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VOLUME XI NO. 2 Rs 35 AUGUST 2015 BACKYARD STASH IN THE

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CONTENTS YOUR GATEWAY TO INDIA INC. AUGUST 2015, Rs 35 EDITOR AMIT BRAHMABHATT ASSISTANT EDITOR SHRIVATSA JOSHI GENERAL MANAGER (Marketing) C S RAJARAMAN ADVERTISING MANAGER WILLIAM RUMAO GRAPHIC DESIGNER RENUKA SAWANT ADVISORY PANEL SHASHIKANT PATEL JITENDRA SANGHVI REGISTERED OFFICE 102, RAJASTHAN TECHNICAL CENTRE, PATANWALA ESTATE, GHATKOPAR (W), MUMBAI 400 086. INDIA PHONE: 6703 0250/6703 0251 FAX: +91 22 6703 0251 EMAIL: mail@ibj.in BUREAU CHIEFS AHMEDABAD: B D RAWAL CHENNAI: G JACINTH DELHI: RANJANA ARORA KOLKATA: DIPANKAR SEN COVER STORY STASH IN THE BACKYARD Forget Swiss banks. India is a fertile breeding ground for black money that is threatening to outpace its official economy. 26 Face To Face ..........24 "We are keen on making in India": Kenichiro Hibi, Managing Director, Sony India Corporate Reports Bang On Target: New, multipronged distribution channels and acquisition of Lux International take Eureka Forbes closer to its billiondollar-revenue goal. ..........36 Booster Shot: With a higher capex and focus on niche products and new markets, Aurobindo Pharma is all set to hasten its growth momentum. ..........38 Focus ..........40 Dressed To Nines: Sangam India's Channel Nine brand is betting big on seamless technology to tap the lucrative women's wear market. Management Mantra ..........42 "Don't pick anything that shines": Sumit Shah, Executive Director, Madhu Jayanti International Global Wrap-Up ..........46 A quick round-up of news and current affairs across the world Readers' Lounge ..........48 Catch up with new book launches - Kashmir: The Vajpayee Years - The Huawei Story - The Emergency Viewpoint ..........4 Goodbye, People's President News Round-Up ...........6 A brief on news, tie-ups, appointments and awards ..........14 "About 40% growth possible in agro vertical": Pawan Goenka, Executive Director, Mahindra & Mahindra Straight Talk Infotech ..........16 Digital Dreams: India Inc loosens its purse strings to bridge the country's digital divide. But many hurdles remain in the way of India's digital ambitions. Guest Column ..........18 Agrarian Ally: Kissandhan's novel agri-financing approach provides farmers with timely credit as well as vital crop storage solutions. Oil & Gas ..........20 Mutual Gains: The Rosneft-Essar Oil deal offers India's secondlargest refiner a secure supply of crude oil and helps it in slashing debt even as the Russian giant gets a much-needed foothold in the Asian market. Corporate Trends ..........22 Double Bonanza: The CairnVedanta merger plan can slash the latter's huge debt and turn the new entity into a robust natural resources group. INDIA BUSINESS JOURNAL Printed and published by Amit Brahmabhatt for Issues Analysis and Research Pvt Ltd and published from 102, Rajasthan Technical Centre, Patanwala Estate, Ghatkopar (W), Mumbai 400 086 and printed at Graphtone (India) Pvt. Ltd., A1/319, Shah & Nahar Indl. Estate, Lower Parel, Mumbai 400 013 Processed at Graphtone (India) Editor: Amit Brahmabhatt Volume XI, No 2 Issue date August 1-31, 2015 Released on August 1, 2015 EDITORIAL ASSOCIATE Press Trust of India MARKETING ASSOCIATE Milage ads & events SUBSCRIPTION RATES India Rs 420/- for 1 year (12 issues) Overseas Rs 1,860/- or US$32 for 1 year (12 issues) Add Rs 50/- for outstation cheques www.indiabusinessjournalonline.com Star Talk ..........50 Forecast by Bejan Daruwalla Knowledge Zone ..........52 - Nikesh Arora, President, SoftBank Corp - Internet Governance - Spiritual Corner: Worries Hot Seat ..........54 Saba Adil, Head, Human Resource, Aegon Religare Life Insurance AUGUST 2015 3

