SectorSnippets Issue 21:TP4 WhitePaper A4.QXD · • Nissan to build manufacturing unit at Oragadam...

16
Sectoral Snippets India Industry Information Issue 21 - July 2008 KPMG IN INDIA

Transcript of SectorSnippets Issue 21:TP4 WhitePaper A4.QXD · • Nissan to build manufacturing unit at Oragadam...

Sectoral SnippetsIndia Industry Information

Issue 21 - July 2008

KPMG IN INDIA

Page 2 of 16

Sectoral Snippets

About Sectoral Snippets

Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter brought out by

KPMG in India. This newsletter provides an overview of the Indian economy in the form of

news-briefs from across key sectors.

Contact [email protected] if you are interested in receiving this newsletter on a

regular basis, or wish to unsubscribe.

Table of Contents

1. Indian Economy 3

2. Auto and Auto Components 4

3. Banking and Insurance 5

4. Consumer Markets and Retail 6

5. Hospitality 7

6. IT / ITeS 8

7. Media 9

8. Oil and Gas 10

9. Pharma 11

10. Power 12

11.Real Estate and SEZs 13

12.Telecom 14

13.Transport and Logistics 15

Sectoral Snippets, Issue 21

India’s�tourism�and�hospitality�industry�has�beenon�an�upward�curve,�with�tourism�contributingaround�6.8�percent�to�India’s�GDP,�employingapproximately�41�million�people�and�generatingaround�USD�11.96�billion�in�foreign�exchangeearnings�in�2007.�These�developments�have�hada�cascading�effect�on�the�Indian�hospitalityindustry,�enhancing�the�sector’s�attractivenessfor�investment.�Despite�facing�challenges�suchas�shortage�of�trained�manpower,�high�luxurytaxes�and�an�inadequate�tourism�infrastructure,the�hospitality�sector�has�much�room�to�grow-especially�with�heritage,�wildlife,�medicaltourism�etc.�gaining�momentum.

Against�this�backdrop,�we�have�focused�on�keydevelopments�in�the�hospitality�sector,�underthe�new�section�‘Hospitality’,�in�SectoralSnippets.�

We�hope�you�find�this�edition�useful�andinformative.

Regards,

Russell

Russell Parera

Chief Executive Officer

KPMG in India

©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

For�the�week-ended�June�28,�2008,�the�wholesale�prices-based�inflation�touched

a�new�13-year�high�of�11.89�percent�1,�much�higher�than�the�Reserve�Bank’s

tolerance�limit�of�5.5�percent�for�the�current�fiscal.�This�is�the�highest�since�the

current�series�of�inflation�numbers�became�available�in�April�1995.

The�inflationary�pressures,�primarily�an�outcome�of�the�record�crude�oil�and

commodity�prices,�had�forced�the�Reserve�Bank�to�effect�a�series�of�hikes�in�its

key-rates.�The�apex�bank�hiked�its�short-term�repo�rate�at�which�it�lends�to�banks

and�Cash�Reserve�Ratio�(CRR),�the�percentage�of�money�that�banks�are

mandated�to�keep�with�the�central�bank.�Following�the�hike,�the�CRR�and�repo

rate�presently�stands�at�8.75�percent�and�8.5�percent�respectively2.�To�anchor

inflation,�the�central�bank�could�go�in�for�further�rate�hikes�in�its�quarterly�review

of�the�monetary�policy�on�July�29,�2008.

The�yield�on�India’s�10-year�bonds�shot�up�to�9.5�percent,�a�7�year�high,�after�the

inflation�numbers�climbed�to�11.89�for�the�week�to�28�June,�2008�3.�Banks

started�raising�their�lending�rates�in�the�second�half�of�June�and�economists

expect�interest�rates�to�harden�further�as�inflation�continues�to�rise,�which�are

bound�to�affect�fresh�projects.�Due�to�the�rising�cost�of�funds,�some�companies

could�defer�their�investment�plans.�Retail�finance�and�real�estate�are�witnessing

severe�slowdown�due�to�fund�constraints.�According�to�a�report�by�Projects

Today,�investments�of�around�USD�800�billion�may�be�affected�in�the�short�–term

due�to�rising�prices.�

Industry�continued�to�bear�the�brunt�of�rising�interest�rates�as�its�growth�dipped

to�3.8�percent�in�May�2008�4,�against�10.6�percent�a�year-ago.�The�industrial

production�growth�data�points�to�a�slowdown�in�manufacturing�and�capital

goods.�Manufacturing�grew�by�a�modest�3.9�percent�in�May�against�11.3�percent

a�year-ago.�The�growth�in�capital�goods�production�slowed�to�2.5�percent�in�May

from�11.4�percent�in�the�same�month�last�year.�

The�weak�global�environment�coupled�with�portfolio�outflows�has�resulted�in�a

deceleration�in�forex�reserves.�Fiscal�YTD,�foreign�currency�assets�have�risen�by

USD�2.8�billion�vs.�USD14�billion�in�the�same�period�last�year�and�currently�stand

at�USD�302�billion5.�Forex�reserves�including�gold�are�at�USD�312�billion.�The

rupee�may�have�been�weaker,�were�it�not�for�RBI�intervention�and�recent

measures�(special�market�operations,�ECB�liberalization,�higher�FII�investment�in

debt)�taken�to�hold�up�the�unit.

Inflation�along�with�political�tensions�surrounding�Indo-US�nuclear�accord�have

added�to�the�worries�of�ruling�government.�The�Left�parties�withdrew�support�of

the�Congress-led�UPA�Government�after�four�years�of�protest�against�the

decision�to�sign�the�civilian�nuclear�deal�with�the�United�States.�However,�the

Samajwadi�Party�(SP),�a�regional�party�of�Uttar�Pradesh�has�indicated�its�support

for�the�government�and�the�government�appears�confident�of�winning�a�likely

vote�of�confidence.

Indian EconomyPage 3 of 16

Analyst: Asmita Deshmukh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source:�Ministry�of�Industry�and�Statistics

Source: 1,4 Central Statistical Organisation2,3,5 Reserve Bank of India

• Altius Autoworld and Gulliver International Co. form a JV

India’s�Altius�Autoworld�and�Gulliver�International�Co.�of�Japan�have�reportedly

planned�to�invest�USD�234�million�over�the�next�5�years�in�the�auto�servicing

arena.�The�companies�have�planned�to�open�300�outlets�to�service�luxury�cars,

heavy�commercial�vehicles�and�automotive�machines�used�in�the�construction

industry�in�India.�Gulliver�and�Altius�are�to�hold�equity�in�the�ratio�51:49,

respectively.

