derrick 15th edition

8/7/2019 DERRICK 15TH EDITION

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Japan tries to avert nuclear meltdown; tsunamimay have killed 10,000

The world's third-largest economy isstruggling to respond to a disaster ofepic proportions, with more than 1million without water or power andwhole towns wiped off the map.Officials are working desperately tostop fuel rods in the damaged reactorsfrom overheating, which could in turnmelt the container that houses thecore, or even explode, releasingradioactive material into theatmosphere.

The government said a buildinghousing a second reactor at the same complex in Fukushima was at risk of explodingafter a blast blew the roof off the first the day before. The complex is 240 km (150miles) north of Tokyo.

Later it said it was pouring seawater into a third reactor to release a build-up ofpressure.

The International Atomic Energy Agency (IAEA) said the lowest state of emergencyhad been declared at a separate nuclear power plant north of the town of Sendai,which bore the brunt of the tsunami.

However, Japan's nuclear safety agency said there had been a rise in radiation at theOnagawa facility due to leakage from the Fukushima plant and there was no problemwith the cooling process there.

Fukushima's No. 1 reactor, where the roof was ripped off, is 40 years old and wasoriginally scheduled to go out of commission in February but had its operating licenceextended another 10 years.

But Kan said the crisis was not another Chernobyl, referring to the nuclear disaster of1986 in Soviet Ukraine.

Nevertheless, France recommended its citizens leave the Tokyo region, citing the riskof further earthquakes and uncertainty about the nuclear plants.

A collection of rareoughts is nothingss than a cabinet oftellectual gems .

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PAN TRAGEDY

ORPORATE watch

ONOMY watch

DUSTRY watch

CT OF WEEK

TERVIEW

ARGONOMICS

NTREPRENEUR

NSWERS TO BIZ WIZ-8


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THE DERRICK

CORPORATE WATCH

MARUTI AIMS TO PRODUCE 1 CR CARS IN 6-7 YEARSThe countrys largest carmaker Maruti Suzuki India on Sunday said it expects to achieve the feat of producing 1 crore vehicles for the second time in the next 6-7years with the opening of its two new plants at Manesar. The company is likely tocross the milestone of producing the first 1 crore vehicles since its inception,nearly 27 years since it first rolled out M800 from Gurgaon. The company hadannounced an investment of over Rs3,625 crore to set up two new plants with2.5 lakh annual capacities each inside the Manesar facility. The carmaker hadsaid it ramped up production by about 10% to over 1.1 lakh units every monthfrom October 2010, taking its total annual output to 14 lakh units for 2011-12.SMC has made Rs9,000 crore investment in new facilities during 2005-10. In

addition, the company is investing Rs2,500 crore for its K-series engine plant and setting up a dedicated R&Dfacility at Rohtak.

GOOGLE DOLES OUT $8.9 MN IN BONUSES TO TOP 4 EXECUTIVESAppreciating their good showing, Google has awarded bonuses worth $8.9 million for its four top executives.

Apart from the bonuses, these executives have also received equity awards worth $50 million. Bonuses havebeen given to chief business officer Nikesh Arora, chief financial officer Patrick Pichette, senior vice president(engineering & research) Alan Eustace, senior vice president (product management) Jonathan J. Rosenberg.Arora and Pichette, who are also senior vice presidents, have each received bonus of $2.7 million, Googlesaid in a recent regulatory filing.Equity award worth $20 million has been given to Arora, while that for Pichette

it was $15 million. As per the filing, Eustace received $1.8 million bonus as well as equity award of $10 million.Rosenberg got a bonus of $1.7 million apart from equity to the tune of $5 million.

KINGFISHER AIRLINES RECONFIGURES FLEET TO CARRY MORE SEATSKingfisher Airlines Ltd is reconfiguring its fleet to accommodate more seats even as the traditional lean travelseason gets over by the end of March. I ndias second largest airline by passenger carried also plans to f lymore international routes without adding planes to its fleet. The plan assumes significance as in a weak travelseason, carriers are under pressure with brent crude crossing $100 per barrel to hit the highest level sincemid-2008. Jet fuel, the single biggest expense for carriers, accounts for about 40% of their operating cost. The

airline will increase the frequencies on the existing international routes to increase the flight utilization rate.The reshuffle of aircraft layouts is applicable only to Kingfisher Airlines fleet, not Deccan Aviation Ltd.Kingfisher Airlines, owned by liquor baron Vijay Mallya, in 2007 bought Deccan Aviation.


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BHEL TO DECIDE ON FLOATING NBFC BY APRIL

Power equipment maker BHEL is likely to take a final decision on floating a non-banking finance company(NBFC) next month, with a view to cash in on the business potential of funding power projects and acquisitionsin overseas markets. Cash-rich Bharat Heavy Electricals Ltd (BHEL) is looking at creating a NBFC to mainlyfund projects in the power sector. BHEL had appointed financial services firm Crisil to advise the company onfloating a non-banking finance company. The state-run entity in a recent regulatory filing said that its board ofdirectors would meet on March 15 to consider the report of the consultant regarding formation of a non -banking finance company. BHEL is estimated to have a cash surplus of over Rs 9,000 crore. The order bookof the company stood at Rs 1,58,000 crore at the end of the third quarter of the current fiscal and the companyexpects to achieve robust growth in 2010- 11 and beyond, according to BHELs third quarter financialperformance statement. The company had reported a turnover of over Rs 34,000 crore in the 2009 10 fiscal,with a net profit of over Rs 4,310 crore. In the first nine months of this fiscal, BHELs net profit stood at Rs3,213.2 crore. The firm may go for a separate investment arm for funding power sector projects and the NBFCcan target opportunities in overseas markets. BHELs operations are organized under three business verticals power, industry and overseas business. The industry segment includes transmission, transportation and

renewable energy. It has installed equipment with a total generation capacity of over 1, 00,000 MW for utilitiesand captive and industrial users, according to the company Website.

