Impoverished, cities are on prowl
What is the city but the people? The Bard’s surmise still arguably holds true, more or less. Though, these days, up-to-date amenities, infrastructure and public services can and do make all the difference to the urban experience. After all, the planner’s lookout is to find ways of creating, within the civic space, the sense of belonging and place. The figures suggest that from later this year, the majority of people world-wide will be in cities. The times are indeed changing.
Urban areas contribute close to half of India’s GDP. But city finances are in a bad shape, pan-India. There is a growing urban infrastructure deficit as well. It is in this context that Financing Cities, a recent volume of policy papers published by the World Bank, is timely. The book deals with country experiences of municipal finance in such high-growth potential economies as China, India and Brazil.
The key message that comes across is the need to mobilise “more public finance, be it in user charges or taxes”, to boost investment in urban infrastructure. The international track record would suggest that private participation in infrastructure (PPI) “has more potential to improve efficiency than to mobilise new finance”. India accounts for only about 1% of urban PPI transactions, as per the World Bank data.
The biggest gap in India’s infrastructure remains urban infrastructure, as emphasised by Vijay Kelkar, former finance secretary, in the foreword. The Constitution “allocates primary responsibility for urban infrastructure in India to states”, as mentioned in the overview paper by Subhash Chandra Garg, joint secretary (state finance) in the finance ministry. The municipalities have “very limited resource raising authority”.
Meanwhile, most states have abolished octroi, the highly buoyant source of municipal revenue, and it is being phased out elsewhere in what is generally considered a distortionary levy. Additionally, the property tax base has yet to become a buoyant revenue source.
It is not often that there is resort to market borrowings, given the weak institutional arrangements. So municipal bodies largely depend on states for fiscal transfers, which have traditionally been rather limited. Of late, the Centre has indeed been providing grants for local bodies, but surely the way ahead is urban reform along PPP to coagulate funds.
The urban population has grown to 300 million, living in some 3,700 urban areas, including 27 million-plus cities. Although India is still largely rural, it has a larger urban population than the entire population of the US! But municipalities have remained under-funded for years. As a study conducted by the 12th Finance Commission showed, the share of municipalities’ “share in own taxes is around 3% and their revenue is less than 0.75% of GDP”.
The comparative figures are higher abroad. The 74th constitutional amendment did envision municipalities as the first tier of governance and development. But Parliament stopped short of conferring the mandate envisaged in the Twelfth Schedule on municipalities and left it to states to delegate as they deemed fit. There is a marked reluctance on the part of states to grant fiscal authority and revenue earning functions to municipalities.
The end-result is that while India’s services economy—such as trade, transport, telecom, banking et al—are on a high-growth path, urban infrastructure services such as water, power, public transport, sewage disposal, roads, etc have not quite responded to the growing demand either in terms of quantity or improved quality.
Given that many urban services such as power supply, mass transportation and those at airports are ‘charged’, there is much scope for PPPs to rev up efficiency in service delivery and for appropriate pricing and user charges. The monies now centrally budgeted for urban renewal do imply much-needed funding. But the key really is to reduce dependence on government finances and instead boost municipal capability.
Since many municipal-level services are perfectly amenable to cost recovery and right pricing, the way ahead is for strong local governments that are in charge of urban services. Note that many city-level power firms in pre-Independence days were merged into state monopolies with consequent loss of transparency. Now, reform of electricity distribution clearly needs to subsume municipal reforms. It would stem power theft and runaway revenue leakage.
Municipalities have no debt overhang on them given that they have been starved of funds. Also, there is no constitutional bar on municipalities borrowing abroad, as is the case with states. Municipalities can borrow from banks as they are “bodies corporate”.
