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03rd Jan 2013 09th Jan 2013

IN BRIEF
COVER STORY CHANGES IN GLOBAL ENERGY MARKETS
ECONOMIC INDICATORS Gold Prices

31, 070 per 10gm

Dollar:Rupee

1:54.98
(as on 8 Jan 2012)

PERSONALITIES OF THE WEEK

Shinzo Abe

Salman Khan

CORPORATE INTELLIGENCE

INDIAN POWER UTILITIES

NEWS DIGEST
BUSINESS NEWS GLOBAL NEWS MISCELLANEOUS NEWS

Government initiates process of Coal India restructuring

French court overturns ultrarich tax

PayPal founder to build a city on Mars for vegetarians

ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4 CORPORATE INTELLIGENCE 5 NEWS ANALYSIS 6 NEO CORNER 11

PART TWO

K KN NO OW WY YO OU UR RB BA AS SI IC CS S: :E EN NT TE ER RP PR RI IS SE ER RE ES SO OU UR RC CE EP PL LA AN NN NI IN NG G
Enterprise Resource Planning (ERP) is a process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc. ERP is most frequently used in the context of software. As the methodology has become more popular, large software applications have been developed to help companies implement ERP in their organization. ERP systems typically include an integrated system that operates in real time (or next to real time), without relying on periodic updates, a common database, which supports all applications, a consistent look and feel throughout each module and installation of the system without elaborate application/data integration by the Information Technology (IT) department.

E EC CO ON NO OM MI IC CI IN ND DI IC CA AT TO OR RS S
Gold Prices Rs. 31, 070 per 10gm (fall of Rs.90) as on 8 Jan 2012 The Hindu Gold and silver prices declined on Tuesday with silver registering a drop of Rs. 40 and Gold dropping by Rs. 90 to trade at Rs. 31, 070 per ten grams. Traders attributed the decline in both gold and silver prices to subdued demand from retailers at prevailing higher levels and a weak global trend. Dollar:Rupee 1:54.98 (up by 25 paise) as on 8 Jan 2012 The Hindu The Indian Rupee on Tuesday broke its losing streak spread over three sessions and closed at 54.98 against the US Dollar, gaining 25 paise. The rise was helped by fresh selling of the US currency by exporters amid sustained capital inflows. Recovery in local stocks also helped Rupee gain on the dollar. C A R T S R A H S L O B A A N K P O S I T S O A S C H A R T S & G R A P H S G L O B A L B A N K D E P O S I T S & L O A N S CH H A R T S& &G G R AP P H S G G L O B AL LB B A N KD DE E P O S I T S& &L L O AN N S
T H E C O N O M I S T T H E E C O N O M I S T T H EE E C O N O M I S T

BANKS have gained some time and flexibility in meeting the Basel III liquidity requirements, now that the rules will come into effect four years later and the definition of a "high-quality liquid asset" has been expanded. But prospects for the banking industry are grim in 2013, especially for banks in the developed world. Squeezed by sluggish economic growth, strict new regulations and seemingly endless litigation, profits will remain elusive. American banks will be somewhat less stingy than in recent years, although loans will grow by only 4% in 2013. European lenders will cut credit lines, hoard funds, and generally hunker down as the regions sovereign debt crisis rumbles on. Japans banks will also lend less. By contrast, banks in emerging markets will benefit from a flood of customers joining the formal financial system for the first time, as well as burgeoning demand for advisory and investment-banking services from maturing companies. Rising incomes and consumption in emerging markets will give many consumers the confidence to start borrowing.

C N CO OV VE ER RS ST TO OR RY Y: :C CH HA AN NG GE ES SI IN NG GL LO OB BA AL LE E NE ER RG GY YM MA AR RK KE ET TS S
In the last one decade, the world has witnessed some revolutionary changes in energy markets, starting right from the US Government reports in Dec 2012, which suggest that it will stop all its energy related imports by as early as 2020. This means that demand pressures on fuel supplying nations in Middle East would reduce drastically as the United States has been the worlds largest consumer of oil and gas, so far. Modification of US policies in the Middle East is thus inevitable. At the same time, it will open new avenues for Oil and Energy firms in emerging economies such as India & China. Additionally, there has been a remarkable shift in usage trends of coal the primary fuel source, which estimates suggest, will continue to be a significant part of the energy market, at least till 2030.

Shale Gas Boom:

There has been a remarkable increase in the production and scope of Shale Gas (gas trapped within Shale rock formations). Technical advances have made Shale gas recovery easier and economical than ever before. Shale Gas, which used to meet only one percent of the total US natural gas production in 2001, was contributing more than 20 percent to the gas production during its boom in 2010. By 2035, it is expected to meet 46 percent of the total natural gas production in the US. This boom in production has brought gas prices down in the US. As a result, gas-fired power plants in the US are now twice as profitable as the coal fired ones. During its boom in 1988, coal used to contribute 60 percent towards the nations energy production. However, in the earlier half of 2012, both gas and coal-fired plants in the US shared two thirds of total energy generation, equally. Moreover, its not only the power plants that are shifting to Gas; even the steel producers are beginning to plan new plants based on Gas for steel production. The US will also replace Saudi Arabia as the largest oil producer by 2017. Additionally, new vehicle norms which force auto makers to increase mileage every year will ensure that by 2025, the US oil consumption would reduce by 10 percent. By 2020, US will stop importing crude oil from OPEC or the Middle East. In such a scenario, India & China will fuel half of the worlds energy (oil, gas & coal) demands.

Return of Coal: While Shale Gas Boom has deterred the usage of

environment-unfriendly coal in the US, it seems to have increased coal usage in the European Union. In fact many American coal producers have started exporting coal to Europe for better prices. Incidentally, the Gas-fired plants in Europe are not a viable option. Unlike coal, which has world-market prices, gas prices decided on the basis of FoB (freight on board) mechanism are more regional in nature. In order to benefit from the Shale Gas Boom in the US, Europe will have to invest in infrastructure for developing its Shale Gas resources. This will take time. The economic uncertainty prevalent throughout the Eurozone is not helping the cause. Hence, coal will continue to be a primary and cheaper source for energy production in Europe in coming years. Moreover, trends suggest that in next five years, coal will compete with oil as the main source of energy across the globe. It wasnt even half as important as oil a decade ago. China, which became the worlds biggest electricity producer replacing the US in 2011, is mostly responsible for this perennial demand for coal. Other emerging economies are also following a similar graph. According to International Energy Agency (IEA), India will replace the US as the worlds second-largest coal consumer by 2017.