MARUTI KIZASHI GETS 400 BOOKINGS IN FIRST MONTH

Maruti Suzuk i's entry into the luxury sedan segment, aptly named Kizashi' (omen' in English), may turn out tobe a good sign indicative of the small car major's future in the premium segment. Going by the first responsefrom car buyers, the sports sedan seems to have generated good demand in only a month of launch. TheKizashi has already recorded around 400 bookings and now carries a waiting period of up to three months.

Deliveries are to start on March 10. The Kizashi's early popularity contrasts with the Suzuki Grand Vitara, apetrol-powered sports utility vehicle (SUV) that hardly created a stir in the diesel-dominated UV market onsingle-digit monthly sales. Interestingly, both the sedan and the SUV share the same 2.4 litre petrol power plant. The New Delhi-based car market leader is now set to order the second shipment of around 350 units for theKizashi from parent Suzuki Motor Corporation, Japan. The sedan is manufactured in Sagara, Japan, andimported into India as a completely built unit. It has been disclosed that there has been no production constraint. Launched on February 2 with a price of Rs 16.5 lakh (manual) and Rs 17.5 lakh (automatic), the Kizashi is pittedagainst the petrol sedans in the A4 (Honda Civic, Toyota Corolla) and A5 (Honda Accord, Toyota Camry)segments in terms of both features and price. While the Honda Civic sells around 300 units a month, the Accorddoes sales of close to 200 units. According to industry experts, with luxury car sales growing on buyers gettingricher, Maruti's huge customer base and brand goodwill is likely to push its growth in the premium segment aswell. An added benefit is a huge servicing network, which will push sales in smaller towns where many have theresources but, hitherto, no access to luxury products. ONGC SHARE SALE DELAYED TO 2ND HALF OF 2011 The share sale, expected to raise up to $2.8 billion, was likely to be delayed to the first week of April from anearlier launch date of 15 March. A share sale in explorer Oil & Natural Gas Corp (ONGC) may be deferred to thesecond half of 2011 as the Indian state-run firm reconstitutes its board of directors to meet regulatory needs. Thegovernment plans to withdraw both its nominee directors and will set up a committee to select new candidates tothe board , as it seeks to raise the number of independent directors.ONGCs board provides for nine functional


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directors including two government nominees, and it currently has only four independent directors. TheSecurities and Exchange Board of India (Sebi) requires listed firms to have an equal number of functional andindependent directors. The share sale, expected to raise up to $2.8 billion, was likely to be delayed to the firstweek of April from an earlier launch date of 15 March. ONGCs share sale is part of a wider plan by thegovernment to sell stakes in about 60 state-run firms over the next few years to cut its fiscal deficit and garnerfunds for social welfare programmes.ONGC is not the only firm to have delayed its share sale. Steel Authority of

India and Indian Oil Corp have also deferred their share sales to the next fiscal year due to weak marketconditions.

ANIL AMBANIS VC ARM TO INVEST UP TO $150 MN IN FY12

Anil Ambani groups venture capital arm, Reliance Venture Asset Management (RVAM), has drawn up plans toinvest up to $150 million in around a dozen companies in FY12.The chief executive Harshal Shah stated that thecompany is looking to invest $100-150 million in 6- 12-deals next fiscal. Education, infrastructure ancillaries,healthcare, aerospace and defence are the sectors which the fund is bullish on. RVAM, which typically investsup to $15 million per company, is fully sponsored by the Anil Ambani group and currently has over 18investments in Indian and American start-ups.The firm is looking at innovative companies in the defence sector,

where private sector participation is set to increase, while the prospect of higher spends (up to $100 billion) inairport infrastructure is making it interested in aerospace. Considering the demographics, healthcare andeducation continue being very alluring in India. When asked if VC investing in India is losing out to investing inpublic equity, Shah replied in the negative saying only newer ventures have the power to create employmentand drive the economy. This is the ideal time for VC investing...we are passing through our own baby-boomerera.

AIR INDIAS POSSIBLE ENTRY INTO ST AR ALLIANCE WILL BOOST REVENUES

The carriers expected entry into the elite Star Alliance later this year will expand its global footprint and boost itsrevenues. Indias national carrier Air Indias expected entry into the elite Star Alliance later this year will expandits global footprint and boost its revenues, according to the airlines Frankfurt -based regional manager for centralEurope Ratan Bali. He further added the last major hurdle for Star Alliance membership was removed when AirIndia and the Indian Airlines completed the integration of their codes and began using a common code twoweeks ago. A common code for both the airlines was a condition for Air India to join the alliance. The airline alsostarted using a new reservation system in preparation of joining the alliance. Air India has recouped its revenuelosses from the closure of the European hub at the Frankfurt airport last year, by increasing the passengervolume and reducing its operational costs in Frankfurt. As part of its operational restructuring process, the airlinererouted four flights operating from Delhi to Chicago and from Mumbai to New York via Frankfurt airport as directflights on the India-US routes. It closed down its European hub in Frankfurt at the end of last year. Since then,the airline has been operating a daily non-stop flight between Delhi and Frankfurt Air India lost some passengersafter it took out four flights from the commercially important India-Germany route. But the loss of revenue wasrecovered by a higher utilization of the seat capacity in the economy class and by increasing the number of firstand executive class passengers on board the Boeing 777 200LR aircraft.


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THE DERRICK

ECONOMY WATCH

INDIA IS THE WORLDS LARGEST ARMS IMPORTER

The Swedish think tank Stockholm International Peace Reaearch Institute (SIPRI) has said that India is theworlds largest arms importer, according to data on international arms transfers that the think tank has collated.SIPRI published this in a report released on Monday. India received 9% of the volume of international armstransfers during 2006-10, with Russian deliveries accounting for 82% of Indian arms imports. The four largestimporters of conventional weapons in 2006 10 are located in Asia: India (9% of all imports), China (6%),South Korea (6%) and Pakistan (5%). These states have imported, and will continue to take delivery of, arange of major conventional weapons, in particular combat aircraft and naval systems. The USA remains theworlds large st exporter of military equipment, accounting for 30 % of global arms exports in 2006 10.

