Monday, May 21, 2012

ASBM Business Updates Vol.1(16) 21 May 2012, Monday from Chanakya Central Library, Asian School of Business Management, Bhubaneswar.

 




ASBM Business Updates is a Selective Compilation of Business News from Various Sources. To find details follow the links.
ASIAN BUSINESS
The stock markets closed in the red on Monday on the back of disappointing inflation data and weak global cues amidst a volatile trading session.
Moody’s downgrade of three private banks ICICI, HDFC and Axis further dampened market sentiment.
The Nifty was down 0.43 per cent or 22 points to close at 4,908 while the Sensex fell 0.47 per cent or 78 points and closed at 16,216. Realty, banks and oil and gas sector stocks were the worst hit.
Head of Fundamental Research, Kotak Securities Mr. Dipen Shah said: “After opening higher, Indian indices slid fast into the negative territory as soon as the inflation numbers were announced. At 7.23 per cent, the rate of inflation was higher than expected. The RBI will have to take this higher number into account as it tries to support the growth rate through any future rate cuts. The only silver lining is that the core inflation has not risen at a fast pace.”
Despite the widespread view this is the Asian century, underscored by the imminent release of Ken Henry's white paper on the issue, Pratt is a critic of the big four banks' ability to leverage the economic change.
The National Australia Bank "really hasn't discovered Asia", he says, while the ANZ is the most advanced with its super-regional plan, but the payoff for shareholders will take longer than expected, potentially increasing the risk as management seeks profit momentum.
As for the Commonwealth Bank, its approach is more patient and possibly smarter, involving investment plays before starting to "get its hands dirty".
Westpac is seemingly tied to its home base, with a multi-brand approach. "I think for Westpac, a house of brands strategy in a market growing at 2-3 per cent where all you do is cannibalise the other brands in the group. . . I struggle to make strategic sense of it," Pratt says.

ASIAN MANAGEMENT
Asian shares slid on Friday, driving declines in other risk assets, as deepening euro zone political turmoil and weak economic data from China raised growth concerns, while a huge hedging loss from JPMorgan added to market jitters.
European shares will likely open lower, with financial spread betters predicting that major European markets
would open down as much as 0.9%. US stock futures were down 0.6%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell more than 1% to its lowest in nearly four months. At current levels, the index will see a weekly fall of more than 4%, the biggest weekly loss since late November.
Riley Paterson Investment Management Pte, which generated a 21 percent return in the global industry’s worst year, decided to shut its only hedge fund because assets are expected to decline to a 10th of its peak.
“Assets under management looked as though they were going to $30 million by June this year as we fell below institutional size,” Singapore-based Co-founder Daren Riley said in an e- mailed reply to Bloomberg today. “We feel it’s better to return the money to investors than being forced to cut resources employed below the high standard all our investors deserve.”
Riley Paterson Asian Opportunities Fund’s assets fell to $47.9 million by the end of March, after peaking at $335 million at the end of January 2010, according to data compiled by Bloomberg and confirmed by Riley. He added that it became difficult to raise money in a “bear market or if you have bearish views.”
ASIAN SCHOOL OF BUSINESS MANAGEMENT
SAGE India Journals News - May 2012
SAGE India now publishes 50 academic journals in the Social Sciences and related fields, seven of which are indexed in the Thomson Reuters Journal Citation Reports®. These and other titles are available online at your library!
They developed this newsletter to keep you updated with journals news and offers from SAGE and hope you find the information in this e-mailer useful.
If you have any comments, questions, or suggestions with regard to SAGE India Journals News, please feel free to contact via email or Social Media.

