Management TimesDecember, 2013

Management Times 1

India’s Outstanding Management Journal

CONTENTS

In a development that has increased the risk of collapse of Bali talks, India in a strongly-worded message to the WTO members said the food security issue is “non-negotiable” for New Delhi.

Addressing the plenary session of the 9th Ministerial Conference of the WTO, Commerce and Industry Minister Anand Sharma said the Bali package must be substantive, and historical imbalances in trade rules must be corrected to ensure a rule-based, fair and equitable order.

“Agriculture sustains millions of subsistence farmers. Their interests must be secured. Food security is essential for over four billion people of the world. For India, food security is non-negotiable. Need of public stock-holding of foodgrains to ensure food security must be respected. Dated WTO rules need to be corrected,” he said.

The G-33, grouping of 46-member developing nations including India, China and Indonesia, has proposed to amend the WTO Agreement on Agriculture in order to procure foodgrains from poor farmers at minimum support price and sell to

poor people at cheap rates through public distribution system.

India’s Food Security Act entitles 82 crore people to 5 kg of foodgrains per person a month at Rs 1-3 per kg. The country needs 62 million tonnes foodgrains a year to implement the law.

“A trade agreement must be in harmony with our shared commitments of eliminating hunger and ensuring the right to food. These are an integral part of the Millennium Development Goals,” he added.

He said the due restraint provision in its current form cannot be accepted and it must remain in force till “we reach a negotiated permanent solution”.

The G-33 proposal on food security aimed at addressing the problems faced by developing countries due to outdated WTO rules which base agriculture subsidy calculation on external reference prices of 1986-88, even as global food prices have increased manifold during this period.

India is pinning hopes on wide support from the grouping of G-33 which includes China and Indonesia. However, given the political compulsions back home in an election year, sources said, India would prefer a “no deal to bad deal”, especially with regard to farmers.

On the trade facilitation agreement (TFA), Mr. Sharma has clearly said that although I n d i a h a s r e m a i n e d constructively engaged, “yet, a few contentious issues remain” and “we consider it premature to lend support to an inconclusive TFA“.

Further, he added that for over 12 years, WTO members have struggled to bring the complex negotiations of the Doha round to conclusion.

“ T h e c o n t i n u i n g stalemate has led to frustration and cynicism when this was the only round dedicated to development agenda,” he added.

India’s stand could be seen as a major blow to the Bali meeting as several WTO members are pitching for a positive outcome.

S p e a k i n g a t t h e occasion, Brazil Trade Minister Lu iz Alber to F igue i redo Machado too said that food security is an important element for developing countries.

“We had hoped for more...since agriculture is where we find maximum distortions. I must emphasise the central importance of agriculture,” Mr. Machado said.

On TFA, he said that for its implementation, LDCs should be given financial and technical assistance.Mexico also talked about the importance of food security.Mexico and Brazil are important members of the G33.

Chinese Trade Minister H u c h a n g G a o s a i d t h e multilateral system is facing challenges. “Confidence, commitment and changes are important for the deal,” he said.

E U T r a d e Commissioner Karl De Gucht said,”...faith of the entire WTO is a stake...we have come to far to fail.”

U S T r a d e Representative Michael Froman said the Bali deal is close and no country has received all its demands.

“US has negotiated hard but we have shown flexibility...this (the current text) is not we have expected...let us not sugarcoat the failure; if it happens, the loss will be felt by those who could least afford it. We can not take success for granted this time,” he said.

Food security non-negotiable: Anand Sharma

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Editor Writes

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Globe Trot

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New - Now

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Merry, Merrier

Food security non-negotiable: Anand Sharma

DoT invites application for 2G spectrum auction

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Kingfisher House: court allows

banks to go ahead

Nokia seeks Govt help for

clearances

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Management Times

EDITOR WRITES

India is an agricultural country with a vast proportion of its populace directly or indirectly dependent

on the occupation is no secret. What is relatively underplayed is, perhaps, the entire gamut of problems that

plague the farming sector today. Compared to 3.6 per cent in 2011-12, agricultural growth has slowed to 1.9 per

cent in 2012-13. Investment in the sector has also seen a steady decline since the decade of the 80s.Moreover,

almost 80 per cent of the public expenditure going to agriculture is in the form of input subsidies (fertilizers,

power and irrigation) with only 20 per cent being direct investments in agriculture. Tragic, continuing farmer

suicides point to the crisis faced by peasants torn by debts, crop failure, their inability to sell good harvest at a

reasonable price and insufficient access to credit. While these problems are not entirely unknown and there are

ideas afloat to tackle these, not many have been articulated in concrete terms to evolve an actionable agenda.

There is today a strong need for public sector investment to focus on building effective and efficient value chains

and linking farmers to market. There are other less obvious issues as well. For example, despite the realization

that women play a critical role in agricultural development, their participation in the decision making process is

zero or negligible. They primarily undertake the un-mechanized agricultural task which only adds to their

burden. Equality and land rights are a far cry for them yet, which in turn constrains farm output. About 40 per

cent of agricultural workers in India are women but their productivity is seriously constrained by their lack of

access to land, credit (for which land can serve as collateral), inputs, technical information, and so on. Without

land titles women are not even seen as farmers and seldom benefit from government schemes meant for

marginal farmers.

Management

TimesChief Editor

B.Indusekhar, MBA

Managing Editor

Dr. Pradeep Kumar, Ph.D

Administrative Office:

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B. Indusekhar, Editor.

Diesel demand drops for first time in a decade, says IOCFor the first time in more than a decade, diesel demand has declined this fiscal as monthly price hikes and increased

power generation clipped consumption, Indian Oil Corporation (IOC) Chairman R S Butola said on Thursday. Diesel, which is India’s most consumed fuel accounting for close to 45 per cent of the total petroleum product

demand, has seen sales growth of 6-8 per cent since 2003-04. But this year, it has fallen by 0.8 per cent over last year to 39.46 million tons.

