Towards 9th Issue
Transcript of Towards 9th Issue
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21st
August 2008
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Happy Independence day!
To all those who are free.and to all those are not yet free, but in a quest to unshackle
themselves.
Freedom is indeed the most beautiful thing that could happen to you in
life.Yesthat could happenbut has it happened yet to you?...only you can
answerOr may be question to your conscience
So questiondo question yourself.
Dear! Are you free?
Yes ! I am free
Born and learnt believing somethingenchanting mantras oftraditioncultureethosand
all that my forefathers have left for me as legacy
discovering that my soilmy Ganges,Yamunas..Godawarieswould quench my thirsty
soulHimalayas would guardian me..
.I was toldwhen I could sense and conceive.I am born
free
Am I free now..I doubt..somewhere down these days.i feel..day-by-day.i am actually
losing my freedom
When I had to doWhat my conscience wouldnt allow..
When I had to ditch my motherland.while I still being patriotic..
While I see myself enjoying every fun of lifewhile my nation.is actually in pain.
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When I should have shouted at the top of my voiceI wont let this bullshit to be done in
my soilto my nationto my people..But ..i couldnt shout.couldnt even murmur.
I wasnt perhaps free, when they decided overnight.policies,lobbies,quotas..
when they sold my part of nationjust overnight..
I discovered may be I am not free
I woke up early in the morning.unfolded morning newspaper with sipping Coffee.
just todayfew Free people died in Ahmedabad,Bangalore,Ajmer,Jammu..free..YeahI
mean itfree like me..Innocent..
Just today..18 crore Kidsageless than 12 years.are breaking their bones to earn day-
time bread
and just todaymy Government.my elected leaders.sold this great free nation in
nation..and still selling it in installmentsto whoever pays the dirty price.
I believe.I am still free.because..i am not dead yet.becausethe fire in
Kashmirthose Azaadi..Azaadi..screaminghave not torn my ears apart yet
I am still free.because I can still manage my Ferrari,my I-Pod,my Tissot watch
I am still free.for I still spend my evening in Firangi-Paani or Baristashopping in
malls.enjoying PVRs
I am still free.coz..i dont botherthat half of my nation has still not seen Thomas Alva
Edisions Electric Bulb..
Coz I dont bother.that just few Kilometers away from my posh City-Metro..Naxalites are
eating away my territory of freedom.
I dont bother.becauseI am the proud citizen of Worlds most corrupt free nation.
I dont botherif my Government could not give my fellow-countrymen basic amenities of
Roti-Kapda-Makaan..I have Pizzas---Westsides----my Leela Palaces.
----------I dont botherI dont botherI dont bother.just ..dont
My days are passing byso smoothlywhy should I bother..I am
free..free till Sun setsCome the dark night..I ask my selfAm I
free..Yeas.may be.may be not.Or I am NOT
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Democracy is the most beautiful thing that has happened to human civilization.It has
established the fact that all human beings are equal to all opportunitiesto manifest
themselves to their fuller potentials..
Democracy however is also equally dangerous if come without sense of responsibility and
discipline. It could fatally destroy the nation, society and generation..
It is the same democracywhere everyone does not enjoy similar rights..where opportunities
are not equal.where you start doing something goodand you will find many many hands to
stop you doing good.where people just do not wish something good, better that happen to
them.they are just happy being what they arewherever they are.
People are ready to dieready to be crushed.but till we breathe..we do not have time to
think.just no time to think.what is happening with ustous to our childrenwe just dontthinkwhat kind of nation ,we are makingbecause we just dont make this nationwe only
live in itunfortunately for manyand fortunately to few.
We remember.Democracy has rendered rights to us.we forget.it has bestowed few duties
as well.
Day-by-day, minute-by-minutewe are destroying every good thing that was so far with
uspolluting our riverssucking our groundwater, poisoning our air.chopping our
Jungles..Killing our wildlife
.forgetting our traditions..fighting with each
other.casteRacestatelanguagereligion.killing each other..corrupting ourselvesour
systembribing institutions..vulgarizing our schools..
I would not say you Happy Independence Day.
Just that..this independence is attained after much sacrificesit is
still being protected by bloodstained soldiers at our borders.
Please.respect itOur nation is very great.10, 000 years of
burning mid-night candles
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Come togetherfor no time is leftjust come close to each
othereven air could not pass by..
Hold hands.together.
Lets join the caravanlets make our nation stronger..bring all those
who are left behindthose dirty.half-naked.empty-
stomachilliterate...stupidbeggars, laborers.left-behind ones.put
all you intellect, strength..appetitetogether
Feel ProudYou are an Indian.
Feel Responsible..You have to make your India.its still in themaking.
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Heroes and Hooliga
Bihar: On a fast track of growth machine: Clears 135 proposals worth Rs 71,2
crore
The Bihar government has cleared 135 proposals worth Rs 71,290 crore submitted by big
entrepreneurs for setting up medium and large industries.
All these proposals have been approved by the State Investment Promotion Board.
proposals approved include opening of 23 new sugar mills and the expansion of the 7 exis
ones, apart from the production of ethanol in 2 sugar mills and 5 sugar cane juice produc
plants. The projects regarding 5 power plants, 12 food processing units and 15 steel proces
and cement plants have also been cleared.