Gas export market:

IEA has predicted that the US will surpass Russia as the largest gas producer by 2015. The boom is expected to last longer and has encouraged the government to plan Gas exports from the country. Canada & Australia have also struck similar Shale Gas reserves and are open to the idea of exports. Calculations suggest that importing gas can prove to be a profitable exercise for many nations. Compared to Asian markets where LNG is traded at around $9 to $13 per unit (mBTU) at present, the price of LNG at Henry Hub (a key distribution hub in Louisiana) is between $ 3.5 and $5 per unit (mBTU). Even after adding liquefaction, transportation and regasification costs, the import of gas via tankers will be profitable for Asia. Thus oil firms all across the globe are forced to redesign their strategies around exporting gas from the gas rich regions. Indian oil and gas firms such as GAIL, ONGC and IOC have all responded well to this new opportunity. Aditya Birla Group has submitted eight proposals to the US Government to built LNG export terminals around US coasts. Reliance Industries has formed three JVs with Shale Gas firms in the US. IOC and OIL have similar ventures in Canada, where as PetronetLNG has struck a deal with Exxon Mobil in Australia. Such contracts would reduce Indias dependence on OPEC and West Asia for its energy needs. These changes will shift much of the pricing decision powers from OPEC to the new exporters. At the same time, Asian giants like India, Japan, China, South Korea, and Taiwan will hope to form a club of nations that will control most of the gas pricing decisions. Though, coal & crude oil are still a primary source of energy in Asian countries, switching to cleaner sources like natural gas, wind and solar energy may prove to be a profitable exercise in near future.

P PE ER RS SO ON NA AL LI IT TI IE ES SO OF FT TH HE EW WE EE EK K

Shinzo Abe- Prime Minister of Japan

The Japanese rarely believe in giving second chances. However, making an exception, they have elected former Prime Minister Shinzo Abe to lead the nation. In the recently concluded elections, Abe made an impressive comeback, winning power on the promises of reviving the Japanese economy (which is facing its third recession in five years) by increasing federal spending and introducing fiscal reform, adopting a more aggressive attitude towards China, initiating the process of building sturdy and long-term relations with the USA and turning on the countrys idle nuclear reactors (much to the delight of investors). Though his policies have partly succeeded in bringing down the Yen, ghosts of his disastrous first term as Prime Minister continue to haunt the Japanese. Part of an illustrious political family, Abe was born in 1954 (thus becoming the first Japanese Prime Minister to be born after World War-II). After high school, he studied political science at Seikei University, graduating in 1977. With an aim to study further, he moved to the USA, taking English language and public policy classes at University of Southern California's School of Public Policy. After a three year stint at Kobe Steel, Abe entered politics in 1982 as an executive assistant in the foreign affairs ministry. Already a part of his partys (Liberal Democratic Party) inner circle before he held any formal political office, Abe won a landslide victory to Japans House of Representatives in 1993 after the death of his father. Though colleagues conclude that Abe used to behave like the pampered scion of a political dynasty, he shrewdly climbed up the party hierarchy and scaled well trodden paths to the corridors of real power in Japan. In 2007, Abe became Japans 90th and youngest Prime Minister. During his first term, Abe tried to strike a balance between modern ideas about transparency and Japans traditional closed hierarchies. However, financial scandals and declining popularity ended his term early. An outspoken, nationalist and right-wing politician, Abe is aware that his shortterm priority is to kick-start the economy and in this regard, he is pressurizing the countrys central bank to introduce a 2% inflation target to reduce deflationary pressures and to buy an unlimited quantity of bonds till it achieves the target. Abe has also taken a tough diplomatic stand on the Senkaku island issue with China in line with rising anger among the Japanese public on the issue. However, the man needs a much broader to-do list, one which should include, among other things, integrating more women into the workforce and radically deregulating the economy. Introducing comprehensive measures might just make him the man who succeeds in pulling Japan out of its decades-long economic funk.

"A strong economy is the source of energy for Japan. Without regaining a strong economy, there is no future for Japan."

Salman Khan-Founder, Khan Academy

Positively personifying the phrase man with a mission, Salman Khan, the successful founder of Khan Academy, aims to change education as the world knows it and create the worlds first free virtual school. Though the organization follows a typical format of a Silicon Valley start-up, Khan is firm on it being a not-for-profit venture; devoid of any employee equities, IPOs and venture capitalists. Khans commitment-backed work and the popularity of his online lectures have garnered him the title of the worlds first superstar teacher and earned him a place on Time magazines list of 100 most influential people in the world in 2012. Born (1976) and brought up in New Orleans, Khan had his formative education in public schools where, as he recalls, "a few classmates were fresh out of jail and others were bound for top universities". Khan fell in the latter category as he holds four degrees from prestigious universities-a BS in mathematics, a BS in electrical engineering & computer science and an MS in electrical engineering & computer science from Massachusetts Institute of Technology in addition to an MBA from Harvard Business School. The job of tutoring his cousin in mathematics over the internet introduced him to the hidden talent he had and led him to create an account on YouTube to distribute his lectures in 2006. Appreciative testimonials from students and viewers encouraged Khan to quit his job as a hedge fund analyst in 2009 and devote his entire time on developing and adding to the Khan Academy. Khan is very enthusiastic about teaching and learning (expected from someone who has four degrees) and thus the subjects of his tutorials vary from algebra and biology to economics, medicine and astrology. A liberal and humorous boss, Khan does not believe in preaching and thus one cannot see the instructor in his tutorials. Instead a blank digital blackboard fills up with key concepts (mostly prepared by Khan) and the intended effect is working through homework at the kitchen table with your favourite uncle looking over your shoulder. Khans pet venture has several admirers like Bill Gates who also donates to keep the idea afloat. At six million unique viewers each month, Khan wants his knowledge to reach the farthermost corners of the globe. Khans book on exploring the potential impact of the Web as a teaching tool is thought to be one of the most influential books on education in our time, thus making him a true-blue reformer.

