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MARCH 11, 2007
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The centre is looking at removing the distinction between FDI and FII investments. This will impact sectors like asset reconstruction, real estate and aviation, where separate ceilings apply to FDI and FII investment. However, allowing FDI through the FII route in the realty sector could result in prices shooting through the roof. The Asian financial crisis of the '90s is still fresh in mind, and a method should be devised to moderate possible volatility in key sectors.

S&P And After
For the first time in 14 years, international credit rating agency, Standard and Poor's (S&P), has raised India's credit rating to investment grade. S&P is the last of the three major international rating agencies to do so. Moody's Investors Service did it in January 2004 and Fitch Ratings in August 2006. The upgrade is likely to spur the flow of foreign investment into power, steel and other industries, which receive less than a tenth of the funds going China's way.
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Business Today,  February 25, 2007

B.V.R. Subbu: Cashing in on car components
In the close to a decade he spent with Hyundai Motor, B.V.R. Subbu played a key role in transforming a company, which had no brand recognition in India when it entered, into one of the country's most successful automotive companies. In the year or so since he parted ways with Hyundai, Subbu has joked to this magazine that he has had to fend off calls from potential investors all the time. But some calls are difficult to fend off. In November 2006, he tied up with M. Lokeshwar Rao of the Hyderabad-based Lokesh Machines to build a small car. However, Subbu, who will be Chairman of the company, refused to divulge much more than saying that it will build an affordable small car.

Number of Note

However, it seems that even after that, the phone calls didn't stop coming. In February, Subbu, Ajay Singh (of SpiceJet fame) and a clutch of private equity companies (calling themselves Crosslinks Finelease) bought the Surajpur plant of the now defunct Daewoo Motor India (DMIL) for Rs 765 crore. What are his plans for Surajpur? Says Subbu: "The state of the plant is too poor to restart passenger car production. We plan to make advanced powertrains (engines and gearboxes)." The idea is to supply these to car makers in western Europe where costs are 30 per cent higher. Subbu may also restart the press shop. "All those plants in Uttaranchal need sheet metal parts, which we can supply," he says. After a career selling commercial vehicles and cars, Subbu plans to make money making components for cars. And given his track record, one can be pretty certain that the new company will soon start making news.


45 per cent: The growth rate of India's aviation market in 2006, according to a study by the Centre for Asia Pacific Aviation and FICCI

4.5 million: The number of international tourist arrivals in India in 2006, compared to 20 million in China and 16 million in Malaysia

10 per cent: Household borrowing as a percentage of disposable income in India. In Thailand, the figure is 36 per cent and in South Korea 65 per cent

110-150: The number of jets ordered by corporate India in 2006

Rs 2,300 crore: Industry estimates of e-commerce transactions in India, not counting travel, in 2006-07 compared to Rs 1,200 crore in 2005-06

14.7 million: The number of households whose members received employment under the National Rural Employment Guarantee Act (NREGA)

10: The number of design colleges in India. South Korea has 300

£2.4 million (Rs 20.64 crore): The fine imposed on Google Inc., which lost a court battle with Belgian publishers over violaton of copyright laws. Google allegedly published links to Belgian newspaper articles without permission

45,335: Number of Civic hybrid cars Honda Motor Co. is recalling globally to fix a faulty voltage converter that could cause a short circuit and stop the engine

$0.09 (Rs 3.96): Amount spent on market research per person in India. The figure is $39 for the US, $36 in France and $13 in the rest of Europe

31 billion: Estimated number of e-mails exchanged daily on the internet worldwide. Forty per cent of these are spam

Euro 1 million (Rs 5.8 crore): The amount Alitalia, Italy's national carrier, is estimated to have lost every day in 2006. It has not earned any profits since 2002


ANNOUNCED: By the government, Navratna status for Hindus-tan Aeronautics Limited (HAL) and Bharat Electronics (BEL). Once the approval process is completed by the Cabinet Committee on Economic Affairs, these companies will enjoy more autonomy.

ANNOUNCED: By Citigroup, Blackstone Group and Infrastructure Development Finance Company (IDFC) a $5-billion fund (Rs 22,000 crore) to finance infrastructure projects in India. IDFC will manage the equity financing part and invest primarily in roads, ports, airports, power and industrial and commercial infrastructure.

FOUND: In a study on employment trends in global IT companies that one in every six employees in IBM, Accenture, Hewlett Packard, EDS, Oracle, Microsoft, CapGemini and SAP is an Indian. These eight IT majors employ around 990,000 people, of whom 162,000 are Indians.

RANKED: South India as the highest revenue contributor to consumer durables companies. A study by market research agency ORG-GFK found that the region accounted for 35 per cent of revenues of these firms, followed by the North, at 33 per cent. The West ranks third, contributing revenues of 25 per cent and East fourth with 15 per cent.

RAIDED: By the US Food & Drug Administration, Ranbaxy's US headquarters in New Jersey following a full-scale search by "criminal investigators". A Ranbaxy spokesperson was quoted as saying: "The action has come as a surprise, as we were not aware of any wrong-doing. The company is fully cooperating with officials."

SLASHED: By Bharti Airtel, MTNL, Hutch and Reliance Communications national mobile roaming charges starting February 15 in compliance with Trai guidelines. Subscribers will now be charged 56 per cent less at Rs 1.75 for incoming calls on roaming. Rates of STD and outgoing local calls will be Rs 2.40 and Rs 1.40 a minute, respectively. MTNL subscribers, however, will have to pay a surcharge of 14 per cent on all local and STD calls while roaming.


First, the good news-the outsourcing industry continues to be on a fast growth path and despite some quality and delivery issues over the last couple of years, 89 per cent of respondents in KPMG's Strategic Evolution Survey of 659 companies around the world said they planned to maintain or enhance their level of outsourcing.

"Several organisations are considering outsourcing as an integral part of their strategy. This has given impetus to the outsourcing industry," says Pradeep Udhas, Global Partner In Charge, Sourcing Advisory, KPMG. Despite the obvious benefits, companies don't have a uniform method of measuring the impact of outsourcing. Over 40 per cent of respondents do not have a formal strategic measurement network, beyond the conventional service level agreements to measure the success (or failure) of their deals.

But people, a key attraction for most large organisations looking to outsource work to low-cost countries such as India, are also turning out to be a major irritant, with 60 per cent of customers (and 59 per cent of suppliers) admitting that their main problems were people-related.


» 89 per cent of respondents will maintain or increase their levels of outsourcing

» Half the respondents considered their service providers to be moderately or very ineffective in responding to business changes

» 42 per cent of respondents said outsourcing had improved their financial performance

» 60 per cent of respondents face problems getting the right people