Round up of events and news in the corporate world
Hot Picks?: Statues of Indian leaders made in plaster of Paris, cement and brass are on sale near the Rajiv Gandhi International Airport in Hyderabad. Cost: Rs 25,000 to Rs 3 lakh
CORPORATE
The spectrum saga apart, these are difficult times for telecom companies indeed. In the latest episode, Anil Dhirubhai Ambani Group flagship, Reliance Communications, has reported an 86 per cent drop in net profit at Rs 168.6 crore for the January-March quarter. This is the second consecutive drop in profits as the firm struggles in a competitive market and deals with net debt of over Rs 32,000 crore. Meanwhile, the CBI continues to push ahead with its 2G investigation. A special CBI court sent Cineyug Films's Karim Morani to jail on charges that he acted as a conduit for illegal money transfers. Shares of Sun TV, controlled by the family of DMK's Dayanidhi Maran, shed nearly 28 per cent on a single day after reports that the former telecom minister approved the sale of equity in phone firm Aircel to Maxis of Malaysia. Maxis later invested in a Sun TV unit.
Jaguar Land Rover is turning out to be a lucky mascot for Tata Motors. JLR's good showing resulted in Tata Motors posting a four-fold jump in consolidated net profit at Rs 9,274 crore in 2010/11. At Rs 1.23 trillion (one trillion equals 100,000 crore), consolidated revenues were up 33 per cent. JLR operations buffered Tata Motors's standalone net profit, which fell 19 per cent to Rs 1,812 crore. And, to think, just two years ago, the JLR buyout was considered a costly mistake for Tata Motors.
Greenpeace takes on Bharti Airtel for the telecom firm's use of diesel to run mobile towers instead of renewable energy. True, the use of generators as power backups at mobile towers makes the industry the second-biggest consumer of diesel in India after road and rail transport. Still, it looks like Greenpeace will stew for a while since solar panels are not a robust or inexpensive fix.
Talk about incentives. Corporate whistleblowers stand to win multi-million-dollar payouts for reporting financial wrongdoing under a new programme approved by the US securities regulator. Tipsters will be paid between 10 and 30 per cent of sanctions over $1 million for original and useful information.
As succession battles go, this one promises to be in the limelight for some time. Deutsche Bank is in search of a successor to CEO Josef Ackermann whose contract runs until 2013. Jaipur-born Anshu Jain is a favourite of stockholders, but Ackermann seems not hot on his candidature. Jain is head of investment banking, the most profitable business of the German banking giant.
French Finance Minister Christine Lagarde is on a global tour seeking support from all quarters in her bid to replace compatriot Dominique Strauss-Kahn, who quit as IMF Managing Director after being charged for sexual assault. Lagarde's credentials have already won her several backers.
ECONOMY
High inflation is likely to cut into savings of Indian households, as they struggle to maintain spending at last year's levels, according to Morgan Stanley researchers. But, here's the kicker: the research indicates households are likely to cut back on consumption on grocery items but may not reduce consumption of lifestyle category and household amenities. The research is based on a survey of 2008 people representing low, medium and mediumhigh income groups.
SLOW DOWN
Fall in staple consumption seen in the next 12 months
Per capita income of Indians grew by 17.9 per cent to Rs 54,835 in 2010/11 from Rs 46,492 the previous year. Now we know why consumer demand is steaming ahead despite high levels of inflation. A point for politicians to note.
300,000 cloud computing jobs are coming to India. Or, so predicts Microsoft CEO Steve Ballmer. This is cheering news for India's 1,300 independent software vendors, some two million programmers, and 11,000 integrators.
20,000 India wants to raise its nuclear power generation capacity to 20,000 MW by 2020. In contrast, Germany, whose Chancellor Angela Merkel was in India recently, plans to phase out all its nuclear power plants by 2022.
4.7% India's fiscal deficit as a percentage of gross domestic product in 2010/11. This is lower than the revised estimate of 5.1 per cent - small comfort for the Union government fighting inflation. The deficit stood at Rs 3.69 trillion.
MARKETS
The Securities and Exchange Board of India has begun a probe into the possible use of fake bids for artifi cially pushing up the subscription levels in numerous initial public offerings, or IPOs, over past few years. Many of these IPOs are languishing today.
Action heats up in the second rung among US tech stocks. International Business Machines, or IBM, has edged past Microsoft in market value for the first time since April 1996. Microsoft is now the third-largest US tech company by market value, after Apple and IBM. The last decade, in particular, has been brutal for Microsoft investors. An investment of $100,000 in Microsoft stock 10 years ago would now be worth $69,000; its value in IBM stock $143,000.
Debt securities are in vogue. Indian companies have raised $15.7 billion through 81 deals so far this year through such securities. Vedanta Resources was ahead with a $1.7-billion bond issue.
COMING UP
Oil India, India's second-largest oil exploration company, is likely to come up with follow on public offer this financial year. An initial share sale by the company in September 2009 had raked in Rs 4,900 crore.
The Central Board of Direct Taxes will set up a criminal investigation directorate, paving the way for the incometax department to probe cases involving tax evasion arising out of criminal activities. High-profile probes such as the Hasan Ali case can now be effectively investigated.
