ca newsletter 7th jan 11 to 13th jan 11

8/7/2019 CA Newsletter 7th Jan 11 to 13th Jan 11

1/11

11 Pages 7th

JANUARY 13th

JANUARY 2011 www.xedintellect.c

BUSINESS NEWS

ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4 BUSINESS NEWS 5-8

INTERNATIONAL NEWS 9 MISCELLANEOUS NEWS 10 GENERAL AWARENESS 11

NEWS DIGEST

IN BRIEF

PERSONALITIES OF THE WE

COMPILED BY

INDIAN IT INDUSTRY

BSE SENSEX 19,183

NSE NIFTY 5,752

RS/$ 45.13

ECONOMICINDICATORS

Vibrant Gujarat Global

Summit promises $450

billion investment

COVER STORY

INTERNATIONAL NEWS

Dollar is the

currency to own,

say analysts

MISCELLANEOUS NEWS

India to miss 2045

target of population

stabilization

XED NEWSLETTER a weekly news bul leti n

(as on 13.01.2iGATE BUYS PATNI


2/11

TOP 10 HEADLINES OF THE WEEK

1. Vibrant Gujarat Global Summit promises $450 bill ion investment in India.2. Indias higher education spend to hit Rs. 1.5 lakh crore in this decade.3. Price rise continues as food inflation hits 18.3%.4. Parle exits Aamir, ropes in local Ravi Kishan & Rituparna Sengupta as brand ambassadors.5. BMW beats Mercedes Benz, Audi to emerge as top luxury car-maker in India in 2010.6. Infosys losing margin edge, posts 30% margin compared to TCS 28%.7. IndiGo goes shopping, picks up 180 jets for $15.6 bn.8. Dollar is the currency to own, say analysts.

9. German GDP grows @ 3.6%, fastest in 2 decades.10. India to miss 2045 target of population stabilization.

ECONOMIC INDICATORS

THE GOLD RUSH

All the gold ever mined by the end of 2009 totaled 165,000 tonnes(1tonne=1000kg), valued at US$5.3 trillion. This can be representedby a cube with an edge of 20.2 metres (66 ft). Of this all centra

banks and investment funds of the world hold 30,560 tonnes (19%including RBIs 557 tonnes (0.34%)

According to the World Gold Council, annual mine production of goldover the last few years has been close to 2,500 tonnes. About 2,000tonnes goes into jewellery or industrial/dental use and around 500tonnes goes to retail investors and exchange traded gold funds.

In January 1980, gold hit a record high at $850 per ounce(1ounce= 28.35 grams). High inflation because of strong oilprices, Soviet intervention in Afghanistan and the impact of the

Iranian revolution prompted investors to hoard gold.In August 1999, gold fell to an all-time low at $251.70 onconcerns about central banks reducing gold bullion reserveswhile, at the same time mining companies were selling gold inforward markets to protect against falling prices.Gold has steadily increased in the last decade mainly due toinflation, exploding demand from investors, Central banks

becoming net buyers and demand from consumers in China.

Indians owns over 18,000 tonnes of above groundgold stocks worth approximately $800 billion &

representing at least 9% of global stock.

This is equivalent to nearly half an ounce of gold percapita, a figure which is significantly belowconsumption in Western markets, representing scopefor additional future growth.

In 2009, total Indian gold demand reached $19billion, or Rs 974 billion, which accounts for 15 pecent of the global gold market.

Stock Market Indices as on 13th Jan11 Values

BSE SENSEX 19,183

NSE (NIFTY) 5,752

Current Market Rates as on 13th Jan11 Values

Rupee / US Dollar 45.13

Rupee / Euro 59.10

Rupee / Pound 71.05

Gold (10 Gram) in Rs. 19,960


3/11

COVER STORY: IGATE BUYS PATNI

Whats The Big Deal: Phaneesh Murthys US listed iGate, backed by private equity firm ApaxPartners, will pay Rs 503.5 a share, 9% above its Market Price for a 63% stake in PatniComputers, valuing the deal at $921 million. It will buy an additional 20.6% stake through anopen offer to Patnis minority shareholders for $301 million. The stake is being sold by Patni'sthree founding brothers, who collectively own 45.6% & private equity firm General Atlantic, whichowns 17.4%. The deal values Patni at around 8 times EBITDA & at around 1.8 times revenue. Thevaluation appears rich for any mid-tier firm but compares poorly with the big IT companies likeInfosys, Cognizant & TCS which quote at 20 times EBITDA & between 5-8 times revenue.

Buying a Ferrari with a credit card: Despite a funding gap, the team was driven by the

knowledge that it was imperative for iGate to build scale. It is a tale of cancelled holidays

sleepless nights, anxiety & frustration, interspersed with moments of satisfaction & a keen

sense of a last chance at making history. iGates CFO Sujit Sircar & Director-Corporate

Strategy Salil Ravindran, along with CEO Phaneesh Murthy, worked to close the $1.22

billion (Rs5,527 crore) deal.

