India Shining

Pakistan's nuke arsenal bigger than India's

2010-06-03T09:56:00.000+05:30

Swedish report reveals Pak's nuke plans

After racing ahead of India in ballistic and cruise missiles, with covert help from China and North Korea, Pakistan seems to be surging ahead on the nuclear front too.

A series of recent estimates by international nuclear watchdogs and reputed thinktanks hold that Pakistan has a total of 70 to 90 warheads compared to India's 60 to 80. China, in comparison, has around 240 warheads.

Even as global fears about the possibility of jihadis gaining access to Pakistan's nuclear arsenal, enriched uranium or technical know-how continue, its deadly inventory is only going to expand in the coming years.

Pakistan, after all, is supplementing its ongoing enriched uranium-based nuke programme with a weapons-grade plutonium one. Its two new heavy-water reactors being built at Khushab nuclear facility, with China's help, are clearly geared towards producing weapons-grade plutonium, as reported by TOI earlier.

In its latest annual world military expenditure report released on Wednesday, the Stockholm International Peace Research Institute (SIPRI) said Pakistan's weapons-grade plutonium production would jump seven-fold with the two new reactors at Khushab nearing completion.

"Our conservative estimates are that Pakistan has 60 warheads and could produce 100 nuclear weapons at short notice," said SIPRI, adding that Islamabad had earmarked its US-supplied F-16 fighters, Ghaznavi and Shaheen missiles as its nuke delivery systems.

India's nuclear weapons programme, in turn, has largely been plutonium-based, basically centred around the Pu-239 produced in research reactors like Cirus and Dhruva at Bhabha Atomic Research Centre.

Nuclear arsenals of India, Pakistan, and even China, pale in comparison to the gigantic ones of the two former Cold War foes, US and Russia. SIPRI estimates there are a whopping 22,600 active, inactive and stored nuclear warheads around the globe, enough to destroy it several times over.

While Russia has 12,000 warheads, 4,630 of them "deployed" ones, US has 9,600, which includes 2,468 of them operational. The two have, however, recently decided to slash their inventories by nearly one-third.

France comes third with 300, followed by UK with 225. Israel, which like India and Pakistan is not a signatory of the Nuclear Non-Proliferation Treaty, completes the list of the eight countries with nuclear weapons, with an arsenal of 80 warheads. Then, there is also North Korea, which has produced "enough plutonium for a small number of warheads", SIPRI said.

All these figures are not exact because countries keep their nuclear weapons programmes in thick cloaks of secrecy, which is only now being lifted by countries like US and UK.

India has been concerned about Pakistan's drive to bolster its nuclear arsenal over the past few years. While India has a clear and declared `no-first use' nuclear weapons doctrine, Pakistan has kept it vague to use as a tool to offset India's conventional military superiority.

Moreover, there is continuing controversy in India over whether the country has a credible thermonuclear or hydrogen bomb, given that a few experts contend the 45-kiloton thermonuclear device tested under the Pokhran-II tests in 1998 was "a fizzle".

The armed forces also remain quite worried about the lack of SLBMs (submarine-launched ballistic missiles) and ICBMs (intercontinental ballistic missiles) in their armoury, which are needed for a credible deterrent and for robust second-strike capabilities against both Pakistan and China.

At present, only the short-range Prithvi missile (150-350km) and the 700km range Agni-I have been fully operationalized till now. Agni-II (over 2,000km) and Agni-III (3,500km) are still in the process of being inducted by the Strategic Forces Command. India's most ambitious strategic missile Agni-V, with a 5,000km range, in turn, will be tested for the first time only by early-2011 or so.

Nuclear Warheads (Source: SIPRI)

Russia: 12,000
US: 9,600
France: 300
UK: 225
China: 240
Pakistan: 70-90
Israel: 80
India: 60-80

Budget 2009-2010 Highlights

2009-07-06T22:20:00.000+05:30

Highlights

Taxes

· Surcharge of 10% on personal income tax removed

· No change in Corporate taxes

· Increase exemption on personal income tax by Rs 15,000 to Rs 2,40,000 for senior citizens

· Increase exemption on personal income tax by Rs 10,000 to Rs 1,90,000 for women

· Increase in exemption on personal income tax by Rs 10,000 to Rs 1,60,000 for all others

· Surcharge of 10% on personal income tax removed

· Propose to phase out surcharge on Direct Taxes

· To remove Fringe Benefit Tax

· States agree on basic structure of Goods and Services Tax

· To raise Minimum Alternate Tax(MAT) TO 15 % of book profit

· MAT hiked from 10% to 15%

· Commodity Transaction Tax scrapped

· Carry Forward Tax credit on MAT to 10 year

· To exempt Pension trust from Securities Transaction Tax

· To create Alternate Tax disputes resolution mechanism for foreign companies

· Software Technology Parks of India (STPI) extended by a year

· GST to be a dual regime with Central and state terms

· No Securities Transaction Tax (STT) on sale/purchase of shares by NPT

Reforms, Tax reforms

· To work on Saral 2 form to make income tax procedure simple

· Tax reform system to be completed in 4 years

· Balanced approach to financial de-regulation in justified

· Review and aims of the budget

· It a mandate we accept with humility and will do all we can for the welfare of the nation

· Strong mandate for growth

· Sensitive to the challenges of a young India

· The govt has to sustain a growth of 9% create 12 mn jobs per year

· Reduce poverty levels by half by 2014 infrastructure investment to more than 9% by 2014

· Focus to sustaining momentum in exports

· Strengthen primary healthcare delivery

· Plan to strengthen primary health care

· Broaden inclusive growth agenda

· Our target of agricultural growth at 4%

· Signs of revival of domestic industry

· Fiscal deficit has widened from 2.7 % to 6.2% of GDP

· Institutional reforms to bring the fiscal deficit under control

Challenges

· To get the GDP growth to 9% at the earliest

· To deepen the process of inclusive development

· To reenergise govt, govt must provide service with accountability

· Growth driver in the last 5 yrs has been private investment

· Structure of Indian economy has changes in last 10 yrs

· Now services constitutes more than 50% of GDP

· Increase investment in infrastructure to 9% by 2014

· To focus on infrastructure development

· Growth co-operative effort of Centre and States

· Job growth rate hit by dip in GDP

· Integration of Indian economy with the world has opened up new opportunities and new challenges

· Aim to return to FRBM target at the earliest

For revival

· Govt provided three stimulus package

· RBI took monetary measures to meet the needs of productive sector

· This led to fiscal deficit to rise to 6.2% in 08-09

· We achieved a growth of 6.7% of GDP last fiscal

· Signal of recovery visible in the last few months

· Uncertainty about revival of global economy remains

Infrastructure

· We had set up IFFCL to provide financial assistance to infra companies

· IIFCL will be given greater flexibility

· IIFCL will refinance 60% of bank loans in critical sectors

· IIFCL will evolve a take-out financing schemes for incremental funding in infra

· Fiscal stimulus at 3.5% of GDP helped economy revive

· Sensitive to the needs of young India

· Endeavour to make Budget participatory and ensure continuity

· Significant increase in capital inflows needs

· PPP to be encouraged especially in infrastructure

· Need to improve and strengthen regulatory framework

· To speed up Golden Quadrilateral Project

· Total investment of 100000 CFR in infrastructure

· Need to remove bottlenecks for speedy implementation of infra projects

· Highways allocated 23% more than 08-09

· Rs 15800cr for Railways

· JNURM allocation increased by 80% to Rs 12887 cr

· Basic amenities for urban poor to get more than 3000 cr to make country slum free in 5 yrs

· Provision for housing urban poor at Rs 3973 cr

· Allocation to NHAI increased to 23& Y-O-Y

· Fiscal deficit has widened to 6.7% of GDP

· Target agriculture credit inflows ay Rs 3.25 lakh cr

· · Focus of NCC, Gammon for highway development

· JNNURM to get more than Rs 12000 cr up 87%

· Basic amenities for urban poor to get more than 3000 cr to make country slum free in 5 yrs.