“This year there has been 0.8-1 per cent de-growth,” he said at the Third World Energy Summit in New Delhi. The deceleration in diesel demand, he said, was due to better power production which saw lesser burning of the fuel in gensets.

But the bigger reason is the move to deregulate diesel rates through small monthly increases. “Small adjustments of 50 paise every month has brought some parity with cost,” he said.

Diesel rates have risen by a cumulative Rs 6.62 per since January, leading to drop in demand. Mr. Butola said petrol consumption had dropped when the fuel was deregulated in June 2010 but diesel continued to

see rise in consumption as it was heavily subsidised thereby discouraging people to use it optimally. Now, petrol is at par with its cost of production but the current selling price of diesel still is a Rs 9.99 a litre lower than

its cost. “We believe that market forces need to be allowed to have proper inter-play (on demand and consumption),” he said. While diesel sales dropped in first seven months of the fiscal year that began in April, petrol consumption has risen

by 10 per cent to 9.05 million tons. Overall, fuel demand during April-October was largely unchanged at 90.576 million tons when compared with 90.233 million tons of consumption in the same period last year.

Besides losing Rs 9.99 a litre on diesel, fuel retailers are currently losing Rs 36.20 per litre on kerosene sold through the public distribution system and Rs 542.50 per 14.2-kg cylinder of domestic cooking gas (LPG), according to IOC, the nation’s largest oil refining and marketing company.

Last fiscal, diesel sales had risen 6.68 per cent to 69.08 million tons. Diesel consumption in 2003-04 was 37.07 million tons and has risen to 69.08 million tons in 2012-13. It had recorded a 11.1 per cent growth in 2007-08.

Digital magazine store Magzter raises $10 mMagzter Inc., a New York-based online magazine store which has roots in Chennai, said it had picked up $10 million

in its second round of funding.This new round, which is led by a wholly-owned subsidiary of Singapore Press Holdings Ltd. (SPH) and its existing

investor Kalaari Capital, takes the total amount of funding raised to roughly $13 million.Magzter, which was co-founded by entrepreneurs Girish Ramdas and Vijaykumar Radhakrishnan in 2011, has more

than 16 million users, and offers a global catalogue of 3000 magazines. “This whole process has taken around three-to-four months. Much of the money will be used in global expansion

and hiring people for technology and sales,” said CEO Girish Ramdas.

Management Times 3

India’s trade deficit with China nears record $30 b

India’s trade deficit with China after 11 months of this year has reached a record $29.5 billion, exceeding last year’s annual figure, according to newly released trade data.

The numbers underline the sharp decline in once-burgeoning trade, which reached $74 billion in 2011 when China became India’s biggest trading partner.

The following year, a 20 per cent slump in India’s exports, largely on account of iron ore mining bans, coupled with the global slowdown, resulted in a 10 per cent decline as trade fell to $66.50 billion, even as both countries announced an ambitious $100 billion target for 2015.Doubts over achieving target

The latest figures have cast doubt on whether that target may be achieved. During the period under reference, even as China’s trade with the rest of Asia as well as with its major Western trading partners has picked up, trade with India has remained in a slump, suggesting that causes were more structural rather than a reflection of global trends.

After 11 months of this year, India’s exports to China reached only $14.87 billion out of total bilateral trade of $59.24 billion, according to data released this week by the China’s General Administration of Customs.

Trade between the two countries was down by 2.7 per cent year-on-year, even as China’s overall global trade rose 7.7 per cent. This was driven by an export sector that has continued to show signs of revival, growing 12.7 per cent and marking the second straight month of rising exports.

Among China’s biggest trading partners, trade with the U.S. was up by 7.6 per cent. China’s trade with Southeast Asian countries showed the biggest growth, growing 10.9 per cent.

Border trade up 23 per cent, still minuscule India’s border trade with China, while still at a minuscule $14 million, grew 23.3 per cent last year, local authorities in the Tibet Autonomous Region (TAR) were quoted as saying by the official Xinhua news agency this week.

Trade has grown more than 50 times since 2006, when the Nathu La pass, between Sikkim and the Shigatse prefecture in Tibet, was reopened. Most of the trade is made up of imports of Indian goods into Tibet, which reached $12 million last year. Authorities said the border market is open for only six months of the year — opening on May 1 and closing on November 30.

DoT invites application for 2G spectrum auction

Cutting down the proposed 60-day process to 42 days for sale of telecom airwaves, the Department of Telecom has issued the main document — Notice Inviting Application (NIA) — to start the spectrum auction from January 23.

“The award of Spectrum in 1800MHz and 900MHz band shall be conducted as a single process. A common notice has been issued only for the sake of convenience,” the NIA issued late Thursday night said.

The last date for submission of applications by interested companies is January 4. DoT will hold a pre-bid conference on December 20, and the last date for companies to seek clarifications on rules stated in the NIA is December 28, the NIA said.

As per the initial proposal, DoT had sought 60 days time to start auction from the date Cabinet decides on the spectrum base price, and the NIA was to be issued after 15 days of the decision.

DoT has, however, issued NIA within three days of Cabinet putting its stamp on the minimum price for two sets of 2G spectrum — 1800 Mhz band and 900 Mhz band.

Together, the 900 MHz and 1800 MHz band airwaves are valued at about Rs.48,685 crore. The government has provisioned garnering Rs.40,874.5 crore from spectrum revenue in the Budget. This includes upfront money from the auction and various fees levied on airwaves used for commercial mobile communications.

The successful bidder will have option to pay the final price of spectrum in instalments. Successful bidder in 1800 Mhz band will have the option to pay 33 per cent upfront, while for airwaves in 900 Mhz band, the upfront payment is 25 per cent.

There shall be a moratorium of two years for payment of the balance amount of one-time charges for the spectrum, which shall be recovered in ten equal annual instalments.

The successful bidder will have to pay the first instalment of the balance amount on the third anniversary of the first payment, and the subsequent instalment will have to be on the same date of each following year.