GROWTH-INFLATION DYNAMICS A WORRY, SAYS RBI GOVERNOR

Reserve Bank of India (RBI), widely expected to raise interest rates again next week, is struggling with its dualobjectives of containing inflation and promoting growth, its governor said on Thursday. The RBI has raised itskey lending rate, or repo rate, seven times by a total of 175 basis points since March 2010, and is expected toraise it by another quarter point on 17 March at its mid-quarter review. The central bank expects the economyto grow at 8.5%, with an upward bias, for the fiscal year that ends this month. For 2012, finance minister

Pranab Mukherjee said last week he expects the economy to grow at 9%, plus or minus 0.25%, in the nextfiscal year, which is above many private forecasts. High inflation has been the key driver for the central banksrecent policy moves. Food price index rose an annual 9.52% in the week to 26 Feb., slower than a 10.39%rise in the previous week as prices of vegetables, potatoes and rice declined, data showed on Thursday. Withcrude oil prices near a 2-1/2-year high, central banks across Asia are under pressure to act for fear that thesecosts will fuel broader inflationary pressures in the economy.

INDIAS BULGING GRAIN STOCKS RAISE EXPORTS HOPES

Indias bulging grain stocks prior to end -March harvest season make a strong case for lifting export curbs, butanalysts say it is unlikely due to political compulsions ahead of state elections in coming months. The sourcessaid they believe India, the worlds second -biggest rice and wheat producer, can now afford to allow grainsexports, banned since 2007. India is on course for its second-highest food grains harvest in 2010-11, includinga record 81.47 million tonnes wheat, which could help the government rein in food prices and allow overseassale of wheat and rice. High food prices pose a political challenge, drawing voter ire ahead of state elections incoming months that will help determine the strength of the ruling Congress party-led coalition for the rest of itsterm. State-run Food Corp of India, the main grain procurement agency, buys wheat from local farmersbetween March and May, while it procures rice throughout the year from October. The government buys riceand wheat from farmers to build reserves for emergency, run various welfare programmes and protect farmersfrom distress sale.


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KEY OFFICIALS TERMS ENDING, STAGE IS SET FOR SEBI TOP DECKRESHUFFLE

Indias capital market regulator may see a change at the top because the terms of five key officials come to anend by August. While the finance ministry has already begun hunting for two whole-time members at

Securities and Exchange Board of India (SEBI) to replace M.S. Sahoo and K.M. Abraham, terms of threeexecutive directors, too, are coming to an end in July and August. SEBI s new chief U.K. Sinha has indicatedreconstitution of some advisory committees under the regulator. With the terms of top officials ending in thenew fiscal, Sinha may get a new team to run the organization. Appointment of whole-time members of SEBIare done by the department of economic affairs under the ministry of finance. SEBI has three whole-timemembers and seven executive directors. All five officials whose terms are coming to an end in the new fiscalyear are eligible for extensions. The finance ministry can extend tenures of Sahoo and Abraham, while theSEBI board appoints executive directors.

DISMANTLING TRADE BARRIERS OF 6 TRADING PARTNERS IS EU'S TOPPRIORITYThough India and the European Union (EU) have been holding negotiations to wrap up a free trade agreement(FTA) on goods and services since 2007, the EU is now moving the dismantling of trade barriers in the marketsof six strategic economic pa rtners including India to the top of its political agenda. The European Commissionhas highlighted market access barriers in six of its strategic economic partners China, India, Russia, Japan,Mercosur (Brazil/Argentina) and the US. These countries together cover 45 per cent of the EU's trade in goodsand commercial services and 41 per cent of the EU's foreign direct investment. Terming India as an importanttrade partner' and a growing economic power', the EU said in just four years EU -India trade increased by 31 percent to over 53 billion in 2009. Pointing out that India's trade regime and regulatory milieu still remaincomparatively restrictive', it said that over and above high tariff barriers, India also slaps a spate of non -tariffbarriers (NTBs). These are in the form of quantitative restrictions, import licensing, burdensome mandatorytesting such as for tyres and certification for a large number of products as well as complicated and lengthycustoms procedures. Finally the EU said India's investment policy continues to obstruct foreign investments inmany important segments such as multi-brand retail which is closed to foreign investment. India has alsoadopted a series of steps to control foreign capital flows and ensure maximum benefits for local companiesthrough technology and know-how transfers. The report suggested concrete action such as the launch of aninitiative to open government procurement markets, possible dispute settlement action and continuing dialoguewith strategic partners but also raising the bar at the highest political level in bilateral summits with the countriesconcerned to bring down trade and technical barriers.

UNDER DEVELOPED, SPECIAL STATES TO BENEFIT FROM BUDGET: FITCH

The Union Budget 2011-2012 is likely to be more beneficial for the special and underdeveloped states, includingJ&K, Himachal Pradesh and Bihar, rating agency Fitch said. The Union budget 2011-2012 is a credit positive forspecial-category states, who receive a larger share of their revenues from the central government.Underdeveloped states are benefited from higher allocation to Backward Region Grant Fund in FY12.The reportattributed the benefits to the backward and special states to the higher growth expectations in 2011-12 (9 percent), which has led to the increase in the budget forecasts for overall net transfers (share in central taxes, andgrants and loans) from the central government to states by 23.7 per cent.


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GOVT AIMING TO INCREASE EXPORTS TO $450 B IN THREE YEARS'

In its bid to ensure that the country's trade deficit does not go up, the Government is looking at doubling exportsto $450 billion in the next three years. By March 31 this year, the Government of India thought exports should be$200 billion. However, in February itself the country has crossed that figure and therefore by March-end it will doaround $225 billion of export. This year's deficit is likely to be around $120 billion. The country's trade deficit thisyear is likely to be around $120 billion, which is less than 2.5 per cent of our GDP and over the years we would

like to bring it down as a percentage of GDP. And in order to see that in the future our trade deficit does notincrease, the Government wants to increase the exports in the next three years by doubling it from this year'sexport figure. So, the govt. will try to reach $450 billion of export in the next three years .

