ALL in One Club: October 2011

Monday, October 17, 2011

Allahabad Bank ties up with Aditya Birla Money

KOLKATA: State-run Allahabad Bank has entered into a strategic alliance with Aditya Birla Money, the broking, wealth management and retail distribution arm of Aditya Birla Financial Services Group.

This will provide 27 million Allahabad Bank customers the convenience of investing in financial products online.

With online trading gaining significant momentum, this strategic tie-up will enable Aditya Birla Money to tap the bank's customer base and provide them with online trading facilities.

Through this tie-up the Kolkata-based bank will be able to extend its offerings beyond the realm of traditional banking, creating significant value for their customers and providing them a superior trading experience with seamless integration of state-of-the-art technology.

The bank's account holders can benefit from Aditya Birla Money's single window interface to invest in equities, derivatives, commodities and IPOs.

"Under the backdrop of growing financial services opportunity and the increasing surge in internet penetration levels, this tie up serves as a win-win proposition for both partners," the bank said in a statement issued on Monday.
PRABHAKAR MANI
PGDM 3 SEM

Suzuki Ultimatum to VW: Hybrid Technology or Split

Suzuki Motor Corp accused Volkswagen of breaching a partnership pact by withholding hybrid technology it promised to share, pushing their two-year-old alliance to the brink of disintegration.

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REUTERS

SUZUKI

The latest exchange of accusations deepens a feud between the two car makers. Last month, VW accused the Japanese company of breaching their agreement by procuring diesel engines from Fiat and is demanding it end that cooperation.

VW bought a 19.9 percent interest in Suzuki for about 1.7 billion euros ($2.3 billion) in January 2009. At Thursday's closing price that stake was worth $2.4 billion.

"There is not enough invested on either side to justify the effort to try to salvage the relationship. Both can and will eventually walk away," Sanger,auto analyst at Deutsche Securities.

Suzuki, which says it has yet to hear a proper response from VW about a proposal for a divorce, may consider other steps if VW ignores the notice, Harayama said.

Last month, Suzuki chairman and CEO Osamu Suzuki offered to buy those shares cash on hand, and in return, promised to offload its 1.5 percent stake, worth $1 billion, in Volkswagen back to its estranged German partner.

Billed as a partnership of equals, the tie-up was meant to bolster VW's presence in India for small cars and give Suzuki access to technology it could not afford to develop on its own but the partnership has so far failed to deliver any meaningful cooperation.

"If this situation is not resolved quickly, it does not mean that Suzuki is in trouble, but it is in neither companies' interest for this uncertainty to drag on for too long," said Harayama, adding that Suzuki's engineers are now happily developing new products without additional outside help.

In 1998, Suzuki joined a strategic partnership with General Motors, which took a 17.4 percent stake in the Japanese firm. That unravelled in 2006 when the U.S. car company sold most of its stake as it scrambled for cash amid ballooning losses.

Suzuki's shares dipped 0.5 percent to 1,650 yen, broadly in line with the Nikkei's 0.8 percent fall in Tokyo trading.

The Suzuki crisis for VW comes as it tries to juggles other deals including a Porsche merger and plans to combine the truck-making business of MAN and Sweden's Scania.

"Suzuki is very good at making practical relationships when it needs something," such as a diesel engines in India from Fiat or an OEM agreement with Nissan, said Sanger from Deutsche. "It does not need to go out and remarry tomorrow.\

ROHIT KALIA

PGDM 3RD SEM

Sahara Group Invests $100 mln in Force India

Indian business conglomerate Sahara group has invested $100 million in Force India and taken a 42.5 percent stake in the Formula One team which it now co-owns with liquor baron Vijay Mallya while Dutch entrepreneur Michiel Mol takes a backseat.

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Reuters

Vijay Mallya, co-owner of the Force India Formula One team, extends his hand to Sahara Group Chairman Subrata Roy at a news conference in New Delhi

The Sahara Group, which has interests in the financial sector, entertainment, housing and sport among others, said in a statement on Wednesday that it had subscribed to new shares in the F1 team and has an equal stake with Mallya.

The Mol family owns the remaining 15 percent.

