Saturday, December 31, 2011

What to expect in 2012: Rupee, India Inc, Ambani brothers, jobs, travel and more

The most basic factor that determines the currency value is demand and supply. The US dollar is a reserve currency and is gaining strength across the world.

A 22 per cent fall in the value of the rupee in 2011 has generated a lot of interest in prospects for the rupee going forward. After all, a weak currency is not good if you plan extensive overseas travel, shopping abroad or fund expenses overseas of your loved ones. As a consumer, you would want the currency to remain strong.

Analysts believe that the rupee could remain under pressure till March 2012 and then appreciate.

“The rupee is expected to appreciate to Rs 48.5 per US dollar by end 2012 as the domestic economy gathers momentum leading to FII inflows,” Dun & Bradstreet, a data firm said on Thursday in an optimistic note.

Credit Lyonnais Securities, an influential foreign brokerage, expects the rupee to fall to Rs 60. It is already advising its clients to cut exposure to Indian equities.

For the rupee to strengthen, India needs to get more foreign capital flows and have strong macro-economic fundamentals.

In 2010, foreign institutional investors or FIIs injected $ 29 bn in Indian equity markets. In 2011, they pulled out $ 242m.

FIIs have been a patient lot. They have seen their investments in India erode in value. In 2011, the BSE sensex shed 22 per cent value in rupee terms. However, as the rupee fell sharply since July 2011, the BSE sensex has shed 36 per cent in US dollar terms. Yet, FIIs have not been selling heavily in the market. They have barely taken out $ 242m during the whole of 2011. They have stopped buying Indian equities though.

A falling currency and dithering macro-economic fundamentals would unsettle FIIs sooner than later.

A weak rupee has resulted in foreign exchange losses worth Rs 4,800 crore in the July-September quarter for 50 companies that make up the NSE NIFTY index. They wiped off close to 8 per cent of their profit before tax (PBT), a study by rating agency CRISIL revealed.

Hence, if the rupee continues to fall, it would hurt company profits further. This makes Indian equities unattractive.

The other avenue for foreign flows is foreign direct investment. Prospects for a significant amount of FDI are dim considering the political resistance to FDI in multi-brand retail, aviation and financial services. The government is not able to take a decision to push FDI as it faces opposition from its own allies.

Macro-economic indicators weakening further

India’s fiscal deficit will surge by the end of March 2012. It is likely to be even bigger by March 2013. The Indian government spends more money than it earns as tax revenue. Subsidies on food, fertiliser and fuel are expected to cost much more than originally expected. On Thursday, the government announced plans to borrow more. The original central government target for the fiscal deficit was 4.6 per cent set in the budget of February 2011. Analysts now expect that to go close to 6 per cent of gross domestic product. This makes the central bank print more money to fund the government borrowing. It eventually hurts the rupee value as supply increases. Central banks around the world typically raise interest rates to strengthen currencies. RBI has hiked rates 13 times since March 2010 to fight inflation. However, this has not helped the rupee in any way.

RBI has introduced some measures to curb speculative foreign exchange trade and allowed banks freedom to set interest rates on non-resident Indian savings and fixed deposits. After all, remittances from overseas Indians stood at $ 58 bn in 2011, according to the World Bank data, the highest for any country. However, many analysts have pointed out that these measures do not address the fundamental issues of demand and supply.

India is also a net importer. Hence, it runs a current account deficit. With the Indian manufacturing output contracting by 5.1 per cent in November 2011, it would hurt exports going forward. If exports fall, that would bring even less dollars into the economy.

The most basic factor that determines the currency value is demand and supply. The US dollar is a reserve currency and is gaining strength across the world. It has touched a new 11-month high against the euro on Wednesday.

As things stand, there are no signs of a resolution in the European debt crisis. This means, in the short-term, the global demand for the US dollar is expected to stay strong. This would affect the rupee value too. If the US dollar gains against major currencies, it is bound to gain against the rupee.

Friday, December 30, 2011

Boeing wins $3.48 billion U.S. missile defense contract

Boeing Co beat out Lockheed Martin to retain its position as the prime contractor for the U.S. long-range missile shield, the Pentagon said on Friday.

The U.S. Defense Department said it was awarding Boeing a $3.48 billion, seven-year contract to develop, test, engineer and manufacture missile defense systems.

A team led by Lockheed Martin Corp and Raytheon Co had vied with Boeing to expand and maintain the Ground-based Midcourse Defense, or GMD, hub of layered antimissile protection.

Boeing partnered with Northrop Grumman Corp to retain the work.

"We believe the government conducted a fair and open competition, making the right decision for the future of the program," Norm Tew, Boeing vice president and program director of GMD, said in a statement.

Lockheed said it was "honored" to have participated on the bid, a company spokesperson said in a statement on Friday.

The GMD contract's value to Boeing will have been about $18 billion from January 2001, when it formally became the system's prime contractor, through the end of this year, Boeing has said.

GMD uses radar and other sensors plus a 20,000-mile fiber optic communications network to cue interceptors in silos at Fort Greely, Alaska and Vandenberg Air Force Base, California.

The shield has been shaped initially to guard against ballistic missiles that could be fired by Iran and North Korea. It is the only U.S. defense against long-range missiles that could be tipped with chemical, biological or nuclear warheads.

TCS pips Reliance to become largest company by m-cap

TCS' m-cap stood at Rs 227,282.29 crore against RIL's m-cap of 226,898.64 crore at the end of trade on the Bombay Stock Exchange today. TCS closed 0.35 per cent lower but Reliance saw a shaper fall. The stock slumped 2.81 per cent to close below the 700 mark for the first time since 13 April 2007.
India's biggest software services firm Tata Consultancy Services has pipped Reliance Industries to become the largest company by market capitalisation on the last day of trading in 2011. Market capitalisation is the total worth of a company in terms of its shares and is equal to the share price multiplied by the total number of shares.

Reliance Industries lost its position as the country's most valued company to Tata group firm TCS this afternoon, as the shares of billionaire Mukesh Ambani-led corporate giant fell sharply in a weak market.

"The past three years have been quite stunning for Reliance Industries. Except the joint venture with British Petroleum, there were not many good news for the group. The challenges in KG-D6 Gas basin in terms of lower gas rampage surely proved to be a drag on the company and stock," Jagannadham Thunuguntla, Strategist & Head of Research at SMC Global Securities Limited said.

TCS' m-cap stood at Rs 227,282.29 crore against RIL's m-cap of 226,898.64 crore at the end of trade on the Bombay Stock Exchange today. TCS closed 0.35 per cent lower but Reliance saw a shaper fall. The stock slumped 2.81 per cent to close below the 700 mark for the first time since 13 April 2007.

"All the new businesses the company has attempted such as retail have proved to be facing much longer gestation period and may not have any meaningful impact in the short term. The telecom bet that company has been attempting may also prove to be long-gestation venture," Thunuguntla added.

RIL has been the country's most valued company for many years, except for a brief period in August this year, when it first lost its top slot to Coal India Ltd. It regained the top sport later but was again overtaken by another state-run firm ONGC.

Earlier this month, RIL also lost its tag of the country's most influential stock to another IT firm Infosys, as measured by their weightage on the stock market barometer Sensex. RIL first slipped below Infosys in terms of Sensex weightage on December 12, and thereafter, a situation similar to game of musical chairs has been on display between the two, as they have overtaken each other on various occasions.

Currently, Infosys commands a higher weight than RIL.

ONGC is currently ranked third with a market cap of Rs 2,19,833.32 crore, while CIL is fourth at Rs 1,90,027.81 crore.

Russia hands over Nerpa attack submarine to India

Russia has handed over the much- awaited nuclear-powered attack submarine Nerpa to India on a 10-year lease, boosting the Indian navy's fire-power.

The Akula-II class Nerpa nuclear submarine had recently finished sea trials.

"The signing ceremony happened yesterday at the Bolshoi Kamen ship building facility in the (Far East) Primorye region where the Nerpa is now based," ITAR-TASS news agency quoted a senior Russian navy official as saying.

The deal for the submarine, which is being transferred on a 10-year lease, was worth USD 920 million.

The report said an Indian crew would sail the Akula II class craft to its home base at the end of January.

"All of the naval tests and performance checks have been completed," the Russian navy official said.

The submarine, capable of remaining underwater for months, will be rechristened as 'INS Chakra' and it would be for the first time in more than two decades that the Indian navy would have a nuclear attack submarine.

When Russia makes the delivery, it will make India only the sixth operator of nuclear submarines in the world.

The submarine deal had figured during Prime Minister Manmohan Singh's visit to Russia earlier this month.

The Nerpa, an Akula II-class attack submarine, had originally been scheduled for delivery in 2008 but an accident during sea trials on November 8 that year had forced the Russian authorities to put it on hold.

Twenty people, mostly civilians, had been killed when a fire-suppressant gas was released on the Nerpa during shakedown trials, in one of Russia's worst naval accidents.

