XED NEWSLETTER a weekly news bulletin

11 Pages 28th JULY 2011 03rd AUG 2011 www.xedintellect.com

IN BRIEF
COVER STORY US: SUBMERGED IN DEBT
ECONOMIC INDICATORS
BSE SENSEX 17,940 NSE NIFTY 5,402 RS/$ 44.37 rd (as on 03 AUG 2011) PERSONALITIES OF THE WEEK

CORPORATE INTELLEGENCE

NEWS DIGEST
BUSINESS NEWS

GLOBAL & MISC NEWS

FINANCE NEWS

COMPILED BY

India set to fund European bailouts ECONOMIC INDICATORS 2 INTERNATIONAL NEWS 9

Iran says oil payment row with India resolved

Rupee hits near 3 year high on weak dollar

COVER STORY 3 PERSONALITIES OF THE WEEK 4 BUSINESS NEWS 5-8 MISCELLANEOUS NEWS 10 GENERAL AWARENESS 11

TOP 10 HEADLINES OF THE WEEK

1. India set to fund European bailouts. 2. Indians do not like to be indebted: Keki Mistry, CEO, HDFC. 3. ITC to invest Rs 5,000 crore for buying shares of rival FMCG: YC Deveshwar. 4. Air Indias 38,000 staff not paid salaries for months, forced to borrow, sell assets. 5. Burgernomics and Indian Exports. 6. Just a Day to Start a Business. 7. Iran says oil payment row with India resolved. 8. Foxconn assembles iPads & iPhones in China plans use 1 mn robots in 3 yrs to cut labor cost. 9. Lokpal bill cleared, PM not in ambit. 10. New draft Land Acquisition Bill

ECONOMIC INDICATORS
Current Market Rates as on 03rd Aug11 Rupee/US Dollar Rupee/Pound Values 44.37 72.20 Stock Market Indices as on 03rd Aug11 BSE SENSEX NSE (NIFTY) Values 17,940 5,402

THE GLOBAL TOURISM

As the northern hemisphere passes through the height of summer, millions of tourists are jetting off on holiday. International tourist arrivals last year reached their highest total yet of 940m, according to the United Nations World Tourism Organization.

Data gathered by the organization, from national statistics, give France as the most common destination for foreign tourists, with 76m visitors in 2010. But the $46bn

it makes from them is not enough for a place on our list of countries that make the most from each tourist.
When calculated as the total of tourist receipts divided by the total number of arrivals, several geographically isolated countries fare well. This may be because holidaymakers will stay longer and fork out more on a long-distance trip.

COVER STORY-US: SUBMERGED IN DEBT

What is Debt ceiling: To start at the most basic level, countries like individuals are able to borrow money to finance spending. A government debt is held in the form of bonds, and the government sells these bonds in the market, promising to pay a level of interest over a set period of time, after which they repay the money to the person or company who owns that bond. US Government has a borrowing limit of $US14.3 tn and interest repayments of about $US200 bn a year. That limit was reached in May but extended until Aug 2. The current proposal is to lift the debt ceiling by $US2 tn of which $900 bn will be raised immediately and in return to cut up to $US2.5 tn in spending by 2021. What does the US do with all the money it borrows: The US Government increased its mandatory spending by 15 % ($US2.17 tn) last year mainly on social security, Medicare and Medicaid programs as well as interest repayments. Discretionary spending increased by 14 % ($US1.34 tn) with increased spending on defence the biggest item ($US663 bn). As the US population ages, spending on health and social security as a percentage of GDP is expected to rise from about 5 % to between 6 and 10 % of GDP in the next 20 years. How the crisis occurred: The 2008 global financial crisis created a fragile US economy and caused government spending to soar while tax revenues dropped. This has caused a big rise in the government's deficit (its annual debt). The crisis is a political one. Republicans control the House of Representatives and they want to bring the deficit back under control through spending cuts but without raising taxes. President Barack Obama's Democrats want to shield healthcare and pension programs from cuts and raise taxes. Where US gets its money from: China is the biggest lender to the US, owning $US1.16 tn worth of US Treasury bonds at May 2011. This is followed by Japan ($US912 bn), Britain ($US346 bn) and oil exporting countries such as Saudi Arabia, Ecuador, Venezuela, Indonesia, Bahrain, Iran and Iraq. US taxpayers own Government bonds through investment funds, banks, major securities brokers & through most of the world's biggest financial institutions that use US Treasuries with their AAA rating as collateral to borrow. Why US cant live without Debt? Though the debt ceiling has been raised, the equal amount of cut in the spending mandated can put US on the back foot at a time when it is suffering from one of its biggest employment crisis ever. It desperately needs to inject more money in the economy instead of strangulating it with its austere measures like spending cuts. Supposedly US doesnt have enough money. In such scenario it is left with two choices. The first is to start prioritizing which payments the government makes; currently only 60% of US spending is financed by taxation while 40% coming from debt. Therefore the Obama administration would have to find a way of delaying 40% of their expenditure, by cutting back on the healthcare reforms and delaying the payment of benefits, which leaves the government open to significant legal challenges by those entitled to benefits. The other option is however even more scary, the possibility that the US defaults on its payments. This works in a very similar way to your credit card. You are required to pay off a certain amount each month, if you simply don't have the money to, however, you can default and not pay but this comes with severe penalties and a downgrading of your credit score. In a similar way, if the Obama administration is unable to continue paying the interest on the bonds its issued, then it faces catastrophic problems, with its perfect triple A credit rating lost which means that any future debt becomes more expensive. And this isn't just a risk for America, everyone right across the world will be hit by it. If you need evidence, look at the 2008 economic crisis. It wasn't problems in England, Britain or even Europe which caused the recession; it was a collapse in confidence in the US financial market. A default on debt by the US government would do exactly the same thing, plunging scores of countries back into recession. However, if the US administration responds to the alarming sluggishness of the US economy with more quantitative easing (that is, printing money by buying back assets such as bonds to inject cash and confidence into the financial system) then all bets may be off. Quantitative easing may, or may not, have succeeded in saving the financial system but it sure has distorted investment markets by creating a bubble in UK and US government bonds. Held to Ransom: To most Americans and the rest of the world, the policies of Tea party which orchestrated the deal is beyond comprehension and referred to as voodoo economics. The intent behind deficit-reduction is no doubt pragmatic but the means to achieve so- i.e., through spending cuts- is being considered outrageous. Pundits comment, if you really want to cut debt, you need to put more money to spur growth which eventually will generate revenue and cut the deficit. However, it remains to be seen who is proved right. Only problem is, its not just the US that will face the consequences but the whole world.

