HEADLINER
Toyota Kirloskar

FOR A COMPANY THAT'S been in India for less than a decade, Toyoto Kirloskar Motor Company Ltd (TKML) has had more than its fair share of labour trouble. Its workers struck work in 2001, 2002, 2005 and, now, last fortnight. The trigger this time around was the management's decision to dismiss three employees on January 4, following an investigation into their alleged misconduct in 2004. The CITU-affiliated TKM Employees Union, to which 1,400 of TKML's 2,350 employees belong, promptly called for a strike. "These three employees were dismissed after a year-long enquiry found conclusive proof of their wrongdoing," A.R. Shankar, TKML's General Manager (Corporate Planning) told BT. The lockout is indefinite and if not reviewed, could hurt Toyota's sales. "The management (seems) confident that the 6,000 vehicles in the yard will last it a while before any supply crunch happens," S.R. Deepak, General Secretary of the union, told BT. Toyota's Bidadi plant near Bangalore rolls out 200 vehicles a day, including Innova and Corolla.

-Venkatesha Babu

Will Kampani Do A Kothari?

JM Fin.'s Kampani: Reason to smile

After DSP Merrill Lynch's Hemendra Kothari, it may be JM Morgan Stanley's Nimesh Kampani who sells out to his foreign partner. When BT went to press, there were reports-denied by Kampani-of Morgan Stanley planning to buy out the local partner from the listed holding company JM Financial, where the Kampanis own about 69 per cent. Morgan Stanley already owns 49 per cent in JM Morgan Stanley Securities and 51 per cent in JM Morgan Stanley (I-banking business). If a deal does happen, Morgan Stanley-it is being said-will end up with control of the partnership's institutional equity broking, I-banking and NBFC business, while Kampani-who could make Rs 600 crore in the process-gets retail broking and asset management.

Tata Tele Scouts For A Partner

The buzz on deal street is that CDMA operator Tata Teleservices is planning to sell a 10 per cent stake in itself to a financial investor. Tata Tele executives wouldn't confirm or deny it, but one of the investors being talked to is Singapore's private equity giant, Temasek. Tata Tele operates in 20 circles and at last count had 7.1 million subscribers.

UB's Mallya: A change of heart

Mallya Saya No To Air Sahara

Until recently, UB group's Vijay Mallya was said to be the front-runner for acquiring Air Sahara, but now he's had a change of heart. Last fortnight, Mallya announced in Mumbai that he was no longer considering buying Air Sahara, and instead his Kingfisher Airline would look at growing organically. For instance, the airline plans to start first-class service from April this year.

NEWSMAKERS
Anil Ambani

Reliance Infocomm's Ambani: Riding high, riding low

It has been a mixed bag of a new year for reliance Infocomm and its high-profile chairman Anil Ambani. The good news is that the telco became the first in the country to buy into Communications Minister Dayanidhi Maran's vision of 'IndiaOne', a single tariff for any telephone call made from Point A to Point B within the country, irrespective of the distance between the two. Reliance Infocomm has picked Re 1 as the single tariff, which is only in keeping with the IndiaOne concept. The buzz in the capital's telecom circles is that Anil shares a better relationship with Maran than his brother Mukesh (who ran Infocomm until a June settlement that saw its ownership pass to Anil) did. Significantly, India's telcos that use the GSM platform (think Bharti, Hutch, and other companies that are part of the Cellular Operators Association of India, COAI, and were perceived to be the stronger lobby (than rivals such as Reliance that use the CDMA platform) in the government of the day's dispensation, are yet to do anything about IndiaOne. Reliance Infocomm's initiative could well see it retain pole position in India's mobile telephony market. The bad news took the form of the involvement of some of the company's executives in the tapping of Samajwadi Party leader Amar Singh's phone and the Supreme Court's directive to the Central Bureau of Investigation, the Union Government, and the Central Vigilance Commission to look into an allegation that Reliance Infocomm shares were issued at a significant discount to some companies associated with former Communications Minister Pramod Mahajan (the court was responding to a Public Interest Litigation filed by an NGO). Both episodes date to a time when Anil was not in charge of the company. Still, it is his company now and is in the news for all the wrong reasons.

