1. Decoding the new Direct Taxes Code New Finance Minister Pranab Mukherjee, in his Budget speech last month, promised that the much-awaited new Direct Taxes Code would be released within 45 days. And the promise was duly met on Wednesday when the draft of the Code was released for public comments. While the FM clearly delivered as far as the timeline is concerned, let us now see certain reactions at first sight on the content of the Code. The Code is proposed to come into effect from April 1, 2011. The Foreward to the Code clarifies that the Code is to eliminate distortions in the tax structure, introducing moderate levels of taxation, expanding the tax base and simplify the language. Some of the key changes bought about by the Code are as under: First and foremost, the Code proposes that the tax rate for companies (both domestic and foreign) can be substantially reduced to a uniform rate of 25 per cent. However, foreign companies would be required to supplement their corporate tax liability by a branch profits tax of 15 per cent on branch profits (that is, total income, as reduced by the corporate tax). Further, for the individual taxpayers, the taxation continues to be on slab basis. However, the limits under the tax slab are proposed to be considerably increased as under: Up to Rs 1.6 lakh: Nil; Rs 1.6 lakh to Rs 10 lakh: 10 per cent; Rs 10 lakh to Rs 25 lakh: per cent; above Rs 25 lakh: 30 per cent. The Code now provides for the Minimum Alternate Tax calculated with reference to the “value of the gross assets”. This is on the premise that the shift in the MAT base from book profits to gross assets will encourage optimal utilization of the assets and thereby increase efficiency. The rate of MAT will be 0.25 per cent of the value of gross assets in the case of banking companies and 2 per cent of the value of gross assets in the case of all other companies. The present distinction between short-term investment asset and long-term investment asset on the basis of the length of holding of the asset is proposed to be eliminated. The Securities Transaction Tax, or STT, is proposed to be withdrawn. One of the things on the simplification front is that the separate concepts of ‘previous year’ and ‘assessment year’ will be replaced by a unified concept of ‘financial year’. Consistent with the international trend, the Code contains a specific section on general antiavoidance rule saying that any ‘arrangement’ entered into by a person may be declared as an impermissible avoidance arrangement. It may be noted that such general anti-avoidance rule is non existent in the present statute. Tax incentives for savings is proposed to be rationalised to an ‘Exempt-Exempt Taxation’ method. Under this method, the contributions are exempt from tax, the

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accumulation/accretions are also exempt, however all withdrawals at any time are subject to tax at the applicable personal marginal rate of tax. It is proposed that the withdrawal of any amount of accumulated balance as on the March 31, 2011 from PPF and EPF will not be subject to tax. In other words, only new contributions after the Code commences will be subject to EET method of taxation. The Code also substitutes profit-linked incentives by a new scheme. Under the new scheme, a person would be allowed to recover all capital and revenue expenditure (except expenditure on land, goodwill and financial instrument) and he would be liable to income-tax on profits made thereafter. The period consumed in recovering capital and revenue expenditure will be the period of tax holiday. The new scheme applies to developing, operating, maintaining of infrastructure facilities, power generation and distribution, exploration and production of mineral oil or natural gas, developing of SEZs, etc. It will now take some time before the entire fine print is slowly decoded and then the other side which is the tax experts, companies and associations take off with their comments. These may be provided at direct taxes code-

2. Subir Gokarn tops list for RBI Deputy Governor’s post Subir Gokarn, Executive Director and Chief Economist at Standard & Poor’s Asia Pacific, is heading the shortlist of candidates for the Reserve Bank of India (RBI) Deputy Governor’s post. Gokarn is also a Business Standard columnist. The selection committee, headed by RBI Governor D Subbarao, has forwarded the shortlist to the Appointments Committee of the Cabinet, which will take a final decision. Gokarn’s name topped the list for the fourth Deputy Governor, sources close to the appointment process said. They added that a formal announcement was expected over the next few days. If selected, Gokarn will replace Rakesh Mohan who quit the central bank in June and will be in charge of monetary policy matters, which are being looked after by the Governor himself. The others in the running included Arvind Virmani, the government’s chief economic advisor, Ashoka Mody, assistant director at the International Monetary Fund’s European department, and Jahangir Aziz, J P Morgan India’s Chief Economist. 3. Danone got Rs 380-cr capital gain in Britannia divestment

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Groupe Danone, the global dairy products major based in France, netted a capital gain of Rs 380 crore (¤56 million) when it recently divested its indirect 25.5 per cent holding in the Bangalore-based biscuit major Britannia Industries. Danone and the Mumbaibased Wadia Group in April 2009 agreed to end their 13year-old joint venture for running Britannia Industries for around Rs 900 crore. The relationship had turned sour during the preceding 18 months owing to a range of issues — intellectual property rights over Britannia’s ‘Tiger’ brand of biscuits, a minority stake purchase by Danone in Bangalorebased nutraceuticals firm Avesthagen, to Danone’s application to the Indian government to do business in India on its own. Wadia Group and Danone owned 25.48 per cent each in Britannia through Associated Biscuits International Holdings (ABIH), a London-based company. This company, in turn, owned 50.96 per cent in Britannia. Leila Lands, a Mauritius-based investment firm and wholly-owned subsidiary of Bombay Burmah Trading Corporation, a Wadia Wadia Group company, bought out the Danone stake, giving the Wadias complete control. Group company, bought out the Danone stake, giving the Wadias complete control. 4. Mid-rung Bollywood houses enter regional movie sector With the release of its first Kannada movie, Houseful ,a comedy starring south Indian actor Diganth, Maverick Productions ventured into regional cinema in July. The mid-rung Bollywood firm is making three more regional movies, one each in Kannada, Gujarati and Malayalam, slated to be released this year. At least 10 other midrung production houses are following, mainly driven away by the high production costs of Bollywood movies. Further reasons like entry of corporates into production of Hindi films, a growing regional film sector and a rising number of multiplexes across states are other reasons. Ultra Distribution, Shri Ashtavinayak Cine Vision, Seven Star Creations, Down Town Films and Spectra Multimedia, among others, which were into production of Hindi films, have already lined 10-12 regional films this year. “We ventured into production of regional movies as costs of producing Hindi movies have escalated. Producing a Bollywood movie involves a high-degree of risk compared with that of a regional film, which is still a niche market,” Ultra Distribution’s Chairman and Managing Director Sushilkumar Agarwal told Business Standard. The cost of an average Hindi movie is around Rs 30-35 crore, more than 10 times that of the average regional film. It would cost around Rs 1-3 crore for making a Gujarati or Marathi film, while a Bhojpuri one would cost around Rs 50 lakh to 2 crore. So, too, with Malayalam (Rs 80 lakh–Rs 3 crore), Kannada (Rs 1.5-3 crore) and Bangla (Rs 80 lakh- Rs 3 crore).

5. Bharti Airtel may sweeten MTN offer

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Mobile phone giant Bharti Airtel may increase its offer for a stake in South African peer MTN by between 5 and 10 per cent, a source familiar with the negotiations told Reuters. The two companies, which have been working on a complex $23-billion cash and share swap for over two months, had said on Monday that exclusive talks will be extended until late August and that the terms of the potential deal may be adjusted. . The increase in price will likely be in the range of 8 to 9per cent, the source added, and an agreement could be reached in a couple of weeks. But a second person close to the proceedings cautioned that any improvement to the terms had yet to be agreed. A sweetener below 5 per cent would not make a substantial difference to the current proposal, while raising the offer price by more than 10 per cent would require major changes to the deal structure, the second person added. Bharti and MTN hope that the deal will lead to a full merger, creating the world’s third biggest cell phone group, with more than 200 million customers and combined revenues of $20 billion.

6. China to check stock gains without capping loans Chinese officials said they will scrutinize gains in stock prices without capping new lending after a record $1.1 trillion of loans in the first half added to credit risks and threatened to cause asset bubbles. The government wants stock-market stability and is studying share-price rises, Vice Finance Minister Ding Xuedong said at a press briefing in Beijing today. The People’s Bank of China has a range of tools to limit money supply, Su Ning, a deputy governor of the central bank, told the briefing. The Shanghai Composite Index has rallied 79 per cent in 2009 and real-estate prices have rebounded, fueling concern that loans meant for infrastructure projects are being used for speculation. The government wants to cool asset markets without derailing the recovery of the world’s third biggest economy, which grew 7.9 per cent in the second quarter from a year earlier. Ding and Su’s comments show the key factor in policy decisions is “economic indicators, not asset markets,” said Gabriel Gondard, a portfolio manager at Fortune SGAM Fund Management Co in Shanghai, which oversees about $7.2 billion. “Investors could read that as meaning liquidity levels will remain high, at least for now.” Shanghai’s benchmark stock index closed down 2.9 per cent, before the briefing started, for the worst weekly loss since February. The measure fell by the most in eight months on July 29 amid concern that the central bank would rein in liquidity. The central bank won’t consider asset prices when adjusting policies, said Su, who also elaborated on a reference in a quarterly monetary policy report to “fine-tuning” policy, saying that this happened continuously. The surge in loans in the first half was due to the rollout of the government’s stimulus plan

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and lending won’t grow as quickly in the second half, Su said. China Construction Bank Corp President Zhang Jianguo said yesterday that the nation’s second-largest bank will cut new lending by about 70 per cent in the second half to avert a surge in bad debt. Construction Bank plans to extend about 200 billion yuan ($29 billion) of loans, down from 708.5 billion yuan in the preceding six months. The company’s new lending through June 30 was 42 per cent more than for all of 2008.

7. Hong Kong to hear billionaire Huang’s asset freeze BLOOMBERG Hong Kong’s High Court will hear on September 8 the application by the city’s securities watchdog to prohibit the disposal of assets by billionaire Huang Guangyu, China’s second richest man. The court ordered the former chairman of Gome Electrical Appliances Holdings Ltd, his wife Du Juan and the two companies through which he holds his stake in Gome not to remove from the city assets worth as much as HK$1.66 billion ($214 million), legal documents showed. The schedule of the hearing was posted on the Hong Kong judiciary’s website. Gome fell 7.8 per cent to close at HK$2.37 in Hong Kong trading, the most in almost eight months. The stock resumed trading June 23 after a seven-month trading halt following the detention of Huang, Gome’s largest shareholder, by Beijing police for unspecified “economic crimes.” “The company was not approached by any regulators or judicial authorities relating to such a court order,” Gome said in a statement to Hong Kong’s stock exchange today.

8. Bollywood finds reason to smile After a lull of three months, good times seem to have returned for Bollywood. Three recent films — Love Aaj Kal, Kambakht Ishq and New York —have done well at the boxoffice and have together collected over Rs 150 crore from ticket sales. The success of the three films augurs well for the industry. Financiers had become risk-averse, thanks to the liquidity crunch. Also, there was the suspicion that viewers, especially in the urban markets, would cut down their entertainment expenses in the economic slowdown. In addition, the multiplexes had gone on a long strike recently after differences emerged with producers over revenue sharing. The reversal in fortunes has brought relief to producers, especially because 40 big budget movies are lined up for release in 2009-10. Eros International President (India) Sunil Lulla said, The industry is equally upbeat about coming movies like Kaminey, What’s your Rashee, Kites, Blue, London Dreams, Qurbaan, Sikander and 3Idiots. Big Pictures has two films lined up for release: Sikander and Daddy Cool. Big Pictures Chief Operating Officer Mahesh Ramanathan said, “We have come out very strongly after the strike and it is important that films perform well to keep the momentum strong. Our two movies are Page | 5

ready for release in August, in which we have invested about Rs 20 crore.” According to a Mumbaibased media analyst, there is no more looking back for Bollywood with three hits in a month and with aggressive line-up of movies like Aladdin, London Dreams, Kites and Yash Raj’s Dil Bole Hadappa. What has also lifted the mood is the recent acquisition of the marketing and distribution rights of Karan Johar’s My Name is Khan Rs 106 crore. The turnover of the Indian film industry stood at Rs 10,700 crore in 2008, up from Rs 9,600 crore in 2007. It is expected to grow 11.5 per cent over the next five years to touch Rs 18,430 crore in 2013. The domestic box-office segment is expected to grow at 10.2 per cent cumulatively over the next five years to reach Rs 13, 200 crore in 2013 from Rs 8,100 crore now, according to a PricewaterhouseCoopers study on the Indian film industry.

9. Rio Tinto brings home the world’s costliest diamond Rio Tinto, one of the world’s largest diamond mining companies, has launched the pink diamond in India. Proposed to be sold through tender, the diamonds were opened for public viewing today. Pink diamonds cost at least 20 times more than processed white diamonds and only 40 to 60 pieces are available worldwide, with each stone weighing 40 to 60 carat. They are mined at Rio Tinto’s Argyle mine in Africa and processed at its cutting and polishing facility in Perth. The Perth-based facility of the global mining major processes only around 50 such diamonds every year, making them the world’s rarest gems, Bruce Cox, managing director of Rio Tinto Diamonds, said here today.

Merck shareholders approve merger with Schering-Plough Merck & Co shareholders overwhelmingly approved the drug maker’s planned merger with Schering-Plough Corp, and the deal remains on track to close in the fourth quarter, Merck said on Friday. Merck, which held a special shareholders’ meet on Friday to vote on the proposed merger, said a preliminary tabulation indicates more than 99 per cent of votes cast endorsed the deal. The deal, whose value was pegged at $41 billion when it was announced in March, still requires approval by US and European regulators. The merger pact, which followed a long-standing joint venture between Merck and ScheringPlough that sells the cholesterol fighters Vytorin and Zetia, was announced only weeks after Pfizer Inc’s $68 billion planned purchase of Wyeth. That deal is also slated to close this year.

