The government on Saturday said it would not roll back the hike in petrol, diesel and cooking gas prices that came into effect on June 5.
"Decision on the hike in prices of petrol, diesel and LPG is final and there will not be any change to it," Petroleum Minister Murli Deora said in an interview.
Many states have already slashed sales tax on petrol and diesel and VAT on cooking gas to cushion the impact of the hike on consumers.
The Centre announced an increase of Rs 5 per litre in petrol, Rs 3 per litre in diesel prices and that of LPG by Rs 50 per cylinder earlier this week.
Deora explained that the price hike had become necessary to curb the losses of oil marketing companies.
States ruled by Left parties observed a shutdown, including two days in West Bengal, to protest the price increase.
Had it not been for the increase, the three-state run oil firms BPCL, HPCL and IOC would have lost over Rs 225,000 crore in revenues this fiscal and would have run out of cash to import crude.
Although many states, including Delhi, Tamil Nadu, West Bengal and Bihar, have come forward to forego a part of their tax revenues from petroleum products, Deora appealed to other states to reduce sales tax on these fuels to give relief to consumers.
Saturday, June 7, 2008
Inflation rises to 8.24%
Inflation surged to 8.24 per cent for the week ended May 24 from 8.1 per cent in the previous week, despite fall in prices of some essential commodities like fruits, vegetables, spices.
Wholesale prices-based inflation stood at 5.15 per cent a year ago. The rate of price rise is expected to advance further after two weeks, when the June 5 increase in prices of petrol, diesel and cooking gas would be taken into account.
During the week ending May 24, non-food articles, raw rubber, raw cotton and groundnut seeds became expensive by 1-2 per cent.
Finance Minister P Chidambaram said inflation was a problem, but with people's support price stability could be ensured.
Cereal prices went up by 0.5 per cent, while fruit and vegetable prices declined by about one per cent.
Despite fiscal measures taken by the government, prices of imported edible oil surged by 6 per cent.
Wholesale prices-based inflation stood at 5.15 per cent a year ago. The rate of price rise is expected to advance further after two weeks, when the June 5 increase in prices of petrol, diesel and cooking gas would be taken into account.
During the week ending May 24, non-food articles, raw rubber, raw cotton and groundnut seeds became expensive by 1-2 per cent.
Finance Minister P Chidambaram said inflation was a problem, but with people's support price stability could be ensured.
Cereal prices went up by 0.5 per cent, while fruit and vegetable prices declined by about one per cent.
Despite fiscal measures taken by the government, prices of imported edible oil surged by 6 per cent.
Fuel price hike a step in right direction: RBI chief
The Reserve Bank has said the increase in global crude prices was more than what was anticipated, and described the hike in retail fuel prices as a step in the right direction.
"The government's announcement (of hike in petroleum products) involves some pass-through and some burden sharing. It is a very, very positive step in the right direction," he told reporters here last evening.
"Our overall assessment is that we must recognise that there are three extraordinary factors in the global situation that have converged at the same time. These relate to food, financial markets and fuel," Reddy said.
Asked whether the oil bonds would be given Statutory Liquidity Ratio (SLR) status, the RBI chief said: "We in RBI would like to maintain the integrity of the SLR regime." Pointing out that the uncertainty in the global oil scenario was not entirely unexpected, he said: "Actually, increase in oil prices has been more than what was anticipated, though we have factored in the possibility of high volatility in oil prices."
Replying to a question on global developments, he said "Currently, the global situation is quite extraordinary. As mentioned in the monetary review policy, we in the RBI are carefully monitoring the global and domestic developments with regard to growth, inflation and financial markets."
"The government's announcement (of hike in petroleum products) involves some pass-through and some burden sharing. It is a very, very positive step in the right direction," he told reporters here last evening.
"Our overall assessment is that we must recognise that there are three extraordinary factors in the global situation that have converged at the same time. These relate to food, financial markets and fuel," Reddy said.
Asked whether the oil bonds would be given Statutory Liquidity Ratio (SLR) status, the RBI chief said: "We in RBI would like to maintain the integrity of the SLR regime." Pointing out that the uncertainty in the global oil scenario was not entirely unexpected, he said: "Actually, increase in oil prices has been more than what was anticipated, though we have factored in the possibility of high volatility in oil prices."
Replying to a question on global developments, he said "Currently, the global situation is quite extraordinary. As mentioned in the monetary review policy, we in the RBI are carefully monitoring the global and domestic developments with regard to growth, inflation and financial markets."
Tata to drive Jaguar into India
After completing the acquisition of Jaguar and Land Rover from Ford for $2.3 billion, Tata Motors said on Friday it is exploring the possibility of bringing the two British marquees to India.
"Like Russia and China, JLR would be exploring the Indian market also. A team will be coming to India to study the market," Tata Motors Managing Director Ravi Kant told analysts in a conference call.
He, however, said the company was not expecting big numbers from the two brands in India.
"As these are high priced products, we should not be putting big numbers. The market is developing and other high priced products like Mercedes and BMW are also doing well in India," Kant said.
Asked if JLR would be adding additional capacity in view of new models XK, XF from Jaguar and other products from Land Rover being in the pipeline, and whether it plans to enter new markets, Jaguar Land Rover CEO David Smith replied in the negative.
"Our capacity has been realigned but we do not expect additional capacity requirement," he said.
Smith also said during the transition period, Ford Credit would continue to support vehicle and dealership financing. "But we are also working on the replacement plans."
On the imminent launch of Nano and the possibility of Tata looking to synergise JLR's distribution network in overseas market, Kant said: "Jaguar and Land Rover are premium products and Nano is at the other end of the spectrum. We have no plans to use JLR network."
On June 2, Tata Motors announced completion of acquisition of the two premium brands in an all cash deal worth $2.3 billion and appointment of David Smith chief executive officer of the brands.
Ford and Tata had entered into a definitive agreement for the deal in March this year.
The purchase consideration included the ownership of Jaguar and Land Rover or perpetual royalty-free licences of all necessary Intellectual Property Rights, manufacturing plants, two advanced design centres in the UK, and worldwide network of national sales companies.
Tata Motors had recently announced a Rs 100-billion capex plan over the next three years, which would include launching 100 new products or variants, streamlining of existing production facilities and setting up four new greenfield units.
"Like Russia and China, JLR would be exploring the Indian market also. A team will be coming to India to study the market," Tata Motors Managing Director Ravi Kant told analysts in a conference call.
He, however, said the company was not expecting big numbers from the two brands in India.
