the derrick 22nd edition

8/4/2019 The Derrick 22nd Edition

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22nd Edition (12-18 September2011)

RBI warns of downside risk to GDP growth outlook

The Reserve Bank ofIndia warned that the risksto the 8 per cent GDPgrowth projection for2011-12, made in its Julyreview, are on thedownside. In its mid-quarter monetary policyreview the central bank

has attributed thedownside risk to thegrowth projection toweakening global demandand the slowing down ofdomestic demand, towhich the monetary policystance is also contributing.Although India's exportshave performed extremelywell in the recent period,this trend is unlikely to be

sustained in the face of weakening global demand. GDP growth decelerated to 7.7

per cent in Q1 of 2011-12 from 7.8 per cent in the previous quarter and 8.8 per centin the corresponding quarter a year ago. Agricultural growth has accelerated, butindustry and services have decelerated, the RBI said. According to the bank, inflationremains high, generalised and much above its comfort zone of 4.0-4.5 per cent.The inflation reading for August was 9.78 per cent. Pointing out that there is anelement of suppressed inflation', the RBI said though global oil prices havemoderated, the pass-through to domestic prices remains incomplete.

Food inflation, which is at near-double digit levels despite normal monsoons, underlinesthe fact that it is being driven by structural demand-supply imbalances and cannot bedismissed as a temporary phenomenon, the central bank said. The RBI is of the viewthat a premature change in its policy stance could harden inflationary expectations,thereby diluting the impact of past policy actions. It is, therefore, imperative to persist

with the current anti-inflationary stance. Market experts say the RBI may not pause in itsinterest rate hike cycle till it gets inflation within the comfort zone. As monetary policyoperates with a lag, the RBI observed that the cumulative impact of policy actions shouldnow be increasingly felt in further moderation in demand and reversal of the inflationtrajectory towards the later part of 2011-12. The RBI expects the 0.25 percentage pointshike in repo rate to reinforce the impact of past policy actions (it has hiked the repo rate12 times in the last 18 months cumulatively by 3.50 percentage points to 8.25 per cent)to contain inflation and anchor inflationary expectations.

The gulf between the

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INSIDE THIS

ISSUE:

CORPORATE watch

ECONOMY watch

INDUSTRY watch

FACT OF WEEK

INTERVIEW

ZARGONOMICS

COLUMNIST

JOB watch

ENTREPRENEUR


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THE DERRICK

CORPORATE WATCH

INFOSYS IN ADVANCED TALKS TO BUY US COMPANY FOR $450-500 MILLION

Infosys Limited, India's second largest software exporter is in advanced talks to buy a US firm for $450-500million. The target company operates in the public services and healthcare space and has revenues of over$300 million but less than $500 million. However, the sources refuse to divulge the name of the targetcompany. This will be a very big step for Infosys; public services and healthcare especially is an area where itscompetitors such as Cognizant have been very strong if the buyout goes through, it will be Infosys' biggestacquisition in history. Infosys has been in the focus for quite some time now with analysts and investors raisingquestions about its huge cash pile and how the company really plans to utilise that. Infosys for now says that itcannot comment on market rumours but sources on the status of this acquisition say that it is almost a donedeal.

AUDI AIMS TO OVERTAKE MERCEDES-BENZ THIS YEAR SAYS CHIEF RUPERT

STADLERVolkswagen's premium car brand Audi aims to overtake Daimler's Mercedes-Benz this year by racking upsales to 1.3 million vehicles. The company claimed that it will surpass Mercedes this year and move up fromposition No. 3 to number 2. Audi was also upbeat on the economic outlook for the automotive industry. Thereare two early warning signals. One is fleet sales, the other used car sales, and in neither we currentlyrecognize any headwinds.

FORTIS HEALTHCARE TO CONSOLIDATE, BUYS S'PORE ARM

Malvinder and Shivinder Singh-promoted Fortis Healthcare India and also announced that it would acquireSingapore affiliate Fortis Healthcare International Pte Ltd in an all-cash deal as part of a consolidation of its

domestic and global operations. The board of directors approved the acquisition move. The valuation for thiswill be advised by an independent agency. After the consolidation, Malvinder Singh, who is group chairman,Fortis Healthcare, will take over as executive vice-chairman of the combined entity. His sibling Shivinder Singh,managing director, Fortis Healthcare India Ltd, would take over as executive vice chairman. The total revenueof the combined entity would be in the range of $1 billion. The demand for better healthcare is risingsignificantly in the Asia-Pacific region due to increased urbanisation, and the group would cash in on theopportunity. After the consolidation exercise, the combined entity will have over 74 hospitals, more than 12,000beds and 580 primary care centres. The company would make a total investment of $1 billion in the next threeyears, which would be a mix of equity and debt.