This dream of ours, of doing a big, hairy audacious deal started with Satyam, said Sircar. The company had looked a

as much as 20-30 companies over the last couple of years, he added. We thought this is the last chance. We had the

$140 million cash. We knew Patni could happen but there was a huge funding gap, it was like trying to buy a Ferrar

with a credit card. This is not one deal, there are two deals here, Apax investing in iGate, & iGate investing in Patni

Apax will bring in up to $480 million for the acquisition of Patni's majority stake, and iGate will raise debt of up to

$750 million from Jefferies & Company and RBC Capital Markets.

Small fish swallows a bigger one: Patni has more than 16,000 staff, 282 clients andrevenue of $689 million for the 12-month ended Sept 30, 2010. iGate, with 8,278 employeesand 82 customers, had $252 million in revenue at the end of the 12-month period on Sept,

2010. Nasdaq-listed IT services provider iGate Corp was hammered by US investors and itsshares fell 11% following its announcement to buy a company 2.5 times its own size. Thetakeover is seen by analysts as a David and Goliath scenario.

Phaneesh Murthy fought all odds and battled rivals to clinch the Patni deal. He is expected tobe the CEO of the combined entity. Phaneesh was the head, sales & marketing, InfosysIndustry observers said credit goes to Phaneesh for making Infosys visible in the US market.He had a rather unceremonious exit from Infosys following allegations of sexual harassmentby his former executive assistant, Reka Maximovitch.

Desperate to get into the big league, he was on the lookout for a big acquisition. He tried hardfor Satyam too, but failed. He now has the launch pad to prove that his success as global saleshead of Infosys Technologies where he took revenues from $2-million to $700-million in adecade was as much his effort as that of the storied founders of India's second largest ITservices firm. This deal typifies what close associates describe as his risk taking ability.

Wanted Economies of Scale: For long Patnis share traded at a steep discount of 30% to itslarger peers. That could change now. The combined entity will now be in the billion dollar league.With a stronger sales force and a scale comparable to its bigger rivals, revenues and valuationswill boost. While Patni has a strong presence in insurance, manufacturing and productengineering, iGate is well entrenched in financial services. In addition, the combined presence ofboth the companies in communications, media and entertainment will create a strong platform.The iGate-Patni combined entity will have close to 25,000 people and revenue of around $1billion, making it the 6th largest IT player in the country. Patni will also enable iGate to widen its

client base and reduce its dependence on a few clients. The two companies also enjoy synergiesin business verticals. While 60% of iGate's revenues come from banking and finance, 30% ofPatni's revenues come from insurance. By leveraging both strengths, the companies plan to build

a strong BFSI team.

Challenges Ahead: Merger and acquisitions could have pitfalls, too. While there is theacquisition-related risk of integration, the $750 million debt on the books could put somepressure on the margins. The interest burden will be significant given the size of the P&L. Patncould also see some growth challenges in the interim period as the management would focus itsattention on integration. Patnis already high attrition rate of 26% could scale to higher levels inthe near term. The US market too has been skeptical about the iGate-Patni integration. iGatesstock fell 11% in a single day. The big concern that hit the sentiment was iGate is too small tohave taken a big bite of Patni.


4/11

PERSONALITI ES OF THE WEEK

PRANAB MUKHERJEE - THE BEST FINANCE MINISTERSon of Kamada Kinkar Mukherjee a freedom fighter Mr. Pranab Mukherjee wasborn on 11th December, 1935 in a small village, Mirati in West Bengal. His fatherwas an active member of Indian National Congress also member of West BengalLegislative Council from 1952 to 1964. It was quite obvious that Pranab would joinactive politics following his fathers foot-steps. He began his career as a college-teacher and later as a journalist.

Political career: Pranab Mukherjees parliamentary career began as a RajyaSabha member from Congress Party in 1969. Thereafter, he was re-elected in1975, 1981, 1993, and 1999. His ministerial career began in 1973 as the DeputyMinister, Industrial Development. When he was the Finance Minister of India during1982 to 1984, Euro money Magazine rated him as the best Finance Minister of theworld.

He was victimized by Rajiv Gandhis coterie and was not included in his cabinetformed after Lok Sabha elections held following Indira Gandhi's assassination. Hewas pushed out of the Congress party for a brief period, during which he formedhis own political party Rashtriya Samajwadi Congress, but later merged it with the Congress in 1989 after settlementwith Rajiv. In 1997 he was voted as an Outstanding Parliamentarian.

Controversies: Pranab Mukherjee was a Minister in Indira Gandhi's Cabinet during the infamous Emergency and was

held by many to be personally responsible for some of the excesses. His role in making things difficult for TaslimaNasreen, so much so that she had to leave India was also criticized.

Foreign Minister: On 24 October 2006, he was appointed as the External Affairs Minister of India. AmongMukherjee's current legacy was the successful signing of the Indo-US civilian nuclear agreement with the USgovernment. He is also awarded the Padma Vibhushan, India's second highest civilian honor in 2007.

Finance Minister: In the second government of Manmohan Singh, Mr. Mukherjee, became the Finance Minister ofIndia. On July 6, 2009, he presented the government's annual budget and announced many tax reforms, such as thescrapping of the 'irritant' Fringe Benefit Tax, and the Commodities Transaction Tax.

NIRA RADIA: FACE OF MULTI-BILLION DOLLAR TELECOM SCAMShe can talk casually about a designer gown she hasn't found an occasion to wearwith industrialist Ratan Tata and chat up with the same ease with some of themost powerful people in politics, business and media to allegedly fix the telecomministry for A. Raja. Kenya-born and London-educated Nira Radia was perhapsdestined to fly high, but little did she know that she would be trapped by tell-taletapes one day and become the face of a multi-billion dollar scam.

