Article

Time for introspection

Dr Rakesh Singh

Most companies have come to realise that climate change is going to have a major impact on their business.
So corporates have begun investing on reducing their carbon footprint

Whatever the outcome at Copenhagen, climate change is a major environmental problem facing the globe.
While much can be done by globally, some of the onus can be taken by corporates also.

A primary step that corporates can take is ensuring that their company measures, monitors, and acts on
maintaining environmental regulations. Addressing climate change is also a part of corporate social
responsibility (CSR). As strategy guru Michael Porter remarks “the effect of climate change on companies
operations are so tangible that the issue is best addressed with tools of strategists, and not philanthropists.”

The action begins

Green as a strategy is in and is here to stay. The quest for sustainability is redefining the business landscape
which will force companies to think differently about technologies, processes, and business models.
Contrary to the opinion that adhering to sustainability norms will lead to unsustainable cost for the
organisation, early movers may develop competencies that will be hard to match. The competitive advantage
will always be an integral part of the development.

There is no one-size-fit approach to climate change. Companies may adopt climate change practises most
suited to their line of business. Their approach must include ways and means to reduce climate related costs
and risk in their value chains. These are the minimum initiative required to remain competitive. In addition
to understanding its emission costs firms need to evaluate its vulnerability to climate related effects such as
regional shifts in the availability of energy and water, the reliability of infrastructure and supply chains and
prevalence of infectious disease. The firm’s leader should systematically assess these risks and then decide
which to reduce through redesigning operations, which to transfer to others through insurance or hedging
contracts, and which to bear.

In a study we conducted at Institute of Supply Chain Management, Mumbai, we addressed the following
questions -- (1) Does following green manufacturing technique lead to overall cost reduction and higher
revenue? (2) Is there a positive relationship between consumers attitude towards environmental issues and a
perceived image of a firm in following green manufacturing techniques/ (3) Is there a relationship between
green practises and attainment of higher strategic platforms?

Our result clearly showed that green strategies have a positive impact on profitability of a company. The
results also added mileage to the fact that environmental management simultaneously protect the
environment and increase competitiveness. The result further suggested that if green manufacturing
techniques are marketed to the correct target group in India, it can lead to revenue increase as consumers
concerned about the environment are willing to buy commodities manufactured through green techniques at
a price comparable with or 5 percent above market standards.

An article published in the Harvard Business Review speaks of how Hewlett-Packard (HP) gained an
incomparable first mover competitive advantage by meeting complete environmental norms in totality. This
when most other players preferred to adhere to lowest environmental standards for as long as possible. HP
realised that lead is toxic and that one day the government would ban it. So over the years, the company
went on to develop solders that are an amalgam of tin, silver and copper. It even developed chemical agents
to tackle the problem of oxidation and tarnishing during the soldering process.

Hence the belief holds true that transferring to environmental norms can help companies enforce single
norms and thus reap in benefits of economies of scale and optimise supply chain operations. In 2001 when
European Union ruled that companies could not use hexavalent chromium, as it increased the risk of cancer
to anyone who comes in contact with it, HP thought it needed more time from the regulators to change to
trivalent chromium coatings. It persuaded the regulators to postpone the ban for a year and this way it
completed trials on organic and trivalent chromium coatings. HP used the time to transfer the technology to
more than one vendor. The vendors competed to supply the new coatings which helped HP reduce costs.

These are just few examples to motivate firms to be proactive and adopt green strategies. These will be the
next practises that will change existing paradigm. Sustainability can lead to next practise paradigm. Indian
firms need to take off now and lead the world in shaping these paradigms rather than be late followers.

Dr Rakesh Singh is Dean, School of Economics, NMIMS Mumbai.

NEWS ROUNDUP

Ports / Shipping

Cargo handling at Haldia port to drop by 9 mn tonnes this fiscal

With oil firm Indian Oil Corporation shifting the handling of crude from the heavily-silted Haldia to Paradip,
cargo handling by the beleaguered Haldia port and the Kolkata Port Trust together will drop by 9 million
tonne in the current fiscal compared to last year.

The Haldia Port and the Kolkata Port Trust together are expected to handle 45 million tonne of cargo in the
current fiscal compared to 54 million tonne in 2008-09, according to the Chairman of Kolkata Port Trust
Anindo Mazumdar.

He said that cargo handling would drop mainly because of the direct crude pipeline installed by State—
owned IOC from Paradip port to Haldia. Earlier, Haldia port used to handle the IOC crude oil cargo.

Concor's eastern region facilities to be commissioned soon

Within the next three to four months, Container Corporation of India (Concor) is planning to commission
two additional handling facilities in eastern region.

While the Majherhat facility near Kolkata Dock System will be a container freight station (CFS), the one at
Rourkela will be a domestic terminal.