There are regulatory restrictions on such bank loans to states. Municipalities can and do need to tap the capital market, issue bonds and step up recourse to bank finance to boost infrastructure investments. What is lacking is a conducive legislative framework. The urban development ministry has drafted a model municipal law for reform of municipal services. It calls for proper norms for levy of user charges and standards for local services. The model law needs to be enacted and adopted by states and duly made into law. Right away
India-based journalists hot property in US
There is hardly anything odd about American IT firms moving back office jobs to low cost destinations like India, but a California daily is recruiting journalists here to report what's happening 12,841 km away in Pasadena.
"We seek a newspaper journalist based in India to report on the city government and political scene of Pasadena, California, USA," said a job advertisement posted on the Internet earlier this week.
While the industry has already seen some editorial jobs being outsourced to India, the latest one is sure to raise eyebrows, as reporting, that too on issues like city government and politics, is something that requires first-hand account and understanding of the local issues, said an industry expert.
However, the daily 'Pasadena Now' is confident the arrangement will work.
"We do not believe that geographic distance between India and California will present unsurmountable problems, and that working together with you will result in your development of a keen working knowledge of this City's affairs. This will result in accurate and authoritative News reports," Pasadena Now's Publisher James Macpherson said in the job posting.
"Due to California's public access laws, virtually all relevant government documents and meetings are available on the Internet," MacPherson said. In addition, the publication's staff in Pasadena would record and photograph all the required meetings and interviews and send them to India through e-mail.
"We propose to work closely with you to direct you to the issues, research, and references in order for you to carefully watch, analyse, and report upon the city's affairs," said the job posting.
Friday,May 11, 2007 Source: PTI via Economic Times
Tech MNCs step up hiring pitch
The IT recruitment scene these days is buzzing with activity. The top three multinational software/BPO firms, IBM, Cognizant and Accenture possibly added more people to their Indian operations than the top three Indian IT/BPO companies TCS, Infosys and Wipro. While the net additions made by TCS, Infosys and Wipro to their headcount in 2006 were more than those by IBM, Cognizant and Accenture, discounting the numbers for onsite deployment reveals a different picture.
In 2006, the Indian IT firms together added 55,758 people globally — TCS 20,596, Infosys 20,010 and Wipro 15,152. At the same time, their MNC counterparts recruited close to 41,400 in India. IBM ramped up its India workforce by 14,500 while Cognizant added 14,550 people globally, with three-fourths of its total workforce deployed in India.
For Accenture, these figures are only available with a one-month lag. Between the end of January 2006 and January 2007, Accenture stepped up the recruitment ante by hiring more than 16,000 people in India.
There is a crucial difference between these two sets of numbers, though — global vs Indian. For pure-play Indian IT companies, the numbers are global and include people working in subsidiaries abroad and at on-site projects. For MNCs IBM and Accenture, the numbers relate to Indian operations.
Discounting the non-India component for Indian IT companies at 30% — on-site effort for Infosys and Wipro in 2006 was a little over 30% whereas TCS doesn’t give that figure — pure-play Indian companies added a little over 39,000 people to their domestic operations. This is against 41,400 people in the case of MNC IT companies. This is after discounting 25% on-site effort for Cognizant and taking the net additions of IBM and Accenture.
This should not come as a surprise. It’s, in fact, part of a bigger trend. Even five years ago, pure-play Indian IT companies had maintained that they increasingly found themselves competing with MNCs for some of the projects, indicating that the customer segments for MNCs and Indian players were converging. Eventually, when IBM and Accenture announced the plans to tap India as a resource base, the trend became much clearer.
The present trend is expected to become stronger in the days to come. For example, Accenture may take its headcount to 35,000 by August 2007, 52% over the same period last year. “We have built Accenture into a powerful global brand — and we intend to be a leading brand and an employer of choice in India.
There is a tremendous opportunity for Accenture to work with the talented people in India to help our clients compete on the world stage. We are also keen to build our domestic business here,” Sandeep Arora, lead executive, Accenture Delivery Centres for Technology, India, said.
Cut to IBM. Since June 2006, IBM has set up 10 new IBM global delivery centres in India in Kolkata, Chennai, Bangalore, Pune, Hyderabad, Chandigarh, Gurgaon, IBM spokesperson said. “India is home to IBM’s largest service delivery teams that provide end-to-end services to clients globally — across remote infrastructure management, application services and business transformation outsourcing,” she said.
