Cygnus New update
Sandeep GV
CYGNUS DAILY INDUSTRY NEWS
14th Apr’ 2011
HEADLINES:
Global Economy
ü Obama seeks tax on wealthy, cuts in public debt
ü China set to overtake US as world’s largest energy consumer
Indian Economy
ü Direct tax mop-up at record Rs 4.5L cr
Industry
ü Hero Honda to give 3,500% dividend
ü Nissan India plans two new launches by next year
ü Corporation Bank eyes 25% credit growth, 22% in deposits in FY12
ü Samsung eyes US$4.9 bn sales in India, launches 60 new items
ü Education system in urgent need of improvement
ü Organised retail jewellery sector growing by 40%
ü IT-ITeS firms put M&As in fast lane
ü Goa government to amend rules to curb illegal mining
ü Reliance Industries hires McKinsey for corporate restructuring
ü ONGC Videsh to sign pact to buy stake in Kazakh block
ü Additional safety features for India's nuclear plants: NPCIL
ü Dr Reddy’s launch generic version of Allegra in US
ü Mobile cos should source 80% of network equipment from domestic market: TRAI
Global Economy
Obama seeks tax on wealthy, cuts in public debt
With an eye on the 2012 presidential elections, the US President Barack Obama has proposed significant reduction in budgetary deficits through a series of proposals including taxing the wealthy and seeking spending cuts. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford US$ 1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it. And, I refuse to renew them again, Obama stated. The US president stated the rising debt will cost the country jobs and damage its economy. The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about US$ 750 billion over 12 years. We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs, Obama stated, adding that the country would continue investing in medical research, clean technology and infrastructure.
China set to overtake US as world’s largest energy consumer
A high-ranking Chinese official has publicly admitted for the first time that his country is on the verge of overtaking the United States to become the world’s biggest energy consumer. The world’s second-largest economy has been under mounting pressure to transform its economic development pattern, further improve energy efficiency and diversify its energy-supply mix, stated Ding Zhimin, Deputy Director-General of China’s Policy and Law Department of the National Energy Administration. As there are no final statistics (for energy consumption), we are still the second-biggest energy consumer. It’s the first time that a Chinese official has publicly admitted that the country will soon overtake the US, the Daily stated. However, China’s per capita energy consumption is far lower than that of the US, the official stated. However, the rate of increase is slower than the country’s economic growth of 10.3% year-on-year in 2010.
Indian Economy
Direct tax mop-up at record Rs 4.5L cr
The government has collected an all-time high income tax of Rs 4.5 lakh crore in 2010-11, at least Rs 4,000 crore more than the revised budget estimate of Rs 4.46 lakh crore. This is in addition to all-time high refund of Rs 72,000 crore that the Central Board of Direct Taxes (CBDT) has made till March 31, 2011 by clearing backlogs. In previous years, the tax collection figures were bloated by delayed refunds, giving a wrong picture to net direct tax collection. The early refunds have also saved the government nearly Rs 4,500 crore towards interest payments. In Nagpur, while addressing the passing out of 63rd batch of Indian Revenue Service officers, CBDT chairman Sudhir Chandra stated, Direct taxes collection by the end of financial year 2010-11 stood at Rs 4.50 lakh crore against a revised target of Rs 4.46 lakh crore. Officials in the Mumbai commissionerate have refused to abide by the finance ministry's diktat and have gone slow on refunds. It has cleared nearly 7,000 refunds between April 1-10. In contrast, relatively smaller formations such as Baroda and Hyderabad cleared more than 15,667 and 18,174 refunds respectively during this period.