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11. IS INDEX-APING LUCRATIVE? A lot has been written about index funds in the past two years, with most proponents recommending it as a key component in a portfolio. The overall argument being that most diversified equity funds are unable to beat the index, just as in the case of Western markets. The other point was that index funds were a low-cost alternative to exposure in the stock markets. On the other hand, most asset management companies prided themselves on their active stock picking skills and hence made a lot of noise with their performance statistics during bullish periods. Do index funds really do better than actively managed funds in India? First, let’s understand some basic definitions. Index Fund: An index fund is a mutual fund scheme that will mirror a stock market index and invest in stocks that are part of that index in the same proportion. For e.g. India’s widely followed stock market indices are the BSE Sensex and NSEs Nifty 50. Most of the 21 index funds in existence follow either of these two. Tracking Error: It is a measure of how closely a scheme follows an index to which it is benchmarked. Since an index fund is an imitation of the Sensex or Nifty, it is fair to assume there will be no tracking error. However, the reality on the ground is completely different and the tracking error varies between 0.3 to 2 per cent, plus or minus. Expense Ratio: This is the annual fund management charge by mutual funds. This is charged on a daily or weekly basis and varies between 1.7 to 2.3 per cent p.a. Index Funds have an expense ratio of 1-1.5 per cent. Let’s take a look at some performance figures. This data is based on pure NAV and excluding an entry load of 2.25 per cent. If you look at the above data, it is very clear that some of the well-managed diversified equity funds have clearly outperformed the index. The difference in outperformance is not small, but as high as 5-18 per cent in a one-year time frame, 5-9 per cent each year across a three-year time frame and 8-12 per cent ever year for a five-year period. This is a huge gap and is one that typically happens in strong bull markets. One will find similar outperformance during the bullish phase of 2003-2007, where a lot of well managed diversified equity funds beat the benchmark index. However, once the equity markets entered a downtrend or even a trading range, a lot of funds were unable to beat the index and hence the entry costs mattered a lot. The consistent ones, though, have done a fine job in bearish periods, too. Besides the huge gap in returns, there is some tracking error of index funds that are visible, too. Let’s understand how a well-managed equity fund could beat the Sensex. The Sensex is an index made up of 30 stocks which have an unequal weightage in the index. For example, Reliance Industries accounts for a 13.65 per cent weightage in the Sensex. Similarly, Infosys has 8.7 per cent and ICICI Bank has 7.41 per cent. These three stocks put together comprise about 30 per cent of the index and the top 10 stocks have a weightage of 67 per cent. The other 20 stocks, some of which are Tata Motors, Jaiprakash Associates, Hero Honda, Reliance

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Infrastructure, Tata Steel, Maruti, Hindalco, and Wipro and so on, form a very small percentage of the index. Now if the top 10 index stocks do not perform well, but the balance 20 stocks do well, the impact on the Sensex will not be huge. At the same time, if a diversified equity fund has a Tata Motors weightage of 5 per cent in the portfolio (versus 0.92 per cent in the Sensex) and Sterlite of 5 per cent (1.62 Sensex weightage) in the portfolio, an outperformance versus the Sensex is quite likely, as performance has been negligible and this is the reason why actively managed large-cap funds, which had a higher proportion of these stocks have done well. With this data and those over the past several sharp bull markets, one can conclude that during sharp rises and strong bull markets, a well managed, consistent and diversified fund can beat index funds by a huge margin. The argument of low cost, which until now was present because of the entry load in diversified funds, should be history as even diversified funds will be no-load from here on. At the same time, the expense ratio plus tracking error of index funds is equal to the expense ratio of sizeable diversified equity funds.

12. A-I gets an extra month’s credit to pay ATF dues... Coming as a relief for cash-strapped Air India, the Union petroleum ministry has approved a three-month credit period to oil marketing companies (OMCs) for payment of its aviation turbine fuel (ATF) dues. Currently, OMCs provide A-I a two-month credit. “There was a request from the committee of secretaries (CoS) to extend the credit on ATF to three months from the existing two months to help Air India. The ministry has agreed to it,” said a senior petroleum ministry official. The assistance was sought by Air India last month during a presentation to the CoS, which is headed by cabinet secretary KM Chandrasekhar. ATF prices had touched a peak of Rs 71,028 a kilolitre (in Delhi) in August last year. Prices fell to Rs 27,106 a KL in March this year but have again moved up to Rs 36,922 in line with crude prices. The Indian basket of crude has averaged $72.81 a barrel in the month so far, up 12.3 per cent from the July average of $64.83. As of August 6, the Indian basket stood at $73.70 a barrel. As a result of rising losses, most airlines have not been able to make timely payments to OMCs for ATF. However, of late, airlines have been rationalizing capacity to increase operational efficiency and contain mounting losses.

13. Turnaround at operating level for pharma sector Pharmaceuticals companies struggled for volume growth during the quarter ended June due to weak US markets, but still ended with profit before tax and extraordinary income of Rs 2,502 crore compared to a net loss during the preceding two quarters. An analysis of results from 83 small, medium and large companies indicate that the domestic business is growing at a healthy pace, while export markets remain subdued.

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The reported net profit of 83 firms rose by a healthy 29.4 per cent (adjusted net profit up 5per cent), but largely due to gains on foreign exchange loans, gains on fair valuation of derivatives and profits in FCCB buyback. Ranbaxy Laboratories, Aurobindo Pharmaceuticals and Stride Arcolab are illustrations and have reported higher profits on extraordinary gains. Wockhardt provided mark to market losses on derivatives, while Glenmark Pharmaceuticals made a provision for foreign currency exchange losses, to report lower profits. The profits of Sun Pharmaceuticals were hit by lower sales by its US-based subsidiary, Caraco, while Divi’s Laboratories reported a decline in net profit due to tax provision for earlier years. Dr Reddy’s Laboratories posted a healthy result on the back of a one-time contribution of Rs 210 crore in sales and Rs 73.4 crore in net profit from Imitrex AzG. Cipla reported strong numbers on healthy growth in export formulation sales and lower provision for forex losses at Rs 27 crore against Rs 74.7 crore in the same quarter last year. Overall, the numbers for the first quarter ended June were notably higher than the growth in previous quarters due to the improving business environment in semi-regulated and advanced markets and the European Union, indicates the pharma analyst at Sharekhan Research. The domestic formulation business continued to be the main growth driver for most of these companies, while Piramal Pharma, Cadila Healthcare and Lupin benefited from consolidation of their acquisitions. The reported earnings were higher due to significant profitable adjustment and a stronger rupee. The operating margins were lower by 132 basis points to 13.52 per cent due to a poor show by Glenmark Pharmaceuticals, GlaxoSmithKline, Novartis, Plethico Pharma, Ranbaxy Labs and Sun Pharmaceuticals. The results were extremely well for Dr Reddy’s Laboratories, Cipla, Cadila Healthcare and Piramal Healthcare. The analyst at Kotak Securities said the decline in sales of Sun Pharma was largely due to fall in finished dosage sales at Rs 300 crore from an estimated Rs 400 crore. The US generics’ sales were, at Rs 230 crore, lower than the estimate of Rs 380 crore due to lower sales at Caraco. Margins were significantly lower due to inventory provision at Caraco, forex losses and adverse product mix, with lower proportion of formulations’ sales. Ranbaxy Laboratories reported a flat year-on-year consolidated revenues, but an appreciable 15 per cent improvement over the March 2009 quarter. The sequential growth in revenues came from the domestic formulation market. According to the analyst at Reliance Money, European sales were key to revenue growth, while US operations witnessed a hit from US FDA issues. The emerging markets contributed about 57 per cent of Ranbaxy’s global sales. Latin America and the Middle East faced lower demand due to the slowdown.

14. Indian hotel chains face double whammy When Indian Hotels Chairman Ratan Tata told shareholders at the annual general meeting earlier this week that the hotel chain, which operates the Taj group, continues to be impacted by the slowdown, he was merely echoing what P R S Oberoi, his counterpart at the East India

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Hotels (EIH), had said recently. The performance of these two leading chains bear this out. In the first quarter of the year, EIH saw a 22 per cent dip in its net profit. The impact was much more severe for Indian Hotels, which posted a 73 per cent decline in net profit during the quarter, while total income was down 24 per cent, partly on account of closure of 287 rooms in the Taj Mahal Palace and Tower in Mumbai, target of a terrorist attack last year. Room rates have also seen a sharp decline during the quarter, as the effort was on to fill empty rooms. The industry faces a double whammy — declining demand and increasing supply. This year is particularly challenging, as a bunching of supply is projected. In the premium 5-star segment, for instance, rating agency Crisil had earlier estimated that about 3,000 rooms will be added in the current year in the 12 destinations it tracks, compared with about 1,000 rooms last year. While the dip in rates had been a muted 2 per cent in the past year (compared to the year before), HVS expects a countrywide decline of 20 per cent in room rates this year. Occupancy is likely to remain at around 60 per cent, the same as last year, though sharply lower than the 69 per cent occupancy recorded in the year before (2007-08). According to Crisil data, average room rates have dropped 26 per cent in the first quarter of the year. The overall drop this year was likely to be above 20 per cent, though the final numbers were yet to be crunched, Crisil analyst Sudip Mukherjee said. But, hotels are under pressure to increase rates, given the increasing costs of staff and other inputs like energy. In the first three months of 2009, tourist arrivals declined by 10-18 per cent, compared with the same period last year, according to provisional data compiled by the tourism ministry. Then, things improved; the decline in April and May came down to single digits –3.5 per cent and 1.9 per cent –and in June, arrivals were up 0.3 per cent. Foreign tourist arrivals in June were at 341,000 against 340,000 last year So, the trend is positive. Data from Crisil (see chart) show some relief in room rates in the tourist destinations of Goa and Jaipur. These are also the only two destinations showing an increase in occupancy. Occupancy in Goa went up to 61 per cent in June 2009, compared with 56 per cent in the same month last year. In Jaipur, occupancy went up to 37 per cent against 35 per cent in June last year. The interesting point is, while occupancy rates across all leisure destinations rose, business destinations, widely regarded as the cash cows for the industry, witnessed a substantial decline. That’s giving sleepless nights to the leading lights of India’s hospitality industry.

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Duty exemption needs to be made more user-friendly In the new Foreign Trade Policy, Commerce Minister Anand Sharma should try to revamp the duty exemption scheme and make it more user-friendly. The advance authorization scheme, put in place about four decades ago, has stood the test of time and become the basic scheme around which many alternative schemes (some of them very poorly conceived) have been introduced from time to time and discarded. This basic quantity based duty exemption scheme deserves to be simplified further and made more user-friendly. The advance authorization scheme allows the exporter to get duty-free imports for export production. The Standard Input Output Norms (SION) specify how much quantity of inputs can be imported against a unit of export product. The General Notes to SION, however, require the exporter to declare the quality, grade and specification of the inputs and export product. Sometimes this ‘nexus’ condition creates problems for the importers in compliance as well as documentation. Considerable simplification can result if the ‘nexus’ condition is restricted to only a few select ‘sensitive items’, as in the case of Duty-Free Import Authorization (DFIA) and Annual Advance Authorization (AAA) schemes. Advance authorization can be issued by simply stating the description of the inputs and export product and the value, without stating the quantity to be imported against each input. The exporter may be required to account for the inputs at the time of redemption, the way it is being done under AAA and through Appendix23 consumption statement. This will eliminate the need for AAA. Similarly, the advance authorization scheme can allow excise duty free procurement from domestic sources under notification number 43/2001CE(NT) dated June 26, 2001, the way it allows the facility under the DFIA scheme. Transferability may be allowed upon condition of CVD (countervailing duty) payment. In that case, the DFIA scheme can be given a quiet burial. Quite a few redemptions are held up for want of proper documentation. The condition of realization of export proceeds and production of Bank Realization Certificate must be done away with. The redemption must be granted on the basis of the shipping Bill transmitted electronically to the Regional (licensing) Authority by the Customs. The requirement to submit hard copy of the shipping Bill must be done away with. Once the Regional (licensing) Authority issues the export obligation discharge certificate, the exporter should not be required to again submit all the documents to the Customs get the bond/Bank Guarantee redeemed. In cases where the Advance Authorization is issued on ‘no norms’ basis, a ‘norms committee’ should fix the Input Output Norms within reasonable time. Although categorical provisions exist to treat the norms applied as final after elapse of a certain time, the regional (licensing) authorities are not allowed to redeem the authorization, unless norms are fixed. Specific provisions must be made to redeem the authorizations, once the exporter is able to properly account for the inputs, whether the Norms Committee has finalized the norms or not. The exporter should not be made to suffer due to delay by the Norms Committee. The scheme can be better administered through Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. That way, a single monitoring authority, the excise, can issue the Procurement Certificate, monitor proper end use and

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ensure fulfillment of export obligation and, thereby, plug rampant misuse of the scheme.

NTPC likely to set up power plants in Nigeria, Sri Lanka National Thermal Power Corporation Ltd (NTPC), country’s largest power utility, is likely to set up power plants in Nigeria and Sri Lanka, a top NTPC official said. It is also pursuing coal blocks amongst NTPC, RNRL, SAIL, NMDC and CIL for sourcing coking coal and thermal coal from abroad for which International Coal Venture Pvt Ltd was incorporated on May 20 this year. The Joint Venture (JV) will explore various opportunities in Australia, Mozambique, Indonesia and Canada etc, Sharma said.

Tata Power Trading approaches CERC against power exchanges Tata Power Trading Company Ltd, the power trading arm of India’s largest private sector electricity generator, Tata Power, has approached the Central Electricity Regulatory Commission (CERC) against the two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL). In a petition filed at the regulator last month, Tata Power Trading (TPT) has questioned the functioning of some members of the exchanges. The company has accused these members of operating as power traders but without any licence granted by the commission. “The exchanges have registered some people (as members) who are neither grid-connected generators nor trading licensees. Our main objection is that while these members are performing activities akin to a licensed power trader, they do not possess trading licences,” said a senior official from TPT. The CERC admitted TPT’s petition on July 30 and has directed the two exchanges to file their reply by August 21. Anybody who wishes to buy or sell power at the exchange is required to route the transaction through a member. Entities such as power generators, distribution companies, independent power producers (IPPs), captive power producers (CPPs), merchant power plants and traders — with a minimum net worth of Rs 1.5 crore — are eligible to become members of the Indian Energy Exchange.

18. Publicis to buy Razorfish ad agency from Microsoft Publicis struck a $530 million deal with Microsoft to buy the Razorfish ad agency and boost its position in digital communications, the world’s third-largest communications group said on Sunday.

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Publicis will issue 6.5 million treasury shares to the software giant, worth ¤162 million ($232.6 million) at Friday’s closing price, and pay the rest in cash from its ample liquidity position. The two firms, which concluded a cooperation deal in June, also signed a strategic alliance agreement to deepen their ties in digital advertising while Microsoft uses Bing as its battleship in the search engine war with Google Inc. Publicis is already the number one in digital advertising and Razorfish was number two in the single advertising sector that still shows growth rates despite the economic crisis. The group, based in Paris, beat Britain’s WPP Plc and Japan’s Dentsu Inc in the final bidding from an original field of some eight parties interested in the Microsoft unit. The transaction means that Publicis will generate 25 per cent of its sales from the digital sector, up from 21 per cent at the half-year stage, a figure Levy originally targeted for end2010. Publicis is the world’s third largest advertising group with ad agencies such as Leo Burnett, Saatchi & Saatchi, media buyers Starcom MediaVest Group and Zenith Optimedia while in digital advertising it owns Digitas. Razorfish was founded in 1995 and became part of Microsoft in 2007 as part of the $6 billion aQuantive acquisition.