As per the report, a sum of INR 603 crore had already been spent on various activities pertai
to the cleared projects, which are likely to create job opportunities for over 0.114 million peo
Amarnath Shrine issue: Its more than just a few acres
Kashmir is burning and so is Jammu.The issue is odd 180 Hectare of land that was a bout to
transferred to Amarnath Shrine board. The decision was initially taken by the then
Government in J&K. The issue was then taken up by fundamentalist and separatist, pro-Pakis
pro-Taliban forces who purposefully wanted to vitiate the peaceful environment of valley.
So far, it is not strange, Mr.Mirwaiz Umer Farooq,Mr Gilani,Hurriyat Conference,JKLF and t
rank and file were always Pakistani interest on Indian soil, They were eagerly waiting for
opportunity to poison the environment and fuel separatist sentiments among comm
KashmiriesAnd eventually they got chance.
But there is a catch in the drama here. And there are people to be exposedthese are the
people more dangerous than Pakistan or terrorist outfits like APHC and JKLF.
And these are the people who swear by being Indian. The role of Ms. Mehbooba Mufti,
Farooq Abdullah and their political cousins need to be scruitinised. They are the real vill
backstabbing Indian interest and fuelling common Kashmiries sentiments against In
mainstream.
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An era ends/begins in our neighborhood: Musharraf
dethroned
General Pervez Musharraf, President of Islamic Republic of Pakistan has finally resigned from
his premiership after a month old political tussle with the democratically elected government
and its core forces.
Departure of Mr. Musharraf from the political landscape of Pakistan has closed a great chapter,
not just in the Pakistani History but in Global power circles, especially in the Indian context and
much hyped US-Global war on terror.
Mr. Musharraf has played a very crucial role in Terror-corridor, from Saudi-to Iran to
Afghanistan-Libya-Egypt and most of the Muslim dominated world. Here is the man who has
sailed his country prudently in its most difficult time and transformed (or tried to transform,
but failed) a fast-getting-Talibanised country to a country, which has visibly shown its
determination in global war against terrorism.
If you follow the statistics in last 10 years, you can easily understand that his was the time,
when terrorism and infiltration dropped substantially and acrimonious gesture of Pakistan
towards India moderated a bit.
While looking little deeper in Pakistan, for recent years, one also can observe the positive
changes, Mr. Musharraf had tried to bring in the mindset of Pakistan.
Here was a dictator who, with all his human weaknesses, mistakes and ill-intentios, had
something, substantial to contribute not just to his country, but to the global mainstream.
What failed Mr. Musharraf?
Musharraf seems to be more secular, pro-developmental and more modern than any other
ruler, Pakistan ever had in its history. He was a great opportunity for Pakistan to come out of all
those stupid medieval aged mindset and become a modern developed state of respect, repute
and prosperity.
Pakistan failed, but who is responsible? Onus lies with the man himself. Mr. Musharraf failed todeliver, what he promised for or rather what he had thought he would have achieved.
He could not change the psyche of Pakistani intelligentsia. He lost it to Taliban. Pakistan of
today is , sadly much more talibanised than ever before. It is well saidYou can kill an
institution, millions of people, but you can never kill an idea, a thought. Taliban has resurrected
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itself in common People of Middle East, London, USA and Islamic world. Taliban now is much
much stronger that it ever was.
Recent bomb blasts and terrorist activities in India are evidence that the so called democratic
regime and forces in Pakistan are actually people and philosophy of Taliban and Al-Qaeda
resurfacing with a legal face. Its as soon world realizes the fact that political power of Pakistan
has actually in hands of Taliban and faces like Mr. Gilani, Asif Zardari and Nawaz Sharif are just
puppets being played by very strong invisible hands who are very soon going to be surfaced.
What are the takes from the saga of Pervez Musharraf?
Number one is that it zeroes in to the Leadership ultimately. Mr. Musharraf failed to deliver
what he promised for. Leaders, who do not hold on the promises they make are bound to be
thrown into dust, no matter how strong legacy they assume.The second lesson is for the world and people in so called democratic society about thepotential weaknesses of democracy as an institution.Democracy, per se, does not guarantee
freedom and prosperity. Democracy must have elements of Discipline, Responsibility and
sociological character, for, without them it is bound to fail and succumb to fundamentalist and
destructive forces.
Third and the most important lesson are for India to learn.
We need to be over cautious and prepared about coming forces in Pakistan. People in power
de-fecto represent Taliban and Al-Qaeda and their very survival depends on their acrimonious
attitude towards us..
Watch on the newer stage for newer players to play with?Fr
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MAKETS FORTNIGHTL
Amar Sab
20th Aug:
Firming trend in Asian region boosted
the trading sentiment. Hong Kong stocks rose,
with the benchmark index rebounding from a
one-year low on speculation that China will
introduce measures to support the economy.
19th Aug:
The domestic market had shown smart
recovery during final trading hours to came off
from the days low but closed with marginal
losses.Weak European markets also added tothe negative sentiments. Along with this, fears of
more losses from the US mortgage crisis globally
mulled over the sentiment.
14th Aug:
Domestic market ended the day w
heavy losses as witnessed a sharp fall during
trading session on the back of sustained sel
activity over the counters.The market extenlosses for the third session in a row as a bou
back in crude oil prices stroked fears of incre
in inflationary pressures.