The flamboyant Mallya will continue as the team principal of India's only Formula One team, to be now known as Sahara Force India, while Sahara group chairman Subrata Roy will be the chairman.

"It is the coming together of two of India's prominent groups, both of whom have supported sports in our country for many years," Mallya said.

"The possibilities are limitless. With this kind of resource in the company Force India will invest in further research and development and upgradation of its facilities and therefore hopes to be a lot more competition

Force India was formed in 2007 when a consortium led by Mallya and Mol bought the loss-making Spyker Formula One team and later renamed it Force India.

The F1 team, whose current drivers are German Adrian Sutil and Britain's Paul Di Resta, are sixth in the constructors' standings ahead of Sunday's race in South Korea.

Mallya has a profitable liquor business, but is facing rough weather in aviation.

His Kingfisher airline, India's second-largest private airline which has never reported a profit, recently announced plans to exit the low-cost part of the airline business and focus on the premium model to reduce debt.

The auditors of Kingfisher have said that the firm needs extra cash as the airline struggles to survive in a challenging market.

"I have not sold a single share (in Force India). None of the existing shareholders are selling anything," Mallya said.

"My first approach to Sahara was for sponsorship. He (Roy) said I like it... I want to own it."

India is set to host its maiden Grand Prix on Oct. 30 at the 120,000-capacity circuit on the outskirts of Delhi.

The Sahara group, which also sponsors the Indian cricket team, had bid $370 million to become owners of the Pune franchise in cricket's Indian Premier League in October, 20

ROHIT KALIA

PGDM 3RD SEM

Tuesday, October 11, 2011

Overseas mutual funds' returns decline 7% in past 12 months despite rupee depreciation

MUMBAI: Domestic mutual funds, which invest in overseas equities, have failed to live up to the expectations of investors who desired higher returns and effective portfolio diversification. Despite a favourable rupee movement, international funds have delivered poor returns as a result of declining global markets and softening commodity prices.

International funds, as a category, have returned minus 7% over the past 12 months. Though, this genre of funds has performed better than domestic equity schemes, it has ceased to be high-return funds, as was the case some months ago. Funds, like HSBC Emerging Markets Fund, ING Latin America Equity, Mirae Asset China Advantage, JP Morgan Greater China Equity, Sundaram Global Advantage and Franklin Asian Equity, among several other funds, have fallen 11-22% over the past one year.

"Concerns of a global meltdown, including a hard-landing in China and policy-tightening across countries, have prompted commodity prices to fall. Almost all emerging markets have also corrected 10-20% since the beginning of this year. These factors have impacted returns on international funds," said Gopal Agrawal, chief investment officer of Mirae Asset Global Investments, which manages a global commodity fund and a China advantage fund.

According to fund researchers, international funds would have fared even badly had the rupee not weakened by about 12% since August this year. In general terms, funds that invest in foreign currency-valued assets benefit when local denominations weaken. For instance, an investor who redeems a one dollar worth of investments - made when the rupee was 44 to a dollar - will now get about 49, excluding capital appreciation, when converted to the rupee.

"Weakening of the rupee has not helped international funds. The reason for this is that currencies in countries, like Australia, Brazil and Indonesia, have weakened in tandem with the Indian rupee. There's not much of arbitrage opportunities on the currency side," Mr Agrawal said.

Most EM currencies, like Brazilian real, Russian rouble and Indonesian rupiah have depreciated significantly over the past few months. The currency of Brazil, where most Indian funds have exposure, has weakened from 1.55 per US dollar to 1.9 per USD. Emerging market wonder Indonesian rupiah has fallen from 8500 per USD to 9100 per USD over the past few months.

"Increased global volatility over the past quarter or so had an impact on emerging markets. Indian markets, which were underperforming for the most of the year, managed to hold their ground relatively better during this period," said KN Sivasubramanian, chief investment officer of Franklin Templeton Investments India.

PRABHAKAR MANI

PGDM 3 SEM

Sensex hovers near 16700; Infosys, TCS, Cipla up

MUMBAI: The 30-share Bombay Stock Exchange benchmark Sensex held on to intraday gains even as IIP growth data was below estimates. India's IIP for the month of August 2011 grew at 4.1 per cent against 3.3 per cent a month ago. August Manufacturing Growth was at 4.5 per cent vs 2.3 per cent in July.