· Provision for housing urban poor at Rs 3973 cr

· Allocation to NHAI increased to 23& Y-O-Y

· Fiscal deficit has widened to 6.7% of GDP

· Target agri credit inflows ay Rs 3.25 lakh cr

· Focus of NCC, Gammon for highway development

· Rural electrification allocation up 27%

Agriculture

· Interest subvention scheme for agriculture loans to continue

· 60% population depended on agri

· Sustained increased in plan allocation

· Target credit flow Rs 325000 cr

· Loans upto 3 lakh at 7% per annum

· Those who pay their loans in time will get loans at 6%

· Task force set up to look into farmer suicides in Maharashtra

· Rajiv Gandhi Krishi Vikas Yojana allocation up by 30%

· Fertilizer subsidy to go to farmers directly

· To move towards Nutrient based subsidy regime

· Additional allocation of Rs 1,000 crore for accelerated irrigation project

· Central assistance for storm-water drainage project increased to Rs 500 crore from Rs 200 crore in the interim Budget

Exports

· Market development assistance schemes allocation up by 180% to 124 cr

· Interest subvention extended to march 2010 for employment extensive export sector

· Special fund for small industries development bank of Rs 400 cr

· Focus to sustain momentum in exports

· 2% Interest subvention for exporters

· Extension of interest subvention scheme extended upto March 2010 to cover sectors like handicrafts and handlooms

· Allocation for market development assistance scheme enhanced by 148 per cent

· To set up handloom mega clusters in Rajasthan, West Bengal and Tamil Nadu

· Export Credit Guarantee scheme extended till March 2010

Oil and gas

· Domestic oil prices should be in sync with global crude

· National gas grid to be set up

· Outlay for Assam Gas Project increased

· Effective interest rate is 8% for farmers with foreclosures

· Expert group to be set up petro product pricing

· Domestic oil prices should be in syncy with global crude

· To develop National Gas Grid

PSUs, banks and Insurance

· To hike promoter shareholding in PSUs

· Encourage people participation in disinvestment

· Banks and insurance will remain in public sector and will get all support

· Banking network to be expanded

· One banking centre in every block planned

· 160% hike in ADPRP

· Capital in fusion in PSU banks to keep them competitive

Inclusive development

· Creating entitlements backed by legal authority to provide basic facility to the aam aadmi

· NREGA gave employment to 4.4 cr household

· Reserve wage of RS 100 per day as an entitlement under NREGA

· Rs 39100 cr for 09-10 for NREGA an increase of 140%

· NREGA allocation increase at 144%

· New scheme PMAGY for integrated development of under developed villages

Pilot project this year

· Poverty eradication goal by 2014-15

· Interest subsidy to poor families for loans upto Rs 1 lakhs

Pension

· Substantially improve pension for armymen

· Pension benefit extended to war wounded being liberalised

· One Rank One Pension committee recommendations accepted

National Food Security

· BPL entitled by law for Rs 25 kg of rice/wheat at Rs 3 kilo

· Bharat Niraman allocation up 45%

· PM Gram Sadak Yojana allocation up to Rs 12000 cr

· Indira Gandhi Awas Yojana allocation up by 63%

Women and child development

· Focus on women self help groups

· 22 lakhs such groups of women active today, aim to link such self help groups to banks

· Corpus for such schemes to be raised to Rs 500 cr in this fiscal

· Aim to reduce female literacy by half in 3 years

· New scheme to give interest subsidy to poor students pursue any recognised course

Climate change

· Rs 562 cr for national river and lakes conservation

To build accountable institutions:

· RTI act an important step in ushering in accountability

· Unique ID project is major step in this regard: it also marks a beginning of the private involvement in projects of national importance

Police and security

· Rs 430 cr for police modernisation

· 1 lakh housing units for central paramilitary forces

· Borders: 2284 cr for strengthening of borders

Education

· Rs 50 crore for Chandigarh University

· Interest subsidy on loans for higher education

· Rs 2130 crore to set upto more IITs and IIMs

· Spending on higher education raised to Rs 2010 crore

Minorities

· Allocation hiked from Rs 1000 cr to 1700 cr in 09-10

· Scholarships for minorities

· AMU to get Rs 25 cr for each of its new campuses

· Rs 1740 crore outlay for minorities

Budget estimates

· Rs 1020838 cr total budget allocation for 09-10

· Out this more than Rs 6000 cr is planned expenditure while the rest is non-plan

· Increase in non-plan expenditure was due to pay commission and food subsidy

· Interest payment consists of 36% of non-plan expenditure

· Defence outlay up from Rs 105600 cr in 08-09 to 104703 cr in 09-10

· Total tax receipts expected at Rs 641079 cr

· Revenue deficit is estimated at 4.8% and 4.6 as per provisional account for 09-10

· Revenue deficit as percentage of GDP is pegged at 6.8%

· To spend Rs 10.20 lakh crore as total expenditure in 2009-10, crossing the Rs 10 lakh mark for the first time in history

· Increase in plan expenditure 34 %, non-plan at 37 %

· Revenue deficit projected at 4.8% in FY 10

· Fiscal deficit projected at 6.8 % in FY 10

Others

· DEPB scheme for print media extended

· Stimulus package for print media extended to Dec 31

· Hike in allocation for management of Mumbai Floods

· New project for modernisation of employment exchange

· A national web portal for the same

· New programme for rehabilitation of those effected by cylone Alia

All about unique identity

2009-06-29T17:45:00.000+05:30

What?
It will be a permanent identification number -- from birth to death -- aimed at eliminating the need for multiple identifications. Photographs and biometric data will be included to make the identification perfect.

Who?
It will cover all citizens, including those below 18 years of age. To start with, the unique IDs will be given to those on electoral rolls.

Why?
It will help in establishing citizenship, reduce identity related frauds, address security issues and ensure that benefits of schemes reach the people.

Centre appoints Nilekani head of unique ID agency

2009-06-29T17:42:00.002+05:30

New Delhi: The centre on Thursday appointed Infosys co-founder Nandan Nilekani as chairman of the Unique Identification Authority of India (UIDAI), an agency that will provide unique identity cards to citizens to ensure that the benefits of the government's flagship schemes reach the people.

As chairman of the UIDAI, Nilekani will enjoy the rank of a cabinet minister with a task force of 1,400 people.

Nilekani, 54, has resigned as co-chairman of the Indian software giant to lead the authority, which has been created under the aegis of the Planning Commission. Nilekani's resignation would be effective from July 9, Infosys said in a statement.
Nilekani described the appointment as "humbling". It had been a tough decision to quit "a company that I've been part of for 30 years" and the appointment was a chance to do something for the country, he told a TV news channel in New Delhi.

He is the personal choice of prime minister Manmohan Singh, who is keen on inducting talented professionals in managerial and decision-making positions in the government. Though the PM failed to get Montek Singh Ahluwalia and former RBI governor C Rangarajan inducted into the finance ministry, he had his way this time.

Singh had been keen to get Nilekani on board for some time now, but the former Infosys chairman took his time to make up his mind. According to senior government sources, Nilekani insisted on a position and status that was in keeping with his expertise and experience, besides a certain amount of functional autonomy. He agreed to head the authority only after his demands were addressed, sources said.

His appointment was ratified by the Union cabinet at its meeting on Thursday.
Infosys chairman and mentor NR Narayana Murthy said: "We are glad that an extraordinary individual like Nandan has got an opportunity to add value to India through this position. As a company that has always put the interest of society ahead of itself, Infosys will accept his absence with a sense of duty to a larger cause."

In November 2008, an empowered group of ministers had approved setting up UIDAI with an initial core team.

Under Nilekani, the new authority "shall lay down plans and policies to implement the unique identification (UID) scheme, shall own and operate the unique identification number database and be responsible for its updation and maintenance on an ongoing basis," information and broadcasting minister Ambika Soni told reporters.

The authority will identify the targeted groups for various flagship programmes of the UPA government, such as the National Rural Employment Guarantee Scheme, Sarva Shiksha Abhiyaan, National Rural Health Mission and Bharat Nirman.

The Centre also plans to set up state units of UIDAI, headed by state UID commissioners.

The government plans to implement the project in three years. Finance minister Pranab Mukherjee had set aside Rs100 crore for the unique identity project in the interim budget presented before the Lok Sabha election in February.

Bharti (Airtel) has unveiled a new logo

2009-06-24T18:50:00.000+05:30

By 2020, We will make Bharti the finest Indian conglomerate – Bharti

Bharti (Airtel) has unveiled a new logo and vision to make the next big leap. It is targeting$10bn revenue by 2010. Bharti also want to grow its non-telecom business from 15% to 50% in the next 5 years. That would make its telecom business to 50% which is at 85% now.

Simply put, Bharti wants to be the next big conglomerate and join the elite club of Tata and Reliance.

Bharti is looking for both organic and non-organic growth. Just a few months ago it looked for South Africa’s MTN which would have made it the top 10 telecom company in the world. We already know that it just entered top 25 club of global telecom companies. One of its non-telecom interests are in Insurance, where Bharti has a joint venture with France’s AXA.

Wal-mart’s joint venture for retail operations with Bharti are all set to rock India in March 2009. Bharti has just entered into a young and growing DTH space. But, until now telecom was their forte. They want to change that going forward.India already has 300 million mobile subscribers. Target for 2010 is 500 million subscribers. That is a good 200 million left on the table. But, there are too many players on the line. The recent license allocation to players and to Reliance had kicked of the second round of telecom revolution. Unlike the first round, Bharti (airtel) will not have a first mover advantage and find it tough to gain a significant share in the next 200 million. May be this is the reason for Bharti’s change in direction.

It is not just Bharti which is obsessed with conglomeration. Every company once successful in their chosen business looks to explore other options. The IT companies after successful operations have either started or acquired BPO operations. Mobile operations and value added services are the other area which IT companies look at. Same is the case with energy companies.

GMR industries is one such company which has interests in several businesses. Don’t even get me started with Future Group. They need a serious brand consolidation and new identity.

Airtel is one of the better brands in India. Not as many people relate with Bharti as much as they do with Airtel. There can be a brand confusion for Airtel (oops Bharti). That is because its brand Airtel is so successful. I just hope that Bharti does not become like Future Group with too many brands.