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VIEWPOINT Goodbye, People's President ndia has lost a true Bharat Ratna with the demise of its 11th President - Avul Pakir Jainulabdeen Abdul Kalam. Dr Kalam, popularly called the Missile Man or the People's President, succumbed to a cardiac arrest on July 27. His end came in the company of students, whom he had inspired all his life. Dr Kalam had just begun his address to the students of the Rajiv Gandhi Indian Institute of Management in Shillong, Meghalaya, when death intervened. It was more than a full life that the 83-year-old former president lived. From humble beginnings in Tamil Nadu's Rameshwaram, he went on to become a great scientist and then occupied the highest office of the nation. Above all, he proved to be a great human being. The son of a boatman, Dr Kalam distributed newspapers to support his family's finances. After graduating in aeronautical engineering from Madras Institute of Technology, he began his career with the Defence Research and Development Organisation (DRDO) and then moved to the Indian Space Research Organisation (ISRO). His contributions to the development of the satellite launch vehicle (SLV) at ISRO - the precursor to the Polar Satellite Launch Vehicles (PSLVs) that later launched Chandrayaan and Mangalyaan missions - established his credentials as a top scientist. At the DRDO, he conceived the Integrated Guided Missile Development Programme, a work that later earned him the epithet of Missile Man. As the chief scientific adviser to Atal Bihari Vajpayee, he was also instrumental in the Pokhran nuclear test in 1998. Science was his true passion. As a true scientist, Dr Kalam went beyond the call of duty to live that passion. No wonder, the former president contributed more than his name to the invention of the KalamRaju stent. That medical invention, built with missile composites, dramatically brought down the cost of heart stents from Rs 55,000 to Rs 10,000 in the mid-1990s. In 2002, Mr Vajpayee turned to this great scientist to soothe the frayed nerves of the nation. The communal carnage of Gujarat had shocked the nation. The Vajpayee government chose the Gita-quoting, Rudra Veenaplaying, Muslim scientist to occupy the President's post. It appeared to be the best balm for a nation torn on mindless communal lines. Once elected, he was no pushover. Nor was he naive as most people had feared. He decided to visit riot-torn Gujarat even though Mr Vajpayee was not very comfortable over his travel plan. But the real test for him came after the UPA came to power. He returned the Office of Profit Bill to Parliament for reconsideration in 2006 because he did not consider it fair and reasonable. It was not a common action as the Bill sought to shield Sonia Gandhi against her disqualification as a Lok Sabha member from Rae Bareli. However, Dr Kalam had his low points too. He signed a proclamation imposing President's rule on Bihar in May 2005 while on a tour of Russia following a recommendation by then State Governor Buta Singh. The Supreme Court reversed the dissolution of the Bihar Assembly, describing it as unconstitutional. Dr Kalam almost came to quitting office in anguish. But ultimately, he decided to stay on. Throughout his Presidency and later too, Dr Kalam went about inspiring the youth. No one connected science to the common people, to youth and to children in the manner that he did. From day one, he began to open up the Presidency to the people. He spoke directly with child-like enthusiasm to the young. Sadly, Dr Kalam is no more. But the great scientist, the tall leader and, above all, the passionate humanist will continue to inspire India. INDIA BUSINESS JOURNAL I Missile Man Dr Kalam ignited hopes and passion in people, especially youth, throughout his life. In 2002, Mr Vajpayee turned to this great scientist to soothe the frayed nerves of the nation. The communal carnage of Gujarat had shocked the nation. The Vajpayee government chose the Gita-quoting, Rudra Veena-playing, Muslim scientist to occupy the President's post. It appeared to be the best balm for a nation torn on mindless communal lines. 4 AUGUST 2015

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NEWS ROUND-UP MISCELLANEOUS Telangana government is moving rapidly to transform its capital Hyderabad, a hub of information technology (IT) and pharmaceutical industries, into the most preferred investment destination in the country. Telangana Minister for Panchayat Raj and IT K T Rama Rao, who recently led a delegation and interacted with industry leaders in the banking, financial services and insurance (BFSI) sector in Mumbai, invited them to set up their operations in Hyderabad. Mr Rao added that Hyderabad was a strong contender to emerge as the ICT (information and communication technologies) capital of the country and pointed out that this would further enable its big plans in the BFSI sector. Telangana woos BFSI sector to Hyderabad The the uranium deal, Kazakhstan, a leading uranium producer globally, will supply 5,000 tonnes of the vital mineral to India between 2015 and 2019. This is the second such agreement between Astana and New Delhi since 2009. India crosses 100 crore phone connections Stock Exchange (NSE) has filed a Rs 100-crore defamation suit in the Bombay High Court against online news portal Moneylife for publishing allegedly false reports on algorithm trading mechanism on its platform. The exchange said it had sought withdrawal of the reports and had made a claim of Rs 100 crore (which can be revised upwards) from Moneylife for the defamation. In one of its reports recently, Moneylife had claimed that certain institutions registered for algorithm trading were allowed to profit illegally by the NSE. term supply of natural uranium. The two nations also sealed a wide-ranging defence cooperation pact and a railway cooperation agreement to boost connectivity to realise full economic potential. The agreements are a part of India's plan to expand bilateral strategic partnership and its presence in Central Asia. According to NSE files Rs 100-cr suit against Moneylife The National Kazakhstan last month inked a deal for a renewed long- India, Kazakhstan seal uranium deal India and Telephone connections in India have crossed the one billion (100 crore) mark with mobile phones accounting for around 978 million (97.8 crore). The country has been adding 50 to 70 lakh new mobile connections every month. Besides, India has around 3 crore internet connections and has set a target to achieve 50 crore connections in the next two years. The government, under National Telecom Policy 2012, has set a target to provide affordable and reliable broadband-ondemand by 2015 and to achieve 17.5 crore broadband connections by 2017 and 60 crore by 2020. Department's strategy to India Post gains from ecommerce bets The Postal APPOINTMENTS Credit Information Bureau of India (CIBIL) has appointed Satish Pillai as its managing director and chief executive officer. Ram Sewak Sharma, the former information secretary, has been appointed as chairman of the Telecom Regulatory Authority of India. TIE-UPS Airports Authority of India has signed an 6 AUGUST 2015 INDIA BUSINESS JOURNAL