Meanwhile, investors continued to lap up shares of IT sector following in-line second quarter results from Infosys Technologies.

The IT bellwether reported 9.72 per cent growth in its consolidated net profit to Rs 1,906 crore for the second quarter ended September 30 against Rs 1,737 crore in the same quarter last fiascal. Consolidated revenue rose to Rs 8,099 crore from Rs 6,947 crore in the year-ago period.

"Infosys reported Q2FY12 results better than our/consensus expectation in a quarter that had demand weakening headwinds, but currency tailwinds. However, the marginally lowererd guidance for FY12 US$ revenue is below our but ahead of consensus estimates. We see result as better than consensus expectation," said Prabhudas Lilladher report.

"We recommend switch from TCS to Infosys due to lower exposure in Europe and capital market. We may revisit our estimates post conference call," the report added.

At 11:15 am; the Sensex was at 16671.68, up 135.21 points or 0.82 per cent. The 30-share index touched intraday low of 16653.48 and high of 16778.64.

The National Stock Exchange's Nifty was at 5023.80, up 49.45 points or 0.99 per cent. The broader index touched a high of 5048.40 and low of 5011.20 in trade so far.

"The overall trend still remains cautious as Nifty was not able to sustain above its resistance level of 5050 and corrected sharply. We still maintain a stock specific approach rather focusing on Nifty movements. On the lower side support seen around 4880 - 4830 levels," said Nirmal Bang report.

BSE Midcap Index was up 0.49 per cent and BSE Smallcap Index gained 0.51 per cent.

Amongst the sectoral indices, BSE IT Index surged 4.18 per cent, BSE FMCG Index moved 0.93 per cent higher and BSE Metal Index advanced 0.83 per cent. BSE Auto Index was down 0.81 per cent.

Infosys Technologies (5.26%), TCS (3.25%), Jindal Steel (2.46%), Wipro (2.43%) and Cipla (1.69%) were amongst the major Sensex gainers.

Tata Motors (-2.72%), Tata Power (-2.53%), M&M (-1.48%), DLF (-1.28%) and HDFC (-0.60%) were amongst the losers.

Market breadth was positive on the BSE with 1396 gainers against 931 losers.

PRABHAKR MANI

PGDM 3 SEM,

Monday, October 10, 2011

China Telecom eyes deals with Indian telecom players

China Telecom Corp, is looking to establish a cable connection between China and India, and is eyeing three Indian telecom players for a deal, Wall Street Journal said, citing sources.

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Sivaram V / REUTERS

Airtel

Internet is crucial to India's burgeoning BPO and call center services, as the country becomes increasingly popular as the destination for outsourcing services. Such disruptions can create major havoc to businesses in India, creating a ripple effect to other regions as well.
While the company is not interested in acquiring a network or a stake in Indian companies, given the licensing and regulatory obstacles, it would like to create a Sino-Indian land cable to cash in on the increasing demand in the region.
China Telecom’s profit growth is slowing due to increasing competition due to government led restructuring, increased marketing costs and handset subsidies.
China Telecom bought China Telecommunications under the government restructuring plan for telecom. The restructuring was done with an intention to transform into the companies that offer both 2G and 3G services and improving the competitiveness of local players.
State-owned telecom operator saw its profit grow about 1 percent in the first half of 2010. But the company has not backed away from spending more to upgrade its network and transmission.
The company’s market share has risen 10 percent from 4 percent since it acquired Unicom’s CDMA operations, Feng said.
In a plan to boost its share further, the company has opened Internet data centers in Hong Kong and Singapore, and has plans to open future centers in Japan and Australia.
China Telecom could not be immediately reached for a comment by the International Business Times.

ROHIT KALIA
PGDM 3RD SEM

India Introduces $35 Tablet Computer ‘Aakash’

Following the suit of HP and the $99 TouchPad sale, India plans to introduce a $35 tablet computer dubbed the "Aakash" for students. This will be the least expensive tablet in the world.

