f o r    m a n a g i n g    t o m o r r o w
NOV. 19, 2006
 Cover Story
 BT Special
 Back of the Book

Rural-Urban Divide
The rural-urban divide continues despite a high growth rate. According to the 61st round of the National Sample Survey, apart from rural-urban wage differentials, gender differentials are very much a part of the present-day Indian economy. The urban regular wage earner earned Rs 194 a day, which was one-and-a-half times the rural average of Rs 134 a day in 2004-05. Interestingly, the wage gap is most pronounced among graduates. An analysis.

The Asian Agenda
Is a region-wide free-trade area a realistic goal? So far, 183 free trade agreements have either been signed or are being proposed or negotiated across Asia. The share of intra-regional trade has risen to about 55 per cent last year from 40 per cent in the early 1990s. Aside from trade in goods, there is a need to focus on free trade in services. Given the stalled WTO talks, it is vital for Asian countries to pursue further market opening and structural reforms.
More Net Specials
Business Today,  November 5, 2006
All That Glitters...

Is speculative trading at commodity exchanges pushing gold out of reach of retail buyers? According to the World Gold Council, the demand for gold in India fell 43 per cent year on year in the second quarter of the current calendar year. The price of gold jewellery during this festival season hovered in the range of Rs 8,400-8,600 per 10 gram, about 25 per cent higher than the prices prevailing the corresponding period of last year. In October, international gold prices were in the range of $560 (Rs 25,760) to $600 (Rs 27,600) per ounce (about 31 gram), compared to $460-480 (Rs 21,160-22,080) per ounce in October, 2005.

Who Benefits From Ethanol?
VC Funds For SMEs

"Trading in the futures commodity exchanges-fuelled mainly by unaccounted black money-is pushing prices to artificially high levels," says Rohit Mahendru, a Delhi-based gold trader. Joseph Massey, Deputy MD, MCX Commodity Exchange, denies this. "The price discovery in the Indian market largely depends on global factors. Local trading doesn't play much of a role."

Indian demand finally picked up this Diwali only when gold prices crashed to Rs 8,400-8,600 per 10 gram from Rs 11,000 earlier this year, but whether this trend will continue is anybody's guess.

Who Benefits From Ethanol?

Ethanol depot price: Rs 21; petrol depot price: Rs 35. This figure alone should mean that ethanol, which is alcohol to most of us, is the manna that most of us have been looking for. But is that the case? Taxes on ethanol are significantly lower than those on petrol-16 per cent versus approximately 50 per cent on petrol (depending on the state). Yet, since the oil marketing companies are selling petrol at a loss, any cost benefit of 10 per cent ethanol-blended petrol will mean a benefit of Rs 2-3 at the pump. So, the real benefit of ethanol-doped petrol will not accrue to the consumer, but the shareholder of the oil marketing companies-the government of India.

VC Funds For SMEs

Here's more proof of the rising profile of India Inc. on the world stage. Corporate finance companies and venture capitalists in the UK are lining up funds to help Indian companies acquire companies and assets in Britain. "VCs in the UK are visiting India looking for companies interested in acquiring businesses in that country," says Alpesh Patel, founder of Tradermind, which is based in London and advises several such financiers in Britain. Patel is working with some Indian companies looking to acquire small UK companies. "We are looking at it as a growing area-small and medium Indian companies acquiring small UK companies." This allows Indian companies to expand into newer markets and enables British companies to benefit from access to low-cost Indian inputs and raw materials.

Adds Mark White, Head (Operations), UK, HBD Capital, a UK-based venture capital firm: "Financers in the UK are more confident about working with Indian companies with proven capabilities," he says adding: "UK-based financers are now ready to finance Indian companies in almost every sector."

NorthStar, a UK-based VC, has already launched two funds for this purpose and is actively scouting for opportunities in this country.

This trend is a recent phenomenon and follows several high profile Indian or Indian-led acquisitions of large companies in the UK and Europe. The Tata Tea takeover of Tetley and the Apeejay Group's acquisition of Typhoo first brought Indian companies on to the radar screens of these financiers, but what really swung the pendulum decisively in their favour was L.N. Mittal's high profile hostile takeover of Arcelor and then Tata Steel's ongoing acquisition of Corus. The big fish have landed; the small fry will follow.




Partners: BT-Mercer-TNS—The Best Companies To Work For In India