Author
The White House forecast more robust economic growth in 2014 than last year and a further pickup in the economy in 2015. Under a White House projection, the US economy is expected to expand by 3.1 per cent this year, faster than last year’s 1.7 per cent. Growth will pick up to 3.4 per cent in 2015. The Barack Obama-led administration also forecast that unemployment will ease to an average of 6.9 per cent in 2014. The jobless rate, which reached a high of 10 per cent in 2009, fell to a five-year low of 6.6 per cent in January. Many economists say that the unemployment rate has dropped in part because many people have stopped looking for work. Almost five years after the end of the recession, the economy is still growing modestly and the unemployment rate, while declining, has remained persistently high. All’s In A NameSteven A. Cohen, whose hedge fund SAC Capital Advisors pleaded guilty to insider trading, is changing the name of his firm to Point72 Asset Management (effective 7 April) as it shifts focus to managing his own assets from serving as a hedge fund for wealthy investors following an agreement with the US government. “We have been through a great deal during the past few years. Our new name, combined with the other changes we have announced, are intended to help us move forward,” Tom Conheeney, SAC’s president, wrote to employees. Level UpKing Digital Entertainment, maker of hit mobile phone game Candy Crush Saga, expects to be worth up to $7.6 billion when it goes public in March in the US, amid concerns about its over-reliance on the game. King will hope to benefit from its focus on the estimated $17-billion market for mobile game apps and avoid the fate of rivals such as Zynga, which has struggled to make its games as popular on phones as they are online. King expects to price its IPO at $21-24 a share, valuing the company at up to $7.6 billion — slightly higher than Hasbro, the 90-year old maker of Monopoly and Scrabble. Key issuesFederal prosecutors are examining whether General Motors (GM) is criminally liable for failing to properly disclose problems with some of its vehicles that were linked to 13 deaths and led to a recall in February, said a source. Federal investigators are reviewing information about how GM handled reports of problems with ignition switches that first came to light 10 years ago. The failure is believed to be caused when weight on the ignition key, road conditions or some other jarring event causes the ignition switch to move out of the ‘run’ position, turning off the engine and most of the car’s electrical components mid-drive. GM has recommended that owners use only the ignition key with nothing else on the key ring. Bonus RoundBarclays faces a backlash from shareholders over its decision to raise bonuses despite profits falling by a third, with investors increasingly demanding CEO Antony Jenkins give more money to them and less to his staff. British banks have failed to rein in pay despite a new European Union cap, leading to a threat that politicians and regulators in both Brussels and London may impose more curbs. Jenkins said an exodus from Barclays’s investment bank in the US forced him to take this step that has resulted in paying staff three times more in bonuses than in dividends to owners, pushing shareholders to be more “aggressive”. On The Mend Italian PM Matteo Renzi recently presented a sweeping package of tax cuts, saying they could help economic recovery in the euro zone’s third largest economy without breaking EU budget deficit limits. Renzi said income tax would be reduced by a total of €10 billion annually for 10 million low- and middle-income workers from 1 May. The cuts will be financed by reductions in central government spending, extra borrowing and by resources freed up thanks to the recent fall in Italy’s borrowing costs, he said. Italy’s economy minister said the government will need to evaluate the effect of its measures on public finances and would need to seek EU approval if deficit and debt targets appeared in doubt.In The Cups?With the World Cup in June and July and a presidential election in October, many Brazilians aren’t thinking beyond 2014. But this year and the next may be memorable for all the wrong reasons in Latin America’s biggest economy. The next president will have to make deep budget cuts, raise taxes and take other painful steps to address Brazil’s growing financial imbalances. The fallout will likely be more damaging than many investors anticipate, resulting in a fourth straight year of disappointing growth — a fallback for a country that last decade was one of the world’s most dynamic emerging markets. Green DriveHyundai Motor plans to