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MONDAY, 16 MARCH 2015

www.business-standard.com

20 pages in 2 sections

MUMBAI (CITY)
~6.00

VOLUME XIX NUMBER 152

How markets performed last week
Index on
Mar 13, ‘15

Sensex
Nifty
Dow Jones
Nasdaq
Hang Seng
Nikkei
FTSE
DAX

28,503
8,648
17,749
4,872
23,823
19,254
6,741
11,902

% Chg over Dec 31, ‘14
*Oneweek Local currency
in US $
———————————————————————————————————————————————————

-3.2
-3.2
-0.6
-1.1
-1.4
1.5
-2.5
3.0

3.7
4.4
-0.4
2.9
0.9
10.3
2.7
21.4

3.8
4.5
-0.4
2.9
0.7
8.7
-3.0
4.8

THE STRATEGIST SEPARATE SECTION

COST CUTTING: WHAT WORKS
AND WHAT DOES NOT

COMPANIES P2

PARASURAMAN QUITS AS
CARLYLE INDIA MD

*Change (%) over previous week , Source : Bloomberg, Compiled by BS Research Bureau

> IN

Commercial mining of
coal to be allowed

BRIEF

Lagarde set to visit India today

AmidtheInternationalMonetaryFund cautioning
Indiaagainstheadwindstoitseconomicgrowth,
FundchiefChristineLagardewillvisitthecountry
fortwodays,startingMonday.Lagardeislikelyto
meetPrimeMinisterNarendraModiandFinance
MinisterArunJaitley.
4>

Mines to be allotted to states for mining and sale of coal

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

SHREYA JAI

April.
New Delhi, 15 March
Companies such as
Adani
Enterprises,
n the first major step
Reliance
Power
and
towards opening the
Monnet Ispat are likely to
coal mining sector, the
benefit from the move.
government will start alloThese companies’ plans to
cating coal blocks to state
operate as MDOs were hit
governments for commerwhen the Supreme Court,
cial mining. The move,
in August 2014, cancelled
likely in a month, will put
all coal block allocations
an end to the Centre’s 41through the past two
year-old monopoly over
decades.
commercial sale of coal.
The coal ordinance has
The coal ministry will
inserted section 3A in the
allot
non-operational
Coal Mines Nationalisation
mines to state governAct to enable joint ventures
| In 1970, the Union government took over
ments for commercial
by central and state govmining and sale of coal for
ernments and their commining, according to the Coal Mining
end use in the iron, steel,
panies, and any other comNationalisation Act
cement and allied sectors.
pany,
for
mining
| Coal ordinance 2014 enables commercial
This will bring business
operations in India “in any
mining by Indian and foreign companies,
and revenue to coal-rich
form, either for own constates and private joint ventures
states, which have so far
sumption, sale or for any
received only royalty from
other purpose”, in accor| Allocating coal blocks to states likely to begin
private companies mining
dance with a licence grantin a month
coal for captive use.
ed by the state government
| The move will bring business to mining
“Non-operational
concerned.
development operators
mines from schedule-I will
The ordinance classifies
be allotted to state governmines and their assets into
| Companies such as Adani Enterprises and
ments to extract coal for
three schedules. The first
Reliance Power to benefit
commercial usage and
has all the 204 mines demarket sale. States could
allocated by the Supreme
then sell this coal to the utilities under their umbrella or Court. Now, mines under this schedule will be allotted
any private company for various end uses, as specified in to states. Subsequently, the government will consider
the ordinance,” said a senior official. This is pursuant to commercial mining by private companies.
an enabling provision on commercial mining and sale of
There are 74 mines with specified end use in the
coal in the coal ordinance (special provisions), 2014.
power, steel and cement sectors. These mines are
Sources say the Centre is already in talks with states under the second (42 operational mines) and third (32
to allot mines for commercial use.
mines in various stages of development) schedules. Of
However, a lot will depend on the fate of the ordi- these, the coal ministry has allocated 40 mines with
nance in the Rajya Sabha, which has referred it to a specified end uses to private companies, through an eselect committee. So far, the ordinance has been prom- auction. The government received bids for revenue
ulgated twice.
amounting to ~2.35 lakh crore through 30 years, to
The coal ministry will also issue guidelines for the coal mine-bearing states.
appointment of mining development operators (MDOs)
It is also allocating 42 mines to states and stateby states. It is likely the guidelines will be announced by owned companies for specified end uses.

