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  | Saturday, May 17, 2008
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 Prices rise as growth slows |
| Crude nears record $128 |
| Icahn’s fight puts MS in driver’s seat |
| OLPC and Microsoft join hands |
| RIM to solve BlackBerry’s row by June |
| Vodafone acquires Danish company |
| Sebi court: No cases, no judge |
| Jewellery body eyes overseas market |
| Manipal gets Rs 1,435cr |
| US small regional airlines face cash crunch |
| EU laws may hit Tata JLR |
| Markets rise on IT, metals |
| Karnik: To maintain lead, use rural talent |
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Prices rise as growth slows |
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Hyderabad, May 16: Higher prices of manufactured products and fuel are responsible for inflation reaching the new peak of 7.81 per cent. Prices of manufactured products could be up because of increased raw material costs while in case of fuel, prices of products such as naphtha, aviation fuel among others. The price situation could worsen further as the Indian rupee has fallen about 6 per cent against the US dollar over the past fortnight.
About 30 per cent of the inflation basket is sensitive to imports and a dearer dollar would have an impact here. Meanwhile, there are also concerns that growth is slowing down. "We were surprised by the high inflation figures as we were expecting a figure closer to 7.5 per cent," says Ms Shubhada Rao, chief economist, Yes Bank. She expects the numbers to cross 8 per cent in the next two to three weeks. One of the factors that could play a role here is the fall of rupee against the dollar.
"The depreciation of the rupee against the dollar is a negative development as far as inflation is concerned. While we expect stability in the rupee by the end of May, we don’t think its likely to rise back to the level of Rs 40 against a dollar," says Mr Abheek Barua, chief economist, HDFC Bank. One reason why the rupee has weakened against the greenback is the bunching up of repayment of external commercial borrowings of several large firms. The falling rupee has created another hazard, points out Mr Barua. The currency risk will also be factored in by foreign money before entering India and that could affect capital inflows.
Another adverse factor over the next few weeks will be the adverse base affect, says broking house Edelweiss. Inflation had fallen sharply after mid-April FY08, so the current price levels would seem even higher in comparison. Apart from inflation, growth could also become a concern. The index of ind-ustrial production, which had increased 14.4 per cent in March ’07, rose at a disappointing 3 per cent for March ’08.
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Crude nears record $128 |
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London/New Delhi, May 16: The price of oil rocketed to a record high of $127.82 per barrel on Friday, as the US President, Mr George W. Bush, prepared to urge Saudi Arabia to pump more crude, analysts said. Meanwhile in India, faced with a Rs 2 lakh crore revenue loss on fuel sales this fiscal, the state-run oil firms have decided not to issue new domestic LPG connections and fix quota for the existing customers.
Marketing directors of Indian Oil, Hindustan Pet-roleum and Bharat Petroleum issued a joint petition to the petroleum ministry on Thursday. The petition suggested cost cutting measures as their losses on sale of petrol, diesel, LPG and PDS kerosene mounted to over Rs 550 crore a day, a top official said. Government’s bar on oil firms to raise fuel prices despite cost of crude oil soaring high, is likely to see the three firms end the current year with a revenue loss of Rs 2 lakh crore. Last year, the revenue loss was Rs 77,304 crore.
Friday’s record run for New York’s light sweet crude beat the previous best of $126.98, which was set on Tuesday. After hitting $127.98, New York’s main oil futures contract, light sweet crude for June delivery, stood at $127.43, up $3.31 from Thursday’s close.
London’s Brent crude contract for June spiked to $126.34 on Friday, beating the record of $125.90 reached on May 9. It later stood at $126.07, up $3.44. Mr Bush arrived in Saudi Arabia from Israel on Friday for talks with the world’s biggest crude exporter on record oil prices that have hit Western consumers hard.
Mr Bush aides have said that, at more than $125 a barrel, oil prices were set to top the agenda of his talks with the Saudi officials. "The global oil market remains indeed structurally tight," said Mr Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
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Icahn’s fight puts MS in driver’s seat |
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Seattle, May 16: Two weeks after Microsoft Corp abandoned its pursuit of Yahoo Inc, a proxy fight launched by activist investor Mr Carl Icahn has put Microsoft in the driver’s seat. Mr Icahn wants Yahoo to reopen talks with Microsoft, saying the company’s board had acted "irrationally" when it rejected Microsoft’s $47.5 billion buyout offer.