• Ashok Minda group acquires Schenk Plastic Solutions, a German

firm

The�Ashok�Minda�group�has�acquired�a�plastic�automobile�component

manufacturer;�Schenk�Plastic�Solutions,�a�German-based�firm.�The�deal�is

expected�to�be�completed�by�August�2008.�Schenk�has�annual�sales�of�USD

118.25�million�and�about�500�employees.�This�could�turn�out�to�be�a�strategic

acquisition�for�the�Minda�Group�as�Daimler�accounts�for�60�percent�of�Schenk’s

total�business�and�could�help�the�Ashok�Minda�group�enter�European�markets.�

• Nissan to build manufacturing unit at Oragadam

Nissan�Motor�Co.�has�announced�the�setting�up�a�manufacturing�plant�at

Oragadam�with�French�car�manufacturer�Renault�with�an�investment�of�USD

1.1�billion.�The�plant�is�expected�to�be�operational�in�2�years�and�is�expected�to

roll�out�400,000�cars�annually.

• Mahindra and Mahindra acquire an Italian motorcycle designing

firm

Mahindra�and�Mahindra�(M&M)�has�acquired�a�controlling�stake�in�a�leading

two-wheeler�designing�firm,�Engines�Engineering�SpA�of�Italy.�According�to�the

agreement,�between�M&M�subsidiary�Mahindra�Systech�and�the�Engines

Engineering�SpA,�a�new�entity�called�Engines�Engineering�S.r.L�has�been

formed,�with�M&M�holding�a�100�percent�stake�in�it.�The�Italian�firm’s�revenue

is�around�USD�12�million.�This�acquisition�could�help�Mahindra�penetrate�the

European,�Chinese�and�Russian�markets.

• Reva Electric Car Company to invest USD 20 million

The�Bangalore-based�electric�car�manufacturer�Reva�Electric�Car�Company

(RECC)�has�launched�its�REVAi�two-seater�hatchback�a�revised�version�of�its

earlier�car.�With�the�growing�prices�of�petrol�and�increase�in�the�popularity�of

electric�and�hybrid�vehicles,�RECC�has�planned�to�invest�USD�20�million�in�its

Bangalore�unit�to�increase�the�production�from�6,000�units�to�30,000�units

annually.�Also�to�popularize�the�car,�the�Delhi�government�has�announced�a�15

percent�subsidy�on�its�base�price,�12.5�percent�exemption�of�Value-Added�Tax

(VAT),�and�a�refund�of�road�tax�and�registration�charges.

Page 4 of 16

Auto and Auto Components

Analyst: Rajiv Somani©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

New Launches in June 2008

MODEL PRICE (USD)

New�Ford�Fiesta 14,245-16,900

Revai 6,980-�8,750

Mercedes�E�230� 97,000

Mercedes�E�220�CDI� 91,000

Honda�Civic�Hybrid 47,000

CBF�Stunner�(HondaMotorcycle�and�Scooters�India) 1,100-1,200

Skoda�Fabia�1.2�Mpi 11,700-13,900

Maruti�800�Duo�(LPG) 4,800-5,280

TYZF-R15,�Yamaha� 2,280

Source:�Collated�from�various�press�articles�in�themonth�of�June,�2008

• Indian banks raise lending rates

With�the�Reserve�Bank�of�India�(RBI)�hiking�the�short-term�repo�rate�to�8.5percent�and�cash�reserve�ratio�(CRR)�to�8.75�percent,�as�part�of�its�on-goingeffort�to�contain�rising�inflation,�public�and�private�sector�banks�have�hiked�theirinterest�rates�across�the�board.�Leading�banks�like�State�Bank�of�India,�PunjabNational�Bank,�ICICI�Bank�and�HDFC�Bank�have�hiked�their�respective�primelending�rates�in�the�range�of�0.25�percent�to�1�percent�to�protect�their�margins.

• GIC Re signs cooperation deal with Hannover Re

German�reinsurer�Hannover�Re�and�Indian�government-owned�GeneralInsurance�Corporation�of�India�(GIC)�have�entered�into�an�exclusive�cooperationagreement�regarding�the�joint�development,�marketing�and�underwriting�of�lifereinsurance�business�in�India.�Under�the�five�year�agreement,�the�twocompanies�will�be�sharing�underwriting�revenues�from�new�businesses.�Thiscooperation�is�expected�to�provide�Hannover�with�faster�access�to�the�rapidlyexpanding�Indian�insurance�market,�while�GIC�Re,�which�currently�providesnon-life�reinsurance,�is�likely�to�profit�from�Hannover�Re’s�long-standingexpertise�in�life�reinsurance.

• Societe Generale plans private bank expansion in India

French�bank�Societe�Generale�is�planning�to�expand�its�private�bankingoperations�in�India,�as�it�is�also�intends�to�double�its�staff�and�expand�its�reachto�8�to�10�Indian�cities�from�existing�offices�in�Mumbai�and�New�Delhi.�SocieteGenerale�is�also�gearing�up�to�launch�its�Non-Banking�Finance�Company�(NBFC)operations�in�India,�having�received�the�regulatory�approval.�The�group�expectsto�offer�a�wider�portfolio�of�products�to�its�rapidly-growing�customer�base�inIndia�through�the�NBFC�route.�Societe�Generale�follows�a�host�of�other�foreignmajors�like�HSBC�and�Deutsche�that�are�looking�at�enhancing�their�NBFCpresence�in�India.

• RBI draft norms for mobile banking

As�a�first�major�step�towards�mobile�payment�framework�in�India,�the�ReserveBank�of�India�(RBI)�has�issued�draft�guidelines�for�mobile�banking�with�a�long-term�goal�that�is�expected�to�enable�funds�transfer�across�different�bankaccounts�on�a�real�time�basis,�irrespective�of�the�mobile�network.

As�per�the�draft,�even�those�with�the�most�basic�mobile�phones�may�be�able�topay�for�transactions�through�their�mobile�in�the�future.�RBI�has�permitted�theuse�of�SMS-based�mobile�payments�for�small�transactions�up�to�USD�38.Banks�which�are�licensed�and�supervised�in�India�and�have�a�physical�presencein�India�are�to�be�permitted�to�offer�mobile�payment�services�to�residents�ofIndia.�

Page 5 of 16

Banking and Insurance

Analyst: Kunal Jain©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source: RBI

• GIC to invest USD 214 million in Reid and Taylor

The�private�equity�investment�arm�of�Government�of�Singapore�InvestmentCorporation�(GIC�SI)�is�expected�to�acquire�25.4�percent�in�Reid�&�Taylor,�asubsidiary�of�Indian�apparel�firm�S�Kumars�Nationwide,�for�USD�214�million.GIC�SI�plans�to�make�this�investment�through�its�affiliate,�Indivest�Pte.�Ltd.�Theinvestment�is�expected�to�help�Reid�&�Taylor�further�strengthen�its�ability�togrow�in�the�luxury�fabric�and�apparel�and�other�textile�segments.�S�Kumars�hasfive�manufacturing�facilities�with�the�capacity�to�produce�over�200,000�metersper�day.�It�has�30,000�outlets�across�the�country