15 dead in suicide blasts in Pakistan

At least 15 people were killed and about 80
others injured on Sunday when Taliban suicide
bombers attacked two churches during Sunday
mass in a Christian colony in Lahore.
15 >

Street awaits new triggers
to sustain market rally
Valuations of financials already at a 10-year high

IN SEARCH OF MORE ENGINES
Sectoral weights in the Nifty

I

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Murdered techie’s body brought back

Mourners paid their last respects to information
technology professional Prabha Arun Kumar
(41), stabbed to death in Australia, whose body
was brought to Bengaluru on Sunday.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

NEW HORIZONS

Flipkart may be listed on Nasdaq

Flipkart is believed to be working on an
international listing, with Nasdaq in the US
emerging as the preferred destination. Experts
say before an initial public offering, expected in
12 to 18 months, the company must strengthen
its financials and organisational structure. 16 >
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Cong might harden stance

The alleged snooping on Congress vicepresident Rahul Gandhi by an assistant subinspector of the Delhi Police threatens to dent
the Narendra Modi government’s reforms
agenda, as the Congress is likely to adopt an
aggressive stance following the incident.
16 >

HAVELLS: GROWING
BRICK BY BRICK

As Business Standard looks
ahead to its 40th
anniversary in March, we bring you a
special series on India’s journey
through the past 40 years. SEE
THE STRATEGIST (separate section) to read
Havells India’s Chairman & MD
Anil Rai Gupta’s account of how the
brand became a well-known name
in the electrical trade circles of Delhi

BS SPECIALS ON MONDAY
STATSGURU

Business Standard looks at how the automobile sector,
a bellwether for economic recovery, has been doing 4 >

Price/earnings

Price/book

* Current valuation based on earnings in trailing 12 months
Sources: Bloomberg, Capitaline

KRISHNA KANT

Mumbai, 15 March

Dalal Street is waiting for new triggers for the
market rally to continue. Valuations in the
banking and financial segment, at the fore of
the rally, are at an all-time high, limiting further upside in the near term. Market players
say now, top companies in underperforming
sectors such as information technology, consumer goods, oil and gas, power, telecom and
metals should start delivering to take the market to new highs.
The top 15 banking and financial companies are trading at a 10-year high valuation of
18.1 times their trailing earnings and 2.3 times
their latest book value. Together, financial
stocks account for 30 per cent of the Nifty,
against 24 per cent a year earlier and the previous high of 27 per cent (in March 2013).
These stocks include State Bank of India, ICICI Bank, HDFC, HDFC Bank, Axis Bank,
Punjab National Bank, Canara Bank, Bank of
Baroda, YES Bank, IndusInd Bank and IDFC.
Through the past 12 months, the Bank
Nifty has risen 55 per cent, outperforming the
benchmark Nifty, which is up 33 per cent.
“Further upside in financials is limited.
Other heavyweights in sectors such as oil and
gas, capital goods and metals should start
contributing to take the rally forward,” says a
senior analyst at a city-based brokerage firm.
“Such high exposure to a single sector is a risk
to the market in the near term, as a correction
in the stock prices of banks and financials will
pull down the overall market even if other

COMPANIES P2

Checking out the jungle
with entrepreneurs

Jungliceo.com has wowed new business
owners by allowing them to network
while watching the lions and tigers in the
wild. It plans to turn 500 entrepreneurs
’wild’ by next year.
N SUNDARESHA SUBRAMANIAN reports

Exports likely to
contract in FY15

For a third time in six
years, exports are likely
to contract, owing to
lower global prices and
not enough
diversification.
NAYANIMA BASU reports