13th Aug:
on a subdued note as investors
waiting for the outcome of SEBI`s board m
regarding participatory notes. Weak global cu
13000
13500
14000
14500
15000
15500
25-Jul
27-Jul
29-Jul
31-Jul
2-Aug
4-Aug
6-Aug
8-Aug
10-Aug
12-Aug
14-Aug
16-Aug
18-Aug
20-Aug
Sensex.too sensitive to cues
Sensex.too
sensitive to cue
date sensex
25-Jul 14274.94
26-Jul 14274.94
27-Jul 14274.94
28-Jul 14349.11
29-Jul 13791.54
30-Jul 14287.21
31-Jul 14355.75
1-Aug 14656.69
2-Aug 14656.69
3-Aug 14656.69
4-Aug 14577.87
5-Aug 14961.07
6-Aug 15073.547-Aug 15117.25
8-Aug 15167.82
11-Aug 15,223
12-Aug 15,212.13
13-Aug 15,093.12
14-Aug 14,724.18
18-Aug 14,645.66
19-Aug 14,543.73
20-Aug 14,678.23
21-Aug 14244
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12th Aug:
broke its winning trend to close the
session with heavy losses on sustained selling
pressures due to disappointing IIP numbers that
were down at 5.4% YoY and negative cues from
European and Asian markets.
11th Aug:
The Sensex witnessed the awaited
correction today, as meltdown in major global
indices turned the domestic market upside
down. After rallying for the past few sessions,
the Sensex lost 292 points on sustained selling in
heavyweights, metal and banking stocks.
8th Aug25th July
This fortnight the markets opened dull
on 28th July-08, Monday aftermath Bangalore
and Ahmedabad bomb blast which had already
knocked 500 points off the sensex on 25thjuly,
Friday. Major focus was on RBIs monetary po
on short term rates scheduled for release
29thjuly, Tuesday. On Tuesday RBI hiked not o
hiked CRR by 25 basis points as expected bu
also hiked repo rate by 50 basis points aga
the investor expectation. This again l
weakening of sensex by over 500 points clos
at 13791.54. The market sentiments for
whole period was negative due to high inflatrate hike by RBI, monsoon forecast etc. But
these news were out weighted by cues form
markets and falling crude prices. Thats why
30th July, Wednesday, market gained 495 po
due to fall in crude prices by $3/barrel amid h
in rates by RBI just the previous day. US inde
were up DJIA by 2.4% and NASDAQ by 2.5%.
The crude oil prices dropped by $10
fortnight. This has led to a rally in US markThe Dow Jones which was at 11370.69 on 2
July climbed to 11734.32 up by 3.19%.
The reactions of sensex to cues from US
markets were notable. In fact sensex almost
followed the same trends as the US markets.
This trend is visible only in short run, in
absence of any positive news and
uncertainty. For most part sensex was similar
to US markets except few days when local
news was strong. Like on 1 st Aug, Friday the
markets went up irrespective of weak global
cues because of expectation that IAEA
give green signal to Indo-US nuclear de
Stocks of infrastructure companies- L&T,
Associates; power companies-NTPC; pow
equipment supplier-BHEL, ABB, Siem
were up because of the positive news
nuclear deal. Rcom on the same day w
badly hit trading 13% below at Rs.436.8 d
to lower that expected Q1 results.
108110112114116
118120122124126128
crude
crud
Date crude
25-Jul 125.93
26-Jul 125.93
27-Jul 125.93
28-Jul 125.05
29-Jul 124.71
30-Jul 125.19
31-Jul 122.03
1-Aug 125.19
2-Aug 125.19
3-Aug 125.19
4-Aug 122.07
5-Aug 117.42
6-Aug 117
7-Aug 118.2
8-Aug 115.11
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Table 1: comparison of sensex and DJIA
Table 1 shows the movement of sensex in
comparison to DJIA (Dow jones industrial
average). X-axis is dates and Y axis is %
change in indexes. Due to time difference
the US markets lag behind our markets i.e.US markets on 1
stAug will act as cue for
Indian markets on 2nd
Aug(US markets open
at 7.30pm IST).
Now to sum up the overall story sensex this
fortnight was a big gainer. On 25th July it was
at 14274.94 but on 8th ague it was at
15167.82 up 892.88 points (6.25%)
compared to 25th
July. The positive si
were only in the form of falling crude pric
Due to slowing down of US economy
evident from low GDP growth of 1.9% l
demand for crude is expected. For Indiamay act as a signal of lowering of inflat
and thus, no further hike in RBI rates.
The most active sectors in this period w
Banks (because of RBI policies, inflation a
crude), Capital goods (because of Indo-
deal), Sugar (because of monsoon), oil a
gas (because of falling crude).
-6
-4
-2
0
2
4
%change in sensex and djia
%senxex %djia
date DJIA
25-Jul 11370.6928-Jul 11131.08
29-Jul 11379.56
30-Jul 11583.69
31-Jul 11378.02
1-Aug 11326.32
4-Aug 11284.15
5-Aug 11615.77
6-Aug 11656.07
7-Aug 11431.43
8-Aug 11734.32
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Sector Watc
Real Estate: CB Richards Ellis views
Investment in country's real estate sector remained subdued in the second quarter this ye
amid global economic slowdown, which has also cast its shadow on the property mark
across the world.
Like most property markets around the world, Asian markets have been affected by slow
economic growth and unsettled capital markets. The cautious attitude was largely becau
many investors expect the ripple effect of the global credit crunch to continue unfolding
Asia. Investors have been exercising restraint in launching new developments and proje
intended to support new emerging commercial hubs. Developers profitability was a
impacted by rising construction costs, escalating interest rates and tighter lending measure
However, financially-sound institutional investors, including pension and sovereign wea
funds, remained active across major cities in Asia. Direct commercial property transactions
Asia were up moderately in the first half of 2008, as compared to the corresponding perlast year.
