<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[BEING PROACTIVE: Developers in Dubai and Abu Dhabi have cut prices by 4-5 per cent to
drive demand (Bloomberg)
Domestic realty companies that made enormous money during the boom in the past three years have obstinately dismissed suggestions of slashing property prices despite a 30-35 per cent drop in demand in the past six months. Indian developers could take a leaf out of their counterparts in the Middle-East on how to perk up demand.
In a coordinated move, developers in Dubai — who have been advertising in India and have attracted a steady stream of investors —have decided to cut back on construction and trim prices to counter the ongoing financial crisis. News reports emanating from the Middle-East say builders have cut prices up to 4-5 per cent in Dubai and Abu Dhabi.
High-end villas are being sold at a rebate of 20 per cent as banks tighten lending norms. The slowdown in Dubai will also affect Indian realty as construction giants such as Emaar and Damac Properties — who have been investing in India — will now face problems meeting their commitments here. The move to restrict supply and offer affordable prices in Dubai is being coordinated at the government level. That is probably because officials such as Mohamed Alabbar (also the chairman of Emaar Properties) have interests in realty. He has taken the lead to ensure developers fall in line. Indian developers need to learn from their counterparts in Dubai. But with leading Indian developers continuing to ride a high horse, the property market is frozen. “They have failed to cut prices substantially to generate demand,” says Arvind Pahwa, CEO of JPMorgan Real Estate.
GLOBAL NEWS
The allies of Philippines President Gloria Macapagal Arroyo defeated an attempt by opposition leaders to impeach her on corruption charges. The House Justice Committee dismissed the impeachment complaint. The complaint alleged that Arroyo and her husband were directly involved in an internet broadband deal with a Chinese firm.
EDUCATION
Tough Times
Plummeting endowments are forcing Harvard University to cut expenses
COST-CUTTING: The university plans to stop
all staff hiring (Bloomberg)
The dean of harvard’s Faculty of Arts and Sciences has called for an immediate freeze on staff hiring and strongly encouraged department heads to consider cancelling faculty searches.
In an email, Michael Smith, dean of the largest Harvard faculty, outlined immediate steps in response to the worsening economic climate.
“Given our heavy reliance on endowment income, these losses will have a major and long-lasting impact — one that will require significant reductions in our annual expenses,” Smith said.
Smith’s message comes two weeks after Harvard’s president, Drew Faust, told the Harvard community that the university is looking for ways to reduce spending across the campus, raising the specter of cuts to programmes and compensation, as Harvard’s endowment plummets. Harvard University has the world’s largest university endowment stockpile of $36.9 billion.
Leading educational institutes in India such as an Indian Institute of Technology or an Indian Institute of Management still oblivious of the downturn.
Their survival may not depend on endowments — they are funded by grants from the Indian government — but they can surely start thinking on these lines.
BW Bureau/Bloomberg
PHARMACEUTICALS
Patenting Restrictions
The Public Funded R&D (Protection, Utilisation and Regulation of Intellectual Property) Bill, cleared recently by the Cabinet, mandates patenting of medical research.
The law is modelled on the Bayh-Dole Act in the US, which has been criticised for creating a culture that allows scientists and institutions to put profits (patent fees and royalties) above all else, thus impeding knowledge-sharing and access to medicines. “The Indian Act threatens to replicate all the failures of Bayh-Dole, but likely with more damaging consequences,” says Ethan Guillen, executive director of the Universities Allied for Essential Medicines (UAEM), a coalition of students in 40 research institutions in the US, the UK and Canada. “While Bayh-Dole included several weak safeguards to protect access in the interest of public health, a draft of the Indian Bill, excluded even those,” he says. Given that UAEM represents universities behind some breakthrough drugs, this is a warning that India will do well to heed.