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Parivartan Sharma / REUTERS

Students display Aakash after launching ceremony in New Delhi

"Aakash," which means "sky" in Hindi, will use Android OS and will be 7 inches long. However, it will only gain access to the Internet through Wi-Fi and will only have 2 GB of memory without an SD card, which can boost it to 32GB, CNN reported.
The idea to introduce an affordable tablet to students came from the National Mission on Education through Information and Technology (NME-ICT). The Education Ministry plans to send the Aakash devices to colleges throughout India's states and territories, where still hundreds of thousands of citizens have no electricity, never mind Internet access for students.
"[It's] for the benefit of students who do not have access to libraries." a government official said.
Calling it a "mobile Internet device," it is an endeavor backed by the Indian Institute of Technology (IIT), Rajasthan, and manufacturing company Data Wind. Data Wind will assemble the Aakash tablet in India, though it will obtain nearly half of its parts from South Korea, China and the U.S.
According to Businessweek, the Indian government will buy 100,000 of the manufactured tablets at Rs.2,250 and will become available for students in the near future. Sibal said it has plans to purchase 10 million Aakash tablets over the next five years.

ROHIT KALIA
PGDM 3RD SEM

Sunday, October 9, 2011

Ghazal maestro Jagjit Singh passes away

NEW DELHI: Renowned ghazal singer Jagjit Singh, 70, passed away at 8 am in Lilavati Hospital on Monday morning.

Jagjit Singh was admitted to the Lilavati Hospital on September 23 after he suffered brain haemorrhage in suburban Bandra where a life-saving surgery was performed on him.

He is survived by his wife Chitra Singh.

Jagjit Singh was born in Sri Ganganagar, Rajasthan. He had four sisters and two brothers and he is known as Jeet by his family.

Popularly known as "The Ghazal King" he gained acclaim together with his wife, another renowned Indian ghazal singer Chitra Singh, in the 1970s and 1980s, as the first ever successful duo act (husband-wife) in the history of recorded Indian music.

Recipient of Padma Bhushan award, he has sung in several languages including Hindi, Urdu, Punjabi and Nepali.

His popular ghazals include, Meri zindagi kisi aur ki, mere naam ka koi aur hai, Apni marzi se kahan apne safar ke hum hain, Wo jo hum mein tumme qaraar tha, Patta-patta boota-boota haal hamaara jaane hai, Hoshwalo ko khabar, etc.

Jagjjit Singh has also sung for popular movies like Sarfarosh and Tarqeeb.