The Akula-II class submarines are equipped with 28 nuclear-capable cruise missiles with a striking range of 3,000 km. The Indian version is reportedly expected to be armed with the 300-km Club nuclear-capable missiles.

India had funded the completion of the Nerpa nuclear submarine at Amur Shipyard before the collapse of the Soviet Union in 1991

Kalpakkam nuclear reactors not affected by cyclone Thane

It was business as usual at the Kalpakkam atomic power plants, around 80 km from here, even as cyclone Thane lashed the coastal districts affecting normal life on Friday.

The two power plants of Madras Atomic Power Station (MAPS) located on the Kalpakkam coast were generating power as usual, though necessary precautions against the cyclone have been taken, said a senior official.

"Both the units are generating 150 MW power each. The cyclone Thane did not hamper our operations in any way," S. Ramamurthy, MAPS station director, told IANS.

All the precautions to be taken as per the Operating Procedure for Emergency Conditions for Cyclone were taken in the warning period, he said.

There was no disturbance to any of the operating systems, including the power supply systems, during the entire period and the reactor operation is continuing.

According to Ramamurthy, there was no water logging in the MAPS complex.

"The cyclone has not affected the construction operations of the 500 MW prototype fast breeder test reactor," Prabhat Kumar, project director of the power plant built by Bharatiya Nabhikiya Vidyut Nigam Ltd (Bhavini) told IANS.

In a statement issued here by the Indira Gandhi Centre for Atomic Research (IGCAR), the operations of the fast breeder test reactor (FBTR) continued without any interruption.

The research group working on the atmospheric dispersion modelling were closely monitoring the movement of the cyclonic storm and were feeding the information to the authorities for taking precautionary measures, the statement said.

Thursday, December 29, 2011

Intel ships new Atom processors to PC makers

Global chip maker Intel Corporation began shipping its new mobile Atom processors with more features and longer battery life to manufacturers of personal computers (PC), laptops, netbooks and smart devices.

"Computing systems using new Atom processors will debut in early 2012 through leading original equipment manufacturers (OEMs) such as Acer, Asus, HP, Lenovo, Samsung, and Toshiba," Intel said in a statement here on Thursday.

The third-generation Atom processor-based platform introduces several new features for low-power designs such as netbooks, retail and healthcare IT devices.

Netbooks based on the new platform offer up to 10 hours of battery life, weeks of standby and high-definition video.

Formerly codenamed "Cedar Trail", the chip (processor) has been designed to provide on-the-go computing with longer battery life at an affordable price.

"The integrated graphics media accelerator combined with the memory controller provides enhanced performance and system responsiveness, including an improvement in graphics performance up to 2x compared to the previous generation platform," the statement noted.
The new processors also provide a lower thermal design power and power management features for netbooks and intelligent systems, including healthcare equipment, retail systems and entry-level digital signage.

"Based on 32nm (nanometer) process technology, the processor enables end-users to share videos or photos wirelessly from their netbooks to a television or stream music through their home stereo speakers," the statement added.

Additional features such as smart connect technology allows users to have an instant internet connection as soon as they open their netbook, and have email, Twitter and RSS feeds automatically updated even in sleep mode.

Tablets, e-readers closing book on ink-and-paper era

Tablet computers and electronic readers promise to close the book on the ink-and-paper era as they transform the way people browse magazines, check news or lose themselves in novels.

"It is only a matter of time before we stop killing trees and all publications become digital," Creative Strategies president and principal analyst Tim Bajarin told AFP.

Online retail giant Amazon has made electronic readers mainstream with Kindle devices, and Apple ignited insatiable demand for tablets ideal for devouring online content ranging from films to magazines and books.

In 2011, digital books earned about $3.2 billion in revenue, an amount that the combined momentum of e-readers and tablets is expected to triple to $9.7 billion by the year 2016, according to a Juniper Research report.

Readers are showing increased loyalty to digital books, according to the US Book Industry Study Group (BISG).

Nearly half of print book buyers who also got digital works said they would skip getting an ink-and-paper release by a favorite author if an electronic version could be had within three months, a BISG survey showed.

"The e-book market is developing very fast, with consumer attitudes and behaviors changing over the course of months, rather than years," said BISG deputy executive director Angela Bole.

Concerns about e-book reading are diminishing, with people mainly wishing for lower device prices, according to the survey.

Owning e-readers tended to ramp up the amount of money people spent on titles in what BISG described as a promising sign for publishers.

Major US book seller Barnes & Noble responded to the trend by launching an e-reader, the Nook, and other chains are picking up on the strategy, according to Juniper.

"I'm among those who believe that the new e-book craze expands a person's interest in reading overall," said Gartner analyst Allen Weiner.

"When you can get someone excited about reading in any way, you turn on the reading ignition and it leads to all content," Weiner said, adding that ink-and-paper works will continue to hold a place in the mix.

Bajarin believes it will be at least a decade before print is obsolete.

"For one thing, there is a generation of people above 45 who grew up with this reading format and for many this will remain the most comfortable way for them to consume content for quite a while," he said.

"However, younger generations are already moving rapidly to digital representations of publications and, over time, they will be using e-books and tablets to consume all of their publications."

Weiner expected hardback or paperback books to be preferred in some situations, such as home reading, even as digital dominates publishing.

"I think it is a myth that it is going to kill the print book business," Weiner said.

"Will it force publishers to think differently?" he asked rhetorically. "Absolutely, but it doesn't spell the demise of print (book) publishing."

Newspapers and magazines, however, should read the digital writing on the wall, according to analysts.

"Newspapers and magazines have different issues," Weiner said.

"Print will wind up extinct for newspapers, while magazines will need to figure out the balance between print and digital," he contended.

Newspapers spend a lot of money printing and distributing daily editions that can't be kept as fresh as stories on the Internet.

Meanwhile, advertising has been moving online where audiences can be better targeted and advertisers pay when people actually click on ads.

In 2011, media colossus News Corp. launched an iPad only publication, The Daily, as newspapers big and small improved mobile websites and invested in applications to get their publications on tablets.

Struggling Internet pioneer Yahoo! has been recreating itself as a platform for "premier digital content" and in November it launched a Livestand news magazine tailored for the iPad.

Livestand weaves video, pictures and text in easily navigated presentations in a challenge to popular iPad social magazine application Flipboard.

Time Inc. last month brought in digital advertising veteran Laura Lang to run what is the largest magazine publisher in the United States.

"Magazines are still figuring it out," Weiner said of adapting to the smart tablet age. "I think they are in evolution."

As if online competition weren't enough for the print magazine business, the US Postal Service is proposing to do away with weekend deliveries in a move that could make weeklies seem like even older news by the time they arrive.

Stanford archives offer window into Apple origins

In the interview, Steve Wozniak and the late Steve Jobs recall a seminal moment in Silicon Valley history - how they named their upstart computer company some 35 years ago.

"I remember driving down Highway 85," Wozniak says. "We're on the freeway, and Steve mentions, `I've got a name: Apple Computer.' We kept thinking of other alternatives to that name, and we couldn't think of anything better."

Adds Jobs: "And also remember that I worked at Atari, and it got us ahead of Atari in the phonebook."

The interview, recorded for an in-house video for company employees in the mid-1980s, was among a storehouse of materials Apple had been collecting for a company museum. But in 1997, soon after Jobs returned to the company, Apple officials contacted Stanford University and offered to donate the collection to the school's Silicon Valley Archives.

Within a few days, Stanford curators were at Apple headquarters in nearby Cupertino, packing two moving trucks full of documents, books, software, videotapes and marketing materials that now make up the core of Stanford's Apple Collection.

The collection, the largest assembly of Apple historical materials, can help historians, entrepreneurs and policymakers understand how a startup launched in a Silicon Valley garage became a global technology giant.

"Through this one collection you can trace out the evolution of the personal computer," said Stanford historian Leslie Berlin. "These sorts of documents are as close as you get to the unmediated story of what really happened."

The collection is stored in hundreds of boxes taking up more than 600 feet of shelf space at the Stanford's off-campus storage facility. The Associated Press visited the climate-controlled warehouse on the outskirts of the San Francisco Bay area, but agreed not to disclose its location.

Interest in Apple and its founder has grown dramatically since Jobs died in October at age 56, just weeks after he stepped down as CEO and handed the reins to Tim Cook. Jobs' death sparked an international outpouring and marked the end of an era for Apple and Silicon Valley.
"Apple as a company is in a very, very select group," said Stanford curator Henry Lowood. "It survived through multiple generations of technology. To the credit of Steve Jobs, it meant reinventing the company at several points."

Apple scrapped its own plans for a corporate museum after Jobs returned as CEO and began restructuring the financially struggling firm, Lowood said.

Job's return, more than a decade after he was forced out of the company he co-founded, marked the beginning of one of the great comebacks in business history. It led to a long string of blockbuster products - including the iPod, iPhone and iPad - that have made Apple one of the world's most profitable brands.

After Stanford received the Apple donation, former company executives, early employees, business partners and Mac enthusiasts have come forward and added their own items to the archives.