PERSONALITIES OF THE WEEK

C.K. Prahalad: Management guru with varied interestsKnown for being a management guru the late C.K.Prahalad had varied interests from writing to teaching to business. As a thinker, his contribution to the field of management is irreplaceable. He is the father of concepts like Core Competence and Bottom of the Pyramid that became the guiding force for many business ventures. His major ideas are about core competencies of the organization and leveraging on it and the idea of looking at the poor as a source of profit than as an object of charity. Getting a foothold: C.K.Prahalad was born in the town of Coimbatore in Tamil Nadu. He studied physics at the University of Madras. He worked as a manager in a branch of the Union Carbide battery company, before continuing his education in the United States, and earning a PhD from Harvard. He taught in India and America, eventually joining the faculty of the University of Michigan's Business School, where he held the Harvey C Fruehauf chair of Business Administration. Carving the path ahead: At Ann Arbor, University of Michigan, he met Gary Hamel, then a young international business student. Their collaboration ultimately resulted in the bestselling, Competing for the Future (1994). In his book (written with Venkat Ramaswamy), The Future of Competition (2004), C.K. Prahalad argued that companies have not made enough use of the opportunities provided by globalization. There is an inability to realize that not only have the rules of the game changed but the role of the players has been transformed too. The 'customer' is a more powerful and pro-active figure. Customers are no longer abstractions that have to be satisfied. Thanks to the internet, they are agents creating and participating in transactions. The concept of value has also changed. It is not inherent in products or services. It can't be instilled by producers or providers. It has to be co-created with consumers. They build this by experiencing it. The only way companies can compete successfully is through building new strategic capital. Alongside this work, Prahalad had been wrestling with the perplexingly complex and political issue of poverty. This led him to write The Fortune at the Bottom of the Pyramid (2004) in which he identified the world's poor (the 'bottom of the pyramid') as a potential untapped market for companies, worth anything up to $13 trillion a year. He believed "The real source of market promise is not the wealthy few in the developing world, or even the emerging middleincome consumers. It is the billions of aspiring poor who are joining the market economy for the first time" C.K.Prahalad was insightful and definitely provocative resulting, in an interesting combination of an academic and a practitioner. Joseph Eugene Stiglitz: The Honorable Joseph Stiglitz an American economist and a professor at Columbia University is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He has been the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, freemarket economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank. Against the consensus: Stiglitz did research on efficiency wages, and helped create what became known as the "Shapiro-Stiglitz model" to explain why there is unemployment even in equilibrium, why wages are not bid down sufficiently by job seekers (in the absence of minimum wages) so that everyone who wants a job finds one. Stiglitz joined the Clinton Administration in 1993, serving first as a member during 1993-1995, and then as Chairman of the Council of Economic Advisers during 1995-1997, in which capacity he also served as a member of the cabinet. Along with his technical economic publications (he has published over 300 technical articles), Stiglitz is the author of books on issues from patent law to abuses in international trade. He has authored books like Globalization and Its Discontents where he argues that what are often called "developing economies" are, in fact, not developing at all, and puts much of the blame on the IMF. The book The Three Trillion Dollar War examines the full cost of the Iraq War, including many hidden costs. The book also discusses the extent to which these costs will be imposed for many years to come, paying special attention to the enormous expenditures that will be required to care for very large numbers of wounded veterans. Stiglitz was openly critical of George W. Bush at the time the book was released. Another book written by Stiglitz is Making Globalization Work in which he surveys the inequities of the global economy, and the mechanisms by which developed countries exert an excessive influence over developing nations. Dr. Stiglitz argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is being both economically and politically destabilized. Joseph Stiglitz has always challenged traditional western thinkers and his literature generally tends to support the East.

BUSINESS NEWS
1) India set to fund European bailouts- TOI 3 Aug India is set to fund bailouts in financially-stricken Europe, marking a dramatic role reversal from 20 years ago when it went knocking on the doors of the International Monetary Fund to avert a balance of payments crisis. The government on Tuesday sought parliamentary approval to provide over Rs 9,003 crore (over $2 billion) in loans to the multilateral agencys New Arrangements to Borrow, a fund whose corpus was raised to over $500 billion in March when the crisis in Europe showed no signs of abating. So, from Greece, which has received $300 billion so far, to Portugals $100 billion bailout, India could be playing a part in the international rescue operations. There are already suggestions that more funding would be required from the European Union as well as multilateral bodies. 2) Indians do not like to be indebted: Keki Mistry, CEO, HDFC- TOI 31 July India has a huge shortage of housing & mortgages are only 9% of GDP. In the US everyone has a house & mortgages are 84% of their GDP. On the face of it little has changed at HDFC from the time of liberalization . But at the same time, the subtle changes are hard to miss as well. For instance, what began as a metro-centric lender in the '70s today generates most of its business from smaller cities with average loans of little over Rs 18 lakh. The biggest change is, however, in the scale of business without a corresponding increase in costs, which has made the company the darling of investors. In the '90s, its 727 employees manned 24 branches and brought in an average profit of Rs 3.3 lakh per employee. Today, its headcount is 1,607-a little more than double-but branch network has grown nine times and the profit per employee stands at around Rs 2.44 crore. As on June 2011, the company's loan book amounted to Rs 1,24,100 crore. Even with this scale the company has been growing loans at an average of 25%. 3) ITC to invest Rs 5,000 crore for buying shares of rival FMCG: YC Deveshwar- ET 30 July ITC plans to invest up to Rs 5,000 crore buying shares of its rivals across sectors it operates in, its chairman YC Deveshwar said. "We currently have liquidity in our books to the tune of Rs 4,000-5,000 crore of funds. We would like to deploy it as equity investments in sectors where we operate, have a thorough understanding and hence feel safer about our investment," he told newsmen after the company's 100th AGM here on Friday. The cigarettes-to-hotels conglomerate will look at a wide range of rival companies in FMCG, IT and agri-products for treasury investment. ITC also plans to get into dairy business, making pasteurised milk, milk powder, cheese, milk chocolates and butter, Deveshwar told the AGM. "It's actually a compliment to rivals if we invest in them. As far as I know, some of them are actually happy with our investment," said Deveshwar. ITC's investment in East India Hotels (EIH) and Hotel Leela venture have yielded handsome returns. 4) Air Indias 38,000 staff not paid salaries for months, forced to borrow, sell assets- ET 28 July Air India staff forced to borrow, sell assets & brace for tougher times as salaries are not paid. The 40-year-old Air India Staff Colony Consumers Cooperative Society provides monthly household goods to some 8,000 employees of the national carrier residing in the suburban Mumbai colony. In good times, the cooperative would provide credit, including funds to take capital goods on hire purchase, to the tune of . 35 lakh every month to some 4,000 members. The money would be deducted from monthly salaries. But these are turbulent times for Air India, which is bleeding losses of a little over . 20 crore a day. Employees have not been paid for two monthsand the salary for July looks uncertain. Some are selling gold and jewellery, two-wheelers and even considering selling homes to make ends meet. 5) Burgernomics and Indian Exports- ET 1 Aug Why are Indian exports surging (up 46% during Apr-Jun 2011) when the rupee is at a 3-year high against the US dollar? Its because the most quoted exchange rate of the rupee ( versus $) is also the most misleading right now. In real terms, the rupee is actually one of the most undervalued currency in the world. The famous Big Mac index proves this conclusively. Developed by The Economist 25 years ago, the Big Mac index uses the price of McDonalds burger in different countries to construct an informal (but surprisingly accurate) indicator of real exchange rate. India, which makes a debut in the index this week, has one of the most undervalued currencies vis-a-vis the dollareven more than the Chinese Yuan. As The Economist says, its fast food for thought.