Cement: prices to fall on surplus output
Cement makers feel their margins will remain under pressure for the next several quarters
excess capacity build up in the country is expected to keep prices from moving up. This
despite various infrastructure development projects which is keeping demand alive even
real estate development has witnessed a slowdown. The bullishness surrounding the cem
sector has ended due to overcapacity. The economys performance is below expectation a
will result in lower demand for cement. Overcapacity alone will not result in decline in pricIf input costs keep rising and cement makers still reduce prices, many of them will just go o
of business. Therefore, itd be difficult to say if prices will surely decline in a year.
The cement industry has added around 20 million tonnes of capacity in the Q1 of calen
year 2008 taking the existing installed capacity to 203 million tonnes per annum. The indus
is expected to increase its capacity to 254 million tonnes by the end of next calendar ye
which may create a huge supply demand mismatch. Last year, the capacity utilization of t
industry was over 90% with several plants working at over 100% capacity.
Fertilizers: New Policy: A bullet fired so closed, yet missed
The new rules would promote joint ventures abroad, which in turn will help meet Ind
domestic demand through imports at competitive prices.
According to the new investment policy, additional urea from the revamp of existing units w
be recognized at 85 per cent import parity price with the floor and ceiling price of $250 a
$425 per tonnes respectively. The urea from the expansion of existing units would
recognized at 90 per cent of import parity price with a floor price of $250 per tonnes. T
new policy also provides that coal gasification-based urea projects will be treated at par w
other new and existing plants, which will encourage use of local coal.
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Iron ore prices likely to rise in near term
The domestic price of iron ore is once again rising, after experiencing a marginal slip l
month. Prices are likely to shoot up even further, with steelmakers indicating a 5 perc
hike in prices which they had kept in check till now.
On the global front, iron ore prices have been declining, which has affected Indian iron o
exports adversely. In fact, miners in India are on the back-foot and have said that exportiron ore has slipped by as much as 20 percent in just the past month. Steel production in t
country has been slow and is expected to pick up once the Olympics are over. Therefore, t
current lower freight rate is nothing but a temporary phenomenon and stands to
corrected soon. According to a source, f.o.b price of 63.5 grade iron ore is currently rang
between $128 and $130. Change in prices is unlikely to occur before the first week
October.
Core Sector Research:
Indian production at 6 key sectors grew by 3.4% in June
India's production at six key industries, which account for a quarter of the nation's indust
production, rose by 3.4% in June 2008. The Ministry of Commerce and Industry said i
release that the index for the six key industries rose to 232.5 in June from 224.8 a year earl
Production in the three months ended June 30 rose by 3.5% as compared with a 6.4% a ye
earlier.
The following is the percentage change in production
Sector Jun'08
Electricity 2.6Coal 6.2
Steel 4.4
Crude oil -4.7
Refined petroleum 5.6
Cement 3.8
Overall 3.4
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1st
Quarter result Analysis: Devil lies in details:
Sales grew at a record pace (37%); profit growth was the slowest in the past
quarters.
Fertilizer companies showed an unexpected 60 per cent jump in sales as t
government increased the subsidy to compensate for the higher raw material prices
Food processing, pesticides, agrochemicals, industrial gas and explosives, compu
education and cement firms, recorded a healthy 40 per cent growth due to high
income and increased industrial activity.
The software sector, after growing at a scorching pace of more than 35 per cent
the past five years, grew at a moderated pace of 25 per cent in the period afte
slowdown in the US.
Power cables grew at a higher rate of 25 per cent helped by demand fro
telecommunication and power companies.
Passenger cars, diversified companies, paints, pharmaceuticals and t
manufacturers posted 20 per cent-plus revenue growth.
Commercial vehicle sales grew by 18 per cent driven by tractors and LCVs. Motorcy
producers saw sales rising 12 per cent even after hardening of interest rate. A
ancillary makers, which derive demand from automobile sector and origi
equipment manufacturer, posted a modest revenue growth of 15 per cent.
Foods products (manufacturers of biscuit and dairy products), tea, personal c
products, sugar, consumer durables, cigarettes, textiles and retailers, which fac
price competition, expanded revenue by 10-15 per cent.
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Economy: Would the Elephant still be dancing?
CAPEX increased to Rs 1,050,950 crore in 6 months
Despite global slowdown, the capacity expansion plans announced by Indian corporate
surged to INR 10, 50,950 crore in the first 6th months of the current calendar year as again
INR 5, 67,851 crore between August to December 2007.
Current Account deficit widening
India's current-account deficit, which includes trade and investment flows, widened to a
record $17.4 billion in the financial year ended March 31, from $9.8 billion in the previous 1
months, partly because of increased spending to keep fuel prices below international levels
The deficit is the amount the government needs to borrow to bridge the difference betwee
spending and receipts. A narrower budget gap may lead to lower government borrowing in
Asia's third-largest economy, allowing reductions in interest rates.
Finance Minister undeterred.Inflation crosses 12%
India's Finance Minister P. Chidambaram believes that the central bank's tight monetary
policy stance would help tame inflation in 3-6 months.