The collection includes early photos of young Jobs and Wozniak, blueprints for the first Apple computer, user manuals, magazine ads, TV commercials, company t-shirts and drafts of Jobs' speeches.

In one company video, Wozniak talks about how he had always wanted his own computer, but couldn't get his hands on one at a time when few computers were found outside corporations or government agencies.

"All of a sudden I realized, `Hey microprocessors all of a sudden are affordable. I can actually build my own,'" Wozniak says. "And Steve went a little further. He saw it as a product you could actually deliver, sell and someone else could use."

The pair also talk about the company's first product, the Apple I computer, which went on sale in July 1976 for $666.66.

"Remember an Apple I was not particularly useable for too much, but it was so incredible to have your own computer," Jobs says. "It was kind of an embarkation point from the way computers had been going in these big steel boxes with switches and lights."
Among the other items in the Apple Collection:

- Thousands of photos by photographer Douglas Menuez, who documented Jobs' years at NeXT Computer, which he founded in 1985 after he was pushed out of Apple.

- A company video spoofing the 1984 movie "Ghost Busters," with Jobs and other executives playing "Blue Busters," a reference to rival IBM.

- Handwritten financial records showing early sales of Apple II, one of the first mass-market computers.

- An April 1976 agreement for a $5,000 loan to Apple Computer and its three co-founders: Jobs, Wozniak and Ronald Wayne, who pulled out of the company less than two weeks after its founding.

- A 1976 letter written by a printer who had just met Jobs and Wozniak and warns his colleagues about the young entrepreneurs: "This joker (Jobs) is going to be calling you ...
They are two guys, they build kits, operate out of a garage."

The archive shows the Apple founders were far ahead of their time, Lowood said.

"What they were doing was spectacularly new," he said. "The idea of building computers out of your garage and marketing them and thereby creating a successful business - it just didn't compute for a lot of people."

A look at major corporate succession stories of 2011

The 43-year-old son of construction magnate Pallonji Mistry, among one of the selectors himself and also the largest shareholder in Tata Sons with an 18 per cent stake would now take over the reins of the 80 billion dollar salt to software conglomerate.

2011 was a year when whispers of succession and change strongly resonated across Indian corporate boardrooms where old hands and industry veterans stepped aside to usher in the new and young to steer ahead some of India's best known companies.

Much in the limelight for its succession planning was Tata Sons as after two decades at the forefront, Ratan Tata decided to hang up his boots for a life of retirement post 2012.

After 15 months of searching everywhere in a closely guarded process a specially appointed five member selection team unravelled the mystery called Cyrus Mistry.

The 43-year-old son of construction magnate Pallonji Mistry, among one of the selectors himself and also the largest shareholder in Tata Sons with an 18 per cent stake would now take over the reins of the 80 billion dollar salt to software conglomerate.

His calm demeanor and 'Profit with principles' approach won him the job say experts as Mistry got a unanimous nod of approval from almost every quarter.

“I have always found him to be very open, very correct and he's not biased. He's quite capable of taking fair and objective decisions. Always keeping the corporate interest in mind and nothing else,” said JJ Irani, former director of Tata Sons.

Ratan Tata himself seemed pleased with the choice saying he has found a worthwhile successor in Mistry to start the process of a seamless transition.

"Finding a worthwhile successor has been an important milestone. I look forward to my retirement while I am still active. I'm very pleased and committed to achieve a smooth and seamless transition to my successor. Cyrus is a very good choice for the job," Ratan Tata had said.

And allegations of nepotism in the selection of an insider were promptly rubbished.

“The only thing that had a little bit of a question mark was that he went from being a member of the committee to a candidate. Now, was there a little bit of awkwardness?” had asked NDTV.

“I will ask you a question in turn. If you found a most suitable person in your community, would you omit him because he was in the community? I think the qualities, qualifications of the candidate must be paramount and excluding him just because happened to be a part of the community, is not a reason disqualify him,” said Shirin Bharucha, member of Selection Committee.

But if keeping dynasties completely out of succession planning seemed too unorthodox for some there were exceptions.

As NR Narayana Murthy, chairman and chief mentor at Infosys Technologys stepped down from the company's board on August 20th to pave the way for veteran banker KV Kamath to fill in his shoes.

Despite holding family stock worth nearly $2 billion in the company Murthy's son publicly declared he had no intention of joining Infosys.

But this transition wasn't without its share of hiccups as outgoing Infosys director Mohandas Pai hit the headlines when he criticized the selection process of CEOs at the company highlighting the growing discord between him and the Infosys top management.

“My request to the board has been that when you choose the CEO, have a very transparent process and choose the best person for the job. But it is the board's prerogative and consensus. Infosys' unique position has declined due to conservatism. Last three years we have seen competition overtake us,” said Mohandas Pai, Ex Board Member, Infosys.

The new Chairman though reiterated that the company has a very clear vision when it came to succession planning.

“There has been over the years a stepping out of people who founded this company and I think that process continues. Clearly the company is preparing itself for a time when you have professionals who're not part of the founding team,” said K V Kamath, chairman of Infosys.

As 2011 closes, it is clear that India Inc hasn't managed to completely shrug off the dominance family dynasties in corporate boardrooms.

Yet with the level of professionalism and planning that was involved in the two key transitions perhaps this year was a watershed for India Inc in succession planning.

And as Indian businesses go global the hope is many more will embrace similar practices as they pass on the baton.

China reveals space plans up to 2016

China plans to launch space labs and manned ships and prepare to build space stations over the next five years, according to a plan released on Thursday that shows the country's space program is gathering momentum.

China has already said its eventual goals are to have a space station and put an astronaut on the moon. It has made methodical progress with its ambitious lunar and human spaceflight programs, but its latest five-year plan beginning next year signals an acceleration.

By the end of 2016, China will launch space laboratories, manned spaceship and ship freighters, and make technological preparations for the construction of space stations, according to the white paper setting out China's space progress and future missions.

China's space program has already made major breakthroughs in a relatively short time, although it lags far behind the United States and Russia in space technology and experience.

The country will continue exploring the moon using probes, start gathering samples of the moon's surface, and "push forward its exploration of planets, asteroids and the sun."

It will use spacecraft to study the properties of black holes and begin monitoring space debris and small near-Earth celestial bodies and build a system to protect spacecraft from debris.

The paper also says China will improve its launch vehicles, improve its communications, broadcasting and meteorological satellites and develop a global satellite navigation system, intended to rival the United States' dominant global positioning system (GPS) network.

China places great emphasis on the development of its space industry, which is seen as a symbol of national prestige.

Its space principles - including peaceful development, enhancing international cooperation and deep space exploration - are largely unchanged from its previous two documents detailing the progress of China's space missions, released in 2000 and 2006.

In 2003, China became the third country behind the U.S. and Russia to launch a man into space and, five years later, completed a spacewalk. Toward the end of this year, it demonstrated automated docking between its Shenzhou 8 craft and the Tiangong 1 module, which will form part of a future space laboratory.

In 2007, it launched its first lunar probe, Chang'e-1, which orbited the moon, collecting data and a complete map of the moon.

Since 2006, China's Long March rockets have successfully launched 67 times, sending 79 spacecraft into orbit.

Some elements of China's program, notably the firing of a ground-based missile into one of its dead satellites four years ago, have alarmed American officials and others who say such moves could set off a race to militarize space. That the program is run by the military has made the U.S. reluctant to cooperate with China in space, even though the latter insists its program is purely for peaceful ends.

"China always adheres to the use of outer space for peaceful purposes, and opposes weaponisation or any arms race in outer space," Thursday's white paper states.

The Chinese government's policy is to "reinforce" space cooperation with developing countries and "value" space cooperation with developed countries. The paper lists cooperation between China and countries including Russia, Brazil, France and Britain, and says of the United States: NASA's director visited China "and the two sides will continue to make dialogue regarding the space field."

In solar power, India begins living up to its own ambitions

Solar power is a clean energy source. But in this arid part of north-west India it can also be a dusty one.

Every five days or so, in a marriage of low and high tech, field hands with long-handled dust mops wipe down each of the 36,000 solar panels at a 63-acre installation operated by Azure Power. The site is one of the biggest examples of India's ambitious plan to use solar energy to help modernize its notoriously underpowered national electricity grid, and reduce its dependence on coal-fired power plants.

Azure Power has a contract to provide solar-generated electricity to a state-government electric utility. Inderpreet Wadhwa, Azure's chief executive, predicted that within a few years solar power would be competitive in price with India's conventionally generated electricity.

"The efficiency of solar technology will continue to increase, and with the increasing demand in solar energy, cost will continue to decrease," Mr. Wadhwa said.

Two years ago, Indian policy makers said that by the year 2020 they would drastically increase the nation's use of solar power from virtually nothing to 20,000 megawatts - enough electricity to power the equivalent of up to 15 million modern American homes during daylight hours when the panels are at their most productive. Many analysts said it could not be done. But, now the doubters are taking back their words.