6) Just a Day to Start a Business- ET 29 July From August 1 it will take just 24 hours to start a company doing everything thats needed online. As India completes 20 years of reforms, another barrier comes down. India has eased its rules to allow companies to be set up in a day. In starting businesses, we may come up to speed with the best (see graphic). Kishore Biyani took almost three months to incorporate Pantaloon Retail; Tulsi Tanti a month to float Suzlon Energy; Ramesh Chauhan took ages. Kiran Mazumdar Shaw says she did it in a record time of three months in 1978. But come August 1, reports Apurv Gupta from Mumbai, entrepreneurs dreaming about walking in their footsteps can float a company in exactly 24 hours, doing everything thats needed online. 7) Bharti Airtel proposes up to Rs 70 crore pay package for Sunil Mittal- ET 1 Aug Telecom giant Bharti Airtel today proposed an annual pay package of up to Rs 70 crore for its chief Sunil Mittal, besides other benefits, while seeking its shareholders' nod for his remuneration. The proposed package would be more than double his last fiscal remuneration of Rs 27.5 crore, which is nearly three-fourth or about 76 per cent of the combined pay package of the company's all directors in fiscal ended March 31, 2011. As per Bharti Airtel's annual report, released today, Mittal's remuneration rose by about Rs 4 crore or 17 per cent from his 2009-2010 fiscal's package of Rs 23.5 crore. Bharti Airtel also sought its shareholders' approval for re-appointment of Mittal as its Managing Director for another five years with effect from October 1, 2011, at a remuneration package of up to Rs 70 crore besides other benefits. 8) Jhunjhunwala to Give Away 25% of Wealth- ET 3 July Rakesh Jhunjhunwala, Indias most famous investor, has pledged to give away 25% of his wealth during his lifetime. He is the fourth Indian businessperson after Azim Premji, Shiv Nadar and GM Rao to make a statement of intent to give away a substantial part of their personal wealth to philanthropy. Announcing this on Monday evening at an event organized by GiveIndia, a giving facilitator, the 51-year-old said he planned to route all his charity through his R Jhunjhunwala Foundation. He has set a 2020 corpus target of $1 billion (about 4,400 crore) for his foundation, which is currently inactive. Jhunjhunwala declined to quantify his net worth, but Forbes magazine, in 2008, had ranked him 1,062 among the worlds richest, with an estimated wealth of $1 billion. Often referred to as Indias Buffett, Jhunjhunwala picks up large stakes in companies he thinks have a competitive advantage, ability to scale up, and good management. In his giving, he now joins Buffett. 9) Those who were buying 2-wheelers are now purchasing bicycles'- The Hindu Business Line 31 July Mr Pankaj C. Munjal, Managing Director of one of the oldest bicycle manufacturers in India, is upbeat about the growth in demand for the common man's vehicle'. The 49-year-old head of Hero Motors Ltd and Hero Cycles Ltd graduated in science and went on for specialized training in automotive manufacturing at General Motors Institute, Flint, US. In an interview with Business Line, Mr Munjal talks about his company's journey so far and future plans. From a modest beginning of mere 639 bicycles in 1956, Hero Cycles now produces over 18,500 cycles a day and has an annual turnover of Rs 1,700 crore. The company employs close to 5,500 people and is the market leader, with 48 per cent share of the Indian market. We are known for fair bargain and reliability. Our huge service network is a big plus. Our manufacturing plant in Ludhiana is the largest bicycle manufacturing plant in the world we sell 5.4 million cycles out of current Indian market size 12 million cycles, manufactured at Ludhiana. 10) 98.5% of inhabited Indian villages have public telephones: TRAI- ET 1 Aug New data released by telecom regulator Trai shows that 98.5 per cent of the inhabited villages in the country had village public telephone connections as of the end of the quarter ended March 31, 2011. There are 5,93,731 inhabited villages in India as per the Census 2001. At the end of March, 2011, 98.5 per cent of the total inhabited villages in India were connected to phone networks through VPTs, as per the Trai report. The number of VPTs increased from 5.81 lakh in December, 2010, to 5.85 lakh as of the quarter ended March, 2011. Himachal Pradesh has the highest rural tele-density of 70.23 (connections per 100 people), followed by Punjab (56.92), Kerala (53.25), Haryana (51.23) and Tamil Nadu (48.92, including Chennai). Bihar continues to have the lowest rural tele-density of 21.86, followed by Madhya Pradesh (22.92). Idea continues to be the service provider with the highest proportion of rural subscribers to its total subscriber base and this proportion rose to 51.62 per cent at the end of the March quarter from 49.73 per cent at the end of December, 2010.