start selling its first battery-powered electric vehicle (EV) in 2016 as South Korea’s champion of fuel-cell cars hedges its bets in next-generation green technology. Hyundai has leant toward engines that turn hydrogen into electricity in response to stricter emission regulations in markets such as the US. Research and development partner Kia Motors Corp has focused on rechargeable batteries. Alongside, BMW’s i3 and Nissan Motor’s Leaf are widely expected to reach Korea this year, as will Kia’s Soul EV.FightbackChina allocated about $35 billion for environmental protection this year to combat toxic smog that frequently engulfs its cities, including capital Beijing. The government will take strong measures to prevent and control pollution with the focus on mega cities and regions with frequent occurrence of smog, Premier Li Keqiang said in a recent report. Hazardous smog, several times more dangerous than WHO limits, engulfs cities, raising serious health concerns, including lung cancer risk, among the public. Going PrivateChina will launch pilot programmes to test the development of privately owned banks in Tianjin, Shanghai, Zhejiang and Guangdong, the country’s bank regulator Shang Fulin said recently. The pilot, which was approved by China’s government in January, is the first tentative step by the country to open its hitherto closely guarded banking sector to private investors. A total of 10 firms will participate in the pilot. According to reports, e-commerce giants Alibaba and Tencent — which have been competing to market high-yielding wealth management products online — may have made the cut. (This story was published in BW | Businessworld Issue Dated 07-04-2014)
Read More
A controversy erupted over a claim that WikiLeaks founder Julian Assange endorsed Narendra Modi as "incorruptible" even as the whistle-blower website disclosed a secret cable by a senior US diplomat eight years ago that described him as a "distrustful person" who reigns more by "fear and intimidation". The website while denying in a series of tweets that it had called the Gujarat Chief Minister "incorruptible" tweeted details of a number of observations made by the then Mumbai-based Consul General Michael S Owen on Modi's leadership in a cable after his visit to the state in 2006. "No WikiLeaks document say #Modi is 'incorruptable', rather he is popular because 'viewed' as 'incorruptable'," WikiLeaks said. Wikileaks said the term "incorruptible" was apparently used by a Gujarat Congress leader Manoharsinh Jadeja. "The Narendra #Modi "incorruptable" quote comes from Rajkot Congress party leader Manoharsinh Jadeja," it said. In another tweet, WikiLeaks accused BJP of using the "fake Assange-Modi endorsement" to raise funds. The website today accused Priti Gandhi, Co-Convener of Maharashtra BJP Communication Cell, of pushing the "fake endorsement" by WikiLeaks. Its clarification came against the backdrop of some BJP supporters circulating posters in Ahmedabad quoting Assange, saying that "America is scared of Modi because he is incorruptible." BJP, however, downplayed the WikiLeaks tweets. "We don't need a certificate from WikiLeaks or Assange on Modiji," BJP leader Mukhtar Abbas Naqvi had said. WikiLeaks went on to tweet a secret cable sent by the US Embassy in 2006 which criticised Modi's style of functioning. "Views remain divided on whether Modi's leadership style will help or harm him if he enters national politics. In public, Modi can be charming and likable. By all accounts, however, he is an insular, distrustful person... He reigns more by fear and intimidation than by inclusiveness and consensus, and is rude, condescending and often derogatory to even high level party officials. He hoards power...," one such diplomatic cable under a sub-heading "Modi's Leadership Style" said. The US Consulate, however, added that all of its interlocutors acknowledged that Modi is a modest man "who, unlike many elected officials in India, has not used his position to enrich himself or his family". "Most contacts also say that he has purged the state administration of petty corruption at the mid and lower levels of the bureaucracy. However, several people tell us that big ticket corruption is still common," it added. The secret cable following Owen's visit also stated that the US Embassy in Delhi had cleared the document.(Agencies)
Read More