RENAULT HEADS FOR PHASE 2 OF INDIA STRATEGY WITH MASS MARKET

MODELSRenault is now gearing up for the second phase of its India market strategy - competing in the mass market forvolumes with localised models. The first phase was completed this month by establishing its brand in thepremium car market with the Fluence sedan and Koleos SUV. According to a company dealer, the fifth productdue late next year is a new sedan positioned between the Volkswagen Vento and the Swift Dzire. In all, 12products are likely to come in by 2014. Their target is to reach one lakh units by 2013. The two new vehicleswill have above 60 per cent localisation and India will be the first market for this small car. The strategy of thefirst two models, manufactured from imported kits at its Chennai alliance plant with Nissan, was to build a


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premium and aspirational brand. The top-down entry plan was especially to undo the brand damage from thenegative publicity received from its first product, Logan.

PSL ARM GETS RS 270-CRORE PIPELINE ORDER

Pipe maker PSL Ltd said its US subsidiary has bagged orders worth Rs 270 crore from large US-basedpipeline operators for shale gas transmission projects. PSL manufactures pipes for transporting hydrocarbonproducts, water products and structural steel applications. The Mississippi-based PSL North America (PSLNA)would supply large-diameter API-certified pipes totalling an estimated 105 miles in length. These pipes fromspecial steel with anti-corrosion coating for shale gas pipeline projects being developed in both Southern andNorth-Eastern parts of the US, PSL said in a statement. Enhanced shale gas expansion activities signal a pick-

up in demand for pipeline-related infrastructure throughout the country, and PSLNA expects to play asignificant role in facilitating the progression of this market. Production against these orders is expected tocommence shortly, and is required to be completed within the course of the current financial year.

TVS LAUNCHES LIMITED EDITION OF STAR CITY

Two-wheeler manufacturer TVS Motor Company has launched limited edition of its bike 'Star City', bearing thesignature of brand ambassador and Indian cricket team captain Mahendra Singh Dhoni. The limited editionbike is equipped with new graphics, contemporary design, and is being launched along with a new, festival-based advertisement featuring Dhoni and his wife Sakshi. "It is the first time that they have been cast togetherin any advertisement. We needed to bring in the element of toughness while portraying festivity, which is somuch a part of our culture," TVS Motor Company President (Marketing) H S Goindi said. This limited editionbike comes with a five-year warranty.

RIM sales goes down, net dips 59 %

Research in Motion Limited (RIM), the maker of BlackBerry smart phones, has reported a nearly 59% declinein net income to $329 million for the three-month period ended August 27. The company had posted a netincome of $797 million for the June 28-August 27 period last year. Revenue for the June 28-August 27 quarterof the 2012 fiscal stood at $4.2 billion, down nearly 9% from $4.6 billion in the same quarter last year. Duringthe quarter, RIM shipped approximately 10.6 million BlackBerry smart phones and approximately 200,000BlackBerry Playbook tablets. The company has launched a range of BlackBerry 7 smart phones around theworld during the latter part of the second quarter and also seeing strong sell-through and customer interest for

these new products. Overall unit shipments in the quarter were slightly below our forecast due to lower thanexpected demand for older models.

The company's total cash, cash equivalents, short-term and long-term investments amounted to $1.4 billion asof August 27, 2011, compared to $2.9 billion at the end of the previous three-month period. Going ahead forthe third quarter of the 2012 fiscal ending November 26, 2011, the company expects revenues to be in therange of $5.3-5.6 billion. BlackBerry Smartphone shipments in the August 28-November 26 quarter areestimated to grow between 27-37% vis-a-vis the second quarter.


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THE DERRICK

ECONOMY WATCH

CHINA HAS 5 YEARS FOR FINANCIAL REFORM: IMF

The International Monetary Fund estimates that China has five years to reform its financial system to keep iteffective. Without reform China risks that significantly low interest rates will promote investment bubbles,particularly in the housing market. Mr. Nigel Chalk, IMF mission chief for China described the Chinese financialsystem as very bank-based, fed by very high savings, and tightly controlled by the government. Its highlyregulated in the sense that interest rates are determined by the Government directly and the exchange rate ishighly managed. The states control of the system, useful so far to boost Chinese economic growth and tocontain inflation and speculation, is at risk of losing its effectiveness with the emergence of unregulatedfinancial institutions. Theres a risk continuing on the current path. Its not an immediate risk, but its a presentrisk on a three- to five-year horizon that the main macroeconomic controls that they have at their disposalactually become much more diluted in their effectiveness.

WHY INDIA CONTINUES TO BE A SAFE REAL ESTATE INVESTMENTDESTINATION FOR NRIs

The factors that drive the sentiment amongst the Non-Resident Indians to invest in a property back home aremany. The idea to have a base in the home country where one can return to is a prime reason that motivatesthe NRI buyer. Also, there are a growing number of NRI investors who look at India to get better appreciationon their investment. According to Knight Frank's recent Global Price House Index, though markets worldwidehave been struggling with growth, Asia continues to outperform all other world regions as prices here rose onaverage by 8.0% in the last 12 months.