Gauri Kamath
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AIRPORT UNDER SIEGE: Thousands of protesters occupied the Suvarnabhumi airport in Bangkok — Thailand’s main international airport — on Wednesday as they pressed their demand for the government’s resignation. The protesters rejected a proposal to conduct fresh elections saying that elections will not solve the political crisis. (AP)
PHARMACEUTICALS
No Qualms
A PE firm brushes aside the Perlecan failure to venture into drug discovery
(Pic by Sanjay Sakaria)
India is seeing the first blush of private equity or venture capital interest in a drug discovery research firm after a one-year lull following the failure of Dr Reddy’s Laboratories’ rese-arch firm — Perlecan Pharma — which cost ICICI Venture and Citigroup Venture Capital International about $3.5 million.
Gurgaon-based Baring Private Equity Partners (India) has announced that it will invest up to $15 million (Rs 75 crore) in Sphaera Pharma — owned by Sundeep Dugar. Baring is following a different approach. While Citigroup and ICICI had invested in just four experimental drugs, Baring is supporting Sphaera’s entire research effort. “Assigning a value to certain molecules is very difficult. So instead, we have adopted a platform-based approach,” says Akhil Awasthi, partner at Baring.
Noemie Bisserbe
EDUCATION
Stumbling Block
Even though Yale University has launched a $75 million India initiative, it has no plans to set up an institute in the country. Yale President Richard C. Levin, who was in New Delhi recently, has ruled out such a possibility. Despite reputed institutes shyi-ng away from India, the government is in no hurry to speed up its pending legisla-tion. The Foreign Education Providers’ Bill that would bring foreign universities to India is still stuck in Parliament.
Shalini S. Sharma
SPORTS
Making No Headway
If you thought indian hockey could not sink any lower, think again. The Premier Hockey League (PHL) looks set to miss its winter season this year, slated for December.
ESPN Star and Leisure Sports, the owners of PHL had signed a 10-year deal with Indian Hockey Federation (IHF) for organising and broadcasting the event.
But at the moment, IHF is involved in a bitter law suit against the Indian Olympic Association (IOA), which suspended IHF earlier this year after India failed to qualify for the Olympics — something that has never happened before. IOA also abrogated IHF’s rights to run domestic hockey and send Indian teams for international competitions.
ESPN Star and Leisure Sports risk violation of contract if they seek IOA’s patronage. On the other hand, they may be stigmatised as ‘rebels’ by IOA, if they go ahead with PHL in association with IHF. PHL’s fate now depends on the verdict of the Delhi high court — the next hearing is scheduled for 8 December. If a decision is taken by then, there may still be time to organise the winter season by around March.
Feroz Ahmed
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AUTOMOBILE
Trend Breaker
A Chinese auto maker beats the downturn to drive into India
BOLD MOVES: A worker at FAW’s
plant in Changchun, China. The auto
major plans to invest Rs 1,500-2,000
crore in India (Bloomberg)
Taking a cue from Tata Motors, another auto manufacturer, Ashok Leyland, recently cut down the number of working days in a week to three. Tata Motors has also since shaved off 4,000 temporary workers. The only saving grace perhaps is that auto firms have not yet axed permanent staff despite plummeting demand.
Companies with finance arms such as Mahindra Finance are also not exactly in good shape, even though about 95 per cent of commercial vehicles are bought via financing.
So, the state of the automobile sector looks as grim as that of the rest of the economy. But there will always be those who beat the trend and take risks. Chinese auto major First Automobile Works (FAW) Group — in a joint venture with Ural India — has chosen this time to plan an investment of Rs 1,500-2,000 crore in India. It plans to make passenger cars (priced at Rs 1.6 lakh) and 80-seater buses in the country.
Similar to China’s reaction to the financial crisis, FAW seems to be looking at the long-term potential. Its cash-rich balance sheet (like China’s record forex reserves) has enabled FAW to enter new markets where it is willing to sell cheap. The company also has the advantage of being able to provide suppliers credit financing. Again, the advantage lies in the cash richness, and the company’s non- dependence on the banking system.
Manashwi
(Businessworld Issue 02-08 Dec 2008)