"As these are high priced products, we should not be putting big numbers. The market is developing and other high priced products like Mercedes and BMW are also doing well in India," Kant said.
Asked if JLR would be adding additional capacity in view of new models XK, XF from Jaguar and other products from Land Rover being in the pipeline, and whether it plans to enter new markets, Jaguar Land Rover CEO David Smith replied in the negative.
"Our capacity has been realigned but we do not expect additional capacity requirement," he said.
Smith also said during the transition period, Ford Credit would continue to support vehicle and dealership financing. "But we are also working on the replacement plans."
On the imminent launch of Nano and the possibility of Tata looking to synergise JLR's distribution network in overseas market, Kant said: "Jaguar and Land Rover are premium products and Nano is at the other end of the spectrum. We have no plans to use JLR network."
On June 2, Tata Motors announced completion of acquisition of the two premium brands in an all cash deal worth $2.3 billion and appointment of David Smith chief executive officer of the brands.
Ford and Tata had entered into a definitive agreement for the deal in March this year.
The purchase consideration included the ownership of Jaguar and Land Rover or perpetual royalty-free licences of all necessary Intellectual Property Rights, manufacturing plants, two advanced design centres in the UK, and worldwide network of national sales companies.
Tata Motors had recently announced a Rs 100-billion capex plan over the next three years, which would include launching 100 new products or variants, streamlining of existing production facilities and setting up four new greenfield units.
UK mobile giant Orange halts expansion of Indian call centre
The new chief executive of British mobile giant Orange has halted the expansion of its offshore call centre partnerships in India, where it currently employs 1,500 people.
Tom Alexander, who announced a raft of plans for the company, said he could foresee a time when the company no longer used call centres outside Britain.
The company's strength in India has risen from 100 in 2005 to 1,500 now, but is unlikely to increase.
Apart from the limiting plans for India, Alexander announced that the company is cutting 450 management and administrative jobs and will open 40 more shops as part of the major shake-up.
Alexander told newspersons: "We're proposing to change the shape of the organisation and the way the business works to serve the 21st Century customer.
"These changes are designed to stop duplication within our organisation, and to ensure we are agile, and able to deliver and react quickly to customers' needs.
"And they'll also make staff more accountable while generating greater financial and operational efficiencies".
Orange has 15.8 million mobile customers and 1.1 million broadband users in the UK.
Tom Alexander, who announced a raft of plans for the company, said he could foresee a time when the company no longer used call centres outside Britain.
The company's strength in India has risen from 100 in 2005 to 1,500 now, but is unlikely to increase.
Apart from the limiting plans for India, Alexander announced that the company is cutting 450 management and administrative jobs and will open 40 more shops as part of the major shake-up.
Alexander told newspersons: "We're proposing to change the shape of the organisation and the way the business works to serve the 21st Century customer.
"These changes are designed to stop duplication within our organisation, and to ensure we are agile, and able to deliver and react quickly to customers' needs.
"And they'll also make staff more accountable while generating greater financial and operational efficiencies".
Orange has 15.8 million mobile customers and 1.1 million broadband users in the UK.
Growth can`t be expressed in just numerical terms
We in the Bharatiya Janata Party, or in the Jana Sangh earlier, never had any doubt about India's development potential, nor were we ever opposed to the steps needed to unleash it. Indeed, I am proud of the fact that ours is the only party that consistently raised its voice against the growth-stifling licence-quota-permit raj, which the Congress had established under the influence of the Communist system in the erstwhile Soviet Union. It was not ideologically fashionable and acceptable those days to speak in favour of the private sector. The Communists, in particular, used to hurl all kinds of epithets at us, drawn from their rich vocabulary of demonology. However, history has vindicated us against the Communists, in respect of both our economic thinking as well as our advocacy for democracy.
google_ad_client = 'businessstandard';
//google_ad_client = 'ca-businessstandard_js';
google_ad_width = 200;
google_ad_height = 200;
google_ad_format = "200x200_as";
google_ad_type = "text";
google_ad_channel = "";
//google_color_border = "FFFFFF";
google_color_border = "F7F7F7";
//google_color_bg = "FFFFFF";
google_color_bg = "ffffff";
//google_color_link = "639ACE";
google_color_link = "0253B7";
google_color_text = "000000";
google_color_url = "D63431";
//google_skip = adsenseSkip;
Let me add here that ours was also the only party that spoke, even in 1960s and 1970s, in favour of Indian companies emerging as successful multinationals. We had faith in the potential of our native companies, and it too has been vindicated in the spectacular manner in which Indian business houses are expanding their footprint internationally.
If the people give the BJP and the NDA another mandate to form the government at the Centre, I assure you that we will be even more pro-business, pro-growth and pro-India. Our goal will be to achieve double-digit GDP growth rate on a sustainable basis.
Let me, however, add a caveat here. India's growth objectives cannot be presented in abstract numerical terms - 8 per cent, 9 per cent or 10 per cent and more. For growth to be meaningful, it must change the lives of the vast majority of our ordinary people, both in rural and urban areas. For growth to be meaningful, it must be equitable, both geographically and socially.
Has India achieved this type of economic growth, which is necessary and conducive to development in the real sense of the term? Certainly not. Shri Bimal Jalan, former governor of the Reserve Bank of India, has remarked recently that the earnings of 20 richest Indians is more than that of 30 crore poorest Indians. Therefore, it seems to me that just as India's economic growth was earlier heavily influenced by the Soviet model, now it has swung to the other end of the pendulum by imitating the western model. India's current problems cannot be solved, and future needs cannot be fulfilled, by following yet another alien model.
I must point out here that just as my party was against excessive state control of the economy, it was also opposed to the idea of the state having no role in the economic life of the nation. In other words, we have never favoured free enterprise, trickle-down theory, etc. The democratic state has a definite and inescapable duty to orient economic growth towards desirable social ends - what in the Indian ethos is termed as Bahujan Hitaya, Bahujan Sukhaya (for welfare and happiness of the masses). The concept of Antyodaya (development of the 'last man' in society) has been extolled by both Mahatma Gandhi and Pandit Deendayal Upadhyaya.
Indeed, economic growth should not only benefit every individual and every section in society, but it should also be protective of the environment. This too is an integral part of the Indian outlook towards the relationship between man and nature. In recent decades, concern for environmental degradation has grown all over the world. And so is the awareness that the western model of development is not quite environment-friendly.