NO EASY BANKING ENTRY FOR NBFCS AS FINANCE MINISTRY SEEKS

TOUGHER NORMSThe finance ministry has sought strict norms for non-banking finance companies, or NBFCs, that want toconvert into banks or promote banks. The ministry has suggested that only those NBFCs, which have aminimum balance sheet size of Rs 10,000crore and gross non-performing assets of less than 5%, should beallowed to convert into banks or set up new banks. Various entities like Religare, Bajaj Finance, Mahindra &Mahindra, IL&FS and Shriram City Union Finance are mulling entering the banking space.RBI had in 2001allowed an NBFC with a good track record to convert into a bank, provided it was not promoted by a largeindustrial house and satisfied the prescribed minimum capital requirement. The finance ministry has alsoopposed RBI's suggestion to restrict foreign direct investment in new banks. It says bringing down foreigninvestment limit to 49% from the existing 74% will send a wrong signal to investors.

INDIA WILL NOT ACCEPT ANY INTELLECTUAL PROPERTY TALKS OUTSIDEWTO: ANAND SHARMA

India will not accept any attempt made by groups of countries to discuss intellectual property rights outside themultilateral forum of the world trade organization, Commerce and Industry Minister Anand Sharma has said.Responding to questions on India's position on the proposed Anti-Counterfeiting Trade Agreement (ACTA), anew intellectual property treaty being framed by a group of developed nations, the minister said a few countriescannot get together and try to change what is and will always be a multilateral regime called the TRIPSagreement. If it (Trips agreement) has to be revisited in any stage in future, it will be only in multilateral forum -the WTO, it cannot be done outside. India is opposed to the ACTA being discussed between countries such as


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the US, Japan, Australia, the EU, Canada and New Zealand on the ground that the stringent intellectualproperty agreement being drafted would affect supplies from non-member countries too. The government aimsat increasing the share of manufacturing sector from 16% to 25% of the GDP by 2020. Manufacturingcontributes over 80% in the country's overall industrial production. The minister said that the Prime Minister willsoon chair a meeting on the proposed policy which aims to set up integrated Greenfield mega-investmentzones to attract global investment and latest technologies.

OBAMA CALLS FOR $3 TRILLION IN DEFICIT CUTS

President Barack Obama will call for new deficit cuts of $3.0 trillion but warn Republicans he will veto any billthat trims healthcare for the elderly without hiking taxes on the rich. Obama will lay out a series of proposals

that include a broad overhaul of the tax code designed to raise $1.5 trillion dollars, mostly by letting previoustax cuts for the wealthy expire and by closing corporate loopholes. The plan would ensure America's long termfiscal future at a time of deep economic gloom, and permit continued investment in education, new generationenergy and job creation. Specifically, Obama will lay out a plan for tax revenue raises and spending cuts whichhe will suggest a congressional super committee charged with coming up with up to $1.5 trillion dollars inspending cuts should adopt. Obama's proposals will bring total deficit cutting plans over the next decade to$4.4 trillion. That topline figure includes $1.2 trillion in cuts in federal discretionary spending already agreed byObama in August as part of a compromise which ended a standoff with Republicans over raising the federaldebt ceiling. It includes 580 billion in spending cuts across all mandatory spending programs and $1.1 trillion ofsavings realized from drawing down US troop numbers in Afghanistan and Iraq. Tax reform would result in 1.5trillion dollars in savings, and a further 430 billion dollars will be found in additional interest savings elsewhere.

INDIA'S GREEN IT, SUSTAINABILITY SPEND TO REACH $70 B BY 2015

India's spending on green IT and sustainability initiatives will double from $35 billion in 2010 to $70 billion in2015, according to Gartner, Inc., a leading IT research and advisory company. Although still buzzwords formany, they will soon emerge as top priorities for businesses, investors and technology professionals acrossindustries and policymakers in India. India's information and communication technology (ICT) industry will bean early adopter of green IT and sustainability solutions as India is one of the fastest-growing markets in termsof IT hardware and communications infrastructure consumption. As enterprises embrace IT to improveproductivity and drive growth, penetration of ICT infrastructure has been growing rapidly during the pastdecade, as has the energy consumption and resulting carbon emissions of India's ICT infrastructure. Apartfrom the ICT industry, the banking and financial services, hospitality, manufacturing (such as automobiles),

pharmaceuticals, and other industries that have significant exposure to the export markets, will join the greenIT and sustainability trend early in India. In other industries, addressing energy, carbon, resource efficiency andsustainable economic development is currently still in the early stages.

GOVT EASES NORMS FOR FII INVESTMENT IN INFRASTRUCTURE SECTOR(INFRASTRUCTURE SECTOR)

Under the revised norms, which would be notified by the market regulator Securities and Exchange Board ofIndia (SEBI), FIIs would be allowed to invest up to $5 billion out of the total limit of $25 billion in long-terminfrastructure bonds, with an initial maturity of five years and lock-in period of one year. The relaxation inguidelines follows low inflows of FII funds in corporate bonds. While the government on March 31, 2011, had

raised the investment limit in such bonds from $5 billion to $25 billion (Rs 1.12 lakh crore), only $109 million(Rs 500 crore) has been received so far. SEBI last month had allowed Qualified Foreign Investors (QFIs) toinvest up to $3 billion, out of the limit of $25 billion, in Mutual Fund Debt Schemes which invest in theinfrastructure sector. Out of the remaining $ 22 billion, $5 billion could be invested by FIIs in long-terminfrastructure bonds with an initial maturity of five-years or more at the time of issue and residual maturity ofone year at the time of first purchase by FIIs. The government proposes to double investment in infrastructuresector to USD 1 trillion during the 12th Plan (2012-17).