India's annual inflation topped 12 % for the first time in 13 years in late July, and analysts sait was yet to peak and the central bank was not done with monetary tightening.
The wholesale price index, India's most widely watched price measure, rose 12.01 pct in th
12 months to July 26, above the previous week's 11.98 % and the highest since the current
series became available in 1995.
Expert Speaks: Double digit inflation to continue till December - Dun &
Bradstreet
Inflation is projected to remain in double digits till the end of this year as the fiscal measureinitiated by the government are expected to yield results only by December.
Given the supply driven nature of the current inflation, the RBI's measures are likely to have
limited impact towards controlling inflation in the short run."
The fiscal measures initiated by the government to augment supply are expected to begin
yielding results from December. As such, we expect inflation to continue to remain elevated
and in double digits till December 2008."
The report stated high input costs and rising interest rates have impacted industrial growth
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with IIP growth slowing down to 5.23% in Q1 of FY 2009 against a growth of 10.28% in the
same period last year. However, with inflation continuing to be in double digits and the
money supply growing well above target, RBI further tightened its monetary stance,
increasing the CRR and repo rates.
Recent increase in policy rates could lead to upward movement in banks' lending rates,
thereby increasing pressure on corporate margins. Also, high interest rates would further
dampen the demand in interest sensitive sectors. We may witness deferment in investmen
decisions by companies. Industrial growth is therefore, expected to be subdued in the mon
to come and average at around 6.8% during FY 2009.
OPEC oil production up in July
OPEC pumped an average of 32.77 million barrels per day of crude oil in July an increase of
300,000 barrels per day on collective production.
OPEC 12, excluding Iraq exceeded their 29.673 million barrels per day target by 637,000barrels per day. An increase in the daily production of 390,000 barrels per day by Saudi
Arabia, Iran, Nigeria and Kuwait was said to be offset by shortfalls in Libyan and Iraqi outpu
The biggest increase in OPEC production came from Saudi Arabia which increased outputfrom 9.45 million barrels per day to 9.7 million barrels per day as it had pledged to do. Niger
increased its crude oil output by 100,000 barrels per day in July to an average of 1.9 millionbarrels per day. Libyan output volume, which had declined in May and June because of repa
work on Totals al-Jurf field decreased further in July after maintenance work commenced othe Waha-Defa oil pipeline. Iraqi crude production was down by 30,000 barrels per day in Ju
to 2.46 million barrels per day.
and the crude tumbled..
Crude oil is on a falling streak for this fortnight mainly on signs that a U.S. economic slump w
extend into 2009, paring fuel demand in the world's biggest oil consumer. Hedge funds and
other speculators are increasing their net-short positions in futures contracts.
Speculative short positions, or bets that prices will fall, have actually outnumbered long
positions by 5,550 contracts on the New York Mercantile Exchange in the week ended Aug.
the Commodity Futures Trading Commission said in its Commitments of Traders report on
Aug. 8. Net-short positions rose by 4,890 contracts, or 741 percent, from a week earlier.
China's July crude-oil imports fell 7 % from a year earlier after global prices increased to arecord, discouraging refiners from purchasing raw material to process into fuels. The
country's 15 biggest oil refineries increased their operating rates to boost fuel supplies for t
Beijing Summer Olympic Games that started on Aug. 8.
Clashes between Russia and Georgia threatened alternative export routes from Azerbaijan,
needed because of a pipeline fire. A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan
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pipeline was extinguished following an explosion last week. Georgia is a key link in a U.S.-
backed southern energy corridor that connects the Caspian Sea region with world markets,
bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Testimony of an optimist: Mr. L.N. Mittal
The shock of credit crunch should moderate by early next year, with the crisis mainly affect
the financial and consumer sectors. I am sure that there will be some calmness in the whturmoil in the next six to nine months. Large parts of manufacturing industry would not suf
the same problems as those parts of the world economy more closely linked to banking a
finance such as housing and consumer goods. The world has to differentiate between t
industrial and consumer parts of the global economy and recognize that they would beha
differently as a result of today's difficult conditions, including tightness in credit markets a
commodity and food inflation.
The substantial parts of the broad industrial sector across the world would perform in
satisfactory way in the next one to two years. Much of this related to the demand
manufactured products in emerging economies such as China and India. They are continu
to grow and they need to grow. They are not stopping even if they have slowed down th
progress.
NYSE Euronext 2009 CEO Report: Managing During Economic Turbulence,
The current US and global economic conditions will separate the best companies from gre
ones.[NYSE Euronext operates the world's leading exchange group with 4,000 lis
companies representing a combined USD 28.5 trillion in total global market capitalizat
more than 4 times that of any other exchange group.]
For the fourth consecutive year, the US is the most important region with 66%, followed China with 9% and Western Europe with 9%. In fact, most CEOs view the US as crucial
important to their businesses. Nearly two thirds of CEOs view BRIC countries as opportunit
This is particularly true of CEOs from non US companies, of which nearly 8 in 10 see BR
countries as an opportunity. Sensible acquisitions and expansions are targeted in BR
countries with the majority saying they would maximize their opportunity by establishing
expanding local marketing and sales activity. Half of CEOs from NYSE Euronext list
companies plan to establish or expand local marketing and sales activities in BRIC countr
through 2009. One quarter will seek or expand local partnerships.
Also, a vast majority of CEOs believe that changes to the US legal and regulatory systewould have a positive impact in the competitive position of the US capital markets. US bas
CEOs are more optimistic about the impact these will have, compared to non US based CE
US based CEOs are less likely to believe a convergence of international accounting standa
would have the same positive impact.