CHINA'S INFLATION STEADIES ON GOVERNMENT PRICE MEASURES

Chinese inflation stabilized in February, helped by government and central bank measures to rein in pricegrowth. Analysts had forecast a figure nearer 4.7%, but said it was more significant that the rate of growth hadsteadied and also estimated that it may show that China was managing to rein in inflation without hurtingeconomic growth. However it was too early to say for certain that the inflationary trend had broken, and that theyexpected the government and central back to keep taking measures to contain price growth. The Chinese

government has set a target of 4% inflation for this year. Rising food prices are of major concern in China, wherepoor families spend up to half their incomes on food. The central bank has raised interest rates three times inrecent months to battle high inflation. It has also increased bank reserve requirements in an effort to stop themlending as freely. Analysts had worried that these tightening measures would slow down the booming Chineseeconomy. However, these concerns eased after separate economic figures out today showed that industrialproduction accelerated in the first two months of the year.

QUAKE SELLOFF WIPES $287 BN OFF TOKYO STOCK MARKET

A massive selloff on the Tokyo Stock Exchange wiped out some 23.5 trillion yen ($287 billion) from the market'svalue with investors dumping stocks as the country recoiled from a devastating earthquake and struggled toavert nuclear disaster. The selloff triggered record volumes and slashed the market's value to roughly 289 trillionyen. Volume was pushed up by window-dressing selling by domestic institutional investors for the March 31financial year-end and by domestic investment trusts and anxious retail buyers, while long-term foreign playerswho have piled into Japanese shares since November also rushed for the exit. Fears of more quake aftershocksand further repercussions from damaged nuclear reactors were cited as the most important factors behind thesell-off. Domestic investment trusts and funds are dumping everything today. Sell orders for tens of billions ofyen were detected. The Mothers market tumbled 17.2 percent, with social networking site Mixi Inc. and Japan'sthird-biggest airline Skymark Airlines Inc both down around 18 percent.


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THE DERRICK

INDUSTRY WATCH

PRICIER LOCAL APPARELS MAY MAKE FOREIGN BRANDS ATTRACTIVEIt may be advantage videshi apparel retailers vis--vis their swadeshi counterparts. Domestic garmentmanufacturers are facing a double-whammy of spiralling cotton prices and the 10 per cent excise duty levy bythe Budget on their branded products. This has narrowed the gap between brands manufactured in India andthose imported. Domestic garment manufacturers and retailers such as Pantaloons, S Kumars and ArvindBrands have hiked or are looking to raise prices of their branded products by between 10 and 18 per cent tooffset costs. Cotton prices, too, have increased nearly 40 per cent in the last two months. This could also leadto urban shoppers shifting from local brands to foreign marquees as prices become more competitive in thepremium segment. While at the lower end of the spectrum consumers will clearly opt for value brands. Interestingly, the excise duty levy comes at a time when several international brands are making a beeline for

India. Many are tweaking their pricing strategies to attract consumers. President of Madura Fashion andLifestyle stated that if raw material prices continue to rise we could hike prices by another 10-12 per cent in thewinters. This could result in a 30 per cent effective hike in retail prices. It could also push people towards valuebrands.

PUBLIC SECTOR BANKS ASKED TO TONE UP CREDIT DELIVERYMECHANISMS The Finance Minister, Mr Pranab Mukherjee asked public sector banks to tone uptheir credit delivery mechanisms so as to ensure that the targeted groups get the benefit of governmentpolicies. He stated that delivery system must improve and financial inclusion was absolutely necessary to

ensure that people get the benefit of economic growth. This could be achieved only through a strategy of newparadigm where people are empowered and empowerment is followed by entitlement and entitlement must bebacked by legal enactment. Despite more than 40 years of bank nationalization, we have not been able toestablish more than 32,000 plus bank branches in rural India with 6 lakh villages. We are in extremely difficultand at the same time encouraging and challenging times. The target of credit flow to the farmers has beenraised to Rs 4.75 lakh crore in 2011-12. Banks have been asked to step up direct lending for agriculture andcredit to small and marginal farmers. At the same time the Union law Minister viewed that banks need topromote entrepreneurs, particularly in rural India and also suggested that banks need to look at moving awayfrom collateral based lending to rural entrepreneurs. The Government has agreed to infuse Rs 309 crore intothe bank, taking the Centre's stake in the bank to little over 58 per cent.

IT SECTOR TO HIRE 2.25 LAKH IN 2011: DELOITTE

The Indian IT industry will add over 2.25 lakh employees in 2011 and will clock revenues of $71.7 billion by theend of the year, consulting firm Deloitte estimated. Revenues from the information technology and businessprocess outsourcing industry will reach $71.7 billion for 2011 and account for 5.8 per cent of the countrysGDP. The total number of employees working in the IT/ITeS (IT enabled services) sector will grow to 22.3 lakhthis year, which translates into the addition of 2.26 lakh personnel, adding that an additional 80 lakh people willget employment indirectly from the sector. The Deloitte prediction follows a spate of announcements by ITmajors like Infosys and TCS, among others, of stepping up recruitment in the current season as the global

economy is going into a recovery mode. Deloitte expects a higher growth in revenues from European andAsian markets compared to the traditional North American market this year. It also added that the under-penetrated SME (small and medium enterprises) space will emerge as a significant opportunity in 2011. Of


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the total $71.7 billion, up to $60 billion will come from the core software and services vertical, while exportsfrom this segment will grow up to 17 per cent to $47 billion.