Dozens of developers like Azure, because of aggressive government subsidies and a large drop in the global price of solar panels, are covering India's north-western plains - including this village of 2,000 people - with gleaming solar panels. So far, India uses only about 140 megawatts, including 10 megawatts used by the Azure installation, which can provide enough power to serve a town of 50,000 people, according to the company. But analysts say that the national 20,000 megawatt goal is achievable and that India could reach those numbers even a few years before 2020.

"Prices came down and suddenly things were possible that didn't seem possible," said Tobias Engelmeier, managing director of Bridge to India, a research and consulting firm based in New Delhi. Chinese manufacturers like Suntech Power and Yingli Green Energy helped drive the drop in solar panel costs. The firms increased production of the panels and cut costs this year by about 30 per cent to 40 per cent, to less than $1 a watt.

Developers of solar farms in India, however, have shown a preference for the more advanced, so-called thin-film solar cells offered by suppliers in the United States, Taiwan and Europe. The leading American provider to India is First Solar, based in Tempe, Ariz.

India does not have a large solar manufacturing industry, but is trying to develop one and China is showing a new interest in India's growing demand. China's Suntech Power sold the panels used at the Azure installation, which opened in June.

Industry executives credit government policies with India's solar boom, unusual praise because businesses usually deride Indian regulations as Kafkaesque.

Over the last decade, India has opened the state-dominated power-generating industry to private players, while leaving distribution and rate-setting largely in government hands. European countries heavily subsidize solar power by agreeing to buy it for decades at a time, but the subsidies in India are lower and solar operators are forced into to greater competition, helping push down costs.

This month, the government held its second auction to determine the price at which its state-owned power trading company - NTPC Vidyut Vyapar Nigam - would buy solar-generated electricity for the national grid. The average winning bid was 8.77 rupees (16.5 cents) per kilowatt hour.

That is about twice the price of coal-generated power, but it was about 27 per cent lower than the winning bids at the auction held a year ago. Germany, the world's biggest solar-power user, pays about 17.94 euro cents (23 American cents) per kilowatt hour.

India still significantly lags behind European countries in the use of solar. Germany, for example, had 17,000 megawatts of solar power capacity at the end of 2010. But India, which gets more than 300 days of sunlight a year, is a more suitable place to generate solar power. And being behind is now benefiting India, as panel prices plummet, enabling it to spend far less to set up solar farms than countries that pioneered the technology.

In its solar power auctions, moreover, NTPC is not creating open-ended contracts. The last auction, for example, was for a total of only 350 megawatts, which will cap the government's costs. The assumption is that the price of solar power will continue to decline, eventually approaching the cost of electricity generated through conventional methods.

Most Indian power plants are fuelled by coal and generate electricity at about 4 rupees (7.5 cents) per kilowatt hour - less than half of solar's cost now. In this month's auction, the recent winning bids were comparable to what India's industrial and commercial users pay for electricity - from 8 to 10 rupees. And solar's costs are competitive with power plants and back-up generators that burn petroleum-based fuels, whose electricity costs about 10 rupees per kilowatt hour.

"At least during daytime, photovoltaic panels will compete with oil-generated electricity more than anything else" in India, said C├ędric Philibert, a senior analyst at the International Energy Agency in Paris. "This comparison is becoming better and better every month."
In addition to the federal government, several of India's states like Gujarat, where Khadoda is located, are also buying power at subsidized rates from solar companies like Azure Power.

Analysts do not expect India's solar rollout to be problem free. They say some developers have probably bid too aggressively in the federal auctions and may not be able to build their plants fast or cheap enough to survive. Consequently, or because their bids were speculative, some developers are trying to sell their government power agreements to third parties, analysts say, even though such flipping is against the auction rules.

Mr. Wadhwa, of Azure Power, said a solar industry shakeout in India was almost inevitable. "Initially, a lot of new players enter the sector," he said, "and then the market settles with a few players who have a long-term" commitment to the industry.

Wednesday, December 28, 2011

Japan announces $4.5 bn loan to India for infrastructure corridor

Ramping up strategic ties with India, Japan Wednesday announced $4.5 billion for the landmark Delhi-Mumbai Industrial Corridor (DMIC) project and agreed to accelerate negotiations for a civil nuclear deal, but made it clear that New Delhi has to square up with non-proliferation norms.

Prime Minister Manmohan Singh and visiting Japanese Premier Yoshihiko Noda held talks for over one-and-half hours that focused on accelerating ties across the spectrum, including political, economic and global.

In key steps that are expected to push the burgeoning bilateral relations into a new trajectory, India and Japan, two of Asia's largest economies, decided to enhance the quantum of currency swap arrangement from $3 billion to $15 billion and set a target of $25 billion bilateral trade by 2014.

In important decisions that will impact the lives of ordinary Indians, the two countries also agreed to launch a ministerial-level economic dialogue, spur talks for a social security accord, collaborate in high-technology trade and rare earths, and to step up collaboration in developing high-speed rail networks in India.

The two sides decided to pursue talks on a new industrial corridor between Chennai and Bangalore, India's emerging economic hub where Japanese companies have made large investments.

Besides $4.5 billion for the DMIC, a 24-city plan which promises to transform the economic landscape of India, Japan also pledged 134.288 billion yen loans for two new projects, including the Delhi Mass Rapid Transport System Project Phase III and the West Bengal Forest and Biodoversity Conservation Project.

Resolving to expand cooperation in anti-piracy, counter-terrorism and maritime security, the two leaders also decided to "redouble efforts" to accelerate the reforms of the UN Security Council.

They also discussed a cluster of global issues, including the global economic slowdown, climate change, non-proliferation and the situation in Afghanistan and North Korea.

Stressing that the two countries have "a complete meeting of minds on most issues of concern to us", Manmohan Singh pitching for more investment from Japan thanked Tokyo for continuing with its official development assistance to India despite the tsunami and earthquake that hit Japan early this year.

The talks between the two leaders at the annual summit imparted the much-needed momentum to civil nuclear negotiations that stalled after the March 11 Fukushima disaster.

"The cooperation with India regarding peaceful uses of nuclear energy is conducive to our efforts to address climate change and to strengthen the global partnership with India," Noda said at a joint press conference with Manmohan Singh after the talks.

Noda, however, did not spell out when the negotiations will be resumed and reminded India about its voluntary commitment on a moratorium on nuclear testing. The fourth round of nuclear negotiations is likely to be held early next year, said reliable sources.

"We shall proceed with negotiations while giving due consideration to security, non-proliferation and disarmament," said Noda, who is on his maiden visit to India.

The Japanese prime minister stressed the importance of bringing into force the Comprehensive Test Ban Treaty (CTBT) at an early date, a joint statement issued after the talks said.

Manmohan Singh reiterated India's commitment to a unilateral and voluntary moratorium on testing. The two leaders also decided to step up global cooperation for concluding a Fissile Material Cut-off Treaty (FMCT).

"As part of our energy cooperation, we reviewed the ongoing discussions on furthering civil nuclear cooperation between our countries. These are moving in the right direction," Manmohan Singh said.

"The two prime ministers welcomed the progress made to date in negotiations between India and Japan on an agreement for cooperation in the peaceful uses of nuclear energy, and directed their negotiators to exert further efforts towards a conclusion of the agreement, having due regard to each side's relevant interests, including nuclear safety," the joint statement said.

Noda welcomed progress in nuclear negotiations and hoped that "mutually acceptable results will be achieved".

"Disarmament and non-proliferation is the tenet of the country. This is a matter of national sentiment," Noda said.

Noda also promised to share the experiences and lessons learnt from the Fukushima nuclear power plant accident to improve nuclear security around the world.

The nuclear deal with Japan will enable India to implement its atomic deal with the US as top American atomic equipment companies are partially owned by Japanese companies.

With an eye on increasingly assertive China, the two countries sought closer cooperation in building "an open, inclusive and transparent architecture of regional cooperation in the Asia-Pacific region."

Is India growth story still intact?

As the India growth story started to look shaky, the already risk averse foreign investors seemed to be the first to take flight.

2011 was a year that's been hard on the country and its economy, given that the industrial growth slumped, investor confidence waned, markets turned sluggish, the government's finances went out of whack - and above all the rupee depreciated beyond control.

The only thing that looked up was Inflation.

So is the India Shining Story suddenly left looking suspect?

At the start of 2011, the Indian economy seemed to have come through the global financial crisis relatively unscathed and was set to achieve near 9 per cent growth. But as 2011 began cracks were starting to show up in the India growth story.

A heady combination of strong demand, high input prices and supply side constraints had left the economy with stubbornly high inflation.

Wholesale inflation had stayed above 8 per cent despite six interest rate hikes in 2010 and as the year moved along the problem only got worse with wholesale inflation hitting a high of 10 per cent in the month of September.

As prices soared the Reserve Bank of India had little choice but to raise rates further.