Right now, Concor has a domestic terminal at Majherhat which is being upgrade into a fully-fledged CFS to
be complete with additional warehousing facility of 2,000 sq metres. The existing railway facilities will be
particularly helpful, it is felt. Once ready, the CFS should be able to handle the export-import traffic also.

At Rourkela, Concor's domestic terminal will be spread over 18,000 sq metres. At present, Concor handles
containerised traffic at Rourkela but from a railway goods shed also used by others, particularly private
container train operators. This often causes delay.

Once operational, the terminal, it is hoped, will substantially boost Concor's throughput at Rourkela from the
present 400 TEUs a month on an average, more so because there will be no waiting period and it should be
possible to handle even factory stuffed boxes at the terminal.

There is a further proposal to set up, at least to start with, a domestic terminal at Jharsuguda. Concor,
inquiries reveal, is in talks with the Orissa Government and the Railways in this regard. An estimated 29
acres is being acquired for the purpose as the plan is to gradually upgrade the terminal into a full-fledged
CFS, it is learnt.

Concor's Durgapur terminal, whose normal functioning was badly hit in the past few months mainly by
inter-union rivalry forcing the prospective users to stay away from it, is coming back to normal operation.
This has happened due to several reasons. First, a new handling contractor has been appointed at the terminal
and, second, Concor has slashed the freight to Tughlakabad by Rs 2500 per TEU .

Another factor which is holding out promise is the prospect of improved availability of empties. Right now,
the empty rakes are repositioned from Kolkata, entailing additional cost.

Of late, Concor has started receiving inquiries for inward movement from as far as Rajasthan. If that
happens, there will be no need for repositioning the empties at an additional cost, it is felt.

Commissioned in April last year, the Durgapur terminal's throughput peaked in June at 300 TEUs, only to
fall steadily after that following the disturbed situation there. Barring unforeseen development, Concor
sources are hopeful of reaching the level of 500 TEUs a month shortly.

Aban seeks moratorium on short-term loans

Aban Offshore, the biggest oil rig company with a huge debt, is negotiating with State Bank of India (SBI)
and Punjab
National Bank (PNB) for a moratorium on short-term loans after failing to refinance a Rs 200-crore bullet
loan due last month, said a banker familiar with the issue.

The company, which piled up a loan of more than Rs 16,000 crore during its acquisition of Norway’s Sinvest
in 2006, has another $335 million (Rs 1,535 crore) of loans coming due by the end of this month, said the
person.

Care Ratings, last month, lowered ratings on many of Aban’s notes, including short-term bank facilities of
Rs 400 crore. Its rest of the long-term loans have been rated as Double B reflecting high-credit risk.

“The ratings revision primarily factors in the inability of AOL to successfully refinance its bullet loans in a
timely manner,” Care Ratings said in a statement on February 24.

Bengal Tiger Lines links up Singapore, Chennai, Thai ports

Feeder operator Bengal Tiger Lines (BTL's) has tied up with the Thailand-based Regional Container Lines
(RCL) and Japan's mainlines Mitsui OSK Lines (MOL) to directly link Singapore to Laem Chabang in
Thailand and Chennai.

Commencing March 23 from Thailand, the parties will each deploy a 1,100-teu vessel on a 21-day round
voyage, providing fixed day weekly calls at all ports. The service will be named RMB after its participants –
RCL/MOL/BTL.

BTL, a renowned Bay of Bengal Feeder specialist, has in recent years been expanding service coverage as
far East as Korea and China and Westward to the Red Sea and Gulf. Additionally, last year a new
Taiwan/Philippines shuttle was launched hubbing over Kaoshiung. However, its main trade remains the
Chennai market and, with this RMB service, BTL will offer four sailings a week to and from Singapore, a
press release issued here said.

Cabinet nod for Andaman & Nicobar as major port

The Union Cabinet has approved the proposal of the Shipping Ministry to declare Andaman and Nicobar
ports as major port and establish the Andaman and Nicobar Port Trust with its headquarters at Port Blair.
The strategic location of these Islands will help service large volumes of cargo and large vessel volumes for
the neighboring ASEAN countries.

The cabinet also approved to extend the applicability of the provisions of the Major Port Trusts Act, 1963 to
Andaman and Nicobar set of ports and to disband the Port Management Board to transfer its establishment to
the proposed Port Trust. It also agreed to bifurcate the Andaman and Lakshadweep harbour works and
transfer a part of its establishment to the A and N Port Trust and to take consequential actions with reference
to the above declaration.

The existing major ports are Kolkata, Haldia, Paradip, Visakhapatnam, Chennai, Tuticorin, Cochin, New
Mangalore, Mormugao, Jawaharlal Nehru port, Ennore and Kandla.