FOREIGN BANKS MAY SEEK MORE SOPS TO SUBSIDIARISE OPERATIONSForeign banks are likely to seek some regulatory sops for converting to subsidiaries here, although most largeones had already indicated their keenness to go in for subsidiarisation. The subsidiary model that the RBIdiscussion paper on foreign banks entry talks about is not a big incentive for foreign banks to massive ly cometo India. It (allowing subsidiary model) is not a big incentive. It will be an additional burden because they (foreign

banks) have to commit real capital to a country. It's not like you can bring the capital today and you can take thecapital out tomorrow. A subsidiarisation is less efficient use of capital. With the banking sector in the developedworld facing problems on account of the financial crisis, many foreign banks would not readily go in for this(subsidiary model) as it would require more capital. A subsidiary model was better from regulatory perspective,but not from the bank's standpoint. At the same time, Mr van Loo,Banking & Capital Markets Leader (EMEIA -Europe, Middle East, India, Africa), maintained that it was for each individual foreign bank to consider whether itwas any worth for them to be in India or not. If they are convinced about the growth potential of India, then theycould be interested to come here. Many banks in Europe are still in the process of regaining standalonestrength, Mr van Loo said, adding that their priorities after the crisis are survival, recovery and not the perfectsituation to go and manifest in newer markets.

ADITYA BIRLA RETAIL PLANS EXPANSION PUSH

Aditya Birla Retail, the retail arm of the USD 29 billion diversified Aditya Birla Group, plans to open as many as130 supermarkets and a dozen hypermarkets in the fiscal year starting in April, to take advantage of the surgingspending power of Indian consumers. It aims to expand its business and revenue share from its in-house labels,which offer higher margins. The company also expects an announcement in the next six months on rules thatwould expand foreign direct investment in India's retail sector as India looks to battle high inflation. Organizedretail accounts for just 6% of overall retail sales in India. The organized retail sector is growing at 20%, morethan twice the rate of the overall economy so it would be a good opportunity for the company in near future.

LOCKHEED KEEN TO SET UP FACILITIES IN INDIA

U.S. aerospace giant Lockheed Martin is keen on doing business in the defense sector and the private industryin India and exploring possibilities for tie-ups to this effect. Lockheed Martin was already working with BharatDynamics and other component suppliers and those in the sub-contracting business in the defense sector. Thecompany hoped to go ahead in the anti-tank guided missiles area, clearances for which were awaited. Theproposals were in the initial stages but once the nod was received, they would look around to setting up facilitieshere and the places that were likely to be narrowed down, included Hyderabad, Bangalore and Chennai.Lockheed Martin is one of six global corporations in the race to bid to supply 126 fighter aircraft to India underthe Medium Multi-Role Combat Aircraft (MMRCA), a deal estimated to cost $10.2 billion and expected to befinalized by September this year. They are to offer F-16 IN Super Viper planes to India which was state-of-the-art and the most advanced technology currently available.

TELECOM, TECHNOLOGY TO FOCUS ON RURAL AREAS

The thrust of the government and corporates in areas of technology and telecom in 2011 will be to helpempower the rural population. The teledensity in India reaching over 128 percent in the urban markets, thetelecom industry now has its eyes set on the rural market which holds a great potential with a teledensity of lessthan 26 percent. With most of the population living in villages in India, there is huge opportunity for technology,media and telecom sectors to bring services such as healthcare, education, entertainment, banking and financeto the rural doorsteps. The variety of programmes around the National e-Governance Plan and the funding from

donor agencies in this region will be key in taking this forward. The study also predicted that in 2011, more than50 percent of computing devices sold globally will be smartphones, tablets and non-PC (personal computer)


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netbooks, breaking the PC's decades-long market dominance. In India, 80 percent of the Smartphone market isstill untapped, the study said. The price of handsets and cost of data usage will decide the penetration ofsmarphones in these areas.

AOL TO CUT 700 JOBS IN INDIA; BUT TO OUTSOURCE 300

American Internet giant, AOL, is cutting 700 jobs in India, but is outsourcing 300, a top company official hassaid. As a company, there's about 200 (job cuts) in the United States and about 700 in India, although about 300of those are going to go an outsourcer. AOL CEO Tim Armstrong told a television channel in an interview thateffectively, it's about 400 to 600 (job cuts) between India and the US.. The company currently has about 5,000employees, which includes employees from the recently acquired Huffington Post. They've dynamically changedAOL over the last couple of years to really focus on content and restructure the organization starting with Europeand the US.

JAPANESE COMPANIES MAY SET UP STEEL PLANTS IN INDIAAfter deadly earthquake in Japan could likely push steel companies from that country to speed up plans to buildmanufacturing presences in safer and low-cost countries such as India, said industry executives who havecollaborated with Japanese steelmakers for joint ventures here. Indian steel companies, that make constructiongrade products, however said it is early to assess the opportunity to supply products to Japan to assist in

reconstruction of regions affected by the earthquake. Japan's top four steelmakers Nippon Steel, JFE Steel,Sumitomo Metals and Kobe Steel already have a presence in India through joint ventures. According to C SVerma, chairman of state-owned SAIL it is too early to say anything, but definitely, Japanese companies shouldexplore the idea of having larger manufacturing plants in India as we have the market as well as resources herein India.

BURDENED HOSPITALITY INDUSTRY LOSING OUT TO SE ASIA

Out-priced by cheap packages offered by Southeast Asian destinations, Indian hotels and restaurants may welllose the race in luring foreign and domestic travellers if the new service tax proposal isimplemented. The hospitality industry has termed the tax "retrograde" and the tourism ministry is inundated bydemands of a rollback from states and industry associations.Hotel associations say the new tax will be a death blow. According to Federation of Hotel and RestaurantAssociation of India (FHRAI) this is retrograde step .The intent of taxation is to bring businesses that are nottapped in the tax net. Hotels are paying luxury tax while restaurants are paying value added tax. So this in asense is double taxation. Gupta added that Indian taxes on hospitality were more than six times those paid bytheir counterparts in Thailand and Malaysia. The World Tourism and Travel Council (WTTC) have also soughtwithdrawal of the Budget proposal. This would translate into a hefty 23.5% tax on room rates in Delhi and TamilNadu (including service tax and luxury tax) and 17.5% in Kerala and Goa. In comparison, other tourismdestinations like Singapore, Malaysia and Indonesia levy only 3% tax.