11) Sebi makes it easier to take over companies-TOI 29 July A slew of new rules by SEBI make it easier to acquire a company and make it easier & safer for small investors to access the markets. Market regulator Securities and Exchange Board of India (Sebi) has announced a slew of measures that can have far-reaching implications for the market, making it easier to acquire a company, helping mutual funds get more retail investors and making it easier and safer for small investors to access the markets. The game changer for India Inc, however, is the change in the almost 15year-old takeover rules, which will now enable companies to buy up to 25% in another company without triggering the mandatory open offer. Currently, this trigger is at 15%. The regulator also said that after the new takeover rules become effective, the acquirer will have to buy a further 26% stake in the acquiring company through an open offer, up from 20% now. 12) Hang on inactive users- The Hindu Business Line 27 July The Department of Telecom will ask telecom operators to weed out inactive mobile users in a bid to free up mobile numbers. According to the telecom regulator, there are 840 million mobile subscribers of whom only about 588 million users are active. However, the operators continue to count the inactive users as subscribers, thus blocking the numbers allocated to them. DoT wants mobile companies to cancel 252mn inactive users out of 840 mn users to free up mobile numbers or else we move to the 11digit series. But the problem is that the current National Numbering Plan 2003 was designed for 750 million connections, including 450 million mobile users, and was expected to last till 2030. This has come under severe strain, with mobile numbers crossing the mark in 2009 itself. We are going to allocate numbering resources based on the active subscriber base. 13) Cos junk videoconferencing for life-like experience offered by new tech- ET 29 July India Inc boardrooms and workspaces are using telepresence applications that are becoming less expensive (as low as . 20 lakh), more accessible (available on desktops, tablets and handhelds) and more intuitive (through the use of robotics). Companies such as L&T, Vedanta, Infosys and P&G are slowly junking videoconference systems in favour of full-fledged telepresence suites. To the uninitiated, telepresence provides an immersive communications experience to the participants complete with high-definition video and audio, multiple cameras with motion sensors, life-sized images of participants, and a controlled environment. This simulates a face-to-face encounter far better than any videoconference ever managed to. Simply put, telepresence is the super-deluxe version of videoconferencing. Telepresence systems now cost $200,000-500,000 and the returns kick in from savings in air tickets and hotel expenses and higher productivity. 14) Online survey firm dupes investors of 1,300 crore- ET 31 July In an operation that unfolded in Indore, the economic offences wing of the Mumbai police arresteda Singapore-based pyramid-marketing companyin the wee hours of Friday for allegedly perpetrating a nationwide scam amounting to Rs 1,320 crore. Three other senior members of the company were also arrested but not the CEO who, the police say, is hiding in Dubai. The firm, which claims to have 12 lakh clients across the country, has also been accused of transferring more than Rs 700 crore to Singapore. 15) Bad roads a pain in the back: Docs- TOI 29 July Back problems and slipped discs caused or aggravated by the citys abominable roads have become the bane of Mumbaikars existence. Orthopaedics in public hospitals say that every day at least 10% of their patients are being treated for bad backs caused because they have to commute for long hours on pothole-ridden roads. Orthopaedics, gynaecologists and general practitioners have noticed a rise in the number of Mumbaikars complaining of moderate to severe back aches. Dr Hemant Thacker, who consults in many south Mumbai hospitals, says every rainy season the number of back problem cases rises. Motorists from the city and the larger metropolitan region are expressing their anger at the poor condition of the roads by refusing to pay toll. Mumbai: Its not just the elderly, those with existing back problems, or pregnant women who have to be extra careful. The condition of our roads is so bad that even people who never felt a twinge of pain in their backs have begun to suffer from slipped discs.

16) Girl child campaign may get star support-TOI 31 July The state government, in a bid to bolster its girl child campaign, has approached star Bollywood coupleKajol and Ajay Devgn to be the brand ambassadors for the state health departments drive. Ajay and Kajol are believed to have consented to the proposal informally. Minister for public health Suresh Shetty, said sources, wanted a Bollywood couple with a girl child and a noncontroversial image. There has been a sharp decline in the girl-boy ratio in the state in the last decade. The child sex ratio figures of 1991 Census show 946 girls per 1,000 boys. In 2011, this dropped to 833 girls per 1,000 boys. Beed district in Marathwada region registered a drop of 93 girls per 1,000 boys in the last decade. The child sex ratio in Beed was 894 girls per 1,000 boys in 2001 as against 801 girls in 2011. Besides Ajay and Kajol, the state government has already roped in prominent Marathi film industry actor Sachin Pilgaonkar and wife Supriya as brand ambassadors for save the girl child campaign. They are popular in rural parts of the state, said an official. 17) As Media Ratchets up Pressure 24x7, UPA Brings on Its G7- TOI 1 Aug Between them, these seven ministers run nine ministries. Yet, at noon every weekday, they leave their ministries and assemble at the conference room on the fifth floor of Shastri Bhavan, home to the information and broadcasting ministry, to take on an additional responsibility: Managing the media. They meet for about an hour to decide issues of the day, who will handle what, and what will they say to the media. For the rest of the day, whenever needed, these ministers represent the government on their respective issues in the media, be it at press briefings or in TV debates. The group was formed in early-May in the aftermath of the Anna Hazare anticorruption agitation. This is the first time an Indian government has institutionalized media management in this manner, where a group of ministers discuss and present a collective front. Home Minister P Chidambaram, one of the seven ministers, says the objectives have been partially met. 18) IT, ITeS Workers Running Out of Space- TOI 3 Aug Its 9.30 am and theres near commotion at a building in Gurgaon that houses off shoring units of US firms. The parking is full employees are being turned away and there are long queues that snake their way to the elevators. The lifts themselves are packed to the gills. Inside an office, employees sit within sniffing distance of each other. Cubicles have made way for linear sitting, and the office does not look too different from a factory shop floor. Lavatories are few, and it isnt uncommon to spot a line outside them. The scene at the cafeteria is not much different from that at the parking lot. Welcome to just another day at a typical small or mediumsized IT outsourcing company. Under pressure from their clients, or parent organizations, to reduce bills amid increasing rentals and employee salaries, these IT-enabled services (ITeS) firms are taking stringent measures to cut costs. They are reducing space per employee, and decreasing the size of common areas like cafeterias and conference rooms. At a clutch of ITeS companies, office space is being shared between IT workers and the call centre workforce (as the latter work the late shift to synchronize with US timings). 19) India tells EU Nations to commit visa numbers for Indian professionals- ET 3 Aug India has sought a commitment from each of the 27 member-nations of the European Union on the number of Indian professionals they would allow to migrate every year in sectors of its interest. While India has agreed to bring down duties on a large number of goods from the EU countries, including automobiles and liquor, as part of the free trade agreement, it is conditional upon the country gaining "substantially" in the services pact, the official said. For instance, India sees a lot of scope for Indian accountants in the UK and IT professionals in France, and it has sought access for them accordingly. Countries in Europe have their own numerical limits on foreign workers and tax structure, but most give visas only to corporate transferees and business visitors and do not allow access to individual professionals and contractual service providers. European countries do not recognize qualifications gained in India and also apply the economic needs test (ENT) in many cases where the hiring company has to prove that the post cannot be filled by European citizens. 20) Tata Motors launches three variants of crossover SUV Aria-TNN 02 Aug The country's largest auto player Tata Motors today rolled out three variants of its recently launched crossover SUV, the Aria. "The Aria 4x2 is launched in three trim levels - the Aria Prestige at the top-end, the Aria Pleasure and the Aria Pure at the lower-end," Tata Motors managing director Indian operations PM Telang said in a release here today. The Aria 4x2 range will be available from Rs 11.61 lakh onwards (ex-showroom, Delhi). The Aria range along with the 4x2 range is being made available, in 85 cities through 150 showrooms, the release said.