In just a year, Bengaluru-based myNoticePeriod.com has over 400
paid clients and 85,000 job seekers, and has raised ~18 crore,
ITIKA SHARMA PUNIT & ANITA BABU report
2>

BUSINESS LAW

The case of missing women
in the boardroom

Many companies are likely to
miss the April 1 deadline for
putting women on their board
of directors. SUDIPTO DEY
finds out why
12 >

BRAND WORLD

Frooti grows up with a
new look

14 >

Totargettheyouth,
Frootihaschanged
itslooksandtaste.
SAYANTANI KAR
reports

Is online transaction
truly online?
Theinitialprocesstocommencea
financialtransactionstillrequires
paperworkanddocumentation.
Thiswillnotchangeuntilacentral
repositoryandcommondemat
accountsareinplace. PRIYA NAIR &
TINESH BHASIN report
10 >

Ashwin Muthiah’s firm plans $1-bn US plant
Proposed ammonia
unit in Louisiana has
secured major sops
from that state
SURAJEET DAS GUPTA

New Delhi, 15 March

In what looks like an innovative alliance
between an Indian business unit and an
Indian-American at the helm of affairs in
the US, the Ashwin Muthiah-led AM
International is set to make a major
investment in Louisiana, with assistance
from that state’s governor, Bobby Jindal.
AM International, which has a controlling stake in Chennai-based Spic, will
set up an ammonia manufacturing plant
at an investment of $1 billion. Jindal,
born to Indian immigrants in the US and
speculated to be the Republican Party’s
nominee for the 2016 US presidential
elections, has offered the company a performance-based $5.6-million grant to
offset the project’s infrastructure costs.
Muthiah’s company will also get the
benefits of the state’s quality jobs and
industrial tax exemption programme,
which offers tax incentives for companies to start operations in Louisiana.
According to sources, AM
Agrigen Industries, a subsidiary of
Muthiah’s Singapore-headquartered

The company headed
by Muthiah (pictured)
will get the benefits of
Louisiana’s quality
jobs and industrial tax
exemption
programme, which
offers tax incentives
for companies
to start operations in
the state

AM International, which will execute
the project, has selected a St Charles
Parish site in Louisiana to develop the
potential 800-tonne ammonia manufacturing facility. Feasibility studies
for the project are underway and the
company has secured an option to
purchase 650 acres of land for the project. It has also received the requisite
environmental permits to operate
such facilities.
AMInternationalhas60percentstake
inSpic,amanufacturerofureainIndia.It

stocks do well.”
In the past, such peaks have been followed
by periods of under-performance by banking
and financial stocks. Overall, however, financials have been out-performing the broader
market since early 2007, resulting in a steady
rise in their index weight. In March 2006,
financials accounted for 17.6 per cent of the
Nifty companies’ combined free-float (nonpromoter) market capitalisation.
Many say financials and other high-beta
stocks could be hit first if foreign capital
inflows to India decline. “Banking and financial stocks have been the biggest gainer of
the strong FII (foreign institutional investment) inflow into India. If the trend reverses
or the flows moderate, it could adversely
affect valuations in the sector and pull down
the broader market,” says Dhananjay Sinha,
head (institutional equity), Emkay Global
Financial Services.
In the past year, pharmaceutical companies, too, have been a net contributor to the
market rally, outperforming the broader market. The National Stock Exchange pharma
index has risen 63 per cent in the past 12
months, helping the Nifty touch a new high
during the year. The top four pharma companies in the country account for 6.4 per cent of
the Nifty, against 5.9 per cent a year earlier and
2.3 per cent five years ago.
Analysts attribute this to the strong operational and financial performance of Indian
pharma companies on the back of higher
exports to the US.
Turn to Page 4 >