"With so little effort on my own part, I can empower an unlimited amount of people for all time. I can't imagine a better use of my time."

C CO OR RP PO OR RA AT TE EI IN NT TE EL LL LI IG GE EN NC CE E: :I IN ND DI IA AN NP PO OW WE ER RU UT TI IL LI IT TI IE ES S NTPC Limited is the largest state owned power utility in India with an installed
capacity of over 39,000 mega watts. The company has thermal power generation capability from coal and natural gas. It is listed on the Bombay Stock Exchange. Indian government holds 84.5% stake in the company. NTPC generates 27% of the total electricity generated in India. It has 23 power generation plants (coal and gas combined) and has ownership in seven other power stations through joint ventures. It has also entered into the hydel & nuclear power generation business. It is developing three hydel power plants and has formed a JV with NPCIL for the development of a nuclear power project. NTPC is present in almost all the businesses in the supply chain of power sector. It has operations like coal mining, fuel exploration, power equipment mining, ash utilization, power trading and power distribution. Apart from this, it also has consulting services, research business NETRA (NTPC Energy Technology Research Alliance) and a Power Management Institute - for training professionals in power sector. NTPC has formulated a long term business plan for the next two decades. The company plans to expand its energy capacity to 1.28 lakh mega watts by 2032. Accordingly, it shall have a diversified fuel mix comprising of coal (56%), Renewable Energy Sources (17% including hydel), natural gas (16%) and nuclear (11%).

Tata Power is the biggest private power utility in India with an installed capacity of over 7,000 mega watts. The

company was started as a hydro-electric power plant and it later diversified into the thermal, solar, wind and geothermal energy businesses. It is one of the biggest power generation companies through Renewable Energy Sources (RES) in India. It has over 14 energy generation plants in the country and has operations in international locations like Cyprus, Mauritius, Singapore and Jakarta. Tata Power is build ing Indias largest power plant in Gujarat with a capacity of 4,000 mega watts. It has recently partnered with the Australian company, Sunengy, to build first of its kind floating solar power plant in India. It is also conducting research on clean power generation technologies like biomass gasification and micro wind turbine, among others. Tata Powers Strategic Electronic Division (SED) is largely involved in developing equipment for the defence sector. It has designed and engineered Indias air defence and naval combat systems. It is currently implementing major hydel, thermal and geothermal projects in Maharashtra, Jharkhand, Himachal Pradesh and other regions in India.

Adani Power Limited, the energy arm of Adani Group is one of the biggest power

companies in India with installed capacity of over 5,000 mega watts. It is the largest solar power producer in the country with 40 mega watts electricity generation capacity. It is also Indias first power company to achieve the Supercritical Technology. Its thermal power plant in Gujarat is the only power plant in India that has been certified by the United Nations under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The company is in a rapid capability enhancement mode and is in the process of implementing several projects with a capacity of 16,500 mega watts. Its mission is to achieve 20,000 mega watts energy capacity by 2020. It has undertaken power projects in Gujarat, Maharashtra, Rajasthan, Madhya Pradesh and Odisha.

N NE EW WS SA AN NA AL LY YS SI IS S
1) GMR walks out of Indias biggest road development project - Rediff.com/ET IMPACT: GMR Infrastructure has backed away from the Rs. 7, 200 crore project for the six-laning of the Kishangarh Udaipur Ahmedabad highway, Indias biggest highway construction project. GMR has terminated the concession agreement it had signed with the National Highways Authority of India (NHAI) after winning the project in 2011. The company had won the bid for development of the 555 km long highway, part of the Delhi-Mumbai Golden Quadrilateral corridor, after stiff competition by quoting to pay Rs. 636 crore annually. The decision was announced by GMR after weeks of discussions with NHAI over various statutory clearances. It is believed that the exit was prompted by failure on part of NHAI to get the required environmental clearances, land de-notification and other pre-requisites which were essential for GMR to start execution of the project. KEY PLAYERS: GMR Infrastructure, NHAI WHY IT IS IMPORTANT GMRs exit assumes significance in the light that India needs to develop advanced infrastructure at a fast pace if it wants to sustain the economic growth seen in the last decade. Importantly, the NHAI is set to loose Rs. 663 crore from its annual revenue which was to come with the execution of the given project. Also, the decision brings to light the problems of debt-laden GMR Infrastructure, which has reportedly decided to go slow on new projects and focus on cash generation and resolving pending issues. 2) Marico plans to demerge services business Kaya - ET IMPACT: Consumer goods company Marico has decided to demerge its services business, Kaya Skincare Solutions, from its mainstay FMCG arm into a separate listed firm. Marico Kaya will be listed separately on the Bombay Stock Exchange as well as the National Stock Echange and will have its distinct set of Board of Directors from that of Marico. "Kaya requires a completely different mindset to grow. So we have taken off the Marico hat from Kaya and unshackled it from the Marico rules," Harsh Mariwala, chairman at Marico, said. Kaya, a decade old provider of skin care services, offers its services through 106 clinics in the country by the name of Kaya Skin Clinic. It contributed around 7% to Maricos consolidated revenues of near ly Rs. 4, 000 crore in 20112012. Kaya remains a loss-making unit overall although the management of Marico is quite optimistic about its turnaround, with Kaya clinics selling high margin products from the portfolio of DermaRx, a firm which has been acquired by it. KEY PLAYERS: Marico, Kaya Skincare Solutions WHY IT IS IMPORTANT Some minority shareholders had been expressing concern on Kayas performance for a couple of years now. The demerger of Kaya could help improve the valuation of its parent company Marico, which has been dragged down by the weak performance of its services business. Also, the strong cultural de-link between Marico and Kaya will no longer be a hindrance with Kaya taking its separate corporate identity. 3) Government initiates process of Coal India restructuring - Financial Express IMPACT: The government has finally begun moving on the restructuring exercise for Coal India Limited, Indias largest producer of coal, by inviting bids for the appointment of advisors. The Coal Ministry had recently informed the Prime Ministers Office about its plans to expedite the long delayed process of restructuring the government owned company. Ministry of Coal invites expression of interest (EoI) from the consultancy firms/organisations for taking up the job of providing consultancy for restructuring of Coal India (CIL), the posting on the website of Coal Ministry said. The consultants would be asked to come up with a restructuring plan and their mandate includes advising the Coal Ministry on the effectiveness of the current management structure of CIL and to also ascertain the drawbacks which are inherent in a monopolistic situation. The consultants will have to submit a report within three months for the government to decide on their suggestions. The consultants should assess the need for evolving administrative structures, which would improve production and marketing with a special emphasis on customer satisfaction, states the EoI. KEY PLAYERS: Coal India Limited, Coal Ministry WHY IT IS IMPORTANT CIL is facing heavy criticism for being unable to supply adequate quantities of coal to steel, cement and power generation companies. It has so far failed to bridge the demand-supply gap in the coal sector, which is at a staggering 200 million tonnes a year. So much so that the central government had to issue a Presidential Decree on the company mandating it to ink fuel supply agreements with coal-starved projects.