Through 2010, RBI governor D Subbarao known in policy circles as a man who believes in measured and calibrated actions had chosen to stick with small 0.25 per cent hikes in moves that he termed as "baby steps".

But as inflation continued to soar, the RBI was forced to move away from baby steps towards more aggressive rates which continued through the year taking the benchmark rate to 8.5 per cent – a process which finally seemed to come to a close at the year ended with some early signs of food and primary article prices easing.

“I am still worried about inflation in manufactured goods picking up. It is too early for the RBI take a call on cutting interest rates,” said Pronab Sen, Planning Commission.

The decision to put an end to interest rate hikes came against the backdrop of a sudden and steep slowdown in the economy.

While the rising cost of money curbed consumption in the economy to some extent.

It was investment that took a real hit pulling down industrial growth to -5.1 per cent in October – the lowest seen since March of 2009.

The combination of high interest costs – a standstill in government decision making and the still continuing global crisis – dented confidence and pulled down growth in the broader economy as well.

The RBI brought down its growth forecast for the year to 7.6 per cent and may reduce it further in January. The government now pegs growth for the year at 7.5 per cent but forecasters are far more bearish and expect growth to tumble well below 7 per cent.

But others point out at even at sub 7 per cent growth India will remain one of the fastest growing economies.

Shankar Sharma, chief global trading strategist, First Global, feels it is fine even the growth rate stands between 5.55 – 7 per cent.

As the India growth story started to look shaky, the already risk averse foreign investors seemed to be the first to take flight.

As Dollar outflows picked up against the backdrop of a widening current account deficit and talk of a fresh balance of payments crisis started to do the rounds.

The Indian rupee plummeted hitting fresh record lows of 54.30 to the dollar and will close the year as the worst performing Asian currency with nearly 20 per cent in losses. This is even after the RBI tried to stem speculation by curbing open forex positions.

The measures seemed to have calmed the markets for the time being but the skeptics of the Indian currency now abound including Chris Woods of CLSA who warned that the rupee could hit 60 to the Dollar.

"Apart from growth the bigger problem with India is the continuing balance of payment problem which is bringing the rupee down, which may help growth in the medium term," said Wilbur Ross, chairman of WL Ross & Co.

As the year closes the Indian economy seems to have come full circle. Experts fear a weakening rupee may add to inflation once again.

Yet the worst of the growth slowdown may be still to come leaving policymakers facing with a year ahead that could bring with it even greater uncertainty and tougher decisions.

What to expect from Ambani brothers in 2012

Reliance Industries needs to highlight new ambition for profits to grow, while Reliance Communication needs RIL to emerge stronger in 2012.

As Ambani brothers dance to the tune of garba music, many Reliance Industries and Anil Dhirubhai Ambani Group investors would have started to build high expectations from the new year.

On Tuesday, when trading began, the BSE Sensex stayed flat. Reliance Communications shares jumped 5 per cent. No other Anil Dhirubhai Ambani Group company share rose so much. Over the past one week, Reliance Communication shares have surged 17 per cent. The BSE Sensex rose 3.3 per cent during the same period.

The trading pattern of the day and the week indicates that the street has already begun to build that anticipation. They expect something to emerge out of the family get-together at Chorwad, Gujarat, the native place of the late Dhirubhai Ambani.

Analysts and bankers tracking the group are hesitant to speak on-record.

However, it is very clear that Reliance Industries and Reliance Communications could explore synergies for rolling out the 4G wireless broadband plan in 2012.

Mukesh Ambani knows the RCom network. After all, he set it up.

Now, it makes sense to utilise the infrastructure already created to offer 4G broadband services. Mukesh Ambani acquired a company Infotel in June 2010 that won the nationwide licence for 2.3 gigahertz broadband wireless access spectrum. This allows RIL to offer 4G broadband services nationwide.

From the Reliance Communications standpoint, this would be a key transaction. The company has in the past tried selling passive infrastructure to companies like Global Tele or GTL and private equity investors. It has not worked out. The balance sheet of Reliance Communication would be relieved of a significant debt burden if any such deal materialises. As of September 2011, the company had debt to the tune of Rs 32,000 crore.
Previous reports say that Reliance Communication was looking to find a strategic partner for the business and a buyer for the passive infrastructure business for over 18 months now. For Reliance Communication, Reliance Industries is the strategic partner or buyer it is looking for.

We cannot speculate about the scope of the deal between Reliance Industries and Reliance Communication. Yet, one can say that in 2012, Reliance Communication could emerge stronger.

Reliance Industries

It is not enough merely being a strategic partner to Reliance Communications in 2012 for Mukesh Ambani’s Reliance Industries.

The street really expects much more from the big brother.

The company is likely to sit on a large cash pile over the next two years with no significant expansion plans in any business. Reliance Industries in 2012 could make better profits than estimated earlier. The fall in the rupee is likely to benefit the company.

According to Kotak Securities estimates, when the US dollar gains a rupee, it boosts Reliance Industries earnings per share by about 3 per cent over the next two years. This means the company is expected to generate more cash. Kotak Securities puts the free cash flow figure at Rs 76,100 crore over the next two years.

The stock market though is concerned about the end-use of this cash pile. The street does not expect the company to deploy the cash pile either into existing businesses in a big way. The company could make some acquisitions of energy assets outside India. The company invested over Rs 12,000 crore in shale gas assets in US.

The other issue is that Reliance Industries has not yet outlined the long-term vision for new businesses like retail or telecom. Hence, the street does not expect the two new businesses to absorb that scale of capital.

This is not such a familiar situation for Reliance Industries as the company has always been in a rapid expansion mode over the years and utilised capital effectively.

In 2012, the street would be interested to the vision for new businesses like retail and telecom.

A higher dividend per share would be rewarding for shareholders. The company has typically followed a conservative dividend policy. However, with no significant use of cash, any buyback of shares or dividend would go a long way in boosting the investor sentiment in 2012.

Tuesday, December 27, 2011

Economy to soon revert to higher growth trajectory: Pranab Mukherjee

Due to the euro zone crisis, a downturn in external demand resulting in a slowdown in exports, currency volatility and current account deficit, he said.

Amid concerns of a slowdown, Finance Minister Pranab Mukherjee has said the Indian economy will soon revert to a higher growth trajectory.

The present downturn is only temporary, Mukherjee said in his address at the fourth meeting of the Consultative Committee attached to the Ministry of Finance this fiscal here yesterday.

Earlier this month, the government lowered the GDP growth forecast to 7.5 per cent from its earlier estimate of 9 per cent for the current fiscal.

"The world economy is going through turbulent times. Due to the euro zone crisis, a downturn in external demand resulting in a slowdown in exports, currency volatility and current account deficit, among others, has also affected our economy."

He also said that necessary instructions have been issued to all ministries and departments to adhere to their expenditure limits.

On price rise, he said food inflation has come down to 1.8 per cent and there is moderation in inflation in general. The savings rate has also gone up.

2011: The year of corporate gloom

At the forefront of the battle between government policy and corporate ambition was the strident Jairam Ramesh whose tough 'go-no-go' policies on mining practices and strict enforcement of environmental norms practically brought clearances and mining activity to a standstill.

2011 was a difficult year for the corporate India as it battled a policy logjam at the centre along with blanket ban in mining, slow reforms and coal shortages in the power sector – all of which brought growth to a grinding halt and shattered sentiment among the head honchos of the corporate world.

“There is uncertainty in terms of approvals, land acquisition, availability of power, environmental clearances as a result of which no new investment is taking place,” said Ajay Piramal, chairman of Piramal Healthcare.

“We should be achieving 10 per cent growth with good government support and Parliament working. But the morass that we are in at present, 7 per cent might be difficult,” said JJ Irani, former director at Tata Sons.

At the forefront of the battle between government policy and corporate ambition was the strident Jairam Ramesh whose tough 'go-no-go' policies on mining practices and strict enforcement of environmental norms practically brought clearances and mining activity to a standstill.

High profile projects like Lavasa Hill City and crackdowns on illegal exports of iron ore in states like Karnataka and Goa further compounded problems for the industry.

“We have lowered our guidance by 14 per cent,” said Sheshagiri Rao, Group CFO of JSW Steel.

But it wasn't just the mining and steel majors who bore the brunt. Coal shortages and slower clearances meant the power sector getting a virtual tailspin.

With projects scrapped, losses mounting and fuel stocks so critically low, large parts of the country even witnessed blackouts in the month of October.

Lack of reforms in distribution and political compulsion to keep tariffs artificially low have exacerbated problems with some developers even vowing not to expand their power portfolios until further reforms are brought in.

“We are not going to do any fresh power projects until the 2nd reforms in the sector,” said GM Rao, chairman of GMR Group.

The cascading effect of these problems clearly have become evident in the capital goods space too with the country's largest private infrastructure company L&T lowering its growth guidance to a mere 5 per cent as a double whammy of low demand & a hostile macro environment hits growth.