JP Morgan to invest Rs 400 cr in Chennai J P Morgan Property Fund, which has mobilised over 300 million dollars to focus on Indian real estate, is going to set up a residential project in Chennai, at an estimated cost of Rs 400 crore.
Chennai-based realty developer Arihant Foundations and Housing will develop the residential property, which will be spread over 45 acres of land, in joint venture with J P Morgan.
The company's Board of Directors today authorised its entry into the joint venture (JV).
The JV would have 50:50 equity participation from both the partners, Arihant Foundations informed the Bombay Stock Exchange (BSE).
The India property fund targets key economic centres in the country including Mumbai, Bangalore, Chennai, Kolkata, Hyderabad and New Delhi among others, to develop projects along with local partners.
Last year, J P Morgan Asset Management had announced the mobilisation of around 360 million dollars from institutional and high net worth investors (HNIs) from the US, Asia, Europe and the Middle East to invest in the booming Indian real estate space.
Wednesday, May 09, 2007 Source: PTI via Economic Times
Sahara Infrastructure plans 217 townships
Lucknow-based Sahara Infrastructure and Housing (SIH), part of the Sahara Group, plans to develop around 11,000 hectares for 217 townships across the country.
The projects would be spread over 100-300 acres each and together would have 30.3 lakh sq m of built-up commercial area and 1008.4 lakh sq m of built up residential area.
In the first phase, the company plans to develop102 townships and the remaining 115 in the second phase. These would come up in tier I, II and III cities.
Speaking to Business Line at the launch of one of the townships, the first in the series, Mr Sushanto Roy, Head, SIH, said, "We have acquired land completely for 75-80 projects and partly for 125. We have spent Rs 1,500-1,700 crore for the acquisition." The total revenue out of the townships is going to be around Rs 240,000 crore, he added.
On the Amby Valley project in Maharashtra, Mr Roy said the company planned to increase its size from the current 10,000 acres.
"We want to take however much land is available in the vicinity for increasing the size of the project," said Mr Roy. Only 300-400 homes have been sold in Aamby Valley until last month. About 3,000 homes were to be built in the first phase and 6,000-7,000 homes in total.
Textile sector will generate 17 m jobs by 2012: Vaghela
The textile sector is likely to attract investment of Rs 1,50,600 crore by 2012 and would generate employment opportunities for 17.35 million workforce, out of which 5.2 million would be skilled, the Union Textile Minister, Mr Shankersingh Vagehla, said on Friday.
Presiding over the Consultative Committee attached to his Ministry, Mr Vaghela said that investment in the textile sector had picked up pace and it was reckoned that aggregate investment in the country's textiles and clothing sector was around Rs 72,452 crore between 2003-07.
He said the growth of the industry is now at 9 to 10 per cent per annum and it is likely to rise to 16 per cent in the coming years. Textile exports are likely to grow 22 per cent to reach $55 billion by the end of the Eleventh Plan period.
Integrated parks
Referring to the Scheme for Integrated Textile Parks (SITP) launched in 2005, Mr Vaghela said that 30 such SITPs would be set up by 2008 with an investment of Rs 15,700 crore. These parks would pan-out an annual production of Rs 23,600 crore and create half a million new jobs. The allocation for the scheme has been enhanced from Rs 189 crore in 2006-07 to Rs 425 crore this year.
Members were also apprised of the extension of the Technology Upgradation Fund Scheme (TUFS) till 2012. The allocation on account of interest support was increased from Rs 485 crore to Rs 535 crore in 2006-07, registering an increase of 10 per cent. For the current fiscal, Rs 911 crore has been provided for interest subsidy under TUFS, the Minister said
Friday, May 11,2007 Source: Moneycontrol.com
Automobile Sector
The government on Thursday divested its entire holding in Maruti Udyog (MUL) by selling the residual 10.27% stake for Rs 2,360 crore to a clutch of financial institutions led by Life Insurance Corp (LIC).