4) Economists want small savings boost from govt, higher taxes on superrich - Financial Express IMPACT: During the customary pre-budget meeting with Finance Minister P Chidambaram, leading economists called for levying higher taxes on the super-rich, encouraging small savings and controlling inflation to bring it in the range of 4 to 5 per cent. Their suggestions also included introduction of inheritance tax and widening of tax base to increase revenue and contain fiscal deficit. Chidambaram said economic and political developments in the Eurozone area and the United States of America have impacted world economy, including India. The Minister however said reform measures taken by the government have had a positive impact on the market sentiments. Suggestions made by economists included "following of principle of progressivity i.e. higher tax rates for high income group, widening of tax base and effective enforcement of tax laws to penalise those who hide their income and pay less tax as well as those who despite high income do not pay any tax at all", according to a press release. KEY PLAYERS: Economists, P Chidambaram WHY IT IS IMPORTANT Budget 2013 will be the last full budget presented by the current UPA government before general elections in 2014. A damp international economic climate and various domestic issues plaguing the government have hit growth in India. The government has of late begun to act proactively to bring back economic growth to previous levels. Budget 2013 assumes greater significance in the backdrop of all these factors. 5) Mahindra announces new electric car e2o - Hindu Business Line IMPACT: Mahindra Reva Electric Vehicles Pvt. Ltd, a part of the US $15.9 billion Mahindra group, has announced the name of its next generation electric car as Mahindra e2o. The vehicle has been extensively tested, validated and certified as road worthy for the Indian market. The car is going to be manufactured at Mah indra Revas recently inaugurated plant in Bengaluru and will be launched soon. Dr. Pawan Goenka, President of the Automotive and Farm Equipment Sectors of Mahindra & Mahindra commented on the e2o saying The Mahindra e2o is a game changing development within the personal mobility space that will help the Mahindra Group usher in a positive change in the lives of our customers. Dr. Goenka called it a significant step towards developing a comprehensive eco-system of sustainable mobility solutions. Founded in 1994, the Reva Electric Car Company was a pioneer of electric vehicle (EV) technologies and was renamed as Mahindra Reva Electric Vehicles Pvt. Ltd in 2010 after Mahindra & Mahindra acquired a majority stake in the company. KEY PLAYERS: Mahindra e2o, Mahindra Reva Electric Vehicles Pvt. Ltd, Mahindra & Mahindra WHY IS IT IMPORTANT Mahindra Group chairman Anand Mahindra had recently revealed the groups Future of Mobility vision, involving the creation of future-ready vehicles that meet the 5 Cs framework of - Clean, Convenient, Connected, Clever and Cost Effective. The launch of the e2o is the first step towards realizing that vision and creating an entire electric vehicle value chain and eco-system. 6) US oil imports to fall to 25-year low FT IMPACT: In a major boost for North American energy independence, the Energy Information Administration (EIA)-the official US data provider and forecaster-has predicted that US oil demand will increase only marginally in the next few years but the output of the commodity will grow rapidly and thus, US oil imports (thought to be on an unalterable upward path) are all set to reach their lowest level in 25 years by 2014. The main reason for this is the discovery of shale oil in colossal quantities. EIA is optimistic that US crude oil production will rise to almost 8 million barrels per day in 2014. EIA has also forecast that average global oil prices would fall from $112 a barrel in 2012 to $99 in 2014. The EIA also expects the US to overtake Russia as the world's biggest shale gas producer by 2015 and to become all but self-sufficient in its energy needs by about 2035. KEY PLAYERS: US oil companies, US oil importers, global oil market WHY IT IS IMPORTANT: The EIAs report is good news for the US economy as increased oil production and lesser oil imports will somewhat insulate it from oil-price shocks in the world market. However, more than the absolute amount of oil imported, the spending on oil imports as a fraction of GDP will determine the countrys risk or exposure to fluctuations in prices. These statistics also change the equations of USA with the Gulf oil producers whose share in global oil production is also expected to rise to 50% in 2035 from the current 42%. However, projected rise in US oil produc tion will further reduce OPECs already dented control over global oil prices. Drilling of shale gas (and oil) has also raised environmental concerns because of possible water contamination, the release of methane and earth tremors caused by drilling (all outcomes of the process of fracking which have been banned in France and till recently in UK). Nonetheless, discovery and extraction of shale oil means that global oil production will not peak in the next 20 years.