As we end the year though there are fresh assurances coming in from the government and a rebuke for an increasingly cynical industry. The Prime Minister speaking at the latest meeting of Council on Trade & Industry said: "It is a little disappointing to sometimes hear negative comments emanating from our business leadership or be told that government's policies are causing slowdown and pessimism. Such comments have added to uncertainty and have emboldened those who have no stake in our economic growth."

But assuring industry he added that: "That our government is committed to create a growth oriented economic environment."

With not much headway in crucial reforms though these assurances mean little and the New Year does not promise to begin on a cheery note either.

India tycoon's got tons of cash, nowhere to invest

Ajay Piramal is sitting on a mountain of cash. Yet the billionaire Indian tycoon, working in one of the world's fastest growing economies, is struggling to figure out what to do with the money.

The problem isn't opportunity, he says. It's India.

"Every large investment, there was no transparency," he said.

His dilemma is a worrying sign for India. With the country mired in corruption, bureaucratic red tape and unclear and changing government policies, many of the men who made their billions here are saying maybe it's time to quit India. It's got to be easier to do business elsewhere.

In May last year, Piramal's healthcare business sold its generic drug operations to U.S. pharmaceutical giant Abbott Laboratories for $3.8 billion. Piramal, a tall big man in a country that still measures prosperity by girth, was eager to set that cash pile to work. He wanted to expand one of his chemical plants, but was told it would take five years.

"The same plant could be set up in China in two years," he said. "I love India, but my customer is not going to wait."

India, still a beacon of relatively fast growth despite a troubled world economy, should be a magnet for capital. Instead, since the beginning of 2010, the amount that Indians have invested in businesses overseas has exceeded the amount foreigners are investing in India, according to central bank figures.

In part this reflects the confidence and aptitude of India's maturing companies and the current malaise in the global economy and financial markets. But it also reflects deep problems at home. India's big coporations may be cash rich but the failure to invest that money domestically is bad news for a developing country that needs capital to build the roads, power plants and food warehouses that could help lift hundreds of millions out of dire poverty.

The frustration of India's business elite with corruption, political paralysis, log-jammed approvals, regulatory flip-flops, lack of access to natural resources and land acquisition battles — to pick a few of the top complaints — has reached a pitch perhaps not heard since India began liberalizing its economy in the early 1990s.

"If you are an honest businessman in India, it's very difficult to start up anything," said Jamshyd Godrej, chairman of manufacturing giant Godrej & Boyce. "Companies are going to operate where they see the best opportunities and efficiency for their capital."

Increasingly, that's outside India.

In 2008, foreigners poured roughly twice as much direct investment into India — $33 billion — as Indians plowed into businesses overseas. By 2010, that had reversed: Indians invested $40 billion abroad — twice as much as foreigners invested in India — a trend that's continued this year.

There is another, unspoken element to all the complaints. To the extent that business in India ran on corruption, some of the old, dirty ways of doing things are being disrupted, freezing India's already glacial bureaucracy, business leaders say.

Scandals in the staging of the Commonwealth Games, the pilfering of homes meant for war widows and the irregular auction of cellphone spectrum that cost the country billions has sent parliamentarians and even a Cabinet minister to prison.

With Indians tiring of the incessant graft, tens of thousands of middle-class protesters poured into the streets and pushed an anti-corruption bill onto the floor of Parliament.

Steelmakers can't get enough iron ore because a massive mining scandal in the southern state of Karnataka prompted a court to order the closure of illicit mines that account for a fifth of iron ore production in the country.

The bureaucrats — even the honest ones — are reportedly so scared of being punished they are refusing to make the decisions needed to make the country run.

Piramal is not unpatriotic. Each room in his executive suite is named after an Indian epic hero: Arjuna, the most pure; Dhananjay, acquirer and master of wealth. There's a quote from the Upanishads scriptures on the wall.

His office sits in a one million square foot office park in Mumbai his family built. The buildings around him — white with blue glass that flashes back the unforgiving sun — bear his own name in large black letters: Piramal Towers.

Piramal had the will and the means to build power plants and roads.

Instead, his Piramal Group's largest investment to date has been in one of the office park's tenants: the Indian subsidiary of the British telecom giant Vodafone Plc.

Last September, when he got the first payout, of $2.2 billion, from Abbott, the phone started ringing.

"Because people knew we had money, we had so many people approaching us for projects in the infrastructure sector," he said. "These people had no experience and no knowledge and no track record of having built a business in any area. And yet they were coming to us saying we have licenses and approvals. That just didn't sound right or smell right."

Each day, they paraded through his office: The investment banker who decided to build a 500 megawatt power plant, the coal trader assured of a government coal allocation, small-time miners with pretty presentations promising land, licenses and financing.

"They'd name politicians from the center and the state who had it all tied up for them," he said. "It didn't sound right. Obviously there were things going on in the system."

Road and port projects weren't much better, he said.

Piramal also looked at investing in engineering and infrastructure services companies, but couldn't make sense of their books.

"We couldn't find anything," he said. "People get greedy. In their desire to get good valuations they resort to, if I can say, creative accounting."

Today, India's infrastructure companies are known as great wealth destroyers.

"Infrastructure investment has become untouchable, a sure way of losing money," said Jagannadham Thunuguntla, head of research at SMC Global Securities. He calculates that four of India's top infrastructure companies — GMR Infrastructure, GVK Power and Infrastructure, Lanco Infratech and Punj Lloyd — have lost over 80 percent of their value since 2007. A fifth, Larson & Toubro is down 50 per cent.

Piramal may have dodged a bullet, but shareholders in Piramal Healthcare aren't happy. Despite a $600 million special dividend and share buyback, the share price has sagged since the Abbott deal was announced on May 21 last year. They'd like to see the Abbott cash productively deployed. Instead, much of it is sitting in fixed deposit accounts.

Piramal says he really does want to run a pharmaceutical company and be the first Indian company to discover a world-class drug — despite his dabbling in telecom, financial services and real estate financing. It's just that pharma can't absorb all his cash. He plans to sell the 5.5 per cent stake he picked up in Vodafone Essar for $640 million in a few years, when Vodafone Essar issues shares in an initial public offering, he said.

He has also launched Piramal Capital, to make real estate and infrastructure loans, and spent about $50 million to acquire IndiaReit, a real estate investment company.

Meanwhile, his thoughts have turned to Boston, where he set up IndUS Growth Partners with a professor from Harvard Business School to look for buying opportunities in the U.S., in security, financial services and biotechnology. And he says he's still planning to spend over a billion dollars on biotechnology acquisitions in North America and Europe.

"India was going more towards capitalism than socialism," Piramal said. "I think we're going back. Capitalism went to too much excess. Corruption levels went to the extreme."

He said he'll announce his first overseas acquisition by March.

Monday, December 26, 2011

China launches super-speed test train

China has launched its first test train that is said to be capable of reaching 500 km per hour from the present 300 km per hour a feat if accomplished would be a big leap forward in high speed train technology.

China's largest rail vehicle maker, CSR Corp Ltd, over the weekend launched the train.

The six-car train with a fair shaped head is the newest in the CRH series.

It has a maximum tractive power of 22,800 kilowatts, compared with 9,600 kilowatts for the CRH380 trains currently in service on the Beijing-Shanghai High-Speed Railway, which holds the world speed record of 300 km per hour.

The grey-coloured train carries testing and data processing facilities, state-run Xinhua news agency reported.

Ding Sansan, the company's chief technician, said the concept of the the super-speed train design was inspired by China's ancient sword.

The bodywork uses plastic materials reinforced with carbon fiber.

Shen Zhiyun, a locomotive expert and academician said the testing of the super-speed train with speeds of up to 500 km per hour will provide useful reference for current high-speed railway operations.

Brazil overtakes Britain to become world's sixth largest economy

According to a report by the Centre for Economics and Business Research (CEBR), Russia and India are going to benefit from higher growth rate in the next decade.
According to a report by the Centre for Economics and Business Research (CEBR), Brazil has overtaken the UK as the world's sixth largest economy.

In its latest World Economic League Table, the CEBR said, the UK economy is now at the seventh place, largely because of banking crash of 2008 and the subsequent recession. Brazil, South America's largest economy, has taken the giant leap because of its rising exports to China and the far east, it said.

The CEBR predicts that the European region may suffer a "lost decade" of low growth following a credit binge over the past 20 years.

The report further indicates that Russia and India are going to benefit from higher growth rate in the next decade.

It predicts that the Indian economy, which is the world's 10th biggest economy in 2011, will rise to become the top five economies by 2020.

CEBR World Economic League Table

Rank 2011 2020 (forecast)


2 China China

3 Japan Japan

4 Germany Russia

5 France India

6 Brazil Brazil

7 UK Germany

8 Italy UK

9 Russia France

10 India Italy

CEBR also forecasts that the world growth would fall to 2.5 per cent in 2012, a downward revision from the forecast made in September.