This being the case, I am more convinced than ever before that we in India have to evolve an Indian model of development that is in alignment with India's needs, is guided by the Indian outlook towards life, and relies on the full participation of Indians themselves. Haven't many countries around the world been trying to evolve their own model of development, based on their specific conditions, constraints, resources and cultures? I can cite the example of China, Singapore, Malaysia, Turkey, Russia and several others.
Time has come for all the key players who are associated with India's economic growth to evolve a common approach towards how to achieve accelerated growth with the primary objective of poverty eradication.
google_ad_client = 'businessstandard';
//google_ad_client = 'ca-businessstandard_js';
google_ad_width = 200;
google_ad_height = 200;
google_ad_format = "200x200_as";
google_ad_type = "text";
google_ad_channel = "";
//google_color_border = "FFFFFF";
google_color_border = "F7F7F7";
//google_color_bg = "FFFFFF";
google_color_bg = "ffffff";
//google_color_link = "639ACE";
google_color_link = "0253B7";
google_color_text = "000000";
google_color_url = "D63431";
//google_skip = adsenseSkip;
Let me add here that ours was also the only party that spoke, even in 1960s and 1970s, in favour of Indian companies emerging as successful multinationals. We had faith in the potential of our native companies, and it too has been vindicated in the spectacular manner in which Indian business houses are expanding their footprint internationally.
If the people give the BJP and the NDA another mandate to form the government at the Centre, I assure you that we will be even more pro-business, pro-growth and pro-India. Our goal will be to achieve double-digit GDP growth rate on a sustainable basis.
Let me, however, add a caveat here. India's growth objectives cannot be presented in abstract numerical terms - 8 per cent, 9 per cent or 10 per cent and more. For growth to be meaningful, it must change the lives of the vast majority of our ordinary people, both in rural and urban areas. For growth to be meaningful, it must be equitable, both geographically and socially.
Has India achieved this type of economic growth, which is necessary and conducive to development in the real sense of the term? Certainly not. Shri Bimal Jalan, former governor of the Reserve Bank of India, has remarked recently that the earnings of 20 richest Indians is more than that of 30 crore poorest Indians. Therefore, it seems to me that just as India's economic growth was earlier heavily influenced by the Soviet model, now it has swung to the other end of the pendulum by imitating the western model. India's current problems cannot be solved, and future needs cannot be fulfilled, by following yet another alien model.
I must point out here that just as my party was against excessive state control of the economy, it was also opposed to the idea of the state having no role in the economic life of the nation. In other words, we have never favoured free enterprise, trickle-down theory, etc. The democratic state has a definite and inescapable duty to orient economic growth towards desirable social ends - what in the Indian ethos is termed as Bahujan Hitaya, Bahujan Sukhaya (for welfare and happiness of the masses). The concept of Antyodaya (development of the 'last man' in society) has been extolled by both Mahatma Gandhi and Pandit Deendayal Upadhyaya.
Indeed, economic growth should not only benefit every individual and every section in society, but it should also be protective of the environment. This too is an integral part of the Indian outlook towards the relationship between man and nature. In recent decades, concern for environmental degradation has grown all over the world. And so is the awareness that the western model of development is not quite environment-friendly.
This being the case, I am more convinced than ever before that we in India have to evolve an Indian model of development that is in alignment with India's needs, is guided by the Indian outlook towards life, and relies on the full participation of Indians themselves. Haven't many countries around the world been trying to evolve their own model of development, based on their specific conditions, constraints, resources and cultures? I can cite the example of China, Singapore, Malaysia, Turkey, Russia and several others.
Time has come for all the key players who are associated with India's economic growth to evolve a common approach towards how to achieve accelerated growth with the primary objective of poverty eradication.
Dell to invest more in India
World’s No 2 personal computer maker Dell said it would invest more in India in the coming years to commensurate with the growth of its products here, adding it expects strong demands in this part of the world to continue.
Micheal Dell, CEO of the company said this amidst the company revenue from outside the US during the first quarter surpassing the same from the US for the first time and Brazil, Russia, India and China leading the accelerated growth in emerging countries with 73 per cent increase in shipments and 58 per cent rise in revenue that accounted for almost 9 per cent of Dell's total revenue.
"Indian market is growing; our investment in India grew close to 100 per cent. We expect to keep investing in India. We have extensive activity here-- software development, manufacturing, IT growth.
"For the last 7-8 years, our business and workforce in India grew tremendously. We expect the growth to continue so also the investment to commensurate with the growth," Dell told the visiting Asia Pacific media here.
He did not give any specific figures on the investment or expected growth numbers. Even as Dell is cutting down workforce globally on its path to post higher profit, the company is unlikely to undertake such measures in India and China where it is seeing strong growth to boost its topline.
Dell, which lost the number one PC maker slot to arch-rival HP last year, is focusing on the markets like China and India to drive the growth. The company expects out of the next billion going to be connected to the web, most of it would come from Asia. Therefore the demand (for PCs) is going to increase in Asia.
Micheal Dell, CEO of the company said this amidst the company revenue from outside the US during the first quarter surpassing the same from the US for the first time and Brazil, Russia, India and China leading the accelerated growth in emerging countries with 73 per cent increase in shipments and 58 per cent rise in revenue that accounted for almost 9 per cent of Dell's total revenue.
"Indian market is growing; our investment in India grew close to 100 per cent. We expect to keep investing in India. We have extensive activity here-- software development, manufacturing, IT growth.
"For the last 7-8 years, our business and workforce in India grew tremendously. We expect the growth to continue so also the investment to commensurate with the growth," Dell told the visiting Asia Pacific media here.
He did not give any specific figures on the investment or expected growth numbers. Even as Dell is cutting down workforce globally on its path to post higher profit, the company is unlikely to undertake such measures in India and China where it is seeing strong growth to boost its topline.
Dell, which lost the number one PC maker slot to arch-rival HP last year, is focusing on the markets like China and India to drive the growth. The company expects out of the next billion going to be connected to the web, most of it would come from Asia. Therefore the demand (for PCs) is going to increase in Asia.
Indian firms not among world's most ethical cos
Indian companies may be making it big on global arena on parameters like brand value and scale of business, but when it comes to being ethical none of them have managed to make the grade.
In the latest annual list of 93 world's most ethical companies compiled jointly by US-based magazines Ethisphere and Forbes, not a single Indian company finds mention.
Incidentally, there were two Indian companies Tata Group and Hindustan Lever in the last year's list. However, none of them could make it in the 2008 list.
HLL's Dutch parent Unilever has, however, made a mark in this year's rankings.