"With Yahoo being pushed by shareholders to get back to the table, you would think it’s just what Microsoft wanted," said Mr Marc Weingarten, an attorney with Schulte Roth & Zabel. For its part, Microsoft has declined to comment on Mr Icahn’s actions. A company spokesman repeated the same message that its executives have said over the last two weeks: it had moved on.
Still, Mr Icahn has opened the door for Microsoft to swoop in as white knight and buy Yahoo in a friendly deal without instigating the proxy battle it had threatened. "Microsoft can come directly back to the Yahoo board and save them from the proxy contest, save them from all the criticism that they are getting," said Mr Weingarten. Microsoft’s motivation for buying Yahoo — to create an online advertising powerhouse to rival Google Inc — remains intact. The alternatives of a build-from-within strategy and a piece-by-piece acquisition strategy could bring significant risk.
"The whole strategy for Microsoft, in an M&A sense, was to say ‘fine, we take our bat and ball and go home.’ You don’t want to say that and then be seen popping out of the house and looking down the block for your former playmates," said Mr Marshall Sonenshine, chairman of New York-based investment bank Sonenshine Partners.
"If they have any intention of coming back, they shouldn’t say anything. If they don’t have any intention, then they have nothing to say," said Mr Sonenshine, who sees the deal getting done at a price slightly above $33 a share.
Mr Sonenshine said an eventual Microsoft-Yahoo deal may play out like News Corp’s acquisition of Dow Jones. The Bancroft family, which controlled Dow Jones, balked at News Corp’s $5.6 billion bid, but the 65 per cent premium proved too attractive for many family members to resist, especially after it eliminated the possibility of competing bids.
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OLPC and Microsoft join hands |
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The One Laptop per Child Project has decided to bring out Windows-powered laptops for kids from June.
Microsoft and OLPC were not in good terms earlier, but have now decided to bury the hatchet. OLPC founder and tech guru Mr Nicholas Negroponte, who has designed the XO laptop, said that bringing out a Windows edition would help the project expand in many ways. “When I talk to people and tell them we can run Windows, they are very impressed,” Mr Nicholas Negroponte said in an interview. “This gives it credibility.” Mr Negroponte added Certain countries such as Uruguay had insisted that the XO laptop be loaded with Windows.The green-and-white laptop, which can also be operated with a hand crank, is meant for kids of third world countries.
RIM plans for touch screen Though RIM’s Blackberry swears by its solid keypad, it will soon bring out a touch-screen handset too, reports say. It is the ‘ordinary’ QWERTY keypad of Blackberry that has made it more popular in corporate circles than Apple’s iconic iPhone whose touch-screen facility is still proving to be difficult for many people. Even as Apple is making efforts to popularise iPhone in corporate circles by developing new software, RIM is reportedly working on a touch-screen version. Several tech sites have reported that the handset named Blackberry Thunder would be released in the third quarter of this financial year. RIM still leads the smart phone sector in the United States, but Apple is now in second place.
100 movies in one CD
Holographic digital storage will enable people to store more than 100 movies in a single disk. The technology is now being developed General Electric and will be ready for use in four years. Under the holographic technology, data is stored in layers in the disk using split laser beams and not just on the
surface as is done now. A single CD would be able to carry around 1 terabyte of data, which is equivalent to around 110 film DVDs. This means that a person can get rid of all clutter by keeping all his films, emails, music and pictures in just one disk.
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RIM to solve BlackBerry’s row by June |
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New Delhi, May 16: Canada’s smartphone company Research-in-Motion (RIM) has assured the government that in a month it will come up with a solution that will enable the department of telecom to monitor the email and data traffic running through its Blackberry’s network. “RIM has assured DoT that within the stipulated time — one month — it will come up with a solution for the purpose of monitoring,” said telecom minister Mr A. Raja.
Mr Raja had earlier also given similar assurances for resolving Blackberry imbroglio. But the talks between the government and RIM have not produced any solution to the monitoring problem so far. Blackberry data traffic is at present not accessible by Indian security agencies. DoT has been demanding RIM to set up servers in India so that its traffic could be monitored by the security agencies, a demand RIM has not agreed so far. DoT is now looking at setting a deadline for RIM and service providers for installing the interception solution on the networks.
There are a little over one lakh Blackberry users in India, as per official estimates. However, industry puts it at four lakh users. Bharti Airtel, BPL, Vodafone Essar and Reliance Communications are the service providers on Blackberry smartphone. DoT has said that any cost involved in the installation of legal interception solutions to ensure national sovereignty and security will have to be borne by the service licencees.