BANKING
When JPMorgan Chase revealed its $2 billion loss last week, it looked as though the big Wall Street banks were up to their old tricks, using their government-backed funds to make risky trades in a misguided effort to improve their profits.
But even banks that focus mainly on good, old-fashioned lending do their fair share of high-stakes trading.
While few other banks, if any, pursue the complex strategies that led to JPMorgan’s losses, many traditional lenders regularly buy and sell securities, and make bets with derivatives, as part of their core operations. Financial firms say such activities allow them to earn a basic return on the deposits they collect and to offset risks on their balance sheets.
European shares hit new four-month lows on Wednesday, with banks weighing on concerns about new, dilutive cash calls at Spanish banks and a political stalemate in crisis-struck Greece.
Spanish banks were among top fallers after financial sources said Spain would demand its banks raise around a further 35 billion euros in provisions against loans that are currently sound in their property portfolios, piling further pressure on banks as they battle to find extra capital. (ID:nL5E8G8H7H)
The move came as the Spanish government was rescuing troubled Bankia, down 6.7 percent on Wednesday, and devising plans for banks to siphon real estate assets into separate holding companies, in a bid to rebuild confidence in a sector where huge losses have raised fears the country may need an international bailout.

BUSINESS

Yahoo to sell back 20 pc of holding to Alibaba Group

Struggling Internet firm Yahoo Inc has said it will sell half of its stake in Alibaba Group back to the Chinese e-commerce company for USD 7.1 billion.
Yahoo, which bought 40 per cent stake in Alibaba Group in 2005 for about USD 1 billion, will sell 20 per cent of its holding to the Chinese firm.
In an agreement reached yesterday, Yahoo said they would receive USD 7.1 billion from Alibaba composed of at least USD 6.3 billion in cash and up to USD 800 million in newly-issued Alibaba preferred stock. As part of the deal, Yahoo would sell the remainder of its Alibaba stake in stages.
"The deal provides for a staged exit over time (to Yahoo), balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba," Yahoo said in a statement.

Business hub BKC will get bigger

Bandra-Kurla Complex (BKC) has rapidly turned into the central business hub of Mumbai, and BKC’s G Block has gained prominence as a key location within this unique micro-market.
The current vacancy level at Bandra-Kurla Complex stands at 16%. The two big game changers in the BKC micro-market will be the redevelopment of the Mhada government colony, and the development of the 18-acre Reliance plot, which will also release 2-3 million square feet of office supply into the market, apart from Reliance’s HQ.
Currently, BKC has a total stock of 8 million sqft of office space. According to a report published by Jones Lang LaSalle India (JLL), an additional supply of 2.5 million sqft is expected in 2012, with the completion of The Capital, FIFC and TCG Finance Centres.

BUSINESS MANAGEMENT
Business process outsourcing provider Covergys Corp reported first-quarter results that trumped Wall Street estimates and said Chief Operating Officer Andrea Ayers will become the CEO as Jeffrey Fox assumes the role of executive chairman.
The company also said CFO Earl Shanks, who has been with the company for the last eight years, will quit. Andre Valentine, who had earlier worked as a senior vice-president and controller, will replace Shanks. The management changes will be effective in the third and fourth quarters, the company said.
Convergys expects its customer management business, in which it handles billings and client service management, to generate revenue of $1.975 billion to $2 billion this year.
It had earlier said it expected the segment's revenue to exceed $1.96 billion.
JPMorgan Chase & Co's trading position that led to a $2-billion loss may call for increased Federal Reserve scrutiny of risk management as the central bank steps up its post-crisis supervision of lenders.
Fed officials are gathering more information about the trading position, which they have known about for several weeks, according to a person familiar with the matter. They don't view it as their role to approve or reject individual trades, the person said. Rather, their job is to ensure firms have enough capital to withstand losses, said the person, who wasn't authorized to discuss the matter and asked not to be identified.
JPMorgan Chief Executive Officer Jamie Dimon announced the "egregious" trading loss on May 10, saying there were "many errors, sloppiness and bad judgment."
Dimon said on a conference call with analysts that while the firm kept its regulators "up to date," he "didn't have great information" to share with them.

FINANCE

Finance ministry wants Central PSUs to go for listing

Unfazed by the current stock market volatility, the government has advised the central public sector enterprises (CPSEs) to go for listing in order to improve corporate governance and reduce their dependence on government finance for their capital requirement.

The financial advisers, who are the board of CPSEs, are requested to emphasise the benefits of listing and get them listed in compliance with the disinvestment policy, the finance ministry said its communications to CPSEs.

"Further, financial advisers advise the CPSEs that consequent to listing such companies would be better able to tap the capital market for capital expenditure requirements instead of depending on government finances," it said.