The shipping activities at A&N Islands are currently managed by the Port Management Board, which is
under the A&N Administration. Under the Central jurisdiction, the port now can access budgetary grants. It
can be developed as a transhipment port such as Colombo, where majority of Indian cargoes are transhipped.

The administration has a fleet of 70-80 odd vessels — mostly passenger, some passenger-cum-cargo and
some pure cargo.

Acquisition of aircraft-carrier Admiral Gorshkov in final stages, says Antony

Indian Navy is in the ‘final stages' of acquisition of the modified Kiev-class aircraft carrier, Admiral
Gorshkov, from Russia, according to the Defence Minister, Mr A.K. Antony.

With a displacement capacity of 45,000 tonnes and a maximum speed of 32 knots, the ship is expected to be
commissioned and transferred to the Indian Navy as INS Vikramaditya by 2012.

The deal also includes the delivery of MiG-29K Fulcrum carrier-based fighters.

Speaking to newspersons after inaugurating the administrative office complex of the Coast Guard, the
Defence Minister said that he would request the US authorities to ensure that the arms and equipment being
supplied to Pakistan are stationed on the Afghanistan-Pakistan border, and not on the Kashmir border with
India.
Peace has been largely prevailing on the Indian side of Kashmir in recent times as evident in a pick-up in
tourist movement into the region. This is despite the fact attempts of infiltrations from across the border,
since thwarted by vigilant army men.

The Home Ministry and the Jammu and Kashmir Government have worked out a formula as part of the
larger mission to bring back Kashmiri's from the other side of the border, Mr Antony said. Replying to a
specific question, he said the military would not involve itself directly in the fight against Maoist violence in
the eastern parts of the country. This is best handled by the police in the respective States, but the Army
would be willing to provide logistical support to the paramilitary forces engaging the misguided elements in
the frontline.
SCI, SAIL set up shipping joint venture

National carrier Shipping Corporation of India (SCI) has joined hands with another state-run enterprise, Steel
Authority of India Ltd (SAIL) in the setting up of a joint venture that will provide shipping-related services.

The two companies had signed a memorandum of understanding (MoU) in March 2008 to establish a joint
venture (JV) that would render shipping-related services to the steelmaker, particularly importing the coking
coal required for its plants.

The scope of the MoU also provided that the JV firm could also participate in the international shipping
trade.

“We expect to double our current fleet strength of 79 vessels over the next five to seven years at an
investment of $3.5 billion,” said Mr Hajara. “We would like some of these vessels to have captive
employment; and the JV with SAIL would provide just such an opportunity.”

INFRASTRUCTURE/NEW LAUNCHES/OPERATIONS

Essar to purchase Trinity Coal from Denham for US $600 million

Essar Group through its subsidiary Essar Minerals, Delaware and Denham Capital, an energy and
commodities focused global private equity firm, has announced a definitive agreement by which Denham
will sell its ownership of Trinity Coal Partners LLC to Essar for US $600 million. Trinity is a leading U.S.
coal producer with operations in the Central Appalachian region. The deal is subject to relevant approvals
and is expected to close by the end of the month.

Trinity owns and operates mines in Kentucky and West Virginia, and has a proven resource base of
approximately 200 million tons of coal – split equally between metallurgical coal and steam coal.

The transaction is part of Essar’s strategy to continue to achieve backward integration and to secure raw
material needs for its global steel and power operations. Essar’s steelmaking capacity of 14 million tonnes is
spread across plants in Canada, India and Indonesia. It also owns iron ore reserves of over 1.4 billion tonnes
in Minnesota, Minn. Additionally, the Group is scaling up its power generation capacity in India to 6,000
megawatts.

UGL and BDP establishes new company in India

BDP International (BDP) has entered a joint venture with local logistics company Unique Global Logistics
Private Limited (UGL) forming BDP Global Logistics (India) Private Limited.

US-based BDP is one of the world's largest privately owned transport and logistics companies, with revenues
in excess of US$1.6 billion and a presence in more than 120 countries. BDP has built its reputation working
for some of the world's largest corporations including DOW, DuPont, Johnson & Johnson, Marks and
Spencer and Revlon.

The new company will be headquartered in Mumbai with a presence in all major cities in India.

BDP will target India's expanding chemicals, life-sciences, healthcare, retail, telecom and manufacturing
industries. India is a key focus for BDP over the next decade as the nation emerges as a true economic
powerhouse.

One area where BDP is an acknowledged leader is the chemical sector, which accounts for 13 to 14 percent
of India's total exports and 8-9% of total imports.

India-based UGL has a strong expertise in the energy sector including oil and gas.