-Krishna Gopalan

NUMBERS OF NOTE

40%: The contribution of Bangalore to India's IT revenues. The city is home to nearly 1,500 tech companies and some 200,000 workers

$138.5 billion (Rs 6,23,250 crore): Total funds raised by 268 IPOs in the world capital markets between January and November 2005. The figure is $14.5 billion (Rs 65,250 crore) more than what was raised in all of 2004

Rs 9,990 crore: Total funds raised by 53 IPOs in the Indian capital market in 2005. Rs 13,121 crore was raised by 25 issues in 2004

500,000: Shortage of IT workers in India by 2010, according to a report by McKinsey and Nasscom

440,000: The number of online transactions (business to consumer) in India. By March 2007, that number will increase to 790,000

16%: The growth registered by Dubai's economy in 2005. The Chinese economy grew by 8.5 per cent in the same period, and India's will grow by 7.5 per cent in 2005-06

750: The number of technology specialists the US produces for every 1 million of its population. The corresponding numbers for China and India are 500 and 200, respectively

17 million: The expected rise in the number of unemployed urban Chinese in 2006

50,000: The number of employees India's top three IT services companies, Wipro, TCS and Infosys, plan to hire over the next 12 months

Rs 1,374 crore: The amount 56 private telecom companies owe the government as licence fee dues

30,000 euros ($35,750 or Rs 16,08,750): The fine imposed by Italy's antitrust agency on Alitalia for misleading consumers by advertising a return flight tariff, but showing only the price of a one-way ticket

Fourth Time Unlucky?

Blame it on fears that a terrorist outfit might use the opportunity to its advantage and launch an attack, or infrastructure (the absence of an international airport, for instance), but the fourth annual Pravasi Bharatiya Divas (an event for the extended Indian diaspora) at Hyderabad was not as big an event as its three previous editions (the first two were held in Delhi and the third in Mumbai). Still, some 1,000 'Indians' attended; the chief ministers of six states, including Bihar's new man-on-top Nitish Kumar, pitched their wares to potential investors; and Prime Minister Manmohan Singh issued the first Overseas Citizenship of India cards.

-E. Kumar Sharma

NOTED

CLOSED: By ChrysCapital, its fourth fund, with a corpus of $550 million (Rs 2,475 crore). With this, the total funds under management of the company co-founded by CEO Ashish Dhawan reaches $1 billion (Rs 4,500 crore), making it the largest India-focussed entrepreneurial venture capital fund.

ACQUIRED: By Temasek Holdings, Dove Finance, a Chennai-based non-banking finance company, thereby rendering redundant the need to seek approval of the Reserve Bank of India to set up a financial services firm, a process that could take time.

ADDED: By India's telcos, a record 4.5 million to 5 million new connections in the month of December, almost double the usual number. State-owned Bharat Sanchar Nigam Limited and the Anil Ambani-controlled Reliance Infocomm both claim to have added over 1 million connections.

CONTENDED: By Rani Chhabria, mother of the late Manu Chhabria, that she has a share in the estate of the latter, a claim that has been rubbished by his wife and the Jumbo Group's Chairperson Vidya Chhabria.

REGISTERED: By New Delhi, a temperature of 0.2 degrees Celsius, on the morning of Sunday, January 8. This was the lowest temperature recorded in the city in 70 years.

ISSUED: To Nivruti Rai, Senior Manager, Chipset Group, Intel India, US citizen, Indian American and mother of two, the first Overseas Citizenship of India (OCI) card, by Prime Minister Manmohan Singh at the recent Pravasi Bharatiya Divas in Hyderabad. The second card was issued to Iftekhar Shareef.

SOUGHT: (As this magazine goes to press), by Taj Television, owner of the Ten Sports channel, a stay of government rules making it mandatory for it to share the feed for the Indo-Pak cricket series with national broadcaster Prasar Bharti, from the Supreme Court.

So long, UTI-I

UTI's Mathur: Overseeing the requiem

Three months from now, UTI-I will cease to exist. In late 2002, the government decided to break India's largest fund into UTI-I, which would take over US-64, the assured returns schemes and SUS-99, a scheme introduced to bail out US-64 in 1999, and UTI-II, which would be a asset management company that would manage all the other NAV-based funds (the two were created in February 2003). There's still the matter of some Rs 8,000 crore worth of equity, which the government doesn't want UTI-I to sell for reasons that vary from fears of a hostile acquisition (in case the fund were to sell its stake in ITC) to unclear policy (in the case of UTI Bank). Another headache is the divestment of UTI-I's shareholding in unlisted entities such as NSE, NSDL, ICRA, IL&FS and ARSEC India, though talks are in advanced stages for selling UTI Securities and IL&FS. "This is one area where major efforts are required," admits S.B. Mathur, the administrator of UTI-I. The good news: given current valuations, the government will have some money left over after UTI-I meets all its obligations.

