will agree that we will grow at 6 per cent in real terms for the next decade or 2 decades which is a level of compounding you wont get in many markets. Perhaps, Africa, Indonesia

maybe China. But China the demographic dividend is shifting the other way now. So from that perspective India remains one of the few bright spots globally. So in this scenario, how are you advising investors to position themselves in terms of equities? SM: We are saying India is all about bottom up stock picking. We did a study recently where we looked at 2008 peak where stocks were till now. Which are the stocks that have done well and the ones which have done poorly. The results were quite eye opening. First thing is even within the same sector, some stocks did so well and some stocks did so poorly like TCS vs. Wipro or Hero Honda vs. Maruti. The outperformance is over 100 per cent in some of these sectors. Which means that you even if you pick the right sector it is not going to help. So that is how we have decided its time to focus on stocks. We have a list of 10 companies which we really think are very attractive Bharti, Idea, Dr Reddy's, M&M, Axis Bank, Federal Bank, Mannapuram, ITC, Power Grid & BHEL. Gautam: In the midcap the names which have done very well are Coromandel, Havells, VIP, Exide. After the US downgrade and fears of double dip recession the IT sector has been hit. What is your view on the sector? SM: In IT we have to relook at some of the numbers in the wake of the downgrade and more importantly the reasons for the downgrade. My own sense is luckily that sector has fairly high quality of governance, those companies are large, liquid, so to that extent I think there will always be investor interest in this sector which is a double edged thing because they might exit also. Infosys has not revised guidance which I think is a good thing. But maybe the lower end of the guidance now becomes the base case. This will mean that there is a bit of negative momentum there. But these are high quality companies. In the worst case scenario, Infosys can trade at 12-13 one year forward p/e multiple that is around Rs 1800-1900. Further, when times are tough companies still have to be competitive. I think offshoring is an inherent part of the competitiveness of a company. The overall demand pie may come down resulting in lower growth. But Indian companies will get their business. A lot of people dont realize that in US the problem is on government debt but the corporate sector is in much better shape than last time. When do you see stability returning to markets? SM: I think by November-December things should pick up as people will start focusing on FY13 numbers and then Indian stock markets will look very attractive. What is your take on the Banking sector? SM: I think credit growth will be around 18 per cent for this fiscal. There could be pressure from past restructured assets on the NPLs. If we see slowdown then the Banks' asset quality could be under stress. We think, 40 per cent of the overall power exposure is at risk (3.2 per cent of total bank loans) of restructuring or NPL by FY13. Gross NPL will go up by 80 per cent in the next two years. We have lowered earnings estimates by around 10 per cent. Our top picks in this space are Axis, SBI, HDFC Bank and Federal Bank

THE DERRICK

ZARGONOMY
Prepayment privilegeA clause in some loans allowing the borrower to pay off the debt prior to its due date without incurring a penalty. This is an advantage for a borrower when interest rates are falling, since he/she can pay off the existing loan and then refinance at a more favorable rate. Also called prior redemption privilege.

Quick responseJust in time inventory partnership strategy between suppliers and retailers of general merchandise. It is aimed mainly at reducing order response time, and achieving greater accuracy in shipping the correct goods in correct quantities, by employing computerized equipment such as barcodes and EDI to speed up flow of information. Its other objectives include reduction in operating expenses, out-of-stock situations, and forced mark-downs (discounts).

Accounting information system (AIS)A system, typically computer-based, used for storing, collecting, and analyzing a company's financial and accounting data. Accounting information systems are generally used by executives to make decisions, develop company strategies, and generate reports for shareholders, internal personnel, and regulatory agencies. Accounting information systems also streamline accounting cycles and reduce the incidence of accounting errors.

Whitewash resolutionA term used in europe to refer to a specific portion of the corporation act (called the companies act in europe). This portion of the act indicates that a specific resolution must be passed before a company being bought out can provide financial assistance to the company which is buying it out. This is to prevent companies from taking advantage of the companies they are buying out.