7) Samsung posts record quarterly profit on back of Galaxy series - Reuters IMPACT: Samsung Electronics said it has likely earned a record quarterly profit of $8.3 billion, selling 500 mobile handsets per minute and capitalizing on strong demand for flat screens it manufacturers for other handset makers. The company revealed the figures while releasing its earnings guidance for the October- December quarter, ahead of the full earnings release expected by 25th January. This is the fifth straight quarter in which the mobile giant has posted record breaking profit figures. Samsung has outpaced Apple Inc, its biggest rival and also its biggest customer, in the smartphone market with the Galaxy range of smartphones that have outsold the iPhone series. Samsung now commands the majority market share in the smartphone arena around the globe and also overtook Nokia recently as the world's largest manufacturer of mobile handsets. Its sales momentum has got a particular boost with last year's launch of its flagship smartphone, the Galaxy SIII, along with the Galaxy Note II 'phablet'. In comparison, sales of the latest iPhone 5 from Apple have been below analyst's expectations. KEY PLAYERS: Samsung Electronics, Apple Inc. WHY IS IT IMPORTANT Samsung's run of five consecutive record breaking quarters may end in January-March due to weak seasonal demand and hints of saturation in the mature markets. However, sales are still going well in emerging markets and are expected to pick up momentum again with the company expected to launch its latest Galaxy SIV model sometime in March or April. 8) French court overturns ultra-rich tax The Guardian/The Independent IMPACT: Inflicting a major blow on French President Franois Hollandes campaign promise to impose a hefty tax on Frances super wealthy citizens (to reduce the countrys deficit), a French constitutional panel has overturned a 75% tax rate on income above 1 million ($1.32 million) which was supposed to come into effect in 2013 by say ing that it was excessive and unfair. The panel did not have a problem with the large tax rate per se but raised objections with the way the tax discriminated between households depending on how incomes were distributed among its members. The tax rule expects one earner making 1.2 million to pay 75% of it as taxes but exempts two earners each making a little under 1 million from paying at the same rate. Taking cognisance of the ruling, the Government (being determined to heavily tax the super-rich) has vowed that it would introduce a new measure, keeping the rate unchanged at 75%. KEY PLAYERS: French Government, French super-rich citizens WHY IT IS IMPORTANT: Hollandes socialist governments intention of introducing the high tax rate was to raise re venues worth 100 million-300 million to reduce the deficit (considered by critics to be an insignificant amount in the context to Frances 85 billion shortfall). Though the tax was likely to affect only a small number of taxpayers, it was criticized from the moment it was approved in the countrys recent budget because of its unlikely impact on Frances fiscal problems, its ability to drive away wealthy citizens and make businesses wary of investing. The ruling does not help Hollandes popularity (which has been in a continuous free-fall) in the midst of 19 unbroken months of rise in the countrys unemployment. Several of Frances wealthy nationals (including its richest man) have applied for Belgian citizenship and announced their plans to settle in the countrys villages. 9) GoI plans to ban import of tech products Wall Street Journal IMPACT: With an aim to bring pressure on foreign firms to increase manufacturing in India, GoI is planning to ban import of foreign technology products which include but are not restricted to tablets, laptops, Wi-Fi devices and wireless telecom equipment. The new proposed rules require foreign companies to either set up factories in India or expand their existing manufacturing capacities as early as April. The ban is mai nly intended to reduce Indias trade deficit by scaling down electronic imports which, if left unchecked, could reach $300 billion by 2020 (thus surpassing Indian oil imports). The news has already become an issue of conflict between India-US relations with US lobbyists vehemently opposing the move. According to Ron Somers, president of the US-India Business Council, "India is the largest freemarket democracy in the world. To mandate local manufacturing is antithetical to the very concept of a free marketplace. KEY PLAYERS: GoI, Foreign technology companies, Indian imports of tech products WHY IT IS IMPORTANT: The proposal is seen as problematic by many because of poor infrastructure which India is infamous for-especially the low quality of its roads and the unreliable energy supply. Bureaucratic red-tapism also discourages global technology companies from setting up plants in the country. Economists are of the view that by taking such a stand, the Government is aiming to increase the contribution of manufacturing to GDP which currently stands at only 16%. It also hopes that this will reduce the level of unemployment in the country. However, analysts are of the view that instead of adopting such a rigid approach, it will be more beneficial if foreign companies are encouraged to set up factories in India by offering them tax holidays and reliable infrastructure.

10) AIG mulls joining lawsuit against US government Reuters/Wall Street Journal IMPACT: The US government and taxpayers were left shocked when the news came that AIG was planning to join a lawsuit against the Federal Reserve. AIG was in liquidity crisis in 2008 and the US government had saved it from bankruptcy by providing a bailout package worth $182 billion. The lawsuit is filed by Starr International, which owned 12% stake in the American insurance company in 2008. Maurice Greenberg the former CEO of AIG, is the chief executive of Starr International. The company claims that the US government provided a bailout at a much higher interest rate of around 14.5% - which substantially increased the amount of the rescue package and ripped off the shareholders. The lawsuit seeks a compensation of $25 billion from the US government for overcharging the shareholders. The US authorities are enraged and have touted it to be a classic case of a patient suing a doctor for saving his life. In the 9th Jan board meeting, the lawyers of Starr International shall discuss the case with the board members of AIG. The representatives of the Federal Reserve shall defend their side. Then board members will then take the decision of entering the lawsuit. KEY PLAYERS: AIG, Starr International, the US Federal Reserve WHY IT IS IMPORTANT: Starr International being one of the key shareholders of AIG, the companys board members are in a tricky situation. They have three options to join the lawsuit or completely scrap the claim or take a middle stand wherein it shall neither object to the lawsuit nor participate in it. If AIG enters the lawsuit, it will damage its reputation. If it does not, there are chances of the company losing out on a substantial amount in case Starr International wins the lawsuit. 11) How Sahara expanded its Pariwar? ET/Moneycontrol.com/Firstpost.com IMPACT: It was quite a mystery some time ago, as how Subrata Roy managed to expand his Sahara India Pariwar in such a short period of time. The puzzle was finally solved by the Enforcement Directorate (ED) playing Sherlock Holmes trying to track down the funds Sahara used to acquire prime properties in the UK. According to ET; the process was initiated by Sahara India Real Estate Corporation issuing convertible debentures and acquiring funds from investors. A part of this amount was routed illegally through its Malaysian entities to buy Londons prime hotel Grosvenor House. The funds were transferred to Sahara Group Companys Aamby Valley Ltd as a loan amount. This loan was converted into equity which subsequently raised the net worth of Aamby Valley. According to regulations, a company can invest an amount up to four times its net worth in an overseas venture through automatic route. Thus, without the permission of RBI, the funds were remitted to Malaysian subsidiary of Aamby Valley which finally made the payments for the London hotels. KEY PLAYERS: Sahara India Pariwar, The Grosvenor House, Indian government, SC WHY IT IS IMPORTANT: In 2012, the Supreme Court ordered Sahara to return 24,000 crore to the investors inclusive of 15% interest on the original funds it had raised from investors. The court had asked the company to pay the amount in three installments by end of Feb 2013. However, Sahara paid the first installment nearing to 5,600 crores, but it failed to deposit the second installment of 10,000 crores to SEBI by the Jan 06 deadline. The company said in its defense that it had already paid the investors and depositing any further amount will lead to paying the investors twice. The Supreme Court however, does not agree to this claim and has asked Sahara to make an immediate payment. 12) Prime Minister hints towards rationalizing energy prices ET/The Hindu IMPACT: Prime Minister Manmohan Singh has asked the government to increase the fuel prices in order to bring them at par with the international rates. These recommendations were initially made by the Kelkar Committee which is now holding discussions with other departments. This price rationalization will be in a phased manner. The Indian government provides subsidies on cooking gas, kerosene and diesel. Oil companies (state-owned and private, both) are incurring huge losses due to these subsidies. The committee has recommended the increase in diesel prices by less than a rupee to bring it at par with international prices. It is planning to deregulate diesel thus oil companies will have the freedom to increase the diesel prices as per the fluctuations in the international crude oil rates. Petrol is deregulated in the country. Also, the government plans to reduce subsidies on cooking gas by one fourth and on kerosene by one third. Figures suggest government is losing around 1.65 lakh crores due to subsidies. KEY PLAYERS: PM, Indian government WHY IT IS IMPORTANT: By raising the fuel prices, the government intends to decrease its internal debts and losses. Fiscal consolidation will increase investor confidence. It will help the economy return on the path of high growth due to increased investments. It will also lead to low inflation and help in long-term sustainability.