C P. Gurnani, chief executive officer and managing director of Tech Mahindra, spoke with BW | Businessworld from Brazil — the Latin American country that hosted the football World Cup this year. Thousands of people from across the globe were parked in the country over June-July to watch the championship. But Gurnani wasn’t in Brazil on a leisure trip. His company, Tech Mahindra, was providing back-end IT support and services for the event, just as it did the last time around. Alongside the project, Gurnani was also working on expanding the company’s footprint in Latin America. He met several clients — both current and prospective — and took in the odd game whenever he could.Indians can take heart from the fact that while the national football team did not come anywhere close to making the cut, an Indian IT company certainly did! International expansion aside, Tech Mahindra has been enjoying a good growth rate. Growing at near industry-leading rates, it is competing with established players such as Tata Consultancy Services and HCL Technologies.The company was, however, seen as a stolid one-trick pony until a few years ago. While it was successful in the global telecom services and support market, it struggled to branch out like some of its Indian peers. But much has changed. It is now part of Indian business folklore. How the Mahindras took over erstwhile IT giant Satyam amidst stiff competition and all the uncertainties that surrounded the company makes for a great case study. Battling court cases, retaining employees and clients, satisfying regulatory demands, even as they pulled off a smooth integration was no easy task. The calculated bet against all odds has paid off quite handsomely. The net sales revenues of the consolidated entity have grown three-fold between 2010-11 and 2013-14. In comparison, yesteryear industry poster-boy Infosys didn’t as much as double its revenues during the same period. Tech Mahindra today is a well-diversified IT services company across geographies. While telecom — its strong suite — continues to contribute 47 per cent revenues, it is now seen as a credible player in areas such as manufacturing, retail, logistics, banking, financial services and insurance after the Satyam acquisition. Tech Mahindra’s clients include British Telecom, AT&T, Vodafone, Honda, Mercedes Benz and Volvo.Gurnani modestly declines credit for the company’s stellar performance. “It has been a collective team effort. There has been a buy-in from all stakeholders that has enabled our growth.” Like its competitors, it, too, is making investments in the SMAC (social, mobile, analytics and cloud) stack of technologies. What sets it apart, however, are the calculated bets it is taking. For example, not many know that Tech Mahindra presently operates in 15 African countries, where it has delivery centres. While Africa still contributes only a small portion to its revenues, the company has made investments ahead of the curve. “While we currently continue to get about 45 per cent of revenues from North America and 32 per cent from Europe, Africa with its huge population and a growing economy is a very good opportunity. It is such bets that have paid off for us,” says Gurnani.Such risk-taking is doing the company wonders. Apart from Satyam, it has acquired vCustomer, Hutchinson Global Services, Comviva Technologies, Complex IT and BASF Business Services. While tripling dollar revenues in five years is an impressive task, the company has publicly stated that its goal is to reach $5 billion in revenues by 2015-16. “To reach those numbers, a part of the strategy will clearly have to be inorganic. We are working on it,” is all Gurnani is ready to say for now. He is currently sitting on a war chest of Rs 3,600 crore in cash and can clearly raise more if required. Integrating acquired companies with its current base of 630 clients and 90,000 employees will clearly be a challenge. Gurnani though sounds unfazed. “We have done a smooth integration in the past and we are confident we will do so in the future too even as we retain our unique values and DNA. The goal is to maintain the agility of a startup and have the maturity of a behemoth.”If Tech Mahindra can pull that off, Gurnani will have more reasons to enjoy the next global sports tourney, wherever it takes place.(This story was published in BW | Businessworld Issue Dated 11-08-2014)
Read More