Aryan Cargo Express awarded Air Operator's Certificate

Aryan Cargo Express (ACE) has been awarded the Air Operator's Certificate (AOC).

The company intends to be a non-integrated carrier of goods providing airport-to-airport freight

transportation services and has been granted bilateral rights of India with Japan, Korea, china, Hongkong,
Thailand, UAE, Kenya, Italy, Belgium and UK to operate Scheduled Air Cargo services.

ACE pioneers in formulating a strategic international route plan with connectivity extending to 150 countries
worldwide through a network of online, offline GSSAs and special prorate agreements with other carriers.
ACE has created 3 main hubs in Delhi, Sharjah and Bangkok to maximize cargo uplift and extend its global
reach. The company initially plans to operate as a scheduled cargo airline within Asia and Europe and
eventually expand its operations and services to other parts of the globe by capitalizing on an alliance model.

ACE is due to start operations with its newly obtained Airbus A310-300F along with the second A310-300F
that shall be delivered in mid March 2010. ACE will offer only Express service for cargo like "ACE
Lightening" and "ACE Flash" which will provide time definite delivery service of less than 36 hrs within its
own network and less than 48 hrs within its extended network. The service will provide faster delivery than
any other airline operating in this part of the world. Services will commence along the routes to Japan,
Korea, China, Hong Kong, Thailand, Sharjah, Italy, Belgium and London.

Maritime varsity to receive grant of Rs 300 crore

The Shipping Ministry has allocated Rs 300 crore to the Indian Maritime University for the next five years to
create infrastructure facilities.

The facility will include an academic complex, administrative building, library, hostels and residential
accommodation for faculty and staff. As a first step, a ‘bhoomi pooja' was performed for the construction of
the university's academic and administrative complex buildings at Semmenjeri, off the Old Mahabalipuram
Road.

The Union Minister for Shipping, Mr G.K. Vasan, after participating in the ‘pooja' said, the university would
be unique in the country and produce ‘high quality' manpower in the maritime sector not only for India but
for the international requirement. According to the university's Vice- Chancellor, Dr P. Vijayan, the new
complex is expected to come up in a year's time.

GST rates likely to be pegged at above 12%

The government on Thursday said the proposed goods and services tax (GST) rate is likely to be pegged
higher than 12% recommended by a task force set up by the 13th Finance Commission. “The task force had
recommended an overall GST rate of 12%, but it is likely to be higher than that”, revenue secretary Sunil
Mitra said at a CII function here.

The task force had recommended 5% for Central GST and 7% for state GST. As per the Centre’s
calculations revenue neutral rate of GST, or the rate at which states will not lose any revenues in the GST
regime, works out to 16-17%, said a finance ministry official who did not wish to be identified. States on the
other hand have suggested a higher combined GST rate of 16-20%.

The GST, set to be rolled out from April 1, 2010, is now scheduled to be launched a year later as the centre
and states are yet to come to an agreement on the nitty-gritty of the tax structure owing to persistent
differences on crucial elements such as turnover threshold limit.

The GST seeks to replace the major indirect taxes — excise duty, service tax, value added tax and other state
taxes — with a single levy and will create a national common market that is at present fragmented because
of multiple levies.

Ashok Leyland to invest Rs 3000 crore

Ashok Leyland has outlined a Rs 3000 crore investment plan for the next three years and said sales were
expected to grow by 15-20% in the next fiscal as economic growth and industrial activity picked up.

“We had cut back on investments due to the market conditions. But now we are activating the investments
again as the market has come back,” said R Seshasayee, MD.

RAILWAYS

Railways February freight earnings up 2.65%

The Indian Railways has registered a 5.43 per cent growth in total earnings, mopping up Rs 7,147.89 crore,
in February against the corresponding period last fiscal.

Earnings from goods movement, which contribute about 67-68 per cent to Railways' total earnings,
registered a low growth rate of 2.65 per cent in the month against February 2009.

This is lower than the 5.39 per cent growth registered by goods movement in January.

In absolute terms, the Railways earned Rs 4,793.56 crore in February from freight movement.

Earnings from passenger movement and other coaching services registered a 7.59 per cent and 12 per cent
growth respectively.

Railway earnings increase during April 2009 – February 2010

The total approximate earnings in the 11-month period of April 1, 2009 – February 28, 2010, were Rs
77,890.29 crore, an increase of 8.45 per cent (Rs. 71,821.97 crore), said an official release here.

The total goods earnings touched Rs 52,584.57 crore in the 11-month period, registering an increase of 7.67
per cent.

The total passenger revenue earnings were Rs. 21,400.1 crore (Rs 19,922.59 crore), registering an increase of
7.42 per cent.