Freemium
A technique where a business offers a free basic product, giving the customer an option to use an advanced version for a premium cost.

Cost-per-action (CPA)
Online advertising payment model in which payment is based solely on qualifying actions such as sales or registrations.

Skyscraper ad
An online ad significantly taller than the 120x240 vertical banner.

THE DERRICK

COLUMNIST
Mr. Pranav Ranjan Assistant professor (Department of Management) Lovely professional University (Punjab)

GREEN MARKETING
Environmental issues are not a fad and climate change is just not an emergency. Like globalization its a force which will shape and reshape business landscape in decades to come. Any organization is not global because it has a VP International and you are not green just because you have a corporate social responsibility group that pushes a sustainability report. Climate change, pollution, unchecked waste in landfills and other problems are affecting your competitive strategy, operations, government and investors relation, supply chain, product ideas and marketing even your ability to attract and retain people .The intensity of their impact will only increase. In todays marketplace one would be hard pressed to find a more utilized buzz word than green. Organic, natural, holistic, sustainable, responsible, however, or whatever you want to call it, the movement is catching on. Whether we are talking about a type of spa, a line of beauty care products, organic produce, a more responsible way of vacationing, a type of construction, or even auto production; many industries are recognizing that it actually pays to go green. Interestingly, this trend in green consumerism is not limited to any one industry or product type. In fact almost all industries contain players who are stepping up their green initiatives. The marketplace is rampant with businesses that have now become involved in the effort to find ways to produce and sell products or provide services that promote conscious and ethical consumption. Most of the green initiatives currently operational in the marketplace typically fall into two categories. On one hand, businesses focus on integrating green features into the design or characteristics of individual products. For example, creating a car that has higher miles per gallon (MPG) designation or developing a laundry detergent that is ecofriendly. On the other hand, a larger portion of resources commits to a reduction in waste and energy usage, building green and limiting CO2 emissions from production. Ideally, green behaviour should go beyond simply creating a biodegradable or recyclable product to a more holistic incorporation of sustainable values into a corporations core principles and values. As resources are limited and human wants are unlimited, it is important for the marketers to utilize the resources efficiently without waste as well as to achieve the organization's objective. So green marketing is inevitable. There is growing interest among the consumers all over the world regarding protection of environment. Worldwide evidence indicates people are concerned about the environment and are changing their behaviour. As a result of this, green marketing has emerged which speaks for growing market for sustainable and socially responsible products and services Thus the growing awareness among the consumers all over the world regarding protection of the environment in which they live, People do want to bequeath a clean earth to their offspring. Various studies by environmentalists indicate that people are concerned about the environment and are changing their behaviour pattern so as to be less hostile towards it. Now we see that most of the consumers, both individual and industrial, are becoming more concerned about environment-friendly products. Most of them feel that environment-friendly products are safe to use. As a result, green marketing has emerged, which aims at marketing sustainable and socially-responsible products and services. Now is the era of

recyclable, non-toxic and environment-friendly goods. This has become the new mantra for marketers to satisfy the needs of consumers and earn better profits. Green marketing is the process of developing products and services and promoting them to satisfy the customers who prefer products of good quality, performance and convenience at affordable cost, which at the same time do not have a detrimental impact on the environment. It includes a broad range of activities like product modification, changing the production process, modified advertising, change in packaging, etc., aimed at reducing the detrimental impact of products and their consumption and disposal on the environment Companies all over the world are striving to reduce the impact of products and services on the climate and other environmental parameters. Marketers are taking the cue and are going green. At the same time, companies cannot ignore three elements that are inhibiting adoption of green brands including: premium price, perceived quality and information. In order to succeed and attract the mainstream consumers, marketers will have to address products quality issues, while highlighting the immediate benefits beyond preservation of the environment. In addition, the development of a mechanism for educating consumers on green brands, green practices, and criteria for green classification is crucial in building consumer trust. More standardization and more consumer education are needed to help consumers make informed purchase decisions and build consumer confidence in the green market environment. To be certified as green, brands cannot rely on a single pro-environmental practice but encompass practices related to the business, the production and the product alike.