INTERNATIONAL NEWS
21) Iran says oil payment row with India resolved- Reuters 31 July Iran's oil payments row with India has been resolved before any interruption in crude exports to its second-biggest customer, the Iranian Oil Ministry's website SHANA said on Sunday. Halkbank, Indian refiners are expected to clear over $5 billion of debts built up with Iran during a lengthy U.S.-inspired payment impasse. "After intensive talks between India and Iran, both sides agreed to clear the debt promptly," Ahmad Ghalebani, head of the National Iranian Oil Co. (NIOC), told SHANA. India and Iran have been looking for ways for New Delhi to pay for some 400,000 barrels per day of Iranian crude, or 12 percent of India's oil demand, since the Reserve Bank of India halted a clearing mechanism under U.S. pressure last December. 22) Foxconn assembles iPads & iPhones in China plans use 1 mn robots in 3 yrs to cut labor cost- ET 3 Aug Taiwan's Foxconn Technology Group, known for assembling Apple's iPhones and iPads in China, plans to use more robots, with one report saying the company will use one million of them in the next three years, to cope with rising labor costs. Fox conn's move highlights an increasing trend toward automation among Chinese companies as labor issues such as high-profile strikes and workers' suicides plague firms in sectors from autos to technology. Contract manufacturers such as Foxconn, which also counts Dell, Hewlett-Packard and Nokia among its clients, are moving parts of their manufacturing to inland Chinese cities or other emerging markets. Foxconn, which has been plagued by a spate of workers' suicides in its Chinese factories since last year, plans to use the robots for simple assembly line procedures, the statement quoted its chairman Gou as saying. 23) US is 'parasite' on global economy: Russian Prime Minister Vladimir Putin- ET 3 Aug Russian Prime Minister Vladimir Putin accused the United States on Monday of living beyond its means "like a parasite" on the global economy and said dollar dominance was a threat to the financial markets. US President Barack Obama earlier announced a last-ditch deal to cut about $2.4 trillion from the US deficit over a decade avoid a crushing debt default and stave off the risk that the nation's AAA credit rating would be downgraded. Putin, who has often criticized the United States' foreign exchange policy, noted that Russia holds a large amount of US bonds and treasuries. US-Russian ties soured during Putin's 20002008 presidency but have warmed significantly since his protege and successor President Dmitry Medvedev responded to Obama's stated desire for a "reset" in bilateral relations. 24) DEBT RIPPLE IMFs lending corpus has grown 10-fold on G20 push- TOI 3 Aug Over the past two years, amid increased stress in the global economy, the International Monetary Fund has been pressed into service on several occasions and has financed bailouts in European countries facing a crisis due to high levels of debt. The 10-fold rise in the New Arrangements to Borrow (NAB) corpus was the result of the new global financing order created by G20, a group of the worlds most powerful economies, in the post-financial crisis era. Along with the jump in corpus, membership to the elite club of NAB contributors was also expanded to include 13 emerging economies, which included India. While the US was the principal donor, chipping in with $100 billion, its largesse was not appreciated at home when the funding was given. Since then, the worlds largest economy has itself had to deal with a crisis over the Obama administration and Congress logjam on borrowing ceiling and spending cuts. 25) Pakistan relying too much on China against U.S.-Reuters 02 Aug Pakistan's quick response to charges by China that militants involved in attacks in Xinjiang had trained on its soil shows the importance of its ties with Beijing, but it could be a mistake for Islamabad if it relies too much on China. Pakistan immediately dispatched Lieutenant-General Ahmed Shuja Pasha, director general of Pakistan's powerful Inter-Services Intelligence (ISI) spy agency, to Beijing after Islamic militants mounted a weekend attack that left 11 people dead in the western region of Xinjiang, according to media reports. "We cannot allow Pakistani territory to be used for any activities against any neighbour, especially a close ally like China," said Mushahid Hussain Sayed, Chairman of the PakistanChina Institute. The United States rarely gets that level of cooperation when it presses Pakistan on militants operating in its border regions. American officials for years said al Qaeda leader Osama bin Laden, killed in a U.S. raid in Pakistan in May, was hiding in the country.