Disinvestment Note

2009-06-20T19:12:00.003+05:30

Overview

Disinvestment of the Government’s equity stake in Central Public Sector Enterprises (CPSE) started in FY92, with the sale of minority shareholding in 30 CPSEs to LIC, GIC, and UTI. Later on, MTNL (FY98), VSNL (FY97 and FY99), and GAIL (FY00) used the GDR route to raise capital. Over the years, the policy for disinvestment has evolved, particularly through the budget speeches of Finance Ministers. In December 1999, the Department of Disinvestment was established to focus on all matters related to disinvestment including implementation of disinvestment decisions.

Following are the key objectives behind the Government's disinvestment plans:

* Decrease the government's restructuring spending to support financially weak CPSEs
* Induct a strategic investor with a proven record of technical, marketing, and managerial expertise
* Raise funds
* Induce operational and financial discipline through investors’ scrutiny

Till date, the Government has raised more than Rs. 510 bn by disinvesting its stakes in companies including IPCL, VSNL, MTNL, CMC, Hindustan Zinc, BALCO, Maruti Udyog, and ITDC.

Current Scenario

The re-elected United Progressive Alliance (UPA) is likely to move decisively on the disinvestment front. As the UPA has a clear mandate and the obstructive left-front is not a part of the government, there are chances of limited political resistance pertaining to disinvestment. Moreover, as the Government’s fiscal deficit is expected to balloon to more than 10% of the GDP for FY10 due to the fiscal stimulus packages, farm-loan waiver, and the pay revision for government employees, the Government is looking at disinvestment as a viable option to improve its finances.

Proposed Disinvestments in FY10

The Government has identified unlisted Oil India Ltd. (OIL) and National Hydroelectric Power Corporation Ltd. (NHPCL) for its disinvestment plans in FY10. These companies are likely to proceed with their IPOs before September 2009 as their regulatory approvals for listing lapse on September 12 and September 15, respectively. According to draft red hearing prospectus, the government may dilute 11% of its stake in OIL and 13.5% stake in NHPCL. Besides, the government has proposed to dilute its stake in Mineral & Metals Trading Corporations (MMTC) and National Mineral Development Corporation (NMDC) in the current fiscal, according to a preliminary draft of the disinvestment road map prepared by the Finance Ministry.

Govt fixes 3G spectrum reserve price at Rs 4040 cr

2009-06-19T19:08:00.002+05:30

A consensus between Finance Minister Pranab Mukherjee and Telecom Minister A Raja was arrived today as the two met Prime Minister Manmohan Singh for the approval of the reserve price, based on which the process of bidding would start soon.

Initially six private operators apart from state owned MTNL and BSNL would be allowed to offer 3G services that enables high speed internet, videos and many other value-added services on mobile phone.

NEW DELHI: Paving the way for unleashing of next generation mobile telephony, the government today fixed reserve price of Rs 4040 crore for auction of 3G spectrum, a move that would help it garner at least Rs 32,320 crore.

A source close to the development said the issue would now go to empowered group of ministers for fine-tuning and hopefully the programme for bidding and other details would get a nod soon.

Raja had met Mukherjee earlier this week too as the Finance Ministry was suggesting the doubling of reserve price from Rs 2020 crore being favoured by Department of Telecom and hence the two ministries had got engaged in a discussion for consensus.

While the government would get at least Rs 24,240 crore from six operators that are chosen after the bids, Psis MTNL and BSNL would shell out another Rs 8080 crore, source said.

After the issue is cleared by EGOM, the Telecom Ministry will announce the detailed programme for the auction which will include pre-bid conference in the next couple of weeks, source said.

Sources said the auction may start by the middle of August.

The Telecom Ministry had earlier recommended a reserve or minimum price of Rs 2020 crore which was not accepted by the Ministry of Finance who had asked the Telecom Ministry to double it.

The likely contenders for the 3G spectrum may include Bharti Airtel, Vodafone, Reliance Communication, Tatas and a few other new private telecom operators.

Similarly, on the lines of 3G the Government will also auction spectrum for wireless broadband services known as WiMax.

The Telecom Ministry had recommended pan-India reserve price of Rs 1,010 crore for wireless broadband services whereas Ministry of Finance had doubled it in this case too.

Its was, however, not immediately ascertained where this also figured in the discussions with the Prime Minister today.

Sources, however, said there could be a consensus on this also.

Sorece: Economic Times

3G may open new biz stream for IT cos

2009-06-19T18:47:00.000+05:30

Jessica Mehroin Irani & Ranjit Shinde
MUMBAI

IF third generation (3G) is the next big opportunity for the domestic telecom operators, it is also expected to open a whole new business stream for IT companies. 3G integrates voice, data and video on a single platform, which in turn allows video downloads and other applications that require high speed connectivity.
IT industry trackers believe that 3G will see a slew of orders for IT companies in key areas such as integration with operational systems and their linkage to internal networks. “With the advent of 3G, there will be large use of data services on both voice and video. The IT infrastructure such as data centres will play an important role,” said Gartner principal research analyst Nareshchandra Singh. As the telcos will want to outsource data centre management, this will provide opportunities for the IT vendors.
Managed services and platform solutions are the two major areas of 3G deliverables for the IT players. Vendors including IBM, Wipro and Tech Mahindra already provide end-to-end IT services to telcos and are expected to be the major beneficiaries. “IBM has a service delivery platform to efficiently launch these new 3G/data services and link them to underlying network capabilities,” said IBM VP communications (growth markets) Tim Greisinger. It has also built capabilities to integrate mobile internet services with the telecom operators’ existing operational systems, including billing, provisioning and CRM.
The 3G and broadband opportunities in the Indian telecom space have also attracted IT players such as Patni Computer Systems, which have been providing 3G related services to global telecom operators. “We have technological frameworks built for 3G and broadband to provide services in areas of service fulfilment, revenue assurance and billing,” said Patni Computers VP Siddhartha Kataki.
While the exact size of 3G opportunity for IT vendors is still not clear as it largely depends on the scope and approach of service providers, Mr. Kataki says that it could be at least 10% of the total proposed capital expenditure by telecom operators. Motilal Oswal, in a recent report, has estimated Reliance Communications’ 3G capex (including spectrum and rollout) to be Rs 7,000 crore.
IBM expects the contract size to be large, depending on the telecom provider. “Contract sizes range from tens of thousands of US dollars to multiple millions, depending on the scope of decisions and the extent to which the service provider relies upon and shares risks,” said Mr Greisinger.

Satyam's True

2009-02-07T14:37:00.000+05:30

: “I am not upset that you lied to me, I am upset that from now on I can't believe you”

—Friedrich Nietzsche

The Satyam Computers imbroglio threatens investors to get into a 'whom do I trust now' mode. And this is quite likely, as the scale of the fraud will have investors, both institutional and retail, get into a shell and for some time, forsake investments in the equity markets.

But then this is as big a mistake as in the first case to trust companies blindly. It is a totally opposite reaction. Many of India's leading lights from the corporate and investing world have said that Satyam's case is a one-off case. Well, it might not be and there could be more skeletons tumbling out of India Inc's closet, the fact remains that not all companies are as devious and that many companies resort to window dressing (see overleaf for examples) and that even they might not be bad.

Window dressing or making up accounts is not a new phenomenon. Not in India and not across the globe. There are thousands of cases of window dressing and accounting frauds that have come to light and even more than have not.

The source of all this lies in corporate governance practices and investor awareness in not tolerating accounting stews. “I think that the failures of Enron and WorldCom and other companies are partially failures of investors to recognise companies that are selling for a thousand times nothing, but chances are they may be worth only that,” said Arthur Levitt longest serving chairman of Securities Exchange Commission of the US.

So, to a great extent, investor demands and blind greed have been also responsible for such frauds to perpetrate, apart from the devious promoters and entrepreneurs.

Why frauds

Cooking accounts, fudging books are not new to India. The earlier days of the existence of the licence Raj meant that the big industrial houses had to float several different companies in the same line of business to get licences. And, when this happened, there were incessant inter company transfers that would take place, often gypping publicly listed companies. The structure at that time prompted such malpractices.

However, better times and global access to funds meant that the companies had to shore up accounts and follow international disclosure norms. Many companies improved their acts. But then tough times call for tough actions, and the pressure to maintain quarter on quarter earnings growth meant that the companies had to resort to nefarious means. And many did.

“We need to keep in mind that history has shown that boom/bust cycles tend to throw up such governance failures in various countries - Enron, Vivendi, Parmalat, Daewoo, Worldcom, Livedoor, etc,” says Sukumar Rajah, CIO of Franklin Templeton Asset Management in India.

And indeed this is the cyclical turn that has taken place. Apart from the accounting loopholes, W Steve Albrecht author and professor at Bringham Young University and somebody who has studied financial statement frauds over a period of time, says that there are several reasons why such frauds are done.

One of them is that there is a vibrant economy, a growing one that creates cheer amongst all participants and when the market is booming, little attention is paid to such acts. And when the promoter gets away with such things, it becomes a habit. As B Ramalinga Raju had to say in his famed letter to the regulators and exchanges, “What started off as a marginal gap between operating profit and the one reflected in the books continued to grow over the years and. It has attained unmanageable proportions as the size of the company grew significantly.”