In case all spectrum gets sold and companies opt for deferred payment mode, then the government will be able to get about Rs.15,200 crore this fiscal from direct sale of airwaves. Minimum bid

New companies will have to bid for a minimum of 25 blocks of airwaves, each of 200 kilohertz frequencies, amounting to 5Mhz in 1800 Mhz band. Existing players will be required to bid a minimum of three blocks of airwaves in this band.

A company will be treated as new entrant in a service area where it does not hold spectrum. Airtel, Vodafone and Loop Mobile will also be considered as new entrant for making bids in 900 Mhz band.

All bidders interested in buying 900 Mhz band — which gives double coverage compared to signals

transmitted in 1800 Mhz band — will have to buy a minimum of 5 Mhz of airwaves.

A company (in both band categories) can hold up to 25 per cent of spectrum assigned to all companies in a service area, and up to 50 per cent of airwaves (allotted to all companies) in a particular band assigned in a service area, the NIA said.

Management Times 4

Kingfisher House: court allows banks to go ahead

In a setback to grounded Kingfisher Airlines Ltd (KAL), the Karnataka High Court, refused to interfere with the action initiated by the consortium of banks for taking possession of ‘Kingfisher House’, a prime property housing the airlines’ prominent offices in Mumbai. The property has a multi-floor structure with built-up area of around 17,074 sq. ft.

Justice Anand Byrareddy passed the order while rejecting KAL’s plea, challenging the application, filed by the SBICAP Trustee Company Ltd. on behalf of the consortium, before the Chief Metropolitan Magistrate, Esplanade, Mumbai, to take possession of the property. The application was filed invoking Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, to realise part of the debts due to the banks from KAL.

KAL had contended that the banks deemed to have relinquished all security interests on the assets, pledged by the company, after they [banks] filed a winding up petition before the High Court [which exercise jurisdiction as a Company Court as per the Companies Act, 1956, in the winding up petition] and, hence, banks cannot invoke the provisions of the SARFAESI Act to realise their outstanding dues.

Rejecting KAL’s contention, Justice Byrareddy said that Section 34 and 35 of the SARFAESI Act bar the Company Court from exercising its power when the banks invoke provisions under this Act for taking possession of the pledged assets.

Pointing out that the SARFAESI Act was enacted, after a series of study and recommendations made by various committees to enable the Indian banks and financial institutions to take possession of securities and sell them without the intervention of the courts for recovering loans without delay, the High Court said that any intervention by it while acting as a Company Court would ‘defeat the object of the Act’.

Hence, the Company Court cannot interfere in the action taken by the banks to take possession of the property in question, the Court said while making it clear that the company can only take recourse under the SARFAESI Act and not under the Companies Act.

Mr. Justice Byrareddy also ruled that the banks could chose to stand outside the winding up process, in seeking to enforce the secured interests, and simultaneously prefer a company petition also seeking winding up of the company in respect of the balance of the debt not covered by such security.

The Court upheld the contention of the banks that attachment of ‘Kingfisher House’ by the service tax authorities in July, 2012, and the income tax authorities in August, 2013, would not come in the way as this property was pledged with the banks much earlier.

While refusing to stay operation of this order to enable KAL to appeal against it, the Court, however, said that banks could take over the property as per law while also providing an opportunity to the company to withdraw from the property.

Court allows Nokia to sell assets

The Delhi High Court, allowed Nokia India’s plea for modification of its interim order, and permitted the company to sell its assets here to Microsoft International.

Modifying the interim order of September 26, a Division Bench of Justice Sanjiv Khanna and Justice Sanjeev Sachdeva said: “…we are inclined to modify our interim order dated September 26, 2013, in particular clause (1) and (3) thereof. We permit and a l low sa le of asse ts by Nokia India to Microsoft/Microsoft International subject to fulfilment of (certain conditions)…’’

In its interim order, the Court had asked Nokia India “not to surrender the lease hold rights or transfer the ownership rights in respect of any of the immovable asset or transfer the fixed asset to any third person.’’

It had further asked it “not to transfer, sell or alienate movable plant or machinery located in the immovable properties…’’

The Court had restrained the company from selling the assets on a plea by the Income Tax Department, which has accused it of defaulting on payment of tax amounting to about Rs.4,000 crore, minus interest and the penalty.

Nokia India is in the business of manufacture and sale of mobile phones. It has a factory in Chennai, employing about 8,000 persons. During 2005-12, it had a cumulative turnover of Rs.1.51 lakh crore, the Court order noted.

While modifying the interim order, the Court said that “Nokia India/Nokia Finland will deposit at least Rs.2,250 crore in an escrow account, details of which will be furnished to the respondents (Income Tax Department) within one month of the agreement with Microsoft/Microsoft International.

“The amount of deposit will go up or increase upon higher consideration being received from Microsoft/Microsoft International, as per the valuation report,’’ the Bench added.

“Nokia Finland will be bound by the statement that they shall be jointly liable and shall pay tax demand determined and payable with interest and penalty thereon…’’ the Bench said.

The Income Tax Department had in January conducted a survey at the Nokia’s Chennai’s office and noticed ‘significant defaults’.Thereafter, the Department reopened the assessment for 2006-07 and 2007-08.

The Department submitted before the Court that it was compelled to issue provisional attachment order in light of the fact that Nokia India had remitted Rs.3,500 crore as dividend to Nokia Finland.

“To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment.”

Ralph Waldo Emerson

Management Times 5

Nokia seeks Govt help for clearances

In the wake of the Delhi High Court order, Nokia said it would now start preparing for the planned transfer of the assets of the Chennai plant to Microsoft.

“Our current understanding is that this decision allows for the transfer of the assets. However, Nokia has been asked to meet a number of conditions in the ruling, and still needs to provide the authorities with additional documentation. Nokia expects these conditions to be in line with international treaties and practices,’’ a late evening release from Nokia said. “There are still a number of statutory clearances that remain before the assets can transfer,’’ it added.