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START-UP CORNER

Only ‘serious’ job seekers wanted
ECONOMY P4

Blended valuation of banks
and financial companies

ILLUSTRATION:
AJAY MOHANTY

alsoholds17percentstakeinTamilNadu
Petro Products, a manufacturer of linear
alkylbenzene,heavyalkylbenzene,heavy
normal paraffin, epichlorohydrine, caustic soda, chlorine, ammonium chloride
and hydrochloric acid; Manali Petrochemicals, in which the holding company
has 40 per cent stake, produces propylene oxide, propylene glycol and polyols.
ItalsoholdsstakeinGreenstarFertilizers,
which manufactures phosphatic fertilisers.AMInternationalwhollyownsWilson
International, a trader of upstream and

downstreamproductsrelatedtofertilisers.
When contacted, Muthiah confirmed there was a proposal to set up a
plant in the US but declined to give
details. Sources close to the company
said the move was an attempt by the
MA Chidambaram group scion to chart
a new and distinct course for the group
he had inherited.
Sources said construction of the
plant was likely to begin in the last quarter of 2015 and be completed in about 30
months. AM Agrigen Industries plans
to tap a mix of global investors, apart
from roping in companies with which it
will have offtake agreements for ammonia to fund the project. The bulk of the
investment will come from the group’s
holding company, AM International.
The company will look to leverage
the US’ highest-density inter- and intrastate natural gas pipeline network,
besides low and stable prices because of
abundant supply of natural gas, a key
raw material for producing ammonia.
AM Agrigen, which will produce ammonia for customers in the US and Europe,
thinks manufacturing in the US is more
cost-efficient than in India, thanks to
the availability of cheap gas there.
Muthiah’s proposed investment is
seen as substantial, considering Indian
companies’ total foreign investment
stood at about $2 billion globally as of
January this year, according to Reserve
Bank data.

I

Indian enterprises modernize
business with Oracle Cloud

ndian organizations are undergoing
a major shift in the way they
implement IT, and cloud is being
strongly considered as an alternate
form of enterprise computing. Today,
enterprises across the spectrum in
India are relying on cloud technologies
to modernize their computing needs.
Oracle is poised to support this growth
and support customer demand.
Oracle’s cloud offerings incorporate
advanced capabilities, especially for
social networking and mobile
computing. Oracle’s mission is to
become the #1 cloud provider in the
world and intends to rapidly grow its
cloud business in India.
Shailender
Kumar,
Managing
Director –
Oracle India
said, “Oracle
cloud has
more storage
capacity than
Facebook
and over 2
Shailender Kumar
billion
Managing Director
transactions
Oracle India
happen on it
daily, which is more than the number
of credit card transactions. This goes
to show the power and robustness of
our technology. Oracle offers more
SaaS apps than anyone, many of
which were developed in 2014 alone.
Due to its focus on cloud in India,
Oracle India is ramping up its cloud
business with the addition of a
dedicated sales force that will sell
Oracle Cloud solutions.”

“Companies
in India
across
industries,
have been
using Oracle
Cloud for a
myriad of
business
applications.
Today, both
large
Niraj Kaushik
enterprises
Vice President – Applications
Oracle India
and SMBs
are relying on cloud technologies to
modernize their computing needs.
Cloud is rapidly gaining acceptance
as the new model for enterprise
computing in India and Oracle is
witnessing a strong demand for these
solutions,” said Niraj Kaushik, Vice
President – Applications, Oracle India.
According to Forbes, two-thirds of
Indian CIO’s are expecting the majority
of their information technologies to run
on the cloud by 2015. Airtel Learning,
Apollo Hospitals, Jabong.com, Intel,
Aditya Birla Management Company,
Maruti Motors, Hero MotoCorp,
BigTree Entertainment, Sonata
Software, Myntra.com, Kalpataru,
NetApp India, Adobe Systems, Haier,
Thomas Cook, Nature’s Feast, Sudhir
Gensets are some enterprise
organizations in India that have
recently embraced Oracle Cloud. To
help Indian enterprises realize the
benefit of cloud, Oracle is hosting an
exclusive conference, Oracle
CloudWorld, in Mumbai on 7th April.
The attendance to CloudWorld is by
Invitation only.