-Anand Adhikari

26 Predictions For 2006

A: AUTOMOBILES
How many passenger cars will be sold?

Around 1.25 million (including utility vehicles), if all goes well, and the economy continues to remain buoyant. Last year, 2005, was the first calendar year when automobile sales crossed the 1 million mark. This, despite misconceptions over vat, and floods in western and southern India.

-Kushan Mitra

B: BUDGET 2006
How will it look?

The controversial fringe benefit tax will undergo a complete makeover. However, there is little chance that direct and indirect taxes will be lowered given the government's compulsions to balance its books. That will also see more services being brought under the tax net and several industry-specific exemptions being withdrawn.

-Ashish Gupta

C: CITIES
Will the National Urban Renewal Mission help?

Well, it has Rs 1,00,000 crore (or will eventually have that amount) to splurge on 60 cities with populations in excess of a million. It will work towards upgrading urban infrastructure and providing basic services (housing, water, sanitation and the like) to the urban poor. This year will see the mission making a beginning with a few cities. Bangalore will be one.

-AG

D: DISINVESTMENT
Yes or No?

Despite the government's attempt to convince its key allies, the communist parties, that all proceeds from the disinvestment drive will be used to fund developmental initiatives, the latter have steadfastly maintained that all disinvestment is bad and are upset with the former's decision to go ahead with the partial disinvestment of its stake in four companies. Our take: No it will be.

-Kumarkaushalam

E: ENERGY
Will we see light at the end of the proverbial tunnel?

Unlikely. The ministry of power estimates that the country will need 782 billion kWh of electricity by March 2007. By the same time, it would have added 1,000 mw of generation capacity to take its total generating capacity to 117,000 mw. Assuming a plant load factor of 70 per cent and a plant utilisation factor of 80 per cent for 365 days (or 8,760 hours), that translates into 573.9 billion kWh. So, there will still be a shortfall of 208.1 billion kWh.

-AG

F: Foreign Institutional Investors
Will they keep the good times going?

Will FII inflows touch the $10 billion, Rs 45,000 crore, mark in 2006? Tough to say, but inflows into emerging markets such as India, especially those with a booming economy should continue to rise. Still, Northward-bound interest rates in the US and a depreciating rupee could reverse the trend.

-Mahesh Nayak

G: GOVERNMENT SPENDING
Will Bharat Nirman finally take off?

Another of prime minister Manmohan Singh's pet projects, this one has Rs 1,74,000 crore to spend on creating infrastructure, and will start burning the money this year. It hopes to bring electricity, roads, safe drinking water and rural telephony to most villages in the country by 2009. Take off it will, but an assessment of its impact will have to wait.

-Ashish Gupta

J: JOBS
Will India create enough?

Not really. The unemployment rate will continue to hover around 9.2 per cent this year too. However, there will be a shortage of trained manpower in certain industries such as it and it enabled services, organised retail, financial services, and telecommunications. And salaries across sectors will increase by close to 15 per cent.

-Kumarkaushalam

L: LAWYERS
Will foreign law firms enter India?

Unlikely. India is bound by the WTO general agreement on Trade in Services to open up legal services, but the Ministry of Law and Justice has recently issued a statement ruling out the entry of foreign law firms. And the all-powerful bar Council of India is against the move too.

-Sahad P.V.

H: HEADHUNTERS
Will their lot increase?

Definitely. Every one of the world's top 10 executive search (that's the term of choice within the industry) firms is in the country, and Indian companies are increasingly turning to them to find people. The new trend of a one-year guarantee, which binds the search firm to find a replacement if a candidate is unsuitable, is a healthy one.

-Amanpreet Singh

I: INDEPENDENT DIRECTORS
Will companies be able to meet the requirements of Clause 49?

The December 31, 2005 deadline for companies to ensure that 50 per cent of their board is composed of independent directors has come and gone. Companies are still hoping that the amendment to the Companies Act, waiting to be passed by Parliament, will reduce the proportion to 33 per cent. Either way, the 9,000 listed companies in the country will need 30,000 independent directors. Where will they find them?

-Krishna Gopalan

K: KOLKATA
Can Buddha make the city a center of industry again?

He could. The city's infrastructure has improved, as has its perception among potential investors. However, the dichotomy between the communist ideology in the state (where Chief Minister Buddhadeb Bhattacharjee calls the shots) and that at the Centre, where Politburo chief Prakash Karat does so, could worsen this year and derail his attempts to do so.