Other companies that have been named to the list include PepsiCo, headed by a person of Indian origin Indra Nooyi, Internet search giant Google, banking majors HSBC and Stanchart, auto giant BMW and human resource firm Manpower.
Although there is no composite list, but the study has named the most ethical companies in various sectors.
"The Worlds Most Ethical Companies are the ones that go above and beyond legal minimums, bring about innovative new ideas to expand the public well being, work on reducing their carbon footprint rather than contributing to green washing and won't be found next to the words "Billion Dollar Fine" in newspaper headlines any time in the near future. These are the companies that stand out among the competition in their industry," the report said.
In the latest annual list of 93 world's most ethical companies compiled jointly by US-based magazines Ethisphere and Forbes, not a single Indian company finds mention.
Incidentally, there were two Indian companies Tata Group and Hindustan Lever in the last year's list. However, none of them could make it in the 2008 list.
HLL's Dutch parent Unilever has, however, made a mark in this year's rankings.
Other companies that have been named to the list include PepsiCo, headed by a person of Indian origin Indra Nooyi, Internet search giant Google, banking majors HSBC and Stanchart, auto giant BMW and human resource firm Manpower.
Although there is no composite list, but the study has named the most ethical companies in various sectors.
"The Worlds Most Ethical Companies are the ones that go above and beyond legal minimums, bring about innovative new ideas to expand the public well being, work on reducing their carbon footprint rather than contributing to green washing and won't be found next to the words "Billion Dollar Fine" in newspaper headlines any time in the near future. These are the companies that stand out among the competition in their industry," the report said.
Indian business school names Hindu monkey god as its chairman
Hanuman, the popular Hindu monkey god revered for his strength and valor, has been named official chairman of the recently opened Sardar Bhagat Singh College of Technology and Management in northern India, a school official said Saturday.
The position comes with an incense-filled office, a desk and a laptop computer. Four chairs will be placed facing the empty seat reserved for the holy chairman, but all visitors must enter the office barefoot, said Vivek Kangdi, the school's vice chairman.
"It is our belief that any job that has blessings of Lord Hanuman is bound to be a success," said Kangdi.
All Hindus know that Hanuman can lift mountains and leap oceans, but ancient texts make no mention of his business acumen. Nevermind that, says Kangdi.
"When we were looking for a chairman for our institution, we scanned many big names in the field of technology and management. Ultimately, we settled for Lord Hanuman, as none was bigger than him," Kangdi said.
Hanuman is one of the most popular gods in the crowded pantheon of Hindu deities.
Hanuman's most famous feat, as described in the Hindu epic the Ramayana, was leading a monkey army to fight the demon King Ravana and rescue a kidnapped princess.
The Sardar Bhagat Singh College in Lucknow, the capital of Uttar Pradesh, India's most populous state, awards bachelor's degrees in engineering and management. The school opened last year.
The position comes with an incense-filled office, a desk and a laptop computer. Four chairs will be placed facing the empty seat reserved for the holy chairman, but all visitors must enter the office barefoot, said Vivek Kangdi, the school's vice chairman.
"It is our belief that any job that has blessings of Lord Hanuman is bound to be a success," said Kangdi.
All Hindus know that Hanuman can lift mountains and leap oceans, but ancient texts make no mention of his business acumen. Nevermind that, says Kangdi.
"When we were looking for a chairman for our institution, we scanned many big names in the field of technology and management. Ultimately, we settled for Lord Hanuman, as none was bigger than him," Kangdi said.
Hanuman is one of the most popular gods in the crowded pantheon of Hindu deities.
Hanuman's most famous feat, as described in the Hindu epic the Ramayana, was leading a monkey army to fight the demon King Ravana and rescue a kidnapped princess.
The Sardar Bhagat Singh College in Lucknow, the capital of Uttar Pradesh, India's most populous state, awards bachelor's degrees in engineering and management. The school opened last year.
Delta Electronics thriving in India
Thanks to strong demand for electronic products in India, Delta Electronics (Thailand) Plc predicts sales in India would double or triple from US$100 million in a few years.
Last year sales in the Indian market were outstanding, more than doubling from $40 million the year before, said Anusorn Muttaraid, the company's executive director.
Mr Anusorn discussed the company's success story yesterday at the Indian-Thai Business Summit, a forum held as part of the three-day International India Film Academy (IIFA) 2008 celebrations in Bangkok, which will end tomorrow.
The electronics market in India, one of the world's fastest growing economies, is vast since most products related to electronic components still need high-technology parts.
Mr Anusorn said that Delta had also enjoyed outstanding business performance in India from exports by its local subsidiary.
The company reported a 61% increase in consolidated net profit in the first quarter of this year, slightly higher than expected.
It posted a net profit of 3.16 billion baht last year, up from 1.96 billion baht in 2006.
Delta had been enjoying rapid growth in India because of the business management of local staff, said Mr Anusorn.
''We have 100% foreign ownership there. We set the rules then management follows our rules. One good thing about Indian people is they obey the rules,'' he said.
However, conditions were not always so easy.
''But in the beginning, it was quite difficult for us to invest in India. Unlike Thailand, there is no one-stop-service for investment.
''What you hear from the local authority could definitely be a different story from [what you hear from] the central government. After we got confused, we were back to the start again,'' Mr Anusorn said as more than a hundred Indian and Thai businesspeople laughed.At yesterday's forum, Thai and Indian authorities encouraged the private sectors of the countries to undertake more bilateral trade and investment.
They said the governments of both countries had already paved the way for them, including establishing a free trade agreement covering more than 80 industrial goods. The pact is expected to cover other products and services by 2010.
Delta shares closed yesterday on the Stock Exchange of Thailand at 21.10 baht, up 20 satang, in trade worth 8.63 million baht.
Last year sales in the Indian market were outstanding, more than doubling from $40 million the year before, said Anusorn Muttaraid, the company's executive director.
Mr Anusorn discussed the company's success story yesterday at the Indian-Thai Business Summit, a forum held as part of the three-day International India Film Academy (IIFA) 2008 celebrations in Bangkok, which will end tomorrow.
The electronics market in India, one of the world's fastest growing economies, is vast since most products related to electronic components still need high-technology parts.
Mr Anusorn said that Delta had also enjoyed outstanding business performance in India from exports by its local subsidiary.
The company reported a 61% increase in consolidated net profit in the first quarter of this year, slightly higher than expected.
It posted a net profit of 3.16 billion baht last year, up from 1.96 billion baht in 2006.
Delta had been enjoying rapid growth in India because of the business management of local staff, said Mr Anusorn.