• Triumph to set up 450 stores across India

Global�women's�innerwear�maker�Triumph�is�expected�to�invest�around�USD47�million�to�set�up�450�stores�in�100�cities�across�India�over�the�next�fiveyears.�Of�the�450�stores,�10�are�to�be�flagship�stores�while�the�remaining440�are�to�be�set�up�through�the�franchisee�route.�The�company�has�alreadyinvested�USD�30�million�to�set�up�a�large�manufacturing�facility�in�Chennai.The�facility,�which�currently�employs�1,300�people,�is�expected�to�employmore�than�5,000�people�when�fully�operational.�

• LG to expand its handset manufacturing facility in India

Consumer�durables�major,�LG�Electronics�is�planning�to�expand�its�handsetmanufacturing�facility�in�India.�The�facility�is�to�be�used�to�export�mobile�phonesfrom�India�to�European�countries�and�the�Commonwealth�of�IndependentStates.�The�company�also�plans�to�expand�LG's�line�of�mobile�accessories�suchas�blue�tooths�and�ear�phones.�LG�has�manufacturing�hubs�in�China,�Brazil,Mexico�and�India.�LG’s�manufacturing�facility�which�is�located�in�India�exportshandsets�to�countries�in�the�Middle�East,�Africa�and�Asia�and�alsomanufactures�mobile�phones�for�the�local�market.

• Reebok to increase retail presence to 225 Indian cities

Reebok�India�has�firmed�up�plans�to�expand�its�retail�presence�in�India�by�theend�of�2008.�The�number�of�exclusive�Reebok�stores�in�the�country�is�expectedto�go�up�from�675�to�800�by�December�2008.�The�company�which�is�present�inall�major�cities�has�plans�to�tap�tier-II�and�tier�III�towns�and�cities�across�India.As�a�strategy,�Reebok�focuses�on�blending�sports�technology�with�lifestyleproducts.�From�being�the�first�athletic�footwear�brand�to�use�soft�garmentleather,�Reebok�is�now�planning�to�venture�into�denim�manufacture.�Their�ideais�to�leverage�on�the�synergy�between�music,�fashion�and�sport.

• Adidas plans retail expansion

German�sportswear�and�apparel�major�Adidas�is�planning�for�a�major�expansionacross�India�in�2008,�which�would�involve�setting�up�around�160�new�stores.Post�the�planned�expansion,�Adidas�would�have�450�franchise�stores�andpresence�in�140�cities�as�against�119�cities�currently.�The�company�recentlylaunched�its�premium�range�of�products�called�'Adidas�Originals’�in�Delhi�andChandigarh,�and�also�has�plans�to�add�6�such�stores�in�select�cities�by�2009.

Page 6 of 16

Consumer Markets and Retail

Analyst: Sonia Topiwala ©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source:�Images�India�Retail�Report,�2007

Growth of Indian Footwear retail (USD

million)

• Marriott plans expansion in Hyderabad

Marriott�International�Inc.�(Marriott),�one�of�the�leading�global�hospitalitycompanies�in�India,�plans�to�open�3�more�properties�in�Hyderabad�by�2010.Marriott�intends�to�set�up�an�186-room�budget�hotel,�‘Courtyard’�behind�itsexisting�property�in�Hyderabad�and�executive�apartments�in�Banjara�Hills.�Theexecutive�apartment�would�have�150-175�rooms.�These�properties�are�expectedto�be�developed�by�the�Viceroy�group.�Marriott�also�plans�to�open�a�premiumJW�Marriott�near�HITEC�City�to�be�developed�by�Emaar�MGF.

• Hilton hotels to expand in Asia

Hilton�hotel�Corporation�plans�to�open�300�hotels�in�Asia�by�2017.�The�focus�ofthis�development�project�is�expected�to�be�in�India�and�China.�Hilton�intends�todevelop�about�17�hotels�in�India�in�partnership�with�Indian�property�developers,DLF�Limited�by�2017.�Hilton�Hotels�is�a�leading�global�hospitality�company�withmore�than�3,000�hotels�in�74�countries�and�territories.

• Accor plans serviced residence project

Accor�Hospitality,�a�French�hospitality�chain�has�entered�into�an�agreement�witha�Bangalore-based�property�developer,�Brigade�Enterprises�for�themanagement�of�the�serviced�residences�project�in�Bangalore.�The�servicedresidence�project�is�reportedly�branded�as�Mercure�and�is�scheduled�to�openby�the�end�of�2008.�It�is�primarily�targeted�towards�the�business�travelermarket�in�Bangalore.

Accor�is�also�planning�to�expand�the�presence�of�its�existing�brands�by�settingup�100�budget�hotels�under�its�brand�name�-�Formule1�and�about�25�hotelsunder�its�Ibis�brand�in�India.

• Raheja Developers to enter the hospitality sector

Raheja�Developers,�an�Indian�real�estate�company,�is�foraying�into�hospitalityprojects�to�develop�five�hotels�in�the�next�two�years.�The�company�expects�tocater�to�business�travelers�in�and�around�the�NCR�region�with�its�proposedbusiness�hotels,�five-star�hotels�and�budget�hotels�in�this�region.

• IHC to buy hotel chains

Indian�Hospitality�Corporation�(IHC),�a�joint�venture�of�Gordon�House�Hotels,Mars�Restaurant�and�SkyGourmet�Catering,�plans�to�acquire�and�rebrand�theirhotel�groups�and�restaurant�chains.�IHC�intends�to�add�2,000�hotel�roomsacross�17�cities,�including�metros�and�towns�such�as�Lucknow,�Amritsar,Raipur,�and�Chandigarh.�

• Royal Orchid to invest USD 121 million in setting up six hotels

Royal�Orchid�Hotels�Ltd�(ROHL),�a�Bangalore-based�group�plans�to�develop�sixnew�five-star�hotels�in�Ahmedabad,�Mumbai,�Hyderabad�and�Jaipur�by�the�endof�2010�with�an�investment�of�USD�121�million�(INR�5,200�million).�ROHL�isalso�adding�a�leisure�resort�at�its�USD�18.62�million�(INR�800�million)�beachfrontproperty�in�Dar�es�Salaam�in�Tanzania.�It�is�expected�to�spend�USD�12.1�million(INR�520�million)�to�develop�a�leisure�resort�and�5-star�hotel�by�December�2010

Page 7 of 16

Analyst: Pallavi Phatak

Hospitality

©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

"India is poised for a bumpergrowth in tourism over the nextfew years. For Accor, this is atremendous beginning for theMercure brand in India. Webelieve Mercure, a mid-scalebrand, has a great future in Indiaand we do expect that we willreach a number of otheragreements this year to developMercure hotels and are activelyseeking business opportunitiesthroughout India to further expandour network," Michael Issenberg, Chairman and COO, Accor AsiaPacific (Source: Financial Express, June 10, 2008)

• KPO sector to reach USD 10 billion by 2012

According�to�report�by�the�Associated�Chambers�of�Commerce�and�Industry�ofIndia�(ASSOCHAM),�the�Indian�Knowledge�Process�Outsourcing�(KPO)�industryis�estimated�to�grow�at�the�rate�of�25-27�percent�and�reach�USD�10�billion�by2012.�Currently,�the�size�of�the�KPO�sector�is�estimated�at�USD�4�billion�and�ithas�grown�at�around�15�percent�in�the�last�few�years,�dominated�byprofessionals�from�the�management,�engineering�and�medical�fields.�Thesector�is�estimated�to�employ�over�100,000�people�by�2012�as�against�thecurrent�number�of�about�40,000.