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Global Stage: Shiva Tankha
Russia Georgia spat
Georgia declared a "state of war" as Russia bombed the country and their armies battled fo
control of the separatist region of South Ossetia.
Georgia is under a state of total military aggression by the Russian navy, air force, large-sca
ground operations.
The Georgian parliament approved the emergency decree, which will last for 15 days and is
equivalent to declaring martial law.
Within hours of the Russian bombing of the second separatist region, the Abkhazians
announced they had begun a military operation against Georgian troops in their territory.
THE BROADER IMPLICATIONS-------
Russian President Dmitry Medvedev ordered a halt to military operations in Georgia on
Tuesday, saying Moscow had achieved its objectives by punishing Tbilisi , after five days of a
and land attacks that sent Georgia's army into headlong retreat and left towns, military bas
and homes in the U.S. ally smoldering. Georgia insisted that Russian forces were still bomb
and shelling.
Senators McCain and Obama are both trying to demonstrate their leadership capacities in
their strong statements on the conflict between Russia and Georgia. Senators McCain and
Obama are both trying to demonstrate their leadership capacities in their strong statement
on the conflict between Russia and Georgia
EFFECT ON CRUDE OIL ----------------------
Oil fell to a three-month low today, dropping for the third day in a row, after the Internatio
Energy Agency (IEA) predicted supplies would be more adequate and Russia called a halt to
the conflict in Georgia.US crude fell to a session low of $112.48.
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Energy Outlook: EIA perspectiveWorld energy demand and carbon dioxide emissions will grow by about 50 percent over the
next two decades despite soaring oil prices as developing countries outpace rich ones in
consumption, the U.S. government predicts.
World marketed energy consumption is projected to increase by 57 % from 2004 to 2030,"
the Energy Information Administration (EIA) says in its International Energy Outlook 2008
report..
During the same period, total energy demand in the non-OECD countries increases by 95 %
compared with an increase of 24 % in the OECD countries."
The non-OECD countries' share of world energy consumption is seen rising from 47.9 % in
2005 to 58.8 % in 2030.
Oil and coal -- both regarded as major culprits in global warming because of the carbon
dioxide they spew into the atmosphere when burned -- will continue to dominate global
energy supply, says the U.S. Energy Department's statistical wing.
As a consequence, and assuming no new measures are enacted to curb climate change, the
annual amount of heat-trapping carbon dioxide flowing from energy use will have balloone
by 51 % between 2005 and 2030.
It sees demand for oil and other liquid fuels growing to nearly one-third more than today's
consumption, topping 113 million barrels a day by 2030. Crude oil will retain its 40 percent
market share throughout thanks to stepped up production by members of the Organisation
Petroleum Exporting Countries (OPEC) cartel.
The EIA also expects alternative liquid fuels -- including environmentally controversial oil
shale and biofuels such as ethanol, which has been assailed as contributing to runaway foo
prices -- to grow to supply nearly 10 percent of total liquid fuel consumption by 2030.
The United States is expected to account for nearly half the growth in global biofuels
production. This is expected to rise from 1.3 million barrels a day in 2010 to 2.7 million barr
a day in 2030, with U.S. production increasing from 500,000 barrels a day to 1.2 million
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barrels a day in the same period.
The EIA sees nuclear power leading growth in alternatives to fossil fuels. It anticipates that
nuclear-generated electricity will grow by about one-third and that 124 new nuclear power
plants will be built by 2030. Around 45 would be erected in China, with another 18 in Russia
17 in India, and 15 in the United States, the agency predicts.
"Electricity generation from nuclear power is projected to increase from about 2.6 trillion
kilowatt-hours in 2005 to 3.8 trillion kilowatt-hours in 2030, as concerns about rising fossil
fuel prices, energy security, and greenhouse gas emissions support the development of new
nuclear generation," the report says.
"Issues that could slow the expansion of nuclear power in the future include plant safety,
radioactive waste disposal, and the proliferation of nuclear weapons, which continue to rai
public concerns in many countries and may hinder the development of new nuclear power
reactors," it says. "Moreover, high capital and maintenance costs may keep some nations
from expanding their nuclear power programmes."
Electricity generated by renewable energy sources will rise by about 2.1 percent a year. Mo
of this growth will stem not from sources favoured by conservationists -- the sun, wind, or
heat trapped under Earth's surface -- but from new mid- to large-sized dams in Asia and Lat
America.
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Our Debutants: Young Blood
Mukesh Kr. Man
SHOULD INDIA GO FOR FULLER CAPITAL ACCOUNT CONVERTIBILITY ?
When the Prime Minister asking the Finance
ministry and the RBI to sketch the road map for
Capital Account Convertibility (CAC), once again
the expectation that the rupee is close to full
convertibility has become a reality. Presently,
current account convertibility is allowed to make
and receive payments in foreign currency for
exports, imports, education, travelling and trade
in services. Capital account convertibi
restricted and full capital account conver
would allow free conversion of Indian asse
foreign currency assets and vice versa.
asking the RBI to prepare the roadmap, the
Minister said that India is more comfortabl
externally and internally and that the time
now for full capital account convert
S.S.Tarapore
In 1997, a committee on
CAC, headed by former RBI
deputy governor S.S.
