NEW DELHI l MONDAY l MARCH 26 l 2012 V O L X X X V I I I N O 2 2 1 6 P A G E S I R s 4 . 0 0 READ TO LEAD P 3 P 14 N E W S PRANAB SAYS INDIA FACING ‘ENERGY FAMINE’, BLAMES JAYA’S PARTY FOR DELAYING KOODANKULAM N-PLANT P U B L I S H E D F R O M : A H M E D A B A D P S U Loss-making CPSEs sink B A N G A L O R E deeper into red C H A N D I G A R H C H E N N A I H Y D E R A B A D Global consulting firms, including IBM Consulting, Boston Consulting Group, AT Kearney and McKinsey, have emerged as the largest recruiters of management graduates from the various IIMs. Close to 30% of the offers at IIM Bangalore came from consulting firms, while 18% of IIM Kozhikode students got placed with such global giants. ■ Details on P5 CWW bid: Tata taps Morgan Stanley Tata Communications has hired Morgan Stanley raising the stakes in the £1-billion battle for UK’s Cable & Wireless Worldwide. Morgan Stanley will work alongside Standard Chartered, its long-term adviser, as it considers an offer by Thursday’s cut-off. ■ P2 Posco likely to start plant work in July South Korean steel major Posco may begin work on its R52,000-crore steel mill in Orissa in July, as the state government is likely to hand over 2,700 acre to it by June. “The Orissa government would start land acquisition next month and is likely to hand over 2,700 acre of land to Posco by June in the wake of discussions with the PMO,” PTI quoted sources as saying. EDIT P8 American recovery A mix of steadfastness, caution and good luck is needed for that to happen Mohamed A El-Erian L U C K N O W M U M B A I Ajay Sukumaran & Debojyoti Ghosh Bangalore, Mar 25 Maruti hikes prices by up to R17,000 A few FMCG companies are planning to raise prices after the excise duty hike in the Budget. Godrej Consumer Products is planning an across-the-board 2% hike. Coca-Cola India is also planning to hike prices of certain packs. Britannia Industries, ITC Foods and Parle Products said they are reviewing the situation before taking a final call. ■ P4 K O L K A T A I HAVE SOME UNFINISHED BUSINESS AT MINDTREE, SAYS SUBROTO BAGCHI P U N E Infy eyes shop floor for products push; agriculture is next Consulting cos top recruiters at IIMs Post Budget, FMCG cos to hike prices K O C H I e F E SERVICES GIANT TARGETS NEW AVENUES In the news Maruti Suzuki India has increased the prices of its cars by up to R17,000 following the hike in excise duty. “There has been an average increase in prices of our vehicles by 1.75% after the Budget,” managing executive officer (marketing & sales) Mayank Pareek said. ■ Details on Page 4 P 10 P O W E R A Prime Minister Manmohan Singh raises a toast with South Korean President Lee Myung-bak during a luncheon at the presidential house in Seoul on Sunday. The countries agreed to expand their political and security ties, besides upgrading the already booming business cooperation to achieve an ambitious trade target of $40 billion by 2015. Fuel shortage prompts govt to warn against gas-based units Noor Mohammad New Delhi, Mar 25 T HE Union power ministry has asked developers not to plan projects based on domesticgasuntilthereisclarity about availability of the fuel. The ministry’s advisorycomesas8,200MWunderconstruction capacity, including Reliance Power’s Samalkot project in Andhra Pradesh, is facing the prospectofgettingstranded due to gas shortage due to production drop at Reliance Industries’s D6 block in the Krishna-Godavari basin. In a recent letter to states, GAS-BASED CAPACITY STOOD AT 18,093 MW OR 9.5% OF ALL INSTALLED CAPACITY AS ON FEBRUARY 29, 2012. 6,845 MW GAS-BASED CAPACITY WAS ENVISAGED DURING THE 11TH PLAN the central electricity authority, the nodal agency for finalising power sector capacity addition, has indicated that as per the petroleum ministry, India's natural gas production is likely to fall by 35% to 27.64 million metric standard cubic meters per day (mmscd) in the next fiscal and may dip another 12% to24.22mmscmdin2013-14. However, the advisory is unlikely to have any longterm impact on the capacity addition programme. For one, the government has targeted just 1,000 MW gasbased capacity out of 1 lakh MW envisaged under the coming 12th Plan. Second, in any case, there was no certaintyaboutgassupply. “The ministry has just removed the uncertainty by issuing the advisory,” NTT Docomo likely to use call option to raise Tata Teleservices stake Rajat Guha New Delhi, Mar 25 J APANESE telecom operator NTT Docomo is in talks to raise its 26% stake in Tata Teleservices,evenastheIndian partnerisevaluatingabuybackof Docomo’sshares. Docomo can increase its stake in Tata Teleservices as it has two call options it can exercise — first in March 2012 and second in March 2014 — which gives it the right, but not the obligation, to increase stake in its Indian telecom partner under certain conditions. Docomo bought its stake in Tata Teleservices for $2.7 billion in 2008. The covenants under the shareholder agreement signed between the two partners allow Docomo to raise stake if its Indian partner (Tata Teleservices) meets certain performance parameters. However, the agreement also allows Tata Teleservices to mandatorily buy THE JAPANESE CO IS IN TALKS TO UP ITS 26% STAKE EVEN AS TATA TELE IS EVALUATING A BUYBACK OF DOCOMO’S SHARES out the entire stake of Docomo in 2014 if the Japanese company is unable to findastrategicinvestoror the Indian partner is unable to meet certain performance parameters whichincludeachievinga target subscriber base and subscriber additions every year and attaining minimum revenues and profits for the company in specified time-frame, among others. Sources say Tata Teleservices has not been able to achieve