The revenues from other coaching amounted to Rs 2,087.35 crore, an increase of 15.83 per cent against
corresponding period last fiscal.

Indian railways carry 803.50 million tonnes of freight during April 2009-February 2010

Indian Railways have carried 803.50 million tonnes of revenue earning freight traffic during April 2009-
Febuary 2010. The freight carried shows an increase of 52.20 million tonnes over the freight traffic of
751.30 million tonnes actually carried during the corresponding period last year, registering an increase of
6.95 per cent.

he month of February 2010, the revenue earning freight traffic carried by Indian Railways was 72.54 million
tonnes. There is an increase of 2.52 million tonnes over the actual freight traffic of 70.02 million tonnes
carried by the Indian Railways during the same period last year, showing an increase of 3.60 per cent.

ROAD TRANSPORT

BEST to get 468 CNG buses under urban renewal scheme

Brihanmumbai Electric Supply & Transport Undertaking (BEST) will get 468 CNG buses under the under
the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

The executive committee of the Mumbai Metropolitan Region Development Authority (MMRDA) has
sanctioned a loan of Rs 88.39 crore to BEST for the purchase. The loan needs to be repaid in six years with 8
per cent interest, said an MMRDA release.

Under the JNNURM scheme for strengthening urban transport infrastructure, BEST had sought Rs 284 crore
for buying 1,000 buses. The Centre has already provided about Rs 142 crore under the scheme, while state
government through MMRDA is paying its share of money in tranches. BEST has so far purchased about
500 buses under scheme.

MMRDA has also decided to extend the financial advisory services of KPMG for two years. It had
appointed KPMG in December 2009 to study the financial viability of all projects under implementation and
those to be undertaken in the near future.

63,000 hectares needed for building highways

The government today said over 63,000 hectares of land will be required for expansion of national highways
in the country.

The government will be requiring 63,211.721 hectares of land (for projects being implemented by the
National Highways Authority of India) for the expansion of highways in the country, Minister of State for
Road Transport and Highways R P N Singh said in a written reply to Lok Sabha, the lower house of
Parliament.

He said, among the top six states acquiring land would be Tamil Nadu which would need 9,981 hectares,
Madhya Pradesh 5,862.81 hectares, Uttar Pradesh 5,630.678 hectares, Haryana 5,148.582 hectares, Bihar
4,774.014 hectares and Rajasthan 4,124.798 hectares.

AIRWAYS

AI and GE to invest $90 mn engine facility

India’s national carrier Air India has signed an agreement with GE Aviation, a unit of General Electric Co
(GE), to set up a $90-million facility to maintain aircraft engines.

Under the GE Branded Services Agreement (GBSA), GE Aviation will provide technical support, while Air
India will offer maintenance, repair and overhaul (MRO) services for the GEnx-1B engine.

The facility will come up at Air India MRO in Mumbai and with an investment of $90 million, of which GE
will contribute $20 million, Air India chairman and managing director Arvind Jadhav told reporters at India
Aviation 2010 here on Thursday.

Under the GBSA, Air India will be licenced to perform maintenance and overhaul work on the GEnx-1B
engine. GE will provide Air India with assistance on overhaul workscoping and component repair licences,
comprehensive material support and training.

The GEnx-1B will power Boeing's 787 aircraft. Air India has 27 GEnx-1B powered Boeing 787 aircraft
ordered.

Nalin Jain, country director, GE Aviation, said it would be GE's second such MRO facility in the world.

AI eyes 15-17% pay cut, awaits Cabinet approval

A 15-17% pay cut is on the cards for employees of the loss-making Air India-Indian Airlines combine. The
management is eying a saving of Rs 700-800 crore on its annual wage bill of about Rs 3,100 crore through
this move. However, the airline brass says this move will only be taken after top government clearance to go
ahead with tough steps that may lead to industrial action by employees.

The merged airline, National Aviation Company of India Ltd (NACIL), has liabilities running in several
thousand crores and is now battling for survival. The government has cleared Rs 800 crore equity infusion
into the company and has said another Rs 1,200 crore may be given next fiscal if NACIL is able to cut costs
and improve performance drastically.

Aviation minister Praful Patel stated that NACIL has to cut costs as government support can't be indefinite.
Airline chief Arvind Jadhav said that the ministry will be holding discussions on all issues about AI for two
days around March 15. Asked on the proposed wage cut, he said, "We will need the shareholders' (read
government) consent before doing anything. Other full service carriers like Jet and Kingfisher also cut
salaries drastically during the slowdown to survive."

AAI to raise Rs 3,000 crore through bonds

Airports Authority of India (AAI) is planning to raise Rs 3,000 crore in the next financial year through bonds
from banks. The country’s largest airport operator is already in talks with various banks and is expected to
get the first instalment of Rs 600 crore by March end.