Nevertheless, Nokia yet again urged the Central Government “to work with urgency to facilitate the other approvals needed for the transfer and secure employment for the tens of thousands of employees involved.’’ Nokia, in the meanwhile, expressed the optimism that the transaction with Microsoft would close in the first quarter of 2014.

Reserve Bank of India Governor Raghuram Rajan said the IIP and the CPI numbers were surprising, and the central bank would have to look at the details and then frame its policies.

“We are uncomfortable with the numbers,” Dr. Rajan said here at a press conference after the Board of Governor meeting.

Pointing out that he would not like to give quick reactions without going into “the details of what went into it,’’ the central bank chief said, “We will wait for the WPI numbers, which are expected next week, but certainly the CPI is higher than the market expectation.”

He, however, emphasised that no single piece of data would determine RBI’s policies, adding that while the IIP surprised on the downside, CPI surprised on the upside. Weaker growth

“Clearly, growth is weaker than we would like, and inflation is higher than what we would like. In a situation like this, we have to calibrate our policies and make trade-offs based on all available data,” he said.

However, growth of liquidity would would be maintained, he said.Dr. Rajan spoke at length on the need for financial inclusion, saying that this and the ease of investing in safe entities could help prevent Saradha-type scams. To a question on the new banking licences, he said these might be announced early next year.

“As for how many… this will be based on the recommendations of the committee, and what the RBI decides. It will be based on what we think is appropriate and who is meeting the norms, the RBI Governor said.

BASF Catalysts to expand Chennai unit

BASF Catalysts India Pvt. Ltd. is going in for an expansion of its mobile emissions catalysts production capacity here.

As part of the plan, it will construct a new 47,000-sq. metre facility. This will come up in Mahindra World City near here.

Also, the company is planning to shift the existing operational unit at Maraimalai Nagar near Chennai to the new site once it goes functional.

Construction work at the new site will commence this month. And, the facility is expected to go on stream in the first quarter of 2015.

Upon completion and consequent to consolidation of production activity, a total of nine manufacturing lines will be housed in the new operating site.

The facility will produce light-duty, heavy-duty and motorcycle emissions control catalysts to meet the growing market demand and customer technology needs. At full capacity, the site is expected to employ around 300 people.

A company spokesperson declined to divulge the financial details of the expansion plan.

“The pending expansion of Bharat Stage IV (Euro IV equivalent) emission control regulations in India combined with overall vehicle production growth will drive a significant increase in demand for our advanced emission control solutions,” said Anup Kothari, Vice-President, Mobile Emissions Catalysts, Asia-Pacific.Regional hub

“BASF is investing to more than double our manufacturing capacity in India to help customers meet these emerging needs.

“At the same time, this expansion project will allow us to establish Chennai as our regional production hub to serve the fast-growing motorcycle manufacturing markets in India and ASEAN,” he added.

Book on N. S. Bhat, doyen of industrial relations

A book has been brought out to commemorate the centenary birthday of late N. S. Bhat, the first Indian Executive Chairman of Binny (B&C Mills). The book, ‘A Titan Among Men’, gives a glimpse into the life and work of Bhat. He served as a desirable model in improving the employer-employee relations at both micro and macro levels. Bhat served on the boards of several well-known firms.

“A friend is someone who knows all about you and still loves you.”

Elbert Hubbard

“Your life is an occasion. Rise to it.”

Suzanne Weyn

Management Times 6

Globe TrotSebi did not use Sahara money for own expenses: Govt

Market regulator Securities and Exchange Board of India (Sebi) has not spent any amount towards its own expenses from Rs 5,120 crore of investors’ money received from Sahara Group, Parliament was informed .

In a written reply to Rajya Sabha, MoS for Finance Namo Narain Meena said “Sebi has not spent any amount out of the Rs 5,120 crore of investors’ money received from the Saharas towards its own expenses.”

He said this in a reply to a query by Samajwadi Party MP Naresh Agarwal.The case related to two Sahara Group firms —— Sahara Housing Investment Corporation Ltd (SHICL) and Sahara India Real Estate Corp Ltd (SIRECL) —— raising more than Rs. 24,000 from an estimated three crore investors through issuance of certain bonds between 2008-2009.

The Securities and Exchange Board of India (Sebi), however, charged them with having raised these funds through “various illegalities” and restrained them in November 2010 from mobilising further funds. Subsequently, Sebi ordered refund of money through an order passed in June 2011.

The matter later reached the Supreme Court, which passed an order on August 31, 2012 asking Sahara firms to deposit the money with Sebi for refund of investors’ money.

Sebi is believed to have incurred huge costs, including initial expenses of about Rs. 56 crore for putting in place storage, scanning and repayment systems, for the task of facilitating Rs. 24,000-crore refund to bondholders of two Sahara firms after verifying their credentials, for which Sahara has to clear the bills.

No large scale discrepancies in disclosures by companies: Meena

Market regulator SEBI has not found any ‘large-scale’ discrepancies in the mandatory financial and other corporate disclosures made by listed companies to the bourses, Parliament was informed.

In a written reply to Lok Sabha, MoS Finance Namo Narain Meena said, “SEBI has reported that they have not found any large-scale discrepancies in the mandatory financial and other corporate disclosures made by listed companies to the stock exchanges.”

The Securities and Exchange Board of India (SEBI), last month, had put in place mechanism to address possible violations of regulations for disclosing key details such as financial results and shareholding data among others.

According to norms, delay in compliance would lead to measures such as imposition of fines, transferring of transferring of shares to the restricted trade category, freezing of shares of the promoter and promoter group and

Isuzu joins SUV fray with MU-7Isuzu Motors, announced its entry into the

Indian UV (utility vehicle) market with the launch of its premium SUV (sport utility vehicle) MU-7 as the Japanese auto major is preparing for a long-term play in the Indian UV and LCV (light commercial vehicle) segments with manufacturing investments of Rs 3000 crore., announced its entry into the Indian UV (utility vehicle) market with the launch of its premium SUV (sport utility vehicle) MU-7 as the Japanese auto major is preparing for a long-term play in the Indian UV and LCV (light commercial vehicle) segments with manufacturing investments of Rs 3000 crore.