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GOVT SHOULD REVISIT SEZ POLICY: ASSOCHAM

The government should revisit the policy on special economic zones (SEZs), particularly matters related withtaxation in order to make them attractive for domestic and global investors. Huge investments have been madein SEZs across the country and frequent changes especially relating to tax matters and land acquisition areeroding confidence among investors. The government had imposed 18.5% minimum alternate tax on SEZdevelopers and units besides 15% dividend distribution tax on developers. According to the revised DTC draft,which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to the existing units.Under the SEZ Act, SEZ units get 100% tax exemption on profits earned for the first five years, a 50%

exemption for the next five years and another 50% exemption on reinvested profits in the following five years.SEZ developers, on the other hand, get 100% tax exemption on profits for 10 years which they can choose toinvoke within the first 15 years of operation. Merchandise exports from the 143 operational SEZs in the countrytotal Rs 72,255 crore in the April-June period, an increase of 23% vis-a-vis the same period last year.

S&P DOWNGRADES ITALY DEBT RATING

Standard & Poor's on Monday downgraded Italy's sovereign debt rating, citing economic, fiscal and politicalweaknesses in a fresh blow to Silvio Berlusconi's fragile coalition government. The rating agency said it haddowngraded Italian debt to A/A-1'' from A+/A-1+'' grade because of Italy's weakening economic growthprospects.'' It added that Italy's weak governing coalition would limit the government's ability to responddecisively to events. We believe the reduced pace of Italy's economic activity to date will make thegovernment's revised fiscal targets difficult to achieve,'' S&P said in a statement. It was more bad news forItalian Prime Minister Berlusconi who is under fire over the economy, in the courts and, increasingly, from thevoters; his popularity plunged to 24 per cent in a September poll.

SHARMA PROMISES INDIAS RETURN TO DOUBLE DIGIT GROWTH

Addressing a 650-strong ballroom of dark-suited Indian-American business leader in the heart of the DeepSouth of the United States, Indias Commerce, Industry and Textiles Minister, Anand Sharma, promised Indiasreturn to double digit growth after the wobbles of the global economic downturn and the shaky ongoingrecovery. Further Mr. Sharma sought to allay concerns surrounding the controversy on outsourcing of U.S. jobsto India, arguing that for every job outsourced to India, two skilled and well-paid jobs were created on U.S. soil.

In building this case he also made a plea to end a host of restrictive rules that made it difficult for Indianprofessionals in areas such as information technology to work in the U.S. Delivering a keynote address thattouched upon wide-ranging issues from current counterterrorism concerns to shared values between India andthe U.S. Mr. Sharmas overall thrust was to pitch for deepening commercial ties between the two nationscorporate sectors.

ASIAN STOCKS STEADY AHEAD OF FED, EURO RECOVERS

Asian stocks held steady ahead of the conclusion of a two-day US Federal Reserve policy meeting in whichChairman Ben Bernanke is widely expected to announce further steps to stimulate a flagging economicrecovery. The Fed is expected to announce plans to intervene in the bond market to push long-term interestrates -- already near historic lows -- even lower in a move known as Operation Twist. Stocks on Wall Street

drifted lower overnight as earlier enthusiasm about an euro zone debt crisis resolution faded although AppleInc shares hit an all-time high. European debt worries were tempered to some extent after Greece promisedfurther cuts to its public sector before a second conference call with international lenders that Athens mustpersuade to extend more loans to avoid bankruptcy next month. That relief helped the beleaguered eurostrengthen against the dollar, having fully recovered following a downgrade of Italy's credit rating. The eurorose more than a cent to $1.3711, from a low of $1.3591. The MSCI Asia ex-Japan index of stocks was trading0.1% lower in early trade. Japan's Nikkei was little changed and was expected to stick to a narrow rangethrough the day. In commodity markets, spot gold hovered around $1,800 an ounce after a 1.4% rally in theprevious session. Brent crude futures held steady around $110.50 a barrel ahead of the Fed meeting.