''We have 100% foreign ownership there. We set the rules then management follows our rules. One good thing about Indian people is they obey the rules,'' he said.
However, conditions were not always so easy.
''But in the beginning, it was quite difficult for us to invest in India. Unlike Thailand, there is no one-stop-service for investment.
''What you hear from the local authority could definitely be a different story from [what you hear from] the central government. After we got confused, we were back to the start again,'' Mr Anusorn said as more than a hundred Indian and Thai businesspeople laughed.At yesterday's forum, Thai and Indian authorities encouraged the private sectors of the countries to undertake more bilateral trade and investment.
They said the governments of both countries had already paved the way for them, including establishing a free trade agreement covering more than 80 industrial goods. The pact is expected to cover other products and services by 2010.
Delta shares closed yesterday on the Stock Exchange of Thailand at 21.10 baht, up 20 satang, in trade worth 8.63 million baht.
Indo-Saudi relations prospered during Saeed’s four-year term
INDIAN Consul-General Dr Ausaf Saeed is leaving the kingdom following the end of his term in Jeddah.
A significant achievement of his nearly four years term of office here was the boosting of relations between Saudi Arabia and India in business, trade and investments, and one platform to achieve that end was his pioneering role in establishing the Saudi Indian Business Network (SIBN).
Saeed, a career diplomat belonging to the 1989 batch, has served mainly in the Gulf and the Middle East, and everywhere, he has promoted cultural, people-to-people relations, trade, business, investments, helped organise seminars and conferences, and create such fora as SIBN.
He explained that the concept of SIBN came to mind not while being in the kingdom but during his posting in Qatar.
Indian Ambassador M.O.H. Farook said that bilateral trade relations were already strong, and he took the responsibility of strengthening political relations with the kingdom. “Our bilateral political relations got a boost with Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz’s visit to India. Yet, we have to go a long way. We don’t have to sell India (to you), but help you see India to realise its potential. India tops in telecom, medical facilities and professionals like engineers and technicians. What we need is a perfect understanding between the two countries,” he said.
Described as a true platform for Indians, and Saudis, SIBN appropriately held a farewell reception for the outgoing consul-general at the Inter-Continental Hotel here on May 31, during the celebration of the Network’s third anniversary, and the launching of a web site by Ambassador M.A.H. Farook.
It was noted that the web site would not have been possible without the support of the consul-general, and that it will contribute to the enhancement and strengthening of the trade and traditional relations between the two countries, which is essential, especially in view of the present international situation.
As Khaled Al Maeena, Editor-in-Chief of Arab News, who was one of the speakers, put it, “We should not become victims of big powers. We should look at each other with our eyes, and not through those of others.”
Saying that “Saudi Arabia’s destiny lies East, not West,” Al Maeena added that there is a desire from both Indian and Saudi sides to benefit from each others’ capabilities, resources, and strength. “We are not just a gas station. We want to translate trade into industry, education, KBIs (knowledge-based industries), agricultural research, and finding ways to increasing food production,” he added.
Al Maeena said that SIBN was a great idea and will grow bigger. He said that he felt a sense of accomplishment to see the progress achieved by SIBN in the last three years. “People make plans and nothing comes out of that. SIBN has proved otherwise. Saudi captains of business and industry are highly capable,” said Al Maeena, whose uncles have been doing business with India for more than 100 years.
Dr Adil A. Bushnak, chairman of Bushnak Group, told Khaleej Times that India is an “extremely rewarding country with an ocean of opportunities.”
He said that SIBN and Saeed have made really commendable efforts in this area, and thus have added a new dimension to Saudi-Indian relations. “It is sad to see Consul General Saeed leave. I am sure he will continue his efforts to bolster relations between the two countries, and I hope his successor will add more to his efforts,” said Bushnak, who has a lot of projects coming up in India involving ‘substantial investments’.
Sami Fouad Bahrawi, chairman, Jeddah Chamber of Commerce and Industry (JCCI) said that a Saudi businessman should seriously consider all that India has to offer. There is so much information available on the Internet and there are many organisations such as SIBN.
A significant achievement of his nearly four years term of office here was the boosting of relations between Saudi Arabia and India in business, trade and investments, and one platform to achieve that end was his pioneering role in establishing the Saudi Indian Business Network (SIBN).
Saeed, a career diplomat belonging to the 1989 batch, has served mainly in the Gulf and the Middle East, and everywhere, he has promoted cultural, people-to-people relations, trade, business, investments, helped organise seminars and conferences, and create such fora as SIBN.
He explained that the concept of SIBN came to mind not while being in the kingdom but during his posting in Qatar.
Indian Ambassador M.O.H. Farook said that bilateral trade relations were already strong, and he took the responsibility of strengthening political relations with the kingdom. “Our bilateral political relations got a boost with Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz’s visit to India. Yet, we have to go a long way. We don’t have to sell India (to you), but help you see India to realise its potential. India tops in telecom, medical facilities and professionals like engineers and technicians. What we need is a perfect understanding between the two countries,” he said.
Described as a true platform for Indians, and Saudis, SIBN appropriately held a farewell reception for the outgoing consul-general at the Inter-Continental Hotel here on May 31, during the celebration of the Network’s third anniversary, and the launching of a web site by Ambassador M.A.H. Farook.
It was noted that the web site would not have been possible without the support of the consul-general, and that it will contribute to the enhancement and strengthening of the trade and traditional relations between the two countries, which is essential, especially in view of the present international situation.
As Khaled Al Maeena, Editor-in-Chief of Arab News, who was one of the speakers, put it, “We should not become victims of big powers. We should look at each other with our eyes, and not through those of others.”
Saying that “Saudi Arabia’s destiny lies East, not West,” Al Maeena added that there is a desire from both Indian and Saudi sides to benefit from each others’ capabilities, resources, and strength. “We are not just a gas station. We want to translate trade into industry, education, KBIs (knowledge-based industries), agricultural research, and finding ways to increasing food production,” he added.
Al Maeena said that SIBN was a great idea and will grow bigger. He said that he felt a sense of accomplishment to see the progress achieved by SIBN in the last three years. “People make plans and nothing comes out of that. SIBN has proved otherwise. Saudi captains of business and industry are highly capable,” said Al Maeena, whose uncles have been doing business with India for more than 100 years.
Dr Adil A. Bushnak, chairman of Bushnak Group, told Khaleej Times that India is an “extremely rewarding country with an ocean of opportunities.”