AAI has been looking to raise money from the market for quite sometime, mainly for its airports upgradation
programme. It was earlier planning to borrow around Rs 1,000-1,200 crore from Exim Bank of United
States, but it did not materialise because of the bank’s pre-condition that AAI must buy equipment worth the
loan amount in US itself.

It has a total borrowing plan of Rs 2,800 crore. According to another AAI official, under the present plan the
banks will issue bonds to AAI at an interest rate of about 7.5 to 8 per cent. The loans from foreign banks
would have attracted lower interest rates. However, the official said the authority is trying to negotiate with
commercial banks for a lower interest rate.

The AAI has appointed KPMG to consult it on its corporatisation plans. Civil aviation minister Praful Patel
in August 2009 had announced that AAI would be converted into a public company. Once this is done,
funding will be easier. It can go to the market for raising any amount of money. The ministry has said the
AAI Act would be amended to facilitate AAI’s corporatisation.

At present, AAI is in the process of modernising 35 non-metro airports. It manages 125 airports across the
country, out of which only 86 are operational.

Indocopters to invest 150 crore on expansion

Indocopters, a Vectra Group company and distributor of Eurocopter in India, is planning to invest close to
Rs. 150 crore in expanding its three maintenance, repair and overhaul centres located in New Delhi, Mumbai
and Bangalore.

The company will set up another MRO centre at Bhubaneswar in Orissa during the second half of the current
year, while Hyderabad too is on Indocopters' radar for setting up a centre here. “Hyderabad is definitely on
the radar and is of lot of interest to us. We will set up a centre as and when volumes warrant,” company CEO
Rohit Kapur said.

Indocopter signed agreements for supply of three AS 350 B3 helicopters — two to Summit Aviation and one
to Morey Group — as part of the India Aviation 2010 here on Thursday. The company also signed an
agreement for supply of EC135 Eurocopter to a Mumbai-based corporate, but did not prefer to name the
firm. The total market value of the contracts was pegged at 15 to 18 million euros.

Chennai airport upgradation

The Rs 2,300 crore Chennai airport modernisation project being undertaken by Airports Authority of India
(AAI) is expected to open on schedule without any delays.

According to the Chairman of AAI, Mr V.P. Agrawal, some minor structural changes have been made to
ensure that the project is completed on time.

The need for change was required as there were some issues with the Defence forces.

UAC signs deals for 18 An-148 aircraft

Russian aircraft manufacturer United Aircraft Corporation (UAC) has signed deals with three domestic non-
scheduled airlines for supply of 18 aircraft in its An-148 series, including 10 cargo carriers, during the on-
going India Aviation 2010 meet.

It has signed deals for supply of eight passenger aircraft, with an option for another eleven. “While we are
looking to deliver the passenger aircraft from the first quarter of 2011, delivery of the cargo series will begin
from the first quarter of 2012, as we need to complete certain certification process,” Mr Yuri Grudinin, UAC
Director, told media persons at the India Aviation 2010 meet here on Friday.
UAC, which commercially launched the An-148 series last year, had on display at the India Aviation meet
the third aircraft produced at its manufacturing facility at Vronezh, about 600 km from Moscow.

The An-148 series, with seating capacity ranging from 60 to 85, is meant for short hauls, such as the non-
scheduled routes.
Mr Grudinin said, at present the two manufacturing units of the company had the capacity to produce nine
aircraft annually, which was being expanded to reach about 20 units a year. He said that globally the
company had over 50 aircraft in this series on order.

He said the company was planning to set up a MRO (maintenance, repair, overhaul) unit to service its
aircrafts after their delivery.

AgustaWestland and Tata Sons Establish a Joint Venture Company

AgustaWestland, a Finmeccanica company, and Tata Sons have signed a Shareholders’ Agreement for the
formation of an Indian joint venture company which will establish in India a final assembly line for the
AW119 helicopter for the worldwide market.

The agreement was signed in New Delhi today by Mr. Giuseppe Orsi, CEO, AgustaWestland and Mr. Ratan
Tata, Chairman, Tata Sons. The joint venture company will be responsible for AW119 final assembly,
completion and delivery while AgustaWestland will retain responsibility for worldwide marketing and sales.
The first aircraft is scheduled to be delivered from the new facility in 2011 with production forecast to rise to
30 aircraft per year to meet worldwide demand.

Mr. Giuseppe Orsi, CEO, AgustaWestland speaking after the signing ceremony said "It gives us great
pleasure to have achieved this important agreement with such a leading industrial partner in India. The
establishment of a Joint Venture to set up an AW119 assembly line in India will provide extraordinary
industrial opportunities both in the country and worldwide through the synergies generated by
AgustaWestland and Tata Sons capitalizing upon the depth of their respective resources. We are committed
to enabling Tata Sons to play an increasing role as an aerospace enterprise and to jointly exploiting future
prospects in the growing Indian helicopter market.”