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THE DERRICK

FACTS OF THE WEEK

1) Duration of ICC World cup : Cricket World Cup will be played from Feb 19 to April 2. Qualifying round matches will be till March 20 Quarter Final matches will be played between March 23 to March 26 Semi Final matches on March 29 and March 30 Cricket World Cup Final will be held April 2

2) Host nations : This world cup will be jointly hosted by 3 countries India, Bangladesh and Sri Lanka.

3) Participating Teams : There are total of 14 teams participating in this world up comprising of 2 groups with 7 teams each

Group A Group B

Australia India Sri Lanka England Pakistan South Africa New Zeeland Bangladesh Zimbabwe West Indies Canada Netherlands Kenya Ireland

4) Total number of World Cup matches Total of 49 matches will be played (incidentally one of the highest compared to any previous world cup). Therewill be 42 qualifying matches, 4 Quarter Finals, 2 Semi finals and 1 Final

Out of total 49 matches India will host 29 matches (including a Quarter Final, a Semi Final and the Final).Bangladesh will host 8 matches (including 2 Quarter Finals) and Sri Lanka will hold 12 matches (including aQuarter Final and a Semi Final)

5) Total venues in all : There will be Total of 13 grounds used for this tournament

India 8

Eden Gardens, Kolkata, Capacity 90,000 (3 matches) Feroz Shah Kotla, New Delhi, Capacity 48,000 (4 matches) Chinnaswamy, Bengaluru, Capacity 42,000 (5 matches) Chidambaram, Chennai, Capacity 50,000 (4 matches) Mohali, Chandigarh, Capacity 35,000 (3 matches including a Semi Final) Motera, Ahmedabad, Capacity 50,000 (3 mathces including a Quarter Final)


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Jamtha, Nagpur, Capacity 45,000 (4 matches) Wankhede, Mumbai, Capacity 45,000 (3 matches including the Final)

Bangladesh-2

Zahur Ahmed Stadium, Chittagong, Capacity 20,000 (2 matches) Shere Bangla Stadium, Mirpur, Dhaka Capacity 25,000 (6 matches including 2 Quarter Finals)

Sri Lanka-3

Rajapaksha Stadium, Hambantota, Capacity 35,000 (2 matches) Muralidharan Stadium, Kandy, Capacity 35,000 (3 matches) Premadasa Stadium, Colombo, Capacity 35,000 (7 matches including a Quarter Final and a Semi Final)

The Quarter Finals will be held at Mirpur, Dhaka (2 matches), Ahmedabad and Colombo. Semi Finals will beheld at Colombo and Chandigarh. The finals will be held at Wankhede Stadium in Mumbai

6) ICC World Cup Trophy and Prize Money

There are two original Trophies with ICC. One would be held in its HeadQuarters in Dubai and the other is given to the Winning team. Both thetrophies are identical, the only difference wouldbe, the Trophy in ICC Head Quarters will havethe names of all the previous World Cupwinners inscribed on it.

Prize Money :

Winner 3 Million US Dollars, Runner Up 1.5 Million US Dollars, Total Prize Money 10 Million US Dollars.

7) ICC World Cup 2011 official Mascot The official Mascot of ICC world Cup 2011 is Stumpy, the Elephant .

8) ICC World Cup 2011 official Song :

The official theme / song of ICC World Cup is De Ghuma ke (3 Min 56 Sec). It is composed by ShankarMahadevan, Ehsaan Noorani and Loy Mendonsa. It is sung by Shankar Mahadevan and Divya Kumar whilethe lyrics are given by Manoj Yadav

9) ICC World Cup 2011 Official Event Ambassador :

Sachin Ramesh Tendulkar


13/20

THE DERRICK

INTERVIEW

I'm more than fully satisfied with how Gamesa is developing in India'

Spanish wind turbine manufacturer Gamesa started operations in India a little over a year back through a subsidiary. It has set up an assembly plant near Chennai and has announced plans to put up three more facilities to make different parts. The additional investment in India (the company plans to pump in more than Rs 600 crore) demonstrates the importance of India in Gamesa's global plans. In 2010, India accounted for 8 per cent of Gamesa's total wind turbine sales.

I can say that I am more than fully satisfied with how Game sa is developing in India, says Mr Jorge Calvet, Chairman and CEO,Gamesa. During a recent interview here, Mr Calvet spoke about Gamesa's operations, both in India and across the world, and the

status of the wind turbine industry. Excerpts from the interview.

How is the market in India?

The two markets in the world that have been consistent for the last year are China and India. They aregrowing consistently, which is absolutely critical for any economy. You have been able to see this especiallyin the last couple of months with the upheavals in North Africa and West Asia, how important renewableenergy is to the world of power. Oil prices have gone up dramatically in the last three months and will gofurther up. That is why renewable energy has always been important . India has done a tremendous job inthe last year by supporting renewable energy, especially wind.

How about Gamesa's operations here?

I am more than fully satisfied with how Gamesa is developing in India. We have been in operation for a littleover a year and it has exceeded our expectations. This year looks also nice. As I have explained to theteam here, India is going to become a significant part of the overall sales effort and portfolio of Gamesaworldwide.

I am here reviewing and confirming all the investments that we are going to be doing in India, not only thisyear, but also next year. This is significant to us because we are going to have a big slice of the overallinvestment that we are going to do worldwide in India. The investments will be in three new plants to makeblades, towers and nacelles. We will also introduce a 2 MW turbine and we will double the number ofemployees.

In 2010, China topped in wind power capacity addition. What has been driving this growth in China?

Three factors. One, they are conscious about energy independence. Obviously, renewable energy will not


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give them full energy independence, but it is going to be an important component. Second, the commitmentthe Chinese Government has made in reduction of CO2; renewable energy is a part of that. The ChineseGovernment has been intelligent in creating an industrial base of renewable energy that is also driving thegrowth trends.