“We have sold the entire lot of shares held by the government in MUL at an average price of Rs 797 a share to raise Rs 2,360 crore,” minister of heavy industries and public enterprises Santosh Mohan Dev told reporters after the bids were opened. MUL scrip closed at Rs 764.65 on the bourses.
The government had fixed a floor price of Rs 760 per share for the sale. The government had offered 2.96 crore shares in the company, representing 10.27% stake. LIC got 1.3 crore shares at a price of Rs 800 per share. The country’s biggest insurer, which earlier held 8.1%, would now own 12.5%.
It would now be the second-largest shareholder in the company. The government sold the shares in a French auction, in which bidders paid the price they bid, instead of a common cut-off price. In all, 32 financial institutions and mutual funds were allotted shares.
State Bank of India (SBI) was the second most-successful bidder and got 83 lakh shares at Rs 775 per share. Along with LIC and SBI, Corporation Bank and Union Bank of India had also put in bids for buying the government stake in MUL.
“The shares would, however, be transferred to LIC in September when the shareholders of Suzuki Motor Corp (SMC), which owns the company, amends the Articles of Association. SMC officials have already given a go-ahead to LIC, increasing its stake in MUL to over 10%,” department of disinvestment secretary PV Bhide said.
Corporation Bank and Exim Bank have been granted 5.88 lakh and 1.18 lakh shares each. The two banks submitted the highest bids at Rs 850 per share. Among mutual funds bidding for the stake, Reliance MF and HDFC MF have been given 20 lakh and 10 lakh shares, respectively.
They had quoted Rs 790 and Rs 782 per share. SBI MF got 49.76 lakh shares for Rs 775 per share and Punjab National Bank 12.29 lakh shares at Rs 815 per share.
Friday, May 11, 2007 Source: Economic Times
Daimler Chrysler begins construction in Pune The world's second largest luxury carmaker Daimler Chrysler Wednesday began construction of its new plant for the production of Mercedes-Benz cars near Pune in Maharashtra.
The new facility, to be located at Chakan near the city, will initially employ around 350 workers, matching the level of the current facility, said Joachim Schmidt, chairman of Daimler Chrysler India.
"Our confidence in the Indian market is reflected in our long association with the country. Our engagement with India dates back to 1954 when we started collaboration for trucks in India. Subsequently, we were also the pioneers of the luxury car market in India," said Schmidt.
The new manufacturing facility will produce S, E and C-Class Mercedes-Benz cars for Indian market. The production of cars is expected to start around early 2009. The new plant will initially employ around 350 workers, matching the level of the current facility.
In 2006, DaimlerChrysler sold 2,121 vehicles, achieving strong growth of 11 percent against 1,915 in 2005. In the first quarter of 2007, the carmaker already recorded further growth of 17 percent.
On Jan 4, Daimler Chrysler India had signed a memorandum of understanding (MoU) with the state government over the construction of the new plant. Chief Minister Vilasrao Deshmukh laid the foundation stone of the new facility.
Among those present included Minister of Industries Ashok Chavan, Minister for Water Resources and Water Supplies Ajit Pawar as well as Minister of State for Industries Rana Jagjitsinh Patil. Representing DaimlerChrysler India were Schmidt, and Wilfried Aulbur, managing director and CEO of Daimler Chrysler.
Thursday, May 10, 2007 Source: IANS via Economic Times
Durable Sector
AC market turns hot
The airconditioner market has become red hot. The number of national and international brands operating in the AC market has overtaken the number of brands in the high-volume colour TV. Driven by consistent high growth rates as many as 25 national and international brands have cropped up in the domestic AC market as against 15-20 such CTV brands with a national presence.
Historically, CTVs have been the most competitive product category for consumer durable. This is despite the fact that the size of the domestic AC market is less than one-fifth in volumes. As against an estimated market of 10 million units for CTVs, the AC market is expected to touch 2 million units only this year.