India pushes for higher Fitch ratings; cites good FDI inflows, fiscal ...

India made a strong case for higher ratings from global agency Fitch, citing good foreign direct investment inflow and commitment to keep fiscal deficit under control.
The finance ministry is keen to avoid a repeat of the embarrassing rating cut by the Standard & Poor's that lowered India's rating outlook to 'negative' from 'stable' because of poor fiscal health and deteriorating economic indicators. "We told them to look at the FDI inflows and market returns that India has to offer. We told them that India is committed to cap subsidy at 2%," said a finance ministry official after a meeting with Fitch representatives on Thursday. The US-based rating agency is likely to come out with its assessment within a month.
Riding on some big-ticket investments, India received highest annual FDI at nearly $50 billion in 2011-12 despite poor investment sentiment, but other capital flows remained muted.
The current account deficit is expected to have widened to 4% of GDP in the last financial year.
The policy inaction and the continuing slide of the Indian rupee amidst global volatility loomed large over the discussion between the government and the rating agency officials.

INDIA BUSINESS
The income-tax authorities will pursue all targeted cases that concern overseas transactions involving Indian assets, said a senior finance ministry official, making it clear the intent of retrospective tax was not merely to penalise Vodafone, and the exemptions announced by the finance minister earlier this week will not benefit most of the deals being investigated.

The controversy over the retrospective amendment to law that will allow the government to tax past overseas transactions involving
Indian assets has so far centred around the multi-billion dollar demand on the Vodafone-Hutchison transaction.

But the stage is now set for a showdown between tax authorities and other affected companies, which are exploring legal options to challenge the constitutional validity of the amendment.
German sportswear giant Adidas has petitioned the Indian law enforcement authorities to open a criminal investigation into alleged financial irregularities uncovered in its Indian arm Reebok India.

A "criminal complaint" was filed with the Indian law enforcement authorities in order to bring formal charges in connection with the "commercial irregularities uncovered at Reebok India", an Adidas spokesman told PTI.

An Adidas team is currently in India to assist in the investigations. Further details cannot be made public at this stage as investigations were continuing, the spokesman said.

Adidas claimed earlier this month that it had uncovered commercial irregularities to the tune of 125 million euros in its subsidiary Reebok India and announced plans to close one-third of around 900 Reebok stores as part of a restructuring strategy.

INDIA MANAGEMENT
Soon after the Delhi High Court on Wednesday declared that the Air India Pilot's strike is illegal, the Air India management acted and sacked 10 more pilots. Admonishing Air India pilots union Indian Pilots Guild, the court said that the strike should be halted until hearings in the case are completed and also said no pilots should call in sick.
Pilots represented by the union the Indian Pilots Guild called in sick on Monday. At least five domestic and two international flights were cancelled on Wednesday morning.
The court observed that Air India is a public utility services company and the Supreme Court through various orders has said that such a company cannot be held to ransom by using methods like strike of calling in sick.
Renault Nissan Automotive India Pvt Ltd (RNAIPL) is looking at localising its top India management in five to 10 years, according to a senior executive with the Franco-Japanese car manufacturing joint venture. The company is planning to manufacture around 0.25 million units of vehicles from its facility in Oragadam on the outskirts of this metro.
RNAIPL senior vice president Koji Takei said on Monday at a seminar that the city-based company was hiring 10 management people from the “local area”. The company’s policy mandates localisation of its top management within five to 10 years, he said. The event, with focus on the opportunities for business cooperation between Tamil Nadu and Japan’s Kanagawa Prefecture, was organised by the Confederation of Indian Industry along with Tamil Nadu Industrial Guidance and Export Promotion Bureau besides Japan External Trade Organisation.