Then there are the analysts and the traders who create this pressure for the company to present strong quarter on quarter numbers. Better consistency means lower risk in earnings and therefore a better valuation. This is a 'short-term' trap that the companies fall in their quest to get premium valuations. Scruples are often set aside.

There is also the role of the profit-linked bonuses that lure executives to take the easy way out and compromise governance practices. And then there are the corrupt auditors and professionals as well. These are the people and circumstances that lead to corporate fraud.

Spotting frauds

And for investors it is not really difficult to smell one, though cases like Satyam Computers can be a shocker as the company had won several accolades for its corporate governance. But still some telltale signs were present.

Here, one can follow Benjamin Spock, the American author's wisdom, “Trust yourself. You know more than you think you do.” There are a few ways that companies mislead investors and other, they are: Revenue or receivables fraud, inventory mismanagement, understating liabilities, overstating assets, overall misrepresentation. The balance sheet and the profit and loss accounts have enough evidence to set off a trail, though they might not tell you the exact story.

Frequent changes in accounting norms, especially the manner in which inventories are valued, is the easiest one, and often legal. So is changing the method of depreciation from the straight line method to a written down value method, where there are simple accounting changes and the profit tends to look inflated (examples overleaf). Companies are obliged to report such changes and the extent to which they change the profit numbers and most of the companies do report them. They might not be called fraudulent acts but are unethical and an indication that the management is working up the numbers. Many private equity investors in India are suing companies because they had cooked up inventory numbers and prompted them to take investment decisions. Something simple that even the expert investors overlook.

Then there are the huge amounts with debtors that swell. Many revenue frauds are perpetrated through these means. Investors should take a look at the debtor numbers and the ratio of debtor days. Such ratios are readily available with several online personal finance portals for free. The point is that investors should look out for an increasing trend of debtor days or uncanny spikes in certain quarters where sales numbers have not looked so good. “Cooking up revenue numbers is the biggest cancer as it then percolates down the P&L and infects other numbers as well,” says Sailesh Shah, a chartered accountant.

Overstating assets can't really be tracked to the detail by investors but, there are companies that frequently rely on revaluing their assets. This usually happens when the company intends to raise money, especially before an initial public offer. Investors should be wary of such companies.

And then there are the promoters who have several companies in the same line of business, not really bothered about the age old maxim of getting economies of scale. A listed company would then often make loans to its group company at concessional rates or receive loans at exorbitant rates. And in such cases there are inter-group sales and transfers that are affected at beneficial rates.

These are all the shenanigans that several unscrupulous managements have been using to deceive the public, little knowing the damage they could create. “Financial statement fraud causes a decrease in market value of stock of approximately 500 to 1,000 times the amount of the fraud,” says Albrecht. Often, this damage is inflicted on the investing community. In the case of Satyam, the Rs 7,400-crore scam and mismanagement has seen Rs 18,000 crore of wealth being wiped off till now.

More importantly, the first important and oldest investment lesson is that the biggest risk in an investment is the promoter or management itself. Sound managements have known to make weak projects work and generate wealth and bad managers have caused most exciting projects to collapse.

As for investors, the best advice is the one that the sage of Omaha would give, “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” It is time that investors shun companies that chronically resort to window dressing. This is probably the lesson of the new year.

Source: FE Investor Bureau

What is recession?

2009-02-07T14:26:00.000+05:30

This Story is about a man who once upon a time was selling Hotdogs by the roadside.
He was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio.
His eyes were weak, so he never watched television. But enthusiastically, he sold lots of hotdogs.

He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up.

He ordered more a more raw material and buns and use to sale more. He recruited few more supporting staff to serve more customers.
He started offering home deliveries. Eventually he got himself a bigger and better stove.

As his business was growing, the son, who had recently graduated from College, joined his father.

Then something strange happened.

The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."

The man thought that since his son had been to college, read the papers, listened to the radio and watched TV. He ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down the his raw material order and buns, took down the colourful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic.

He reduced his staff strength by giving layoffs. Very soon, fewer and fewer people bothered to stop at his hotdog stand. And his sales started coming down rapidly, same is the profit.

The father said to his son, "Son, you were right". "We are in the middle of a recession and crisis. I am glad you warned me ahead of time."

Moral of The Story: Its all in your MIND! And we actually FUEL this recession much more than we think.

Lehman Brothers May Have to Put Itself Up for Sale

2008-06-07T14:07:00.002+05:30

June 4 (Bloomberg) -- Lehman Brothers Holdings Inc.'s balance-sheet troubles threaten to harm the wider financial system unless the bank takes decisive action, the Wall Street journal said in its ``Heard on the Street'' column. The company, which is likely to report a second-quarter loss this month, may be forced either to sell all or part of itself to a bigger financial firm or sell a large quantity of new shares, the newspaper said. If it were to go for the outright sale option, Lehman might, at the right price, attract interest from Blackstone Group LP, Citadel Investment Group LLC or J.C. Flowers & Co.,the Journal said.The investment bank has seen its shares fall for two days in succession and they're now 22 percent below their book value, reflecting investors' concerns about the values put on its assets, many of which are backed by poor-quality real-estate loans, the newspaper said. While a plan to sell as much as $4 billion of new stock is being considered, the share-price decline makes it harder to do that, and as Lehman's market capitalization has fallen to about$17 billion, $4 billion is equivalent to almost a quarter of the company, the newspaper said. Investors might, in any case, want the bank to raise more than $4 billion, to cover any future losses from marking downasset values, the Journal added.

				Percentage Stake			Stock Fall
	Co_Name		Holder's Name ( 31/03/2008)	31/03/2008	No of Shares	Cmp	Weekly
1	Develop.Cr.Bank	31/03/2008	Lehman Brothers Asia Ltd	3.04	5301900	65.3	-18.88%
2	Spice Mobiles	31/03/2008	Lehman Brothers Asia Ltd	4.41	3289474	24.65	-18.78%
3	Prajay Engg.	31/03/2008	Lehman Brothers INTL Europe	1.15	457701	192	-17.28%
4	Edelweiss Cap	31/03/2008	Lehman Brothers Netherlands Horions BV	1.8	1350000	652	-10.78%
5	KPIT Cummins Inf	31/03/2008	Lehman Brothers Asia Ltd	1.11	862823	68.2	-10.44%
6	Anant Raj Inds.	31/03/2008	Lehman Brother Asia Ltd	1.82	5362500	204.65	-10.24%
7	Pion. Embroider.	31/03/2008	Lehman Brothers Intl Europe	3.23	394356	77.85	-10.21%
8	GTC Inds.	31/03/2008	Lehman Brothers Asia Ltd	1.56	275000	188	-9.68%
9	Prithvi Info	31/03/2008	Lehman Brothers Asia Ltd	2.63	476160	150.1	-7.12%
10	Champagne Indage	31/03/2008	Lehman Brothers Asia Ltd	1.62	236574	480	-5.63%
11	Orbit Corporatio	31/03/2008	Lehman Brothers Asia Ltd	4.69	1700000	471	-3.25%
12	Godawari Power&I	31/03/2008	Lehman Brothers Asia Ltd	1.47	413832	188	-3.09%
13	IOL Netcom	31/03/2008	Lehman Brothers Asia Ltd	1.68	447032	108	-2.70%
14	Aztecsoft	31/03/2008	Lehman Brothers Asia Ltd	4.85	2180308	70.6	-2.55%
15	West Coast Paper	31/03/2008	Lehman Brothers Asia Ltd	4.37	2504774	66.9	-1.11%
16	Indo Asian	31/03/2008	Lehman Brothers Asia Ltd	1.66	254450	90	-0.99%
17	Consolidated Con	31/03/2008	Lehman Brothers Asia Ltd	1.36	503000	601	-0.17%
18	IVRCL Infrastruc	31/03/2008	Lehman Brothers Asia Ltd	1.2	1600000	386	1.65%
19	Spice Commun.	31/03/2008	Lehman Brothers Opportunity Ltd	1.33	9203339	52.5	6.17%

Holding of Lehman Brothers

Indiabulls' Singapore REIT IPO retail portion fully subscribed

2008-06-07T14:03:00.000+05:30

MUMBAI - The retail portion of Indiabulls Real Estate Ltd's Real
Estate
Investment Trust to be listed on Singapore Stock Exchange has been
fully
subscribed.
Thursday, the company had extended the closure of the public offer
until today "to enable wider retail investors participation."
Around 25% of the 353-mln-share issue, which is priced at S
$1.00-1.10 per share, is reserved for retail investors.
The issue had been subscribed 1.8 times on Thursday led by
institutional investor response, but had not received mandatory
response from minimum 1,000 retail investors.
The real estate company-sponsored Indiabulls Properties Investment
Trust will close today and is estimated to raise $286 mln (12.25 bln
rupees).
Shares of the trust--which owns two properties in Mumbai developed
by Indiabulls Real Estate across 3.4 mln sq ft--will list on SSE on
Wednesday. At 2:24PM, shares of Indiabulls Real Estate were
trading at 431.70 rupees on National Stock Exchange, up 6.8% from
close Thursday.
Thursday, the stock fell 9.5% to touch an intraday low of 373
rupees on reports retail investors response to the IPO remains
lukewarm, and is unlikely to get minimum 1,000 investors in this
category.