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13) PayPal founder to build a city on Mars for vegetarians FE/Dailymail UK IMPACT: Co-founder of PayPal and chief executive of the space transport company SpaceX, Elon Musk, has recently unveiled his futuristic plans to build a city on the planet Mars. The small city will have a population up to 80,000 and will be selfsustainable. But the civilization will have only vegetarian population. The project is still in the nascent stage and will take decades to implement. Musk has admitted that there are many challenges like radiation and toxic dust to overcome. Musk is not the only person who intends to explore space. In July 2012, owner of Virgin Atlantic, the dynamic Sir Richard Branson, unveiled his plans to start space travel (tour) by end of this year. The Virgin Galactic space tourism programme will fly tourists the rich and famous including Hollywood stars like Angelina Jolie & Ashton Kutcher; up to 60 miles in space. KEY PLAYERS: Elon Musk, SpaceX, Sir Richard Branson, Virgin Galactic WHY IT IS IMPORTANT: The exceptionally brilliant Elon Musk sold his first computer software at the age of twelve. He always had a vision to take human civilization to other planets. He founded SpaceX in 2002 in order to build space transport vehicles. NASA is one of the key clients of SpaceX which has developed the Falcon 1 & Falcon 9 launch vehicles and the Dragon spacecraft. These space transport vehicles were built with an intention to carry humans to outer space in the near future. 14) First gene therapy drug for curing an orphan disease given green light Reuters IMPACT: Orphan diseases are extremely rare diseases that affect a very small percentage of the population. Most of these diseases are genetic by nature and thus a cure for them can only be found by gene therapy which involves the use of DNA as a pharmaceutical agent. The most common form of gene therapy involves using DNA that encodes a functional, therapeutic gene to replace a mutated gene. The drug (Glybera) which has been given the green light by regulators in Europe is an example of this type of therapy and it will be used against a rare inherited disorder which disrupts fat production in the body and can lead to acute inflammation of the pancreas called lipoprotein lipase deficiency (LPLD). Keeping true to the ritual of charging high prices for the treatment of orphan diseases, Glybera is all set to cost 1 million ($1.6 million) per patient when it goes on sale in Europe in mid-2013. KEY PLAYERS: Pharmaceutical firms, regulators, patients WHY IT IS IMPORTANT: Treatment for orphan diseases has attracted the attention of major pharmaceutical companies because of its unavoidable extreme pricing (since a single dose of these kind of drugs is usually enough to last for the entire life, drug makers have only one chance to get back their investment and hence the drugs are very expensive). The global orphan drug market looks to be a promising one as its annual growth is averaging out to be 25.8% from 2001 to 2010 as compared with 20.1% for the market of non-orphan drugs. According to a Thomson Reuters analysis, Orphan drugs' average "present value" - which measures the current worth of future revenues - is higher than for non-orphan drugs, despite their tiny target populations. This reflects lower development and marketing costs, as well as longer market exclusivity. New explorations in science along with active interest by big pharmaceuticals will lead to faster and better cures for these diseases. It may also lead to more responsible orphan drug pricing. 15) NIC to launch Rs 5,000 cr VC fund for innovation - Financial Express IMPACT: The National Innovation Council (NIC) will launch its Rs. 5, 000 crore venture fund aimed at supporting small enterprises by March, Chairman Sam Pitroda has announced. "We are creating a Rs 5,000-crore venture fund which will be operational by the end of March. We have already spent a year-and-a-half structuring, working on it and getting government approvals," said Pitroda while addressing a CII conference on design through a video link. Mr. Pitroda is also an advisor to the Prime Minster on public information infrastructure and innovation. The fund has got a seed money commitment from the government and will work on a commercial basis, supporting enterprises that drive change at the bottom of the economic pyramid, Pitroda said. "Best brains in the world are busy solving problems of the rich who really don't have problems to solve. As a result the problems of the poor don't get the right kind of talent," he added. Mr. Pitroda informed that although the government is providing seed capital, some banks have also committed money and private capital will too flow into the corpus eventually. KEY PLAYERS: NIC, Sam Pitroda WHY IT IS IMPORTANT Innovation is a critical requirement for the sustainability of any economy and India is no different. Although the country has seen impressive economic growth in the past decade, the growth story has not touched a large population with various problems that require ingenious solutions. Every attempt to ferment innovation is a big step in the direction of growth.

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Where Challenges abound The hard reality of sales The initial days were challenging to say the least as the pampered engineers were forced to face the reality of convincing operators and agents, and most of all actual travellers to trust them and buy tickets from them. The first ticket sold was by an Infosys engineer travelling to Tirupati. The hard reality of sales was a humbling experience as not long before they used to be amongst those who disdained salesmen flocking outside their IT campuses. From pursuing one operator after another and waiting in their offices for hours together, the firm today has operators lining up to be featured on redBus. Operational challenge Operationally, the payment gateway is the biggest challenge for Sama as nearly 25% of the transactions fail thanks to Payment gateway issues!