• WNS buys BIZAPS

WNS�(Holdings)�Limited,�a�global�Business�Process�Outsourcing�(BPO)�serviceprovider,�has�acquired�Business�Applications�Associates�(BizAps)�for�anundisclosed�sum.�Based�in�the�UK�and�US,�with�development�capability�inChina,�BizAps�provides�SAP�solutions�to�optimize�Enterprise�Resource�Planning(ERP)�functionality�for�finance�and�accounting�processes.�WNS�believes�thatthe�acquisition�is�in�line�with�its�strategy�of�enhancing�service�offerings�andexpanding�its�global�footprint.

• TCS bags contract from Uganda authority

Tata�Consultancy�Services�(TCS),�India’s�largest�IT�company�has�won�a�contractfrom�the�Uganda�Revenue�Authority�to�design�and�install�an�integrated�taxadministration�system.�Under�the�contract,�TCS�would�develop�a�suite�ofapplications�for�key�tax�activities�like�registration,�returns,�payments,assessment,�audit,�investigations�etc.�TCS�would�also�provide�a�humanresource�management�system,�document�management�system�and�casetracking�system�as�part�of�the�project.�The�USD�11.5�million�project�has�beenfunded�by�the�UK,�the�Netherlands,�Belgium�and�Uganda.

• Tanla acquires 85 percent in Openbit

Tanla�has�acquired�a�stake�in�Finland-based�Openbit,�a�leading�provider�ofglobal�on�device�payments�for�mobile�applications.�Tanla�is�acquiring�85�percentfrom�the�outgoing�financial�investors,�in�an�all�cash�deal.�The�remaining�15percent�held�by�the�management�is�agreed�to�be�purchased�by�Tanla�in�twotranches�of�5�percent�and�10�percent�after�the�first�and�second�yearrespectively.�With�this�acquisition,�Tanla�expects�to�extend�its�payment�portfoliobeyond�operator�billing�products�to�address�the�emerging�market�for�rich�mediaand�business�applications�on�handsets.

• Indian IT market to grow by 18 percent in 2008

As�per�the�study�conducted�by�Forrester,�The�Indian�IT�market�is�estimated�togrow�by�18�percent�in�the�year�2008�to�reach�USD�38�billion,�the�secondhighest�growth�rate�after�China�which�is�likely�to�attain�a�20�percent�growthand�touch�USD�138�billion.�Indian�firms�are�likely�to�make�the�greatest�leaps�inapplication�integration,�ERP,�customer�relationship�management,�unifiedcommunication,�and�security�and�regulatory�compliance.�

Page 8 of 16

Analyst: Parnika Patil

IT / ITeS

©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

"The IT sector has long looked toIndia for top-drawer technologytalent. But India is poised tobecome an increasingly importantmarket for technology vendors asits population comes of age (halfof India's population today isunder 20), its rural areas becomeincreasingly developed, and itsengagement with the USincreases".Jonathan Brown, Senior Analyst, Forrester.(Source: The Economic Times, June 13, 2008

• Warburg Pincus acquires stake in Laqshay Media

Global�private�equity�firm,�Warburg�Pincus�has�acquired�15�percent�stake�in�anIndian�outdoor�advertising�firm�Laqshay�Media�for�USD�64.5�million.�LaqshyaMedia�has�a�strong�national�and�international�presence�and�ownsadvertisement�assets�ranging�from�digital�media�networks,�transit�mediaconcessions,�street�furniture�and�traditional�unipoles�and�billboards.�LaqshayMedia�plans�to�expand�its�international�presence�across�Middle�East,�Africa�andSouth�East�Asia.�The�outdoor�advertising�industry�is�estimated�at�around�USD350�million�to�USD�470�million�with�a�growth�rate�of�20�percent�and�isexpected�to�account�for�10-15�percent�of�the�country’s�total�ad�spend�by�2010.

• Times Group acquires UK’s Virgin Radio

TIML�Golden�Square�Ltd.,�a�wholly-owned�subsidiary�of�Bennett�Coleman�&Company�Ltd�(BCCL),�acquired�Virgin�Radio�Holdings�Ltd.�and�its�subsidiaries�inthe�UK�from�SMG�Plc�for�USD�105.04�million.�Virgin�radio�operates�a�FMlicense�in�London�and�AM�license�in�the�rest�of�UK.�TIML�Golden�Square�Ltd.along�with�an�Irish�company�Absolute�Radio�plans�to�invest�approximately�USD30�million�in�re-launching�and�developing�the�brand.�BCCL�owns�two�of�theleading�media�brands�in�India�such�as�The�Times�of�India�and�The�EconomicTimes.�

• HDIL acquires 51 percent in Broadcast Initiative Ltd.

Wadhawan�Group’s�real�estate�arm�Housing�Development�and�InfrastructureLtd.�(HDIL)�has�acquired�51�percent�stake�in�Broadcast�Initiative�Ltd.�(BIL)�foran�undisclosed�amount.�Through�this�acquisition,�HDIL�also�get�majorityownership�in�Sri�Adhikari�Brothers�Media�(SABML)�and�Technocraft�Media(TMPL),�the�wholly�owned�subsidiaries�of�BIL.�This�acquisition�is�expected�toenable�HDIL�to�expand�into�the�broadcasting�segment.�HDIL�had�recentlyentered�in�the�film�exhibition�segment�through�the�launch�of�Broadwaymultiplexes�in�Mumbai.�The�acquisition�is�subject�to�regulatory�approvals.

• Private Equity firms invest USD 28 million in PVR Pictures

The�Private�Equity�arm�of�JP�Morgan�and�ICICI�Venture�Fund,�have�investedclose�USD�28�million�in�PVR�Pictures�Ltd.,�a�wholly�owned�subsidiary�of�PVRLtd.�Through�this�investment,�PVR�Ltd.�expects�to�become�a�fully�integratedfilm�company�with�interests�across�production,�exhibition�and�distribution.�Thecompany�is�expected�to�generate�20-25�percent�of�its�revenues�annually�fromfilm�production�and�distribution�from�the�current�10�percent.�

• BIG 92.7 FM forays into Singapore

BIG�92.7�FM,�a�part�of�Reliance�Anil�Dhirubhai�Ambani�Group�(R-ADAG)�is�allset�to�launch�a�24-hour�FM�radio�station�in�Singapore�in�a�venture�with�localMediaCorp�Radio.�The�FM�station�plans�to�broadcast�Indian�film�music,�news,Bollywood�celebrity�interviews,�quizzes�and�other�live�entertainment.�Thestation�is�expected�to�be�launched�on�July�1,�2008�and�is�called�BIG�Bollywood96.3�FM.