19. England pull out of badminton event after LeT threat England today pulled out of the World Badminton Championship, citing a “specific Lashkar-eToiba threat” against the elite event, starting in Hyderabad tomorrow. They were the only team to do so, and their action could leave a bad taste in India’s mouth for its demonstration of low confidence in New Delhi’s ability to provide security. Home Minister P Chidambaram had said: “I am satisfied that the World Badminton Championship will take place in complete security. No one needs to have any apprehensions on this score. The alert in Hyderabad was based on information shared with the state police in a routine manner. There is no specific information that points to any imminent threat to the championship.” Badminton England said in a statement that the decision followed “concerns about the English team potentially being a target of attack in the event of a terrorist act”. Badminton England Chief Executive Adrian Christy said the decision was taken after seeking advice from the British Foreign Office and High Commission in India.

20. Now, fund-raising for charity goes mobile Realizing that raising money for charity will only get tougher in the present economic

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environment, the International Society for Krishna Consciousness (Iskcon) has decided to harness the ever-increasing mobile users in India. For Iskcon, this will help them sustain the inflow of donations for its mid-day meals programme. Iskcon along with Atom Technologies has introduced a mobile interactive voice response system (IVRS) module that will enable individual donors to zip cash donations over the mobile phone, using their credit cards. Technology will make fund-raising easier, asserts Shri Radha Krishna Das, MD, Iskcon Food Relief Foundation, who is keen to roll out the IVRS mode of payment to all 16 Iskcon centres across India. At present, the IVRS mode has been launched for Iskcon’s Mumbai centre. Through the IVRS mode, Iskcon is targeting the Gen Y (a term applied to those born between 1981 and 1995), who are comfortable paying for downloads, movies and music electronically and most of whom have mobile phones. Neralla asserts, “India’s mobile population is a huge universe for charities, especially for the smaller players who struggle for donations.” He reckons that mobile donors may contribute smaller sums, averaging between Rs 100 and Rs 200, but the volumes are bound to be much larger than any other form of donations. While nonprofits relied on a smaller number of donors making large gifts in the past, the new paradigm is appealing to a vast number of smaller donors. Atom Technologies has also joined hands with two other NGOs — GiveIndia & CPAA. GiveIndia will be adopting atom’s IVR-based payment option, whereas CPAA will be going in for a mobile-based payment solution where donors can donate via text messages. Nonprofits could also send targeted messages to their donor base to update them on the progress made with fund-raising or on cause objectives.

21. Sony plans $199 e-reader in Amazon challenge Sony Corp will begin selling this month the cheapest digital book reader for the United States, heating up the competition with Inc in the small but fast-growing market for electronic readers. Sony plans to start selling its 5-inch-screen Reader Pocket Edition at $199 — which it called a breakthrough price — and a larger touchscreen reader for $299, through nationwide retail outlets such as WalMart and Best Buy. To drive demand, the company plans to reduce the price it now charges for downloads of bestsellers and new releases to $9.99 from $11.99, bringing prices largely in line with Amazon’s.

22. Idea walks the talk ‘Walk, When you Talk’ has prompted many viewers to approach the Indian Customer P a g e | 14

Complaints Forum on the ground that walking while talking can lead to accidents, but Idea Cellular isn’t complaining. The country’s fifth largest telecom services operator is busy enjoying all the attention the campaign has drawn. The latest campaign, which is the fifth in the ‘What an Idea, Sirjee!’ series, was launched last month and its success has led Idea to conduct ‘walkathons’ all over the country, introduce theme ring tones and launch a website , which suggests that if ‘Talktime’ equals ‘Walktime’ for mobile users, fitness scores can go up. Lowe Lintas India Chairman and Creative head R Balakrishnan (popularly known as Balki), who has conceptualized the ‘What an Idea…’ series, says he sees little point in the protests. “These campaigns are based on fun themes. I don’t expect the whole world to follow it, even though I expect everyone to appreciate it,” Balki says. The ‘Walk, When you Talk’ campaign is about a universal insight that as people spend almost 1.5 hours on an average on the phone every day, walking while talking might be a solution to solve the fitness problem.

23. DTH operators may have to offer inter-operable boxes Direct to Home (DTH) operators could be asked to provide inter-operable set-top boxes to their customers with the Competition Commission of India (CCI) seeing prima facie merit in a complaint filed by a consumer organization that it is in violation of competition laws. The CCI is already one month into its investigation that began on the basis of information filed by Consumer Online Foundation that says DTH service providers are limiting competition among themselves by not providing consumers inter-operable set-top boxes that will allow them to switch operators without paying for a new box. There are over 15 million DTH subscribers currently among five private DTH operators — Dish TV, Tata Sky, Reliance Big TV, Sun Direct and Airtel Digital TV. Current DTH licensing norms only specify inter-operability between DTH operators offering services using MPEG-2 technology like Dish TV and Tata Sky (which are in compliance). However, the Bureau of Indian Standards (BIS) is yet to set out norms for MPEG-4 technology (used by Sun Direct, Big TV and Digital TV), so the boxes of Dish TV or Tata Sky are not portable with the services of the MPEG-4 DTH operators. Gautam Shahi, advocate with APJ-SLG Law Offices, who is handling the case for Consumer Online Foundation, said operator-set-top box link is a direct violation of licensing conditions. "There is a prima facie tie-in of DTH services with settop boxes that violates Section 3of the Competition Act, 2002," he said.

24. JLR ties up three-year financing for inventory Tata Motors-owned Jaguar Land Rover (JLR) said yesterday it had successfully secured a financing facility of up to £75 million (Rs 600 crore) with Burdale Financial Ltd, a member of P a g e | 15

the Bank of Ireland Group. The package consists of a three-year committed facility to finance Land Rover’s parts and accessories’ inventories and receivables in the UK and the US. It does not form part of JLR’s applications to the UK government’s Automotive Assistance Programme, about which discussions continue, the company said in a media statement. Said Ken Gregor, CFO: “Jaguar Land Rover is pleased to have concluded this facility, which is an important element of our working capital financing arrangements.” This is an important element of JLR’s working capital financing to cover the key Land Rover parts and accessories’ inventories and receivables part of our business, which has a high cash requirement, to function properly.

25. Channel V gambles again on new format Channel V faces a tough task. While its revamp — a new look with focus on reality shows —is slated for August 22, market analysts are of the view that it’s almost a do-or-die situation for the TV channel. Languishing at the bottom of the pile (among the top five players), with a market share that has risen marginally from 6to 8 per cent in the past six months, the channel needs to do something new to garner eyeballs. The new mix — 60 per cent music and 40 per cent reality show — are targeted towards achieving just that. The bouquet of reality shows would include, Exhausted and Kidnap (both game shows), Dare to Date (based on the blind date concept), Lola Sunday and School Of Cool (a show for college students). But will it able to turn on the magic? Says Prem Kamath, General Manager: “In the first quarter itself, we have launched five new shows. This revamp would help us differentiate far more significantly.” According to him, besides changing the content matrix from 90 per cent music and 10 per cent shows to 60 per cent music and 40 per cent shows, they have also hired an external production house, Endemol, for the first time. Endemol will produce their lead show, Exhausted —a show based on an international format that will have contestants performing tasks for 48 hours without sleep. Kamath hopes this show will help turn around the channel’s fortunes. Market leader MTV India is following a wait-and-watch policy. Said its General Manager and Senior Vice President (Creative and Content) Ashish Patil, “It should be interesting to see how audiences react towards these new shows. Anyway, they have revamped five times in the last few years, but the content mix has not worked still. I hope they get it right this time.” The issue, Patil felt, was faulty execution. MTV is launching a new show called Striped this Friday. While admitting that MTV’s shows, like Roadies, have worked better, Kamath said they have had a line-up of shows like Get Gorgeous and Launch Pad. “Our market share among all the channels has risen from 0.18 per cent to 0.4 per cent, whereas MTV’s is at 0.6 per cent.” Media analysts said it is imperative for Channel V to get the programming mix right this time. “It has not been able to garner market shares despite the various revamps. It is important for them to click this time,” said one.

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26. IOC-Adani win CNG rights The Indian Oil Corporation (IOC) and Adani Energy combine has bagged rights to retail CNG to automobiles and piped gas to industries in Chandigarh and Allahabad by quoting zero pipeline tariff. The Petroleum and Natural Gas Regulatory Board (PNGRB) had asked the companies to quote only the tariff that they will charge for transporting gas within the perimeters of a city and left the final selling price of the fuel for the companies to decide. Industry sources said PNGRB today opened price bids for two cities to discover that IOC-Adani combine had quoted zero pipeline tariff for 25 years in Chandigarh and the same for 7 years in Allahabad. On top of this, the PNGRB has also allowed a 5-year marketing exclusivity to the winning company. Even after 5 years, the operator like IOC-Adani will have system (that is pipeline) exclusivity for 25 years, meaning no other company can lay a pipeline network and would have to necessarily request them to use their network if they want to retail CNG to automobiles and piped gas. But the regulations do not specify the extra capacity the operators would have to create in the system for usage by others and so third parties can be turned down on pretext of no capacity, they added. The other bidding criteria was the length of pipeline a company proposes to lay in the city and the number of consumers they propose to sell the gas to. In some cases, companies have indicated enrolling consumers even more than the population in that area, again making a mockery of PNGRB’s regulations, they added.

27. Emerging Media’s Badale to buy 50% in Rajasthan Royals MANOJ Badale, co-founder and managing partner of the UK-based venture capital group Blenheim Chalcot, is acquiring a 50.3% stake in Rajasthan Royals, the team that won the first edition of the Indian Premier League (IPL) in 2008. Jaipur IPL Cricket, the company which has the franchise for the Rajasthan Royals team, is wholly-owned by Mauritius-based EM Sporting Holdings (ESH). Nigeria-based NRI family Chellarams holds 44.1% in this company and is the single largest shareholder. Emerging Media (IPL), promoted by Mr Badale, owns 32.4% in this holding company while the rest 23.5% is equally split between Blue Water Estate, representing Lachlan Murdoch and Kuki Investments, which is promoted by UK-based Kundra family and is also believed to represent investments of Bollywood actress Shilpa Shetty. Post this transaction, Emerging Media (IPL) will own 50.3% direct stake in the cricket team besides an indirect stake of around 16% through the Mauritius joint venture. The fresh issue of shares is being made against the initial investment made by the venture. As per the deal, the Rajasthan Royals franchise owners had to pay BCCI $67 million in ten equal installments of $6.7 million. Emerging Media (IPL) had paid $5.05 million as earnest money for the bid to get the team

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franchise. This earnest money was to be adjusted with the first installment of $6.7 million to be paid to BCCI. The remaining $1.65 million was paid by the Mauritius joint venture, partly through a wholly-owned unit.

28. DoT to refund Rs 86-cr fee paid by ByCell THE Department of Telecommunications (DoT) will refund the entry fee and the performance guarantee of Rs 86 crore paid by little-known Swiss firm ByCell to start operations in India. DoT has prepared a draft note revoking the letters of intent (LoIs) issued to ByCell, paving the way for refunding the entry fee of Rs 23 crore, and two performance bank guarantees of Rs 18 crore and Rs 45 crore, said a government official, who asked not to be named. ByCell, which was given approval to begin operations in 13 circles, including Assam, Bihar, north-eastern states, Orissa and West Bengal, has received LoIs for five of these circles. But DoT had withheld its licence because of security concerns raised by the ministry of home affairs (MHA) and the revenue department. In 2006, it had received FIPB approval to invest Rs 500 crore. ByCell, founded by a group of Russian businessmen, was to hold 74% in the Indian telecom company with Hyderabad-based Jayalakshmi Group that has interests in tea, tobacco, cotton yarn and power owning the rest. Both companies had announced this joint venture in 2006. In fact, FIPB had given ByCell approval twice to invest in India, but DoT refused to give it licence on grounds of security. In 2008, the company moved court to obtain licence to operate in the country as it had paid the licence fees and other charges to the government. On the court’s direction, it received a licence from DoT to start its services in India. Meanwhile, it also received clearances from the home ministry. On the basis of this, the company decided to invest $500 million. Earlier in May this year, MHA and the revenue department had sought that FIPB review the clearance it had given to ByCell to launch telecom operations in India. The revenue department had expressed concerns to FIPB about ByCell’s shareholding structure, its source of funding and the lack of clarity about the company. It had said the company be allowed to launch operations only after it offers clarity on these issues. 29. India emerges as the new IT front office of the world GLOBAL markets may be the breadwinners for Indian technology majors, but the domestic market is fast becoming the next hot destination for global firms, particularly smaller, niche market players. While the western economies are still waiting for ‘green shoots’ of recovery, a slew of niche technology vendors, who were focusing on the US and Europe for so long, are finding greener pastures in emerging markets such as India. Some of the companies that have set up shops in India in the past six quarters include business intelligence provider MicroStrategy, anti-virus vendor AVG Technologies, investment analytics provider MSCI Barra, document manager ReadSoft, insurance software company IDIT Technologies, banking solutions firm Trasset and financial technology outfit SmartStream. While the downturn in western markets triggered this trend, these firms were lured by India’s resilience to the global crisis, its strong local industrial base and the government’s bigticket spends on technology infrastructure. “Corporate India consists of 5,000 large enterprises, 27,000 small and medium outfits (SMEs) and more than seven lakh home-office

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set-ups. This sums up into a huge opportunity for tech providers,” says Mohammad Saif, global consulting firm Frost & Sullivan deputy director of ICT practices for South Asia and the Middle-East. Most new entrants into India are niche technology players, points out Milan Sheth, business advisory services partner of professional advisory firm Ernst & Young. “These companies are targeting two major areas, including government and public sector segment and specialized analytics and modelling,” he adds. Some of the new entrants that ET spoke to cited maturity in domestic IT market as an important reason to target India. “Since Indian companies are increasingly competing in the world market, they find a need to adhere to global best practices in their respective fields. Hence, we feel that the time is right for us to bring our global customer insights to the Indian market,” says Shankar Ganapathy, world-wide V-P of MicroStrategy, a $360-million US provider of business intelligence solutions that announced the launch of its India operations a few weeks ago. Also, according to SunGard managing director Atul Sareen, various regulatory changes in India are creating new opportunities for technology providers to bring in best in-industry solutions. For instance, the Reserve Bank of India’s decision to allow retail investors to invest in global markets requires technologies to connect broker terminals to international exchanges and also necessitates use of advanced risk-mitigating solutions, says Mr Sareen, who looks after sales of financial solutions for SunGard, a $5.6-billion US vendor of software solutions. SunGard, which has been operating off-shore development centres in India since 1993, recently set up sales office in India to cater to local customers. The company will initially target financial solutions for segments including banking, insurance, front and back-office trading, and energy trading. At the end of 2008, the company had 2,000 employees in India or 10% of its global headcount of 20,000. It expects a 50% rise in its Indian headcount by the end of 2009. AVG Technologies, which has 80 million users of its anti-virus solutions across the world, launched direct channel presence in India two months ago. “So far, our India presence was through Internet downloads of our free software. However, looking at fast growing Internet connectivity in India, we have established channel sales in the country,” said Peter Baxter, vice-president, business development. Foreign firms that set up shops in India early have already started reaping the benefits. Buongiorno, the world’s largest listed mobile value-added services (MVAS) provider that launched its India operations three years ago, is expecting a three-fold growth this year. The company, which earns close to 10% of its global revenue from India, has been providing VAS services to top domestic telecom operators, including Bharti Airtel. According to Nasscom estimates, the domestic IT services market has grown two folds to $8.3 billion in the three years ended March 2009. Over half of this revenue came from IT spends by small- and medium-sized companies. 30. Coca-Cola arm buys back Kinley bottling rights from franchisees HINDUSTAN Coca-Cola Beverages, the bottling subsidiary of Coca-Cola India, has acquired the bottling and distribution rights for its Kinley packaged water brand from franchisee bottlers in three states, ending a long-drawn dispute. The compensation the world’s largest beverages maker paid to individual franchise bottlers could not be confirmed. With this acquisition, which is for both retail and bulk water, Coca-Cola can have a direct and centralized distribution system for Kinley, which tops the retail packaged water market