the milestones till now and chances are remote it could meet those by 2014 due to market conditions and tight margins. Responding to an email query, an NTT Docomo spokesperson said: “NTT Docomo cannot comment on any actions it plans to take or the conditions of the agreement.” A Tata Teleservices spokesperson also declined comment. The Tata Sons 2010-11 annual report said the shareholding agreement with Docomo obligates the Indian conglomerate to buy back shares in the event of the Japanese partner deciding to divest its entire shareholding in Tata Teleservices. In 2008, Tata Sons andotherTataGroupfirms sold 6% stake to Docomo. Therest20%wassoldinthe form of new shares issued byTataTeleservices. Telecom players divided on 4G spectrum reserve price S HARP differences have emerged among major telecom, broadband wireless access (BWA) service providers and related industry associations over the fixing of reserve price for 4G spectrum, reports Ashish Sinha in New Delhi. Reliance Industries’ subsidiary Infotel Broadband, Bharti Airtel, Vodafone and Reliance Communications have given varied opinions on a consultation paper floated by Trai on spectrum auction issues. ■ Details on P5 said Shubhranshu Patnaik, senior director, oil & gas, Deloitte India. India’s gas-based generation capacity stood at 18,093 MW, or 9.5% of the total installedcapacity,asonFebruary 29, 2012. A total of 6,845 MW gas-based capacity was envisaged during the 11th Plan, including 1,500 MW Bawana power project in Delhi, Torrent’s 1,128 MW Pipavav project and Reliance Power’s 2,400 MW Samalkot project. However, some these projects are still awaiting gas supply and have deferred commissioning schedule pending that. ■ Continued on Page 2 C Rangarajan, PMEAC chairman Notsureif RBIwillcut ratesinApr: Rangarajan New Delhi, Mar 25: Prime Minister’s Economic Advisory Council chairman C Rangarajansaidhewasn’t sureif theReserveBankof India, which has maintained a tightmonetarypolicyforover two years, would go for a rate cut even in its April review. “I’m not sure what will happen as it would depend on the inflation number for March.Butduringthecourse of the year, there is a possibility (of rate cut by RBI),” he told MK Venu in an interview for Rajya Sabha TV. Rangarajan believes the 6.5% inflation rate projected for 2012-13 is achievable even with the excise duty hike and the likely increase in diesel price, but feels that a tolerable level will be still lower. Headline inflation firmed upto6.95%inFebruaryfroma yearearlierfrom6.55%inJanuary Rangarajan said manu. facturing inflation might comedownfurtheroverthenext one or two months, but said it was likely to stay at that level duringtherestof thefiscal. ■ Q&A on Page 2 STRATEGIC shift is underwayatInfosys, India’s second largest software exporter. The $7-billion firm, globally renowned for its IT services, is opening a whole new channelof doingbusinesswithits latest software product platforms, taking the first steps towards achieving what Infosys 3.0 set out to do – securing a third of its revenues fromproducts.Atpresent,Infosys derives only 5% revenues from products. The new platform for emerging markets, TradeEdge, is probably where the rubber meets the road for Infosys. In India's maze of kiranastoreswherecomputers are yet to break in, getting real-time analytics on goods sold could be a daunting experience. TradeEdge, which Infosys co-developed with an unidentified American FMCG giant to link up small stores and manage the distribution channel with call centres, is now used in seven emergingeconomies,including India. The software product is expected to be Infosys’s biggest calling card in the product space after the success of its banking software Finacle, launched NEW CALLING ■ Infosys to use TradeEdge to secure a third of its revenues from products ■ TradeEdge links stores & manages distribution channel with call centres ■ In just a year, Infy has won 23 customers for new product platforms more than a decade ago. Infosys executive cochairman Kris Gopalakrishnan told FE that product revenues will soon play a major role at Infosys. “There is no doubt that it is a big part of the future,” he said in a recent interaction. In just a year, the firm has won 23 customers for new product platforms including e-commerce applications, digital marketing, talent management and sourcing. It recently launched a mobile wallet for phone transactions (Airtel Money) and is also looking to adapt Flypp, its mobile phone app store to the television app space. Sanjay Purohit, senior vice-president and global head for products, platforms and solutions (PPS), Infosys, said: “Over3-5years,youwill seemoremomentumcoming out of this every quarter. We have just started thinking throughwhatweshoulddoin the agriculture space; that's one focus area over time.” The platforms clocked a contract value of $300 million during the December quarter. However, Purohit reckons the next 18-24 months will still be the foundation years as the PPS business gains momentum and credibility. “The market will then start understanding what we are trying to do,” he said. The 12 new platforms and a suite of products will add to thecompany'sflagshipbanking product, Finacle, which earned$237millionrevenues in the last three quarters. Finacle,aweb-basedcorebanking system launched in 2000, is currently operating in 150 banksacross75countries.Infosys claims a marketshare of over 70% for Finacle in India where the product first created a base for itself before expanding its footprint intoAsiaPacificandthecompany's biggest markets such as the US and Europe. ■ Continued on Page 2
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.