-Ritwik Mukherjee

M: MANUFACTURING
Will India become a hardware hub?

Yes. But only if it gets its act (in terms of infrastructure, most importantly) right, and experiments such as the chip fabrication plant being put up by Sem-India succeed. The country already boasts some of the required ingredients, such as a growing domestic market, and a highly educated workforce.

-Venkatesha Babu

P: PHARMA
Will the year be a better one for Pharma?

Yes. Pharma biggies such as Dr Reddy's laboratories and Ranbaxy Laboratories are armed with a stronger pipeline for generics, drugs that are going off patents. The latter proposes to launch 15 products in the year, with at least two of them promising to bring in $300 million a year in sales.

-Sahad P.V.

R: RETAIL
FDI finally?

Unlikely, although it remains one of the top (articulated) priorities of the government of the day. The communist parties, a key ally, are dead against the move.

-Ashish Gupta

N: NEW NEW THING
Genetech, nanotech, or something else?

Well it will likely be one of the two, and most probably the first. India's pharma companies, and several hot start-ups are already exploring the frontiers of genetech, the Holy Grail as far as lifesciences is concerned. Nanotech promises much, and there are a few Indian companies working in the area, but give them time.

-VB

O: OFFSHORING
Will India remain the preferred off-shoring destination for IT and IT-enabled services?

Yes, but not for too long. It produces enough engineers and graduates, and boasts a 50 per cent cost advantage. However, it consulting firm Gartner predicts that crumbling infrastructure, rising hr costs, and growing competition from other destinations could erode India's share of the market from 85 per cent today to 45 per cent in two years.

-Rahul Sachitanand

Q: QUALITY
Will India's obsession with the Deming Medal continue?

Yes. Thus far, 13 Indian firms have won Quality's Oscar with 3 doing so in 2005. At least four or five companies will do so this year, and not all of them will be from the automotive sector.

-Nitya Varadarajan

S: SENSEX
Which way will it go?

The sensex (leaving out oil and steel firms) is trading at a forward price earnings multiple of 21-22, which is not cheap. As long as foreign institutional investors continue to pump in money, there shouldn't be cause for concern, but the upside will be limited from now on.

-Mahesh Nayak

T: TRADE
Will India move closer to becoming an export powerhouse?

Not anytime soon, although its exports will increase to around $145 billion (Rs 6,52,500 crore) for the year 2005-06. With bilateralism (free trade agreements with several countries) becoming the order of the day, and the consequent lowering of tariffs, the country will be happy to increase its share of world exports from 0.82 per cent now to 1.10 per cent by 2010.

-Kumarkaushalam

V: VENTURE FUNDING
Will VCs rush to fund Indian web 2.0 companies?

Well, most venture capitalists have hitherto been content with playing the private equity game. Web 2.0 companies are sprouting in Bangalore and Mumbai, but it is unlikely that VCs will make a beeline for them. This year, they'll probably focus on engineering and design backroom firms.

-S P.V.

W: WOMEN CEOS
Will we see more?

Not really. However, with more companies buying into the concept of a diverse workplace, and consciously working to remove glass ceilings, several women will enter the ranks of senior management. Next year, maybe.

-Amanpreet Singh

Y: YOUTH
Will an Indian Michael Dell arrive on the scene?

For a long time, until he turned 40 last year, Dell was on top of Fortune magazine's list of the 40 Richest Under 40. Today, conditions in India are propitious enough to see the emergence of an Indian Dell. After all, a third of the Indian population is under the age of 25, the country is in the midst of an entrepreneurial boom, and with the stock markets on a roll, billionaires are being created by the minute (well, almost).

-Venkatesha Babu

U: UNIONS
Will trade unions become stronger?

They showed some muscle in 2005, and will likely show some more this year. The communists, after all, are key allies of the ruling United Progressive Alliance government. Their next target: it and it enabled services firm.

-Sahad P.V.

X: XXX
With Playboy here, will India turn liberal?

In your dreams. Even the magazine Playboy will launch in the country will be sans nudes and the name. Porn is still a big no for the government.

-Ashish Gupta

Z: ZEITGEIST
Last year was for the investor; who will this year be for?

For the indian multinational, that's who. It isn't just the software biggies that are acquiring firms overseas. Even old-world companies such as Bharat Forge and Tata Steel are doing the same.

-Arnab Mitra