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Vodafone acquires Danish company |
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London, May 16: Telecom major Vodafone on Friday said that it will acquire Denmark-based ZYB, which operates a social networking site focused on mobile phone users, for about 31.5 million euros. After acquisition, ZYB would be incorporated into Vodafone’s Internet Servi-ces Division, the company said in a regulatory filing.
ZYB operates a social ne-tworking and online management tool enabling cellphone users to share their handsets’ contact and calendar information online. Further, the buyout would help in enhancing the range of communications services offered by Vodafone. “This acquisition is consistent with our strategy of delivering products and services which meet our customers’ total communication needs,” Vodafone Group’s Internet Services Director, Mr Pieter Knook said.
Using a web portal as a link between the PC and the mobile device, ZYB provides an interactive way for people to nurture, contact and develop their relationships and builds links with those contacts’ wider networks. This is Web 2.0 in action, Mr Knook added.
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Sebi court: No cases, no judge |
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Mumbai, May 16: Almost three years after a special court was set up exclusively for speedy disposal of prosecution cases filed by the Securities Exchange Board of India, the courtroom based in Kurla’s metropolitian magistrate court is idle as there is no judge to hear the cases. Surprisingly, only one trial was conducted in that court during last three years. In July 2005, the state government had set up the special court to handle the trial of cases involving violation of Sebi Act. But till now the court has conducted only one trial, wherein the accused, a stockbroker was convicted for one year in October 2007.
“In January, 2008, the Bombay high court directed that certain cases from the special court should be transferred back to the magistrate’s court. Accordingly, around 130 cases were transferred and now only 10 cases are remaining,” said special public prosecutor, Mr Ashwin Modi, of the Sebi court. About 450 cases related to stock market irregularities are pending in various metropolitan magistrate courts across the city. “Since the last six months, around 10 cases are registered every month,” added Mr Modi. After the magistrate court frames charges in a case, it is transferred to the special court for conducting a trial.
“The complaint is first registered with Sebi, then Sebi appoints its investigating officer who files a charge sheet in the magistrate’s court and then the case is transferred to the special court,” said Mr Modi. “In some cases, prior to commencement of the trial, the accused moves an application for compounding of the trial (settlement). While in some cases, the accused have moved the Bombay high court stating that the court didn’t have jurisdiction to conduct the trial,” said Mr Modi.
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Jewellery body eyes overseas market |
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Chennai, May 16: With gem and jewellery exports touching $20 billion-mark, Gem and Jewellery Export Promotion Council is planning to accelerate export growth by promoting the ‘Brand India’ in the international market. “We have appointed an agency to promote made-in-India brand. This programme is the council’s initiative to promote Indian jewellery to the end users in markets like the United States, China, the Middle East, CIS, Russia and India,” said Mr Sanjay Kothari, chairman, GPEC.
The gems and jewellery council, he said, would focus on trend forecasting,and design and innovations. India has witnessed a growth of 22.27 per cent in gem and jewellery export at $20.90 billion for the 2007-2008 as against $17.10 billion in the previous year.
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Manipal gets Rs 1,435cr |
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New Delhi, May 16: Finance minister, Mr P. Chidambaram, has approv-ed 18 FDI proposals totalling Rs 1,820.24 crore, including Manipal Educational Group’s to induct foreign investment of Rs 1,435 crore in a holding company and US-based Freightcar to set up a joint venture for railcars. Manipal, a major financial and industrial group in south India, has got approval to induct foreign equity of Rs 1,435 crore in a holding company.
The finance minister approved these proposals on the recommendations of Foreign Investment Promotion Board (FIPB), which met on May 9, a finance ministry statement said. Freightcar America Inc has proposed to set up a joint venture with an investment of Rs 78 crore to undertake test marketing of aluminum railcars besides other activities.
However, the proposals of realty firm DLF and software giant Pepsi India was deferred by the FIPB, said the statement. DLF had sought approval to issue shares in lieu of pre-incorporation expenses, while Pepsi India wanted exemption from parting with its equity stake to Indian shareholders. Vodafone Essar also got approval to convert operating company into an operating cum holding company.
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US small regional airlines face cash crunch |
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New York, May 16: Cracks in the airline industry are widening, pushing smaller regional air carriers such as Mesa Air Group Inc to the brink of bankruptcy. Regional jet operators such as Mesa and ExpressJet Holdings Inc are being pressured by flight cutbacks from national airlines that reduce the number of passengers into outlying areas where regional carriers fly.