MISCELLANEOUS NEWS
26) Lokpal bill cleared, PM not in ambit Asian Age 29 July The Union Cabinet on Thursday decided to keep the office of the prime minister outside the fold of the proposed Lokpal, overruling Prime Minister Manmohan Singh himself. The deliberations spread over two hours saw Singh make a strong argument for the inclusion of his office in the Lokpals ambit, only to run into resistance from the overwhelming majority. The governments decision met with a sharp attack from civil society activist Anna Hazare who announced that he would go ahead with his fast from August 16 and demanded that the government bill be withdrawn. The revised draft provides for the majority of the 9-member Lokpal to be drawn from among people with a legal background: a concession to the argument that the quasi-judicial body will require people with understanding of law and legal practices. In another significant addition, any trust or body, including NGOs that receive public funds, will come under the Lokpals scrutiny. 27) New draft Land Acquisition Bill -Business Today 30 July The new draft Land Acquisition Bill proposes that the Government will not acquire land for private companies for private purposes or multi-cropped irrigated land. Companies will have to buy it themselves at 6 times the market rates The draft Bill says that the public purpose once stated cannot be changed. But it also says that if the land is not used in five years for the purpose for which it is acquired, it should be returned to the original owner. Most of such land is in Punjab, Haryana, West Bengal, Bihar and poll-bound Uttar Pradesh, which has become a political hotspot on land acquisition issues. Called the Draft National Land Acquisition and Rehabilitation & Resettlement Bill, 2011, it proposes a comprehensive compensation policy. In the urban areas, the amount should be not less than twice that of the market rate, whereas in the rural areas, it should be not less than six times the original market value. Among its other salient features is a comprehensive rehabilitation package for land-owners and livelihood losers, including the landless, particularly the Scheduled Tribes that are primarily dependent on the land being acquired. 28) Abbreviated expressions make their way into everyday communication- ET 28 July Twitter lingo like, TMI (too much information), IMHO (in my humble opinion) & TBH (to be honest) now part of Oxford Dictionary. If you thought TMI and IMHO are abbreviations used only by Facebook-obsessed Gen Z, you are wrong, TBH. Such Internet usages are now part of the official Oxford English Dictionary and are creeping into corporate communication. For the Twitter uninitiated, TMI is too much information, IMHO is in my humble opinion and TBH is to be honest. And they are getting into corporate lingo, as PepsiCo India Executive Director (Marketing) Deepika Warrier says. Languages change with time. Such words are being frequently used in our internal informal communication as it saves time, Warrier says. She expects these words to gradually make their way into formal communication. With the cult of social networking sites such as Facebook, Twitter and now Google+ catching up, abbreviated expressions used widely in chats and Tweets started making into the online format of Oxford English Dictionary in March. 29) Job Satisfaction Just Temporary- TOI 30 July Young Indian employees have no hang-ups about job security and are increasingly switching permanent jobs for temporary roles offering better money, career profile and quicker rise to the top. As many as 15% new recruits of temp staffing firm Teamlease are permanent employees switching to temp jobs, company officials say. The development suggests that for the first time, the Indian workforce is putting opportunity ahead of security. The carrots better career profile, money and organisation brand. Younger employees have a higher risk appetite in terms of job movement. A shift such as this can give the employee exposure to new growth areas, experience of working on cutting-edge technology and an opportunity to get absorbed as a permanent employee eventually, says Sudhakar Balakrishnan, managing director & CEO of Adecco India 30) Mining mafia paid of Karnataka CM Yeddyurappas family- TOI 28 July In a stunning finding that could blunt the BJPs attack on the Congress on corruption, Karnataka Lokayukta, Justice Santosh Hegde, has said chief minister B S Yeddyurappas family got illegal payoffs from a mining company to hasten clearance of pending applications. Not just this, he has recommended criminal proceedings against Yeddyurappa and some of his ministers. Lokayukta pegs loss to Exchequer at Rs16,000cr. BJP Asks CM to resign. Justice Hegdes second report, released on Wednesday, pegs losses suffered by the state exchequer due to illegal mining over four years (2006-2010) at Rs 16,085 crore and recommends that the amount be recovered from those who caused itpoliticians, officials and companies. The report also seeks criminal action against three ministersG Janardhana Reddy, G Karunakara Reddy and B Sriramulu.

CORPORATE INTELLIGENCE THE ESSAR GROUP

Head Quarters: Mumbai Revenue: US$20 billion Group Statistics: The Essar Group has operations in more than 25 countries across five continents and employs 75,000 people. The group companies are well diversified across core economic sectors of steel, oil & gas, power, communications & business process outsourcing (BPO), shipping, ports & logistics, projects and minerals. Other ventures include those in publishing, agribusiness, realty and financial services. Group Companies: Essar Steel a steel manufacturing company with fully integrated operations from iron-ore mining to steel retail outlets; Essar Energy plc a low-cost, integrated energy company with US$12 billion worth of assets across the power and oil & gas industries; Essar Oil & Gas involved in exploration, production and retail of Oil with offshore and onshore oil & gas blocks worldwide; Essar Power Indias second largest power generation company in the private sector; Essar Shipping Limited an integrated logistics solution provider with investments in logistics services, sea transportation and oilfield drilling; Essar Ports Limited develops, owns and operates ports and terminals and is Indias second-largest private sector port and terminal company by capacity; Essar Projects Limited an engineering, procurement and construction (EPC) company; Essar Communications a global player with presence in telecom services, consumer durables and IT and BPO services; Essar Minerals owns iron ore and coal mines in India, Indonesia, Mozambique and the USA. Key People: Shashi Ruia (Chairman); Ravi Ruia (Vice-Chairman) Essars Humble Beginnings: In 1956, Nandkishore Ruia, father of Shashi and Ravi Ruia, began undertaking independent contract works (mostly in the construction and shipping businesses) under the name of Essar Construction and Carriers Ltd. named Essar after the first letters of his sons' names S and R. After the death of Nandkishore Ruia in 1969, his sons laid the foundation of the Essar Group which began its operations with the construction of an outer breakwater in Chennai port. Capitalizing on emerging business opportunities, it became Indias first private company to buy a tanker in 1976. The Group also invested in a diverse shipping fleet and oilrigs, when the Government of India opened up the shipping and drilling businesses to private players in the 1980s. In the 1990s, Essar began its steelmaking business by setting up Indias first sponge iron plant in Hazira, a coastal town in Gujarat. The Group went on to build a pellet plant in Visakhapatnam, and eventually a fully integrated steel plant in Hazira. Through the 1990s, with the gradual liberalization of the Indian economy, Essar diversified its shipping fleet, started oil & gas exploration and production, laid the foundation of its oil refinery at Vadinar, Gujarat, and set up a power plant near the steel complex in Hazira. Essar also entered the GSM telephony business in 1995, establishing Indias first mobile phone service in Delhi (branded Essar Cellphone) with Swiss PTT as the joint venture partner. The Essar Group Today: Having started out as a construction company, the Essar group today is a multinational conglomerate growing through strategic global acquisitions & partnerships. Its flagship Essar Steel is a global steel producer having manufacturing facilities in India, Indonesia, Canada & North America and a capacity of 14 million tonnes per annum. It operates specialized plants to manufacture value-added products like plates and pipes. It is also a leader in cold rolled, galvanized and pre-coated steel products. Essar Power has a current generation capacity of 1,600 MW spread across five power plants in India and Canada. While Essar Communications has over 140 million subscribers in India, Kenya, Uganda and Congo, Aegis - Essar's BPO arm - serves Fortune 500 companies across 10 countries through 47 delivery centers. INTELLIGENCE BYTES: Essar Energy plc, was listed on the London Stock Exchange in 2010 following a highly successful Initial Public Offer (IPO), the second largest overseas IPO ever floated by a company of Indian origin. Essar Oils 300,000 barrels-per stream-day refinery located at Vadinar, Gujrat has processed more than 32 varieties of crude (Vadinar receives almost 70% of Indias crude imports). Essar has brought all its retailing arms -- The MobileStore and The ElectronicStore which retail mobile & consumer durables and IT products, Essar Hypermarket which retails steel and fuel retail operations of Essar Oil under Essar Retail, having a combined turnover of $1.5 billion. On 1 Aug, 2011, Essar Energy completed the $350 million takeover of UK's second-largest refinery, popularly known as Stanlow refinery, from global major Shell. The acquisition gives Essar direct access to the UK market.