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with a 10.3% share, and align its bottling operations more efficiently. The mass-distributed Kinley leads the Rs 2,200-crore retail packaged water market with a 10.3% share, according to market research firm AC Nielsen. The market is growing at a rate of about 17% per year. The integration of bottling operations also means that there is no overlapping between Hindustan Coca-Cola Beverages and Coke’s franchise bottlers in these markets. The Coca-Cola spokesperson said the integration has been done over the last 24 months. Several leading franchise bottlers of Coca-Cola had signed an agreement called the Coca-Cola International Bottlers Agreement (CIBA) to get the franchise r i g h t s for Kinley. Under the agreement, bottlers had to set up manufacturing capacities and take care of infrastructure development of coolers and signages. Coca-Cola did only advertising. The contracts, ranging between five and eight years, had been renewed from time to time. Packaged water is highly fragmented and categorized by low margins estimated to be a third of carbonated drinks. 31. Three top Hollywood studios bring films to web IT IS a dash of Hulu and a sprinkle of YouTube, features a crystal clear picture, can rewind or fast forward at lightning speed, and doesn’t require a download of any special software. But, the soon-to-launch video website, will have its success dictated more by the movies, concerts and original programmes it offers than the technology behind it, said the executive charged with creating and running the site. But they added a twist. In addition to the premium movie channel and a video-on-demand component, the venture is building a website where the studios’ vast collections of full-length movies and new original programming can be streamed by any subscriber. Rensing, a former executive with Time Warner’s AOL, was hired to run the site. His aim, he said in an interview, was to make it “all about being easy to use” yet not a “dumb player” that simply acts as a projection screen for video. So comes with an array of features. When watching Paramount’s “Iron Man”, for instance, a person will have access to the trailer, lists of facts about the superhero film, a plot synopsis, and cast list. Because of its relationship with the studios, Rensing said could eventually offer more unique features. is due to launch before the cable channel does in October, and will build its library of films from its parent studios in the months that follow. At the moment, it is still being tested in front of a small audience. As for its appearance, the site features as wall of movies from which a viewer with a click of the mouse. The movie then pops up, set against a traditional red movie theatre curtain. Another mouse click plays the movie. Rensing noted one feature he particularly liked: a sharing function. Under the current distribution agreement with Verizon Communications, Epix subscribers can invite up to four friends to watch a movie online — from their own computers. Those friends can also swap message about the movie through a chat function in the player. And so long as they are invited by an Epix subscriber, the friends watch for free. “Hey, when you come to my house and we’re going to sit down and watch the ‘Sopranos’ and you don’t have HBO, do I charge you a dollar and stick it in my cable bill?” — Reuters 32. Govt to pocket Rs 10k-cr special dividend

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THE government will mop up around Rs 10,000 crore by way of special dividends from some cash rich companies run by it, ahead of planned public issues aimed at enhancing public ownership. It plans to tap the unlisted Bharat Sanchar Nigam (BSNL) and Coal India as well as listed companies such as NMDC and MMTC, said an official, requesting anonymity. The intent is not to strip these companies of their assets, he said, adding, “Large amounts of cash in banks reduce overall rate of return on capital.” The move will not affect the valuation of the companies, he said. The government had raised its target for dividend income by Rs 10,000 crore to Rs 49,750 crore in the Union Budget 2009-10, against the revised estimates of Rs 39,736 crore for the previous year, clearly indicating the intent to claim special dividends. Though the proposal is still at the discussion stage, officials with the government and companies involved in the deliberations said they were already planning for special dividends. “The government may ask for a special dividend,” said a BSNL official. A leading banker, involved in disinvestments process in some of these companies, also confirmed the development. “Going by the economic indicators and performance of the companies, chances are that the actual dividend income for 2009-10 would be lower than the previous year’s figure, unless the companies declare special dividends,” he said, requesting anonymity. In 2008-09, the government earned Rs 39,736 crore in dividend and profit, Rs 3,468 less than the target of Rs 43,204 crore. “Since the year 2008-09 was a bad one for many public sector oil companies, it was expected that the actual dividend would be lower,” said another government official. Some of the companies such as BSNL and Coal India have cash to the tune of Rs 35,000 crore and Rs 25,000 crore, respectively, on a consolidated basis. Though these companies need some cash to meet their capital expenditure, the current level of cash was far beyond their requirement in short to medium term, he said, requesting anonymity. Total amount of cash with all public sector firms is estimated to be over Rs 75,000 crore. While NMDC has Rs 7,200 crore in cash, MMTC and Neyveli Lignite have Rs 5,950 crore and Rs 4,750 crore cash reserves, respectively. 33. Reliance General fined for tweaking ‘approved’ plan INSURANCE Regulatory and Development Authority (IRDA) has imposed a Rs 20-lakh fine on Reliance General Insurance for violating ‘file-and-use’ guidelines, which apply to the approval of new products. Reliance General Insurance has been penalized for making changes to its health insurance plan after it was approved by the regulator. Just as the market regulator Sebi requires a company to file a draft red herring prospectus a few weeks before its listing on the stock exchange, IRDA mandates that insurance companies seek its approval before launching new products. If the regulator has no queries or objections, insurers can start selling products after a fortnight. The norms relating to the process of lodging details of a new insurance plan with the regulator before starting to sell are termed as file-and-use guidelines. Once a new scheme is approved by the regulator, the insurance company cannot make changes without the former’s clearance. When contacted, Reliance General Insurance said, “We had filed and received approval from IRDA for our retail health product by the name of Reliance HealthCare, while we introduced the same as Reliance Health Wise. In 2007, we had reviewed the pricing based on our claim experience after two years of the product approval and the same was introduced after filing with IRDA as per ‘file-and-use guidelines’. This confusion/lapse had occurred on

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account of oversight as the new file-and use guidelines were introduced around the same time which required prior approval for any revision even in existing products which was not the case in the earlier file-and-use guidelines.” The statement added that the company has confirmed strict compliance to the file-&-use guidelines as advised by IRDA and that there would be no impact on policyholders. In 2007-08, the insurance regulator collected Rs 25 lakh by way of fines imposed on insurance companies. Earlier, the regulator had imposed fines on private and state-owned insurance companies for not meeting priority sector targets, selling policies below prescribed rates, opening branches without permission and for delay in filing returns. Section 102A of the Insurance Act, 1938, allows IRDA to impose a penalty on insurers of Rs 5 lakh for each violation. The violations include failure to furnish any document, failure to comply with directions, failure to maintain solvency margins and failure to comply with the direction in insurance treaties. Despite the limit, IRDA can charge higher penalties by compounding the violations. 34. Is India ready for debt management office? DEBT MANAGEMENT HAS OVER THE YEARS become a specialist job and administrations the world over has resorted to branching this activity under a separate authority. In the US, debt management falls within the Treasury’s domain, while the Federal Reserve, the US government’s central bank, deals with monetary policy. Most of the jurisdictions worldwide, like UK, Sweden, Brazil, have a separate entity managing debt and in-charge of raising and managing debt for the respective administrations. Presently, the Reserve Bank of India carries out both the debt management and the monetary policy implementation functions, for the central government. Therefore, a case for a separate DMO is being made out mainly on the ground that the central bank is conflicted when it acts both as the government’s banker trying to borrow as cheap as possible, and also as the prime authority responsible to enforce the monetary policy with the prevalent interest rates. Contrary to popular belief, a separate DMO is unlikely to increase in forced mopping of government securities (G-Secs) by public sector banks anymore than already be. With everdecreasing global interest rates, higher yield of Indian public debt anyways remains very alluring. Importantly, the development of the G-Secs market is essential for any economy to come of age. It requires dedicated professional management and carving out a separate DMO may be the correct approach. Another factor to consider is India’s debt rating that is just about investment grade or thereabouts. A dedicated approach towards debt management will help in improving the disappointing debt rating. With the Indian government taking on its biggest public debt raising exercise till date of approximately close to $ 90 billion or Rs 4.5 lakh crore, the presence of a vibrant and dynamic debt and G-Secs market involving participation from all class of investors (and not only from a few institutional players, as is the case now) has become paramount. Due to the severe global credit crisis, the Indian government, like most other governments the world over, was pushed to walk the path of an expansionary fiscal policy. The Fiscal Responsibility and Budget Management Act, 2003, which lay policy targets for both the fiscal deficit and the revenue deficit up to 2008 and aimed at institutionalizing fiscal management to bring about greater fiscal discipline, had to be consequently put in suspension. Taxes were lowered and expenditure increased to stimulate (a) the sagging economic sentiment; and (b) increase the money flow to thwart the adverse effects of credit crunch which has resulted in India’s present fiscal deficit reaching alarming levels.

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Therefore, the need for a sound public debt management strategy has become even more pressing. It is the need of the time to lower the cost of public borrowing, while balancing it with extant monetary policy initiatives and refinancing risks inherent in any government borrowing plan. Is there a downside? Absolutely, every change has the potential to be catastrophic. It is contended that there exist three pre-conditions to separation of debt management, namely, (a) reasonable control over fiscal deficit; (b) development of financial market; and (c) legislative changes. The first two pre-conditions are moot as they pose the chicken and egg problem. The third one is entirely achievable. There are some issues that must necessarily be addressed during the process of setting-up the DMO. • The seamless integration for efficient debt management and coordination of the DMO with the other limbs of the Indian government is the pivotal concern. • Sustainability analysis for public debt should incorporate appropriate mechanism for reporting from onground debt managers, thereby drawing upon their market intelligence and understanding. • The ongoing credit crisis has proven that the once infallible are also fallible. Countries can little afford defaulting on their sovereign debt obligations as there is unquantifiable reputational risk associated with it. Legal enforceability of debt obligations in both, domestic and international markets, and understanding the legal implications of various complex structured transactions becomes essential. Adequate measures are necessary in this regard. • Creation of DMO has to adhere to a proper constitutional procedure that empowers the DMO to bind and be bound on behalf of the Indian government. Clarity in delegation of this power and function is indispensable. • It is rather impossible to foresee all future situations for such a wide function. Thus, the regulations must not be too detailed. They should clearly state the main activity of DMO, provide operational guidelines and establish a seamless coordination mechanism. Indian regulators, RBI and SEBI, have been casted away for towing a conservative approach over the years, but the same dogged approach tempered with sensible pro-action, like in the Satyam fiasco, has largely served in shielding India from the Asian financial crisis and the present global credit crisis. Nevertheless, the creation of DMO will not be frivolous, as it shall result in removing the conflict with monetary policy management and provide the much needed stimulus to debt markets. In any case, divestment of the debt management function from RBI to a separate authority is likely to involve multiple phases, with adequate check-posts at each phase. If worked out with adequate precaution, the DMO can serve as a change agent for the development of the Indian debt markets. 35. Maruti stays ahead of the pack THE lower base effect of July 2008 translated into healthy sales growth in July this year, as carmakers posted increase in sales of 31% to 1.15 lakh cars last month in the domestic market over the same month last year, when sales dipped 1.7% to 87,724 cars.

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As per the Society of Indian Automobile Manufacturers (Siam), the domestic auto industry is likely to perform well for the next few months, with strong demand expected during the upcoming festive season. Car sales were primarily led by Maruti Suzuki India, whose sales jumped 31% to 60,012 cars and the No. 2 carmaker Hyundai recorded a 54% increase in sales to 23,193 cars. Mahindra & Mahindra sales jumped 74% to 11,660 units last month. “The domestic market will continue to post impressive sales growth till the festive season and after that, there could be some correction in the sales numbers. The market is growing as the fundamentals of the economy are strong, but the ongoing drought could play spoilsport in demand after the festive season,” said Mahantesh Sabarad, an auto analyst with Centrum Broking. Tata Motors sales rose 21% to 14,537 units in July, while Honda Siel Cars dispatches rose 20% to 4,827 units last month compared with 4,006 units sold in the same month last year. General Motors India, the Indian subsidiary of troubled American carmaker General Motors, saw sales drop 16% to 3,729. The sales growth story was the same for commercial vehicle (CV) makers, which after a gap of 11 months, posted an increase of 10% to 37,624 vehicles in July against 34,325 vehicles in the year ago period. The growth came largely from light commercial vehicles, which grew 28% to 21,486 units in July, while medium and heavy truck sales fell 8% to 16,138 vehicles in July over last year. The CV segment posted a small 1.93% growth in July 2008 and had started declining from August last year. The two-wheeler segment also posted growth as market leader Hero Honda’s motorcycle sales surged 31% to 3.42 lakh units though rival Bajaj Auto’s sales dipped 4% to 1.09 lakh units. Honda Motorcycle’s bike sales rose 53% to 38,758 units while TVS Motors posted a decline of 19% to 31,916 bikes. Export of passenger vehicles grew 21% to 33,789 in July. Exports led by huge demand from Europe helped carmakers generate impressive growth, and this was largely driven by Maruti Suzuki India, whose overseas sales grew 88% to 10,432 units last month. 36. It’s a big day for Nokia chief NOKIA folklore has it that in the early 1990s, when the Finnish mobile phone giant’s board was deliberating whether to set up operations in India or China, the then CFO Olli-Pekka Kallasvuo insisted that it was not an either-or decision—Nokia needed both markets. So the company set up operations in India in 1995. And the rest, as they say, is history. Today, Nokia boasts of Rs 24,200-crore business in India with 70%-plus market share in mobile handsets. On August 20, the 56-year-old Finn will have to take similar decisive calls. As the chairman of the jury for the ET Awards for Corporate Excellence, he will head an eight-member grand jury that will change the lives of a chosen few in India Inc—doing no less than inducting them into India Inc’s Hall of Fame. Mr Kallasvuo, now president and CEO of the euro 51.05-billion Nokia is looking forward to the challenge. “It’s an honour. It’s also a great opportunity to meet some of the architects of the new Indian business powerhouses,” he says. “It’s a big event for me personally. India is not an emerging economy now, but it’s in full bloom—taking into account the significance, the size, the importance of the nation.” In his 28 years with Nokia, Mr Kallasvuo has seen a small company from Finland transform into a truly global handset giant. Naturally then, the category that excites the chairman of the jury is Emerging Company of the Year. “That category holds huge promise as these companies identify new business opportunities and think of new marketing techniques that enable a successful outreach. I have looked at some of the nominations, they are quite interesting,” he says.