Soaring High: Nira got married to UK businessman Janak Radia, a Gujarati. Themarriage did not click and the divorced Nira moved to India in mid-nineties. Shestarted off as Sahara liaison officer and soon became representative of SingaporeAirlines, KLM and UK Air for their India operations. It is during this time sheforged her powerful contacts in the civil aviation ministry, the government and themedia. She tried to float an airline, Crown Air, in 2000, but the plan did not take

off. In 2001, she set up Vaishnavi Communications, followed by Noesis, Victomand Neucom Consulting.

Nira's big-ticket break came when she bagged all 90 Tata group accounts in 2001. She is rumored to have such aninfluence over Ratan Tata that the top industrialist does not tolerate anyone speaking ill of her to his face. In 2009her ambitions soared further as she moved from corporate lobbying to fixing the lucrative telecom ministry, resultingin a scam that depleted the national exchequer by billions of rupees. Her overarching ambition perhaps became henemesis when a suspicious IT department taped her conversations at the time of cabinet formation last year in UPA-

II. Those tapes have now become part of the national conversation, showing how a small elite can subvert the systemwith impunity.

Bollywood too plans to cash on Niras sensational story. Soon a film titled "2G Radia-tion" will be screened withPoonam Jhawar, a small time actress playing Niras role.


5/11

BUSINESS NEWS

1. VIBRANT GUJARAT GLOBAL SUMMIT ET Jan 12Gujarat gets 20 lakh crIndustry captains endorsed Gujarat as the countrys investment destinationby proposing investments worth Rs. 20 lakh crore in the Vibrant GujaratGlobal Summit. Everybody from the Ambani brothers to Ratan Tata andKumar Mangalam Birla, showered praise on Gujarat chief minister NarendraModi, calling him the change agent of the decade. The world looks at India

and India looks at Gujarat, said ICICI Bank chairman Chanda Kochhar. The

last summit drew project plans worth 12.4 lakh crore. Several critics calledthese figures unrealistic and inflated, but state official said that 40% of thememoranda of understandings (MoUs) signed during the 2009 summit arebeing implemented and 60% projects inked in 2007 are off the ground.

2. India's higher education spend to hit Rs 1.5 lakh crores - ET Jan 07According to an Ernst & Young study on higher education sector, India currently spends Rs46,200 crore. The growth rate is projected at 12.8% and is expected to touch nearly Rs150,000 crore in the coming decade. Currently the Indian population to enroll into a highereducation course is more than that of Europe, USA, Australia combined. Even for the pre-school segment, market size may touch $1 billion by 2012, clocking a growth of over 3% year-on-year. As per estimates, education is the third largest expenditure group for an average

Indian household. Even corporates like Reliance, Future Group and Zee Group are looking toenter the education sector. As players, both private and public look to create a P&L model in

the education space, the need for creating a brand image has gained currency. One indicationof the investment being made in branding and marketing is the TAM data, where education hasemerged as the most advertised category in print and television for the year 2009-10.

3. Wikipedia, 10 years old, targets India for growth - ET Jan 13With China virtually cut off and Western markets maturing, Wikipedia is targeting India &Brazil to reach its goal of 1 billion users. Wikipedia which turns 10 years old, vows to reachthat goal in the next five years while maintaining its status as a non-profit organization,raising funds mostly through donations. Wikipedia claims 440 million unique visitors a month-- fifth most in the world -- making it the envy of many for-profit rivals in the Silicon Valley

who aspire to generate such numbers. This year it will open its first overseas office, in Indiawhere Wikipedia hopes to increase readership and articles in English and several Indianlanguages, she said. The company relies on some 100,000 regular contributors who work forfree and the general public to write and edit its articles in 270 languages. Although Wikipediaallows virtually anyone to add or alter entries without oversight, the journal Nature reported

in 2006 its accuracy was close to that of Encyclopedia Britannica.

4. Price rise continues as food inflation hits 18.3% - ET Jan 07Food inflation rose to 18.3% for the week ended December 25, its highest level in 23 weeks,even as key policymakers in charge of fighting price rise threw their hands up in despair. Theuntimely spurt in prices is being attributed to a supply shock, whose effect on retail prices isseen as disproportionate. Food inflation stood at 14.4% in the previous week. Curbingpersistent inflation has become a major policy challenge as food prices continue to soar in a

country that has a third of its population below poverty line. The governments efforts totackle food inflation, which has been in double digits since June 2009 except for a three-weekperiod in November, have not yielded much result so far. The Pakistan governments decisionto stop export of onions to India could lead to a further increase in prices. Economists say this increase is partly dueto inefficiencies of supply management, middlemen and hoarding.

5. Not just food, everything is pinching your pocket- TOI Jan 07

Whats destroying the household budget is not food prices alone; prices acrossthe board are rising. Oil, property, insurance rates, fridges, washing machines,air-conditioners, soaps, hair colour, insect repellents, air tickets, milkproducts, eating outyou name it, and its price is up. In the poorer strata osociety, many things are off the purchase list, and for many in the middleclass, planned purchases have been deferred. The government, worried abou

the political cost of this unchecked inflation, has tried several things fromimports to crackdown on hoarders, but it hasnt really worked so far. Now ithas asked states to remove all bottlenecks in the supply chain to help bringdown food prices. Will that work? No ones betting on it.