FINANCE NEWS
1. Facebook Credits on mobiles likely Business Standard 28 July Facebook Inc is in talks to let developers sell virtual goods within mobile web browsers, enabling developers to use Facebooks currency, called Credits, on mobile applications accessed over the web. That means Facebook could get about 30% of revenue generated by the sale of virtual goods. Right now, that commission goes to Apple Inc or Google Inc because they run the operating systems for phones. Facebook is one of the most popular mobile apps on Apples iPhone and Googles Android, though it makes no revenue from the programmes. Developers of Facebook apps make money when users buy virtual items within their programmes. Facebook makes most of its money from ads and started testing Credits in 2009, to diversify its revenue sources. The system lets users buy items in different games using a single virtual currency, with a commission going back to Facebook. 2. Rupee hits near 3 year high on weak dollar ET 28 July The rupee rose to an almost three-year high against the US dollar , expecting a rise in fund flows due to higher interest rates compared with the US where the Federal Reserve is holding policy rates near zero. Although the rupee has been rising steadily, currencies of competing nations have appreciated more and exports have been gaining, since their relative position in global trade vis-a -vis China, Indonesia and Sri Lanka is still better. The climb of the rupee this time around is not due to domestic factors, unlike in the past when foreigners poured into equities, but a global trend where the dollar is sliding against multiple currencies due to a potential downgrade of US debt from AAA rating. The debasing of the US dollar due to the cheap money policy of the Fed has led to many currencies appreciating simultaneously. The US dollar, the global currency for trade, hit a new low against the currencies of Australia and New Zealand and also the Swiss Franc. The Canadian dollar and the Japanese yen have also been rising against the greenback. The rupee touched a peak of 43.8550 to the US dollar, the highest since August 29, 2008, but ended 0.2% up at 44.0850. It rose 0.5% on Tuesday after the RBI surprised the market by raising the repo rate- the rate at which it lends to banks-by 50 basis points to 8%. 3. S&P: Deficit cuts of $4 trillion a good start Reuters 28 July Cutting the U.S. deficit by some $4 trillion over 10 years would be a good start, but more savings would be needed over time to bring the country's finances under control, said ratings agency Standard & Poor's. John Chambers, the chairman of S&P's sovereign ratings committee said that $4 trillion in savings is not going to do the trick in terms of stabilizing the U.S. government debt-to-GDP ratio. That ratio, which measures the country's debt load against the size of its economy, is one of the main factors considered by ratings agencies on deciding on a rating. It depends on cutting the deficit as much as it depends on economic growth. According to the International Monetary Fund, the U.S. government would have to come up with savings of about 7.5% of its gross domestic product to actually stabilize its debt-to-GDP ratio. Savings equal to 7.5% of U.S. GDP would represent around $1 trillion a year. This year the U.S. budget deficit has blown out to $1.4 trillion. At about 9% of GDP, it is one of the highest since World War II. 4. Trading interest in equity futures at 5-yr low Business Standard 29 July There was confusion on the Street after open interest in the domestic equity derivatives segment, which signifies trading positions, touched a five-year low on Thursday on monthly expiry of stock futures and options contracts. Rollovers in the National Stock Exchanges (NSEs) S&P CNX Nifty index futures were abysmal. The open interest rollover in Nifty futures stood at just over 18.9 million shares on the expiry day the lowest since November 2005. The benchmark indices BSEs Sensex and NSEs Nifty have come down by over 3% since Monday and participation is low, as traders are limiting leveraged positions on the back of rise in cost of financing. . The Reserve Bank of India (RBI) on Tuesday raised the repurchase rate to 8% from 7.5% and showed it was prepared to accept slower expansion to restrict inflation. Combined open interest across all Nifty futures contracts before expiry on Thursday totalled 29.2 million shares, the lowest level since at least July 2008. Rollovers were at 45%, compared with 53.6% on June 29, the day before the end of the June series 5. Indian cash rates top 8%; RBI repo bids fall ET 28 July Indian cash rates rose to above 8% as lenders adjusted to the RBI's repo rate increase of 50 basis points on Tuesday. The Mumbai inter-bank offered rate, which is the reference rate for call money, rose to 8.06% on Wednesday from 7.64% on Tuesday in response the central bank's rate increase. Banks borrowed Rs 254.30 billion from the RBI's repo window on Wednesday, sharply lower from Tuesday's Rs 727.10 billion. On Tuesday, the RBI raised its key repo rate citing need to tame inflation, but kept the CRR and SLR steady at 6% and 24%.

6. SEBI imposes transaction fee on MF investments ET 28 July New investors will now have to pay an additional Rs 150 for investment of Rs 10,000 and above in mutual funds, while the charge will be Rs 100 for existing investors. The Securities and Exchange Board of India (SEBI) said that in order to help mutual funds penetrate into retail segment in smaller towns and also incentivize distributors, the distributor would be allowed to charge Rs 100 as transaction charge per subscription. No charge can be made for investments below Rs 10,000. An additional amount of Rs 50 can be charged to first time mutual fund investor. Investors are already paying a commission in some cases, besides up to 2.5% of their investment as fund management charges. MF distributors had been demanding a re-introduction of entry load, which was abolished by SEBI in 2009, complaining that their business has taken a hit since then. A major portion of entry loads used to go to the fund distributors as their commission. 7. SEBI amends rule to check black money, tax evasion in market ET 31 July In a widely-prevalent, but secretly operated practice, people looking to evade taxes approach certain brokers to show losses in their stock trading accounts, so that their earnings from other sources are not taxed and also to show their black money as earnings made through stock market. In exchange for a 5-10% commission, these brokers show desired profits or losses in the accounts of their clients after transferring trades from fictitious accounts, created for such purposes only. In market parlance, this is known as profit or loss shopping - profit is purchased to show black money as earnings from the market & losses are purchased to avoid tax on earnings from other sources. As the transfer of trades is not allowed from one account to the other in general cases, brokers show the trades conducted in their own fictitious accounts as 'punching' errors. From August 1, SEBI has asked stock exchanges to impose hefty penalty on brokers facilitating such transactions. 8. Life Insurance companies premium income slips 28% - ET 29 July Life insurance companies reported a 28% fall in premium income during the first quarter of 2011, according to IRDA data. LIC witnessed a 29% decline compared with private life insurers' 27% fall. Experts feel the introduction of a host of guidelines for Ulips and the subsequent withdrawal of policies last September, are showing their gradual effects on the industry. Meanwhile, Non-life companies registered a 22% growth in premium income, a little higher than the 21% during the previous corresponding period. In the non-life segment, private companies command close to 43% of the total market share while public sector companies hold 56% and the rest belongs to Export Guarantee Corporation and Agriculture Insurance of India. 9. Stocks jump, gold falls on U.S. debt breakthrough Reuters 1 Aug Stocks rose while gold and the yen dropped as investors cut safety trades after Washington reached a last-minute deal to escape default. After a tense weekend, U.S. President Barack Obama said leaders from both parties reached a deal to cut the budget deficit by $1 trillion over 10 years, with additional savings of $1.4 trillion possible. U.S. S&P 500 stock futures bounced 1.5% in a relief rally, high-yielding currencies such as the Australian dollar and emerging Asian units strengthened, while U.S. Treasuries -- which have maintained their haven status despite being at the center of the debt ceiling impasse slid and Gold prices tumbled 0.9% to $1,611.89 an ounce, down from a record high of $1,632.30. Investors were still on guard, though, since the plan, which will likely come to a vote in Congress on Monday, may not necessarily satisfy Standard & Poor's enough to keep the U.S. triple-A debt rating. Also there is persistent unease that Greece's problem may spread to other European countries and hence a still heightened risk aversion in the market, with gold expected to remain volatile in the next few days. 10. Retail Credit grows 17% despite rate increases ET 1 Aug An increase in borrowing cost does not appear to have dented credit demand as banks saw robust growth in their retail loan portfolios in the quarter-ended June. According to the latest RBI data, Indian banks reported 17.3% year-on-year growth in retail loans to 6,95,257 crore at the end of June, compared with 6.6% growth a year earlier. "Though inflation and interest rates are going up, affordability is also going up as wages are increasing. Moreover, India is reaping the benefit of demographic dividend," said Shamal Saxena, head of retail banking products-India and South Asia at Standard Chartered Bank. "The 25-onwards age group is willing to borrow to lead a better life. Many of the second-rung cities too are contributing to as much growth as the large cities. Some borrowers could be also shifting from unorganized sector borrowing to organized sector," Saxena said. Incremental credit growth for the banks like HDFC Bank is coming from tierII and tier-III locations with almost 50% of the new loans are coming from these locations. Dhanlaxmi Bank MD & CEO Amitabh Chaturvedi says: "There is a slowdown in home loan demand as customers expect home prices to correct. But demand for auto, personal and gold loans continues to be robust."