INSURANCE
The Cabinet on Thursday deferred a decision on two important Bills — on insurance and a coal regulator — even as it cleared a Bill to make the Reserve Bank the regulator of all microfinance companies. The insurance Bill is one of the main pieces of legislation for financial sector reform.
The Cabinet postponed the Insurance Laws (Amendment) Bill, which had been diluted from an earlier version that proposed to raise the foreign direct investment (FDI) cap to 49 per cent from the existing 26 per cent in private insurance companies. The Bill was expected to retain the cap at 26 per cent as recommended by Parliament’s standing committee on finance.
The Cabinet referred the Coal Regulatory Authority Bill to a Group of Ministers (GoM).
Banking giant HSBC may exit its Indian insurance venture, becoming the second foreign company and the third from the financial services industry to give a thumbs down to the local market. "HSBC is evaluating possible ways to exit the business," said a person close to the business. A decision is expected soon, he added.
HSBC, which does not run any insurance company anywhere in the world, has a three-way joint venture in India - called Canara HSBC Oriental Bank of Commerce Life Insurance Company. Canara Bank and Oriental Bank of Commerce together own 74% in the JV with HSBC holding 26%. Indian insurance laws do not allow foreign companies to own more than 26% in local ventures. New York Life recently exited its life insurance JV with Max India, while mutual fund giant Fidelity sold its business to L&T. ING Life is also said to be weighing an exit.

INTERNATIONAL BUSINESS
South Korea's main airport operator is interested in buying London's Stansted from the British Airports Authority in a bid to expand overseas business, an official said on Monday.
State-owned Incheon International Airport Corp is "watching with interest" Stansted as well as Glasgow airport, the Incheon official told AFP on condition of anonymity.
"We also have an interest in other British airports to be put up for sale in the near future," he said, adding no specific plans had been made yet including how to finance a potential bid.
Britain's Competition Commission in 2009 ordered BAA, owned by Spanish conglomerate Ferrovial, to offload London's Gatwick and
Stansted airports as well as either Edinburgh or Glasgow to meet anti-competition requirements.
With its growth slowing down in the face of global economic downturn, China has decided to lower banks' reserve requirement ratio (RRR) by 0.5 percentage points starting May 18 to pump prime the economy.
The cut, the second of its kind this year, will bring down the RRR for the country's large financial institutions to 20 per cent and the medium and small-sized financial institutions to 16.5 per cent, the People's Bank of China announced today. China had previously lowered the RRR by 0.5 percentage points on February 24.
The bank's latest move came in the backdrop of newly released economic indicators showing that China's economy continued to slow in April, raising expectations that the government will resort to greater policy easing to help stimulate the GDP.

LOGISTICS
Jaguar Land Rover (JLR) will invest an additional one billion pound (over Rs 8,500 crore) in sourcing parts from the UK-based suppliers for its latest sports utility vehicle Range Rover Evoque over the next four years, the Tata Motors-owned British multinational automotive company said today.
Besides, 300 people will be hired at the logistics unit, which would be be managed by DHL, at JLR’s Halewood plant in the UK. “JLR has increased the value of UK supply contracts by one billion pounds, in addition to the £2-billion supply contracts it awarded to more than 40 UK suppliers in March 2011,” the 2008-founded company saidin a statement.
The additional investment will be over the next four years, it added.
These suppliers will provide components, facilities and services to support the Range Rover Evoque production at Halewood plant in Merseyside of North West England.
Japanese investors are looking at the food processing and logistics sectors for investments in the State, Shinya Fuji, director-general, Japan External Trade Organisation, and Masanori Nakano, Consul-General, have said.
Addressing reporters after a business meet here on Friday, they said that automotive components and supply chain management were two other major sectors in which they were keen on investing. India is already a major export base for Japanese entrepreneurs. This would be consolidated further, they said.
Inkel Managing Director T. Balakrishnan said that Kerala proposed to pitch its position as an investment base for specified Japanese investments. Mr. Balakrishnan, who is also the chairman and managing director of Kerala High Speed Rail Corporation, which is setting up the country's first high-speed rail corridor, said that this project, expected to cost Rs.1.5 lakh crore, had seen some Japanese connection with the Japan International Cooperation Agency being the prime lender.