He said that SIBN and Saeed have made really commendable efforts in this area, and thus have added a new dimension to Saudi-Indian relations. “It is sad to see Consul General Saeed leave. I am sure he will continue his efforts to bolster relations between the two countries, and I hope his successor will add more to his efforts,” said Bushnak, who has a lot of projects coming up in India involving ‘substantial investments’.
Sami Fouad Bahrawi, chairman, Jeddah Chamber of Commerce and Industry (JCCI) said that a Saudi businessman should seriously consider all that India has to offer. There is so much information available on the Internet and there are many organisations such as SIBN.
Cricket is big business
Four months ago, when the Indian Premier League (IPL) idea took shape, there were a lot of doubts. Not many thought that the concept would take off. Strong votaries of test cricket were quite offended. They denounced the concept of slam-bang stuff that they said the Twenty 20 tournament was, and harked back to the golden age of five-day cricket. Even one-day tournaments were seen as leisurely!
The spectacle of cricketers being auctioned to different team owners, the mind boggling sums that they fetched, the differential pay given to the ‘icon’ players, the idea of archrivals in national teams playing alongside for different city teams – all these and more combined to provide a feeling of ‘commercialising the game’ and evoked reactions of shock and disgust.
Besides, there was always the fear of overkill. Wasn’t there already enough cricket being played everywhere? Would crowds come to the stadium at all? Would anyone want to watch this exciting and forceful stuff on TV continuously? And then critics simply upped the ante with the controversy over cheer leaders and their exposure.
The Cassandras may have to eat their words.
As things stand today, the IPL concept has redefined the game. It is not just about cricket any more. It is entertainment – pure and simple. Families that huddled together at 7.00 p.m. to watch interminable soap operas now have another option – a three-hour cricket match that has pulsating action from start to finish. And so do advertisers. In fact, marketing heads of different TV channels are wondering how to handle this new challenge to their viewership ratings. Last heard, even some film launches were being postponed – since there was little chance of crowds packing the theatres when the IPL show was on!
Rakesh Singh, Joint President (Marketing), India Cements Ltd, which owns the Chennai Super Kings franchise, shared some insights with BrandLine when we met him shortly after the first tournament ended last week.
Among the very first issues that they had to tackle was whether the concept of a ‘city team’ would take off? Would there be loyalty to a city team? And would the locals adopt outsiders (foreign players or even players from other States) as Chennai lads? And would there be the partisan support that forms the bedrock for such concepts to click? As Mr Singh puts it, the concept actually needed those emotions – of fanatical support for the local team and making the other team feel ‘unwelcome’!
Did that mean that they would be inhospitable? Mr Singh rushes to clarify that the city branding meant that there would be rabid support for the local team. Yes, it didn’t mean that we would be inhospitable to visiting teams. There won’t be any shortfall there, or off the field. But on the field, there was no place for neutrality! He likened it to an Indo-Pak cricket match where emotions always come to the forefront.
He explained how the concept of city branding took off, with a very interesting point on crowd behaviour. Apparently there were more people wearing respective city team colours in the crowds than was the case when even the national team played in one-day internationals. He revealed that Reebok, one of the manufacturers of team jerseys, found it difficult to sell even a couple of hundred national team jerseys. In contrast, the city team colour jerseys had to go for multiple manufacturing runs –as jerseys flew off the shelves faster than they could manufacture! But on occasion, it also set them up for clashes between rival team supporters in the stands – since they were now clearly identifiable!
He also mentioned that for matches in Chennai, there were at least 500 dealers of India Cements who were given tickets. For many of them, it was a matter of honour and prestige – and they wanted more. And when it came to supporting their team, it was no holds barred – some went to the extent of ‘fasting’ on match days. (With such kind of support, it is no wonder that the Chennai team reached the finals!)
Mr Singh says that India Cements has more than broken even with the very first instalment of IPL itself. Although internal estimates had given a time frame of two to three years for the concept to take off and start raking the bucks, the moolah has come in. Although the complete figures are not yet fully in as accounts are still being tallied, the initial estimates are that India Cements has spent about Rs 70 crore on this so far and raked in a little over that through gate collections, sponsorships and distributions from the central pool.
The one thing which they didn’t fully tap was the merchandising aspect. As he admits, “We underestimated the potential. But now we have seen what the market is like. We hope eventually to earn about 6 to 8 per cent of revenue through this channel.” This will in all probability mean using the brand for different products – anything from a pen to a mug to a bat and getting a share of that revenue.
The company is also contemplating follow-up activities, including starting a fan club and having a dedicated Web site for them.
Asked about the role of ‘brand ambassadors’ and ‘star ambassadors’, Mr Singh pointed out that both were very relevant for the concept. Speaking about the Chennai Super Kings ambassadors – cricketer K. Srikkanth and actor Vijay, he said both of them helped significantly.
The IPL show was like any other reality show and the only way to get people to move from other ‘soaps’ was to bring the stars to the stadium! So whether it was a Shah Rukh or Vijay or Dhoni or Srikkanth, the crowds trooped in to watch them as much as the game. To paraphrase the requirements for success, as defined by one of their consultants, IPL had to get both eyeballs on screen and bums on the seats. It succeeded in doing both.
And what about the competition from the rival - Indian Cricket League? Mr Singh thinks it will die a natural death. And that it should withdraw from the scene gracefully. Spoken like a winner.
The spectacle of cricketers being auctioned to different team owners, the mind boggling sums that they fetched, the differential pay given to the ‘icon’ players, the idea of archrivals in national teams playing alongside for different city teams – all these and more combined to provide a feeling of ‘commercialising the game’ and evoked reactions of shock and disgust.
Besides, there was always the fear of overkill. Wasn’t there already enough cricket being played everywhere? Would crowds come to the stadium at all? Would anyone want to watch this exciting and forceful stuff on TV continuously? And then critics simply upped the ante with the controversy over cheer leaders and their exposure.
The Cassandras may have to eat their words.
As things stand today, the IPL concept has redefined the game. It is not just about cricket any more. It is entertainment – pure and simple. Families that huddled together at 7.00 p.m. to watch interminable soap operas now have another option – a three-hour cricket match that has pulsating action from start to finish. And so do advertisers. In fact, marketing heads of different TV channels are wondering how to handle this new challenge to their viewership ratings. Last heard, even some film launches were being postponed – since there was little chance of crowds packing the theatres when the IPL show was on!
Rakesh Singh, Joint President (Marketing), India Cements Ltd, which owns the Chennai Super Kings franchise, shared some insights with BrandLine when we met him shortly after the first tournament ended last week.