Oil Price Hike

2008-06-04T18:08:00.002+05:30

The government has hiked petrol prices by Rs 5 per litre, diesel by Rs 3 per litre and LPG price hiked by Rs 50 per cylinder.

Petroleum Minister Murli Deora feels that the price hike is not steep. The steeped price is not more than market price, he said. The amount of money the government is losing is colossal, he added. He feels that if crude prices touch USD 130 per barrel; the Indian economy will get affected.

In India, we don't catch terrorists

2008-05-28T10:43:00.000+05:30

ndia has once again been attacked. This time the target was Jaipur. The ease with which these attacks are being conducted only gives rise to one question -- Is terrorism becoming as common as a case of theft?

Looking at the numerous incidents of terror across the country, one could come to the conclusion that it's slowly becoming a part of our life.

Political parties have been using terrorism as a weapon to get back at opponents. While the mudslinging continues, fact remains that almost all incidents of terror, which have taken place across the country in the last year, remain unsolved.

The Shahid Bilal Angle
The HuJI operative has figured in at least 5 of the 8 cases. Cops in all the terror-hit states feel that Bilal -- who originally hails from Hyderabad -- will be the key person to divulge correct details regarding all these attacks. However, while Pakistan claims he is dead, Indian intelligence says this is not true. The fact remains Bilal's name seems to crop up only when an act of terror is committed in this country.

TATA Vs Jaguar Vs Land Rover

2008-03-27T18:38:00.000+05:30

Journey of TATA
1945 | Tata Engineering and Locomotive (Telco) was set up to manufacture locomotives and other engineering products
1986 | Production of first light commercial vehicle, Tata 407
1991 | Launch of indigeneous passenger car Tata Sierra
1992 | Launch of Tata Estate
1994 | Launch of multi utility vehicle Tata Sumo 1998 | Tata Safari, India’s first sports utility vehicle, launched
Indica, India’s first fully indigenous car rolled out 2002 | Introduces sedan Indigo
Telco signs a product deal with MG Rover of the UK 2003 | New identity. Tata Motors replaces Telco 2004 | Takes over Daewoo Commercial Vehicle Co
Tata Motors lists on the New York Stock Exchange
2005 | Launches Tata Ace, India’s first mini truck
2006 | JV with Marcopolo of Brazil to manufacture fully built buses and coaches for India and overseas markets
2006 | Inks Industrial joint venture with Fiat at Ranjangaon, near Pune, to produce both Fiat and Tata cars and Fiat powertrains for the Indian and overseas markets
Journey of JAGUAR
1922 | Jaguar founder William Lyons forms ‘Swallow Sidecar Company’ for making sidecars for reconditioned motorcycles.
1966 | Jaguar merged with the British Motor Corporation, the Austin-Morris combine, to form British Motor Holdings
1968 | Merges with UK’s Leyland which had taken over Rover and Standard Triumph. New company British Leyland Motor
1975 | Became British Leyland Ltd after nationalisation
1984 | Jaguar floated off as a separate company on the stock market, one of the Margaret Thatcher govt’s many privatisations
1989 | Ford buys the company for $2.5 billion
Journey of ROVER
1948 | First vehicle unveiled at the Amsterdam Motors Show
1988 | British Aerospace takes over Rover Group
1994 | British Aerospace sells Rover Group to BMW
2000 | BMW splits the Rover Group into two, selling Land Rover to Ford for $2.73 billion. The car division is sold to the British Phoenix management group

India Inc Shining: Jaguar is now Indian Brand

2008-03-27T16:21:00.000+05:30

So what if the Kohinoor diamond—once considered the ultimate symbol of Indian wealth and power—now resides with the Queen of England? On Wednesday evening, Jaguar and Land Rover, icons of British luxury, passed into Indian hands for £1.15 billion ($2.3 billion). The event was marked by a no-frills note issued by Tata Motors from its Mumbai HQ. The irony of it all wasn’t lost in either India or the UK.
With an investment of $104 billion, India is now the second largest foreign investor in Britain. And it took a company from a former colony to come to the rescue of a beleaguered British brand. In 2000, the Tatas had similarly bailed out another quintessential British brand, Tetley Tea, by acquiring the company for $432 million. Last year, in an operation marked by high drama, they mounted an aggressive bid for Anglo-Dutch steel behemoth Corus.
The JLR transaction has been a relatively tame affair. Soon after Ford Motor Company—the American owner of the brands for the last 18 years—put the brands on the block, the Tatas, Mahindra & Mahindra and Jacques Nasser, former CEO of Ford, had expressed interest.
Mahindra and Nasser backed out after Ford and the company unions indicated they were comfortable with the Tatas. What followed was mere wrangling over details. For instance, Ford Motor Finance will continue to finance buyers across the world looking to acquire Jaguar or Land Rover products for the next 12 months. Also, Ford will continue to supply key technology and components to both brands for some time to come.
In a conference call, Ravi Kant, MD, Tata Motors, said the existing management at Jaguar and Land Rover would be retained and Geoff Polites, CEO at both companies, had agreed to continue in his existing role. He also reiterated that there would be no job cuts at the manufacturing facilities in the UK.

What if US go to recession?

2008-03-20T15:26:00.000+05:30

I always Admired USA because of its intellect and great home to all the knowledgeable Institutions Like MIT, Harvard, Wharton, etc ( in fact out of top 100 education institutions more than 50 belong to USA) . I always believe their superior intellectual power due to the above-mentioned reason.

So I wanted to take opportunity to discuss some notions about USA Recession floating around us. Some are comparing it to 1920s situation that I beg to differ.

May be in short term yen may appreciate, Fed may cut interest rate and dollar depreciates, May gold and crude rise on Hedging. But in longer term Everything will get Reversed (may be 6 month from now)

Now lets take case by case,

If dollar depreciates than US exports will Benefit and it will rise as it will become more competitive. Companies Like Microsoft, GE, Boeing and other companies in Technology space, Heavy Engineering , Defense , agro processing will benefit . Thus more income from exports will stimulate the economy. Mind it USA economy stands on many pillar and one breaks (housing) other will hold.

But as you know Imports will be expensive …like crude

Now unlike India where higher energy cost are not passed to the consumers due to the political pressure, In US its gets adjusted every day… so if Fuel cost will rise than it will pinch people there more and they will become more efficient user . They might shift to efficient cars, (so new cars sales may actually rise) or they will take mass transit system (again it will be good as under capacity will be used optimally). Thus reducing the demand of over all crude. As prices goes up demand comes down simple. And if demand comes down than crude prices will come down I feel it will come down as USA consumes 50% of total crude supplies , so impact on prices will be visible) or atleast they wont rise. (but

Now lets talk about non-crude imports. As we know USA major trade partner is China, and China has a fix dollar policy (currency is fixed /pegged) the impact in value of import will be Nil. Thus exports will rise and import value will be stagnant thus reducing the trade deficit. Once the trade deficit will start reducing dollar will stop depreciating and infact it may start appreciate. Thus people will again shift from gold (as gold bear no interest and have no economic value if its stagnant or declining ) to dollar .

Now lets see what will happen to China

China in last decade used appreciating dollar to its advantage . It pegged its currency with Dollar . So its export value was rising with the appreciation of dollar and at the same time Imports were getting cheaper (like crude and steel) thus it was able to amass 1 trillion dollar of reserves in last 10 years. Hence the growth rate and low inflation.

But now when dollar depreciates its export value is coming down for the same volumes but import is getting more expensive hence high inflation and low growth …

It will be just matter of time that China will be forced to break the peg with the dollar sooner than later. If it does so than its export will become expensive and countries like India and other ASEAN countries will become more competitive. Thus its will be good news for India.

What will happen to Japan ??

As we know that's yen has rallied from 125 to sub 100 levels in matter of 4 months .

And we also know that Japan have 1.5 trillion dollar worth of US treasuries.

So if yen appreciates by 20% than US will make 20 % on 1.5 trillion dollar or 300 billion of notional profits ( which is almost the amount of US subprime losses) because Japan has invested into a depreciating asset (which get depreciated by 20%)

Secondly Japan's economy is 4 trillion USD and major portion is export. Again USA and china are the major partners . So if its currency appreciates by 20 % than one can imagine what will happen to exporters . ( just imagine what will happen to Infosys if rupee appreciates from 40 to 32 levels) . So Japan cannot afford this double whammy both from investment loss and demise of exporters . So in all probability it will cut rates from .5% to 0% thus depreciation of yen and start of carry trade … thus inflating asset classes like equities

Now again back to USA

If Fed cuts rate than housing will again starts and will help economy .

Secondly , even in 2003 companies like ENRON and Worldcom went bust but USA expansion did not stopped . In capitalist economy companies goes bust and new companies takes place . If u see the original companies in Dow jones index only 2-3 companies has survived . All are new entrants. It happens everywhere ..

So trust Fed as Ben Barnake is very respected academician and is author of many vital economic theories paper even Nobel economists admires

So we are lesser Mortals in passing outright judgments on him and US government

Why Are So Many Americans Financially Dumb?