MANAGEMENT
IT giant Infosys paid its top management personnel a total remuneration of USD 10.7 million (over Rs 50 crore) during the last fiscal, marking an increase of about 50 per cent from the previous year.
The remuneration paid to its key management personnel, which includes directors and executive council members, had remained almost unchanged at about USD 7 million for fiscals, 2009-10 and 2010-11, as per an annual regulatory filing by the US-listed Infosys with the US market regulator SEC. But it rose sharply in 2011-12 despite a fall in the individual pay packages of some top executives, including its Executive Co-Chairman S Gopalakrishnan, CEO S D Shibulal and Chief Financial Officer V Balakrishnan.
A total of 31 multi-national companies on Thursday expressed interest in supplying suitable technology to the Chennai Corporation for its massive solid waste management initiative that includes remediation and scientific closure of the Perungudi and Kodungaiyur dumpyards.
The Corporation Council on Thursday approved private participation in solid waste management of the city. Officials from Tamil Nadu Urban Infrastructure Financial Services Ltd will help the Chennai Corporation zero in on the right technology.
A few months ago, the Chennai Corporation intensified its search for sustainable world class technology in the wake of the National Green Tribunal setting aside the environmental clearance granted by the Tamil Nadu government to the integrated solid waste management facility at Perungudi.
The civic body will identify alternative regional landfills and commence work on remediation of the Perungudi and Kodungaiyur dumpyards where garbage is being dumped in an unscientific manner for over three decades.

MARKETING
Stem cell banking companies are looking at aggressive marketing initiatives to move into the mass market segment. Direct marketing to customers and reduction in price tag for storing umbilical cord blood are on the cards.
The umbilical cord blood and cord tissue are one of the richest sources of stem cells and have potential to treat over 75 serious ailments.
The average cost for storing these for a period of 21 years ranges between Rs 75,000 and Rs 90,000 in India.
According to Chennai-based Life Cell, high price points and lack of proper marketing have limited the penetration of cord blood banking in India. “Affordability is the key factor in India.
Only when the prices come down will we see more customers opting for the service. We are working on it (bringing down prices),” Mr Mayur Abhaya Srisrimal, Executive Director Life Cell, told Business Line.
India on Thursday pitched for higher ratings from global agency Fitch citing good inflow of foreign funds, high returns from the market and steps being taken by the government for fiscal consolidation.

"We pitched for a rating upgrade. We told them look at the FDI inflows, look at the returns in the market. We said we are committed to capping subsidy at 2 per cent," said a Finance Ministry official after a meeting with the representatives of Fitch in New Delhi.

Fitch had last rated India in 2010, giving India's foreign and local currency rating at 'BBB-/stable'.

Last year, the agency had affirmed the 'BBB-' rating for India indicating moderate degree of safety regarding timely servicing of financial obligations.

The representatives of the US-based credit rating agency would meet the officials of the Finance Ministry again on Friday and Fitch is likely to come out with its assessment within a month.

ODISHA BUSINESS
With ArcelorMittal making it clear that the company's investment in India may not materialise for another five years, Odisha government today said it would review the progress made by the steel maker regarding its proposed project in Keonjhar district.
"The state government will certainly want to know the reason for the delay in execution of the project by ArcelorMittal. We will raise the issue at the next review meeting with the company executives", state Steel and Mines Minister Raghunath Mohanty told reporters here.
"The company is yet to submit its detailed project report to the state government", he said while conceding that there was 'little bit of opposition' to the 12 mtpa greenfield steel mill in Keonjhar.
ArcelorMittal, which requires 8,000 acres at Patana tehsil, is yet to begin land acquisition and has not completed 'palli sabha' (village meeting) in the 15 villages demarcated for the proposed steel plant, he said.
ArcelorMittal, which signed an MoU with the state government on December 21, 2006, had proposed to invest Rs 40,000 crore in the project.
GMDC has put on hold its plans to set up indigenous coal-based thermal power plants with an estimated investment of Rs 20,000 crore to generate 4,000 MW.
Uncertainties over the coal blocks allocated to the state PSU appears to be a key reason for the decision.
Five years ago, the Ministry of Coal had allocated the Morga coal block in Chhattisgarh and the Naini block near Angul in Odisha to GMDC, which prompted it to put in place pit-head power generation plans.
But GMDC’s 2,000 MW power plans went awry when the Ministry of Environment and Forests declared Morga a “no-go” area on environmental concerns. In the Naini case, GMDC faced a new situation when Adani Power and Torrent Power, which were to jointly set up a power plant near this coal block as “end-users”, wanted the power plant shifted to Gujarat, in which case GMDC would be shipping the Naini coal to the western state.