THE DERRICK

JOB WATCH
Opening in Pragati Power Corporation Limited for Management Officer.
SEPTEMBER 1, 2011 Openings (54) in Pragati Power Corporation Limited ForManagement Officer. Last date to apply is Within 30 days from the date publication in the Employment News.

Job Role: Management Officer Total Post: 54 Application Fee: Bank Demand Draft for Rs.400/- (No fee for SC / ST/ PWD) drawn in favour of Pragati Power Corporation Limited payable at New Delhi is. Candidates are advised to write their name and position applied on the side of DD. Steps to apply for the position:

1. The application should be submitted in the given proforma in the www.ipgcl-ppcl.gov.in (or) www.ipgcl-ppcl.nic.in website, preferably type written. 2. The outer cover should be subscribed as Application for the post of-. 3. A non-refundable Bank Demand Draft for Rs.400/- drawn in favour of Pragati Power Corporation Limited payable at New Delhi is to be enclosed. Candidates are advised to write their name and position applied on the side of D.D. No application fee need to be paid by the candidates belonging to SC /ST/ PWD category and Internal candidates. 4. The application should be accompanied with attested copies of certificates in support of educational qualification, age, experience, etc. Candidates belonging to SC /ST/ OBC ( Non creamy layer) should furnish the attested copy of the certificate issued by the Competent Authority to the effect. OBC (Non-creamy layer) candidates are also required to submit a self undertaking to that effect. 5. Duly completed application should be sent to Deputy Manager HR ( Rect.), Pragati Power Corporation Limited, Corporate HR department, Rajghat Power House Complex, Rajghat, New Delhi -110002 through Registered / Speed Post / Courier within 30 days from the publication of this advertisement. Applications received late / incomplete will be rejected without assigning any reasons. PPCL will not be responsible for any postal delay / courier delay / loss of documents during transit. Application Deadline: Within 30 days from the date publication in the Employment News. More Information: http://www.ipgcl-ppcl.gov.in/documents/Employment/advt.pdf

THE DERRICK

ENTREPRENEUR

Mark Elliot Zuckerberg

Mark Elliot Zuckerberg (born May 14, 1984) is an American computer programmer and Internet entrepreneur. He is best known for co-creating the social networking site Facebook, of which he is chief executive and president. It was co-founded as a private company in 2004 by Zuckerberg and classmatesDustin Moskovitz, Eduardo Saverin, and Chris Hughes while they were students at Harvard University. In 2010, Zuckerberg was named Time magazine'sPerson of the Year. As of 2011, his personal wealth was estimated to be $13.5 billion Personal life Zuckerberg was born in 1984 in White Plains, New York to Karen, a psychiatrist, and Edward Zuckerberg, a dentist. He and his three sisters, Randi, Donna, and Arielle, were brought up in Dobbs Ferry, New York. Zuckerberg was raised Jewish and had his bar mitzvah when he turned 13, although he has since described himself as an atheist. At Ardsley High School, Zuckerberg had excelled in the classics before transferring to Phillips Exeter Academy in his junior year, where he won prizes in science (math, astronomy and physics) and Classical studies (on his college application, Zuckerberg listed as non-English languages he could read and write: French, Hebrew, Latin, and ancient Greek) and was a fencing star and captain of the fencing team. In September 2010, Zuckerberg invited Chan, by then a medical student at the University of California, San Francisco, to move into his rented Palo Alto house. Zuckerberg studiedMandarin Chinese every day in preparation for the couple's visit to China in December 2010. As of 2010, Facebook is blocked by that country's Internet firewall. On Zuckerberg's Facebook page, he listed his personal interests as "openness, making things that help people connect and share what's important to them, revolutions, information flow, minimalism". Zuckerberg sees blue best because of redgreen colorblindness; blue is also Facebook's dominant color. In May 2011, it was reported that Zuckerberg had bought a five bedroom house in Palo Alto for $7 million.