6/11

6. SBI wants cash for Vodafone guarantee- ET Jan 07Telco Told To Offer Liquid Collateral Worth 110% Of Total 8,500-Cr Surety

SBI has asked Vodafone for cash and cash equivalent against guarantee sought by the telcofor depositing with the Supreme Court in its case against the income-tax department. Thecountrys largest lender has also said that it is not in favour of a counter guarantee fromforeign banks as security. Vodafone has to offer liquid collateral worth 110% of the totalguarantee amount of 8,500 crore the largest ever provided by a single bank. Bank officialssaid that SBI would charge a commission of between 0.5% and 0.75%. After providingthe guarantee, SBI will assign it to other Indian banks a way of sharing risk. Thedepartment had made a claim of 11,200 crore as capital gains tax after Vodafone bought the

Indian operations of Hutch for $11 billion three years ago. The Bombay High Court had ruled in favour of the I-Tdepartment, following which Vodafone moved the Supreme Court which has directed Vodafone to provide a guaranteeto the government and deposit cash before hearing the case.

7. Sibal rips into CAG, calls its 2G report utterly erroneous- ET Jan 08Communications and IT minister Kapil Sibal on Friday launched a blistering attack onthe methodology used by the CAG to reach a figure of Rs 1.76 lakh crore as thepresumptive loss to the exchequer caused by A Rajas controversial award of 2Glicences. Sibal said this policy was akin to the grant of free land for infrastructureprojects, and supply of subsidized fertilizers, kerosene and foodgrains. The ministersaid the CAGs calculations were all wrong. Besides, CAG had benchmarked the 3Glicence auction amount to reach the figure of a notional loss suffered by theexchequer by the grant of 2G licences. This was again wrong as 3G was a value-added service, as against basic telephony provided by 2G. He further argued that the

growth of telecom sector was more important than revenue from the award of spectrum. Sibal however conceded thaprima facie, there was something wrong in the procedure adopted in the allocation of 2G spectrum, which is why theone man committee was set up to examine the procedures adopted since NTP 99.

8. Mumbai firms keen on hiring mothers: Survey - ET Jan 08Up to 62% of Mumbais companies said that, they were looking at hiring mothers who hadtaken time off for a baby but now wanted to return to work. The Mumbai response was higherthan those from Delhi (50%) and Bangalore (58%). National average is 56% and globalaverage is 36%. Globally, Asian countries topped in their demand for returning mothers, withJapanese firms being most willing (78%), India next and China third (44%). US & UK showedplunging commitment to returning mothers, with only 28% and 26% of firms willing to hire in2010. However, a huge negative for India was that the % of companies willing to give themothers a good appreciation (salary, etc) was the worst worldwide. While Japan topped, with54% of firms offering good appreciation, Indian firms were bottom of the pile with 11%. South

Africa and China were higher, with 17% and 28% of firms answering positively.

9. Malaysians NRIs ask India to terminate its business relations with Malaysia - TNN Jan 07The Malaysians of Indian origin might put India in a tight spot. The community hasasked the government of India to terminate all present and future businessprojects with Malaysia. The demand has come at a time when most NRIs arekeenly looking for business and investment opportunities between India andforeign countries. Malaysian newspapers claim that 95% people killed by theMalaysian police were ethnic Indians. Indians constitute 8% of the Malaysianpopulation. According to the HR Ministry of Malaysian government, 200,000 Indianyouth in Malaysia are involved in crime. The report says that this figure amountedto 60% of the Indian population in Malaysia. Chairman HINDRAF, Malaysia, hasasked the government of India to issue a note of censure against the Malaysiangovernment for its human rights record with respect to people of Indian origin.

10. Nippon Steel, Tata sign $480 mln India steel JV- Reuters Jan 07Nippon Steel Corp, the world's No.4 steelmaker, and Tata Steel Ltd said on Friday their $480million cold-rolled sheet steel joint venture will begin production in India by late 2013. The600,000-tonnes-a-year plant, which targets India's surging automotive sheet steel market,will be the first production base for a Japanese steel maker in India. "India's huge growthpotential is very attractive," Junji Uchida, Nippon Steel managing director, told a newsconference. "We also see a big advantage in linking up with Tata, which has high self-sufficiency rates in iron ore and coal, and a big cost advantage." India's growingmanufacturing sector is expected to become a base for exports to the Middle East, Africa andEurope, he said. India's car market of around 2.4 million units a year is growing 15-20 percent annually. Other leadingJapanese steelmakers have also forged technology tie-ups with players in India. The joint venture, will be 51 percentowned by Tata and 49 percent by Nippon Steel.


7/11

11. Indian apps-makers raking the moolah globally- ET Jan 09Apps, or mobile applications, have become an important criterion on which the buyerdecides which phone to buy or to recommend. Indian app-makers are proving theimettle. Take Sourcebits, for example. It took them just three months to develop an

app, commercializing it and earn a million bucks. Popular apps are usually listed in thetop 100 of the iPhone App Store and value around Rs 50 lakh in income, says RohitSingal, director, Sourcebits, which is being touted as one of the most successfuemerging companies in the space. What is even better is that this revenue comes fromapps priced at just $1-2, all within months. For the free ones, it might take around sixmonths, as the earnings comes mainly from advertisements in the app.