Some of the brands which have entered the AC market over the last two to three years include Chinese brands TCL, Haier and Gree. This apart, some brands which have been engaged in other product categories have extended their presence into ACs.
This includes names such as Onida, Kelvinator, Godrej and Symphony. The traditional players include among others LG, Voltas, Samsung, Hitachi, Carrier, Daikin, O General, Blue Star and Videocon.
What’s attracting the new players is the consistent high growth rate. Says Sanjay Johri, chief operating officer, unitary products business group, Voltas, “The 25% growth being clocked by the market is attracting new players. It is only when the growth rate tapers down that we can see any shakeout.”
Apart from growing demand, the changes in the industry has also attracted new players. The higher-priced split ACs which accounted for just about a quarter of the market few years back has become almost 50% in volume terms and even higher in value
Friday, May 11, 2007 Source: Economic Times
Food Sector
Liquor Sector
Oil Sector
Petroleum sector drives infrastructure growth A turnaround in crude oil output and higher production by refineries pushed the growth of six infrastructure industries to 8.6 per cent in 2006-07 as against 6.2 per cent in the previous year.
The crude production, which had declined 5.3 per cent in 2005-06, increased by 5.6 per cent in 2006-07. Similarly, the output of refineries grew 12.6 per cent in FY07 as compared to 2.4 per cent in 2005-06.
In March 2007, the growth of the core sector was 10 per cent as against 7.1 per cent in the same month last year.
The increase in growth during the last month of 2006-07 was due to better performance of steel, whose production increased by 15 per cent. Besides, electricity grew at eight per cent and refinery throughput at 13.4 per cent.
The growth in production of cement, however, fell in March 2007 to 5.5 per cent from 17 per cent in the same period last year. During 2006-07, the growth in cement production slowed down to 9.1 per cent from 12.4 per cent in 2005-06. Though coal production was up 10 per cent in March, the overall increase in the entire financial year was 5.9 per cent as against 6.6 per cent in 2005-06. Electricity sector grew 7.3 per cent in 2006-07 as against 5.1 per cent in 2005-06. Import of power from Bhutan also contributed to the growth. Steel production grew at a marginally slower rate of 10.9 per cent in 2006-07 against 11.2 per cent in 2005-06.
Benetton perfumes add fragrance to sweaty summers After chic clothes and fashion accessories, United Colors of Benetton has unveiled its new range of perfumes called 'Cotton' to make the hot, sweaty summers fresh and fragrant. The new range is available in three variations - Woman, Man and Unisex.
The Benetton Group has signed an agreement with Selective Beauty, a Paris-based international cosmetic group, for the development and worldwide distribution of the perfumes.
"Cotton is an element that Benetton knows extremely well, as it is a source of inspiration for many ideas connected to its core universe of fashion and colour. These fragrances are in sync with the philosophy," Patrick Mallek, export director of United Colors of Benetton, said while launching the new perfumes here late Thursday.
"Perfumes are a part of India's tradition and culture. Keeping in mind the potential and brand acceptability, we have come up with our new range, which is all about sensuality, simplicity and comfort," added Mallek, who is also export manager of Selective Beauty.
These 'Cotton' perfumes would be available in all major retail stores and Benetton showrooms and would cost between Rs.995 and Rs.1,925.
Paris Designs, a concept store headquartered in the UAE that has a strong all-India distribution network of perfumes and accessories, has also joined hands with Benetton for distribution In India.
"Our endeavour has been to provide luxury at affordable prices and our association with United Colors of Benetton fragrance is a step in the same direction," said Asif Siddique, CEO, Paris Designs.
Friday, May 11, 2007 Source: IANS via Economic Times
Liberty rolls out sanitaryware products Homegrown footware major Liberty on Wednesday forayed into the high-end sanitaryware market with the launch of its branded whiteware, Beach, and anticipates the new business to touch Rs 200 crore revenue mark in next five years.