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Over the years, the jury has been chaired by a range of diverse personalities—from Infosys’ NR Narayana Murthy, to HDFC’s Deepak Parekh, to PepsiCo’s Indra Nooyi and ArcelorMittal’s LN Mittal. 37. Nokia boss believes in consensus THEY brought their individual styles to the collective decision making process: some were consensus-builders, some wanted time-bound quick decisions, some allowed long debates and even agreed to disagree with the members. Mr Kallasvuo sees himself as a consensus-builder. “Nokia’s culture is very collaborative and equitable. But I guess, it’s also about finding the right balance,” he says. But after looking at the list of nominees, Mr Kallasvuo has no doubt that arriving at decisions is going to be a tough ask; he finds the shortlisted companies truly world-class. Unsurprisingly, he remains bullish on the India story. “India has come a long way from the agrarian economy it was to being one of the most favoured investment destinations,” he says. “The liberalization charter and reforms process initiated by the government 18 years ago were the first steps toward global optimism for India. The telecom industry has immensely benefited from the steps that were taken in the early years.” Mr Kallasvuo believes the rise of the Indian MNC has been an important step in the movement of India Inc to the global centre stage. “It indicates India’s growing role in global business. Today, Indian businesses are competing at the global level—making global acquisitions to expand their reach and grow their capabilities. Tatas’ Corus acquisition, HCL’s Axon buy, the acquisition of Jaguar-Land Rover, all of these reflect India’s growing role in the comity of nations,” he expands. The winners of The Economic Times Awards, like Infosys, Tata Steel, Bharti, HDFC Bank, Ranbaxy Laboratories and TCS, have helped the India story go further and also done their bit in nation-building. Mr Kallasvuo’s jury will take it a step further. The ET Awards are presented by Raymond in association with Trident, Nariman Point, Mumbai, and the television partners are ET NOW and Times NOW. 38. Bharti to offer $500-m cable network outsourcing deal INDIA’S largest telco Bharti Airtel will outsource the management and maintenance of its 80,000 km-plus inter-city optic fibre cable network in a deal that is estimated to worth about $500 million over a five-year period, two executives familiar with the development said. Bharti has made outsourcing the cornerstone of its business strategy, and has signed multi-billion dollar contracts with network vendors such as Ericsson, Nokia and Siemens, which build, operate and manage its mobile network. It pioneered the network outsourcing model in 2004 by awarding contracts to Ericsson and Siemens — which later merged with Nokia Networks — and this business model has now been replicated by over 100 operators globally. Bharti was also the first to outsource its IT requirements when it awarded a 10-year $750 million contract to IBM, which is now worth $2.5 billion. Vodafone, too, has outsourced its IT systems to IBM. Another billion-dollar pact exists with six BPOs, which collectively handle Bharti’s customer services for a 10-year period. The Alcatel-Lucent-Bharti JV is the front runner to manage and maintain the telco’s intercity networks, said another industry executive aware of the development. In April 2009,

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Bharti Airtel entered a joint venture with Franco-American telecom gear maker AlcatelLucent to manage its landline and broadband business, expanding its tested strategy of outsourcing technology functions to focus more on marketing and sales. 39. Lehman verdict will decide future of securitization AUS court verdict of a case shortly, which may largely determine the future of securitization globally, will be closely watched by markets worldwide, including in India. The case is a claim by the bankrupt Lehman that disputes the concept of ‘bankruptcy remoteness’ for special purpose vehicles (SPVs), considered the basis of securitization. An SPV is bankruptcy remote, if it enjoys the legal protection against claims from the bankruptcy of the originator, limiting the credit risk of investors to the assets of the SPV. This case refers to the synthetic Dante Multi-Issuer Secured Obligation Programme, where a few Irish SPVs — held by Lehman — issued notes to investors to raise money, which was then used by the SPVs to buy collateral, such as government and other secured bonds. Simultaneously, the SPVs entered into a default swap with Lehman Special Financing (swap counterparty), where Lehman bought protection from the SPVs, agreeing to make payment of regular swap premium to the SPVs. Collateral is usually held by SPVs to ensure that the swap is backed by real assets and gives investors the confidence to put money into an SPV. With Lehman’s bankruptcy in September resulting in default of swap payments, the investors’ trustees filed a claim for the collateral, as the agreement stated that investors would have a priority over the collateral, in case the swap counterparty defaulted. Contesting the claim, Lehman’s lawyers, in the UK Chancery Court, argued that the clause providing for subordination of Lehman’s interest in the collateral, was void, under UK Law, based on a some earlier rulings. A UK court, in an earlier case, had ruled: “There cannot be a valid contract that a man’s property shall remain his until bankruptcy, and on the happening of that event go over to someone else, and be taken from his creditors.” Lehman’s lawyers also contended that the proceedings should be held in US courts, as the bank is American, even though the documentation is done in the UK. The Chancery Court, however, quashed Lehman’s arguments on grounds that Lehman cannot continue to enjoy the collateral even after defaulting the swap payments. The case was adjourned, to comply with UNCITRAL’s model law on cross-border insolvency, as Lehman’s bankruptcy proceedings are already going on in the US. Analysts said a court ruling in favour of Lehman will be hugely negative for the global credit markets, as investors would fear that their money would no longer be safe in bad times. The head of global markets with a foreign bank said, “The implications of a court order against the investors go beyond securitization into any trade where the concept of credit risk mitigant becomes important. In the absence of such a vehicle, a significant part of investors would be precluded from taking active interest in the programme.” According to Vinod Kothari, a Kolkata-based credit derivatives analyst, “We have always contended that the concept of bankruptcy remoteness is a product of good times, and has not been tested in bad times such as these.” Kothari said the issue is relevant to India, as some domestic banks have exposure to synthetic credit products. “Also, the litigation on principles of bankruptcy laws is equally relevant to India, as we have adopted bankruptcy principles from the UK,” he added.


Nokia goes the Apple way to prop up sales

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HANDSET giant Nokia may well bite into Apple’s market share in India. The Finnish mobile maker will launch its Music Store later this month, allowing Nokia users online access to a huge catalogue of music — films, devotional and international among others. The move is expected to boost device sales for Nokia, which already has over 70% share of the Indian market. The Music Store may give enough reasons for Apple, which started off as a computer maker and is now best known for iPhone, to speed up the launch of its web-based music download service iTunes in India. Pending that launch, music lovers may opt for Nokia devices over Apple’s iPhone and iPod. Apple’s iPhone has not taken off here due to a price tag of over Rs 30,000. Nokia will not charge users for downloads during the first year, whereas iTunes is a paid service. Currently, Indian users cannot download music from iTunes. Nokia’s focus on music is part of the handset giant’s strategy to turn into a services provider from a pure products company. “We want to generate revenues through services and music is one of them. We will soon launch our online digital stores,” Nokia marketing director Vineet Taneja told ET. The first of the Nokia Music Stores went live in the UK in November 2007, and is now available in 15 markets. The service will be available as an application on handsets and on the web. To promote its music initiatives, Nokia has also partnered with Hong Kong-based Music Matters to start India’s first music forum, Music Connects. The forum, which will meet on August 26 in Mumbai, will discuss issues being faced by the Indian music industry. “The aim is to bring together all stakeholders. I think music will be one of the biggest services for Nokia while most revenues will still come from handset business,” Mr Taneja said. “By offering unlimited free music, Nokia stands to wean off market share from all its nearest competitors in the low-end smart phone category and will also take a stab at the higher priced iPhone as well as iPod, Apple’s music playing device,” said Ascentius Consulting principal analyst Alok Shende. The smartphone market in India, including iPhone, is estimated to be 6 million phones in 2009, with estimated revenues of Rs 7,800 crore. According to a SoundbuzzPricewaterhouseCoopers report, the mobile music industry in India will be at Rs 3,600 crore by 2009-10. Nokia is eyeing a share of this pie. Anubhuti Belgaonkar, telecom market analyst at technology research firm Ovum, said Nokia will be able to influence user consumption habits through its free download offer. “People will use it even when it becomes a paid service, proving a good revenue opportunity for Nokia, especially in a market where low-cost handsets are hitting Nokia’s margins,” she said.


China Mobile to open online app store soon –source China Mobile (0941.HK), China's leading mobile telecoms provider, will launch an online mobile phone applications store soon to tap into the segment's rapid growth, a company source said on Wednesday.

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The company's Mobile Market store,, will be open to developers to create games and other mobile phone applications and will only be available for download by existing China Mobile subscribers, the source said. China Mobile, the world's largest mobile carrier by number of users, dominates China's cellular market with a two-thirds share. The firm will charge developers a small listing fee. China Mobile has said it was actively preparing a site to sell mobile phone applications but declined to give further details. China Mobile competes with China Unicom (0762.HK) and China Telecom (0728.HK) in an increasingly saturated and competitive market. (Reporting by Melanie Lee; Editing by Edmund Klamann) 42. Microsoft plans Office tie-up with Nokia SEATTLE (Reuters) - Microsoft Corp said it will announce an alliance with Nokia on Wednesday, likely unveiling plans to make the software company's Office suite of applications available on devices made by the world's top cellphone manufacturer. Microsoft, the world's largest software firm, is set to bring out the latest version of its Office product next year, including an online version that will allow users to access the popular Word, Excel and PowerPoint programs over the Internet. The move counters the recent entrance of Google Inc into the software market, offering free versions of word processing, calendar and e-mail applications online. 43. Britain's Royal Opera wants you to make tweet music LONDON (Reuters) - Britain's Royal Opera House (ROH) wants Twitter users to help create the "world's first online opera." The Covent Garden institution, which stages performances of ballet, opera and other classical music productions wants Internet-savvy tweeters to write the words to an opera using 140 characters or less at a time. Duthie told Reuters on Tuesday that the most dramatic moments of the opera will be performed as part of the Deloitte Ignite festival in September and said the experiment aimed to debunk notions of opera as stuffy and traditional. Twitter, the online micro-blogging site used by celebrities and less well-known people to broadcast their thoughts to followers over the Internet in bursts of text 140 characters or less has become a sensation on the web. Anyone interested in contributing to the Royal Opera piece can sign up and start writing at So far only Act One, Scene One has been completed with the character William languishing in a tower, having been kidnapped by a group of birds bent on revenge after he has killed one of their number, according to a link on the Twitter site: Facebook to face off with new Web rivals SAN FRANCISCO (Reuters) - Facebook's vision of becoming a "utility" that offers activities to keep people online for hours could set it on a collision course with the Web's giants. In recent days, the No.1 social networking company revamped its search engine and bought a start-up that some call a rival to hot micro-blogging service Twitter. It is also testing a stripped-down version of its service to boost growth overseas and is developing an electronic payments system.


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These moves mark a new phase in Facebook's evolution as the five-year-old company meshes the viral power of social networks and its huge member base to barge into new markets. The site, co-founded by 25-year-old Mark Zuckerberg in a Harvard University dorm room, could challenge Web portals like Yahoo Inc and Google in content and communications, Brigantine Advisors analyst Colin Gillis said. With more than 250 million members, Facebook was the world's fourth most visited website in June, according to comScore. It is on track to bring in more than $500 million in revenue this year, most of it from advertising sales. The new initiatives represent the natural evolution of the service, said Facebook Vice President of Product Christopher Cox. He downplayed the increasing overlap between Facebook's new search engine and Twitter's search engine, or Google's dominant Web search engine. 45. Hollywood sees win in China WTO case as first step LOS ANGELES (Reuters) - Hollywood scored a win with the World Trade Organization as it seeks inroads into China, but rampant piracy in the market means the WTO ruling is just a first step in a long slog for the U.S. entertainment industry. The WTO said China broke international trade rules by restricting the imports of movies, music and books and other audiovisual content. The current system hinders studios, filmmakers, musicians, videogame makers and authors from marketing works at competitive prices, it said. China has said it will evaluate the decision and had not ruled out an appeal. Hollywood has sought for years to crack the world's third-largest economy, but has failed due to restrictions on getting films into theaters and a torrent of pirated media content, with DVDs going for $1 on most street corners. The ruling was a landmark decision 10 years in the making, said Greg Frazier, executive vice president of the Motion Picture Association of America, representing the world's largest studios like Walt Disney Co and Time Warner Inc's Warner Bros. Michael Pachter, analyst with Wedbush Morgan, said while the business atmosphere may improve, the studios may still face challenges in appealing to consumers, used to cheap DVDs.