The diesel-driven MU-7, described as one of the longest SUVs available in India now, will be positioned against its Japanese rival Toyota’s Fortuner, the top selling model in Rs-15-25 lakh UV segment in the country, and Mahindra Rexton. The BS III-compliant MU-7 will carry a price tag of Rs 22 lakh (ex-showroom, Chennai). BSIV variant is priced at Rs 22.3 lakh. Isuzu Motors is also chalking out its LCV strategy for the Indian market, and is contemplating launching a pick-up truck in 3-tonne GVW (gross vehicle weight) category next year. “Isuzu brand is well-accepted brand in India as we used to supply our engines to Ambassador cars. In the next five years, our focus will be to accelerate our business and establish our brand in LCV and UV markets in India,” said Takashi Kikuchi, Managing Director, Isuzu Motors India.

The company will initially be assembling CKD (completely knocked down) kits of MU7 and the upcoming pick-up truck at Hindustan Motors’ Thiruvallur plant near Chennai till the commissioning of its upcoming Greenfield plant at Sri City, a special economic zone along the border of Andhra Pradesh and Tamil Nadu. This comes after a contract manufacturing agreement signed by HM and Isuzu in January this year. Isuzu targets annual sales of at least 5,000 units over the next two years.

Isuzu, a pioneer in diesel engine technology, has earmarked a total budget of Rs 3,000 crore for the upcoming manufacturing unit at Sri City for an annual capacity of 100,000-120,000 units. This plant is expected to be operational by 2015-16. It also charting out plans to source significant portion of components for its vehicles from local market as it aims for a 70 per cent local content during the launch of its plant.

On the marketing front, the company has already appointed eight dealerships in South, and intends to build a network of 60 dealerships before the launch of its own manufacturing unit.

You must be the change you wish to see in the world.

Gandhi

Management Times 7

OVL skips bids for oil and gas blocks in Sri Lanka

In a significant development, state-run Oil and Natural Gas Corporation Videsh Limited (OVL), after having evinced keen interest in bidding for hydrocarbon reserves in Mannar and Cauvery basins, has opted out of bidding for any of the 13 oil and gas blocks in Sri Lanka.

However, private sector energy major Cairn India has put in a bid for one block. Officials in OVL said it had decided against participation in this round of auctions in Sri Lanka as it did not find the prospects of these blocks very viable. The bids for 13 offshore exploration blocks offered in the Sri Lankan Licensing Round, only the second in its history, closed on November 29. Only three bids have been received at the close by Sri Lanka's Petroleum Resource Development Secretariat (PRDS) as major oil and gas giants excluding Cairn India stayed away, officials in the Petroleum Ministry said in New Delhi.

Reports said Cairn had bid for a block in Mannar basin while OVL skipped the round. Singapore-based Bonavista Energy Corp bid for two blocks in the Cauvery basin located offshore Jaffna in the North. OVL had expressed interest in three blocks M3, M5 and M6 in the Mannar basin but did not make an offer due to its assessment of poor prospects. Cairn bid for M5 block and Bonavista bid for Cauvery Blocks C2 and C3. PRDS had offered 13 blocks in the Cauvery and Mannar basins. Cairn already has a block in Mannar basin where it has made two gas discoveries. It had won the block in Sri Lanka's first licensing round in 2007 by defeating OVL and Niko Resources of Canada.

PRDS is the government agency responsible for overseeing all petroleum exploration and production-related activities in Sri Lanka. The Island nation does not currently produce oil or gas and spent $5 billion on imports in 2012. Besides the 13 shallow water blocks, Sri Lanka has also offered six ultra-deepwater blocks off the southeastern coast for a joint study with PRDS to establish their hydrocarbon potential.

Interestingly, OVL had approached the Ministry of External Affairs last month for permission to take part in the second round of bidding for oil and gas blocks in Sri Lanka. “We have approached the MEA for clearance as it has been instrumental in the past in working with the Sri Lankan authorities to ensure India is a part of the bidding process for the oil and gas blocks being offered by Colombo in the Cauvery and Mannar basins. It is important that OVL and other Indian oil companies take active interest in the hydrocarbon sector of Sri Lanka, keeping in mind the strategic importance and location of the island nation,’’ a Petroleum Ministry official had stated.

Iranian market keeps Indian tea exporters guessing

Indian tea exporters are cautiously optimistic about the opportunities that are likely to emerge in the Iranian tea market following the signing of the accord between the super-powers and Iran.

Tea exports to the sanctions-hit country have been rising in recent times after a sharp drop in 2010, post-sanctions. It started picking up after the Indian government created an alternative rupee-based settlement mechanism through which five Iranian banks were designated to open letters of credit and interact with city-based-UCO bank.High-value market

India had worked its way into this high-value market, increasing exports from 1.5 million kg in 2003 to 14.5 million kg in 2008. It collapsed to around 3 million kg in 2010 in the wake of U.S. sanctions and consequential payment problems.

Referring to the gains that Indian tea exports made in the market through the financial pathway enabled by UCO Bank, Monojit Dasgupta, Secretary General of the Indian Tea Association, said : “Latest statistics show that between January and July, 2013, India exported 10.8 million kg of tea to Iran valued at Rs. 252.3 crore. This compares with the exports of 3.5 million kg of tea valued at Rs. 64.7 crore exported a year ago.

Among the major Indian tea exporters are: McLeod Russel Ltd., Goodricke, M K Shah Exports, Rossel Tea, Warren Tea and Andrew Yule.

Indian exporters are somewhat circumspect that competition may now also move in as the deal may ease international trading with Iran.

Tea Board chief to return to Assam cadre

Tea Board Chairman M. G. V. K. Bhanu will return to his parent cadre ahead of his five-year term completion. He had assumed charge at the Tea Board in November 2011 on Central deputation.