CORPORATE
The spectrum saga apart, these are difficult times for telecom companies indeed. In the latest episode, Anil Dhirubhai Ambani Group flagship, Reliance Communications, has reported an 86 per cent drop in net profit at Rs 168.6 crore for the January-March quarter. This is the second consecutive drop in profits as the firm struggles in a competitive market and deals with net debt of over Rs 32,000 crore. Meanwhile, the CBI continues to push ahead with its 2G investigation. A special CBI court sent Cineyug Films's Karim Morani to jail on charges that he acted as a conduit for illegal money transfers. Shares of Sun TV, controlled by the family of DMK's Dayanidhi Maran, shed nearly 28 per cent on a single day after reports that the former telecom minister approved the sale of equity in phone firm Aircel to Maxis of Malaysia. Maxis later invested in a Sun TV unit.
- Honda Motorcycles and Scooters India, or HMSI, is revving up its act, just months after exiting its motorbike joint venture with the Hero Group. HMSI wants to set up a third factory in Karnataka that, together with its Manesar, Haryana plant and a new one coming up at Tapukkara, Rajasthan, will take its India capacity to four million units by 2013. Market leader Hero has a capacity of six million and Bajaj Auto five million. That's zippy.
- British services and consulting firm Serco Group has acquired Intelenet Global Services, an unlisted business process outsourcing firm in India, for 385 million (around Rs 2,864 crore). The deal is a 100 per cent buyout from Blackstone Group, Barclays and HDFC. Is a consolidation wave building up in the Indian BPO business?
Jaguar Land Rover is turning out to be a lucky mascot for Tata Motors. JLR's good showing resulted in Tata Motors posting a four-fold jump in consolidated net profit at Rs 9,274 crore in 2010/11. At Rs 1.23 trillion (one trillion equals 100,000 crore), consolidated revenues were up 33 per cent. JLR operations buffered Tata Motors's standalone net profit, which fell 19 per cent to Rs 1,812 crore. And, to think, just two years ago, the JLR buyout was considered a costly mistake for Tata Motors.
Greenpeace takes on Bharti Airtel for the telecom firm's use of diesel to run mobile towers instead of renewable energy. True, the use of generators as power backups at mobile towers makes the industry the second-biggest consumer of diesel in India after road and rail transport. Still, it looks like Greenpeace will stew for a while since solar panels are not a robust or inexpensive fix.
Talk about incentives. Corporate whistleblowers stand to win multi-million-dollar payouts for reporting financial wrongdoing under a new programme approved by the US securities regulator. Tipsters will be paid between 10 and 30 per cent of sanctions over $1 million for original and useful information.
As succession battles go, this one promises to be in the limelight for some time. Deutsche Bank is in search of a successor to CEO Josef Ackermann whose contract runs until 2013. Jaipur-born Anshu Jain is a favourite of stockholders, but Ackermann seems not hot on his candidature. Jain is head of investment banking, the most profitable business of the German banking giant.
French Finance Minister Christine Lagarde is on a global tour seeking support from all quarters in her bid to replace compatriot Dominique Strauss-Kahn, who quit as IMF Managing Director after being charged for sexual assault. Lagarde's credentials have already won her several backers.
ECONOMY
High inflation is likely to cut into savings of Indian households, as they struggle to maintain spending at last year's levels, according to Morgan Stanley researchers. But, here's the kicker: the research indicates households are likely to cut back on consumption on grocery items but may not reduce consumption of lifestyle category and household amenities. The research is based on a survey of 2008 people representing low, medium and mediumhigh income groups.
SLOW DOWN
Fall in staple consumption seen in the next 12 months
Per capita income of Indians grew by 17.9 per cent to Rs 54,835 in 2010/11 from Rs 46,492 the previous year. Now we know why consumer demand is steaming ahead despite high levels of inflation. A point for politicians to note.
300,000 cloud computing jobs are coming to India. Or, so predicts Microsoft CEO Steve Ballmer. This is cheering news for India's 1,300 independent software vendors, some two million programmers, and 11,000 integrators.
20,000 India wants to raise its nuclear power generation capacity to 20,000 MW by 2020. In contrast, Germany, whose Chancellor Angela Merkel was in India recently, plans to phase out all its nuclear power plants by 2022.
4.7% India's fiscal deficit as a percentage of gross domestic product in 2010/11. This is lower than the revised estimate of 5.1 per cent - small comfort for the Union government fighting inflation. The deficit stood at Rs 3.69 trillion.
MARKETS
The Securities and Exchange Board of India has begun a probe into the possible use of fake bids for artifi cially pushing up the subscription levels in numerous initial public offerings, or IPOs, over past few years. Many of these IPOs are languishing today.
Action heats up in the second rung among US tech stocks. International Business Machines, or IBM, has edged past Microsoft in market value for the first time since April 1996. Microsoft is now the third-largest US tech company by market value, after Apple and IBM. The last decade, in particular, has been brutal for Microsoft investors. An investment of $100,000 in Microsoft stock 10 years ago would now be worth $69,000; its value in IBM stock $143,000.
Debt securities are in vogue. Indian companies have raised $15.7 billion through 81 deals so far this year through such securities. Vedanta Resources was ahead with a $1.7-billion bond issue.
COMING UP
Oil India, India's second-largest oil exploration company, is likely to come up with follow on public offer this financial year. An initial share sale by the company in September 2009 had raked in Rs 4,900 crore.
The Central Board of Direct Taxes will set up a criminal investigation directorate, paving the way for the incometax department to probe cases involving tax evasion arising out of criminal activities. High-profile probes such as the Hasan Ali case can now be effectively investigated.