Jumpstarting U.S. Biodiesel Industry for Less than 3 Cents Per Gallon B5 blend would add up to $6 billion to GDP, $1.3 billion in tax revenue, prevent export of more than $2.5 billion dollars, reduce imports by 60 million barrels - all for less than 3 cents per gallon cost increase SEATTLE--(Business Wire)-- Imperium Renewables today applauded U.S. Senators Maria Cantwell (D-WA) and Patty Murray (D-WA) for their continued support of the U.S. biodiesel industry. The senators co-signed a letter from U.S. Senators Kent Conrad (D-ND) and

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Charles Grassley (R-IA) which asked President Obama to enforce the consumption of 1.15 billion gallons of biodiesel, as mandated by the Renewable Fuels Standard (RFS) and Congress in early 2007. Those goals could be met by replacing 5 percent of each gallon of petro diesel with biodiesel at a cost of less than 3 cents per gallon. This would revitalize the U.S. biodiesel industry, creating tens of thousands of jobs, contributing $6 billion to the nation`s Gross Domestic Product and reducing CO2 emissions by 30 million tons. The RFS mandates the consumption of 1.15 billion gallons of biodiesel at retail pumps in 2009 and 2010. Meeting those mandates by replacing 5 percent of each gallon of diesel with biodiesel (a level that is approved by nearly all engine manufacturers), would result in significant benefits, including: * Reduction of imports of 27 million barrels of foreign oil over two years * Retention of more than $2 billion dollars that would otherwise go to foreign governments and unstable regimes * Creation/Retention/Re-hiring of more than 20,000 family wage jobs * Contribution of more than $2 billion to nation`s GDP * More than $550 million in local, state and federal tax revenue * Reduction of greenhouse gas emission by nearly 13 million tons * Over $50 million in tax and other revenues to Washington State At current prices, the additional cost to using a 5 percent blend of biodiesel is less than 3 cents per gallon. However, the RFS target of 1.15 billion gallons is still only a small percentage of the overall 60 billion gallons of annual diesel consumption in the U.S., and significantly lower than the U.S. industry`s current capacity of 2.6 billion gallons. By producing at full capacity the impact would be even greater: * Reduction of imports of 60 million barrels of foreign oil over two years * Retention of more than $5 billion that would otherwise go to foreign Governments and unstable regimes * Creation/Retention/Re-hiring of more than 50,000 family wage jobs * Contribution of $6 billion to nation`s GDP * More than $1.3 billion in tax revenue * Reduction of greenhouse gas emissions by 30 million tons Biodiesel is an environmentally friendly alternative to petroleum diesel fuel made from oils derived from crops, plants and waste products, which can be used in any conventional diesel engine. It can be used in pure form (100 percent biodiesel) or in a "blended" form, in which it replaces a percentage of petroleum diesel. A National Renewable Energy Lab study shows biodiesel emits about 78 percent less carbon dioxide than petroleum diesel. Imperium`s high quality fuel meets or exceeds ASTM D-6751 specifications. 47. Plutocracy: A New Fashion World Order NEW YORK, Aug. 14 /PRNewswire/ -- New York-based designer Anitra Michelle announced today that her highly anticipated collection Plutocracy ( will debut during New York's Mercedes Benz Fashion Week. She will host a two-day presentation at the

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Bryant Park Hotel, located just steps away from the semiannual fashion mecca in the heart of midtown Manhattan, beginning on September 15. The fusion of American design sensibilities and the daring of African exploration, Plutocracy exudes the designer's mantra of Individuality, Innovation and Iconography. Anitra Michelle's goal is to reach out to different types of women based on the idea of showcasing the future, while exploring the past through cultural sensitivity and ancestral roots. To encourage their style discovery and fashion experimentation, Plutocracy offers sexy, flattering silhouettes catering to various shapes and sizes and are complementary in varied settings and platforms. The premier collection is called "Classic Funk." The motivation behind Plutocracy's designs encompass the woman on the move: one who is young and professional, and needs effortless style. According to Anitra, her inspiration is an up and coming professional who is attempting to create her image, while building her rolodex and client base--a vision that is not limited to any particular ethnic or cultural demographic but is expanded upon by the woman, who is dynamic, yet has the desire to maintain a certain mystique. "She engages in networking and business opportunities in versatile environments, while showcasing her individuality," the designer says. ABOUT ANITRA MICHELLE For Anitra Michelle, who hails from Michigan to Maryland, the path to designing has been one of growth and internal exploration. From a very young age, she has embraced all things eclectic and diverse. She earned a dual Bachelors Degree from Howard University with an internship with the Patternmaking Department at Vera Wang, as well as coveted internships in the showrooms of Karl Lagerfeld and Lanvin, while a fashion student at New York's Fashion Institute of Technology. With the anticipated debut of her first collection, Plutocracy, in September 2009, Anitra is awaiting the opportunity to free women and offer something that is not only fresh, but reflects individuality. For more about Plutocracy, visit Da Vinci's lion prowls again after 500 years AMBOISE, France (Reuters) - A mechanical lion invented by Leonardo da Vinci to entertain the King of France has sprung back to life in the Renaissance genius's last home. Da Vinci's original automaton is lost, but the animal has been recreated at the Chateau du Clos Luce, in the Loire Valley town of Amboise in France, where the master lived for the last three years of his life and where he died in 1519. Known around the world for the Mona Lisa and Last Supper paintings, Leonardo was also a prolific inventor who envisioned flying machines including a forerunner of the helicopter. Eye witnesses from Da Vinci's time said a mechanical lion that could walk was presented to King Francois I by the Florentine community in the French city of Lyon in 1515, to celebrate a new alliance between Florence and France. The symbol of Florence was a lion, and when the king lashed the mechanical beast three times with a small whip, its breast opened to reveal a fleur de lys, emblem of the French monarchy.


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A similar lion -- it is not known whether it was the same one or a newer version -- made another appearance at a lavish party organized in honor of the king in 1517. Da Vinci left no plans or sketches of the lion, although he did leave detailed drawings of mechanisms that give insight into how he may have made it work.


Glaxo starts testing flu pandemic vaccine LONDON (Reuters) - GlaxoSmithKline has started testing its pandemic H1N1 swine flu vaccine in humans, and expects to start giving the results to government agencies next month, the drug maker said on Friday. Britain's Chief Medical Officer Liam Donaldson said on Thursday that vaccination would start for at-risk people in October, and Glaxo is expected to be the country's main supplier. The company said that the first tests were being done on 128 healthy adults at a site in Germany, and in the next few weeks it would also start testing children and elderly people. It plans to conduct 16 different trials of the vaccine and to test 9,000 people in total across Europe, Canada and the United States.


German, Greek commandos thwart pirate attack BERLIN, Aug 14 (Reuters) - A German Navy helicopter thwarted a suspected pirate attack on a Turkish ship in the Gulf of Aden on Friday by firing warning shots at a speed boat as it approached the MS Elgiznur Cebi, the German armed forces said. Responding to a call for help from the Turkish vessel, the German helicopter from the warship Bremen, part of a European Union mission to combat piracy, spotted a speed boat with six people and ladders in it. It fired warning shots and the speed boat stopped. A Greek naval vessel, the HS Narvarinon, also responded to the call for help then boarded the speedboat and discovered weapons on board. Piracy has surged off the Somali coast in recent years where sea gangs continue to defy foreign navies patrolling the vast shipping lanes linking Asia and Europe. Germany has two warships patrolling in the region. Piracy attacks around the world more than doubled to 240 from 114 during the first six months of the year, according to the ICC International Maritime Bureau's Piracy Reporting Centre.


Volkswagen threat "tantamount to blackmail": Opel union leader FRANKFURT (Reuters) - Opel labor leader Klaus Franz branded Volkswagen's renewed threat to pull business from Canadian auto parts supplier Magna if it acquires VW's closest German rival as "tantamount to blackmail."

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Magna is in a close race with Belgian finance group RHJ to gain majority control of the German carmaker and has had to play catch-up recently as management at former Opel parent General Motors had already agreed with RHJ in principle over the sale of a 50.1 percent stake. With the board of GM set to make a decision as early as next week over the two bids that could finally end months of uncertainty over Opel's fate, European rival Volkswagen renewed on Friday its criticism of a Magna deal that is backed heavily by the German government. Late on Friday, Opel's senior labor leader Klaus Franz fired back at VW Chief Executive Martin Winterkorn, hoping to quash a harmful debate in its infancy regarding whether a supplier like Magna should compete directly with its customers by acquiring a carmaker. The VW CEO told reporters earlier that day that his company viewed the deal with suspicion, and would reconsider doing business when it came to complex components were it to pose a disadvantage, despite Magna's repeated assurances to cleanly separate its supplier operations with any automotive operations. The Opel labor leader added that Volkswagen has enjoyed state support since decades thanks to Lower Saxony controlling 20 percent.


Swedish consortium eyes Volvo cars bid: report STOCKHOLM (Reuters) - A consortium dominated by Swedish owners plans to bid for Ford Motor Co's Volvo car unit, a Swedish business daily reported on Saturday without disclosing its sources. Dagens Industri said the group, Konsortium Jakob AB, had intensified efforts recently to raise enough capital to make an offer in light of reports Ford was getting ready to intensify talks with China's Geely (0175.HK), which according to sources is among the suitors for the Ford unit up for sale. The U.S. carmaker put money-losing Volvo cars up for sale in December last year as it looked to cut costs and raise cash amid industry wide record-low vehicle sales. The firm said in July it was in discussions with a number of parties on the car maker. The engineers' trade union at Volvo cars had taken the initiative to the consortium, which would aim at listing the car maker, Dagens Industri said.


U Car Share Launches - the Alternative to Car Ownership SALT LAKE CITY, Aug. 13 /PRNewswire-FirstCall/ -- U Car Share is expanding its growth as it partners with the Utah Transit Authority, the City of Salt Lake and the University of Utah by launching the alternative to vehicle ownership in Salt Lake City. U Car Share allows members access to cars 24/7, thus eliminating the need to own a car or bring one to campus during the school year. Members pay only for what they use, in one low hourly rate starting at $4.95 per hour (plus $0.59 per mile). U Car Share takes care of fuel, insurance and maintenance costs. Hourly rates that include 180 miles free per reservation range from $8.00-$12.00 per hour, depending on the vehicle.

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Anyone 18 years or older with at least two years of driving experience may qualify to become a member. U Car Share encourages students at local universities and colleges to consider using car sharing instead of bringing a car to campus. With many locations around town, U Car Share is a convenient alternative that can save thousands of dollars vs. owning a car and having to deal with parking, insurance, fuel and maintenance. Car sharing meets the needs of any individual who needs a car occasionally, while being sensitive to the surrounding community and environment. Car sharing reduces the demand for parking and results in greater sustainability while enabling individuals to retain their mobility. U Car Share vehicles have been positioned for easy access to the local community, and will be available at Ogden Transit Center, Lake Central Station, Ballpark, Millcreek, Meadowbrook, Murray Central and Sandy Civic Center, beginning August 18, 2009. U Car Share will be providing 12 EPA SmartWay certified vehicles: one Ford F-150s, one Ford Escape Hybrid, four Ford Focuses, four Toyota Yarises and two Toyota Priuses. The vehicles will be parked conveniently at each rail location. Sixteen additional vehicles will be arriving and soon will be placed throughout Salt Lake City and the University of Utah. Members will be able to access the vehicle with a U Car Share membership card. They will be able to log on to at any time and reserve any vehicle of their choice on the U Car Share network. Members can reserve cars for as little as an hour at any time of day. Gas and insurance are all included in one low hourly rate starting at $4.95 per hour ($0.59 per mile). Daily and hourly rates with included miles are available, as well. 54. Lula says Brazil's economy turning the corner BRASILIA, Aug 12 (Reuters) - Brazil's economy is showing signs of recovering in the second semester, President Luiz Inacio Lula da Silva said on Wednesday. Interest rates are at historic lows but it is "desirable and possible" for them to be cut further, he said. The central bank has slashed borrowing costs by 500 basis points since the beginning of the year to 8.75 percent. "The employment and industrial activity curves signal a return to growth in the second semester, confirmed by greater confidence by the industry and the foreign investor," Lula said at an event in Brasilia. Brazil's Bovespa stock index .BVSP is up more than 50 percent this year and its real currency BRBY has gained about 27 percent this year. The strength of the economy is what continues to attract foreign capital to Brazil's financial markets, Lula said.


Print Your Own Life Magazine: Getty/Time Partner With HP Ever wanted to run your own iconic photo-journalism magazine? Soon, web users will get to print their own, personalized edition of Life, as Getty Images (NYSE: GYI) and Time Inc. continue trying to monetize the mag they revived as in March. P a g e | 34

This Q4 or next Q1, Getty VP and CFO Catherine Gluckstein tells, will partner with HP’s MagCloud to offer users a personalised “timeline”. They will get to print their own edition of Life magazine comprising a selection of catalogue images from any given date, as well as their own uploads.” It’s a play for the gift market, where newspaper publishers already offer historical editions for readers’ birthdays, and may come in time for Christmas. As the re-awakened debate over pay-for-content rumbles on, Gluckstein says tried it with a set of pictures showing Angelina Jolie and Brad Pitt, but it didn’t work out so well. Whilst carries some ads, it’s more about e-commerce. Visitors can already order Life photos on mugs, mousemats, t-shirts and in frames. Gluckstein says the site, a JV between Getty and Time Inc, clocked 10 million page views a day after launch and is now at 100 million a month, plus nearly 700,000 Twitter followers. “Social media is a massive traffic driver. Celebrity news is the most popular channel on the site.” But, while this new-look has affiliate relationships with stablemates and, there are still no third-party deals.


Bangladesh to get $19 million for reforestation project DHAKA (Reuters) - The United States and Germany have agreed to donate $19 million for the reforestation of a Bangladesh wildlife sanctuary under a global climate change mitigation project, the U.S. embassy said on Wednesday. Low-lying Bangladesh, a country of some 150 million people, is at risk from rising world sea levels caused by climate change, with experts warning of millions of people being forced out of from their homes and encroaching into forests. The funds will be used for the reforestation of Chunati Wildlife Sanctuary, a major corridor for the movement of Asian elephants between Myanmar and Bangladesh and home to an important timber species under threat. The sanctuary lies about 350 km (219 miles) southeast of Dhaka. Under the project, to be implemented over the next four years, trees will be planted to help restore 2,000 hectares of forest land and to decrease carbon emissions in the region. The project will help restore the severely degraded sanctuary, raise awareness through public education, and create alternative income opportunities for over 125,000 people who live in communities in and around Chunati, a U.S. embassy statement said. Sea levels rose 17 cm (6 inches) in the 20th century and the U.N. Climate Panel estimated in 2007 they could rise by another 18-59 cm by 2100, and perhaps even more if a thaw of Greenland or Antarctica accelerates. Bangladesh is considered among the most vulnerable countries to climate change with millions living less than a meter above sea level.

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Facebook sacking highlights hidden dangers The perils of mixing business and pleasure on social networking sites was highlighted again this week after a woman was apparently sacked because of comments she made about her job on Facebook. Details of the work-related rant from an office worker known as Lindsay flew around the internet this week, and were even posted on social bookmarking site Digg, although it remains to be seen if the post is genuine or a hoax. In a status update, Lindsay wrote: "OMG I HATE MY JOB. My boss is a total pervy wanker always making me do shit stuff just to piss me off!!" However, the woman crucially forgot that she had added her boss as a friend on the site, and when he logged on and saw the four letter tirade, he took decisive action. "Hi Lindsay, I guess you forgot about adding me on here?" he commented on her profile page. "You also seem to have forgotten that you have 2 weeks left on your 6 month trial period. Don't bother coming in tomorrow. I'll pop your P45 in the post, and you can come in whenever you like to pick up any stuff you've left here." The incident is one of a growing number of examples of staff failing to understand the potential dangers of social networking sites. In an almost identical incident in February, a 16 year old office worker was sacked after her boss spotted comments she'd made on Facebook criticizing her job.


India Launches Bhuvan to challenge Google Earth Indian Space Research Organization (ISRO) recently unveiled "Bhuvan" which is set to challenge Google Earth. Bhuvan, which means 'earth' in Sanskrit, will allow users to navigate and zoom into any part of the world and discover virtual earth in 3D space, with restrictions and exceptions to sensitive and important places. Bhuvan uses images taken by ISRO's remote sensing satellites building a 3 Dimensional map of the world, which can be used freely on the Internet. India is not the first country to challenge Google. In 2005, a Frenchman planned to develop a search engine with Europe as its center, to challenge "Internet control by Britain and U.S.",

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but it eventually failed. In 2006, France unveiled "Geoportail", satellite mapping service tool, to challenge Google Earth, but it could not attract much attention.