11. SBI Cards launches credit cards with EMV security feature ET 1 Aug SBI Cards, a joint venture between the country's largest lender SBI and GE Capital, launched credit cards with EMV chip security feature, which will provide enhanced security features to customers. EMV or 'Euro Pay, MasterCard & Visa' is an industry standard, which prevents fraudulent usage due to possible cloning of credit cards, thereby, providing customers with enhanced security. Credit card cloning is a technique where someone obtains credit card details, copies them onto a bogus card and begins using the fake credit card. State Bank of India and international financial services provider GE Capital have set up two joint venture companies to develop a credit card business in India. While SBI Cards and Payment Services focuses on marketing and distribution of SBI Cards, GE Capital Business Processes Management Services handles the technology and processing needs of SBI Cards. 12. Finance companies rushing to float retail bonds ET 2 Aug Finance companies shut out of bank funding are knocking the doors of retail investors with nearly Rs 5,000- crore bond issues in the next few weeks with high yielding securities. Religare Enterprises, a diversified finance firm, Muthoot Finance which lends against gold and India Infoline Investment are among firms that have lined up retail bond issues which may yield more than 12% compounded returns with varying tenures of 3-5 years. Some of them are secured, and some of them are not. The latest trend of retail bonds by finance companies is after the Reserve Bank of India restricted lending by banks to asset financing companies which, it felt, were increasing risks in the financial system. It abolished the priority sector status to lending by banks to these firms that raised cost of funds for them. 13. Hit by falling volumes, brokers take the SIP route ET 3 Aug In an uncertain market, with small investors reluctant to write fat cheques to buy stocks, broking firms are peddling a new product: equity SIP. Systematic Investment Plans (SIPs) are typically mutual fund schemes among others that collect money from investors at regular intervals. Investors are attracted to SIPs as investment commitments are in small doses. Now, leading brokers are trying to replicate the principle to attract investors to purchase stocks directly by investing small amounts over a period of time. Brokers, hit by dwindling volumes and drop in earnings, feel it could be a way out to bring back retail investors. Under 'equity SIP' plans, an investor can either put in a fixed amount, say Rs 10,000 every month or week, or instruct the broker to buy a fixed quantity of a scrip. The frequency could be daily, or weekly or monthly and can be stretched over a year or longer. Most brokers don't insist on a lock-in, and investors are free to exit at any point. Equity SIPs act as a hedge against price volatility as they average the cost of purchase of any chosen stock. 14. State-run banks told to boost credit to small industry, farmers - ET 3 Aug The government has asked the state-run banks to focus on traditionally-credit starved areas, such as small industry and agriculture, while credit demand from big industry moderates. The Reserve Bank of India, has already revised the credit growth target to 18% from 19% in this fiscal, after it raised the key rates by sharp 0.5 percentage points in its monetary policy review on July 26. At present, the banking system only covers 50% of the farmers in the country. The government has set a target of Rs 4,75,000 crore bank credit for the farm sector in 2011-12. There are 21 public sector banks in the country and five subsidiaries of SBI. According to the RBI guidelines, banks are required to lend 40% of their adjusted net credit to the priority sector, which includes agriculture (18%), small-scale industries and other weaker sections. If they fall short of this target, they can buy the loans of RRBs or MFIs to meet the level. Banks are like to face more pressure to step up lending this year as the RBI has already has said that loans given to non-banking finance companies (NBFCs) will not be considered priority sector lending except to finance companies lending to microfinance institutions. 15. RBI wants companies to report MTM loss in derivative deals to banks ET 2 Aug Companies cutting derivative deals with banks will have to spell out their mark-to-market loss at regular intervals and submit a detailed board resolution to the bank selling the product, according to a Reserve Bank of India circular. This will minimize risks for banks and disputes between banks & companies as well as bring in safeguards in the deals, help in proper risk management and stop speculative positions being taken without people thinking them through. In the past few years, several companies have entered into cross-currency and other derivative deals to improve export earnings through favourable foreign exchange rates, and also swap high-cost rupee loans into dollar and yen loans with significantly lower interest charge. In 200708, as the currency bets taken by companies backfired, buyers of derivative and structured products moved courts, claiming that banks indulged in mis-selling as the contracts were complex and illegal. Banks, on the other hand, argued that while companies never complained when exchange and interest rates moved in their favour, they took legal refuge to wriggle out of financial commitments. Amid disputes and media glare, RBI last year brought in severe restrictions that virtually took the fizz out of the derivatives market.