Page 9 of 16

Media

Analyst: Mehul Desai©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source:�TAM�Media�Research

Genrewise Share of Channels for Last 4

weeks as on June 21, 2008

• OVL consortia proposes to invest USD Three billion in Iran gas

block

ONGC�Videsh�Limited�(OVL)�and�its�partners�Indian�Oil�Corporation�(IOC)�and

Oil�India�Limited�(OIL)�have�proposed�to�invest�about�USD�three�billion�to

develop�the�Farsi�block�in�Iran.�The�consortium�has�found�12.8�trillion�cubic�feet

(tcf)�of�gas.�As�per�the�group’s�service�contract�for�the�block�they�would�be

reimbursed�35�percent�plus�the�investment�made�during�their�exploration

phase�of�about�USD�90�million.�If�the�consortium�gets�the�developmental�rights

then�they�are�likely�to�be�paid�an�additional�15�percent�rate�of�return�over�and

above�the�investments�made.�The�company�also�stated�that�the�oil�and�gas

would�belong�to�National�Iranian�Oil�Company�(NIOC).�OVL�and�IOC�hold�40

percent�stake�each�in�the�block,�while�OIL�owns�the�remaining�20�percent.

• Sevan Marine bags contract from ONGC

Norwegian�firm�Sevan�Marine�ASA�has�bagged�a�contract�from�state-run�Oil

and�Natural�Gas�Company�(ONGC)�for�deepwater�drilling�rigs.�The�drilling

contract�is�expected�to�have�a�fixed�term�of�three�years.�Sevan�marine�expects

to�generate�revenues�worth�USD�569�million.�The�company�specializes�in

building,�owning�and�operating�floating�units�for�offshore�applications.

• ONGC-Mittal Energy gets permit to drill for oil in Trinidad

ONGC-Mittal�Energy�Limited�(OMEL)�has�become�the�first�Indian�energy

company�to�be�involved�in�oil�exploration�in�Trinidad�and�Tobago.�OMEL�is

awarded�Block�NCMA�2�which�is�located�off�Trinidad�and�west�of�Tobago.�The

block�comprises�of�1,000�square�meters.�The�discovery�and�recovery�of�the

mineral�wealth�trapped�below�the�seabed�in�that�area�would�require�that�the

company�drill�five�wells.

• Cairn India gets approval to explore oil and gas in Sri Lanka

Cairn�India,�a�unit�of�British�exploration�firm�Cairn�Energy�Plc,�has�received

approval�to�explore�oil�and�natural�gas�deposits�off�Sri�Lanka's�coast.�The�area,

block�one,�covers�around�3,400�square�kilometers�off�Sri�Lanka's�northwest

coast.�Besides�Cairn,�the�other�two�companies�that�bid�for�the�same�block

were�India's�ONGC�Videsh�and�Canada's�Niko�Resources.

• Reliance in cooperation agreement with UAE petro company

Reliance�Exploration�and�Production,�a�subsidiary�of�Reliance�Industries�Limited

(RIL)�has�entered�into�a�cooperation�agreement�with�the�UAE-based�petroleum

company�Crescent�Petroleum.�The�deal�aims�at�establishing�a�framework�for

jointly�developing�industrial�projects�of�mutual�interest�in�the�region's�energy

sector�that�would�include�upstream�development,�midstream�pipelines�as�well

as�downstream�industrial�and�petrochemical�projects.

Page 10 of 16

Oil and Gas

Analyst: Rajiv Parekh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Petrol* Diesel* Kerosene* LPG#

India (Delhi) 45.56 31.8 9.09 294.75

Pakistan

(Karachi)42.38 30.88 25.53 415.05

Bangladesh

(Dhaka)37.74 23.84 23.84 406.21

Sri Lanka

(Colombo)48.2 30.36 26.57 742.05

Nepal

(Kathmandu)49.97 35.13 31.98 687.02

Source:http://ppac.org.in/OPM/rspneighbouring_jun.pdfNote:�*�Indian�Rs�per�Litre#�Indian�Rs�per�Cylinder

Exchange�rate�per�USD�considered�as�on�06.05.2008

Pakistan:�Rs�66.55,�Bangladesh:�Taka�68.73,�Sri�Lanka:Rs�107.92,�Nepal:�Rs�65.58�&�India:�Rs�40.96

Retail Price Comparison with Neighboring

Countries - May-08

• Daiichi Sankyo acquires stake in Ranbaxy, India’s largest

pharmaceutical company

Daiichi�Sankyo�Company�Limited,�one�of�Japan’s�leading�pharmaceuticalcompanies,�is�acquiring�a�majority�equity�stake�in�Ranbaxy�LaboratoriesLimited,�India’s�largest�pharmaceutical�company�and�one�of�the�top�tengenerics�companies�in�the�world.�Both�companies�have�entered�into�a�bindingShare�Purchase�and�Share�Subscription�Agreement,�according�to�which,�DaiichiSankyo�is�expected�to�acquire�the�entire�shareholding�of�the�Singh�family,�oneof�the�largest�and�controlling�shareholders�in�Ranbaxy�and�further�seek�toacquire�a�majority�of�Ranbaxy’s�voting�capital.�The�total�transaction�value�isexpected�to�be�in�the�range�of�USD�3.4�billion�to�USD�4.6�billion.�Thistransaction�is�expected�to�value�Ranbaxy�at�USD�8.5�billion�on�the�post�closingbasis.�This�deal�is�expected�to�enhance�Ranbaxy’s�expertise�in�drugdevelopment�and�manufacturing�and�expand�its�global�presence.

• Zydus acquires a 70 percent stake in a South Africa-based

company

Zydus�Cadila,�one�of�India’s�leading�pharmaceutical�companies,�has�acquired�a�70percent�stake�in�Simayla�Pharmaceuticals,�a�South�Africa-based�generics�company.The�acquisition�is�expected�to�strengthen�Zydus’�presence�in�the�South�Africangenerics�market,�which�is�expected�to�grow�at�a�Compounded�Annual�GrowthRate�(CAGR)�of�almost�19�percent�till�2011.�Simayla�currently�has�a�presence�in�thecardiovascular,�respiratory,�anti-infectives,�central�nervous�system,�gastrointestinaland�women-related�healthcare�therapeutic�segments.�Zydus�plans�to�launch�about50�products�in�this�market�in�the�next�3�years.