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THE DERRICK

INDUSTRY WATCH

NATURAL GAS SECTOR: BIG COS TO REAP BENEFITS FROM PIPELINE

NETWORK

The domestic city gas distribution companies have witnessed an unwavering and growing investor confidenceover the past couple of months even though the overall equity markets are in doldrums. Indraprastha Gas (IGL)and Gujarat Gas have emerged as steadily growing companies with robust business model and strong balancesheet. Both these companies are reaping the benefits of widespread infrastructure they created over pastseveral years. Both enjoy strong cash flows with over 35% return on employed capital (RoCE), paying regulardividends and reporting double-digit growth quarter after quarter. Still their valuations differ markedly. IGLtrades at P/E above 21 while that of Gujarat Gas is around 18. This is despite the fact that Gujarat Gas isbigger in terms of volumes. The reason lies in their risk profiles. A large chunk of the gas that IGL retails has

been allotted to it on priority basis and comes at a cheaper rate. In comparison, the bigger companies in thenatural gas transportation business Gail and Gujarat State Petronet (GSPL) have not done as well in the recentturmoil. Both are setting up large pipeline network. However, the infrastructure will be optimally utilized onlyafter availability of natural gas in India improves over the next few years. The premium valuations of the citygas distributors appear justified, but at the same time are too high. Long-term investors should, therefore, dowell to prefer the larger players that will benefit as their growing pipeline network starts getting gas.

CHINA TO EXPAND SEABED MINING IN INDIAN OCEAN

China rolled out the plans to expand its seabed mineral explorations in the Indian Ocean after an internationalauthority approved its bid to mine for polymetallic sulphide ore, much to the surprise of India. Beijing has

approval to explore in a 10,000 sq km seabed area in southwest Indian Ocean for the ore and now it plans toinvest more to expand the depth and scope of oceanic research. Following the approval, Chinas OceanMineral Resources Research and Development Association is set to sign a 15-year exploration contract withthe International Seabed Authority (ISA) later this year granting pre-emptive rights for it to develop the oredeposit in future, state-run Xinhua reported. The move has raised concerns in India with the Directorate ofNaval Intelligence (DNI) informing the Indian government that the contract would provide an excuse for Chinato operate its warships besides compiling data on the vast mineral resources in Indias backyard. Chinesereleased a guideline on the oceanic science and technology development between 2011 and 2015, vowing toinvest more to boost the countrys maritime economy. More efforts will be made to boost innovation and strivefor breakthroughs in key technology in order to stimulate the development of emerging oceanic industries butdid not mention the amount money China will be investing.

RETAIL INVESTORS CONTRIBUTE 60% OF US INDEX FUTURES TRADING

About 60 per cent of the volume traded in American indices the NSE launched recently, futures and optioncontracts for S&P 500 and futures for DJIA, has been from retail investors and high net worth Individuals.Proprietary trading contributes to the rest. About 50 per cent trading is coming from Mumbai, 22 per cent fromKolkata; about 18 per cent from Delhi and 4 per cent each from Chennai and Ahmadabad. The rest is spreadacross other metropolises. More than 50 per cent of existing equity derivative members has traded at leastonce in the new products. Domestic institutional investors, which form a minor part of investors into derivatives,are eligible for participation in the segment. But none has participated as of now.


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9/18

THE DERRICK

FACTS OF THE WEEK

1. Rice exporter Kohinoor Foods today said it had completed the Rs 520-crore deal with US-based spicemaker McCormick to set up a joint venture for marketing basmati rice and other food products in India.

2. Dell has acquired the U.S.-based $200 million revenue networking company Force 10 Networks.Force10 Network's Chennai research and development team will be significantly ramped up over the next12 months to play a crucial part for Dell's networking business.

3. Tata Consultancy Services and Felda Prodata, Malaysia's most diversified agro-based enterprise, haveannounced the signing of a collaboration agreement to jointly develop and deliver strategic informationtechnology services and solutions to the Malaysian market.

4. German carmaker Volkswagens Czech unit, Skoda Auto, today said its new compact car MissionL will

be launched in India by the end of this year.5. A joint venture of BGR Energy and Hitachi to get orders worth Rs 3,600 crore from NTPC Ltd for thesupply of super-critical steam turbine and generators has led the Chennai-based company to emerge asthe winner for supplying nine units of stem turbines.

6. Infrastructure developer GVK group on Friday said it had acquired a strategic part of a large coalresource and infrastructure development project from Hancock Prospecting in Queensland, Australia, for$1.26 billion.

7. The owners of Pothys, a chain of textile showrooms in south India, has acquired a prime property inChennai for around Rs 60crore. This would be the second biggest property deal in the city in the last threemonths after India Cements MD's Rs 90crore deal in posh boat club area.

8. General Motors Co. and the United Auto Workers reached a tentative agreement on a new four-yearcontract late Friday.

9. Details werent immediately released, but the union said the contract will ensure that laid-off workers willbe hired back. The union said the contract also will improve health care benefits and profit-sharing plans.

10. The Future Group has joined hands with the Himachal Pradesh Government for a strategic partnershipto promote Brand Himachal', aimed at developing various source-to-market initiatives and facilitate forcreating livelihood for over 25,000 families in the State.

11. Reliance Communications (RCom) and the China-based Coolpad Overseas, rolled out a fully loaded

Android (clair) CDMA phone, D530, in Tamil Nadu.

12. Nokia on Thursday announced the launch of its most affordable Nokia 101 dual SIM music and Nokia100 single SIM phones in India, priced at Rs.1,699 and Rs.1,399, respectively.