2008-03-20T15:16:00.000+05:30

Yeah, we are a nation of financial dummies.

1. Look at all the worthless get-rich schemes on the Net and TV. These ads exist BECAUSE people are buying.

2. Watch the confused look on the cashier?s face when you hand over extra coins AFTER the register displays your change.

3. Witness the people standing in line overnight for the privilege of ?25% savings.? Aren?t they waiting to SPEND money?

If you?re a non-believer, read these statistics:

1. According to fool.com, ?68% PER CENT of graduating high school seniors surveyed by the Jump$tart Coalition for Personal Financial Literacy failed a personal finance test in 2002, compared with 44% who failed in 1997.?

2. The U.S. Public Interest Research Group states that ?40 percent of college students are graduating with unmanageable levels of student loan debt, and half of those have an average credit card debt of $3000.?

3. Near retirement age baby boomers have saved only 12% of what they think they will need for retirement.

THE REASONS WHY?

The U.S. Public Interest Research Group attributes the debt issue to rising costs.

The deputy assistant secretary for financial education at the Treasury department testified before the House, "The downstream, adult problems of rising bankruptcy rates, low savings rates and misuse of credit can all be traced upstream to how our schools FAIL TO adequately prepare children for their financial futures."

So far, the reasons why we we?re financially dumb are because of rising costs and inadequate schooling. But clearly, these are not all the contributing factors?

There are other reasons, including...

1. Math skills are declining. This is the author?s observation. It?s based on teaching high school math 30 years ago compared to teaching college-level math in 2003. Kids in the same area are less skilled than 30 years ago.

2. Parents forget they are financial role models. They miss opportunities to develop their kids money smarts.

CONSIDER THIS SOLUTION

Hate to ride the ?family values train? because there are conflicts with the conductor. And the author?s opinion is an educated guess.

But, parents, consider this...your kids reflect your money habits, attitudes, and behavior. What are YOU teaching your kids about money?

What's a recession? How will US slowdown hit India

2008-02-15T13:55:00.000+05:30

The fear of a recession looms over the United States. And as the cliche goes, whenever the US sneezes, the world catches a cold. This is evident from the way the Indian markets crashed taking a cue from a probable recession in the US and a global economic slowdown.

Weakening of the American economy is bad news, not just for India, but for the rest of the world too.

So what is a recession?

A recession is a decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down.

What causes it?

An economy which grows over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years.

A recession normally takes place when consumers lose confidence in the growth of the economy and spend less.

This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment.

Investors spend less as they fear stocks values will fall and thus stock markets fall on negative sentiment.

Stock markets & recession

The economy and the stock market are closely related. The stock markets reflect the buoyancy of the economy. In the US, a recession is yet to be declared by the Bureau of Economic Analysis, but investors are a worried lot. The Indian stock markets also crashed due to a slowdown in the US economy.

The Sensex crashed by nearly 13 per cent in just two trading sessions in January. The markets bounced back after the US Fed cut interest rates. However, stock prices are now at a low ebb in India with little cheer coming to investors.

Current crisis in the US

The defaults on sub-prime mortgages (homeloan defaults) have led to a major crisis in the US. Sub-prime is a high risk debt offered to people with poor credit worthiness or unstable incomes. Major banks have landed in trouble after people could not pay back loans (See: Subprime pain: Who lost how much)

The housing market soared on the back of easy availability of loans. The realty sector boomed but could not sustain the momentum for long, and it collapsed under the gargantuan weight of crippling loan defaults. Foreclosures spread like wildfire putting the US economy on shaky ground. This, coupled with rising oil prices at $100 a barrel, slowed down the growth of the economy.

How to fight recession

Tax cuts are the first step that a government fighting recessionary trends or a full-fledged recession proposes to do. In the current case, the Bush government has proposed a $150-billion bailout package in tax cuts.

The government also hikes its spending to create more jobs and boost the manufacturing and services sectors and to prop up the economy. The government also takes steps to help the private sector come out of the crisis.

Past recessions

The US economy has suffered 10 recessions since the end of World War II. The Great Depression in the United was an economic slowdown, from 1930 to 1939. It was a decade of high unemployment, low profits, low prices of goods, and high poverty.

The trade market was brought to a standstill, which consequently affected the world markets in the 1930s. Industries that suffered the most included agriculture, mining, and logging.

In 1937, the American economy unexpectedly fell, lasting through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3 per cent in 1937 to 19.0 per cent in 1938.

The US saw a recession during 1982-83 due to a tight monetary policy to control inflation and sharp correction to overproduction of the previous decade. This was followed by Black Monday in October 1987, when a stock market collapse saw the Dow Jones Industrial Average plunge by 22.6 per cent affecting the lives of millions of Americans.

The early 1990s saw a collapse of junk bonds and a financial crisis.

The US saw one of its biggest recessions in 2001, ending ten years of growth, the longest expansion on record.

From March to November 2001, employment dropped by almost 1.7 million. In the 1990-91 recession, the GDP fell 1.5 per cent from its peak in the second quarter of 1990. The 2001 recession saw a 0.6 per cent decline from the peak in the fourth quarter of 2000.

The dot-com burst hit the US economy and many developing countries as well. The economy also suffered after the 9/11 attacks. In 2001, investors' wealth dwindled as technology stock prices crashed.

Impact of a US recession on India

A slowdown in the US economy is bad news for India.

Indian companies have major outsourcing deals from the US. India's exports to the US have also grown substantially over the years. The India economy is likely to lose between 1 to 2 percentage points in GDP growth in the next fiscal year. Indian companies with big tickets deals in the US would see their profit margins shrinking.

The worries for exporters will grow as rupee strengthens further against the dollar. But experts note that the long-term prospects for India are stable. A weak dollar could bring more foreign money to Indian markets. Oil may get cheaper brining down inflation. A recession could bring down oil prices to $70.

Between January 2001 and December 2002, the Dow Jones Industrial Average went down by 22.7 per cent, while the Sensex fell by 14.6 per cent. If the fall from the record highs reached is taken, the DJIA was down 30 per cent in December 2002 from the highs it hit in January 2000. In contrast, the Sensex was down 45 per cent.

The whole of Asia would be hit by a recession as it depends on the US economy. Asia is yet to totally decouple itself (or be independent) from the rest of the world, say experts.