Among the very first issues that they had to tackle was whether the concept of a ‘city team’ would take off? Would there be loyalty to a city team? And would the locals adopt outsiders (foreign players or even players from other States) as Chennai lads? And would there be the partisan support that forms the bedrock for such concepts to click? As Mr Singh puts it, the concept actually needed those emotions – of fanatical support for the local team and making the other team feel ‘unwelcome’!
Did that mean that they would be inhospitable? Mr Singh rushes to clarify that the city branding meant that there would be rabid support for the local team. Yes, it didn’t mean that we would be inhospitable to visiting teams. There won’t be any shortfall there, or off the field. But on the field, there was no place for neutrality! He likened it to an Indo-Pak cricket match where emotions always come to the forefront.
He explained how the concept of city branding took off, with a very interesting point on crowd behaviour. Apparently there were more people wearing respective city team colours in the crowds than was the case when even the national team played in one-day internationals. He revealed that Reebok, one of the manufacturers of team jerseys, found it difficult to sell even a couple of hundred national team jerseys. In contrast, the city team colour jerseys had to go for multiple manufacturing runs –as jerseys flew off the shelves faster than they could manufacture! But on occasion, it also set them up for clashes between rival team supporters in the stands – since they were now clearly identifiable!
He also mentioned that for matches in Chennai, there were at least 500 dealers of India Cements who were given tickets. For many of them, it was a matter of honour and prestige – and they wanted more. And when it came to supporting their team, it was no holds barred – some went to the extent of ‘fasting’ on match days. (With such kind of support, it is no wonder that the Chennai team reached the finals!)
Mr Singh says that India Cements has more than broken even with the very first instalment of IPL itself. Although internal estimates had given a time frame of two to three years for the concept to take off and start raking the bucks, the moolah has come in. Although the complete figures are not yet fully in as accounts are still being tallied, the initial estimates are that India Cements has spent about Rs 70 crore on this so far and raked in a little over that through gate collections, sponsorships and distributions from the central pool.
The one thing which they didn’t fully tap was the merchandising aspect. As he admits, “We underestimated the potential. But now we have seen what the market is like. We hope eventually to earn about 6 to 8 per cent of revenue through this channel.” This will in all probability mean using the brand for different products – anything from a pen to a mug to a bat and getting a share of that revenue.
The company is also contemplating follow-up activities, including starting a fan club and having a dedicated Web site for them.
Asked about the role of ‘brand ambassadors’ and ‘star ambassadors’, Mr Singh pointed out that both were very relevant for the concept. Speaking about the Chennai Super Kings ambassadors – cricketer K. Srikkanth and actor Vijay, he said both of them helped significantly.
The IPL show was like any other reality show and the only way to get people to move from other ‘soaps’ was to bring the stars to the stadium! So whether it was a Shah Rukh or Vijay or Dhoni or Srikkanth, the crowds trooped in to watch them as much as the game. To paraphrase the requirements for success, as defined by one of their consultants, IPL had to get both eyeballs on screen and bums on the seats. It succeeded in doing both.
And what about the competition from the rival - Indian Cricket League? Mr Singh thinks it will die a natural death. And that it should withdraw from the scene gracefully. Spoken like a winner.
Indian ad houses step on to global stage
With the Indian advertising industry growing in stature, the country is beginning to gain a reputation among global ad agencies as a source of creative content offerings, in addition to its strength in outsourced production.
Valued at Rs 17,800 crore, the industry is growing at 16-18%, and a report by ZenithOptiMedia sees expenditure on advertising rising from 0.5% of GDP to 0.53% in the next three years. On the other hand, the global advertising market is seen growing at 6.7%. As the Indian advertising industry sets its sights on becoming a significant global player, its success will be determined by its creative ability. Lowe’s decision to make India its global outsourcing hub and KC Star’s deal with Infosys for handling its digital media production are examples of India’s standing in technology and business process outsourcing. “India’s competitive cost base for production and coding work is the main factor that makes it a favourite,” says Contract Advertising creative director Vineet Mahajan. The studio business is already moving to this part of the world. But, the real challenge lies in attracting creative work from the global frontrunners. “Lenovo handed us their worldwide account last year. Experience in creative work like this will make a difference,” says Ogilvy and Mather regional head (south) Prateek Srivastava. Industry biggies are beginning to make their mark. McCann-Erickson is filming in Italy for an Italian company.
They have already worked on a project for HappyDent, covering nine countries; and Contract created a film for HSBC London a year ago. An example of enhanced creative reputation is the presence of McCann-Erickson CEO Prasoon Joshi on the outdoor jury at Cannes this year. “As the economy booms, both the software industry and creative talent are being recognised in the world today,” says Mr Mahajan. “It’s about quality. Compared to the ads being screened in the US, Indian ads are very entertaining. The brands in India are big and they will recognise true talent for what it is,” he adds. However, it will be another couple of years before India becomes a major contender on the international advertising stage. Meanwhile, the industry should concentrate on further exploiting the domestic market, feels brand specialist Harish Bijoor. “Creating media property like the IPL and exploiting the point of purchase more efficiently will definitely help the industry gain firmer ground,” he says.
Valued at Rs 17,800 crore, the industry is growing at 16-18%, and a report by ZenithOptiMedia sees expenditure on advertising rising from 0.5% of GDP to 0.53% in the next three years. On the other hand, the global advertising market is seen growing at 6.7%. As the Indian advertising industry sets its sights on becoming a significant global player, its success will be determined by its creative ability. Lowe’s decision to make India its global outsourcing hub and KC Star’s deal with Infosys for handling its digital media production are examples of India’s standing in technology and business process outsourcing. “India’s competitive cost base for production and coding work is the main factor that makes it a favourite,” says Contract Advertising creative director Vineet Mahajan. The studio business is already moving to this part of the world. But, the real challenge lies in attracting creative work from the global frontrunners. “Lenovo handed us their worldwide account last year. Experience in creative work like this will make a difference,” says Ogilvy and Mather regional head (south) Prateek Srivastava. Industry biggies are beginning to make their mark. McCann-Erickson is filming in Italy for an Italian company.
They have already worked on a project for HappyDent, covering nine countries; and Contract created a film for HSBC London a year ago. An example of enhanced creative reputation is the presence of McCann-Erickson CEO Prasoon Joshi on the outdoor jury at Cannes this year. “As the economy booms, both the software industry and creative talent are being recognised in the world today,” says Mr Mahajan. “It’s about quality. Compared to the ads being screened in the US, Indian ads are very entertaining. The brands in India are big and they will recognise true talent for what it is,” he adds. However, it will be another couple of years before India becomes a major contender on the international advertising stage. Meanwhile, the industry should concentrate on further exploiting the domestic market, feels brand specialist Harish Bijoor. “Creating media property like the IPL and exploiting the point of purchase more efficiently will definitely help the industry gain firmer ground,” he says.