12. Parle ropes in Ravi Kishan and Rituparna Sengupta as brand ambassadors- ET Jan 10The country's top biscuit maker, Parle Products, is going regional with its marketing strategy. Themaker of Monaco, Parle-G and Hide & Seek biscuits have roped in regional actors Ravi Kishan andRituparna Sengupta for endorsing Monaco salty biscuits, with increasing focus on rural markets asthey can establish a huge connect with regional audiences. The company has decided not to have anational-level brand ambassador and did not renew its endorsement contract with Aamir Khanwhose fees was in the range of 10-12 crore per brand annually. Regional actresses can be roped infor as low as 30-50 lakh per year. In Sep10, Airtel released ads for rural audiences featuringRajpal Yadav, a popular star in the North, with the tagline - 'Airtel bajega toh tarraki bolegi'. Yetanother example is that of beverage maker Coca-Cola. despite having national star Akshay Kumarfor its Thums Up brand, Coke uses Telugu actor Mahesh Babu for endorsing the brand in the South.

13. Dollar is the currency to own , say analysts - ET Jan 11The world's most accurate foreign-exchange forecasters say the dollar will be the best currency toown this year as the Federal Reserve's bond purchases bolster the US economy. According to thedata compiled by Bloomberg News, the dollar will strengthen against the euro, yen and pound. NickBennenbroek , the head strategist at Wells Fargo in New York and the most accurate of the group,predicts about a 5% gain against the euro over the year and 11% versus the yen. He adds "We wilsee the economic recovery in the US outpacing that of Europe, Japan and even the UK, which

would see the dollar stronger against those currencies." The US economy will expand 2.6% thisyear. Growth in the euro region will rise 1.5%, with Japan at 1.3% and the UK at 2%, surveys

show. Manufacturing in the US expanded last month at the fastest pace in seven months, while retailers' 2010 holidaysales jumped 5.5% for the best performance since 2005, reports in the past two weeks showed.

14. BMW beats Mercedes Benz, Audi to emerge as top luxury car-maker in India in 2010- ET Jan 10Germany's BMW today said it maintained its lead over rivals Mercedes-Benz and

Audi to remain the top luxury car-maker in India in 2010, with sales of 6,246units. BMW India, which saw 73 per cent growth in sales during the year, enjoysover 40 per cent share of the luxury car market in the country, which is estimatedat around 15,000 units per annum. Rival Mercedes-Benz India, on the other hand,sold 5,819 cars registering a growth of 80% during the year, with key growthdrivers being its E-Class model (2,490 units), C-Class (2,070 units) and SUV range (523 units). The company saidthat the strategy is focused on offering a comprehensive product portfolio, besides aggressive product launches andenhanced network in smaller towns and cities. Another leading luxury car-maker, Audi India, sold 3,003 units in thecountry, translating into a growth of 81 per cent vis-a-vis the previous year.

15. Infosys losing margin edge as rivals catch up - ET Jan 12After years of commanding up to 15% better rates for outsourcing projects than domesticpeers, Infosys Technologies now sees its premium pricing erode. During the second quarteended September last year, TCS reported operating margins of 28%, quite close to Infosys

30% margins. In many ways, Infosys relationship with large customers such as BT andGoldman Sachs helped it build its premium positioning in the past. However, during the pas2-3 years, when customers, including BT, started looking beyond just a few vendors to

further squeeze costs, that positioning was threatened. The only problem is that whatever distance you create, ikeeps coming down, so you have to keep building that distance, Infosys COO, Shibulal said. Margins for companieslike TCS have improved by reducing manpower & overhead costs. On its part, Infosys is pushing harder to increase itsrevenues from newer areas that are not commoditised. Infosys plans to have a third of its total revenues coming fromnew services, including cloud computing and platform-based offerings, over the next few years, even as suchengagements mean lower profitability to begin with. In a cloud computing or platformbased model, Infosys can serve

multiple customers using same set of services developed for an existing customer such as Royal PhilipsElectronics. But rivals TCS and Wipro are already offering similar services to customers who are seeking to lower theicapital expenditure by adopting pay-as-you-go model.


8/11

16. Auto sales set to slow after record surge in 2010 - Reuters Jan 11Auto sales in India grew a record 31 percent in 2010, driven by a burgeoning middle classbut a likely hike in interest rates, and rising fuel and vehicles costs are expected to slowsales growth this year. China, sales rise by a third in 2010, and is also seen slowing in 2011

due to rising gas prices, the withdrawal of subsidies and new laws governing new carregistrations. While India's car market is growing apace with China's, it has a lot more roomto grow as Chinese car sales reached 13.8 million units in 2010, while Indian sales totaledjust 1.9 million units. Indian auto sales are expected to moderate in 2011, pegged at 12 to15 percent by Fitch Ratings which is more in line with the U.S. auto market, which is theworld's second-largest and grew 11 percent in 2010, snapping a four-year decline.