59. Nandita Das appointed head of CFSI National award-winning actress and independent filmmaker Nandita Das, who has acted in several films in English, Hindi, Oriya, Urdu, Bengali, Malayalam, Tamil, Telugu and Kannada, has been appointed the new chairperson of the Children's Films Society of India (CFSI). The tenure of her appointment, subject to the provisions of Rule 18 of the aforesaid Rules, shall be for a period of three years. CFSI is a nodal Government of India organization dedicated to providing wholesome entertainment for children through film and television, with the objective of broadening their horizon and justifying the role of film and television. Earlier, the post was held by actresssocial activist Nafisa Ali. It fell vacant when she resigned to contest the Lok Sabha election from Lucknow on the Samajwadi Party ticket this year. Nandita, widely acknowledged for her stupendous performances in Fire (1996), Earth (1998),Bawandar (2000) and Aamaar Bhuvan (2002), is the daughter of celebrated Indian painter Jatin Das. The 39-year-old recently donned the director’s hat for Firaaq (2008), which has won a number of national and international awards. She is a B.A. (Hons) in Geography and M.A. (Social Work) from Delhi University. Wipro close to Rs 1,500-crore IT deal with Etisalat Etisalat DB Telecom India, in which the UAE-based Etisalat holds a 45 per cent stake, is close to signing Rs 1,500 crore outsourcing deal with IT major Wipro Technologies. If the deal goes through, this would be the second largest deal for Wipro in the telecom space. Earlier in April, the IT major bagged Rs 2,500-crore contract from another new operator, Unitech Wireless. Importantly, Wipro will be pipping seven other IT vendors, including IBM and Tech Mahindra, who were also in discussions with Etisalat, according to sources. Under the agreement, Wipro will manage the IT infrastructure and services for Etisalat, including setting up of servers, enterprise resource planning (ERP) suites and technology, computers and other software required for billing and customer care, among other things. While a Wipro spokesperson declined to comment, an Etisalat spokesperson stated that the company does not comment on speculation. Etisalat DB Telecom India, a joint venture between Etisalat and Mumbai-based Dynamix Balwas Group, has licence to provide services across 15 circles. The company had received spectrum

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to start services across 13 circles in the country and was gearing up for the services. The telecom companies were increasingly outsourcing their IT infrastructure, as it would enable them to be asset light and concentrate on their core competencies. In January 2008, Aircel Cellular had awarded a $600-million deal to Wipro, while Aditya Birla group company Idea Cellular had signed a 10-year IT outsourcing deal with IBM. Idea Cellular’s deal was estimated to be around $600-800 million. IF THE DEAL GOES THROUGH It would be the second largest deal for Wipro in the telecom space It will be pipping seven other IT vendors, who were also in discussion Wipro will manage the IT infrastructure and services for Etisalat

India to rope in China for climate change initiative While it fights the pressure of the Western countries over the issue of climate change, India now wants to rope in China in its efforts. Minister of State (independent charge) for Environment and Forests Jairam Ramesh today said the two countries would set up a joint mechanism to study the Himalayan glaciers. Ramesh is set to visit China towards the end of this month to finalize this mechanism, along with related bilateral issues on environment protection. The minister also made it clear that the joint mechanism would not be made only to produce “bundles of research papers” but also to take concrete action plans. “There is no Indian research so far to decisively conclude that the Himalayan glaciers are melting because of the global warming. While the bulk of glaciers are receding, there are also some glaciers that are expanding. We need to study this matter,” the minister said. While the Indian scientists will study the glaciers on the Indian part of the Himalayas, their Chinese counterparts will undertake a similar exercise. Following this, both sides will exchange their findings and try to chalk out a comprehensive solution. Ramesh also said some findings suggested that the Gangotri glacier’s rate of melting has slowed in comparison to what it was during the 1960s and the ’70s. “On Monday, I saw a report saying the Siachen glacier is actually expanding. So, we need a comprehensive study about the impact of global warming,” Ramesh said.

India and global finance: What next? The global financial system is evolving. What does it mean for India, asks SUMAN BERY Almost six months after their last get-together in London in early April, the heads of

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government of the G-20 countries will meet again in Pittsburgh in the United States in late September? They will presumably return to the quartet of issues that has progressively engaged them since they first met as a group in Washington in November 2008. These issues are: macroeconomic coordination, global imbalances and resumption of global growth; global financial reform (including reform of the IMF and the multilateral development banks); strengthening the global trading system and avoiding protection; and burden-sharing in fighting global warming, primarily by capping the growth in the stock of green-house gases in the atmosphere. Looking at the agenda as a whole, one would have to conclude that progress since April has been somewhat underwhelming, largely because of political constraints in the advanced countries. Profound differences of views persist between the major blocs on the appropriate fiscal/monetary mix, reflecting different traditions and capacities. In the absence of such coordination, exchange rates are likely to take on the main burden of adjustment, raising risks of protection, primarily directed at the emerging markets. Banking systems in both Europe and the United States, while now better capitalized, remain dependent on exceptional liquidity support, even as the cleansing of toxic assets from their balance sheets remains unresolved, inhibiting the flow of credit. The US administration shows little or no appetite for deep engagement in multilateral trade negotiations, although the political window for action in the US, India and Brazil is hauntingly narrow. On preparation for the Copenhagen meeting in December, the less said the better. But my main theme this month is the second topic listed above, the evolution of the global financial order. India has dual, linked interests in this topic. On the one hand, it has the opportunity, if it wishes to exercise it, to be an active player in G-20 debates on this issue (as was done, for example, by Rakesh Mohan as Deputy Governor earlier this year). The second challenge is to equip the domestic financial system to deal with the next phase in global finance, whatever that may turn out to be. The four issues he chooses to address are the role of global imbalances; coordination of fiscal and monetary policies; inflation targeting; and the relationship between the financial sector, the real economy and growth. Given his courteous and civil personality, the broad conclusions Dr Subbarao draws are moderate and sensible. As with all central bank heads, however, the interest is in the nuance, so it is worth examining his views in some detail. Dr Subbarao draws similarly cautious conclusions on the prospects for prompt fiscal adjustment in the advanced countries, with the implication, as he puts it, that “monetary policy will have to be conducted in a regime of large and continuing structural deficits” for some time to come in the advanced countries. In the language of economists, “fiscal dominance” and public debt management are likely to drive monetary policy much more in the future than in the past. So far, then, so good. But what conclusions should one draw on how Dr Subbarao might steer the RBI in preparing for India’s future engagement with global finance? Dr Subbarao is silent on the future evolution of the global exchange rate system, and what that implies for India. The combination of slow growth, global imbalances and structural fiscal deficits in the advanced countries is quite likely to lead to fundamental shifts in real exchange rates between emerging markets and rich countries. Greater flexibility in nominal rates would facilitate such adjustment. Second, there is bound to be the relocation of major financial P a g e | 39

institutions to Asia where the world’s growth and savings will be centered. Does India want to opt out of this wave? Or will we encourage our financial institutions to go abroad as we have our corporations? Finally, while we remain concerned by asset bubbles, I understand that the Chinese are drawing the opposite conclusion, namely that inflation alone should be the preoccupation of monetary policy. Dr Subbarao is in for interesting times. We need to wish him luck. MphasiS to buy AIG’s Indian IT arm IT and BPO services company MphasiS today said it will acquire AIG Systems Solutions (AIGSS), the IT arm of the US based insurance giant AIG (American International Group), for an undisclosed sum. The acquisition, which comes with guaranteed business from AIG, is expected to strengthen MphasiS’ domain-based solutions in its key banking, financial services and insurance (BFSI) industry vertical, MphasiS CEO Ganesh Ayyar said. The BFSI segment brings in 40 per cent of the company’s revenues. MphasiS, a majority of which is owned by Hewlett-Packard subsidiary EDS, did not disclose the financial details of the deal. With cash and bank balances of $74 million in its second quarter ended April 30 this year, the company is likely to fund the acquisition through internal accruals, according to analysts. The MphasiS buy of AIGSS signals renewed activity in the tech merger and acquisitions space, which has been sluggish since January this year. TCS had bought the back-office unit of Citigroup Inc for $505 million in October last year, while Wipro acquired in December another captive unit of Citigroup for $127 million. AIG, once the world’s largest insurance company, was part of an $800-billion fiscal stimulus package from the US government and has been looking at hiving off assets which fall outside its core insurance business.

Jaypee Group, L&T ink Rs 4,000-crore deal Jaiprakash Power Ventures Ltd (JPVL), promoted by the $7-billion Jaypee group, has signed Rs 4,000-crore agreement with Larsen & Toubro Ltd, the engineering and construction major, for supply of equipment for its Nigrie Super Thermal Power Project in Madhya Pradesh. Under the agreement, L&T will supply two units of 660 Mw each for the power plant. Coal for the plant will be sourced from two captive coal blocks – Amelia (North) and Dongri Tal II – owned by a joint venture of Jaypee Group with the Madhya Pradesh State Mining Corporation Ltd (MPSMCL). The first 660 Mw unit of the power project is expected to be commissioned in April 2013 and the other unit would be commissioned in September same year. The power plant, when operational, will generate over 10 billion units of power

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annually. The Jaypee Group has a current operational power generation capacity of over 900 Mw and plans to add another 2,000 Mw capacity by the end of the current Plan period ended March 2012. This is the second order bagged by L&T in the supercritical segment in India after it won the order for supplying a 1,600 Mw turbine generator from the Andhra Pradesh Power Development Corporation earlier. The company plans to set up around 4,000 Mw of domestic power equipment manufacturing capacity by 2010.

Samsung launches HD video recording cellphone in India Samsung Electronics today launched OMNIAHD in India — world’s first full-touch handset featuring 720P HD video recording, with the largest 9.4 cm AMOLED screen on mobile. The Active Matrix Organic Light Emitting Diode or AMOLED touch screen offers sharpness of tone, vivid colours, greater clarity in direct sunlight and consumes less power. With its 1 Ghz Processor, Samsung OMNIAHD is a high performance full-touch screen phone that incorporates the latest multimedia features and speedy data communication. The phone has a16:9 screen with 16M colours and a dual stereo speaker. It helps users capture photographs with a 8MP (megapixel) camera. Users can enjoy and share these images and videos through highspeed internet access (HSUPA 5.76Mbps and HSDPA 7.2Mbps). Global positioning system (GPS) with an integrated compass makes OMNIAHD suitable for both pedestrians and drivers, and the navigation touch control and voice guidance via dual stereo speaker provide drivers with easy ternal memory — expandable to another 32GB — allows users to store up to 48GB of data. IBM wants to make our planet ‘smarter’ Malta — a group of islands in the Mediterranean sea —is known for its dry sunny weather, knights and architectural history. More importantly, however, this Mediterranean archipelago is about to become the world’s first ‘smart grid’ country. Malta’s electricity and water systems are intertwined. It depends entirely on foreign fuel oil for the production of all of its electricity and for more than half of its water supply, which filters through an energy-intensive desalination process. The new smart grid, integrating both water and power systems, will be able to identify water leaks and electricity losses in the grid, allowing the utilities to more intelligently plan their investments in the network and reduce inefficiency. Around 250,000 interactive meters will P a g e | 41

monitor electricity usage in real time, set variable rates, and reward customers who consume less energy and water. And by addressing the issues of water and power as a system, the Maltese government can provide citizens with better information to make smarter decisions about how and when they use power. It can also help the country to begin the task of replacing carbon-intensive fuel oil with renewable energy for the future. Malta has contracted global IT giant IBM to install this £70 million (around Rs 560 crore) smart utility grid and replace the 250,000 analogue electricity and water meters with smart meters by 2012. IBM is intent on using information technology to create many such ‘smart grids’ all over the world —including India — in a bid to create a ‘smarter planet’. Indeed! The concept is hotting up. Billions of dollars are expected to start pouring into Smart Grid development from big companies like Cisco, IBM, Intel, Oracle and Google, as well as from governments which are expected to spend billions of dollars for the Smart Grid. IBM, however, insists that its proposition is unique and more broad-based. Third, all of those instrument Stockholm, for instance, has With innovative digital techply. Investigators in the United States were baffled by a mysterious salmonella outbreak that infected more than 1,300 people and cost tomato growers more than $100 million. These events illustrate the vulnerability of the food supply chain as well as the fragility of food supplies in general. The IT giant is also focusing on creating smarter infrastructure. As populations grow at a fast clip, they are placing greater demands on city infrastructures that deliver vital services such as transportation, healthcare, education and public safety. “However, with recent advances in technology, we can infuse our existing infrastructure with new intelligence,” says Rhoda. IBM is also working to build smarter railways in some of the most complex transit systems in the world, partnering with Netherlands Railways, the Taiwan High Speed Rail Corporation and Guangzhou Metro in China to improve the commute of millions of travellers every day. Mobile condition-based monitoring systems, the company argues, will provide railroads with more intelligence through continuous real-time capture and analysis of critical data, such as the health of rolling stock as well as operational data. Sensors on cars will trigger messages based on decision modeling and analytics. Autonomic routines will then distribute the information appropriately, dispatching service, ordering parts, scheduling maintenance and performing remote diagnostics. Eventually, such mobile technologies could reduce the need for fixed infrastructure along the wayside and give railroads the flexibility and responsiveness they need to make decisions to optimize crew schedules, add or remove cars, and integrate passenger and freight transport more seamlessly, with far fewer delays, notes Rhoda. Smarter railroads can create competitive advantages in the ecosystem of transportation infrastructure for rail companies besides reducing the costs of adding new lines and rolling stock even as they increase customer service in a capacity constrained environment. And by taking on more freight and passenger traffic, smarter railroads can reduce congestion and

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improve safety on highways which will also reduce carbon emissions.

US wins WTO case against China China today suffered another defeat at the World Trade Organization when a dispute settlement panel ruled in favour of the US by pronouncing that Beijing violated core global trade rules, including the obligations it undertook to join the global trade body, in restricting foreign books, publications and audiovisual home entertainment products. In a 469-page final ruling, a three-member WTO panel said several Chinese measures to restrict the flow of imported books, newspapers, periodicals, electronic publications, audiovisual home entertainment (AHVE) products and films for theatrical purposes violated China’s commitments under its Accession Protocol (AP). The AP set out all the obligations and commitments that China had to implement after joining the WTO in 2001. It also indicated the timeframe for implementation of each commitment as well as the liberal treatment that it would have to grant “trading rights”. However, key industrialized countries led by the United States, the European Union and Canada among others raised several trade disputes alleging that China created numerous hurdles to deny them access to the Chinese market. From auto parts to audiovisual films, the industrialized countries took China to task at the WTO for its alleged violation of global trading rules. The US, for example, challenged the Chinese measures on a range of products that fall under the so-called cultural goods, like books, recorded audio tapes and films, saying Beijing also chose to treat domestic entities more favorably than foreign companies to provide these products. China claimed that it had the right to regulate the flow of these cultural goods under what are called Article XX exceptions. Beijing argued that it was well within its rights to adopt measures relating to foreign reading materials, sound recordings and audio-visual home entertainment products to protect public morals given their adverse impact on societal and individual morals. The panel disagreed with the Chinese claim saying that Beijing’s justification under Article XX exceptions was not “necessary”, ruling that the Chinese measures were inconsistent with its WTO obligations Since many of these items fell under both goods and services, the panel’s ruling has important implications, analysts said, suggesting that Beijing lost the dispute on various important grounds such as market access and national treatment principle.