Industry News
Automobiles
Hero Honda to give 3,500% dividend
In a move aimed at making investors happy, the country's largest two-wheeler maker Hero Honda Motors Ltd on Wednesday announced 3,500% dividend or Rs 70 per equity share of face value Rs 2 to its shareholders. This is expected to cost the company Rs 1,500 crore. In its board meeting held today, the company considered and declared an interim dividend at the rate of 3,500%, that is Rs 70 per equity share of Rs 2 each, company stated in a filing to the Bombay Stock Exchange (BSE). In its filing to the stock exchange, the company did not say how much it would cost the bike major. The company's spokesperson could not be reached for comment. The company has done well exceeding market expectations. The two-wheeler sector in general is doing well. There is a lot of cash reserves with the company. So, I do not see why it will have any negative impact on revenues, Chawla added. Meanwhile, Hero Honda Motors appointed Toshiyuki Inuma as a non-executive additional director with effect from April 13.
Nissan India plans two new launches by next year
Japanese auto major Nissan may launch two new vehicles in India by 2012, a top company executive stated. According to Kiminobu Tokuyama, Nissan Motor India Managing Director and CEO, a global sedan will be in market this year and another vehicle, which is expected to compete with Toyota's Innova, will be launched in 2012. The sedan will be built on the same platform on which the Micra is built. It will be launched first in China. It will be manufactured in our Chennai plant for Indian market. We will launch the vehicle in 2011, he told media persons here. Tokuyama stated the company expects to export 1.1 lakh units of Micra to Europe, Africa and West Asia, and exports in October last and we have so far exported 55,000 units to Europe Africa and Middle East (West Asia). We expect to export 1.1 lakh units by October this year, he added.
Banking
Corporation Bank eyes 25% credit growth, 22% in deposits in FY12
Public sector lender, Corporation Bank, is expecting a credit growth of 25% and deposits to expand by 22% in 2011-12, a top bank official stated. According to my estimates, our deposit growth will be around 22% and credit growth 25% (in FY 12), the Managlore-headquartered bank's Chairman and Managing Director, Ramnath Pradeep, told reporters on the sidelines of an event here. The bank will be focusing on the retail, micro small and medium enterprises, and agriculture to achieve the growth, Pradeep stated, stressing that an economy projected to grow at 8.5% requires a ramp-up in lending. The bank's zonal heads would be meeting here over the next two-days for arriving at an exact target on the two critical parameters, he stated. Corporation Bank is not looking at any fund-raising in the near future as a recent infusion of Rs 300-crore has resulted in a comfortable capital adequacy ratio of 15%, Pradeep stated. To a query on the bank's exposure to the micro-finance institutions (MFIs), Pradeep stated it currently stands at Rs 700-crore and all the loans are performing well.
Consumer durable
Samsung eyes US$4.9 bn sales in India, launches 60 new items
Korean consumer durables major Samsung on Wednesday introduced 60 new products across all categories in India with an eye on achieving a 40% jump in sales to US$4.9 billion in the country by year-end. We expect a growth of 40% in sales this year in India. This will be over US$3.5 billion, which we did last year," Samsung West Asia Operations President and CEO Jung Soo Shin told reporters here. The strategy for the region is to strengthen market leadership while identifying new opportunities, he added. Samsung today introduced around 35 new models of television, expanding its 3D range. It also introduced advanced version of Galaxy Tab, which it is planning to introduce in June this year. Besides it has brought a new range of cameras, refrigerator and washing machine among others totaling to 60 new products. Asked about the company's budget on marketing the new range this year, Zutshi stated every year Samsung India spends around 3-4% of the total revenue various marketing initiatives.
Education
Education system in urgent need of improvement
India will have nearly 241 million people joining the workforce by 2030. This statistic underlines the urgent need to improve the country's education system in order to develop able mindsets for productive employment. Addressing MBA students of the Sai Ram Engineering College, Mr N. Subramanian, CEO and MD, TRS Forms and Services Pvt Ltd stated, I will focus on how the challenges and issues in the Indian education system can be addressed for creating a better tomorrow. Solutions such as e-assess were specially designed for student tests and feedback-related problems. They provide a user-friendly and unique platform for creating, publishing and evaluating examinations, both online and offline, using modern interactive software. The smart card was another effective solution for a cashless campus. Automatic Dummy Numbering and e-Valuation software augment the processing of results by integrating the scanning, indexing and evaluation modules under one platform. The 2D barcode is the ultimate security feature developed to handle issues of mark-sheet and certificate forgery in educational institutions.