17. IT, BPO buyouts in hibernation ET Jan 13A Cautious Industry One Y ear into Recovery Yet To Take Bold Steps

The IT & BPO industry seemed to have clearly put the recessionary past behind, with goodfinancial results, operational improvements, and an overall sense of optimism. In 2010,M&A activity involving domestic IT and BPO entities went up by about 15% to 76 deals in

volume terms, but dropped by about 24% to $833 million in value terms. The $1-billionplus club contributed to 19% of the deal volume in 2008, 9% in 2009 and 7% in2010. But whats truly startling is that they contributed to 50% of the deal value in 2008,21% in 2009 and only 7% in 2010. Although companies are sitting on ever increasingcash reserves, they want market-leading capabilities, great growth, clear profitabilityspecific types of customers and contracts, a superb management that will stay on and

continue to deliver. However, things may change with iGate acquisition of Patni in January this year.

18. Rural growth story scripting new chapter ET Jan 12The rural India growth story is spreading with governments stimulating measuresand increasing reach of marketers helping laggards such as Karnataka & MPoutpace bigger markets like UP & Maharashtra in rural sales growth. Dabur India,for example, has rolled out special rural focused sales initiatives in many fast-

growing states. The company stepped up distribution reach in 71 high-potentialdistricts penetrating to villages with lower population strata. The company focusedon Haat activities and events like Kumbh Mela to woo rural customers and launcheda Daabur apnaao, Lakshmi lao promotional programme for sub-stockists in ruralareas. Emami group has launched Project Swadesh to increase rural penetrationby appointing several super stockists who cover a lot of rural areas in vehicles. Themove has helped the company cut costs and reduce dependency on wholesalers.

19. India, 3rd largest economy by 2050 ET Jan 12Country May Overtake Japan This Year, Says Pw C ReportChina and India will be the largest and third-largest economiesin the world by 2050, with US at number two, conclude twoinfluential reports from HSBC and PwC, respectively. HSBCfinds that 19 of the 30 largest economies will be todaysemerging nations, and the emerging world will increase fivetimes to be bigger than developed nations. Also, the goodnews is that the next decade will see higher growth globally, at3%, compared with 2% in the 2000s. PwC, however, findsalmost all of Europe dropping down the value chain including

UK to 10th position. Indias share of global GDP is expected torise to 13%, from 2%. HSBC warns the biggest danger is thatopen borders, that have delivered prosperity, will be closedand trade wars could lead to real wars.

20. IndiGo goes shopping, picks up 180 jets ET Jan 13Biggest Order: Budget Airline to Buy 150 Next-Gen A320NeosLow-cost airline IndiGo has ordered 180 Airbus A320s from at a valuation of $15.6 billion,indicating that the aviation industry is beginning to fly out of turbulence. The deliveries areexpected to begin from 2016 and continue till 2025. IndiGo currently has a fleet of 34 AirbusA320s. It flies to 24 destinations and has 221 daily flights. Air India, had earlier placed anorder for 111 Boeing and Airbus aircraft for $11 billion in 2005. The aviation market in Indiahas been growing at 15% and is poised to expand by 20% in the near future, surpassingbooming markets such as China and Brazil. Some aviation experts feel IndiGos order size isjust a smart move by the airline to bargain for a better price from the manufacturer, makequick money on the sale and lease back. IndiGo, Indias 3rd largest airline by market share posted a net profit of 550crore for financial year 2010 with a profit margin of 25% on revenues of 2,664.5 crore.


9/11

INTERNATIONAL NEWS

21. German GDP grow th fastest in 2 decades Bloomberg Jan 13Germany enjoyed its fastest economic expansion in twodecades last year as booming exports spurred hiring andconsumer spending. Gross domestic product jumped 3.6%the most since data for a reunified Germany began in1992, after slumping 4.7% in 2009. The Bundesbankexpects Europes largest economy to expand 2% this yearand 1.5% in 2012 as the sovereign debt crisis damps

demand in the euro area, its main export market. Domesticdemand was the main contributor to GDP growth, adding2.5 percentage points. Private consumption rose 0.5%state spending increased 2.2% and capital investmentjumped 5.5%. Bloomberg.

22. China remains worlds biggest car producer & market - PTI J an 12China, where gridlocks on highways and cities have become a major source of publicconcern, continues to be the worlds biggest car producer and market for the second year,as its auto sales hit 18.06 million last year, registering a 32.37% increase. The salesrecord last year was achieved because of Chinas stable economic growth and thecountrys accelerated industrialization and urbanization. China overtook the United Statesin 2009 for the first time to become the worlds largest auto market. But Chinese

apparently were in no mood to celebrate their high rating in car sales as Beijing and

Shanghai have already imposed heavy restrictions on buying cars as a measure to easerecurring gridlocks. About 215,425 people applied for car purchase licences in Beijing inJanuary alone, but only 20,000 will be issued through a monthly lottery.

23. Sarkozy takes G20 case to Obama as food prices soar Reuters Jan 9French President Nicolas Sarkozy takes his campaign for greater global food priceand currency stability to Washington next week when he seeks Barack Obamassupport for Frances goals as head of the Group of 20 powers. Soaring food pricesand riots in places like Algeria offer Sarkozy ammunition to press for morecoordination between G20 governments to combat wild swings in vital commodity

prices as well as exchange rates versus the long-dominant US dollar. SouthKorea, which has just handed the rotating presidency of the G20 to France, saidworking-level meetings had already begun on food price rises that have revivedfears of a repeat of the 2008 food crisis. The problem is moving up the politicaagenda in Asia, where China has recently sold corn, sugar, rice and othecommodities out of state reserves to cool prices.