Prem Paritosh
PGDM - 3rd

Volkswagen, Toyota, Ford, Renault, Nissan challenging Maruti, Hyundai, Tata MotorsDepending on whom you ask or what you read, China has between 100 and 250 carmakers. Joint ventures with the global biggies dominate the top 10, think General Motors (GM), Volkswagen (VW), Toyota, Ford, Nissan, Hyundai, and a rash of domestic players makes up the rest of the pack. The sheer number of players may not come as a surprise considering China is the largest car market in the world, in 2010, 13.8 million units were sold. In Pic: Nissan 'SUNNY' sedan In Pic: All new Audi A6 The Indian car market is roughly a seventh of the Chinese one, and at last count, there were a little over 20 major players, mostly multinational, in the race with close to 40 brands. The difference: the top three are not global leaders by any yardstick. There's no Toyota, GM, VW, the global one-two-three, at the top of the India grid. Rather, there's Maruti, the affiliate of world No 9 Suzuki at pole position, followed by Hyundai Motors (No 8 globally) and home-grown manufacturer Tata Motors in third spot. What's more, the top three rather remarkably control almost 70% of the Indian car market, with the Detroit giants GM and Ford (globally No 2 and No 4, respectively) relegated to 6th and 7th position, Toyota at No 5 and VW at No 8. Much of this, of course, has to do with Suzuki's early entry into India, via a joint venture with the government in the early 1980s when the competition at that time was sparse and outdated. Ford, GM, Toyota and Honda began Indian operations over a decade ago but have met with limited success thanks largely to their top-down approach of first launching cars at the higher end of the market where margins are fatter but volumes slim. A situation in which global leaders are also-rans with market shares in single digits is unimaginable in most other parts of the world. But that situation may not hold for too long back home. For, even though growth in car sales fell by 15% in July to touch a two-year low, global auto majors are convinced about prospects in the long haul. Abdul Majeed, auto practice leader at PricewaterhouseCoopers (PwC) expects the Indian car market to more than double to five million from 2.2 million units in five years. Depending on whom you ask or what you read, China has between 100 and 250 carmakers. Joint ventures with the global biggies dominate the top 10, think General Motors (GM), Volkswagen (VW), Toyota, Ford, Nissan, Hyundai, and a rash of domestic players makes up the rest of the pack. The sheer number of players may not come as a surprise considering China is the largest car market in the world, in 2010, 13.8 million units were sold. In Pic: Nissan 'SUNNY' sedan In Pic: All new Audi A6 The Indian car market is roughly a seventh of the Chinese one, and at last count, there were a little over 20 major players, mostly multinational, in the race with close to 40 brands. The difference: the top three are not global leaders by any yardstick. There's no Toyota, GM, VW, the global one-two-three, at the top of the India grid. Rather, there's Maruti, the affiliate of world No 9 Suzuki at pole position, followed by Hyundai Motors (No 8 globally) and home-grown manufacturer Tata Motors in third spot. What's more, the top three rather remarkably control almost 70% of the Indian car market, with the Detroit giants GM and Ford (globally No 2 and No 4, respectively) relegated to 6th and 7th position, Toyota at No 5 and VW at No 8. Much of this, of course, has to do with Suzuki's early entry into India, via a joint venture with the government in the early 1980s when the competition at that time was sparse and outdated. Ford, GM, Toyota and Honda began Indian operations over a decade ago but have met with limited success thanks largely to their top-down approach of first launching cars at the higher end of the market where margins are fatter but volumes slim. A situation in which global leaders are also-rans with market shares in single digits is unimaginable in most other parts of the world. But that situation may not hold for too long back home. For, even though growth in car sales fell by 15% in July to touch a two-year low, global auto majors are convinced about prospects in the long haul. Abdul Majeed, auto practice leader at PricewaterhouseCoopers (PwC) expects the Indian car market to more than double to five million from 2.2 million units in five years.

Depending on whom you ask or what you read, China has between 100 and 250 carmakers. Joint ventures with the global biggies dominate the top 10, think General Motors (GM), Volkswagen (VW), Toyota, Ford, Nissan, Hyundai, and a rash of domestic players makes up the rest of the pack. The sheer number of players may not come as a surprise considering China is the largest car market in the world, in 2010, 13.8 million units were sold.

In Pic: Nissan 'SUNNY' sedan

In Pic: All new Audi A6

The Indian car market is roughly a seventh of the Chinese one, and at last count, there were a little over 20 major players, mostly multinational, in the race with close to 40 brands. The difference: the top three are not global leaders by any yardstick. There's no Toyota, GM, VW, the global one-two-three, at the top of the India grid. Rather, there's Maruti, the affiliate of world No 9 Suzuki at pole position, followed by Hyundai Motors (No 8 globally) and home-grown manufacturerTata Motors in third spot.

What's more, the top three rather remarkably control almost 70% of the Indian car market, with the Detroit giants GM and Ford (globally No 2 and No 4, respectively) relegated to 6th and 7th position, Toyotaat No 5 and VW at No 8. Much of this, of course, has to do with Suzuki's early entry into India, via a joint venture with the government in the early 1980s when the competition at that time was sparse and outdated. Ford, GM, Toyota and Honda began Indian operations over a decade ago but have met with limited success thanks largely to their top-down approach of first launching cars at the higher end of the market where margins are fatter but volumes slim.

A situation in which global leaders are also-rans with market shares in single digits is unimaginable in most other parts of the world.

But that situation may not hold for too long back home. For, even though growth in car sales fell by 15% in July to touch a two-year low, global auto majors are convinced about prospects in the long haul. Abdul Majeed, auto practice leader at PricewaterhouseCoopers (PwC) expects the Indian car market to more than double to five million from 2.2 million units in five years.

DEEPAK KUMAR
PGDM 3 rd Sem

Carmakers like Honda, BMW, Toyota go missing from Formula 1 lineup

MUMBAI: For a sport that pivots around cars, Formula 1's ability to draw and keep their manufacturers is cyclical and, in the current season, at its lowest in its 61-year history.