Film business may lose Rs 25 crore

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With the Maharashtra government ordering closure of all multiplexes and theatres in Mumbai till August 16 due to fast spreading swine flu, the film exhibition business may incur an overall financial loss of at least Rs 25 crore from the upcoming long weekend holiday on account of Janmashtami and Independence Day. This is because the film exhibitors are expecting a lower occupancy rates in the multiplexes in all major centers as a direct fall out of swine-flue spreading at a fast pace. However, the much awaited Bollywood film, Kaminey, (starring Shahid Kapoor and Priyanka Chopra) remains on-schedule for an all-India release on August 14 along with another new film, Life Partner, also releasing on August 14. The Saif Ali Khan-Deepika Padukone starrer, Love Aaj Kal, has already done brisk business in the past week, may suffer from lower theatre occupancy the coming weekend, say film trade analysts. UTV, the producers of, Kaminey, have clarified that it is going ahead with the release despite the closure of theatres in Mumbai region. The Maharashtra government has already ordered the closure of around 10 multiplexes in Pune. With the 30-odd multiplexes in Mumbai region, that contribute around 25 per cent of the overall weekly box office collections in the country remaining closed during the weekend, trade analyst are fearing the worst for the overall financial health of the Bollywood business that is already coping with the adverse impact of the two-month strike during April and May when no new films were release in the theatres. According to, an online movie booking website, swine flu and the “verified by visa” directive from the Reserve Bank of India on all online credit card transactions together have contributed to at least 5-10 per cent reduction in the online bookings. Industry sources say, around 10,000 tickets have already been booked for August 13 to August 16. “ We will make full refund for all tickets booked for multiplexes in Mumbai,” says Roopesh Shah, head of marketing at Aditya Birla Nuvo in talks with global PE investors Aditya Birla Nuvo is in talks with global private equity players Blackstone, Carlyle and KKR to sell shareholding in its proposed holding firm for its financial services business. The financial services holding company will house its asset management, insurance, stock broking, wealth management and private equity businesses. Nuvo, in a joint venture with Canadas Sun Life, holds 74 per cent in its life insurance and 50 per cent in its asset management company under Birla Sun Life. It recently acquired Apollo Sindhoori from the Chennai-based Reddy family to scale up its stock broking business. It also increased its stake in the distribution and wealth management company Birla Sun Life Distribution by buying Sun Life’s 50 per cent stake. An A V Birla spokesperson said, “We do not comment on market speculation.” The life insurance venture — Birla Sun Life —saw operating losses rise 57 per cent to Rs 686.56 crore during the year-ended March 2009, against Rs 437.60 crore in 2007-08. The market share of

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the fifth largest private life insurer went up to 10.4 per cent in the last financial year from 7.8 per cent in the previous year. The company is focusing on the life insurance business as it expects over half the revenue to come from this sector by the end of 2010-11, the year when Birla Sun Life Insurance is expected to break even. The company had earlier said that the group had lined up capital expenditure of around Rs 1,000 crore during the current financial year for the business, while another Rs 800 crore will be required in 2010-11. The company requires equity to expand because its debt is already high. At the end of the last financial year, it had Rs 4,300 crore of debt against a net worth was Rs 3,744 core. The company also had a treasury surplus of Rs 800 crore, which gives it a net gearing of 0.93. This gives Aditya Birla Nuvo little room to raise fresh debt.

FTA inked, $50-bn trade by ’10 The signing of the Free Trade Agreement (FTA) with the Association of South-East Asian Nations, or Asean, would increase the overall trade turnover between India and the 10-country block by over a fourth to as much as $50 billion. Under the pact, which forms a part of the Comprehensive Economic Cooperation Agreement, tariffs on most of the trade between India and Asean will be cancelled by 2016, while duties on 489 “very sensitive” products will be retained. The agreement would come into force from January 2010. Trade between India and Asean has grown at a compounded annual growth rate of 27 per cent since 2000. The pact will give a further impetus to the bilateral trade and investment linkages, the government said. The agreement, which was inked after six years of negotiations, calls for gradual elimination of duties on items which account for 75 per cent of the trade between India and Asean. These include electronics, textile, machine and chemical goods. The agreement would provide additional market access to exporters, fuelling the growth in bilateral trade and investment. Indian exporters which stand to benefit from the pact include those dealing in machinery, steel, agriculture products, auto components, chemicals and synthetic textiles. In addition, Indian manufacturers now would also be able to source products from overseas at competitive prices from the Asean members. The pact also provides for safeguard mechanisms to protect bilateral trade in case of a sudden surge in imports after the treaty. “In such an eventuality, if it hurts a domestic industry, measures like imposition of safeguard duties may be put in place for up to 4 years,” the statement mentioned. Commerce Minister Anand said that India’s trade with Thailand alone — one of the Asean P a g e | 45

members and ranking fourth in Indian imports — may jump to around $10 billion by the end of 2010 from $6 billion currently. The overall trade turnover between India and Asean was over $40 billion in 2007-08, making the bloc the fourth-largest trading partner for the country. The domestic industry bodies have expressed hope that the pact would open up market for the exporters. India-Asean trade was around $40 billion during 2007-08, making Asean the fourthlargest trading partner of India India’s total trade in services was $137.50 billion in 2006. The corresponding figure for Asean was $280.90 billion India and Asean have set an ambitious target of achieving bilateral trade of $50 billion by 2010 India has excluded 489 items from the list of tariff concessions and 590 items from the list of tariff elimination The Trade in Goods agreement is targeted to eliminate tariffs on 80% of the tariff lines accounting for 75% of the trade in a gradual manner starting January 1, 2010

Thaicom to launch IPSTAR service in India Thailand’s leading satellite operator, Thaicom PCL, said on Thursday it expected to launch a high-speed internet service in India via its broadband satellite IPSTAR in the second half of this year. The company should start booking revenue from the Indian market in the fourth quarter, and an IPSTAR service in China should be relaunched soon, Chief Financial Officer Tanadit Charoenchan told reporters. The Indian market, accounting for about 17 per cent of IPSTAR’s capacity, is the second largest after China, where operations have stalled. Thaicom has already made an agreement with new partner China Telecom, which should help stimulate revenue growth in the second half of 2009, Tanadit said. ICICI Pru ranked first for managing EPFO funds ICICI Prudential AMC has emerged as the top earner by providing a return of 8.73 per cent on the EPFO funds, invested by the private fund house during the nine months period ended June 30. The State Bank of India was relegated to the second spot by providing 8.70 per cent returns to the Employees’ Provident Fund Organization (EPFO) during the period, according to the Crisil analysis. P a g e | 46

The other two fund managers HSBC AMC and Reliance AMC were ranked third and fourth having recorded investment yields of 8.67 and 8.52 per cent, respectively. The EPFO had appointed the four fund managers in July last year to manage its funds with an idea of improving returns on its funds. A major chunk of its funds are invested in government schemes and securities having yields of less than 8 per cent. EPFO manages PF deposits of about 45 million subscribers with a corpus of around Rs 2.57 lakh crore. Its incremental deposits every year is close to Rs 25,000 crore. It had also appointed Crisil for evaluating the performance of fund managers. ICICI Pru AMC, HSBC AMC and Reliance AMC were ranked second, third and fourth with returns of 8.84, 8.72 and 8.68 per cent, respectively, for those six months. 73. RIL exits ONGC team for Venezuela oil bid RELIANCE Industries (RIL) has pulled out of an ONGC-led consortium which was formed to bid for a 40% stake in an oil field in Venezuela, leaving the state run company to find another partner to bid for the foreign oil block. ONGC chairman RS Sharma confirmed the development to ET, but declined to elucidate. Mr Sharma said he was talking to other global energy firms to jointly bid for the Venezuela oil block which is estimated to hold up to 40-50 billion barrels of proven oil reserves. The ONGC chief, who spoke to us on Monday, declined to name these potential partners. The winning bidder may be required to invest $16-18 billion for development of the block over a 15-year period, the estimated life of the field, according to earlier media reports. An analyst with an international research firm said RIL might bid on its own for the large oil field in the vast Orinoco oil belt of Venezuela. An e- mail sent to RIL remained unanswered. Although RIL and ONGC, along with BG, operates the Panna Mukta and Tapti (PMT) oil and gas fields of India’s west coast, they have never jointly bid for any foreign assets. So, they took the market by surprise when they announced a combined bid for the Venezuela asset in April. Venezuela’s national oil firm Petroleos de Venezuela SA (PDVSA) has invited bids for three oil blocks in the Orinoco Belt. Under the bid proposals, PDVSA will offer a 40% stake to winning bidders, keeping the remaining 60% with itself. PDVSA is yet to notify the last date for the bidding. However, the interested parties might include global energy majors like Chevron, Gazprom, Shell and Total. Mr Sharma said ONGC Videsh, the overseas investment arm of ONGC, has been looking for assets across the globe. “We are evaluating various options. However, I can’t comment on any specific transaction,” he said. This deal, if it goes through, will help ONGC increase its oil production as the company is spending billions of dollars to maintain its ageing fields in India. The Organization of Petroleum Exporting Countries (OPEC) expects that India and China will drive future global oil output. The ONGC stock lost 1.82% to close at Rs 1,130.55 on the BSE on Wednesday. The RIL stock also marginally declined to close at Rs 1,991.75.

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Microsoft can’t sell Word version in US A US federal court has ordered Microsoft to stop selling some versions of its widely used Word software in the United States in two months, ruling in favour of a small Canadian firm that accused the software giant of violating its patents. A US district court in Texas ruled in favour of i4i in its long-running patent dispute against Microsoft, slapping more than $290 million in damages on Microsoft and issuing an injunction preventing the world’s top software company from selling versions of Word that contain the disputed patent technology. The patent in question relates to the use of XML, or extensible markup language, in the 2003 and 2007 versions of Word. Toronto-based i4i had claimed in a 2007 suit that Microsoft knowingly infringed one of its patents in its Word application and its Vista operating system. The injunction, set to take effect in 60 days, is not expected to hurt Microsoft. It could easily adjust its programmes to comply with the court’s ruling, according to industry experts, or settle with i4i. And a new version of Word — which does not include the disputed patent technology — goes on sale next year with the release of Office 2010, potentially side-stepping the issue. Microsoft, which is involved in a number of legal battles over patents, said it plans to appeal the verdict. “We believe the evidence clearly demonstrated that we do not infringe,” Microsoft spokesman Kevin Kutz said. — Reuters


Godrej eyes Sara Lee’s foreign biz GODREJ Consumer Products, India’s second-biggest soap maker, may acquire some of Sara Lee Corp’s international businesses, including the US company’s stake in its Indian joint venture. Godrej Consumer may acquire Sara Lee’s stake in the companies’ venture as well as “bits and pieces” of the Downers Grove, Illinois-based company’s global assets, Hoshedar Press, vice chairman of the Indian company, said in an interview. “If Sara Lee manages to find a buyer globally, we will certainly want to buy out their local business,” he said. Sara Lee, which owns 51% in the venture with Godrej Consumer, may sell its Utrecht, Netherlands-based international household and body-care unit that sells items such as Ambi Pur air-fresheners and Brylcreem hair products. The Indian household goods maker has told Sara Lee that it will exercise its right to buy out its partner’s stake in the local venture, should the maker of frozen cakes sell its global businesses, Press said. Godrej Consumer, based in Mumbai, is also looking to purchase other companies valued at as much as Rs 1,000 crore ($208 million), Press said from Mumbai by phone on August 11. “We have some dedicated resources in the Godrej Group that are looking for acquisitions,” he said. Good Knight mosquito repellent and other household insecticide products account for the bulk of the revenue of Godrej Sara Lee. The venture also sells Ambi Pur, Kiwi shoe polish and Brylcreem in India. Godrej Sara Lee’s household insecticide products account for about a third of the Indian market, according to the company. — Bloomberg


VW seals Porsche deal for € 3.3 b VOLKSWAGEN, Europe’s largest carmaker, will pay about € 3.3 billion ($4.7 billion) for a 42% stake in Porsche’s automotive unit as it executes a gradual merger of the two

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manufacturers. Volkswagen will fully integrate the maker of the 911 sports car in 2011 as long as all merger requirements are met, the companies said on Thursday in separate statements. Volkswagen plans to issue new preferred shares in the first half of next year to help pay for the purchase, which values Stuttgart, Germany-based Porsche’s car division at € 12.4 billion. Volkswagen CEO Martin Winterkorn said the merged carmaker’s operating profit will increase by € 700 million annually. Winterkorn will be CEO of the Porsche holding company as of September 15 and VW’s CFO , Hans Dieter Poetsch, will take the same role at the company. “The merger seems kind of odd because the companies work together anyway, so they clearly don’t need to own one another to work together,” said Stephanie Brinley, an analyst at AutoPacific in Troy. “The story reads like a personal war instead of a strategic purchase, but that doesn’t mean VW can’t make it work.” The manufacturers announced plans in July for a transaction that would include a state owned Qatari investment fund buying 17% of Wolfsburg, Germany-based Volkswagen and a possible holding in Porsche. Winterkorn said Qatar will be a “strong partner” for VW. Executives have said the combined company will eventually overtake Toyota Motor, the world’s biggest automaker, in sales and profitability. Winterkorn set a target in early 2008 of beating Toyota in sales and profit margins as the Japan-based competitor was poised to overtake General Motors as the industry’s largest carmaker by deliveries. Winterkorn said the combined carmaker will have sales of 6.4 million vehicles and more than 400,000 employees. Porsche will become the 10th brand in the Volkswagen stable and will continue to have all of its production sites. Volkswagen brands include the Audi luxury division and the cheaper Seat and Skoda marques. — Bloomberg ‘Opel deal not imminent’ FRANKFURT/BERLIN: General Motors and the German government on Friday played down hopes of an imminent decision over the sale of the carmaker’s European unit, Opel. GM’s top negotiator for the sale, John Smith, said the company still needed to compare the latest offer it got from Magna with the “attractive proposal” it received from Belgium-based financial investor RHJ on July 20. GM was also awaiting input about what state aid it could expect from European countries that host Opel plants — AP

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