“Without the flights from the major carriers, the regional carriers don’t have a sufficient customer base to support their operations,” said Lorraine McGowen, a bankruptcy attorney at the Orrick law firm in New York. National airlines are re-evaluating the hub-and-spoke model they have used for decades as transfer points to get passengers to their destinations as they try to find ways to manage fuel, labour and other costs.
Last month, Mesa, which provides regional service for Delta Air Lines Inc, US Airways Group Inc and UAL Corp’s United Airlines, said that Delta planned early termination of its Delta Connection agreement with Mesa’s Freedom Airlines subsidiary. Mesa said it would contest Delta’s plan, which threatens to lop off about 20 per cent of Mesa’s passenger revenue.
Mesa is also running out of options to fund potentially crippling debt obligations, said Mr Roger King, an airlines analyst at credit research firm CreditSights. The company has two convertible notes coming due, one for $38 million in June and another for $100 million in February, and bondholders have an option to make the company repurchase those notes, Mr King said.
“The first one might not be the stake in the heart, but the second one would be,” said Mr King, adding that his analysis shows the company may have about $130 million in cash. Mesa, which has delayed filing its first quarter financial results with the SEC, has not publicly addressed the issue of bankruptcy protection, and its general counsel, Mr Brian Gillman, declined to comment on whether bankruptcy was a possibility.
The company said on Wednesday that its shareholders had approved a plan to issue as many shares as necessary to buy back all of its senior convertible bonds, due in 2023.
But based on its current stock price of 63 cents per share, whether it can reach that goal is questionable, analysts said. “Their options are very limited,” King said. “They might just want to declare bankruptcy now.” Mesa shares are down from $7.25 a year ago and Standard & Poor’s removed the company from its SmallCap 600 index in April, citing the company’s market value as $33 million.
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EU laws may hit Tata JLR |
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London, May 16: Tata Motors may be in for a shock. Under a new emissions regime to be introduced by the European Union, Land Rover and Jaguar are likely to face emission fines of up to £17,000 for each car off the assembly lines, according to a report.
The European Commission is drawing up plans to fine manufacturers unless they meet new targets for carbon dioxide emissions. However, businesses will be jud-ged by the average level of pollution created by the their cars. The EC is planning to force manufacturers to reduce carbon dioxide emissions to an average of 130 gm per km by 2012. Carmakers will be fined up to £68 for every gm/km over the limit from 2015.
Land Rover and Jaguar’s most fuel-efficient vehicle, the X-Type two-litre diesel, emits 149 gm/km, meaning this model would face a fine of £1,292 per vehicle. The Range Rover V8 emits 376 gm/km and would attract a fine of £16,728 per vehicle, says the Birmingham Post.
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Markets rise on IT, metals |
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Mumbai, May 16: It was a good week for the stock markets with the Nifty up 3.51 per cent and the Sensex 4.17 per cent. Even the broader markets fared well. This feel good factor percolated to the sectoral indices with the IT and metals index up 3.8 per cent and 8.3 per cent respectively for the week. The laggard was the oil and gas index which skid one per cent on galloping crude oil prices. The market on Friday even ignored the inflation figures for the second consecutive week. According to analysts the view was that the RBI was unlikely to ann-ounce any measures as there is still one tranche of 25 basis points to come into force on May 24. The RBI had ann-ounced a total hike of 75 basis points in the CRR. The Sensex closed up 81 points at 17,434 on Friday. The Nifty also closed up 42 points at 5,157.
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Karnik: To maintain lead, use rural talent |
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Hyderabad, May 16: To maintain its lead over competition, Indian IT industry will have to look for untapped sources of talent. "There are huge challenges ahead for the IT-BPO industry. We have a lead, but for how long? At some point, someone is going to catch up," ex-president, Nasscom, Mr Kiran Karnik, said.
The answer might lie in searching new reservoirs of talent, Mr Karnik says. "There is huge, untapped talent in the rural areas." He was speaking at the first national rural BPO conference organised by the Hyderabad-based Byrraju Foundation.
Byrraju’s rural BPO, GramIT, is into travel bills verification, lateral recruitment and travel booking. It is also working on a data management project for a UK-based publishing firm. "Our employees need some extra training for voice processing. In three to four months, they learn the basic language and computer skills," Mr Jacob Varghese, lead partner at Byrraju, says.
Satyam Computers, one of GramIT’s clients, is satisfied with the results. "We end up saving 42 per cent of costs when we get the work done through GramIT," says the company’s director of human resources, Mr A.S. Murthy. Byrraju Foundation is planning to open six additional GramIT centres by the end of the year. The cost of setting up a typical centre comes to Rs.50-60 lakh.
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