13. Tata Steel has announced a major five-year improvement programme for its IJ muiden steelworks inthe Netherlands that is designed to sustain the plant's potential to be a world-class steelmaker. It isintended that this programme will be accompanied by a substantial investment that may total around 800million euro (about Rs.5200crore) over the five-year period.


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THE DERRICK

INTERVIEW

MITUL KOTECHA, CREDIT AGRICOLE CORPORATE & INVESTMENT BANK

The rupee slipped to a near two-year low against the dollar, as the euro zone crisisworsened, weakening the euro and emerging market currencies. Mitul Kotecha, managingdirector and head (global exchange research), Credit Agricole Corporate & Investment Bank,in an interview with Malvika Joshi, says the rupee stares at the risk of touching thepsychologically important level of 50. Edited excerpts:

The rupee has been depreciating against the dollar sharply since the beginning of this month.

What do you think are the reasons?

The rupee has been particularly susceptible to risk aversion. This partly reflects Indias reliance on capitalflows. Recent datalike that on tradehave also not helped. As risk aversion has risen, the rupee hasweakened and the currency is likely to remain under pressure, given the likelihood of risk aversion remainingelevated.

What is your short- and long-term outlook on the rupee?

The rupee is set to remain under pressure over the short term, since the global risk appetite continues to

worsen. Worries about the euro zone periphery and the US economy suggest the risk appetite would notimprove quickly. Consequently, if the pace of the weakness of the rupee continues, there is a risk that therupee touching the psychologically important level of 50. Over the medium term, I believe the current weaknesswould prove transitory, and I expect the rupee to strengthen to around 45.40 against the US dollar by the endof this year and 42.90 by the end of the next year.

The floor has been set for the Swiss franc against the euro. How do you think this would

change India Incs fund-raising pattern?

I think the floor for the euro/Swiss franc would deter many Indian and global investors from utilising the Swissfranc as a safe haven currency, as they shift from holding the euro.

What should the Reserve Bank of India (RBI) do to maintain a balance between exchange ratestability and its aim to make the capital account fully convertible?

If the drop in the rupee is extreme, RBI may be forced to take other measures to limit speculative trading in thecurrency and ensure stability. However, as long as such measures are seen as temporary, this should notinterfere with the aim of capital account convertibility eventually.


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Do you think RBI would intervene sometime soon to stop the rupees free fall?

As with other central banks in Asia, RBI may be inclined to intervene in the foreign exchange markets toprevent too much volatility in the rupee. If the currency's drop continues to accelerate, RBI is likely to intervene.

What strategy should be adopted by Indian export and import firms for currency hedging,

given the current global economic uncertainty?

The rupee is likely to remain vulnerable in the short term, which could be costly for importers. Hedging againstfurther weakness of the rupee may be necessary in the current environment. Assuming we are correct, therupee should strengthen and this suggests such hedges should be undertaken to limit short-term foreignexchange risks. Conversely, exporters would benefit from the rupee's weakness. But they may seek to take theopportunity of short-term weakness of the rupee to hedge their long-term exposures.

Reports have surfaced that the Yuan would be strong in the next few years and may act as a

hedging currency. Do you think this is possible, given the large Chinese exports to the US and

its large reserves of the dollar?

We expect the Yuan to continue to strengthen over the coming months and years, while the Chineseauthorities move towards greater internationalisation of the currency. The use of the Yuan in international tradeand hedging is still relatively small, but is expected to grow over the coming years, as China edges towards full

capital account convertibility. Ultimately, China would reduce its reliance on the US dollar.

(This circulation is just for education purpose)


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THE DERRICK

ZARGONOMY

COLLAR:This is a term used to describe an options strategy in which both Call Options and Put Options are used to puta "collar" around an investment position. For example, by simultaneously writing near-the-money calls andbuying near-the-money puts, one can lock in a share price range (until the options expire) regardless of themarket's vagaries.

COMMON SHARE

A common share is the standard for of ownership in an incorporated company. Common shares allow theholder to vote his/her shares. Each share gets one vote at a meeting of shareholders. Each share entitles theholder to participate, pro-rata, in profits of the company. Hence, Common shares are usually voting,

participating shares.CRAMDOWN

When investors get heavily diluted by a subsequent round of investment especially when the investment is adown round. Also known as a washout.

DOWN ROUND

This is an investment round that is done at a valuation substantially below previous ones, often excessivelydiluting earlier investors.

LEAPFROG

To surpass your competition, usually by engaging in one gigantic, hopelessly ambitious leap of faith that isalmost sure to end in ruin and despair. Bring a parachute, golden or other.

TERMS SHEET

This is a document outlining the investment terms of a particular investment opportunity. It defines the termsand conditions of an investment, usually as dictated by an investor. It is the negotiating document that theparties must jointly agree to before a definitive investment agreement can be drafted.