Gem & Jewellery
Organised retail jewellery sector growing by 40%
The country’s organised retail jewellery sector is growing by 30-40% annually, thanks to the rising brand consciousness among the masses. However, it still accounts for a measly three% of the consolidated jewellery retail space, which is estimated at Rs 70,000 crore. Although, the organised pie is quite small, it is growing rapidly. In the next five years, it is likely to account for 10% of the total market, Vijay Jain, CEO and director of leading jewellery retailer Orra, told here. High prices of precious metals, including gold, had not dampened the buying pattern of domestic consumers, he stated. In fact, due to the high prices, the investment demand has shot up. Fund managers also suggest investors to invest 5-10% of their portfolios in gold assets. Besides, people buy for weddings and other customs, he added. Jain was in town to flag off the company’s anniversary sale. The company is offering up to 25% discount. It also vends Bureau of Indian Standards (BIS)-hallmarked gold/silver coins and bars. The company showcased its Million Euro Diamond Bustier, which has been crafted by its international design centre with 500 carats of diamonds. Headquartered in Antwerp, Belgium Orra is part of the world’s largest diamond manufacturing company, with presence across 15 countries.
IT
IT-ITeS firms put M&As in fast lane
With growth back on track, the US$71-billion IT-ITeS industry is now opting for mergers and acquisitions (M&A), with higher revenues, a presence in different geographies and newer service lines in mind. The past three months alone have seen big-ticket acquisitions Genpact buying Headstrong and Igate Patni,·with deals ranging between US$500 million and US$1billion. On April 6, the country’s largest BPO, Genpact, acquired US consulting and IT services firm Headstrong for US$550 million, the biggest acquisition in the BPO space so far. The deal clearly brings Genpact into the IT services business, along with greater presence in the US. Pramod Bhasin, CEO and president of the company, stated, “We want to have our centre of gravity closer to customers and clients in the US and UK. Headstrong presently has 60% of its employees onshore, which will help us build the onshore capability further. Headstrong CEO and President Sandeep Sahai give his perspective on the acquisition.
Mining & Mineral
Goa government to amend rules to curb illegal mining
Goa government will soon amend the current rules to give more teeth to enforcement agencies for curtailing illegal mining and related activities in the coastal state. State Mines and Geology Department Director Arvind Lolienkar stated the process to amend Goa Prevention of Illegal Mining and Transportation and Storage of Mineral Rules, 2004 has already begun. The rules would be amended and ready to be implemented by next mining season, starting in October this year, Lolienkar stated. Goa has 105 operational mining sites from which 45 million metric tones of iron ore is exported to various countries. Considering the huge demand for iron ore, there are several illegal mining sites that have sprung up creating a massive ecological menace in the tiny state. The state is also contemplating the possibility of making mine owners responsible for the overloading of minerals done by the trucks. There are several amendments that would be executed. The rules will make everybody responsible including mine owners, Lolienkar stated.
Oil & Gas
Reliance Industries hires McKinsey for corporate restructuring
India's largest corporarte, Reliance Industries has hired business consultancy firm McKinsey to advice it on a business transformation plan which would catapult the company's enteprise value by another US$ 80 billion in the next 10 years. RIL will also take help from its independent director and former dean of Kellogg's management school Dipak Jain to chart out the new business reorganisation plan. In India , Reliance bought 14.8% stake in Oberoi Hotels and spent Rs 4500 crore in taking over Infotel Broadband to launch 4G telecom services in the country. The company recently sold 30% stake in its Krishna Godavari based gas assets for US$ 7.2 billion to BP. The new corporate restructuring is expected to enable RIL transform itself into one of tge world's biggest conglomerates. RIL's main businesses under older Ambani brother have been exploration and production of oil and gas, petroleum refining and marketing, petrochemicals, textiles, retail and special economic zones. RIL has now become the world's largest producer of polyester yarn and fibre, is among the world's top ten producers of various petrochemicals and is the largest producer of gas in India.