• Intas Biopharmaceuticals acquires US-based Biologics Process

Development Incorporated

Intas�Biopharmaceuticals�Limited,�an�Indian�biopharmaceutical�company,�isacquiring�Biologics�Process�Development�Incorporated�(BPD�Inc.),�abiotechnology�company�in�the�US.�BPD�Inc.�is�a�Contract�ResearchOrganization�(CRO)�providing�services�in�the�area�of�Molecular�Biology.�Theacquisition�is�expected�to�support�Intas’�entry�into�the�US�market�andstrengthen�its�presence�in�the�Contract�Research�and�Manufacturing�Services(CRAMS)�segment.

• Maneesh Pharma acquires 51 percent stake in US-based Synovics

Pharmaceuticals

Maneesh�Pharmaceuticals,�an�Indian�pharmaceutical�company,�has�acquired�51percent�stake�in�Synovics�Pharmaceuticals�Inc.,�a�specialty�pharma�companywith�a�focus�on�Over-The-Counter�(OTC)�and�branded�drugs�segment,�for�anundisclosed�amount.�This�acquisition�is�expected�to�facilitate�Maneesh’spresence�in�the�US�market�through�Synovics’�distribution�set-up.�

• Arch Pharmalabs acquires majority stake in Benzochem

Lifesciences

Arch�Pharmalabs�Limited,�an�Indian�pharmaceutical�company�with�a�presencein�the�Active�Pharmaceutical�Ingredients�(API)�and�intermediates�segments,�hasacquired�a�majority�stake�in�Benzochem�Lifesciences�Pvt.�Limited,�an�Indiancompany,�for�an�undisclosed�amount.�The�acquisition�provides�Arch�Pharmalabsaccess�to�a�cGMP�compliant�facility�for�oncology�products�and�enhances�itsportfolio�to�cover�almost�all�therapeutic�segments.�

Page 11 of 16

Pharma

Analyst: Nandita Kudchadkar©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“Together with our pool ofscientific, technical andmanagerial resources and talent,we would enter a new orbit tochart a higher trajectory ofsustainable growth in the mediumand long term in the developedand emerging markets organicallyand inorganically. This is asignificant milestone in ourmission of becoming a researchbased internationalpharmaceutical company.”Malvinder Mohan Singh, CEO and ManagingDirector, Ranbaxy Laboratories Limitedcommenting on Ranbaxy’s acquisition by DaiichiSankyo (Source:http://www.ranbaxy.com/news/newsdisp.aspx?cp=889&flag=ARC)

• GMR acquires 50 percent stake in Intergen

Hyderabad-based�GMR�Infrastructure�Limited�has�acquired�50�percent�stake�inUS-based�power�company,�Intergen�for�USD�1.1�billion.�The�stake�was�acquiredfrom�the�AIG�Highstar�Capital�II�fund.�Intergen�is�an�independent�powerproducer�with�operations�in�the�UK,�Mexico,�Philippines,�Australia�and�theNetherlands.�It�has�an�ownership�interest�in�12�operating�power�plants�withgross�capacity�of�8258�MW�and�4822�MW�of�assets�under�development.�

• BHEL wins 1750 MW NTPC deal

Utility�major,�National�Thermal�Power�Corporation�(NTPC)�and�its�joint�venturesubsidiary,�Nabinagar�power�plant�have�awarded�boiler-turbine-generatorcontracts�of�1750�MW�(7x250�MW)�units�to�Bharat�Heavy�Electricals�Limited(BHEL)�at�an�estimated�value�of�USD�875�million.�The�deal�is�for�two�differentprojects.�The�first�one�includes�3�units�of�250�MW�at�an�investment�of�USD375�million�at�Bongaigaon�in�the�North-East.�The�other�project�worth�USD�500milion�will�be�for�4�units�of�250�MW�at�Navinagar�in�Bihar’s�Aurangabad�district.

• Indiabulls signs MoU for power project with Jharkhand

government

Indiabulls�power�services�has�signed�a�Memorandum�of�Understanding�(MoU)with�the�Jharkhand�government�for�setting�up�1320�MW�power�project�in�thestate.�The�power�project�is�expected�to�entail�a�capital�expenditure�of�USD1650�million�and�would�be�operational�within�4�years�from�the�date�of�financialclosure.�The�government�would�have�the�right�to�claim�25�percent�of�powerdelivered�by�the�proposed�power�plant�and�Indiabulls�would�sell�the�remaining75�percent.

• Jindal Steel & Power has signed an agreement with Jharkhand

government for power project

Jindal�Steel�&�Power�has�signed�an�agreement�with�the�Jharkhand�governmentfor�setting�up�2640�MW�power�project�in�Jharkhand�at�an�estimated�cost�ofUSD�2920�million.�As�per�the�MoU,�the�state�government�would�provide�all�thenecessary�assistance,�including�providing�state-level�clearances,�selecting�coalblocks�within�the�state�and�recommending�Jindal�Steel�to�the�center�forallocation�of�coal�blocks.�

• IPGCL to set up 2000 MW power station in MP

The�Delhi�government�owned�Indraprastha�Power�Generation�Company�Limited(IPGCL)�will�set�up�2000�MW�coal�fired�power�plant�in�Mara�II�Mahan�coalblock�in�Madhya�Pradesh�(MP).�For�this�purpose�the�centre�has�allotted�Mara-Mahan�coal�block�jointly�to�Delhi�and�Haryana�governments.�The�infrastructurework�for�mining�is�expected�to�take�three�years�while�the�same�for�power�plantis�expected�to�be�four�years.�The�power�will�be�equally�shared�by�Haryana�andDelhi.

Page 12 of 16

Power

Analyst: Rajiv Parekh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source:�Ministry�of�New�and�Renewable�Energy

• Sobha Developers to develop projects in Mysore

Sobha�Developers,�a�Bangalore-based�real�estate�developer,�plans�to�foray�into

the�Mysore�real�estate�market�with�three�projects.�The�company�aims�to

develop�a�villa�project�on�14.5�acre�plot�in�at�Jattihundi�village;�and�a�residential

and�commercial�project�of�5�lakh�square�feet�apiece�on�a�7�acre�plot�in�Belvatha

grama�near�Mysore.�The�company�believes�that�the�entry�in�Mysore�is�in�line

with�its�strategy�of�developing�projects�in�tier�II�cities�of�Karnataka.�The

company�currently�has�a�presence�in�Mysore�through�a�contractual�project�for

Infosys�Technologies.�These�3�projects�are�a�part�of�the�company’s�plan�of

developing�12�million�square�feet�property�in�the�financial�year�2008-09�with�a

budget�of�around�USD�514�million.

• Actis invests in Vaishnavi group

Actis,�the�UK-based�private�equity�firm,�has�invested�USD�25�million�in�Vaishnavi

Group,�a�Bangalore-based�infrastructure�company.�Actis�is�investing�in

Vaishnavi’s�special�purpose�vehicle�that�is�developing�a�9,25,000�square�feet

residential�cum�retail�project�in�Yeshwantpur,�a�suburb�of�Bangalore.�This�is�the

first�investment�by�Actis�India�Real�Estate�Fund,�a�USD�300�million�fund

sponsored�by�Actis.�O3�capital�advised�Vaishnavi�Group�on�the�private�equity

transaction.