Has Europe recovered from the slowdown in terms of the wind energy industry?

You have to distinguish between Western Europe and Eastern Europe. Western Europe has been sufferingfrom some problem called Budget deficits. That has had a bearing in the development of wind industry.There will be growth in Western Europe, but perhaps not as steep as you can see in the rest of the world.Eastern Europe is a different situation. The growth there is going to be significant. It is in Poland, Romania,

Hungary and perhaps Bulgaria. For Europe in general, for Western Europe in particular, somethinginteresting is developing, it is a kind of a substitution effect for onshore wind, which is offshore. There arehuge offshore plans for Europe based in the North Sea.

That is driven by the United Kingdom. Germany, Holland, Belgium and France are also looking at it. TheNorth Sea basin is going to become a significant part of the overall energy supply that will be focussedtowards Europe. The European Union plans to create a North Sea underground infrastructure so that

Europe can bring all the energy that will be produced offshore into the mainstream. The North Sea basinpotential is huge about 50-70 GW.

And Gamesa is present in the offshore market?

We have developed an aggressive plan for being able to have the prototype of our first offshore turbine nextyear. That will enable us to be present when the round three in the UK starts, which will be 2013. That willbe with a 5 MW turbine. It has been developed by Gamesa. We have a technological agreement withNorthrop Grumman. They know a lot about marine environment and their support is going to be critical forGamesa to have the best offshore turbine available in the market. Their expertise would be with regard tocontrol systems, you need to understand the performance of a turbine 50 miles into the sea. And on issues

related to corrosion, salt and humidity.An overview of the Americas?

The US is a complicated situation because of the regulatory environment for one and because of the gasprices. The gas prices are low and the utilities do not have a lot of incentive to look at other types of energy.The US has been able to recover huge quantities of shale gas.

The other thing is the lack of regulation or visibility of regulation going forward. The Obama administrationhas renewed the 1603 section of the tax code, which for manufacturing in the US, you get tax breaks. Butwhat you still need is a renewable energy standard on a federal basis to jumpstart the industry again.

It is a pity because the industry in the US could be the main driver of job creation and also to become anexport driver. I am a bit cautious about that. Last year, the US was a market of just over 5,000 MW and itcould be double that and this year at best would be 5,000 MW. My expectation is that next year it would begoing down.

Could you elaborate on your 2011-13 business plan.

Other than what I have explained to you with regard to India, in China we have made investments for twoassembly plants outside of our main plant. One is Inner Mongolia and the other in Jilin. We are alsoinvesting in a factory in Brazil. A lot of that investment has two major components. One is the development


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of a full new set of family of turbines that we will bring out in the next couple of years; 80 per cent of theturbines that we are going to be selling in the next two years are going to be new turbines.

The second part is the development of our offshore capability. We have opened an R&D centre for offshorein Glasgow. Our global headquarters for offshore will be in London.

We will have one or two factories in the UK, one in Scotland and one in England. But that will depend onthe business.


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THE DERRICK

ZARGONOMY

Owner of record

The name of an individual or entity that an issuer carries in its records as the registered holder( notnecessarily the beneficial owner) of the issuer's securities. Dividends and other distributions are paid only toowners of record. also called stockholder of record or holder of record orshareholder of record.

Back letter

Subsidiary or supplemental agreement (contract) between two or more parties drawn upto document thei robligations and/or rights that (for whatever reason) could not be included inthe original or principal agreement. Aletter of indemnity, for example, is a back letter because it backs up aspecific claim of a contracting party against the other.

Defensive investment strategy

Investing a high percentage of resources in safer investments such as debt securities (see Debt Security) ,and a lower percentage in high yield but risky equities. This strategy followsconservative policies regarding margin and options-trading, and arbitrage

Conversion privilege

An insurance policy in which the insurer is required to renew the policy for a specified amount of timeregardless of changes to the health of the insured. The agreement requires that premiums are paid on timeand that the insurer makes no changes except if a premium change is made for anentire class of policyholders. Also called guaranteed renewable or convertible term insurance or guaranteed insurability.

Quality circle (QC)

Participative management technique within the framework of a companywide quality system in whichsmal lteams of (usually 6 to 12) employees voluntarily form to define and solvea quality or performance related problem. In Japan (where this practice originated) quality circles are anintegral part of enterprise management and are called quality control circles.

Yankee market

A term for forign market in the USA.

Default risk

The risk of failure by a party to fulfil its obligations on a loan repayment, future or options contract when they fall due.

Real Wage FlexibilityDescribes how rapidly real wages (the pay of an individual after adjusting for inflation) respond to imbalances betweenlabour demand and labour supply.
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THE DERRICK

ENTREPRENEUR

VIJAY MALLYA

Vijay Mallya (born 18 December 1955) is an Indian liquor baronand Rajya Sabha MP. The son of industrialist Vittal Mallya, he isthe Chairman of the United Breweries Group and KingfisherAirlines, which draws its name from United Breweries Group'sflagship beer brand, Kingfisher.

He also owns the Formula One team Force India, the IndianPremier League team Bangalore Royal Challengers, and the I-League team East Bengal FC and Mohun Bagan AC.

According to Forbes.com, as of March 2010, Mallya, is worth US$1 billion. He is ranked 937 in The Forbes World Billionaires

Ranking (2010). He receives substantial press coverage that focuses on his lavish parties, villas, automobiles,Force India, Royal Challengers Bangalore and his yacht, the Indian Empress.

Personal life

Mallya was born into a Konkani Gowda Saraswat Brahmin family originally from the town of Bantwal, nearMangalore, in Karnataka. He is the son of Vittal Mallya and Lalitha Ramesh. He was educated at La Martinierefor Boys School, Calcutta and completed his degree at St. Xavier's College, Calcutta

BUSINESS

Breweries

Mallya took over as Chairman of United Breweries Group in 1984 from his father Vittal Mallya. Since then, thegroup has grown into a multi-national conglomerate of over sixty companies, with an annual turnover whichincreased by 63.9% over 15 years to US$11.2 billion in 1998-1999 . The focal business areas of the groupencompass alcoholic beverages, life sciences, engineering, agriculture, chemicals, information technology,aviation and leisure.

