BW Communities

Developers’ Blackmail

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[GROWTH-ORIENTED: The government has provided innumerable sops to private firms to improve infrastructure such as airports (Pic by Subhabrata Das) Private promoters of airports, power plants and road projects are holding the government to ransom, extracting innumerable sops for various infrastructure projects. However, despite taking advantage of the financial benefits, GMR and GVK — private firms developing the Delhi and Mumbai airports — have expressed their inability to complete the airports by the 2010 deadline and are seeking further relief. While aviation ministry officials allege that this is tantamount to “blackmailing” the government, analysts feel the high proportion of revenue sharing with the government, high capital expenditure and lack of liquidity are responsible for the current situation. They also say the companies are well within their contract agreements. “In the absence of a regulator, it is a delicate situati-on,” says Kapil Kaul, CEO of Centre for Asia Pacific Aviation. Also, private firms such as GMR, Reliance Infrastructure and L&T have withdrawn from 30 road projects. Vijay Vancheswar, vice-president of GMR Group, says, “We have withdrawn from a few projects that were not commercially viable.” But one could argue that a viability study was done by these companies before they signed the contracts. The government, however, seems to be bending backwards. The finance ministry, for instance, recently discussed whether it should set an interest cap for infrastructure sector loans and bear the rest of the interest cost. The question is whether all this effort by the government will translate into availability of good infrastructure in the country, at affordable rates to the consumer. STOCKMARKET Bold Move A new index fund based on 500 stocks holds promise for investors RIGHT DIRECTION: The new index fund will track the NSE S&P CNX 500 (Pic by Subhabrata Das) At a time when mutu- al funds (MFs) are reeling under the impact of the financial crisis, Benchmark Mutual Fund (Benchmark) has dared to launch a broad-based passive index fund, representing the National Stock Exchan-ge’s S&P CNX 500. The fund is currently open for subscription and is being marketed on the USP that it will save investors the trouble of sifting through MFs to get a broad equity exposure. Benchmark claims that mirroring the S&P CNX 500 index will enable them to cover all market segments, themes, investment styles and sectors through a single fund. “Though interesting, liquidity problems in buying and selling 500 stocks and consequent tracking error issues can be present,” says Dhirendra Kumar, CEO of Value Research. “Currently, the universe of stocks across all equity schemes of MFs is about 700; three years ago it was just 240.” Benchmark MF, which specialises in index exchange-traded funds and index funds, is not worried. “The weightage of 400 stocks of the index not being more than 20 per cent will keep the overall impact cost levels manageable and yet offer the choice-less diversification that investors are seeking,” says Sanjiv Shah, executive director at Benchmark. Quite a brave move that. Rajesh Gajra GLOBAL NEWS President-elect Barack Obama is getting closer to naming Senator Hillary Clinton as his secretary of state. Sources say serious progress has been made in the talks between the two, leaving both Obama and Clinton increasingly optimistic about the appointment. Her credibility would be a huge plus as Obama seeks to rebuild the US’s relations with its allies.   POLITICS Sexing Up Politics Sex, let us enjoy it and not hide behind guilt — is what Australia’s newest political party, the aptly named Australia Sex Party (ASP), is telling the world. Launched on 20 November, the ASP’s slogan is blunt: “We are serious about sex.” “Economic, social welfare, environmental and even defence policies have got lots to do with sex and sexuality,” the party believes. While India’s puritanical political parties may shudder at the idea, the Australian Sex Party’s convenor Fiona Patten, who is also the chief of Eros Association — the national adult retail and entertainment lobby group — says the government should promote sex education instead of censoring sex with internet filters and the like. Does the party have any brand ambassadors? Patten told BW, “We would very much like Mr Shane Warne’s (Australian cricketer) support and he obviously has an interest in sex, so why not!" M. Rajendran Click here to view ICELAND LOAN FREEZE   DANGEROUS WATERS: Pirates have anchored the hijacked Saudi oil tanker Sirius Star off the Somali coast, as the spate of hijackings gathered pace with two more ships seized on Tuesday. The tanker — one of the largest ships on the seas — owned by Saudi oil firm Aramco, is carrying more than $100 million worth of crude oil (AP)   INTERNET Search Snags Google’s third version of Chrome seeks to fix security concerns Are beta versions of software as good as what they are made out to be? Search giant Google’s latest foray called Chrome, a Web-based browser similar to Microsoft’s Internet Explorer has several problems. A user is unable to log on to websites such as Facebook, Microsoft as well as Gmail. There are also other serious security issues while browsing the internet with Chrome. After Google discovered these shortcomings, it released the third beta version of Chrome, in September to fix the security vulnerability. Google shot into action after a Vietnamese security researcher working for a company incubated at Hanoi University, discovered that any hacker could gain access to a PC running the Chrome browser, which in industry parlance is called buffer overflow bug. Venkatesh G. SPORTS Unexpected Sale (ABP) Just after one season of ipl, some of its team owners are hawking bits of their franchises. While Manoj Badale and associates, owners of Rajasthan Royals, are out to encash their good fortunes, the Hyderabad franchise owner Deccan Chronicle, is trying to yank some of its investment to help its media business. But the biggest surprise is Mukesh Ambani selling a piece of his Mumbai franchise to Deutsche Bank executive Anshu Jain. Feroz Ahmed MEDIA Southern Alliance (Pic by Tribhuwan Sharma) Star is finally all set to get a large slice of the south-Indian market. It has taken a majority stake in a joint venture (JV) with Rajeev Chandra-sekhar-promoted Jupiter Entertainment, which owns a slew of south-based channels such as Malayalam Asianet and Kannada Suvarna. Star has 80 per cent stake in the JV. Star Jupiter will now own Asianet Communications as well as all its broadcasting brands. The Tamil language channel Star Vijay, which it acquired from Ronnie Screwvala in 2001, will also become part of the new firm. “This acquisition route will help us gain scale in the south markets quickly,” says a Star spokesperson. Star’s regional plans gained strength only after Rupert Murdoch paid a flying visit to the country two months ago and blessed them. With the Asianet platform, Star can now successfully challenge both Kalanidhi Maran’s Sun TV network as well as the Hyderabad-based Eenadu Group. Star will, however, have to learn to sidestep heavyweight southern politicians with stakes in media organisations. Gurbir Singh Click here to view THE BEST SOCCER TEAMS   RETAIL New Routes The Tata Group finds a unique way to beat high real estate costs USING EXPERTISE: The company is creating a mall management entity through its retail venture Trent (Pic by Amit Verma) With the economic slowdown failing to bring down real estate prices, Indian retailers are seeking partnerships with developers to turn profitable. But the Tata Group has found a different formula to expand its retail business. The group is in the process of creating a new mall management company that will buy new real estate properties through its retail venture Trent. The new company will attract investments from private equity players offering them the real estate route to invest in retail. This will not only help the group expand its own retail business, but will also allow it to lease out space to other retailers. Trent currently runs its business in the hyper store format — with the apparel store called Westside, bookstore Landmark Books and the food and grocery store called Star Bazaar. Trent has 30 Westside and four Star Bazaar stores in the country and is expanding slowly. Earlier this year, the company announced a franchisee model strategy to expand to tier II and tier III cities. With the new mall management company, Trent could get a larger pie of the country's retail business, which is grappling with losses resulting from low demand. In running its retail business, the Tata Group, though slow, has certainly refused to follow the herd. Vishal Krishna (Businessworld Issue 25 Nov-01 Dec 2008)