• Man forays in Real Estate

MAN�Industries�India,�a�pipe�manufacturer�and�part�of�UK's�MAN�Group,�has

forayed�in�the�real�estate�segment�in�India.�The�company�has�floated�a�new

subsidiary�called�MAN�Infraprojects�in�Mumbai�to�undertake�real�estate

projects.�The�company�plans�to�invest�about�USD�233�million�to�develop�7

projects�totaling�10�million�square�feet�of�construction�in�the�next�3�to�5�years.

The�company�expects�a�realization�of�over�USD�934�million�through�these

projects.�In�the�first�phase,�it�plans�to�develop�two�commercial�projects�in

Mumbai�and�one�mixed-use�township�in�Navi�Mumbai,�with�a�total�built-up�area

of�over�a�million�square�feet.

• Ruchi group to set up real estate project

Ruchi�group,�a�Kolkata-based�company�known�for�its�soya�and�steel

manufacture,�has�forayed�in�the�real�estate�segment�by�setting�a�new

subsidiary�Ruchi�Realty�Holdings�Pvt.�Ltd.�The�company�has�launched�a�sports-

based�residential�condominium�project�comprising�of�6�towers�on�17�acre�plot

with�an�investment�of�about�USD�105�million.�The�project’s�initial�work�has

started�and�it�is�expected�to�be�completed�by�2010.�The�company�has�fixed�the

maximum�price�of�the�apartments�at�USD�233,427�(INR�1�crore).

Page 13 of 16

Real Estate and SEZs

Analyst: Nitin Dehadraya ©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“Actis has taken a significantminority stake in Vaishnavi’sBangalore project as it is situatedat the perfect location. Withcurrent realty market conditions,private equity players prefer toinvest in projects as they can getthe right valuations”. T R Srinivas, Director, O3 Capital.(Source: DNA, June 24, 2008 )

• Idea acquires stake in Spice Telecom for USD 645 million

Aditya�Birla�group’s�Idea�Cellular�has�signed�an�agreement�to�acquire�a�40.8percent�stake�in�Spice�Communications�for�USD�645�million�from�McorpglobalCommunications.�Besides,�Idea�also�intends�to�make�an�open�offer,�along�withTelekom�Malaysia�International�(TMI),�to�acquire�a�further�20�percent�stake�inSpice.�Telekom�Malaysia�is�to�be�allotted�over�464.73�million�Idea�shares�onpreferential�basis�for�about�USD�1705�million,�representing�14.99�percent�ofIdeas�equity�capital�post�allotment.�

These�acquisitions�are�expected�to�help�Idea�to�consolidate�its�position�with�anall-India�subscriber�market�share�of�11.1�percent,�from�the�current�9.5�percent.Idea’s�operations�would�increase�from�the�current�7�service�areas�to�9�serviceareas,�which�is�expected�to�drive�scale�economies�and�operational�synergies.Idea�would�also�pay�USD�127�million�as�a�non-compete�fee�to�Mcorpglobal.

• Tata Communications to acquire stake in Neotel and China

Enterprise Communications

Tata�Communications�Ltd.�(TCL)�has�entered�into�an�agreement�with�the�SouthAfrican�government�owned�Eskom�Holdings�Ltd.�and�Transnet�Ltd.,�to�acquiretheir�30�percent�stake�in�South�Africa's�Neotel�Ltd.�After�the�acquisition,�TCLalong�with�Tata�Africa�is�expected�to�own�nearly�56�percent�in�Neotel�Ltd.�

Tata�Communications�has�also�signed�a�joint�venture�(JV)�agreement�withChina�Enterprise�Communications�(CEC)�for�the�acquisition�of�a�50�percentstake.�Headquartered�in�Beijing,�China,�CEC�is�a�value�added�telecom�servicesand�IT�solutions�provider�and�has�recently�acquired�a�nation�wide�Virtual�PrivateNetwork�(VPN)�license.�The�JV�is�expected�to�focus�on�providing�a�high-qualitynetworking�service�in�China.�

• Sintex acquires Digvijay Communications

Sintex�Industries�Ltd.,�through�its�74�percent�subsidiary�Zeppelin�MobileSystems�India�Ltd.�has�acquired�the�network�services�and�tower�manufacturingbusiness�of�Digvijay�Communications�and�Network�Pvt.�Ltd.�(DCNPL)�forapproximately�USD�12.5�million.�Sintex�is�expected�to�benefit�from�DCNPL’smarket�reach�and�product�portfolio.�DCNPL�is�a�provider�of�telecominfrastructure�services�and�has�a�pan-India�presence�with�more�than�11�officesin�the�country.�

• Sujana Towers acquires Telesuprecon Ltd.

Hyderabad-based�Sujana�Towers,�a�telecom�infrastructure�company,�acquired�51percent�stake�in�Mauritius-based�telecom�infrastructure�company�TelesupreconLtd.�for�an�undisclosed�amount.�Telesuprecon,�has�branches�in�various�east�andcentral�African�countries�and�is�in�the�advanced�stages�of�negotiations�forsecuring�telecom�infrastructure�contracts�aggregating�to�USD�40�million,�whichare�expected�to�be�executed�over�the�next�2�years.

Page 14 of 16

Telecom

Analyst: Mehul Desai©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

"The talks are on between AnilAmbani-led RelianceCommunications and SouthAfrican telecom major MTN andthe significant premium in Idea-Spice transaction proves theinherent value that Indian telecomspace offers for such deals."

Saurabh Agarwal, Managing Director, DSP MerrillLynch.(Source: Financial Express, June 26, 2008)

• Mumbai-Ludhiana freight corridor on the anvil

The�Centre�has�reportedly�agreed�in�principle�to�allot�another�railway�freightcorridor�from�Mumbai�to�Ludhiana,�the�industrial�hub�of�Punjab,�in�addition�tothe�already-�approved�corridor�from�Kolkata�to�Ludhiana.�The�freight�corridorsare�likely�to�boost�industrial�growth�in�the�state�with�better�transportation�ofmanufactured�goods�and�raw�materials.

• Deccan Cargo and MADC sign MoU to set up world class air cargo

hub at Nagpur

Deccan�Cargo�and�Express�Logistics�Pvt.�Ltd.�have�signed�a�Memorandum�ofUnderstanding�(MoU)�with�the�Maharashtra�Airports�Development�Company(MADC)�to�set�up�a�state-of-the-art�cargo�hub�at�the�Multimodal�InternationalPassenger�and�Cargo�Hub�at�Nagpur�(MIHAN).�The�hub�is�expected�to�startfunctioning�by�January�2009.�MADC�is�to�provide�Deccan�Cargo�with�50�acresof�land�at�MIHAN�to�set�up�the�cargo�base,�including�a�parking�facility.