24. Starbucks looks to expand the brand beyond coffee ET Jan 12Starbucks has unveiled a revamped global brand identity as part of a plan toexpand the brand beyond coffee. Worlds largest coffee chain sees the brandsfamiliar logo shift from being green and black to solely green. The outer circle ofthe logo that included the words Starbucks Coffee has been ditched, giving thesiren figure more prominence. Howard Schultz, the Starbucks chairman, president

and chief executive, said the company was at a very important point in its historyand was seeking a new blueprint for profitability. He said: Even though we havebeen and always will be a coffee company and retailer, its possible that well have other products with our name onit but no coffee in it.

25. Asian private equity players cash out in 2010 Reuters Jan 13Asias private equity industry has quickly turned into a sellers market, as firms cash out ofinvestments made on the back of the regions robust economic growth. And the trend isexpected to continue for as long as Asias stock markets remain steady and institutional demandholds up. As of late last year, private equity backed IPOs hit a record $28.9 billion, comparedwith $27.9 billion in new investments, according to Thomson Reuters data marking the firsttime in five years that buyout firm exits in the region exceeded acquisitions. PE firms typicallyraise money from institutional investors such as pension funds, and purchase controlling stakes

in companies by borrowing around two-thirds of the cash needed. After cutting costs andstreamlining, they sell the stakes a few years later, keeping 20% of the profit and handing therest back to investors. About 30% of all IPOs in Asia, excluding Japan last year had a privateequity firm behind them, according to Citigroup.


10/11

MISCELLANEOUS NEWS

26. India to miss 2045 population target - TNN Jan 12The government believes India will miss its target of reaching population stabilizationby 2045. The health ministry now considers 2060 a plausible target with a populationof 165 crore instead of in 2045 with 145 crore people. Population stabilization is astage when the size of the population remains unchanged. It is also called the stageof zero population growth. Only 14 states have achieved the goal of attainingreplacement levels of fertility of 2.1 by the end of 2010. In fact six states have

fertility levels of 3 to 4. The government will use accredited social health activists to

deliver contraceptives to the doorstep of villagers. They will go door to door invillages and sell them at 10% of the cost. He said villagers give up usingcontraceptives because they have to travel far to buy them. They are also shy to ask

chemists in towns for condoms or pills. Unless the rapid growth of population is contained, it will be difficult to ensurequality education, healthcare, food, housing, clean drinking water, sanitation, hygiene and healthy environment, hesaid.

27. Mumbai aces CAT with two perfect scores- TNN Jan 12Mumbai has produced the highest number of candidates scoring a perfect 100percentile in the Common Admission Test this year. About 1.86 lakh candidatestook CAT of which Mumbai threw up two of the eight toppers while Pune producedone. One student each from Delhi, Kolkata, Chennai, Indore and Bangalore also

bagged a cent percentile. This guarantees a call from the top IIMs.Many more students are likely to get into the 10 IIMs this year as they will select

nearly 2,500 candidates. But fees at most Indian Institutes of Management arelikely to rise. About 80 other management institutes in the country also admitstudents based on their CAT scores.

28. UK: Holding a job key to happiness, not salary- ET Jan 10

Holding a job is more important to people than how much they are paid, according to asurvey. The Office for National Statistics (ONS) analysed responses from more than 2,000people to David Cameron's initiative to measure the nation's wellbeing. The emergingresults showed that job security, personal health and relationships with family memberswere at the top of most people's concerns, and were cited by nine out of 10 of thoseresponding to the ONS consultation. Other key ingredients of a happy life were parentssense of security of their children's future, with couples keen that their children have agood life and a nice place to live; the freedom of society; and spiritual and religious beliefs,the Telegraph reports. Respondents were more likely to rate having a job as important to

them as being paid a high salary. "It is about every aspect - having the motivation to get up in the morning, selfesteem and being a role model to your children. Income is almost secondary to that."

29. Indians pay up 78% of medical expenses TOI Jan 13

Private Health Expenditure I s Much Higher Compared To Other Countries, Says StudyMost of the medical expenses incurred by an average Indian are paid from their ownpocket. According to an analysis published in the medical journal Lancet, private expenditureon health in India is close to 78% compared to 14% in the Maldives, 29% in Bhutan, 53% inSri Lanka, 31% in Thailand and 61% in China.Only Pakistan is worse off with private expenditure being as high as 82.5%. The paper,Financing health care for all: challenges and opportunities", says two features of the privateout-of-pocket expenditure in India are noteworthy. First, most of the expenditure (74%) wasincurred for outpatient treatment, and not for hospital care. Only 26% was for inpatient treatment. Secondly,purchasing drugs accounted for 72% of the private out-of-pocket expenditure.