Confirming the development, Mr. Bhanu that he was returning to his parent cadre in Assam. “It is a wonderful experience here, but I am returning to Assam as my services are required there,’’ he said While he said that no date had been fixed, he is slated to address the annual general meeting of the Indian Tea Association, and that might be his last major official assignment.

“It is good to love many things, for therein lies the true strength, and whosoever loves much performs much, and can accomplish much, and what is done in love is well done.”

Vincent van Gogh

“If you tell the truth, you don't have to remember anything.” Mark Twain

Management Times 8

CCI slaps Rs.1,773 cr penalty on CIL

Fai r t r ade watchdog Compet i t ion Commission of India (CCI) has slapped a fine of Rs.1,773.05 crore on Coal India Ltd. (CIL) for allegedly abusing its dominant position in the supply of the dry fuel — its first major penalty on a state-owned company.

The CCI has found that CIL is operating independently of market forces and enjoys an undisputed dominance in the market for production and supply of non-coking coal.

The penalty was imposed by the CCI through an order dated December 9, an official release said on Tuesday.

The ruling has come on complaints filed by the Maharashtra State Power Generation Company and the Gujarat State Electricity Corporation against Coal India and its three subsidiaries — Mahanadi Coalfields, Western Coalfields, South Eastern Coalfields.

According to the release, CIL and its subsidiaries have been found to be “imposing unfair/discriminatory conditions in fuel supply agreements (FSAs) with the power producers for supply of non-coking coal.” Such conditions violate fair trade norms.

Apart from issuing a cease and desist order against Coal India and its subsidiaries, the CCI has directed modification of FSAs.

Besides, the regulator has asked the company to consult all the stakeholders for making the modifications in the FSAs. In recent times, CIL has drawn flak for fuel shortages that have been hurting power generation.

Soft rubber prices to aid tyre makers

Amid sluggish automobile market conditions, Indian tyre makers are expected to sustain good margins, supported by favourable rubber prices and robust replacement demand.

While orders from auto OEMs (original equipment manufacturers) are weak due to demand slowdown in the vehicle market, stronger replacement demand has helped tyre firms to grow revenues.

Industry analysts project a stable scenario on the rubber price front for the next few quarters. This would help companies sustain their margins. Rubber contributes about 50 per cent in volume terms and 55-60 per cent of the total raw material cost for tyre companies, depending on the product mix.

“Soft demand, coupled with good production and decent inventory levels, has led to rubber prices remaining under pressure. Going ahead, in the short-term, we believe rubber prices may recover from these low levels. However, in the medium-to-long term, rubber prices will remain favourable for tyre manufacturers,” said Nishant Vass and Venil Shah, analysts of ICICI Securities Ltd.

The performance of JK Tyres in the first half has beaten estimates on all counts on the back of favourable raw material prices and better capacity utilisation levels, while Apollo Tyres and MRF have benefited from lower rubber costs.“ Considering the estimated surplus of 134,000 tonnes in global natural rubber supply in 2013 as per a report by the Economist Intelligence Unit, we expect rubber prices to remain at lower levels which will help in stabilising MRF’s EBITDA (earnings before interest, tax, depreciation and amortisation)margin, said Nishant Sharma of Angel Broking.

For Apollo Tyres, the share of replacement segment in total sales has gone up to 77 per cent from about 70 per cent last year.

“Rubber prices have been volatile during the last two years and have been declining in the recent past due to slowdown in automobile production and import through duty-free channels that accounted for 50 per cent of the total during 2012-13 and rose by 208 per cent year-on-year till September in 2013-14 due to favourable international price, pointed out Mr. Sharma. Domestic rubber prices, after having peaked at about Rs.240 per kg in April 2011, declined to Rs.160-Rs.170 per kg during 2012-13 and to Rs.153 at present.

IndiGo launches 10 new flights

Budget carrier IndiGo airlines launched 10 new flights on its domestic network on Sunday. The country’s largest carrier will operate its fifth daily non-stop flight between Chennai and Hyderabad, fourth daily non-stop flight between Chennai and Kolkata, and daily non-stop flight from Hyderabad to Chennai, and Goa. 6E will also connect Chennai with Goa (via Hyderabad).

In a statement, the airline said it would also operate its ninth daily non-stop flight between Delhi and Bangalore and third daily non-stop flight between Delhi and Goa, starting December 22. The new flights will provide increased frequencies on the routes and offer greater travel options for its customers. With 459 flights connecting 36 destinations across the nation, the new flights will further consolidate IndiGo’s position as the fastest growing airline in the country. Aditya Ghosh, president and executive director, IndiGo, said having flown over 60 million passengers, the airline had got immense support and encouragement from all across the network.

“Why do they always teach us that it's easy and evil to do what we want and that we need discipline to restrain ourselves? It's the hardest thing in the world--to do what we want. And it takes the greatest kind of courage. I mean, what we really want.”

Ayn Rand

9

Management Times

IBM to contest tax demandU.S.-based technology major IBM is contesting

a claim of the Revenue Department, which has increased the company’s taxable income substantially to around Rs.11,000 crore.

“IBM does not agree with the Tax Department’s claims, and will aggressively defend itself through the appropriate judicial process,” a company spokesperson said.

The company, according to sources, has approached the Dispute Resolution Panel (DRP) against the order of the Assessing Officer, who had alleged under-stating of revenues by the U.S. technology group.

This is the latest in a series of tax disputes being faced by major mult-inational corporations in the country. Among the major MNCs, British telecom giant Vodafone, Finnish handset maker Nokia and major oil company Shell are locked in tax disputes with the Revenue Department.

In the case of IBM, the Assessing Officer is reported to have added back the sales reversal as income of the company, raising substantially the tax liability of the IBM.

The company has contested the claims of the Revenue Department and moved the arbitration panel. Sources further said that the company was contemplating to moving the High Court over the issue.

IBM has extensive operations in India, and is engaged in software development, outsourcing and research.

As for other firms, Vodafone is facing a tax liability of over Rs.11,200 crore, along with interest, on its 2007 acquisition of Hong Kong-based Hutchison Whampoa’s stake in India’s telecom major, Hutchison Essar.