Part 2

Logo The logo of redBus and the name itself drew inspiration from Richard Bransons Virgin. The reasoning went that a colour if used as a name is easier to remember. The logo itself was designed by one of Samas friends classmate. Talent Hiring the right talent is something that can impact a company directly, this is more so in the case of a startup. The mentors found redBuss ability to attract good talent also a significant proof of the companys ability to grow. The founders managed to convince Abey Zacharia, an MBA from the University of Madras, to head business development. Mayank Bidwata, another MBA, from Asian Institute of Management signed up to head marketing. He had previous experience with Lintas and ICICI and actually took a salary cut to join redBus. The head of Alliances, Aditya Swaroop, from IIM Kozhikode had prior experience with corporate strategy at Airtel and also took a salary cut to pitch in. This ability to attract top notch talent differentiates redBus. Thanks to the compan ys continued success, 2012 saw redBus visiting IIM campuses for recruitment. Partners and culture Having good partners is essential to a start- ups success. In fact Sama says, I would say one should look for both. Co Founders need to be smart, hardworking and mature. There needs to be high level of maturity because many things start falling apart during the first few days of startup. If CoFounders start blaming each other, it would all fall apart. Building an organization culture is something very few entrepreneurs have a concrete idea about when they start. For Sama, it was a day to day process. With each passing day they learnt something new and this defined how and what kind of structure the company took on. In fact for redBus the real challenge was propagating the same company culture and value system in their many offices. This was done by frequent travel and mailing everyone at least once a week. This is what the company website says, Every other day new partnerships are forged - all with the aim of adding more value and convenience. We have grown organically by opening office in key metros and inorganically through our partnerships. We encourage customers to let us know of any routes or bus operators we don't have in our list. We go right ahead and make sure that by the next time customer logs on, we have on offer what was demanded. Most importantly, it's a team that has fun at work. It's a team that is close knit. Everyone is on a first name basis and it wouldn't be uncommon to see people exchanging hi-fives on small achievements. Office outings are a regular phenomenon and dancing is a must.

Threats redBus can owe a lot of its success to its first mover advantage, as the fragmented nature of this industry didnt invite attention from existing travel players. However, Success begets competition. After redBus, makemytrip and Yatra also entered the fray, however redBus remains the leader. In fact the case of Ticketwala.com is cited as the main competition for redBus. Ticketwala.com was started by the ex-CTO of Worldspan, a well known name in travel. It even raised greater funding than redBus. However, the model adopted by ticketwala.com was that of a software provider which would aggregate bus operators on a single platform. redBus feels that the logic is understandable but results through that path take time. redBus approach is that of providin g superior customer experience and that is a tenet the firm continues to live by. Advice to future Entrepreneurs:

Phanindra Sama: I would say that dont be very focused on e -service alone. Look at your customer and ask how best

you can serve him. For, an offline, phone based channel could well be a bigger opportunity than e-service. Eg., www.ctrip.com (Chinas largest travel company, with market cap of about 12 Billion USD, has 85% of its transactions on ph one)! Perhaps the lessons learnt by redBus can best be summed up by one of the founders who had this to say in an interview: I think there are three important lessons to learn from this case. First, there is no point having a grand strategy in a bra nd new market opportunity: your strategy is the one that gets executed every day in real time in the field, based on multiple inputs that keep coming at you from various directions. In a market that is so disorganized, nobody knows what will lead you where; you have to move forward. Second, its important to have cost -consciousness built into a startup from day one, as redBus did. Third, you need the right communications and internal information systems to scale up as a company grows. This is a cash-intensive business where you need to have a finger on operations minute by minute. You also have to ensure that the guy you hire in a small branch office understands operations, what bus operators need, and what it takes to adhere to the value of providing a great customer experience. Thats why Phani constantly travels around and communicates to employees and partners why redBus exists.

