The last-quarter sprint is a well-known phenomenon in the corporate sector. Companies, large and small, try to make up for all their lapses in the first three quarters of the year by trying and growing their revenues (sometimes earnings) at any cost. Some loosen their purse strings and burn money on advertising; others launch sales promotion campaigns; and still others play around with numbers, smartly recognising future revenues through present entries in their books.

The United Progressive Alliance government is currently engaged in a similar exercise and it won't be the first government to do so. Previous governments have had public sector companies declare special dividends (this one has gone down that road too), or acquire holdings in each other (holdings acquired from the government at a substantial premium, of course) in an effort to make their numbers look impressive (sorry, respectable).

Exhibit A in any arguments for would have to be the packed economic agenda for the winter session of Parliament that started on November 23. The list includes the Pension Fund Regulatory Mechanism Bill, the National Tax Tribunal Bill, the Factories Amendment Bill, the Electricity (Amendment) Bill and the Unorganised Sector Workers' Bill. By December 23, when the session comes to an end, the government would want to have at least some of these bills passed. The problem with last quarter sprints is that any legislative action they involve (and the current sprint requires lots such) could be blocked by the opposition parties, especially if they have some ammunition, and the recent controversy surrounding former External Affairs Minister Natwar Singh, the Congress Party and oil from Iraq is definitely potent ammunition.

If all goes well, the UPA will begin January having convinced its key allies, the communist parties, to agree to the sale of part of the government's stake (an insignificant part, actually) in some public sector companies and banks. Some of the money arising from this, around Rs 2,000 crore to Rs 3,000 crore, could help jump-start the National Investment Fund which will bankroll ambitious development programmes such as Bharat Nirman (infrastructure), the National Employment Guarantee Programme and the Jawaharlal Nehru National Urban Renewal Mission (yes, it is finally on).

The government will also be hoping that its last quarter theatrics do enough to assure companies and investors that all is well with the Indian economic story. It can then safely increase interest rates that are crying to be increased (the current account deficit could soon touch Rs 1,00,000 crore) without upsetting the apple cart.

The fact is, this government has shown that while its heart is in the right place when it comes to the business of economic policy-making, it cannot really go ahead with key reforms without offending one alliance partner or another. With Delhi's power brokers already beginning to whisper about the next general elections (not due till 2009), and with the defeat in the elections to the Bihar assembly still fresh in its memory, it is unlikely that the UPA will do anything rash or radical in terms of economic policies. The last-quarter sprint and a safe budget for 2006-07 should boost sentiment, help the Sensex over the 10,000 mark and reassure companies and investors of the government's commitment to economic reforms. And it will be back to business as usual until the next last-quarter sprint. Then, that won't be until December 2006.

-Ashish Gupta

INSTAN TIP
The fortnight's burning question.

Q. Will gold be the investment that returns the most over the next 12 months?

Yes. Sunil Ramrakhiani, Head of Commodity, IL&FS Investsmart Commodity Brokers

It is expected to give a return of 15-20 per cent in the next 12 months and higher returns from equity market from the current levels are unlikely.

Can't say. Suresh Nair, Vice President, Commodity Derivatives, Kotak Commodity Services

Difficult to say as technically gold is at an overbought position. However, with the undertone being positive for the metal, bullish trend will continue.

Yes, but... Unupam Kausik, Vice President, Commodity, Anagram Comtrade

Banks and governments could sell it, dampening prices from around $500 or Rs 22,500 per troy ounce. Our view is that it will attract buyers at lower levels to touch $525-530 (Rs 23,625-23,850) in the next year.

--compiled by Mahesh Nayak

Spell Fuel With H

The government would love to do so, and a task force it instituted, chaired by Tata Sons Chairman Ratan Tata thinks it can, provided it is willing to spend Rs 25,000 crore (this will create some 1,000 MW of capacity by 2020). Opinion, however, is still divided on whether hydrogen is the magic alternative fuel as far as India is concerned. "There will be applications for hydrogen energy in both the transport and the power sectors," says Pawan Goenka, President (Automotive), M&M, who is convinced that hydrogen presents a clean alternative to other fuels. R.K. Pachauri, Director General, The Energy and Resources Institute (TERI), isn't so sure. "The 2020 target for hydrogen as an alternative fuel is an illusion," he says, adding that issues related to storage, safety and the creation of necessary infrastructure need to be addressed first.

-Krishna Gopalan

The General In Its Labyrinth

Wall street knew that general motors was in trouble. It was losing share, bleeding money and being investigated by the Securities and Exchange Commission (it has already restated $400 million or Rs 1,880 crore in earnings for 2001). Still, the street was shocked by CEO Rick Wagoner's announcement that it would be closing down 12 plants and laying off 25,000 workers.