Bollywood's Shilpa Shetty goes into fitness business
Bollywood star Shilpa Shetty entered the celebrity physical fitness business on Friday, launching a new yoga video she called a "management system for life."
The 32-year-old actress, who produced and stars in the video, said she made it in response to fans' questions about how she stayed fit.
"A lot of fans have asked about my fitness regime -- I think this is the best way to tell them what to do to be healthy," Shetty told reporters as she released the video in the Indian capital.
Shetty said her aim in producing the 72-minute video entitled Shilpa's Yoga, whose cover features the actress sitting cross-legged in a yoga pose, was "to make it simple for people to do yoga."
"It can be done by a 10- or 60-year-old," she said, adding yoga had a "spectacular impact" on her own life.
"It has helped my mind, body and soul," said Shetty, who also recently launched a perfume.
Shetty made the headlines last year when she won British reality show Celebrity Big Brother UK, during which she faced racist attacks by housemates.
Months later, she made news again when Hollywood actor Richard Gere showered her with kisses at an AIDS-awareness event in India.
The incident, aired on TV, sparked a firestorm in India, where chaste public behaviour is a tradition. Shetty blamed India's "lunatic fringe" for the uproar in which effigies of the pair were burned.
At Friday's news conference, Shetty denounced Bollywood's new "size zero" craze, spawned by media obsession with Indian star Kareena Kapoor's slender new figure.
"Size zero is something very unhealthy. I'm a size eight," Shetty said.
"Today fitness in India is a style statement. My idea of fitness is to be healthy. Even if I am slightly bulky, I am well-toned, I am happy," she said.
The 32-year-old actress, who produced and stars in the video, said she made it in response to fans' questions about how she stayed fit.
"A lot of fans have asked about my fitness regime -- I think this is the best way to tell them what to do to be healthy," Shetty told reporters as she released the video in the Indian capital.
Shetty said her aim in producing the 72-minute video entitled Shilpa's Yoga, whose cover features the actress sitting cross-legged in a yoga pose, was "to make it simple for people to do yoga."
"It can be done by a 10- or 60-year-old," she said, adding yoga had a "spectacular impact" on her own life.
"It has helped my mind, body and soul," said Shetty, who also recently launched a perfume.
Shetty made the headlines last year when she won British reality show Celebrity Big Brother UK, during which she faced racist attacks by housemates.
Months later, she made news again when Hollywood actor Richard Gere showered her with kisses at an AIDS-awareness event in India.
The incident, aired on TV, sparked a firestorm in India, where chaste public behaviour is a tradition. Shetty blamed India's "lunatic fringe" for the uproar in which effigies of the pair were burned.
At Friday's news conference, Shetty denounced Bollywood's new "size zero" craze, spawned by media obsession with Indian star Kareena Kapoor's slender new figure.
"Size zero is something very unhealthy. I'm a size eight," Shetty said.
"Today fitness in India is a style statement. My idea of fitness is to be healthy. Even if I am slightly bulky, I am well-toned, I am happy," she said.
SBI forays into custodial space with SocGen tie-up
State Bank of India (SBI) on Thursday announced a tie-up with an arm of French bank Societe Generale Group to enter the custodial space. This would make it the first Indian bank to enter the this space.
The country’s largest bank signed a joint venture agreement with Societe Generale Securities Services (SGSS), a division of Societe Generale Group, to offer custodial and related services in India. The custodial business provides a range of security services, including safe-keeping and settlement, reporting, corporate actions, dividends collection and distribution, proxy voting, tax reclaim services, fund administration and providing market news and information. SBI will hold 65% stake in the JV while the French major will hold the remaining stake. The CEO of the new company would be from SBI while the deputy CEO would be from SGSS. ET had reported about the JV on January 18. This is the second tie-up between SBI and SocGen. A few years ago, SocGen acquired a 37% stake in SBI’s mutual fund business. Currently, the bigger players in this market are HSBC, Deutsche Bank and Citi. Others like StanChart also offer the service. These overseas banks bring their global relationships into the country. Compared to the Indian players, foreign players have greater reach. A part of the business comes in from foreign institutional investors (FIIs) who have business relations with the international offices of these banks. Most of these overseas banks have a strong domestic as well as international businesses. According to a senior SBI official, the total market for custody business in India, including FIIs, mutual funds, insurance companies and others is over $700 billion. This business is lucrative, especially on the FII side of the business. Even though custodial fees would be only 2-3 basis points, these players earn significantly from float, forex and a host of other transactions. There are over 1,250 FIIs registered in India. SBI is said to be looking at becoming the market leader as early as possible. However, it may find the going tough in the FII space. Also, as this business is process intensive, clients normally do not change their custodians easily.
The country’s largest bank signed a joint venture agreement with Societe Generale Securities Services (SGSS), a division of Societe Generale Group, to offer custodial and related services in India. The custodial business provides a range of security services, including safe-keeping and settlement, reporting, corporate actions, dividends collection and distribution, proxy voting, tax reclaim services, fund administration and providing market news and information. SBI will hold 65% stake in the JV while the French major will hold the remaining stake. The CEO of the new company would be from SBI while the deputy CEO would be from SGSS. ET had reported about the JV on January 18. This is the second tie-up between SBI and SocGen. A few years ago, SocGen acquired a 37% stake in SBI’s mutual fund business. Currently, the bigger players in this market are HSBC, Deutsche Bank and Citi. Others like StanChart also offer the service. These overseas banks bring their global relationships into the country. Compared to the Indian players, foreign players have greater reach. A part of the business comes in from foreign institutional investors (FIIs) who have business relations with the international offices of these banks. Most of these overseas banks have a strong domestic as well as international businesses. According to a senior SBI official, the total market for custody business in India, including FIIs, mutual funds, insurance companies and others is over $700 billion. This business is lucrative, especially on the FII side of the business. Even though custodial fees would be only 2-3 basis points, these players earn significantly from float, forex and a host of other transactions. There are over 1,250 FIIs registered in India. SBI is said to be looking at becoming the market leader as early as possible. However, it may find the going tough in the FII space. Also, as this business is process intensive, clients normally do not change their custodians easily.
Subscribe to:
Posts (Atom)