TSE300

(Also TSE100 and TSE35) - An index for shares trading on the Toronto Stock Exchange, i.e. the TSE300 is acollection of 300 companies and is a measure of how the TSE "market" is performing. This index has beenreplaced by the Standard & Poor's TSX Index.


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THE DERRICK

COLUMNIST

BLUETOOTH MARKETING: THE NEXT BIG THING IN THE MARKETING ARENA

(PART II)

Mr. Abhishek Dutta

Technological Know-How

Coming to some of the technological know-hows of Bluetooth, the most important part is the Bluetooth server

which is installed at very individual hotspot location. These servers act as central point of connectivity through

the Bluetooth hubs spread across the location. These servers are pretty fast since Bluetooth work on short

waves and require very less processing power. Some of the key benefits of these servers are:

Can be programmed to recognise and ignore handsets that have already downloaded information

previously.

Small, light and can be installed virtually anywhere

Lottery function: Means out of the connected device a single device can be selected on the basis ofrandom selection.

Moreover these servers can send nearly all types of files across through a Bluetooth adapter.

Fig.2. Bluetooth Server and adapter with devices to connect

Bluetooth Server


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Bluecasting

The process of broadcasting information through Bluetooth is also known as bluecasting.

Few of the drawbacks of Bluetooth technology which is hindering its usage at all times are firstly, the powerconsumption is very high which results in draining of the battery of the handheld device in a very short time.Hardly a fully charged mobile phone can utilize Bluetooth transmission for 1-1.5 hours. Companies across theworld are heavily researching over this point to make Ultra low power Bluetooth, which could change the way

Bluetooth is used today. It could be embedded into wristwatches which run on very low power batteries.

Secondly, the issue of security is another concern. Many analysts claim Bluetooth to be vulnerable to virusattacks. But, if we see it in other way, Bluetooth is also one of the safest ways of data transfer because anyinformation or file transferred over the Bluetooth requires the users authentication.

Thirdly, the speed of transfer is also a big issue since presently the data transfer speed over Bluetooth is verylow i.e. only 1MB per second at the maximum. Bluetooth 2.1 version gives a better ability to pair with otherBluetooth enabled devices. Whereas, the latest development in this field is Bluetooth 3.0 is all about highspeeds. It is assumed that Bluetooth 3.0 can provide a data transfer speed of 130 times of what currentBluetooth devices provide.

Bluetooth 2.0 was about enhanced data rates, 2.1 are about pairing bluetooth devices better. But 3.0 is abouthigh speed, it could even transmit 130 times higher than current data rates.

Induction in Indian Scenario

In India the increase of Bluetooth enabled devices have increased manifold over the last few years mostly ofthese devices are mobile phones. We can see people sharing pictures, music and video over Bluetooth withone another anytime, anywhere.

The country is among the fastest growing mobile telephony markets in the world, adding about two millionsubscribers in a month.

Some of the places where Bluetooth technology can be used is, Railway Stations across India. The setup ofthese Bluetooth adapters is not very costly since the Bluetooth have been around us for a while and the cost ofproduction has got cheaper. Coming back to Indian Railways, imagine that you are standing on Platform No.17at Howrah Station (The largest Station in India with over 25 platforms), every time you need to check on theplatform number where the train is about to arrive or how late the train is from its scheduled timing you need torush back and forth to the display screen fitted in some part of the platform. Now with the use of Bluecastingwe can receive information regarding all the trains that the arriving or leaving the station along with the timings.No more standing in queue at the enquiry counter and no more shuttling between the screen and the placewhether all your bags and luggage are kept. This is the public information transmission model which would ofcourse be free but, as far as Indian Railways is concerned it can also earn revenues through Bluecasting. Verysimple of course by just adding advertisements and downloads for different companies which would like toadvertise.

Some other spots for advertising could be hoardings. With bluecasting technology hoardings can becomeinteractive. As soon as someone gets near to the hoarding or the banner advertisement the person wouldreceive information through Bluetooth regarding the product or service displayed. The user may also receivegames, interactive content on their smart phones so that it may spread like word of mouth or better said todayas viral marketing.


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Hence, what we see is that the Bluetooth marketing can become a stepping stone for the marketers topenetrate the market even better. Though they may use any marketing tool at the front end but in the back endBluetooth marketing will propel these activities with much more boost than ever. With more and more peoplehaving access to Bluetooth enabled devices in India, the marketers are open to another parallax of marketingand henceforth, an additional thrust to engross the audience with the product/ service. The world is becomingan infinitely smaller place now with access to any information and service at the touch of a button andmarketers will have to reap the benefits of this technology. There might be some disadvantages and

drawbacks to this technology like any other and many critics may call it as breaching the privacy but, after allits science that we are using here and as it is rightly said that Science is like Frankenstein monster, who maystrike back to its developer if not handled judiciously and righteously.

(Author is currently serving as an Assistant Professor in Lovely Professional University. Phagwara, Punjab. Had worked

with banking industry for two and half years before joining academics; He is also an alumni of IBS Hyderabad).