RETAIL
The financial year ending March 2012 saw a visible trend of investors’ affinity for debt funds at a time when the equity markets remained weak and volatile.
Higher interest rates leading to risk-free guaranteed returns of as high as nine to 10 per cent attracted retail investors to other investment options offered by the fund industry. In 2011-12, pure retail folios in the debt category increased by half a million to 4.5 million as on March, compared with 3.9 million during the corresponding month last year. Even gilt funds, which primarily invest in government securities, saw a rise in the number of investors from 23,310 to 26,222 during the period. Last year, Subir Gokarn, the Reserve Bank’s deputy governor, had stressed there was a need for mutual funds, especially gilt funds, to promote retail holding in government securities.
While Mukesh Ambani’s Reliance Retail showed a jump of 25 per cent in consolidated revenue in 2011-12, some of his other major retailing units are still posting losses, according to parent company Reliance Industries Ltd (RIL)’s 2011-2012 annual report.
Reliance Retail, set up by RIL six years ago, runs 1,300 stores. It made Rs 7,599 crore in revenue in 2011-12, but didn’t disclose consolidated net profit. Reliance Fresh Ltd posted a loss of Rs 273.8 crore on a revenue of Rs 3,860.4 crore. Reliancedigital Retail posted a loss of Rs 55.1 crore on a revenue of Rs 1,234 crore. Reliance Brands, which has agreements with global brands such as Diesel, posted a loss of Rs 18.7 crore on a turnover of Rs 30.9 crore. Reliance Trends, which runs fashion stores, incurred a loss of Rs 11.35 crore on a turnover of Rs 489 crore. However, some of RIL’s speciality retail units have reached break-even or are nearing the point.

SUPPLY CHAIN
The crisis in its top India leadership team is ballooning into a major problem for Reebok India.
In what could bring the entire supply chain for Reebok India to a halt, accumulating payments due from the company to franchisees and a stop in the issuance of fresh stock is leading to high uncertainty about the future of the sportswear firm among channel partners.
Sources told Business Line that no fresh supply of apparel and footwear have been issued by parent Adidas Group since March 26. Meanwhile, payments running into crores of rupees are stuck in the spat between the company, distributors and franchisees.
To manage the crisis brewing at the ground level, newly appointed Group sales head for India, Mr Frederic Serrant, is meeting the 34 distributors across the country. His mandate will be to soothe the nerves of the essential distributor partners, while chalking out a plan to pay existing dues.
Jaguar Land Rover has given Britain’s car parts industry a £1 billion shot in the arm and will also push ahead with plans to create a further 300 jobs.
The Indian-owned carmaker is currently riding a high thanks to the success of its Range Rover Evoque model, which has enjoyed strong global demand.
Jaguar Land Rover (JLR) said the £1bn investment would come on top of supply contracts worth £2bn signed in March with UK suppliers.
The company – owned by Indian conglomerate Tata – is due to open a logistics operation this summer in Ellesmere Port, Cheshire, which will create 300 jobs.
Solid demand for new models from the Far East and North America has helped offset weak car markets in many eurozone nations.
______________________________________________________________________
Source of Information for this issue : Google alert accessed on 14th and 18th May & Google search accessed on 19th and 21st May 201­­­­­­­­­­­­­­­­­­­­2.
We welcome your suggestions in improving this information updating service.
Knowledge Is Power. Be Informed, Be Knowledgeable, Be Powerful.
Best wishes
Compilation
 Sabita Sahu, B.A., PGDCA, MLISc, 
Professional Library Trainee
Concept, Layout and Editing
Rajashekhar Devarai
Chief Librarian
Information and Documentation Division,  Chanakya Central Library
Asian School of Business Management
Shiksha Vihar Bhola,
Barang Khurda Road, Chandaka
Bhubaneswar-754012

Sabita Sahu : Professional Library Trainee and R.S.Devarai : Chief Librarian, Knowledge and Information Services Unit, Chanakya Central Library, Asian School of Business Management, Bhubaneswar. chieflibrarian@asbm.ac.in ; www.asbm.ac.in

No comments: