Author
<div class="rc"><p> </p></div>
A few years ago, a doctor had doubts about the accuracy of the blood test report furnished by a neighbourhood pathology laboratory. He devised a test: he sent a sample containing red ink, marked as a patient’s blood sample. The report shocked him. It stated that the patient was hypothyroid as his thyroid stimulating hormone (TSH) level was above normal! Not only did the lab fail to detect that it was not a blood sample at all, it incorrectly diagnosed the condition of above-normal TSH as hypothyroidism when, actually, the diagnosis should have been hyperthyroidism.
Read More
When T.K. Fayaz alighted from a swanky BMW in remote Pallur village of Kannur district in Kerala in 2008, he became an instant hero and a role model for the villagers. Born into a poor family, he had made it big in life, waiting tables and moonlingting for survival. Fayaz told them he ran a hotel in Dubai and many film stars were regulars. He owned a big bungalow, was constructing another and had a fleet of luxury cars, ranging from a Hummer to an Audi. He counted many a film star and politician as ‘friends’. Fayaz went from hero to villain after his arrest in a gold smuggling case in New Delhi on 21 September 2013. Investigations revealed that he was running a gold smuggling racket from Dubai along with a Dubai-based businessman. They had smuggled in 42 kg of gold worth Rs 12 crore through Kochi airport using women carriers in the two months prior to his arrest. Further investigations led to the arrest of several officials at the airport for facilitating ‘green channel’ clearances. From air hostesses to models to film actors, many were quizzed by the investigators. Fayaz is just one among many involved in gold smuggling. Contraband gold is pouring into India — concealed in rectums of carriers, in handles of suitcases, in hair pins, powdered and mixed with engine oil , among a myriad other innovative ways. Directorate of Revenue Intelligence (DRI) figures show seizures between April and September have risen 330 per cent to over 2,100, and gold worth over Rs 600 crore has been recovered. The same period last year saw fewer than 500 seizures, worth Rs 150 crore. Again, last year’s total seizures were worth Rs 1,267 crore, compared to just Rs 200 crore in 2012. Data shows 24.58 per cent of all seizures by DRI in 2013-14 were of gold. A year ago, gold constituted only 8 per cent of all seizures carried out by the directorate.“Nobody knows the actual amount of gold smuggled into India. Some reports put the value at around Rs 70,000 crore last year. In just the recent Diwali season, it amounted to Rs 15,000 crore,” says Kumar Jain, vice-president, Mumbai Jewellers’ Association.Prior to liberalisation, smuggling of gold, using the sea route from West Asia, was a major revenue earner for underworld dons such as Haji Masthan, Karim Lala and Dawood Ibrahim. The Gold Control Act of 1968, which prohibits citizens from owning gold in the form of bars and coins and also restricts trade, killed the legal gold trade, pushing many jewellers and bullion traders to deal in smuggled gold. In the 1990s, when gold imports were legalised as part of liberalisation, smuggling ceased to be attractive. But the introduction of a 2 per cent import duty on gold imports in 2002, which was later increased to over 10 per cent in August 2013, revived the smuggling of the yellow metal. Consider the numbers. Ten grams of gold costs Rs 22,900 (as on 5 November) in Dubai whereas it costs Rs 26,260 in Mumbai. Going by the difference, 1 kg of smuggled gold would translate into Rs 3,36,000 of quick money. Industry insiders say 1,000 dirhams for one kg (or about Rs 15-17,000) is the standard fee of a carrier and a similar amount is paid in bribe to facilitators. Transactions are done through the hawala route — that is payment is made in cash upon delivery of the consignment. According to some estimates, around 500- 700 kg of gold is smuggled into India every day.“We do not accept 24 carat gold as security and KYC (know your customer) norms are mandatory for any loan above Rs 1 lakh. So there is no chance of smuggled gold ending up being pledged with banks and gold loan NBFCs,” says V. P. Nandakumar, chairman and MD, Manappuram Finance, one of the largest gold loan companies in India. Then, where does the contraband gold go? Though nobody says so, it ultimately ends up with retail jewellers. They, in turn, offer discounts to customers willing to buy ornaments without a bill. Deals are done in cash. “India legally imports about 700 tonnes of gold a year. We don’t have estimates of smuggled gold,” says Atul Banshal, president, Finance and Accounts, M.D. Overseas, one of the largest bullion traders in India. Only banks and star houses like M.D. Overseas can import large quanties of gold. There are some 7-8 starred bullion traders in the country. Though gold prices are coming down, the 10 per cent duty continues to be the reason for gold being smuggled into India, say experts. They say the only option to curb smuggling is to do away with the heavy customs duty on the yellow metal.(This story was published in BW | Businessworld Issue Dated 01-12-2014)
Read More
As Kerala prepares for an alcohol ban, many fear it would drive many tourists away from the state, one of India's most popular holiday destinations. But wait before you strike off a booze-less God's Own Country from your travel plans. Endowed with natural attractions, Kerala wants to become a destination for weddings and rural tourism. Those getting married will have a variety of locations to choose from. From the pristine beaches of Kovalam, Kappad, Chavakkad, Beppur and Varkala to the tea gardens of Munnar and the forests of Silent Valley, Thekkady or Wyanad, Kerala's attractions can be myriad. You can also plan a lavish theme marriage and honeymoon in the moon-lit houseboats floating in the backwaters of Kollam and Aalappuzha. And all this can be done in accordance with your tradition, customs and other celebrations. To grow its Rs 26,000 crore holiday trade, the tourism sector is mounting a new campaign to promote Kerala as a destination for "heavenly weddings" and "Kerala village experience". "We are planning to brand Kerala around these two themes to offset any possible reduction in tourist arrivals due to the liquor ban in the Kerala Travel Mart (KTM) from 18-20 September," Abraham George, president of KTM and chairman and managing director of Intersight Tours & Travels, told Businessworld. Kerala's unique village experience may offer a few rounds of exciting "lungi dance" sessions in the evenings with local "toddy" drink and the famous "Kappa-Karimeen fry" dish in addition to a stay in its villages that remain unexplored by outsiders. Visitors will also get a lesson in rice cultivation and the art of pottery making and village crafts. Kerala will have to make this new promotion work if the planned prohibition shuts down the state's 1,000-plus bars. The Supreme Court on 11 September directed the state government not to close bars till the end of the month and directed the High Court to settle the matter at the earliest. The government had last month decided to close about 700 bars attached to hotels below the five-star category. Foreign tourist arrivals in Kerala were more eight lakh in 2013, an increase of eight per cent over the previous year. The number of domestic tourists during the period was 1,08,57,811 compared with 1,00,76,854 in 2012. The tourism industry in the state was growing at 10-12 percent for the last five years. The 8th edition of KTM, held every two years, will attract 292 international buyers from 48 countries and 980 domestic buyers, according to organisers. About 320 exhibitors representing the local industry are showcasing the tourism potential of the state at travel fair. Industry sources say it is early to assess the impact of the liquor ban, if the courts also agree for a total closure. Already some tour operators and hotels have complained of cancellations, but these are not significant. The bookings for the season up to December are already done and thus the state is unlikely to see much revenue losses. But the situation could be different from next year onwards. "We have suggested the government measures like exempting tourist spots and hotels in those regions from the ban or give special tourist permits for using liquor at hotels. Another idea is to promote more wine and beer parlours", said George. The Confederation of Kerala Tourism Industry has asked the state government to freeze the ban till March 2015. The state has only 20 five-star hotels having bars but the hotel industry offers over a lakh rooms in different parts of the state. The state government expects to lose Rs 7,500 crore if the liquor ban becomes a reality. Kerala, known for a small number of manufacturing industries, has an overall debt of Rs 1,15,000 crore and requires about Rs 3,000 crore a month for meeting its expenditure. This includes about Rs 1,400 crore in salaries to government employees and Rs 750 crore for state government pensioners. The banks in the state have over Rs 90,000 crore in savings accounts, mainly coming from Malayalees living outside the country. Home Minister Ramesh Chennithala has said the state government will prepare a roadmap to deal with the financial and other implications of the alcohol ban, which is part of the ruling Congress-led UDF's election manifesto. "It can be called a Kerala model," Chennithala said about the government's aim to make Kerala a dry state.
Read More
Consumers need not suffer if a power company's business decision goes wrong and its profits suffer. It is also not fair to allow renegotiation of tariffs and contracts awarded to the lowest bidder, making a mockery of the entire bidding concept. These were the two key messages the Supreme Court conveyed on Monday (25 August) when it stayed the Appellate Tribunal for Electricity (APTEL) decision to allow higher tariffs for the imported coal based power plants of Tata Power and Adani Power at Mundra in Gujarat.Tata Power claimed the company was making annual losses of over Rs 1,800 crore a year and Adani Power claimed its losses from power supplies annually were over Rs 1,700 crore, following the Indonesian government's decision to sell coal at international benchmark prices since early 2012. In early 2013, the Central Electricity Regulatory Commission (CERC) and later the APTEL allowed the companies to charge higher tariffs because of the costlier fuel, despite opposition from discoms and NGOs representing consumers. Even the CERC panel was divided on its decision. S. Jayaraman, a panel member had strongly opposed the raising of tariffs, saying that allowing this would render the bidding process redundant and open up potential legal issues affecting the rights of other bidders. Estimates say pre-March 2013 dues for Tata Power were about Rs 330 crore and for Adani Power about Rs 830 crore. The utilities challenged this in the Supreme Court. Independent industry observers feel the decisions favouring these two companies could set a precedent and may be used later for revising the power purchase agreements (PPA) for numerous similar projects. The Supreme Court noted the projects were awarded on tariff-based competitive bidding and the developers should have considered the cost and risks for the next 25 years. The apex court's decision can be seen as an intervention to protect the interests of consumers. For the government, the decision should be an eye-opener to tighten the rules related to the Sections 61 and 62 of the Electricity Act and bring more clarity in competitive bidding rules. Otherwise, India's whole power sector may become a mess of errors, litigations and chaos.
Read More
The Vedanta Group promoted power and telecom infrastructure company, Sterlite Technologies, which attracted the first foreign investment in India’s power transmission sector in July, hopes to realise major revenues from its investments in power infrastructure business from FY15, according to CEO Anand Agarwal.Sterlite Power Grid Ventures Ltd (SPGVL), a subsidiary of the Pune-based Sterlite Technologies, focused on the development and operations of power transmission projects, has a portfolio of six projects on Build, Own, Operate and Maintain (BOOM) basis spread across 10 states. Of this, the first three projects with over 2,000 kilometre of transmission lines and two high voltage substations are in the final stages of completion. The other three projects will start operating sequentially from FY17, Anand Agarwal told BW Businessworld.“We have a capital commitment of nearly $1.3 billion and the Rs 500-crore equity investments from Standard Chartered Private Equity in Sterlite Power Grid Ventures Ltd (SPGVL) will be used as equity contribution in existing as well as new power transmission projects”, said the executive.The RS 2,726-crore Sterlite had commissioned India’s first Ultra Mega Transmission Project (UMTP) - the Purnea-Bihar Sharif line in September, last year.Sterlite, which generated Rs 35-crore revenues from power infrastructure segment in FY 14, expects to realise full revenues of over Rs 1,200 crore by 2020 from all the six projects. About Rs 560-crore business is expected by FY16 and over Rs 800 crore by FY18. Currently Sterlite has an all time high order book of Rs 4,400 crore, split evenly between the telecom and power segments, 28 per cent of this from export orders.“With the resurgence in India’s power sector, the transmission and distribution business is expected to grow 12-14 per cent in the coming years”, said Agarwal.The Power Grid Corporation of India (PGCIL) is planning to invest close to Rs 23,000 crore every year in the coming years to strengthen the T&D sector and the total PGCIL ordering in FY 14 was Rs 10,760 crore. When compared to the investments in power generation capacity addition, the investments in India’s T&D sector are only half of what is required, he noted.Sterlite, which makes optical fibre solutions for the telecom sector, power conductors, cables and accessories, had 59 per cent of its revenues coming from the power sector in FY14.He said with the 4G rollout and fiberisation of Towers, the Indian optic cable fibre market is at an inflexion point with an anticipated growth of over 20-22 per cent year on year. India had 10 million fibre kilometres (MFKM) in 2012 and this increased to 14 MFKM in 2013. It is expected to reach 18 MFKM by the end of 2014. Sterlite makes optic fibre cables and controls over 40 per cent of the Indian market. The company has optic fibre manufacturing facilities in India, China and Brazil. Write to pbjayan@gmail.com
Read More
The sudden aggression from Adani Power in adding generation capacity by acquiring Lanco's Udupi Power is part of its strategy to consolidate at the right time to meet its own goals for growth, note industry observers. The 26-year old group, which is trying to become a global integrated infrastructure player by realigning its businesses two years ago, was lagging behind in its power generation production and capacity targets. As part of its Vision 2020, Adani Power targets 20,000 MW of power generation capacity and in the short term was targeting 9280 MW capacity by the end of 2013-2014 from 4,620 MW at the start of 2012. Adani Power's power plants are located at Mundra (4620 MW) in Gujarat, Tiroda (1980 MW) in Maharashtra and (1320 MW) at Kawai in Rajasthan. With the commissioning of the fourth unit of 660 MW at its Tiroda Power plant in Maharashtra in April, Adani Power's total installed capacity had increased to 8,620 MW to become the leading private power producer in the country overtaking Tata Power's 8613 Mw capacity."We are confident of achieving a target of generating 9,240 MW of electricity by March 2014,” Gautam Adani, Chairman, Adani Group had said in December. Sources say Adani Power is targeting adding 5000 MW in near future through greenfield and acquired projects, despite its debt of over Rs 22,000 crore. Two weeks ago, Adani Power had attempted to takeover the hydro assets of Jaypee group, but lost out to Anil Ambani's Reliance Power. "Gautam Adani is one among the few buyers in the market place with deep pockets and can raise equity or debt in the current situation. Udupi Power is an operational power plant with cash flows, which makes it an attractive target for a buyer like Adani", says Sanjay Sethi, executive director- infrastructure, Kotak Investment Banking. He notes that while the sale of Udupi Power helps Lanco to get rid of Rs 4,000 crore debt from its books and an additional cash of Rs 2,000 crore, the buyout of an operational plant helps Adani get rid of the headaches of setting up a greenfield facility. "With many attractive brown field projects that are available for sale, it makes sense for Adani tolook at acquiring them rather than thinking of greenfield additions", says Sanjay Sethi. In FY 14 alone, Adani added 2640 MW, almost 15 per cent of the 17,000 MW added in the country that year. Adani Power commissioned two 660 MW units in the first quarter, one 660 MW unit in third quarter and one 660 MW unit in fourth quarter of FY14 -, two each at Tiroda in Maharashtra and at Kawai in Rajasthan, besides adding a 40 Mw solar power plant at Kutch in Gujarat. However, this was short of its target of 9280 Mw and with the acquisition of 1200 Mw Udupi Power, Adani's total installed capacity will now move up to 9820 MW.
Read More
Piramal Enterprises and the the Dutch pension fund asset manager APG Asset Management on Wednesday (30 July) announced a strategic alliance for investing in rupee denominated mezzanine instruments issued by infrastructure companies in India with a target investment of US$ one billion over the next three years. PEL and APG have each initially committed US$375 million for investments under this strategic alliance.This will be one of the single largest commitments to date by a foreign investor to the infrastructure sector in India. The partners will focus on operational and near completion projects with limited execution risks and high visibility of cash flows coming from a portfolio of projects. The access to this source of capital will enable infrastructure players in India to retain their equity interest in the assets, while raising long term capital to help them complete their on-going infrastructure projects and enhance shareholder value, said a press release. APG Asset Management manages pension assets of €375 billion as at the end of June 2014. It represents over 30 per cent of all collective pension schemes in the Netherlands.Piramal Enterprises, which sold its pharmaceutical formulation business for about Rs.18,500 crore to multinational drug firm Abbott in 2010, is now looking at big investments in high growth sectors like infrastructure, knowledge management and financial services. It has done two structured investments last year, Rs 425 crore in Navyuga Road projects and Rs 500 crore in Green Infra. Piramal Enterprises also had started another joint venture reaI estate fund in February, with Canada Pension Plan Investment Board (CPPIB). The $500 million fund, with equal investment from both the parties, plans to offer project-level debt to local developers for residential projects in Mumbai, Delhi NCR, Bangalore, Pune and Chennai. Indiareit, a private real estate fund run by Ajay Piramal, was acquired by Piramal Enterprises in 2011. Currently it has Rs 5,000 crore under management and has exited a few projects fetching over Rs1060 crore.“This is an opportune time to be creating an aligned pool of capital to target what we believe to be very compelling funding opportunities in the infrastructure sector in India", said Ajay Piramal, Chairman of PEL. Dick Sluimers, CEO of APG said "In PEL, we found an aligned partner with the requisite expertise and industry knowledge to add value through active ownership, which is why we have teamed up with PEL for this strategic alliance in India. The strategy of the alliance to focus on mezzanine investments in infrastructure projects in India ticks the right boxes for our pension fund clients in terms of risk-return profile and high cash flow visibility.”Over $150 billion of equity and mezzanine funding is required to meet government target investment of $1 trillion until 2017, and this is the gap which our strategic alliance seeks to bridge, says Jayesh Desai, co-Head of Structured Investment Group (SIG), PEL. Macquarie Capital acted as the sole financial advisor for the transaction.
Read More
Multinational drug companies may not have grown in the country like some of the domestic drug companies like Cipla, Lupin or Sun Pharma have managed to do, but the top selling drugs in India still belong to the MNCs.GlaxoSmithKline's Augmentin, an antibiotic used to treat bacterial infections is the largest selling drug in the country with sales of Rs 294.2 crore for the 12 months ended May 2013, data from IMS Health says.The second and third largest selling drugs in the country are Pfizer's Corex and Abbott's Phensedyl — both cough and cold preparations — with sales of Rs 286.2 crore and Rs 282.6 crore respectively. The fourth largest selling drug also belongs to a multinational company — Novartis India's Voveran (RS 263 crore) which is used as an analgesic to treat pain and inflammatory disorders. Novo Nordisk's insulin brand Human Mixtard is the fifth largest selling drug with sales of Rs 261.1 crore for the same period. The next two spots are occupied by drugs produced by two domestic companies — Aristo Pharmaceuticals' Monocef which is used to cure typhoid and Bangalore-based Ayurveda company Himalaya's Liv-52, which claims to protect the liver against various hepato-toxins. Liv-52 is also the fastest growing among the top ten brands for the 12-month period, with 29.9 percent in terms of value growth. IMS Health tracks the sales of pharmaceutical drugs in the country sold through the stockists and distributors.For the period MAT (Moving Annual Total) May 2013, IMS Health reports the pharmaceutical market has grown to Rs 74,117 crore, with a growth of 10 per cent, over the same period last year.Abbott, which acquired Piramal Healthcare's formulation business, is the largest drug company operating in India with sales of Rs 5,172 crore and a market share of 7 per Abbott is well ahead of Cipla, with sales of Rs 3,623 crore (market share of 4.9 per cent) and Sun Pharma with sales of Rs 3,277 crore (market share of 4.4 per cent). Glaxosmithkline and Ranbaxy (4.1 per cent each) share the next two slots in terms of market share and sales. Daiichi Sankyo owned Ranbaxy Laboratories was the largest drug company in terms of sales and market share for many years till its sell-off in 2008. email: pb(dot)jayakumar(at)abp(dot)inemail: pbjayan(at)gmail(dot)comtwitter: (at)pbjayakumar
Read More
India's leading apparel and textile major Raymond Ltd has re-jigged its top management to spur growth and to better its dipping profit margins. "We had a few issues in the past in our business strategies and are now in the process of fixing them", Gautam Hari Singhania, chairman and managing director told Businessworld. Sanjay Behl, former head of brand and marketing and CEO of Reliance DTH & IPTV of the Reliance ADA Group, has taken over as the CEO of textile and apparel businesses. The CEO post is newly created for Behl and he will directly report to Singhania. Aniruddha Deshmukh, president, textiles and Robert Lobo, president-group apparel business - will now report to Sanjay Behl. Both Aniruddha and Lobo are long term executives with Raymond and until recently Lobo was heading the brands ColorPlus and Raymond Premium Apparel. Raymond's branded apparel business include Park Avenue, Parx, Raymond Premium Apparel and ColorPlus. In March, the company had brought in a new chief financial officer CFO, M. Shivkumar. He was senior vice-President (finance) at Jet Airways prior to joining Raymond. Before Shivkumar, H. Sunder, whole-time director and chief financial officer, was heading both the finance and strategy portfolios. Now Sunder is fully devoted to strategy function. Raymond, which grew its business from Rs 2617 crore in 2009-10 to Rs 4143 crore in 2012-13, had a sluggish growth in its profits during the period. Net profit for 2012-13 was Rs 28.7 crore compared to Rs155.8 crore in the previous year. Its textile business had seen volume growth, but margins were flat in the last few years. Its foray into denim business through a joint venture with the Belgian company UCO failed to deliver the promises. The 88-year old company also relocated its manufacturing facilities in Thane in recent past to Jalgaon and Vapi. "The full year 2012-13 had been an year of organisational consolidation and has provided us with a platform for a strong bounce back in profitablity", Shivkumar had said in an analyst-call for Q4, 2012-13. email: pb(dot)jayakumar(at)abp(dot)inemail: pbjayan(at)gmail(dot)comtwitter: (at)pbjayakumar
Read More
At last, the public-private partnership (PPP) model in healthcare is poised to make a stride in the country after many years of pilot schemes and lack of interest among private sector to join hands with the Government in large-scale healthcare delivery. The London headquartered $7 billion Enso Group, along with Wipro GE Healthcare, has tied up with the state governments of Maharashtra and Punjab to upgrade diagnostic facilities in 43 civil hospitals — 22 in Maharashtra and 21 in Punjab. An investment of Rs 150 crore from Enso will be one of the largest PPP investments so far in upgrading public diagnostic facilities in India — offering quality diagnostic options at very cheap rates and covering over 3 crore people in these two states.Though pilot projects run in states like Andhra Pradesh, Madhya Pradesh, Karnataka and Gujarat have been successful; scaling them up projects has been an issue due to unviable business models. In India, the public sector accounts for only around 20 per cent of the total healthcare expenditure, representing around 1 per cent of the GDP — among the lowest in the world, notes a KPMG-CII study on the 'Emerging Role of PPP in Indian Healthcare Sector'. In the past decade, though various diagnostic chains offering high quality services have mushroomed, they cater to barely 5-10 per cent of the population.Enso and Wipro GE Healthcare will install CT scanners, magnetic resonance imaging (MRI) machines, radiography systems, colour Doppler’s and analog x-ray units within a year in hospitals in Maharashtra. Enso is in talks with vendors for supply to M hospitals in Punjab. It is estimated that these hospitals currently refer over a lakh CT scans, 50,000 MRIs, 3 lakh color Doppler studies, 900,000 x-rays and 40,000 mammography exams in a year, helping private diagnostic centres reap huge money. Ensocare — the healthcare venture of the Enso Group, hopes to get back its investment within four years, even after providing services at a discount.Ensocare believes volumes will drive business, at about 300 patients per day for each centre.Dr. Akil Khan, vice chairman, Ensocare says "We plan to offer services at the rates offered under the Central Government Health Scheme (CGHS), almost 80 per cent less than what the private facilities charge. The patients will also get cover under the Government sponsored insurance scheme Rajiv Gandhi Jeevandayee Arogya Yojana".Another novelty Ensocare plans is to get even the economically weaker sections of the society an insurance cover for their basic treatments. Vaibhav Maloo, Chairman, Ensocare says the company is in talks with Aetna International, an international healthcare insurance provider, to offer a Rs 50,000 a year insurance cover for a whole family for a year at a premium of Rs 5000, even for out-patient treatments. Currently health insurance cover is available for just 10 per cent of the population in the country.Apart from the PPP plans, Ensocare is also planning another $150 million investment in 300 odd Ensocare brand private clinics in Tier-1 and Toer-2 cities, under its Ensocare brand.
Read More