It is envisaged that the joint venture company would be a supplier for the current Reconnaissance and
Surveillance Helicopter (RSH) programme of the Indian Armed Forces, for which AgustaWestland has
already proposed the AW119 to be manufactured in India. Additionally, AgustaWestland and Tata Sons are
exploring further commercial, technical and industrial collaboration opportunities in the rotorcraft industry to
strengthen their strategic relationship.

Piaggio Aero sees demand for Avanti II

Piaggio Aero Industries, an Italian company, sees increased interest for its new P.180 Avanti II business
aircraft in the SAARC (South Asian Association for Regional Cooperation) region.
The company, which has appointed Taj Air as its distributor in the region, sold three Avanti II in India so far.
Of the three, one was a pre-owned aircraft from the US.
“The twin-engine jet consumes 40 per cent less fuel. This means that it is 40 per cent less emissions than its
peers in the category.
It needs a short runway of 986 metres and landing distance of 1,000 metres,” Mr Enrico Sgarbi, a spokesman
of Piaggio Aero, told Business Line.
Showcasing the aircraft here on Friday, he said Taj Air had been appointed authorised service provider for
the Avanti II aircraft in the region to offer maintenance, repair and overhaul.

NAL plans civilian 90-seater

The National Aerospace Laboratories (NAL) is all set to build a 90-seater, regional transport aircraft (RTA).

NAL has already gained expertise in developing transport aircraft - Saras. Given the huge potential for small
haul passenger travel within India and for cargo movement, the demand for such aircraft is high.

Mr Kota Harinarayana, former Programme Director of the Light Combat Aircraft (LCA), who is presently
with NAL as the Raja Ramanna Fellow, is leading the design and development with a large team. He said the
objective was to come up with a low-cost carrier which can land in all-weather conditions in small airports.

The development of the aircraft would take four-five years. The first of the test flights are expected during
2014-15. The involvement of private sector or large public sector companies would be explored from the
initial stage of development. A host of latest technologies, light weight and tough materials such as
composites and advanced features would be incorporated.

APPOINTMENT

New directors appointed on Air India board

Former IAF Chief Air Chief Marshal(retd) Fali. H. Major and eminent industrialist Anand. G. Mahindra
were among the four new non-official directors appointed by the Government on Friday on the board of
cash-strapped Air India.

The other two to be on the board are FICCI Secretary General Amit Mitra and Industrialist Harsh Neotia. Air
India is facing a whopping loss of over Rs 7,000 crore.

The appointments of the four directors on the Board of National Aviation Company of India Limited
(NACIL), which runs the national carrier Air India, will be for a period of three years or till further orders
whichever occurs earlier, a statement from the Civil Aviation Ministry said. The exact role of the four
directors has not been defined yet.

Nalin Mehta appointed chief operating officer of Mahindra Navistar

Nalin Mehta, the CEO of Mahindra Renault has been appointed the new chief operating officer of Mahindra
Navistar.

He has earlier served as General Manager, Marketing for utility vehicles and Scorpio in Mahindra for over 4
years. He has an overall experience of 26 years including reputed companies like Hindustan Motors and
Atlas Copco.
INTERNATIONAL NEWS

China to build a Pan Asia – Europe 17 country rail network

China plans to develop a three-pronged high speed rail network that will expand its own tracks to a further
seventeen countries throughout Asia and going as far as Europe.

The plans include Southeast Asia, with a network to run south from Kunming through Vietnam, Thailand,
and Malaysia on the way to Singapore and west across to Myanmar and India.

A western network would run from Urumqi through Central Asia, including Kazakhstan, Uzbekistan and
Turkmenistan, possibly connecting through Pakistan, Iran, and Turkey through to Germany.

The third spur would leave Heilongjiang, cross Mongolia, Russia and head west across Siberia on the way to
Europe. China and Russia have already agreed to build a high speed rail line across Siberia.

The routes also go hand in hand with some of the oil and gas pipelines heading into China from Siberia and
Central Asia. China expects trade and commerce to develop significantly in the Western regions with the
establishment of mines, factories, and business centers throughout Xinjiang Province and Central Asia as the
routes assist sustainable development in the region.

Maersk reports losses

At USD 48.5 billion, the A.P. Moller - Maersk Group’s revenue was 21% lower in 2009 than in 2008,
primarily as a result of lower freight rates for container shipping and lower average oil prices.

The result for the year was negative by USD 1.0 billion, which was in line with the expectations announced
on 12 November 2009.