Early years Zuckerberg began using computers and writing software as a child in middle school. His father taught him Atari BASIC Programming in the 1990s, and later hired software developer David Newman to tutor him privately. Newman calls him a "prodigy," adding that it was "tough to stay ahead of him." Zuckerberg also took a graduate course in the subject at Mercy College near his home while he was still in high school. He enjoyed developing computer programs, especially communication tools and games. In one such program, since his

father's dental practice was operated from their home, he built a software program he called "ZuckNet," which allowed all the computers between the house and dental office to communicate by pinging each other. It is considered a "primitive" version of AOL's Instant Messenger, which came out the following year.

Harward years By the time he began classes at Harvard, he had already achieved a "reputation as a programming prodigy," notes Vargas. He studied psychology and computer science and belonged to Alpha Epsilon Pi, a Jewish fraternity. In his sophomore year, he wrote a program he called CourseMatch, which allowed users to make class selection decisions based on the choices of other students and also to help them form study groups. A short time later, he created a different program he initially called Facemash that let students select the best looking person from a choice of photos. According to Zuckerberg's roommate at the time, Arie Hasit, "he built the site for fun." Hasit explains: We had books called Face Books, which included the names and pictures of everyone who lived in the student dorms. At first, he built a site and placed two pictures, or pictures of two males and two females. Visitors to the site had to choose who was "hotter" and according to the votes there would be a ranking. Facebook Founding and goals Zuckerberg launched Facebook from his Harvard dormitory room on February 4, 2004. An earlier inspiration for Facebook may have come from Phillips Exeter Academy, the prep school from which Zuckerberg graduated in 2002. It published its own student directory, The Photo Address Book, which students referred to as The Facebook. Such photo directories were an important part of the student social experience at many private schools. With them, students were able to list attributes such as their class years, their proximities to friends, and their telephone numbers. Once at college, Zuckerberg's Facebook started off as just a "Harvard thing" until Zuckerberg decided to spread it to other schools, enlisting the help of roommateDustin Moskovitz. Zuckerberg moved to Palo Alto, California, with Moskovitz and some friends. They leased a small house that served as an office. Over the summer, Zuckerberg metPeter Thiel who invested in the company. It's not because of the amount of money. For me and my colleagues, the most important thing is that we create an open information flow for people. Having media corporations owned by conglomerates is just not an attractive idea to me. He restated these same goals to Wired magazine in 2010: "The thing I really care about is the mission, making the world open." Earlier, in April 2009, Zuckerberg sought the advice of former Netscape CFO Peter Currie about financing strategies for Facebook. On July 21, 2010, Zuckerberg reported that the company reached the 500 million-user mark. When asked whether Facebook could earn more income from advertising as a result of its phenomenal growth, he explained:

Philanthropy Zuckerberg donated an undisclosed amount to Diaspora, an open-source personal web server that implements a distributed social networking service. He called it a "cool idea." Zuckerberg founded the Start-up: Education foundation. On September 22, 2010, it was reported that Zuckerberg had arranged to donate $100 million to Newark Public Schools, the public school system of Newark, New Jersey.

THE DERRICK

UPCOMING EVENTS
OPEN HOUSE DISCUSSION ON WEDNESDAY (7th SEPTEMBER 2011), TOPIC: REFORMS IN INDIAN SPORTS BODIES Issues to be discussed: Should it be controlled by politicians or by former players? Should retirement age be fixed for heads? Should more autonomy be provided to sports authority? Should Sports bodies fall under RTI Act? Corporate governance should be imbibed in sports bodies accountability.

If you have any feedback, suggestions then mail us on

newsderrick@gmail.com.

Disclaimer: Derrick does not have own reporters. These are the news collected from different sources.