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JOB WATCH

1. ONGC RECRUITMENT 2011 ONLINE APPLICATION FOR 312 A1, A2 LEVEL, AND FIELDOPERATORS POSTS

Age limit: The age limit is minimum 18 years and maximum 30 years for general candidates as on 15-10-2011, age relaxation as per rules.

Application fee: The application fee of Rs 200/- for GEN/OBC candidates and Rs 50/- forSC/ST/PWD/EXSM candidates through challan.

Important dates:

Opening date for Online Registration: 20-09-2011.

Closing date of Online Registration: 15-10-2011.

Last date of Receipt of completed Application Format with relevant documents by Post: 28-10-2011.

Tentative Date of Written Test: 27-11-2011

Read more: ONGC Recruitment 2011 - Online Application for 312 A1, A2 Level, Field Operators Posts |FreeJobAlert.com http://www.freejobalert.com/ongc/18768/#ixzz1YbXk6Kqc

2. RECRUITING FRESHERS, CAPGEMINI KOLKATA

Education requirement: B.E./B.Tech/MCA / BBA/MBA/B.Com/M.Com /MA/BA Any Graduate.

Experience: 0 Years

For more details: http://www.indianfresher.com/50949-Recruiting_Freshers_job.html

3. UNION BANK OF INDIA ONLINE APPLICATION FORM 450 CREDIT OFFICER POSTS 2011

Total no. of posts: 450 posts

Name of the posts: Credit Officer MMGS III: 450 posts

Age limit: The age limit of the candidates is minimum 21 years and maximum 40 years as on 12-09-2011, age relaxation as per rules

For more details:

http://www.freejobalert.com/union-bank-of-india-online-application-form/12857/


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ENTREPRENEUR

Kushal Pal Singh or K.P. Singh (Born 15 August 1931) is a real estate mogul and thechairman and CEO of DLF Limited, India's largest real estate developer. It has anestimated land bank of 10,255 acres (42 km2) with about 3,000 acres (12 km) being inGurgaon called DLF City.

Background

Born on August 15, 1931 in Bulandshahar, Uttar Pradesh in a Jat family (TewathiaGotra), K.P. Singh, established India's largest real estate company. DLF has now

become the world's largest real estate company in terms of revenues, earnings, market capitalisation anddevelopable area. A graduate in science from Meerut College, Uttar Pradesh, and Mr. K.P. Singh pursuedAeronautical Engineering in UK, being subsequently selected to the Indian Army by British Officers Services

Selection Board, UK. He was commissioned into the renowned cavalry regiment of The Deccan Horse of theIndian Army. In 1960, he joined American Universal Electric Company and soon after its merger with DLFUniversal Limited in 1979, he took over as the Managing Director of this new company.

Positions

Present positions:

Chairman of the Board, DLF Limited.

Chairman and Director of 31 different private companies engaged in various sectors of the economy.

MeCommerce & Industry (FICCI).

Member of Delhi Vision Group to overview the Master Plan of Delhi 2021.

Honorary Consul General, Principality of Monaco.

Positions held:

President of the apex industry chamber of the country, Associated Chamber of Commerce & Industry of India(ASSOCHAM).

President of the PHD Chamber of Commerce and Industry.

Director of Central Board, Reserve Bank of India (RBI).

Achievements:

KP Singh made Gurgaon a world-famous outsourcing destination within 10 years, because of his world-classearthquake-proof office buildings, apartments, shopping malls and leisure facilities (including the DLF GaryPlayer designed Golf Course).

In 2008 he was briefly the world's richest real estate tycoon.


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THE DERRICK

UPCOMING EVENTS

CASE STUDY COMPETIETION . A CHALLENGE FOR THE MANAGEMENT STUDENTS

1) PARTICIPANTS:- All the management students can participate.

2) REGISTRATION: - Registration will be opened from 14th September to 20th September. Whosoever isinterested can register them online on the UMS or can seek the coordinators of SYNAPZ for registration form.

3) EVALUATION PARAMETERS: - The person will be evaluated on the different parameters.

a) Feasibility and sustainabilityb) Originalityc) Strategies adopted.

d) Scalability

4) PROCESS: - There will be a proper process which will be followed in order to judge the calibre of thestudent.

a) ROUND 1:- In first round a case study will be given to each team and team should submit the write upto the SYNAPZ CLUB coordinators and the shortlisted candidates will be informed and will go forsecond round. Last date for submission of the write up is 24th September 2011.

b) ROUND 2:- In 2nd round there will be 6 teams who will present a PPT on the same case in front of apanel of judges comprising of senior faculty members.

5) PRIZES: - Two prizes will be awarded. Top 6 teams will get certificates.

a) Winners will be awarded with Rs. 1000b) Runners Up will be awarded with Rs. 500

Registration form is available on UMS. Participants can send the filled forms at [email protected] OR

Contact us at: +919256438739

If you have any feedback, suggestions then mail us on [email protected].

OR Call on our number: +919256438739

Disclaimer: Derrick does not have its own reporters. These are the news collected from different

sources.

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