The rupee rose to a one-week high on Tuesday (18 March) as shares surged to a record high, but erased most of the gains to end flat as oil importers rushed in to buy dollars once the local unit strengthened above 61 to the dollar. The rupee is likely to be supported by strong foreign inflows that helped push up the BSE and Nifty indexes to record highs on Tuesday, but traders expect more narrow ranges given the lack of specific domestic triggers. Global factors will also be key this week, ahead of the Federal Reserve's two-day meeting ending on Wednesday, continued political tensions in Ukraine, and a weakening yuan currency in China. "There aren't any domestic data points so rupee should broadly hold in a 60.60 to 61.75 range with good demand from oil firms being seen," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank. "A breach of 60.60 on the downside for the pair can take it to 60.10 levels," he added. The partially convertible rupee closed at 61.19/20 per dollar, unchanged from Friday. Financial markets were closed on Monday for a local holiday. The rupee earlier rose to as high as 60.88 per dollar in early trade, its highest since March 11, as foreign investors continued to bolster blue chips in the lead-up to general elections. Overseas funds were net buyers of $160.6 million worth of shares on Friday, marking their 20th net buying session in the previous 21, for a net total of $1.6 billion, exchange and regulatory data shows. In the offshore non-deliverable forwards, the one-month contract was at 61.67 while the three-month was at 62.42. (Reuters)
Read More
We do not believe this should be East vs West, Russia vs the United States. This is not Rocky IV”John Kerry, secretary of state, US, on the impact of Russia-Ukraine tensions on Russia-US relations “I stopped using Mt Gox this summer when it started to look like roach motel (a roach-bait device) ”Tyler Winklevoss, founder, Winklevoss Capital, and one half of the Winklevoss twins of Facebook fameGinni Rometty“There’s no ‘For Sale’ sign up on the company” Bill Barney, CEO, Reliance Globalcom, clarifying to a news agency that if need be they will go to the capital markets to raise money “We’re pretty sure that any information that’s inside of Google is safe from the government’s prying eyes, including the US government’s”Carl Schmidt, executive chairman, Google, at a summit “Get out of our way”Richard Branson, founder, Virgin Group, to those who deny climate change, in a blog “There is only good management and bad management. Traditional versus modern is, in my view, not important” Rahul Bajaj, non-executive chairman, Bajaj Auto, on traditional and modern business practices, to a magazine “Our performance did not meet our expectations”Ginni Rometty, chief executive officer, IBM, on the firm’s 2013 results, in a letter to investors (This story was published in BW | Businessworld Issue Dated 07-04-2014)
Read More
Reuters Market Eye - Rupee trading at 60.22/23 versus its close of 60.30/31, as the dollar makes losses versus other Asian currencies with hopes of foreign fund inflows into the local sharemarket continuing to cheer.Foreign investors bought shares worth $26.73 million on Monday (21 July), a fourth straight day of purchases. The Nifty is trading up 0.43 per cent in preopen trade, raising hopes for more foreign fund inflows.Traders, however, expect some dollar demand from importers during the session, which will limit any sharp gains in the rupee. The Indian unit is seen moving in a 60.10 to 60.50 range during the day.(Reuters)
Read More
Resume frauds are rampant in India. A survey of hygiene checks conducted by companies throws up some startling results. A sample...Click here to view graphicCompiled by Team BW; Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 07-04-2014)
Read More
The rupee edged up to 60.95/96 versus its Friday (14 March) close of 61.19/20, tracking gains in the domestic share market. Financial markets were closed on Monday (17 March) for a holiday.Most other Asian currencies trading stronger compared with the dollar.Traders will also monitor the domestic share market for cues on foreign fund flows.The euro edged up 0.1 per cent to $1.3934, within reach of a 2-1/2-year high around $1.3967 hit on Thursday on diminished expectations of easing by the European Central Bank.Traders expect importers to buy the greenback around 60.85-90 levels holding the USD/INR pair in a 60.80 to 61.20 range for the session.(Reuters)
Read More
The price of greatness is responsibility." these words of Winston Churchill were in my mind when I, along with the whole nation, awaited the first budget from the Modi government. With an exceptional mandate awarded by the republic of India, the Modi government’s principal responsibility was to address the hopes and aspirations of an entire nation and spell out an agenda for the future. It is in a unique position to drive reform, insist on fiscal prudence and ensure that Brand India is back with a firm agenda for future growth. While the expectations were high, I also saw a lot of industry leaders remain pragmatic in their approach. No one was expecting miraculous turnarounds. There was, however, a common desire for a vision and a step in the right direction. So how did the finance minister (FM) finally fare? I am not feeling euphoric, but I