ONGC Videsh to sign pact to buy stake in Kazakh block
Energy security will be a key focus area for the Prime Minister, Dr Manmohan Singh, during his two-day visit to Kazakhstan beginning April 15. While ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, is expected to sign an agreement for acquiring 25% stake in Kazakhstan's Satpayev Block, a new pact on broad-basing the nuclear engagement between the two countries is also on the cards. According to reports, a peak output of 287,000 barrels a day is estimated from the field. The agreement will be signed between OVL and KazMunaiGas. The Kazakh company will be the operator of the field, holding the remaining 75% stake. An initial agreement was signed in 2009 for OVL and its partner Mittal Investment Sarl for taking a 25% stake in the block. But Mittals pulled out of the project and since then OVL has been pursuing it on its own.
Pharma
Dr Reddy’s launch generic version of Allegra in US
In a bid to tap the $452-million Fexofenadine drug market, Dr Reddy’s Laboratories today announced the launch of generic version of Allegra Fexofenadine HCl tablets in the US market. The Food & Drug Administration (FDA) approved Dr Reddy’s abbreviated new drug application (ANDA) for Fexofenadine HCl tablets on April 12. The pharmaceutical firm will market the over-the-counter product under store brand labels in the US market. The products are bio equivalent versions of Sanofi-Aventis’ Allegra tablets which received Rx-to-OTC switch approval from the FDA on January 24. In January, the US District Court of New Jersey cleared the decks for Dr Reddy’s Laboratories, the country’s second-biggest drug maker, to launch the generic version of Allegra-D 24 in the US. In September 2009, AMRI filed a patent infringement lawsuit in the court against Dr Reddy’s for infringement of one of AMRI’s patents, related to the manufacturing process for the active ingredient in Allegra, Allegra-D 12, and Allegra-D 24 Hour. AMRI joined hands with French drug maker Sanofi-Aventis SA, which sells Allegra and filed the law suit.
Power
Additional safety features for India's nuclear plants: NPCIL
India's nuclear plants may soon get some additional safety features, including more provisions to add water to the reactors to deal with over heating of the core, a condition that led to the Fukushima nuclear accident. The measures are part of six recommendations made by four separate task forces set up by the country's nuclear plant operator NPCIL to study the capability of handling extended power loss scenario witnessed during Japan's nuclear crisis. He stated the reports of the task forces were thoroughly reviewed and discussed by experts and the top management at NPCIL. However, the task forces have suggested introduction of new technologies to ensure initiation of automatic reactor shutdown on sensing seismic activity. India completed the RAPS-2 on its own after Canada suspended its assistance following India's 1974 nuclear test. Standardised PHWRs are located at Narora (two units), Kaiga (four units), Kakrapara (two units) and Tarapur (two units). The units at Narora, Kaiga and Kakrapara are of 220 MW capacity each, while Tarapur has two 540 MW capacity units.
Telecom
Mobile cos should source 80% of network equipment from domestic market: TRAI
Telecom Regulatory Authority of India (Trai) has proposed that mobile phone companies be mandated to source 80% of their network equipment and other related infrastructure from domestic manufacturers. This includes the networks produced by the manufacturing units of foreign vendors located in India. The move is aimed at boosting domestic output in this strategic sector and ensuring that India becomes a manufacturing hub for telecom hardware. Trai wants the government to ensure that companies owned by Indians and located here get 50% of all telecom network orders by 2020. Trai has also proposed that plans to boost domestic manufacturing be implemented in a phased manner. The regulator has suggested that by 2015, mobile phone companies be mandated to source 45% of all telecoms equipment domestically. Off this, the regulator wants Indian companies to account for 25%. In addition to recommending that domestically manufactured products be given preferential market access, Trai has also suggested a slew of incentives to kick start telecoms equipment manufacturing in India.