According to Dr A K Shiva Kumar, one of the primary authors of the paper, nearly 39 million people in India arepushed to poverty because of ill health every year. Shockingly, 47% of hospital admissions in rural India and 31% inurban India were financed by loans and the sale of assets. Medical insurance too has a meager market share. Analysis

of the per person public spending on health has also thrown up bleak results. While the government spent just 19purchasing power parity (PPP) dollars on every person for health, the figure stood at 207 in Thailand, 122 in China, 88in Sri Lanka, 751 in Maldives and 60 in Bhutan.

30.Messi wins Fifa World player award TOI Jan 13Lionel Messis mesmerizing performances for Barcelona outweighed a disappointing WorldCup, ensuring the Argentina forward was named the worlds best player of 2010. Mess

won the FIFA award for a second straight year. Jose Mourinho won the mens coach awardfor leading Inter Milan to a treble including the Champions League.


11/11

THE IT INDUSTRY: PROGRAMMI NG INDIA FOR A HI TECH FUTURE

The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer,Burroughs, asked its India sales agent, TCS to export programmers for installing systemsoftware for a US client. When Rajiv Gandhi became PM in 1984, his New Computer Policyreduced import tariffs on hardware & software, recognized software exports as a de-licensedindustry, therefore eligible for bank finance and freed it from the license-permit raj.Permission was granted to foreign firms to set up wholly-owned, export-dedicated units. Heset up a chain of software parks that would offer infrastructure at below-market costs.

These policies laid the foundation for the development of a world-class IT industry in India.

Today the IT sector contributes 5% of Indias GDP of $1,488 Billion. Work done by ourSoftware industry includes system integration, software experiments, development,maintenance, Network, IT services and solutions. The countrys IT-BPO industry expandedby 12% during 2009. With an expected compounded annual growth rate of 15% in the next10 years, the Indian IT and ITES sector could touch $285-billion by 2020 from $71.6 billionin 2009.

Tata Consultancy Services Limited is the largest provider of information technologyand business process outsourcing services in Asia. It has offices in 42 countries with morethan 142 branches across the globe. Promoters hold 74%, while the rest is public. Itreported a PAT of Rs 7,000 cr on revenues of Rs 30,300 cr in 2009-10. 45% of its

revenues came from clients in banking, financial services and insurance. It began as theTata Computer Centre, whose main business was to provide computer services to Tata

group companies. JRD Tata was the first chairman.

In the early 1970s, TCS started exporting its services. The company pioneered the globadelivery model for IT services. In 1981, TCS set up India's first software R&D centre, theTata Research Development & Design Center. The first client-dedicated offshore

development center was set up for Compaq in 1985.TCS pioneered the factory model forY2K conversion. TCS is one of the largest private sector employers in India with core strength in excess of 1, 75,000employees. It now boasts of the lowest attrition rates in the Indian IT industry. But, in the recent past TCS has beencriticized by its employees in Public forums on its Appraisal and Promotion policies.

Infosys Technologies Limited, Bengaluru is a MNC IT Services Company. It is one ofIndia's largest IT companies, with nine development centers in India and over 30 officesworldwide. It was founded on 2nd July 1981 by seven entrepreneurs, N R NarayanaMurthy, Nandan Nilekani, Kris Gopalakrishnan, S. D. Shibulal, K Dinesh and N. S.

Raghavan. The founders started the company with an initial investment of Rs. 10,000.The company was incorporated as "Infosys Consultants Pvt Ltd." in Model Colony, Pune.The company went public in 1993. Interestingly, Infosys IPO was under subscribed but itwas bailed out by US investment banker Morgan Stanley, which picked up 13% of equity

at the offer price of Rs 95 per share. Promoters hold 16%, Government of India 3.84%while rest is public. For 2009-10 it earned profits of Rs 6,219 cr on a turnover of Rs.23,732 cr.Infosys is one of the first Indian companies to grant stock options (ESOPs) to itsemployees since 1993. It has the largest corporate university in the world, located on its Mysore campus. Infosys'sintranet, "Sparsh" connects its 114,822 employees across 26 countries in which Infosys operates.

Wipro Technologies is headquartered in Bengaluru and is the third largest IT servicescompany in India. Some of its customers are Nortel, Boeing, BP, Cisco, Ericsson, IBM,Microsoft, Prudential, Seagate, Sony, HP, Windriver, Airbus, Toshiba, Windstream

Communications, and Wal-Mart. It was the sole representative for Sun Microsystems in Indiabefore the Sun liaison office was set up in India, in the early 1990s.

Its PAT for 2009-10 was Rs 4,593 cr and revenues Rs 27,613 cr. It employs 1, 15,900 peopleworldwide as of September 2010. It has varying interests including IT, consumer carelighting, engineering and healthcare businesses. It is the 9th most valuable brand in IndiaAzim Premji is the Chairman of the board. Promoters hold 81%, while public share holding isonly 19%. It is the largest independent provider of R&D services in the world. Using"Extended Engineering" model for leveraging R&D, Wipro enables firms to introduce newproducts rapidly. Wipro BPO employs over 22,000, of whom 3,150 are at its Hyderabad

campus. The planned new recruitments will be from among science and commerce graduatesand under-graduates. The majority of Wipro BPOs business comes from the US, followed by Europe. The rest of theworld contributes only marginally to its top line. The company posted a turnover of $290 million in 2008.

ca newsletter 7th jan 11 to 13th jan 11

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