How Indian companies raised funds in 2011

There was a lull in the primary stock market -- where companies raise funds through the sale of shares via instruments like IPOs -- and it was mostly ECBs that was sought to meet the funding requirements of businesses during 2011.
Most companies knocked on the doors of overseas creditors to expand their businesses in 2011. But in an ironic turns of events, once-attractive-looking foreign debt instruments proved to be the nemesis of Indian companies. Most companies with foreign debts are now burdened with huge debt overruns due to a hardened US dollar and tough global economic conditions.

There was a lull in the primary stock market -- where companies raise funds through the sale of shares via instruments like IPOs -- and it was mostly ECBs (External Commercial Borrowings) or foreign debt that was sought to meet the funding requirements of businesses during 2011.

Nevertheless, the total of Rs 1,80,000 crore worth of fresh capital raised by the Indian companies from equity and debt markets during 2011 was way below the record level of over Rs 3 lakh crore in 2010.

Capital was mostly mopped up mostly via debt because of market downtrend that made it difficult to raise funds through the sale of shares, and the trend could impact the business expansion plans of companies, as well as the industrial production and GDP numbers of the country, experts say.

Nearly Rs 22,690 crore was raised from the equity markets this year, a little above 10 per cent of the record fund-raising of Rs 2 lakh crore in 2010.

The weakness was seen across segments, including Initial Public Offers (IPOs), Follow-on Public Offers (FPOs), Qualified Institutional Placement (QIPs) and foreign depository receipts (ADRs/GDRs).
Even in overseas debt markets, Foreign Currency Convertible Bonds (FCCBs) did not find many takers, as these are linked to the equity markets.

ECBs provided the only silver lining and the funds raised through these instruments, as well as the number of these issues, witnessed a sharp jump in 2011.

External Commercial Borrowings (ECB):

# 2010 saw an estimated 810 ECB offerings against 672 in 2010.
# The amount of debt raised through these instruments rose to $30 billion from $22 billion in 2010.

Public offers - Big year of small issues:

# In 2011, 39 public issues, comprising 37 IPOs and two FPOs, collectively raised about Rs 14,112 crore
# In 2010, a total of 70 public issues (62 IPOs and eight FPOs) together raised about Rs 71,114 crore
# Of the 39 public issues, only nine traded above their issue price, 30 other stocks traded below their issue prices
# Overall, the public issue market in 2011 has seen a wealth erosion of over Rs 4,000 crore, representing a mark-to-market, or notional loss, of 29 per cent
# The entire year saw just one PSU offering - Power Finance Corp (PFC), which also happened to be the biggest public offer of the year at Rs 4,660 crore.
# In 2010, nearly Rs 50,000 crore, was raised through the government's divestment in the public sector. State-run Coal India came out with the largest-ever
public issue in 2010 and raised more than Rs 15,000 crore
# FPOs by Tata Steel and Power Finance Corp accounted for the major chunk of the funds raised (over Rs 8,000 crore)
# 17 offerings had a size less than Rs 100 crore and just three were above Rs 1,000 crore
# At least 28 IPOs (looking to raise more than Rs 32,000 crore) were cancelled by the respective companies due to sluggish market conditions

Qualified Institutional Placements (QIP):

# There were not many takers for QIPs, where already-listed companies sell shares to select institutional investors
# A total of eight companies together raised about Rs 3,451 crore during 2011 through QIPs as compared to Rs 28,339 crore raised in 2010

Foreign depository receipts (ADR/GDR):

# No ADRs were issued in 2011
# There were 12 GDR issuances, which raised Rs 1,156 crore ($220 million). This was almost 75 per cent lower than the funds raised through GDR issues in 2010

Foreign Currency Convertible Bonds (FCCB):

# A total of about Rs 441 crore ($80 million) was mopped up through 10 FCCB issues in 2011
# In 2010, 13 FCCBs raised $1.55 billion

Sunday, December 25, 2011

India to get its own low-cost dreamliner soon

India can soon boast of its very own low-cost, passenger plane. That's right. For the very first time, the country has embarked upon a project to design and manufacture its first, indigenous passenger aircraft. Called the National Civilian Plane, it can carry a little less than 100 people and could make its maiden flight in less than five years.

Nearly 100 engineers are working on this ambitious project at the National Aerospace Laboratory in Bangalore that's expected to cost Rs. 4,300 crore. The plane can take off from small runways and is aimed at air-linking smaller cities.

"We have come out with a project report for developing this aircraft, a 90-seater aircraft which can fly from short runways and operate in between small cities of the country and meet the Indian market very well and capture some of the international market in developing countries", said G. Madhavan Nair, the chairman of the Indian Space Research Organisation (ISRO) and the man who flew India to the moon.

The plane is expected to fill a vital gap in the domestic aviation sector. With air traffic within the country growing annually at the rate of 15%, designers feel that the demand for the new passenger plane could rise to around 500 in the next decade.

The National Aerospace Laboratory has earlier successfully designed the two-seater Hansa plane that has been put into commercial use. It's effort to make a small, 14-seater plane, Saras, though hit a roadblock when a prototype crashed near Bangalore in 2009, killing three people.

Aerospace engineers are banking on the management skills of Mr Nair this time to develop this plane and commercialise it in partnership with the private sector.

Tuesday, December 20, 2011

Meet Charles Feeney, Cornell's $350 Million Donor

The New York Times has unmasked 80-year-old Cornell alum Charles F. Feeney as the anonymous donor who gave the school a $350 million donation to construct a new technology-based satellite campus on Roosevelt Island in New York City. Officials at The Atlantic Philanthropies, the foundation started by Feeney in 1982, confirmed to the paper last night that he was the one who made the gift for the project, which is expected to generate an extra $1.4 billion in tax revenue for the city, plus 20,000 construction jobs and as many as 30,000 new jobs once the facility is up and running.

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Which leads to the inevitable question: who is this guy? To begin with, he's a very rich guy. He co-founded Duty Free Shoppers Group in the early 1960s, and sold his stake in the company to LVMH Moet Hennessy-Louis Vuitton for $2.47 billion in 1996. At the time, The Times noted Feeney's "net worth far exceeds the $975 million estimated by Forbes magazine." After the sale, The Times reported estimated that the proceeds, paired with other funds Feeney turned over to the foundation "left the charity with $3.5 billion, even after the $610 million that has already been distributed to charities."

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To that point, he'd be donating anonymously, but it was Judith Miller of The New York Times who coaxed Feeney into discussing his donations with a member of the press for the first time in 1997, though he wouldn't pose for a picture.

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In adidition to donating to universities and hospitals, Feeney told Miller that he's also made personal contributions to Sinn Fein, the IRA's political arm, worth up to $280,000, which made him the organization's biggest American donor (Feeny holds dual citizenship.) As of 1997, the foundation's largest grant was $30 million, a figure that Feeney has dwarfed in recent years. In 2009, he gave $125 million to build a new medical center for the University of California-San Francisco that would treat women, children, and cancer patients. Over the course of the last decade, he's given more than €46m to the University of Limerick in Ireland. Hs total donations for Cornell over the years -- not counting the latest $350 hit -- exceed $600 million.

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Perhaps not surprisingly, he took the "Giving Pledge" created by Bill and Melinda Gates earlier this year, vowing to give away everything in the Atlantic Properties coffers by 2020. As Dealbook noted at the time, the rapid timetable illustrates Feeney's specific brand of philanthropy, which eschews trusts and foundations for what he calls "giving while living," in which the philanthropist's goal is to become flat broke before his own death.

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Nearly every profile makes note of how unimpressed Feeney is with what his wealth can buy him, noting that he flies coach, wears a $15 watch, and doesn't own a house or a car. When Miller asked him why he decided to give everything away, Feeney replied, "I simply decided I had enough money."

In 2007, when The New York Times convinced him to sit for a profile again, Jim Dwyer said, not inaccurately, that Feeney was "what Donald Trump would be if he led his life backward."

Apple, Google working on wearable devices

Apple and Google are working on wearable technology that would send data to their smartphones, US media reported on Monday.

Researchers in Google's secret Google X lab, a facility where Google is reportedly working on projects pertaining to future technologies, have begun working on peripherals that would communicate information back to Android smartphones when they are attached to one's clothing or body, said Bits, a technology blog of the New York Times, citing sources.

Apple is said to be working on a curved-glass, wrist-wearable iPod. Users could communicate with device with Apple's artificial intelligence software Siri and the information could be relayed to iPhone, reported Xinhua.

A very small group of Apple employees had been conceptualizing and prototyping some devices, said Bits, citing a person with knowledge of the plan.

The core concept of the plans is to make smartphone become the central hub for mobile communication. Some analysts said the companies still need to ensure consumers to recognize the daily value of these novelty product-like devices.

Two Earth-size planets spotted around distant star

Scientists have found two Earth-sized planets orbiting a star outside the solar system, an encouraging sign for prospects of finding life elsewhere.

The discovery shows that such planets exist and that they can be detected by the Kepler spacecraft, said Francois Fressin of the Harvard-Smithsonian Center for Astrophysics in Cambridge, Mass. They're the smallest planets found so far that orbit a star resembling our sun.

Scientists are seeking Earth-sized planets as potential homes for extraterrestrial life, said Fressin, who reports the new findings in a paper published online Tuesday by the journal Nature. One planet's diameter is only 3 percent larger than Earth's, while the other's diameter is about nine-tenths that of Earth. They appear to be rocky, like our planet.

But they are too hot to contain life as we know it, with calculated temperatures of about 1,400 degrees and 800 degrees Fahrenheit, he said.

Any life found on another plant may not be intelligent; it could be bacteria or mold or some completely unknown form.

Since it was launched in 2009, NASA's planet-hunting Kepler telescope has found evidence of dozens of possible Earth-sized planets. But Fressin's report is the first to provide confirmation, said Alan Boss of the Carnegie Institution for Science in Washington. He's a member of the Kepler science team but not an author of the paper.

The researchers ruled out a possible alternative explanation for the signals that initially indicated the planets were orbiting the star Kepler-20. The star is 950 light-years from Earth in the direction of the constellation Lyra.

The planets are called Kepler-20e and Kepler-20f.

Earlier this month, scientists said they'd found a planet around another distant star with a life-friendly surface temperature of about 72 degrees. But it was too big to suggest life on its surface. At 2.4 times the size of Earth, it could be more like the gas-and-liquid Neptune with only a rocky core and mostly ocean, scientists said.

Moscow, eyeing U.S. missile defense plans, announces work on 100-ton “monster” missile

During campaign season, it never hurts for a presidential candidate facing a frustrated public to display toughness and resolve in the face of an old and familiar adversary. And it also doesn't hurt to throw in some shock-and-awe--say, a ballistic missile nicknamed "Satan."

This appears to at least partly explain why on Monday Russia announced that it had successfully tested a short-range interceptor missile; part of its ongoing effort to develop a domestic missile defense system, according to Russia's RIA News Agency. (The Russian Defense Ministry has provided a video of the missile's launch on its website.) Russia also announced it is working on the development of a 100-ton ballistic missile slated for release in 2015, Pravda reports. Russia recently held contested parliamentary polls and is due to hold presidential elections in March. Russia watchers note the political backdrop to the announced plans and their part in the wider narrative agenda: resurgent Russia's determined opposition to American missile defense plans in Eastern Europe.

"In connection with the plans of the United States to develop the air defense system in Europe, in close vicinity to Russia's borders, and because of the unwillingness of the U.S. side to provide any guarantees, the Russian Federation continues to take measures to preserve parity in the field," Pravda reports.

"Russia does not stand against the U.S. missile defense system," Sergei Karakaev, the Russian Defense Ministry commander of the missile troops, was cited by the paper. "Russia stands against the creation of the missile defense system, which would be directly aimed against Russia to potentially reduce the possibilities of the Russian nuclear containment forces."

The field tests come a month after Russia's outgoing president Dmitry Medvedev declared that he was walking away in protest from U.S.-Russian missile defense negotiations. "The United States is unwilling to provide a written guarantee that the system would not be used against Russian nuclear forces," the Union of Concerned Scientists' Elliot Negin wrote at the Huffington Post Monday. "[Medvedev] warned that, if the United States carries out its plans to build it without such an assurance, Russia would site missiles in its westernmost Kaliningrad region and consider walking away from the New START agreement." (The strategic arms reduction treaty, signed last year, calls for the United States and Russia to reduce their stockpiles of nuclear arms by a third over the next seven years.)

Medvedev's throwing down the gauntlet on missile defense talks with the West also played to a delicate moment in Russian domestic politics, analysts say.

Medvedev has served since 2008 as the Kremlin-approved placeholder for Russian president Vladimir Putin after the latter served two terms as president and moved over to serve a term as prime minister. However, Putin, a former KGB colonel, announced in September his plans to run for president again in March.

But things haven't gone as smoothly as Putin planned. Putin's United Russia party barely claimed a majority in contested Russian parliamentary polls held Dec. 5 that many Russians and international observers believed were rigged. Protests ensued, with another major demonstration scheduled for Dec. 24.

"Putin typically has consolidated his power by pursuing campaigns against nefarious foes -- Chechen extremists, Russian oligarchs, and now the West," Anya Schmemann, a Russia watcher at the Council on Foreign Relations, told Yahoo News Tuesday. "This is a time-tested tactic in Russia. The Russian government's threat in November to target missile defense sites fits into this category--blustery talk for a domestic audience. However, the Russian public has become more savvy in recent years and Putin's effort to blame the United States and Clinton for supporting the protests and criticizing the elections was mocked in the streets."

"Russia's military establishment is concerned about losing parity with the United States on the number of deployed strategic nuclear warheads that it maintains," the Ploughshare Fund's Joel Rubin told Yahoo News Tuesday. "By developing a new heavy missile, a perverse outcome is taking place, where Russia is attempting to not fall further beneath New START levels in order to satisfy the concerns of its military establishment."

Of course, tough-guy posturing on the well-worn grooves of the Cold War axis is not unique to Moscow. On Saturday, President Obama's nominated envoy to Moscow, Michael McFaul, was finally confirmed after Republican Senator Mark Kirk of Illinois lifted a weeks-long hold on the nominee.

"Kirk lifted his objections after the White House wrote him a letter assuring him that it will 'not provide Russia with sensitive information about our missile defense systems that would in any way compromise our national security,'" Agence-France Press reported. "Specifically the White House told Kirk that 'under no circumstances' would the United States provide hit-to-kill technology and interceptor telemetry to Russia."

Monday, December 19, 2011

Saudi prince invests $300 million in Twitter

The Saudi Prince Walid bin Talal and his investment company, Kingdom Holding, said Monday they had bought a "strategic stake" in the social media site Twitter for $300 million.

The investment represents roughly 3 per cent stake of the company, based in San Francisco, which was valued at $8 billion in August.

In a statement, Prince Walid, who owns 95 per cent of Kingdom Holding, said the purchase was part of a strategy "to invest in promising, high-growth businesses with a global impact."

Despite ongoing volatility in the financial markets, investors have shown continued interest in Internet companies. Last week, the social network gaming company Zynga raised $1 billion in an initial public offering, while Groupon, the daily deals site, raised $700 million from the markets in early November.

Kingdom Holding stock was up about 6 percent in midday trading in Riyadh.

Prince Walid, who also own stakes in US blue chip companies such as Citigroup, General Motors and Apple, is the nephew of Saudi Arabia's King Abdullah. He also is one the of the Arab world's richest men, with assets worth an estimated $21 billion, according to Arabian Business magazine.

The investment in Twitter comes after the company's co-founder Biz Stone announced in June that he would be stepping back from the fast-growing social media. Twitter's other co-founder, Evan Williams, was replaced by the current chief executive Dick Costolo last year.

Despite the management shake-up, Twitter has continued to gain traction, particularly in the Arab world, where it was credited with playing a role in the recent popular uprisings across North Africa and the Gulf.

Arabic is now the fastest growing language used on Twitter, according to the data intelligence company Semiocast.

The volume of Arabic messages, for example, has multiplied by 2,146 per cent in the 12 months ending in October, according to figures from Semiocast. That makes Arabic the eighth most used language on the site.

"We believe that social media will fundamentally change the media industry landscape in the coming years. Twitter will capture and monetize this positive trend," Ahmed Reda Halawani, Kingdom Holding's executive director of private equity and international investments, said in a statement.

The website currently has over 100 million active users, and raised approximately $400 million of new capital last summer. That investment was led by DST Global, the investment firm headed by the Russian billionaire Yuri Milner.

Sunday, December 18, 2011

Indian Nuclear Energy

The global nuclear industry is moving forward at a brisk pace, only slightly slowed by the Fukushima accident. The International Atomic Energy Agency’s most realistic estimate is that 90 new nuclear plants will enter service by 2030. Ten new nuclear plants went online over the past two years.

The home of more than one billion people, India has had one of the world’s fastest-growing economies over the past decade. During this same time frame, the country has made big strides in increasing its capacity for nuclear generation of electricity.

India now envisages increasing the contribution of nuclear power to overall electricity generation capacity from 3.2% to 9% within 25 years. By 2020, India's installed nuclear power generation capacity will increase to 20,000 MW.

India now ranks sixth in terms of production of nuclear energy, behind the U.S., France, Japan, Russia, and South Korea.

There are now 439 nuclear reactors in operation around the world in over 30 countries, providing almost 16% of the world’s electricity.

Given the emphasis on rapid expansions in the Indian nuclear power industry, it is imperative to bring the Indian know-how and resources together with global nuclear skills and experience to introduce a new dimension to the upcoming nuclear power projects. Looking at all above important issues, UBM India is bringing its 4th International Exhibition and Conference from 25 to 27 September 2012 at Mumbai. The exhibition and the concurrent summit will be an excellent global networking opportunity for the exhibitors, visitors and delegates. It will provide an opportunity for all companies showcase their nuclear expertise and know-how and identify business opportunities in the Indian market.