The company is planning to capture 50 per cent of the high-end sanitaryware market in India, which is expected to grow to Rs 200 crore by 2010 from the present Rs 25 crore.
"Liberty Whiteware is expected to achieve break even point in its first year of commercial operations with an expected turnover of Rs 50 crore. The targeted turnover from the project is Rs 200 crore in the fifth year of commercial operations," Liberty Whiteware CEO Adarsh Gupta told the media.
The total sanitaryware market in India is around Rs 1,000 crore, of which high-end segment is just Rs 25 crore. High-end sanitaryware market would touch a level of Rs 200 crore by 2010 and the company anticipates to capture at least 50 per cent of the market by then.
Gupta said, the demand in the high-end sanitaryware market is primarily met through imports and the company is hopeful to effectively tap this market.
Wednesday, May9, 2007 Source: PTI via Economic Times
Footwear foray into lifestyle Having carved out its niche as the “country’s third-largest footwear retailer”, Khadim’s has taken the plunge into lifestyle retail. The city-based Khadim India Ltd on Tuesday announced the launch of a chain of departmental stores called Egaro.
“Our success in shoes and the strong brand recall of Khadim’s has given us confidence to grow the brand further. We sensed a need for detailing in retail and Egaro is born out of that aspiration,” Siddhartha Roy Burman, managing director, told Metro.
From clothes to footwear, cosmetics to gold ornaments and fashion jewellery, home furnishings to groceries — Egaro promises to offer shopping solutions across an eclectic product mix under one roof, with privately-owned fashion apparel labels taking up 50 per cent of rack space.
The first two outlets will open by May-end on Ashutosh Mukherjee Road, in Bhowanipore and at Howrah Maidan.
The Bhowanipore Egaro has shop space of 28,000 sq ft spread across three levels. The Howrah stop will open with 20,000 sq ft and add another 9,000 sq ft in the second phase.
“We will operate in the value fashion segment, catering to the upper middle and middle-class shoppers,” said the managing director, thanking father Satya Prasad Roy Burman, chairman of the company, for the “inspiration”, and the “liberty” to experiment.
The third outlet of Egaro is expected to open in Asansol by this year-end, followed by outlets in Burdwan and Sodepur. Chief financial officer Ishani Ray said the company plans to pump in Rs 50 crore for the departmental store business, and a sum total of Rs 120 crore towards various projects in the next two years. Four to five Egaros will be added to the chain every year on an average.
Khadim India hopes to touch a turnover of Rs 45 crore in the current financial year, going up to Rs 180 crore in three years. “We are confident of reaching Rs 500 crore in the next three years and become the number one footwear retailer in the country in five years,” declared the managing director.
The in-house brands being launched in Egaro outlets are Adrianna (ladies’ western wear), Manjira (ladies’ ethnic wear), e’Vinson (men’s formal) and Bonito (kidswear). “These lifestyle brands will be 30 to 40 per cent cheaper than the nearest competition, a USP of Egaro,” said Abhishek Kumar, vice-president, LFR (large-format retail) division of Khadim India.
Egaro, named after a Spanish village, pledges a “friendly and comfortable” ambience, also stocking high-profile brands like Levi’s (for women), Pepe, Arrow and Allen Solly. The management is keen to use the learning curve from its maiden large-format venture, a superstore called Khadim’s Khazana in Kanchrapara, targeted at low to mid-income segments.
“We have a huge advantage of being able to draw from our established distribution network and the backend manpower resources,” felt Ray.
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Usha Ganesh is a business writer with Chillibreeze.
Vilasini, seen here with a cat, is actually a dog lover! Started her stint with Chillibreeze as a writer and is presently the Chief Operating Officer of the content division. This is who she says she is "a Masters in Math by qualification, a Coordinator by birth and a 'people person' by nature." Seeing Chillibreeze become a globally recognized company, adding value to clients and making a difference in the lives of Chilli writers, is her mission in life now! You can reach her at vilasini@chillibreeze.com
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