Vodafone Group Plc’s Chief Executive Vittorio Colao, met Finance Minister P. Chidambaram, and was believed to have discussed the long-pending tax liability issue.

The Income Tax Department had slapped a notice on Nokia’s Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

Nokia may have to exclude its Chennai plant from the $7.2-billion deal with Microsoft if tax issues facing the India unit are not resolved by next week.

Haryana woos Chinese cos, offers vast tracts of land

Haryana has made available thousands of acres of land for purchase by Chinese companies, State government officials told potential investors, in an effort to court investment into newly planned industrial bases.

Haryana officials told that the China Development Bank (CDB) — the powerful State-run bank that is responsible for much of China’s outward investment — had recently visited one potential site — a sprawling 6,000-acre site in Gohana within which, they were told, land “was available for them to purchase” for developing industrial estates.

The Chinese officials were also shown a 3,664-acre site in Kharkoda, around 50 km away from New Delhi.

In a bid to court Chinese investment, a delegation of officials from Haryana is, this week, visiting Beijing and Shanghai.The officials made a presentation to potential investors. The ease of purchasing land was emphasised as one of the State’s biggest selling points.

The potential Chinese investors were told that they would be given a guarantee that land would be allotted in only 15 to 20 days if they made a certain minimum investment and presented a suitable project report. The deal, investors were told, could even be settled through just a telephone conversation, if the report was approved.

In prime ‘category A’ land, such as sites located close to Gurgaon and New Delhi, a minimum investment of 30 million yuan (Rs.30 crore) would secure an allotment. Land in category B locations, such as Panipat, would require a 20 million yuan (Rs.20 crore) fixed asset investment, according to the allotment policy.

Tarun Bajaj, Managing Director of the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), told investors that unlike in China, where the State controls ownership of industrial land, the titles “would be in your name”, and that they would be “free to sell the land without encumbrances”.

The State government, he said, had also earmarked around 300 to 500 acres to specifically develop a cluster of Chinese enterprises.

The China Development Bank team visited sites in Haryana and Uttar Pradesh, during a visit aimed at examining possible sites for Chinese industrial parks. The Chinese government is also thought to be considering locations in Gujarat, Maharashtra and Tamil Nadu for the parks.

Haryana officials discounted the proposition that their land policy might fuel speculative investments from Chinese companies, which would, legally, be free to sell land shortly after making their acquisitions.

S. S. Dhillon, Principal Secretary to the Chief Minister of Haryana, said the government could examine inserting conditionalities into the deals that would require a certain level of investment every year,

failing which the company would have to sell back land at the purchased price.

“The idea is to promote manufacturing activity, not to speculate on that”, he said.

Mr. Dhillon added that the government was also seeking Chinese investment in two railway corridors that had been proposed, a 150 km-route from Delhi to Gurgaon and Rajasthan, and a 90-km line linking Delhi, Panipat and other towns. So far, the government had only spoken with Japanese firms. “With the experience, the Chinese have in high speed rails, we are open to their participation,” he said.

Management Times 10

Plastics units seek TUF-like status

The demand for plastic products will more than double in 5-6 years with increasing order from various sectors such as agriculture, automobile, engineering, packaging, infrastructure and healthcare, according to the industry projection.

To cater to these demands, industry players were investing in technology and seeking investment, said top officials of the All India Plastics Manufacturers’ Association (AIPMA).

According to the association, India is now consuming about 8.10 million tonnes of polymers, and this would go up to 20 million tonnes in 5-6 years.

“The per capita consumption of plastic in India is 8.5 kg, whereas the world average is 25 kg. In the developed countries, the per capita consumption is 100 kg. Now that lot of emphasis is given on packaging, and demand is coming from several new sectors, the demand for plastic is to go up sharply, and we are getting ready for this,” said Raju Desai, Chairman of Plastivision India 2013, a trade show that the AIPMA is organising later this month.

“The plastics industry is one of the biggest contributors to GDP with the growth rate of 15 per cent annually. The industry has over 50,000 manufacturers, and employs of over 40 lakh workers. We appeal for Technology Upgradation Fund (TUF)-like status for the industry from the government. Besides, we need uninterrupted power supply and finances at attractive rates from banks,” said Anand Oza, President, AIPMA.

He further added that the AIPMA had also appealed to the government for special Plastic Parks across the country tohelp the industry flourish more. “The AIPMA envisages an additional investment of Rs.25,000 crore, including SMEs, which will help the industry in a big way. At present, Plastic Parks are taking shape in Haryana, Rajasthan, Gujarat, M.P., Karnataka and Kerala,” he added.

Bitcoin gains currency in IndiaThe stratospheric rise in the value of bitcoins,

the digital currency transacted on the Internet, over the last couple of weeks has sparked fresh interest across the country.

An online portal for buying and selling bitcoins, buysell.co.in, has reported a leap in the number of transactions for bitcoins in Indian rupees. “We used to do about 20 transactions a day. Now, we are doing more than 50. On Monday, about 70 transactions were recorded”, said Mahin Gupta, who operates the portal out of Ahmedabad, but has a regional office in Bangalore to cater to ‘bitcoiners’ from South India.

The large IT workforce in Bangalore is believed to be showing interest in the emergence of bitcoins as an alternative currency. “If we go by the PAN card details and the addresses of the banks, Bangalore appears to be showing a lot of interest followed by other South Indian cities like Hyderabad and Chennai”, he said.

Sathvik Vishwanath, who is a prominent organiser of a Meetup.com group on bitcoins in Bangalore, estimates the number of bitcoiners in Bangalore to be around 1,000. “We have about 350 active members in the group. If others, who are not part of the group are taken into account, we may have around 1,000 of them in the city. But, the numbers are growing”, he said.

Sunny Ray, who started the group in October 2012, when a bitcoin was valued at $10 , said that he was always confident that bitcoin is the “future money”.