• Three airlines in the race to become the North East region air

carrier

Apart�from�Alliance�Air,�a�wholly�owned�subsidiary�of�Indian�Airlines,�two�othercompanies�-�Universal�Empire�and�Ace�Airlines�-�have�submitted�offers�for�theregional�carrier.�The�winning�bidder�will�then�be�eligible�for�subsidies�from�theNorth�Eastern�Council.�The�new�dedicated�regional�airline�is�expected�to�startoperations�by�the�end�of�this�year�with�Guwahati�as�its�hub.�At�present,�thereare�11�operational�airports�in�the�region,�including�Dibrugarh,�Tezpur,�Jorhat,Silchar,�Dimapur,�Imphal,�Agartala,�Aizawal�and�Bagdogra.�The�Ministry�forDevelopment�for�North-Eastern�Region�is�aiming�for�as�many�as�400�flightsevery�month�internally�connecting�the�region�by�the�end�of�2009.�

• VRL Logistics to invest USD 258 million in expansion

VRL�Logistics,�which�owns�a�fleet�of�2,446�trucks,�is�planning�a�majorexpansion�of�its�facilities�with�an�estimated�investment�of�around�USD�258million�over�two�years.�The�company�has�filed�a�red-herring�prospectus�with�theSecurities�and�Exchange�Board�of�India�(SEBI)�to�bring�out�an�Initial�PublicOffering�(IPO).�It�plans�to�invest�USD�126�million�on�the�development�oftransshipment�hubs�in�Gurgaon�(Haryana),�Solapur�(Maharashtra)�and�Bijapur(Karnataka).�VRL�proposes�to�invest�another�USD�123�million�on�the�expansionof�its�truck�and�bus�fleet.�A�booking�and�delivery�office�at�Gadag,�involving�aninvestment�of�USD�9�million�is�also�on�the�agenda.�The�company�envisagesentering�the�air�cargo�business�through�chartered�jets.�It�also�proposes�to�startthe�transportation�of�iron�ore�from�Karnataka,�for�which�it�needs�300�truckswith�a�higher�tonnage�capacity�(more�than�15�tonnes).

• TCI to sell 10 percent stake to fund growth plans

Transport�Corporation�of�India�(TCI)�is�all�set�to�dilute�promoter�holding�by�about10�percent�to�raise�capital�for�its�expansion�plan.�This�is�the�second�time�thecompany�is�looking�at�fund�managers�to�finance�its�growth�plans.�Last�year,Fidelity�picked�up�6-7�percent�stake�in�the�company.�With�this�dilution,promoter�holding�in�the�company�is�expected�to�be�around�57�percent�at�theend�of�the�current�fiscal.�The�company�plans�to�raise�between�USD�11-17million�in�the�third�quarter�of�the�financial�year�2008-09.�The�company�plans�touse�the�funds�to�expand�its�shipping�fleet�and�trucking�fleet�and�develop�morewarehousing�centers�across�the�country.

Page 15 of 16

Transport and Logistics

Analyst: Preeti Sitaram©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“The air cargo connectivity in thecountry is limited to only sevencities as of now, leaving out cargoin the smaller cities that accountsfor 85 percent of the GDP.Increase in the velocity ofbusiness cargo will put India inleague of five top globaleconomies in the next ten years.”

Capt. G. R. Gopinath , CEO, Deccan Cargo (Source:http://in.news.yahoo.com/43/20080710/836/tbs-deccan-cargo-to-set-up-hub-at-nagpur.html)

in.kpmg.com

KPMG in India

MumbaiKPMG House, Kamala Mills Compound448, Senapati Bapat Marg,Lower Parel, Mumbai 400 013Tel: +91 22 39896000Fax: +91 22 39836000

Delhi4B, DLF Corporate ParkDLF City, Phase IIIGurgaon 122 002Tel: +91 124 307 4000Fax: +91 124 2549101

Pune703, Godrej CastlemaineBund GardenPune - 411 001Tel: +91 20 30585764/65Fax: +91 20 30585775

©�2008�KPMG,�an�Indian�Partnership�and�a�member�firmof�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.All�rights�reserved.KPMG�and�the�KPMG�logo�are�registered�trademarks�ofKPMG�International,�a�Swiss�cooperative.

The�information�contained�herein�is�of�a�general�nature�and�is�not�intended�to�address�the�circumstances�of�any�particular�individualor�entity.�Although�we�endeavour�to�provide�accurate�and�timely�information,�there�can�be�no�guarantee�that�such�information�isaccurate�as�of�the�date�it�is�received�or�that�it�will�continue�to�be�accurate�in�the�future.�No�one�should�act�on�such�informationwithout�appropriate�professional�advice�after�a�thorough�examination�of�the�particular�situation.

Reference material for preparing this document is

taken from following sources:

Asia Pulse

Business India

Business Standard

Business Today

Central Statistical Organisation (CSO)

Confederation of Indian Industries (CII)

Dow Jones International News

Factiva

Financial Express

Hindustan Times

India Infoline

Indian Brand Equity Foundation (IBEF)

Indian Business Insight

Infraline

India Today

Mergerstat

NASSCOM

Oil Asia Magazine

Petrobazar

Petromin News

Pharma Biz

Press Trust of India

RBI

Reuters News

The Asian Age

The Economic Times

The Financial Times

The Hindu Business Line

The Namibian

The Statesman

Times of India

Voice & Data Magazine

Xinhua News Agency

Antara News

Travers Smith

BangaloreMaruthi Info-Tech Centre11-12/1, Inner Ring RoadKoramangala, Bangalore – 560 071Tel: +91 80 39806000Fax: +91 80 39806999

ChennaiNo.10 Mahatma Gandhi RoadNungambakkamChennai 600 034Tel: +91 44 3914 5000Fax: +91 44 3914 5999

HyderabadII Floor, Merchant TowersRoad No. 4, Banjara HillsHyderabad 500 034Tel: +91 40 23350060Fax: +91 40 23350070

KolkataPark Plaza, Block F, Floor 671 Park StreetKolkata 700 016Tel: +91 33 22172858Fax: +91 33 22172868

Contact us:

For further information about this newsletter, please contact:

Deepankar Sanwalka

National Industry Director

Consumer Markets

e-Mail: [email protected]

Tel: +91 (124) 3074302

Sanjay Aggarwal

National Industry Director

Financial Services

e-Mail: [email protected]

Tel: +91 (22) 3983 5102

Rajesh Jain

National Industry Director

Information, Communication & Entertainment

e-Mail: [email protected]

Tel: +91 (22) 3983 5300

Arvind Mahajan

National Industry Director

Infrastructure & Government

e-Mail: [email protected]

Tel: +91 (22) 3983 6206

Yezdi Nagporewalla

National Industry Director

Industrial Markets

e-Mail: [email protected]

Tel: +91 (22) 3983 5101

Vikram Utamsingh

National Industry Director

Private Equity

e-Mail: [email protected]

Tel: +91 (22) 3983 5302

Research Inputs by KPMG’s India Research Center