Just two of the 12 teams in what is the pinnacle of motor sport today are owned and managed by car manufacturers: Ferrari and Mercedes. A third manufacturer, Renault, has a part involvement, as an engine supplier to other teams.
Contrast this to, say, 2005, when seven of the 10 teams were car manufacturers. What changed? Sentiment changed.

The 2008-09 credit squeeze made car manufacturers take a hard look at what they were getting in relation to what they were spending.

Amid acute business pressure, Honda, BMW andToyota became manufacturers number 12, 13 and 14 to leave the sport following a failure to crack the brutal paradox of F1: winning makes teams financially viable; but to win, teams need to spend.

Elsewhere, Renault scaled back from running a team to being an engine manufacturer. "In order to conserve financial and engineering resources for their passenger-car operations, they moved out of F1," says Ashish Sinharoy, vice-president, communications and corporate affairs, Renault India, of the departures in general.

The savings were significant, given the economic backdrop. Take Toyota, which was the last car manufacturer to enter the sport, in 2002. It did so with a budget that matched veteran -- and frontrunning -- teams like Ferrari and Mercedes.

The company declined to disclose its budget, but industry estimates put it at $350-500 million a year. Part of Toyota's budget was funded by sponsorships.

However, the economics and reasoning for the Japanese company went off track as prize money and revenue sharing - the quantum of which are an outcome of performance, and which feed sponsorships - were conspicuously absent. Toyota drivers stood on the podium 13 times in the 139 races it participated in.

This strike rate would be becoming of a team eight years old. But it was considered a failure for Toyota given the money they were throwing. For a company that had revenues of $208 billion and a marketing spend of $15 billion in 2009, it was easy to bankroll its F1 operations for eight years.

But in the wake of the 2008-09 crisis, Toyota went from a profit of $17.1 billion in 2008 to a loss of $4.5 billion in 2009. In November 2009, it walked away from F1. "The commercial value is there if teams are successful," says Hormazd Sorabjee, editor, Autocar India magazine. "But if they are not winning, it makes less sense. That is one of the reasons why Toyota and Honda pulled out."

DEEPAK KUMAR
PGDM 3 RD SEM

Nifty companies like Maruti Suzuki, Ambuja Cements & Sterlite Industries to record profit fall for first time in 2 years

MUMBAI/NEW DELHI: Maruti Suzuki, Ambuja Cements and Sterlite Industries will lead the earnings fall for S&P CNX Nifty companies in the September quarter - the first profit fall in more than two years - as rising funding costs and higher raw material prices begin to bite.

The aggregate net profit of companies in the Nifty 50 - all industry heavyweights - is expected to drop 1.7% year-on-year in the quarter to September 2011, though revenue is likely to grow 19.4%, according to an analysis of these companies by the Economic Times Intelligence Group.

Cement manufacturers ACC and Ambuja Cements, auto maker Maruti Suzuki, metal manufacturers SAILand Sterlite Industries (India), real estate firm DLF, and telecom companies Bharti Airtel and Reliance Communications are expected to post a double-digit decline in net profit compared with a year-ago.

Afirm trend in the prices of most raw materials, lower expectation of revenue from non-operating sources such as treasury income and sale of assets, and higher finance charges would prevent topline growth from translating into relatively better net profit for companies.

The deceleration is expected to span across industry with hardly any cheer for investors. The sectors that will be impacted the most include cement, automobiles, power, telecom, banking and finance, and real estate, our analysis shows.

While aggregate revenue is expected to be buoyant for the eighth consecutive quarter, the rate of growth has slowed down significantly from the 27% jump seen during the last quarter and 23% in the March quarter.

This could also mean topline growth would mainly reflect the inflationary trend in the economy rather than any meaningful growth in sales volumes. Net margin, which measures the extent of net profit with respect to revenue, is likely to shrink 170 basis points to 10.2% for the September quarter.

DEEPAK KUMAR
PGDM 3RD SEM

Wednesday, October 5, 2011

China Telecom eyes deals with Indian telecom players

China Telecom Corp, is looking to establish a cable connection between China and India, and is eyeing three Indian telecom players for a deal, Wall Street Journal said, citing sources.

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Sivaram V / REUTERS

Airtel