SOURCES Charts & Graphs: http://www.economist.com/node/21563412 Economic Indicators: http://www.thehindu.com/business/markets/gold-and-silver-prices-decline-on-sluggish-demand/article4286951.ece http://www.thehindu.com/business/markets/rupee-up-25-paise-against-dollar/article4287262.ece SOURCES FOR COVER STORY http://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.html http://www.bloomberg.com/news/2013-01-04/oil-may-rise-on-stronger-economic-growth-survey-shows.html http://www.businessweek.com/news/2013-01-06/oil-fluctuates-after-biggest-weekly-gain-in-almost-four-months http://in.reuters.com/article/2013/01/07/markets-oil-idINDEE90602G20130107 http://businesstoday.intoday.in/story/energy-security-india/1/191045.html http://www.economist.com/news/briefing/21569037-why-worlds-most-harmful-fossil-fuel-being-burned-less-america-and-moreeurope http://www.ft.com/cms/s/0/4b3f6280-4609-11e2-ae8d-00144feabdc0.html#axzz2HMSuvgY3 http://www.bloomberg.com/news/2012-12-31/shale-gas-revolution-spurs-wave-of-new-u-s-steel-plants-energy.html http://www.reuters.com/article/2012/11/12/us-iea-oil-report-idUSBRE8AB0IQ20121112 SOURCES FOR PERSONALITIES OF THE WEEK: http://en.wikipedia.org/wiki/Shinz%C5%8D_Abe http://nation.time.com/2013/01/03/japans-not-quite-so-nationalist-leader/ http://www.economist.com/news/asia/21569046-shinzo-abes-appointment-scarily-right-wing-cabinet-bodes-ill-region-backfuture?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e http://www.economist.com/news/leaders/21568731-new-prime-ministers-first-term-power-was-disaster-it-need-not-be-way-againgo?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e http://indiatoday.intoday.in/story/new-japan-pm-shinzo-abe-moots-to-phase-out-use-of-atomic-energy/1/240100.html http://www.bloomberg.com/news/2013-01-03/shinzo-abe-s-mostly-sensible-plan-for-the-bank-of-japan.html http://www.infoplease.com/biography/var/shinzoabe.html http://www.encyclopedia.com/topic/Shinzo_Abe.aspx http://www.factmonster.com/encyclopedia/people/abe-shinzo.html http://en.wikipedia.org/wiki/Salman_Khan_%28educator%29 http://www.forbes.com/sites/michaelnoer/2012/11/02/one-man-one-computer-10-million-students-how-khan-academy-isreinventing-education/ http://www.thelavinagency.com/speaker-salman-khan.html http://www.cnbc.com/id/42904205/Salman_Khan http://www.successstories.co.in/salman-khan-founder-of-the-khan-academy-a-free-world-class-educational-organization/ http://www.outlookindia.com/article.aspx?265875 CORPORATE INTELLIGENCE: http://www.ntpc.co.in/ http://www.ntpc.co.in/index.php?option=com_content&view=article&id=64&Itemid=34&lang=en http://www.ntpc.co.in/index.php?option=com_content&view=article&id=31&Itemid=2&lang=en http://en.wikipedia.org/wiki/NTPC_Limited http://www.tatapower.com/ http://www.tatapower.com/businesses/generation.aspx http://en.wikipedia.org/wiki/Tata_Power http://www.adanipower.com/index.htm http://en.wikipedia.org/wiki/Adani_Power SOURCES FOR NEWS ANALYSIS (1-15) 1) GMR gives up on India's largest highway project http://www.rediff.com/business/report/gmr-gives-up-on-indias-largest-highway-project/20130108.htm http://economictimes.indiatimes.com/news/economy/infrastructure/gmr-quits-rs-7200-crore-kishangarh--udaipur-ahmedabadhighway-project/articleshow/17932377.cms 2) Marico to demerge its services business Kaya into a separate listed company, this move can help improve valuations http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/packaging/marico-to-demerge-its-services-businesskaya-into-a-separate-listed-company-this-move-can-help-improve-valuations/articleshow/17932602.cms 3) Govt sets the ball rolling on restructuring Coal India http://www.financialexpress.com/news/govt-sets-the-ball-rolling-on-restructuring-coal-india/1055930 4) Pre-Budget talks: Economists want small savings boost from govt, higher taxes on superrich http://www.financialexpress.com/news/prebudget-talks-economists-want-small-savings-boost-from-govt-higher-taxes-onsuperrich/1055821 5) New Mahindra electric car is e2o http://www.thehindubusinessline.com/companies/new-mahindra-electric-car-is-e2o/article4286448.ece http://www.mahindrae2o.com/pressrelease/E2OPressRelease.pdf 6) US oil imports to fall to 25-year low FT http://www.ft.com/intl/cms/s/0/00f2b544-59d5-11e2-b728-00144feab49a.html#axzz2HY9JIruH http://blogs.wsj.com/marketbeat/2013/01/09/energy-journal-us-predicts-25-year-low-in-oil-imports/?mod=MarketsMain http://blogs.cfr.org/levi/2013/01/09/how-far-have-u-s-oil-imports-fallen/ http://www.bbc.co.uk/news/business-20957073 http://www.cnbc.com/id/100365742

7) Galaxy phones power Samsung to record $8.3 billion profit http://in.reuters.com/article/2013/01/08/samsung-guidance-note-idINDEE9060EM20130108 8) French court overturns ultra-rich tax The Guardian/The Independent http://www.guardian.co.uk/world/feedarticle/10590118 http://www.independent.co.uk/news/world/europe/french-panel-overturns-75-per-cent-tax-on-ultrarich-8433004.html http://www.aljazeera.com/news/europe/2012/12/20121229102021538304.html http://news.yahoo.com/french-panel-overturns-75-percent-tax-ultrarich-104117363--finance.html http://www.huffingtonpost.com/2012/09/28/france-tax-rich-rate_n_1922089.html 9) GoI plans to ban import of tech products Wall Street Journal http://online.wsj.com/article/SB10001424127887323482504578227583950036410.html http://www.firstpost.com/business/buy-india-delhi-mulls-curbs-on-import-of-western-tech-products-580540.html http://www.techzone360.com/topics/techzone/articles/2013/01/08/321961-us-tech-companies-among-opponents-proposed-importban.htm 10) AIG mulls joining lawsuit against US government Reuters/Wall Street Journal http://www.reuters.com/article/2013/01/08/us-aig-lawsuit-government-idUSBRE9070GR20130108 http://online.wsj.com/article/SB10001424127887324391104578229430899631110.html 11) How Sahara expanded its Pariwar? ET/Moneycontrol.com/Firstpost.com http://articles.economictimes.indiatimes.com/2013-01-05/news/36161822_1_sahara-companies-aamby-valley-sahara-firm http://www.moneycontrol.com/news/business/sahara-fails-to-deposit-2nd-installmentpayment-to-sebi_804544.html http://www.firstpost.com/business/london-hotel-purchase-sahara-must-explain-where-it-got-the-money-and-how-578830.html 12) Prime Minister hints towards rationalizing energy prices ET/The Hindu http://articles.economictimes.indiatimes.com/2013-01-07/news/36192750_1_fiscal-consolidation-energy-subsidies-state-oil-firms http://www.thehindu.com/business/Economy/fm-unveils-roadmap-for-fiscal-consolidation/article4043175.ece 13) PayPal founder to build a city on Mars for vegetarians FE/Dailymail UK http://www.financialexpress.com/news/paypal-founder-to-build-small-city-on-mars-for-vegetarians/1055658/0 http://www.dailymail.co.uk/sciencetech/article-2172022/Sir-Richard-Branson-fly-space-end-year--hes-bringing-family-529passengers-paying-128-000-each.html 14) First gene therapy drug for curing an orphan disease given green light Reuters http://in.reuters.com/article/2013/01/03/us-rarediseases-idINBRE9020C120130103 http://www.dailymail.co.uk/news/article-2226863/First-gene-therapy-drug-given-European-license.html http://en.wikipedia.org/wiki/Gene_therapy http://en.wikipedia.org/wiki/Rare_disease 15) NIC to launch Rs 5,000 cr VC fund for innovation: Pitroda http://www.financialexpress.com/news/nic-to-launch-rs-5000-cr-vc-fund-for-innovation-pitroda/1055801

SOURCES FOR NEO CORNER www.foundora.com/2010/09/27/phanindra-sama-co-founder-of-redbus-tells-his-startup-story/ http://www.rediff.com/business/slide-show/slide-show-1-special-how-redbus-made-it-to-the-worlds-top-50-innovationslist/20120222.htm http://dare.co.in/people/case-studies/building-a-brand-at-redbus.htm http://www.redbus.in/AboutUs.aspx#Ourstory