A.P. Moller - Maersk Group was significantly negatively affected by the global economic crisis. Freight
rates for the Group’s container activities were 28% lower than in 2008, resulting in a negative segment result
of USD 2.1 billion for the container activities. Tanker rates were also substantially lower than in 2008.

As an outlook for 2010, in the container shipping market, a 7-10% addition of tonnage is expected for the
global container fleet. Cargo volumes are expected to rise by 3-5% in 2010 relative to 2009 and freight rates
are also expected to rise. This expected to a significant improvement in results if the level of vessels taken
out of service is sustained. However, rates are not expected to lead to an acceptable return in 2010.

China Railway plans share placement

China Railway Construction said it plans a share placement to raise up to eight billion yuan (R9 billion) to
fund highway projects as Beijing boosts transport network spending.
The state-owned company, a major builder of rail lines, roads and bridges across China, said it will use part
of the proceeds from the private share placement to also boost working capital and repay bank loans.

The announcement to the Shanghai Stock Exchange comes as China invests heavily to expand its
transportation network in a bid to drive growth in related industries as well as the overall economy.

China will invest about two trillion yuan this year in the transport sector, including roads and waterways,
state media reported this week, citing a senior researcher with the National Development and Reform
Commission, the country's top economic planner.
Last year, investment in the sector also reached two trillion yuan, up 80 percent from 2008, the report said.

China Railway Construction said in the statement it plans to sell 1.035 billion yuan-denominated A shares at
a minimum of 7.74 yuan per share to ten institutions including its parent.

The share placement is subject to regulatory approval.

Louis Vuitton choose Kuehne + Nagel for Japanese warehousing and distribution

Louis Vuitton Japan, a subsidiary of the LVMH Group, has awarded Kuehne + Nagel Japan a contract for
the management of its regional distribution centre in Osaka.

Based on the systems and processes customised in this facility, Kuehne + Nagel will further be responsible
for setting up showcase warehouse operations for all of Louis Vuitton’s outsourced distribution centres
worldwide.

As a major part of the agreement, Kuehne + Nagel has leased a dedicated logistics facility in Amagasaki,
conveniently located between the seaports of Kobe and Osaka, and will be installing ultramodern security
measures and advanced information systems fully integrated with Louis Vuitton’s worldwide operations.

Under the contract Kuehne + Nagel will cover the inbound receipt of goods by sea and air, as well as a range
of value-added services and reverse logistics for the entire range of Louis Vuitton leather goods and
accessories.

Deutsche Post Reports Surprise Net Loss

German mail and logistics company

a recovery in the hard-hit sector ensues, even as it reported a surprise fourth-quarter net loss that missed
analysts' expectations.

The company said it expects "a moderate recovery in global transport volumes" in 2010 to result adjusted
earnings before interest and tax, or EBIT, of between €1.6 billion ($2.18 billion) and €1.9 billion for 2010
and an improvement in net profit.
Like rivals, including
the credit crunch and economic downturn that hit global trade. All four companies, which have focused on
cutting costs during the downturn, have now predicted better volumes in 2010, and Deutsche Post and UPS
are predicting this will boost earnings.

But BHF Bank analyst Nils Machemehl said Deutsche Post's forecasts were below market expectations, and
shares of Deutsche Post fell 1.6% to €12.60 on a flat Frankfurt market.

In the last three months of 2009, Deutsche Post narrowed its net loss to €283 million from €3.18 billion a
year earlier. But analysts surveyed by Dow Jones Newswires had expected, on average, a €220 million net
profit. The latest quarter included high restructuring costs and charges related to the
insolvency.

Revenue fell 12% to €12.39 billion from €14.02 billion, reflecting a steep drop in shipping demand and
lower transport rates across the globe due to the weaker economy.

Kanoo, BDP JV to Serve Middle East Chemical Sector

Bahrain-based Kanoo Freight, a division of Yusuf Bin Ahmed Kanoo LLC (Kanoo), and BDP International
(BDP) has announced the formation of a joint venture to serve the logistics and transportation needs of the
Middle East’s burgeoning chemical and petrochemical

The new entity, named BDP Kanoo Chemical Logistics, will be based in Dammam, Saudi Arabia.

Financial terms of the agreement between the two privately-held companies were not disclosed.

Disclaimer: All information contained in this report has been obtained from sources believed to be
accurate by DVV Media India Pvt Ltd. While reasonable care has been taken in its preparation DVV
Media and CIIL make no representation, warranty, express or implied as to the accuracy, timeliness or
completeness of any such information. All information should be considered solely as statements of
opinion and neither DVV Media nor CIIL will be liable for any loss incurred by users from use of the
contents of this report.

© 2008 Confederation of Indian Industry. All rights reserved.