Tarapore, had spelt out the
conditions under which full
convertibility could be ushered in. These are
manageable fiscal deficit, moderate rate of
inflation, strong financial sector and ample forex
reserves.
Government aimed at reducing the Gross Fiscal
Deficit to GDP ratio from 4.5% in 1997 to 2.5% by
2009 and estimated revenue deficit at 1% by
2009. In 2007-08, Gross Fiscal Deficit to G
ratio was 3.1% and revenue deficit was 1.4%.
average inflation for the period 1997-2000 w
maintained between 3 to 5%. But presently,
inflation is hovering around 12% and also
Cash Reserve Ratio (CRR) is 9%, so these m
hamper progress towards full capital acco
convertibility. The banking system has done w
to bring NPAs down and now the Gross NPAall banks in India averaging close to 2% ma
Indias foreign exchange reserves are over $
bn. So situations are favorable for India
introduce full CAC.
PROBLEMS WITH CAC
Several economists are of the view that the full Capital Account Convertibility has serio
consequences on the wellbeing of the country, and this may even lead to extreme sufferi
of the common masses. Some of the reasons are highlighted below.
During the good years of the economy, it might experience huge inflows of foreign cap
but during the bad times there will be an enormous outflow of capital. This has seri
impact on the economy and can even lead to an economic crisis as in South-East Asia in 19
There arises the possibility of misallocation of capital inflows. Such capital inflows may f
low-quality domestic investments, like investments in the stock markets or real estates, a
desist from investing in building up industries and factories, which leads to more capa
creation and utilisation, and increased level of employment. This also reduces the potentia
the country to increase exports and thus creates external imbalances.
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International finance capital today is highly volatile, i.e. it shifts from countrycountry in search of higher speculative returns. In this process, it has led to econom
crisis in numerous developing countries.
Entry of foreign banks can create an unequal playing field, whereby foreign ba
pick the most creditworthy borrowers and depositors. This aggravates the problem
the farmers and the small-scale industrialists, who are not considered to be cre
worthy by these banks. In order to remain competitive, the domestic banks too ref
to lend to these sectors, or demand to raise interest rates to more competitiv
levels from the subsidised rates usually followed.
Under flexible exchange rates, capital inflows lead to an appreciation of the domes
currency directly. On the other hand, in a fixed exchange rate regime, increas
capital inflows lead to monetary expansion and price inflation, which also cause
real appreciation. In both cases, capital inflows tend to cause a real appreciation a
the possibility of current account deficits because of cheaper imports a
uncompetitive exports which, if not controlled in time, will lead to loss of confiden
and capital flight.
A study conducted by Dani Rodrik (1998), finds little evidence of a
significant impact of capital account convertibility on the growth rate of a countA 1999 World Bank survey of 27 capital inflow surges between 1976 and 1996 in
emerging market economies found that in about two-thirds of the cases, there wa
banking crisis, currency crisis or twin crises in the wake of the surge.
BACKGROUND OF CAC IN INDIA
By August 1994, India was forced to adopt full capital account convertibility under t
obligations of IMF. The committee on Capital Account Convertibility, under Dr S S Tarapor
chairmanship, submitted its report in May 1997 and observed that international experien
showed that a more open capital account could impose tremendous pressures on financial system. Hence, the committee recommended certain signposts or preconditions
Capital Account Convertibility in India. The RBI over a period of time has accepted the po
that the South East Asian crisis was a bad example for Capital Account Convertibility and t
India had been insulated from the crisis because it had not allowed Capital Accou
Convertibility.
There are four benefits to India from CAC:
(1) Rates of return on debt and equity in India are high by world standards. Wconvertibility, foreign money will come into India to reduce these rates of retu
i.e., the cost of capital faced by the companies of India in equity and debt financ
will drop. At a lower cost of capital, more investment projects would be viab
which would generate a faster pace of investment and growth in the economy.
(2)With convertibility, Indians would be able to diversify their portfointernationally. Instead of being constrained to only hold Indian real estate, equ
and debt, we will reduce our risk by diversifying internationally. This means that
a bad year in India, when Indian financial assets generate a poor return, fore
assets owned by Indians would continue to generate good returns.
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RETAIL INDUSTRY IN
INDIA
ALL THE POWER IS WITHIN YOU, YOU
CAN DO ANYTHING AND EVERTHING
This positive atmosphere has been prevailing
in India from quite a few time with all the big
players like Reliance, Aditya Birla group, the
Pantaloon retail of Future group, subhikha
group, The Tata and shoppers stop, RPG, Vishal
mega mart, Godrej etc entering and foraying
into retail sector.
The growing Indias GDP at 8%, increase in the
disposable income of middle class in India,
shift in consumer demand to foreign brands,
flexible government policies, the spread of
visual media making consumer more aware of
advancements in the industry are a few factors
driving these players towards the retail sector.
The Indian retail market, which is the fifth
largest retail destination globally, according to
industry estimates is estimated to grow from
the US$ 330 billion in 2007 to US$ 427 billionby 2010 and US$ 637 billion by 2015.
Simultaneously, modern retail is likely to
increase its share in the total retail market to
22 per cent by 2010.
Apart from the domestic players the
announcement of tie ups with the foreign
giants like Wal-mart, Woolworth , etc has also
brought out sea change in this sector.