Microsoft offers $44.6bn to buy Yahoo

2008-02-02T21:04:00.000+05:30

Washington: Microsoft, with the reputation of being among the world’s most hardball companies, has made a massive $44.6 billion bid to acquire internet veteran Yahoo in an effort to challenge their mutual competitor, the omnipresent Google.
Microsoft’s bid comes at a time when Google has raced ahead of the competition in the ad revenue rich search space, and Yahoo, a one-time leader and rival, is in the doldrums. Microsoft’s unsolicited offer of $31 per Yahoo share represents a 62% premium over its closing stock price on Thursday.
Yahoo has said it will consider the offer, but most experts think the buyout will be a shooin, given Yahoo’s weak position arising from poor results and a four-year low stock price. The company also announced a 1,000-person lay-off this week.
If Microsoft’s bid succeeds, it will be the company’s biggest acquisition and the biggest merger in the technology space after Time-Warner bought AOL for $180 billion in the heyday of the technology boom. Analysts say the merger will result in a potent competitor for Google in the lucrative web search and advertising market.
Although Yahoo, founded by two Stanford graduates, was one of the first companies to popularize web searches going back to the mid-1990s, upstart Google has stormed ahead in the last few years. Microsoft, which is the world’s dominant software maker, has not been able to gee up its search capability either.
Microsoft evidently expects to challenge Google with Yahoo’s legacy and its managerial skills. Google’s share of the US web search market is currently estimated at 56% by Nielsen Online as compared to 17% for Yahoo and 13% for Microsoft.
Microsoft acquires anywhere from half-a-dozen to a score of companies each year. Its last acquisition in 2008 was Calista Technologies, a desktop visualization solution company co-founded by Indian techie Anil Kumar. But the Redmond giant has never attempted something on this scale.
Microsoft’s attempt to buy out Yahoo is not new either. The two sides are said to have pursued merger discussions for at least three years, but the offer always came up short. Now, mugged relentlessly by Google’s continuing strides and dominance in the market, the two are expected to team up for a fight.
Assuming that the merger comes through, no one expects any spectacular fireworks,much less immediate results given Microsoft’s past record. The Redmond veteran’s reputation as a destroyer of companies has given rise to the motto ‘Embrace, Extend, and Extinguish’ to describe its tactics. It famously bought out Sabeer Bhatia’s Hotmail in the late 1990s, but failed to make it the market leader in the e-mail space.
High-Profile Internet Deals 2000: AOL buys Time Warner for $164 billion creating AOL Time Warner
2007: Kohlberg Kravis Roberts (KKR) snaps up First Data Corp for $27.5 billion 2006: Google acquires YouTube for $1.65 billion 2002: eBay buys Paypal for $1.5 billion
2005: News Corporation acquires MySpaceparent Intermix for $580 million 1998: Microsoft buys Hotmail for $400 million SEARCH CHARGE MS-Yahoo to rev up Indian mkt With Merger, Microsoft Plans To Create More Revenue Streams In Country
Bangalore: Microsoft’s proposed buyout of Yahoo will redefine the dynamics of global internet space. Being one of the largest web-savvy consumer markets, India too will witness significant market changes, observe industry experts. Analysts also see it as the beginning of a consolidation phase in internet space, although the business is pretty new in India when compared to other markets. Interestingly, six months ago Goldman Sachs had done a Yahoo-buyout feasibility study for Microsoft through JP Morgan Securities. The deal was then valued at $50 billion.
For Microsoft and Yahoo, India probably could be the most vibrant and dominating geography among the rest of the Bric region. “Microsoft is clearly trying to create additional revenue streams and additional people-front through this acquisition. With this, the country will have more number of researchers and developers working on newer internet technologies. The deal will simply bring more action in the internet product space in the country,’’ said Pavan Goswami, an industry expert.
Anand Lavi, partner, Tholongs, an offshore advisory firm said, “From an Indian perspective, Microsoft is a very popular brand. The deal will enhance the country’s internet user base and internet experience of its netizens. It will also significantly expand the internet landscape of the country.’’ Kanwaljit Singh, MD, Helion Ventures, said, large number of social networking sites are becoming popular. Initiatives like Second Life (web2.0) are also expanding the internet market. “This trend is going to be huge thing in India wherein the Microsoft-Yahoo combine would be playing a dominant role along with the number one player Google.’’ The deal makes interesting synergy for Microsoft and Yahoo as both have significant presence in the country, adds Sridhar Mitta, MD, e4e.
(with inputs from Anshul Dhamija)
WHY YAHOO LOGIN?
Microsoft and Yahoo struggle to compete with Google for the lucrative online advertising market, currently worth $40 billion and expected to grow to $80 billion by 2010. Google has cornered around 40% of US online ad share
Yahoo shares have lost around 30% of their value in the past year, while Google shares have gained, despite reporting a slowdown in fourth-quarter revenue growth.
The $31-a-share offer represents a 62% premium for shareholders above the closing price of Yahoo stock on Thursday
WHO GAINS THE MOST?
The deal is a win-win situation for both Microsoft and Yahoo, and it will change the internet landscape, giving Google a serious competitor at a time when it seemed that its lead in all things internet was unassailable
SPAM JAM
One potential hurdle to a Yahoo and Microsoft merger, after the nod from Yahoo itself, would be antitrust concerns, especially from the European Union
MY SPACE NOT YOURS YET
“We are yet to hear anything from our Sunnyvale office. MS’ bidding is not a new thing for us, but we are not sure if it’s actually done this time. Well, none of us is overly excited as we are not going to be bought by an internet firm, but a software one,’’ said one of the Yahoo employees in Bangalore. Yahoo India was in trouble some time ago facing accusations of plagiarism and thereafter facing an exodus of top employees including its CEO, George Zacharias. Currently, Keith Nilsson, (head) emerging markets, based in Singapore, is in charge of India. TNN
DESI SHARE Google 49.6% Yahoo 24% MS 9% AOL 6% Others the rest

Indian FDI in US surges to $2.2 billion

2008-01-29T12:23:00.000+05:30

New Delhi: After making India the second largest investor in the UK, Indian companies and entities are turning their focus to the US. In 2006-’07, Indian FDI into the US was $2.2 billion while US investment in India was $850 million (minus the Mauritius route), according to US ambassador David Mulford.
Talking to reporters on the state of health of the Indo-US relationship, Mulford said the investments reflected the booming confidence of Indian companies which are now looking at the world as their oyster. Of course, the rising rupee and falling dollar have also had their effect on bilateral trade, impacting the balance favourably from the US point of view. With a $50 billion trade, Mulford said the figures estimated that the growth of US exports to India had gone up by 75% last year, while Indian exports had risen 40-42%. FDI in US: India lags behind
New Delhi: After the UK, Indian companies are making big investments in the US. The average increase in the Indian FDI into the US has been about 75% every year since 2002. India also has the highest annual growth average in Asian investment in the US, the closest being South Korea. However, despite India having breached the billion-dollar mark, Indian investments are way below others. For instance, Japan’s investments in the US are $210 billion, Australia’s $25.7 billion and South Korea’s $9 billion. China also invests more than India but as analysts pointed out that the Chinese have been at it for much longer.
But India’s rate of growth in FDI has been on a gallop. Indian investments have largely been in sectors like professional, scientific and technical services, manufacturing and depository institutions.
In the UK, India had raced ahead in 2006-07 to become the second largest investor in the country, second only to the US, at well over 1 billion pounds. With over 500 Indian companies operating in the UK, the country has established its presence in sectors like IT and ITes, and now manufacturing. Mulford, on his part, said after the open skies agreement with the US, India had bought 154 planes from Boeing in the past two years for $23 billion. Significantly, he said, hi-tech exports from the US to India were now to the tune of $7.1 billion, a huge gain from the time the Next Steps in Strategic Partnership (NSSP) began.

Sebi to review IPO process next month

2008-01-29T12:21:00.000+05:30

Mumbai: The mechanism for initial public offers (IPOs) is being reviewed for the purpose of cutting down time and cost, market regulator securities and exchange board of India (Sebi) said on Monday. “A sub committee of primary market advisory committee has gone through various issues and it has submitted its report. This will be considered by PMAC sometime in February,’’ Sebi chief M Damodaran said, while debunking reports that Sebi had virtually decided to reduce the days
from 21 now to less than five for allotment of shares from the time of an IPO closes. “PMAC has been looking at various things. This is for simplification of processes to cut down time and cost. Once PMAC makes its recommendations, then Sebi will consider it. It will take some time,’’ he said. “It is not what has appeared in today’s papers. Today’s papers seem to give an impression... Two things they say—one that it is already (decided), it is not. In the next meeting they will still look at alternatives. Number two, they (papers) said, we are doing it because some particular issue has sucked up a lot of money. But it has been with the PMAC’s sub-committee for some time.
They have been looking (at it) for at least the last six months.’’ Damodaran said the time frame could not just be reduced to zero from being very long, as India was a continent size market and interests of retail investors will also have to be taken care of. He said that in many countries, retail investors were not allowed to participate in IPOs where only mutual funds come in. Retail investors participate in the secondary market and that is why they take lesser time, Damodaran added.
“It will be a retrograde step to say that retail investors (in India) should not be allowed to invest in IPOs. They need time,’’ he said while emphasising that the review of the processes was intended to save on time and cost. AGENCIES
Short selling from Feb 1
New Delhi: Notwithstanding volatility in the market, Sebi said short-selling by institutional investors would be introduced from february 1 and there is no change in the deadline. AGENCIES

‘Earth is getting soft in the middle’

2008-01-29T12:15:00.000+05:30

Material In The Lower Mantle Makes Sound Travel More Slowly, Thereby Suggesting It Is Softer

New York: Scientists claim to have uncovered evidence that our planet Earth is getting soft in the middle.
The researchers in the United States have carried out a study and found that material in part of the planet’s lower mantle has unusual electronic characteristics which make sound propagate more slowly, suggesting it is softer.
“What’s most important for seismology is the acoustic properties — the propagation of sound. We determined the elasticity of ferropericlase (mineral) through the pressure induced high-spin to low-spin transition.
“We did this by measuring the velocity of acoustic waves propagating in different directions in a single crystal of the material and found that over an extended pressure range (from about 395,000 to 590,000 atmospheres), the material became ‘softer’ — that is, the waves slowed down more than expected from previous work.
“Thus, at high temperature corresponding distributions will become very broad, which will result in a wide range of depth having subtly anomalous properties that perhaps extend through most of the lower mantle,” the ‘ScienceDaily' quoted lead researcher Alexander Goncharov as saying.
In fact, Goncharov and his colleagues at the Carnegie Institution’s Geophysical Laboratory analysed the composition and density of the material after watching the velocity of seismic waves as they travel through Earth. PTI
Is our scarred planet entering a new epoch?
Human activity has altered life on Earth so much that that scientists are proposing to change the name of the geological epoch we are living through from the Holocene to the Anthropocene.
“With more than half of all soils on Earth now being cultivated for food crops, grazed, or periodically logged for wood, how to sustain Earth’s soils is becoming a major scientific and policy issue,” Daniel Richter, a soil scientist at Duke University said. “Society’s most important scientific questions include the future of Earth’s soil.”
The name, Anthropocene, was coined in an off-the-cuff remark, by the Nobel prize-winning chemist, Paul Crutzen, in 2002. He suggested that the environmental effect of increased human population and economic development meant the Earth was entering a new era. But scientists want to redefine our epoch to reflect humanity’s impact on the planet. AGENCIES

THIN MARGINS WORRY DEALERS

2008-01-12T12:28:00.000+05:30

TATA Nano is likely to be the biggest bonanza for its dealers, who are facing skidding passenger vehicle sales. In the past 24 hours, dealers’ phones haven’t stopped ringing with queries about the small wonder.
Tata Motors is giving final touches to its comprehensive distribution plans and has roped in dealers to set the ball rolling in 7-8 months.
For Yadur Kapur, owner of A-One Motors, it’s like going down memory lane. “It has generated as much as interest as Indica. The promise of Rs 1-lakh car has been fulfilled, and we are now waiting to hear from Tata Motors on how to distribute and sell these cars. While we are in negotiations, it is too early to decipher the broad contours of the new distribution system,” he said.
“I think it will change the landscape of the Indian passenger car market and distribution channels across dealerships,” said Federation of Automobile Dealers’ Association secretary-general Gulshan Ahuja.
“We are not clear about the pricing yet and, therefore, I can’t comment about dealer margins. However, it’s clear that it is going to be a volume game for Nano as far as distribution strategy goes. We are getting enquiries from all sorts of customers. Even customers who own premium cars such as Tata Safari want to buy it as a second car,” Mumbaibased dealership Fortune Motors’ MD Anil Behl said.
While dealers try to get a hang of the nuances of the distribution strategy, some are not worried about margins and believe the Nano would be a hit in India. “There was a huge gap between the price of a two-wheeler and an entry-level car in India. Nano would meet the demand of this consumer segment,” said Vasan Motors’ Dilip Shah.
Others agree that margins could become a sore point. “This car will generate huge volumes, but margins will be thin. We expect to deliver around 20 cars daily compared to 4-7 cars now,” said a Tata Motors dealer.