The company's Indian operations will not be affected, says P. Balendran, VP (Sales), General Motors. That shouldn't surprise anyone. India and China (more the latter than the former) are emerging low-cost manufacturing locations of choice for global auto firms and the market for cars in the two is also booming. General Motors India, which hasn't exactly set the streets on fire, hopes to launch three models in 2006 and is investing Rs 100 crore to increase its capacity from 60,000 to 80,000. Nor will the parent's collapse hurt Indian auto component firms. The US government will not allow a company "like GM collapse", says S. Ramnath, an analyst at Mumbai-brokerage SSKI, and people "will continue to buy cars whether there is a GM or not", adds Hemant Luthra, MD, Mahindra Systems and Automotive Technologies.

-Kushan Mitra

The Return of Penny Stocks
The market is on a roll and the punters are back.

The penny stocks story has been extensively chronicled, even in this magazine (see How To Lose Your Shirt In A Bull Market, Oct. 23, 2005). However, after a brief interlude, when the prices of most of the species crashed, they seem to be back. And the action has even picked up in stocks such as Consortex Karl Doelitzsch, IFSL and Prime Property Development where the Securities and Exchange Board of India (SEBI), suspecting price manipulation and rigging by promoters and directors of the company, had suspended them from trading in the stock. That shouldn't surprise anyone, say brokers and analysts. People stuck with these stocks are generating interest in them in the hopes of exiting when retail investors start buying them. And, adds Rajesh Boghani, Dealer (Retail Desk), Parag Parikh Financial Advisory Services, "they are available cheap" with their prices having crashed by over 90 per cent in some cases.

-Mahesh Nayak

We Are Here To Stay, Says Metlife

Metlife's Toppeta: India, it is

Metlife, the $38-billion (Rs 1,71,000-crore) insurance and financial services giant, the buzz on India's Deal Street went, was exiting its insurance business in the country. Coming, as it did, on the back of exits by promoters in firms such as AMP Sanmar and ING Vysya, there seemed to be some substance to the rumours. After all, in its four years of existence in India, Metlife India Insurance Co. Private Ltd has managed a market share of mere .38 per cent in terms of gross premium (April-September 2005) and .33 per cent in terms of the number of policies sold. Bill J. Toppeta, President, Metlife International (he was in India recently), however, scoffs at such theories. "We are extremely pleased with the progress Metlife India has made in the past four years," he says, adding that "given the potential, we can definitely do more." He attributes the company's performance to regulatory constraints, claiming that this "allows little room for innovation". So there.

-Venkatesha Babu

Hanumanonomics
Its first domestic blockbuster has set the Indian animation industry agog.

Several years after the country realised that it could repeat in animation what it had achieved in it services-revenues will touch $500 million or Rs 2,250 crore this year, up from $250 million or Rs 1,125 crore in 2004; almost all of it comes from exports-and just when Bollywood was beginning to write off the genre as something that wouldn't work in India comes Hanuman, an animation motion pic that is running to full houses across the country, and which has already earned, in five weeks, some Rs 9 crore in box-office takings. "None of the mainstream films released with or after Hanuman had the stamina to last beyond the second week," says Sanjeev Bijli, Executive Director, PVR. Hanuman, the story of a God renowned as much for his loyalty as his strength and valour, a story most Indian children know, has (had the stamina); in the process, it has proved that animation's failure in India has more to do with poor content than an inherent inadequacy of the genre. "It's a story that all Indians across age groups relate to," says Sandeep Bhargava, Chief Operating Officer, Sahara One, which, along with Percept Pictures produced the film, and is now taking it beyond the metros and large cities to smaller towns and to the international market. Hanuman's success may also have to do with the fact that Sahara and Percept treated it as a mainstream movie rather than a niche one, releasing around 100 prints of it. There's also the religion card. Not surprisingly, the title song of Hanuman as well as the Hanuman chaalisa (a devotional hymn), that constitutes the bulk of its sound-track, have been part of Bollywood's Top 10 charts these past five weeks and Times Music has sold some 22,000 CDs and cassettes of it thus far, "unprecedented for an animation film", according to T. Suresh, Head, Times Music. Meanwhile, the producers have set out to cash in on a good thing by embarking on an extensive merchandising (think soft toys, stationery, T-shirts, and the like) exercise. "The 360-degree commercial exploitation is going to set a trend hitherto unseen in the industry," says Bhargava. And inspire a legion of religious animation films.

-Archna Shukla

The New Telecom policy

Maran: The new new ring

India's ministry of communications (headed by the seemingly-always-in-a-hurry Dayanidhi Maran) has drafted a new telecom policy, copies of which have been sent to telcos for their suggestions. A preview:

• Targeted teledensity of 30 per cent by 2010. Maran's vision remains 53 per cent;

• Norms for IPTV. "It's going to happen in our country soon," says Maran (see IPTV: It's Here, Page 22);

• Special provisions for companies investing in manufacturing such as Nokia, Ericsson and Motorola. "If they come to India, they need to be a success story," says Maran;

• Spectrum to be priced;

• Implementation of Carrier Access Code (an Airtel subscriber, for instance, could choose the long-distance telephony services of another company); and

• Implementation of number portability (change carriers with same number).

-Kumarkaushalam