The Government allows 100 per cent foreign
direct investment (FDI) in cash and carry
through the automatic route and 51 per cent in
single brand. Besides, the franchise route is
available for big operators. To further attract
global retailers, the economic survey 2007-08
has suggested a share for foreign equity in all
retail trade and 100 per cent in respect of
Our Debutant: Young Bloo
--Leena Agarw
Industry Watch
luxury brands and other specialized re
chains.
Retail today has changed from selling
product or a service to selling a hope,
aspiration and above all an experience tha
consumer would like to repeat again
again.
The industry has seen such a transformat
over the past decade that its very definit
has undergone a sea change. No longer camanufacturer rely on sales to take place
ensuring mere availability of his product.
The major investment areas in retail sup
chains lie in the area of sourcing, distribut
centers (warehouse, c
storage),transportation netwo
inventory(both store level and warehou
supply chain information systems such
warehouse management systems, plann
forecasting,inventory management, etc.
Strategies in retailing
Retail chains can choose to own or outsou
one or more areas in the back end start
from inbound transportation, distribut
centers, or even further upstream, va
adding operations. Currently, some of
retail chains like Subhiksha have outsour
most of their back end, while some, such
Reliance, are investing heavily in the sup
chain network. Others are positioned
between owning part of the activities in
back end. Outsourcing is done mostly
inbound transportation to independ
trucking companies, or to 3PLs, who may a
provide other services as warehousing.
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Retailing inherently is a difficult business.
Forecasting is merely 65% accurate, up to
20% of the orders are filled imperfectly,
30% of the merchandise is sold on
markdowns, 75% of the new products fail
to meet expectations, net margins are low
(2-3%) and inventory is high. However,
even beyond that, the Indian retail
scenario has a number of deficiencies.Supply chain and logistics costs currently in
some cases go up to 10% of the organized
retail sales, to the tune of INR 50 bn, while
it is less than 5% in mature retail markets
such as US.
Thus, there is a current improvement
opportunity of up to INR 25 bn. In the next
10 years, this gap of INR 25 bn could go up
to INR 300 bn., and hence a lot more
investment and effort would have to beput in to reduce this.
On other measures of supply chain
effectiveness also, Indian retailers lag
behind that of mature markets. Indian
retail chains turn their inventory much
slower, and stock out levels are also
higher. Even the more established retail
chains are able to turn their inventory only
half as fast as retail chains in US orWestern Europe, and stock out levels are
also twice or thrice as much. On the other
hand, shrinkage levels are in tandem with
international benchmarks. However, since
many retailers have still not invested in the
back end and the average length of the
retail supply chains in India is
comparatively smaller than their
counterparts in other mature markets, this
might not have been captured.
IMPROVEMENT PROJECTS FOR
RETAILERS
The retail firm boundaries may extend
anywhere from the sales point (stores,
typically for Indian retailers today) and
backwards up-to the source, encompassing the
distribution network, intermediaries and the
final supplier. The linkages in between these
entities (transportation network) may be
owned by either of the parties. In addit
parts of the value chain may be outsourced
a 3PL. Finally, to ensure proper planning
visibility, IT systems may need to be deplo
at various points of the value chain, of
connecting one entity to the other.
A number of opportunities exist for Ind
retailers today in terms of reducing cost improving service levels in the existing sup
chains. For most retail chains today, sim
setting up the entire network is a big challe
at the moment, since decisions today
affect the performance of their stores (or
other mode of sales) in the coming ye
Investment required will be huge and
number of challenges will have to
overcome, as described in the previ
sections. Network design, DC design engineering, Supply chain IT syste
implementation, decisions to outsource par
the network are some of the typical proje
Indian retailers are taking up at the mome
and would be taking up in the near future.
However, going forward, there will
tremendous scope to further improve u
the supply chains and even more important
use supply chain innovation for gain
competitive advantage. As mentioned befo
Supply chain best practices in global retail h
created giants like Walmart, Amazon, Targ
Tesco, Metro, to name a few. Hence, a num
of projects, including process improvement
the DC level or the store level, improv
forecasting accuracy, reducing out of sto
increasing sourcing efficiency, increas
product movement visibility, reducing l
time (sourcing, distribution), optimiz
transportation etc. should be on the radar
the Indian retailers for the short to medi
term time horizon.
On a long term basis, supply chains wo
need to be built flexible, in order to respond
changes, drastic or slow, in demand, sup
and technology. Further, flexible supply cha
would allow retailers to tackle any dram
events like natural calamities, terrorism,
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Aligning the supply chain strategy to the
business strategy would be of paramount
importance in order to make strategic
decisions more effectively, like entering new
markets, new product introductions, new
mode of sales, etc. Anticipating the future, and
building a supply chain around it, is another
way of looking at what the customer behavior
would be in the long term.
Prospects
No doubt the retail sector is still going to be a
major contributor to GDP of India.
Now that the influence of the left parties have
been reduced to a great extent from the UPA,
hopefully we expect government to come up
with more vibrant policies to boost the retailboom which would bring about changes in
other sectors like realty, processed food
industry, garments, gems and jewellery,
education,etc and also lead the improvement
in supply chain management services by more
tie-ups with foreign players or hiring more of
experienced executives predominant in this
sector.
CONCLUSION
Past is experience, Present is experiment and
Future is expectation.
Use your experience in your experiments for
better expectations
In the same way the retailers keeping in their
mind their past experiences, using them in
their present experiments will surely come out
with better expectations in future.
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Disclaimer:This magazine isbeing published and circulated onbehalf of Stockyard by Mr.Prem
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