Nano may expand mkt by 65%: Crisil

2008-01-12T11:23:00.000+05:30

TATA Nano’s launch could expand the Indian car market by 65%, according to rating agency Crisil. The low price makes the car affordable for families with incomes of Rs 1 lakh per annum, the agency said.
The increase in the market is expected to push up car sales by 20% over the previous year. “The unveiling of Tata Nano, the cheapest car in the world, triggers an important event in the car market. Based on the statement by company officials, Crisil Research estimates the consumer price of the car at around Rs 1.3 lakh. This brings down the cost of ownership of an entry level car in India by 30%,” the company said in a report.
Crisil said the launch will prompt other players to enter the mini car category over the next few years. These launches will entice a section of twowheeler owners (currently nearly 50 million) to upgrade to cars.
Crisil has prepared these estimates by projecting the income demographic transition pattern in India and the cost of ownership of existing and new entry-level cars. Given the shape of the income distribution pyramid in India, the new price point translates into a 65% increase in the number of families that can afford a car. At the significantly redefined threshold for car ownership in India, annual car sales have the potential to increase by 20% over the sales expected in 2007-08.

Guide to tipping

2007-11-06T00:09:00.000+05:30

Take a taxi anywhere in South America, and rounding the fare up to the next dollar amount is sufficient as a tip. If you’re in an African city such as Cape Town or Nairobi, however, you need to tip 10% for a cab ride. Going to India? Taking a taxi here means there is no need for gratuity at all.
While even the savviest globetrotter might be in the know about the best places to dine and the hippest hotels to stay at, knowing what to tip and when can be downright confounding. At a luxury hotel in Japan, for example, if you try to tip anyone, your gesture will be perceived as a rude and flagrant show of wealth. On the other hand, if you skimp on tipping at any restaurant in the US or to a concierge who has helped fulfill multiple requests, you probably won’t be welcome again.
While these conventions can leave travellers scratching their heads, experts say that there are a few basic rules of thumb to following about tipping. “In most places around the world, it’s better to give something than nothing—so if you’re ever in doubt, tip,” says Erica Duecy, editor of restaurants and hotels at Fodor’s travel publications. “And in many cases, tipping customs can be broken down by area of the world, so what you’re supposed to tip isn’t going to vary too much from country to country in that region.”
In most countries in Europe, for instance, the service charge is included in the meal; it’s customary to add another 5% to 10% for gratuity, especially in highend restaurants. If no service charge is included, add 15% to the total bill. For taxis, 10% is the right amount to tip, and for hotel porters, give the equivalent of $2 per bag.
Experts agree that when it comes to the concierge at your hotel anywhere in the world, you don’t need to tip for advice such as what sights to see; but you should always acknowledge service. In Europe, $2 is enough for each simple request the concierge fulfills, such as arranging airport pickup or making restaurant reservations. If your concierge is performing special tasks, such as arranging an after-hours tour of the Louvre, it’s appropriate to tip $30 or more, depending on the difficulty of your request.
Asia is one part of the world that has slightly different tipping customs for each country. In Japan, tipping is an insult in any situation; but in China, giving 3% is expected at restaurants, while in Hong Kong, 10% to 15% is the norm if the gratuity isn’t included in the bill. For taxis, you don’t need to tip in China, but in Hong Kong, you should round the fare up to the next dollar amount. In both China and Hong Kong, you should give hotel porters $2 to $3 per bag, especially at luxury properties, while $3 to $5 is a good amount for basic requests you ask of the concierge. You should incrementally increase this amount based on the complexity of your request.
It’s not always obvious what you need to tip in the US. While it’s standard to tip 15% at restaurants, if you’re enjoying a meal at an upscale spot such as the French Laundry in Napa Valley, it’s expected that you’ll tip at least 20%.
For taxis in cities such as New York City or Chicago, you should tip 15%, but in smaller cities or towns, you simply need to round up the fare to the next dollar amount. When you check into a hotel, you should give the porter $1 for each of your bags, but if you’re staying at an upscale property such as the Four Seasons or the Ritz-Carlton, $2 to $5 per bag is more appropriate. Give on the higher end for especially heavy bags.
When it comes to the hotel concierge, give $3 to $5 for a basic service, such as arranging airport transportation. If the concierge fulfills a more difficult request, like getting you a last-minute 8 pm table at a restaurant that is typically booked weeks in advance, it’s not uncommon to shell out $20 and up.
Follow these rules, and chances are you’ll be less likely to be tripped up while traipsing around. FORBES

2007-10-14T16:53:00.000+05:30

Below the Line

2007-10-14T16:39:00.000+05:30

IF AGEis just a number, the numbers have just come of age. Perplexing numbers rule lives nowadays as the Alpha-numerico Sapiens awaken in the newest evolution of mankind. As if the brain is a crunching machine, assigned to alphanumeric applications where numbers and passwords are key. Phone numbers, mobile numbers, credit card numbers, PAN, CIN, TIN, login, and the list goes on. We jog our memory to keep them top-of-mind all the time. Nobody’s complaining and marketers are circulating more of that, the latest being ‘toll free’ numbers.
That’s not all. Fineprints and footnotes in every marketing communication are straining millions of eyeballs and eardrums. Bank agreements, car loan documents, insurance schemes, and what have you, are littered with fineprints — jargons, asterix and numerous tit-bits for the brand-new Alpha-numerico Sapiens. Maybe, Gen Z and beyond fall in this category, but that again is a general observation. I, for one, is loathe to play the numbers game as I find it too tedious.
For once, try going through the Red Herring prospectus before applying for shares in the next IPO you come across. Baffled is not the word. It’s ridiculous at an age and time when obsolescence is already obsolete. We live in the NOW and we’ve got to do a job. The fineprints should do just fine when people like us retire.
Ask anyone if he ever bothered to go through them seriously. My belief is, mostly not. Nobody has the time or inclination to read through all those footnotes and conditions in those agreements. So all you do is copiously sign all the pages and cheques and get done with it. No questions asked and nobody insisting you to go through that exercise. Euphoria of asset acquisition keeps you too
much on a high to worry about anything else. Over the years, it has been rendered a tame formality at the hands of marketers that saves them a lot of time and marketing efforts. They are happy keeping it that way.
The new age communication is giving rise to new genre of audio onslaughts these days. While driving to office, I heard this mutual fund ad on FM radio. At the end of the ad, a funny voice breathlessly rattled out something like from a cassette tape gone bad: “Mutual fund is subject to the market risks. Please read the offer document carefully before investing”. Ask any of these marketers if they have as sharp a hearing to comprehend a gibberish sentence spoken in fast forward mode? Thanks to our prudent lawmakers, who made it mandatory that the marketers of financial products serve such a message without bothering to find out how is it being adhered to.
Last month, I wanted to get my damaged ATM card replaced. It seemed so easy to call up, but that call led me into a hosts of options one after other where I had to punch in several identification numbers before I could place my request. How many numbers can you remember and I am supposed to keep this numbers secure lest they fall in unscrupulous hands! Don’t forget these are the days of multiple credit cards and banks accounts. “Why don’t you use net banking,” my friend once quipped. “I do all my transactions on the Net.” Now that adds another user name and password to the list. It looked so much simpler when my father got such jobs done in one trip to his bank branch, although he would wait in a long queue. He never seemed to mind that. Most youngsters today would sneer at any such option.
However, plastic money has its convenience. I don’t have to visit my bank just to deposit cheques or withdraw money. I can do that at any ATM around the corner and that keeps me happy till the day when I absent-mindedly leave my card in the machine posttransaction. That has, on two occasions, left me jittery and desperately punching numbers on cell phone to get the card blocked. The same process of recollecting TIN and CIN begins till finally I reach the phone-banking executive. Phew!
An average person today is loaded with numbers or passwords to keep him going. Want to check your mail? Log in with your username and password, online investors have to keep their demat login ready, online railway booking requires your identity proof (PAN or passport number) apart from credit card number and password. And I find it funny that how alphanumeric language and fineprints are increasingly invading our lives even though we are light years away from Mars.