“In about a month’s time during November this year, the value breached the $1,000 mark when everybody started looking up to the digital currency”, Mr Gupta said, but cautioned that there was a lot of volatility in the bitcoin market when it dropped to $990 dollars. The bitcoin, which was trading at around Rs 67,000 (a little over $1000) on Monday, was trading at almost Rs 76,000 ($1200).

Meanwhile, capitalising on the growing interest in bitcoins among software professionals in Bangalore, Coinmonk Ventures, which is spreading awareness about bitcoins, is holding the first global conference on bitcoins in Bangalore on December 14 and 15.

“The response has been very good even though we are charging $150 dollars for a day and $180 for pre- conference and conference day,” said Mr. Sathvik.

Another web-based service, called UnoCoin, where people buy and sell bitcoins, will be launched in two weeks by Coinmonk, which is pioneering the global conference on bitcoins.

Hershey to bring in ‘Jolly Rancher’ to India

The Hershey Company on Thursday said it will launch its popular sweet brand ‘Jolly Rancher’ sweet brand in India.

India is the first international market for the Jolly Rancher brand outside of North America in the brand’s 65-year history, the company said, adding the Indian confectionery market is one of the fastest-growing markets in the world with a strong double-digit annual compound growth rate of about 18 percent.

The New York Exchange-listed company is present in India through wholly-owned subsidiary Hershey India Private Ltd.

Atul Razdan, General Manager, Marketing, Sweets and Refreshments, for Hershey India said, “We’ve tailored our new Jolly Rancher products for India to appeal, specifically, to local palates with bold, fruity flavours that are unlike any other candy available in the market.”

“I ask not for any crownBut that which all may win;Nor try to conquer any worldExcept the one within.”

Louisa May Alcott

Merry, Merrier

Management Times 11

New-NowACME partners French co to set up solar projects

ACME Cleantech Solutions, an energy generation, management and conservation company, announced it joined hands with French renewable energy giant EDF Energies Nouvelles (EDF EN) to set up 200 MW solar power projects in India.

“EDF EN, the renewable energy arm of French state-run electricity utility Électricité de France S.A., and natural resources saving group EREN, will acquire 25 per cent each in ACME Solar to set up large scale solar projects in India,’’ an official statement by ACME Cleantech Solutions said here. ACME Solar will thus be a joint venture between ACME Cleantech, EDF EN and EREN. At present, ACME Cleantech has a 17.5 MW of solar generation capacity.

The company is developing a 25-MW project in Madhya Pradesh and another 25 MW in Odisha.

The joint venture plans to set up an initial portfolio of 200 MW of solar power projects in various phases.

“We believe EDF EN & EREN partnership will help us scale solar energy generation, and play an important role in the renewal sector,’’ Manoj Kumar Upadhyay, Chairman, ACME Cleantech said in the statement.

EDF EN CEO Antoine Cahuzac said the new partnership would establish themselves in the solar power market in a country with high level of demand for renewable energy.

Boeing boosts stock buyback plan by $10 billionThe Boeing Co. said that its Board of Directors approved a $10 billion increase in its stock buyback program. The aircraft maker will also raise its quarterly dividend payment by about 50 per cent.Chairman and CEO Jim McNerney said the moves reflect its operational performance, increasing cash flow and confidence in the future.The increase in the share buyback program is in addition to the $800 million remaining authority in Boeing’s current stock repurchase program. Boeing will resume buying back its own stock in January and it expects repurchases to be made over the next two to three years.The Chicago-based company said it has declared a quarterly dividend of 73 cents per share payable March 7, 2014, to shareholders of record February 14.Following the announcement, Boeing shares rose $1.78, or 1.8 per cent, to $136.50 in after-hours trading. They closed at $134.72 .

A man placed some flowers on the grave of his dearly departed mother and started back toward his car when his attention was diverted to another man kneeling at a grave. The man seemed to be praying with profound intensity and kept repeating, “Why did you have to die? Why did you have to die? Why did you have to die?” the first man approached his and said, “Sir, I don't wish to interfere with your private grief, but this demonstration of pain is more than I've ever seen before. For whom do you mourn so deeply? A child? A parent?” the mourner took a moment to collect himself, then replied, “My wife's first husband.”

A man sat down at a bar, looked into his shirt pocket, and ordered a double scotch. A few minutes later, the man again peeked into his pocket and ordered another double. This routine was followed for some time, until after looking into his pocket, he told the bartender that he's had enough. The bartender said, “I've got to ask you what's with the pocket business?” The man replied, “I have my lawyer's picture in there. When he starts to look honest, I've had enough.

A person receives a telegram informing him about his mother-in-law's death. It also enquires whether she should be buried or burnt. He replies, “Don't take chances. Burn the body and bury the ashes.”

After being away on business, Tim thought it would be nice to bring his wife a little gift. “How about some perfume?” he asked the cosmetics clerk. She showed him a bottle that cost $50.00. “That's a bit much,” said Tim. So she returned with a smaller bottle for $30.00. “That's still quite a bit,” Tim complained. Growing annoyed, the clerk brought out a tiny $15.00 bottle. “What I mean,” said Tim, “is I'd like to see something really cheap.” The clerk handed him a mirror.

A husband and wife were at a party chatting with some friends when the subject of marriage counselling came up. “Oh, we'll never need that. My husband and I have a great relationship,: the wife explained. “He was a communications major in college and I majored in theatre arts. He communicates real well and I just act like I'm listening.”

With the help of a fertility specialist, a 65 year old woman has a baby. All her relatives come to meet the newest member of their family. When they ask to see the baby, the 65 year old mother says, “Not yet.” A little later they ask to see the baby again. Again the mother says, “Not yet.” Finally they say, “When can we see the baby?” And the mother says, “When the baby cries.” So they ask, “Why do we wait until the baby cries?” “The new mother says, “I forgot where I put it.”

“Silently, one by one, in the infinite meadows of heaven,Blossomed the lovely stars, the forget-me-nots of the angels.”

Henry Wadsworth Longfellow

Management Times

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