In May 2007, United Breweries Group announced the all-cash acquisition of scotch whisky maker Whyte &Mackay for 595 million (approximately Rs 6000 crore). In 2005 he took over Millennium Breweries Ltd(formerly known as Inertia Industries Ltd), which owned the two premium beer brands named Sandpiper andZingaro.

Airlines

In 2006, Mallya established Kingfisher Airlines. At present, the airline connects 32 cities. Kingfisher Airlinesobtained a 26% stake in Air Deccan, a low cost Indian airline which Mallya later acquired fully and rebrandedas Kingfishers Red. Vijay Mallya and his Jet Airways counterpart Naresh Goyal announced an alliance after amarathon meeting on 13 October 2008 at Mumbai, India.

Media


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Mallya owns the MarinScope Newspapers which serve Marin County, California where he maintains a homeand stores a portion of his car collection.

Investment in sports

Formula One

Vitantonio Liuzzi driving for Mallya's Formula One team, Force India, at the 2009 Japanese Grand Prix.

In 2007, Mallya and the Mol family from The Netherlands bought the Spyker F1 team for 88 million euros. Theteam changed its name to Force India F1 from the 2008 Season. Team's car VJM-01 was named after itsowners Vijay Mallya, Jan Mol and Michiel Mol.

Mallya also represents India in the FIA World Motor Sport Council, where he has a seat from 2009 to 2013.

Football

Mallya's United Breweries sponsors the East Bengal and Mohun Bagan football clubs in Kolkata where Mallyaspent his childhood. He also was part of the consortium that acquired Queens Park Rangers FC; theconsortium also included Bernie Ecclestone, Flavio Briatore and Lakshmi Mittal.Vijay Mallya has recentlyindicated his intention to buy AS Bari, a football team which plays in the Italian Serie A.

Cricket

Mallya's flagship firm UB Group owns the Royal Challengers Bangalore team in the Indian Premier League.He won the team in an auction paying US $111.6 million for it.

Political career

Mallya entered politics in 2000 and replaced Subramanian Swamy as the president of the Janata Party. Hisparty contested almost all of the 224 seats during the Karnataka State legislative election. He campaignedvigorously through the media, but his party failed to make any impact and did not win a single seat. Followingthe party's failure in the elections, it has been largely ignored by the media, although Mallya recently becamean MP independently.

Auction purchasesVijay Mallya is noted for his successful bidding in auction of items that are considered of great historical valueto India.[citation needed] In 2004, he placed the winning bid of 175,000 for the sword of Tipu Sultan at anauction in London, and brought it back to India. In March 2009, Mallya successfully bid for the belongings ofMahatma Gandhi at US$1.8 million, in a New York auction that initially caused an uproar in India and itsgovernment tried and failed to prevent it from going under the hammer.

Other businesses

Establishment of Mallya Hospital in Bangalore. The hospital is located on Vittal Mallya Road, named after hisfather.Helped to fund the Mallya Aditi International School, a private school in Bangalore.


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THE DERRICK

ANSWERS TO BIZ WIZ-8

Q1) WHICH INDIAN CO. HAS A CUSTOMER RELATIONSHIP PROGRAMME CALLED PASSPORTPROGRAMME?

Ans : Hero Honda

2) IN 2003, WHICH BRAND HAD CREATED AN ADVERTISEMENT CHARACTER CALLED TERRY TATE?

Ans: Reebok

3) IN 2003, WHICH BRAND HAD CREATED AN ADVERTISEMENT CHARACTER CALLED TERRY TATE?

Ans: Google

4) WHICH COMPANY'S PHILOSOPHY IS REPRESENTED BY THE FIGURES ' 9+1+23 '?Ans: Xerox

5) WHO HAS PROPOUNDED THE 4 A'S OF MARKETING (ACCEPTABILITY, AFFORDABILITY,ACCESSIBILITY, AWARENESS?

Ans: JAGDISH SETH

6) WHICH FAMOUS INVESTOR RAISES MONEY FOR THE CHARITY ORGANISATION 'GLIDEFOUNDATION' THROUGH ONLINE AUCTIONS TO HAVE A MEAL WITH HIM?

Ans: Warren Buffet

7) KARO SIFAARISH' PROGRAMME IS THE NAME OF AN EMPLOYEE REFERRAL SYSTEM IN WHICHINDIAN BANK ?

Ans: HDFC bank

8) CEO OF Whole foodsAns: John Mackey

9) SHOP EAT CELEBRATE is the tagline ofAns:Central Mall

10) Who was the German engineer responsible for creating the Volkswagen?Ans: Ferdinand Porsche

11) Tagline of "Its all about Imagineering "Ans: Larsen and Toubro

12) Find out the wrong link of the subsidiaries and the parent companiesAns: Nissan - Honda

13) If Karsanbhai Patel founded the brand Nirma, what did Tribhovandas Patel establish?Ans: Amul

14) Who said: "If contact between people is based on trust and absolute integrity, then it is of benefit for bothsides."Ans: Julius Baer


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15) 'Latitude' is a range of notebook computers from which company?Ans:Dell

16) Launched in India in 1933, this brand was quick to become a product relevant to the lives of every Indian.It is manufactured by UK based Reckitt Benckiser. What product?

Ans:Dettol

17) Maggi, an array of instant soups, stocks, bouillon cubes, ketchups, sauces, seasonings and instantnoodles is a brand of which company?

Ans: Nestle18) Goldman Sachs' coinage 'BRIC'(Brazil, Russia, India and China) has gained prominence in describing high

growth economies. Late last year, A new nation has joined the four-nation grouping, which is now known asBRICS.Name the nation.

Ans: South Africa19) Identify logo?

Ans:Mercury

20) Identify the personality

Ans: U.K.Sinha

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derrick 15th edition

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