would say the general direction seems to be right and one hopes that policy reforms will continue beyond the Budget. The objective of attracting investments, both foreign and domestic, is appreciated. There is focus on infrastructure, development and financing, and an effort to stimulate and create a vibrant corporate bond market. Various tax incentives have been provided to the manufacturing and infrastructure sectors including a pass-through status to real estate investment trusts (REIT)/infrastructure investment trusts for the purposes of taxation. These measures are bound to have a buoyant effect on investor sentiments, promoting greater stability and investment in India. The MSME sector contributes more to our gross domestic product (GDP) than the corporate sector. Entrepreneurship and capital creation can get a boost from focusing on this sector. A committee will examine the financial architecture of the MSME sector, remove bottlenecks and create new rules and structures and give concrete suggestions in three months. To encourage startups, the FM has proposed to set up a corpus of Rs 10,000 crore to provide equity through venture capital funds, quasi equity, soft loans and other risk capital. Let’s hope the FM has sown the seeds of an “Apple” in India. The long-awaited increase in the foreign direct investment (FDI) limit in defence and insurance has come through. There's hope now that it will be further increased in future again. The FM seems to have successfully avoided the temptation to resort to easy borrowings and has taken effective steps to pull the economy out of populist policies of subsidies. There is focus on providing impetus to agriculture — with the PM’s irrigation scheme, raising the corpus of Rural Infrastructure Development Fund and the proposal to set up a long-term rural credit fund in National Bank for Agriculture and Rural Development. There is intent to accept responsibility and avoid unnecessary spending to contain the fiscal deficit at 4.1 per cent for the current financial year. The FM has set himself an ultra-ambitious target of 3.6 per cent and 3.0 per cent, respectively, for the subsequent financial years. By raising the disinvestment target, the FM hopes to generate funds and concentrate on running the country rather than running businesses. I sincerely hope that having the political mandate and stability will help the government stay close to these targets. The intent to modernise India is evident, not just through infrastructure and smart cities but through the use of information technology. From digital classrooms to introduction of e-visas to broadband penetration, the Modi government appears to be making an effort to digitise India. All the above are positive indicators. However, I feel the FM missed an opportunity to make a clear statement to investors by failing to amend the law on retrospective tax changes. This is where a bold gesture was required and the world would have applauded. Another clear miss is the listing out of concrete steps to widen the tax base. India has an abysmally low gross tax receipts to GDP ratio, currently at 10.2 per cent for the financial year 2013-14; it is less than half that of the UK (26.9 per cent) and South Africa (26.5 per cent). While the FM in his speech talked about adopting non-intrusive methods and using information technology to broaden the tax base, how this will be achieved remains to be seen. Given the bold speeches of Modi, I was hoping against hope that there would be a date for the goods and services tax. However, we must be content with the promise that all issues will be resolved within this financial year.In conclusion, what is worth appreciating is a break from a consumption-led budget to an investment-led budget. The budget appears progressive and sets the tone for attaining higher growth trajectory, supplementing job creation and attracting investments for an economy grappling with multiple challenges. It may not be an inspirational budget, but it is a pragmatic one. Many issues, including the direct taxes code, labour laws and land acquisition laws, remain untouched, but I certainly hope the Modi government will deliver what it has promised. This budget is just the beginning. The buck doesn’t stop at the budget. If I may remind the FM and the PM of the words of Robert Frost — there are “promises to keep and miles to go before I sleep”. (This story was published in BW | Businessworld Issue Dated 11-08-2014)
Read More
Public sector banks need a massive fund infusion. Can the government save them from imminent doom?Click here to view graphicCompiled by Raghu Mohan; Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 11-08-2014)
Read More