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Verbatim... focus on fast growing ecommerce segment has borne fruits as it saw a significant 37 per cent jump in parcel revenues in the past year. The increase in parcel revenues is in stark contrast to 2 per cent decline in 201314. With dwindling letter or document traffic, the department is focusing on the fast-growing parcel segment. Various measures have been taken to modernise the department under the Digital India initiative. As a part of initiatives to leverage the ecommerce sector, the department has forged tieups with leading online marketplaces for parcel delivery. paper copy of ITRVerification Form to the I-T Department's Central Processing Centre in Bengaluru. Besides, Electronic Verification Code has also been provided on the efiling website of the department for the convenience of small taxpayers with total income of Rs 5 lakh or below. MISCELLANEOUS "The greatest mistake was in the branding of the Nano as the cheapest instead of most affordable, which was the intention of the company." Ratan Tata CHAIRMAN EMERITUS, TATA SONS New PPP to upgrade 400 railway stations The income tax return for assessment year 2015-16 can now be verified electronically, thanks to the Income Tax Department's measures to provide end-to-end eenabled services. A taxpayer may verify his return through internet banking or through the Aadhaar-based authentication process. Persons using this facility will not be required to submit a signed agreement with International Air Transport Association for imparting training to 4,000 of its officials for skill development in airport management according to global standards. Multi Commodity Exchange has signed an agreement with the CME Group to study the opportunity of setting up operations in the new international finance service centre coming up at the Gujarat International Finance and Tec-City. Now, I-T returns can be verified electronically The government has announced redevelopment of 400 railway stations across the country through a new public private partnership (PPP) route called the Swiss Challenge. It is a bidding model under which the first bidder is given a chance to match the best bid. Under this model, it would be left to the bidder to suggest the entire development model, including the pattern of raising revenue and how it is shared with the Indian Railway. The redevelopment would be in the category of A-1 and A classes of railway stations, which are mostly located in metros and major cities. "BlackRock is an extremely dangerous company because of its ETF products that are illiquid. And that's what's going to blow this up." Carl Icahn ACTIVIST INVESTOR Place-of-supply rules for GST soon The Revenue "Less than 5 per cent of the GDP has come in from FDI. So, why is the government so keen on it? It must look at other means to raise investment." B N Rai PRESIDENT, BHARATIYA MAZDOOR SANGH Department is preparing place-of-supply rules as a part of the GST roll out, which will comprehensively cover taxation of e-commerce. These rules will be important as the GST will be destination based and levied at the point of delivery. They will help determine the location of supply of goods or services as also whether the supply is intra-State or inter-State. The rules, to be drafted by the Central Board of Excise and Customs for implementation of the GST, will also take into account sales through e-commerce. "Is there one invention from India that has become a household name in the globe? Is there one technology that has transformed the productivity of global corporations? Is there one idea that has led to an earth-shaking invention to delight global citizens?" N R Narayana Murthy CO-FOUNDER, INFOSYS INDIA BUSINESS JOURNAL AUGUST 2015 7

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NEWS ROUND-UP FINANCE State-run banks struggling with NPAs Bad loans will add up to almost half of the equity capital of public sector banks if even a fifth of the loans they have recently restructured continue to default, a recent report of Fitch Ratings has noted. It has added that mid-sized public sector banks remain the weakest, and lenders may have to seek funds overseas as there is no domestic market for hybrid capital. Non-performing assets (NPAs) in the banking system rose to 4.6 per cent of total assets in FY15 from 4.1 per cent in FY14. banking operations in August. The move to grant new permits marks the start of a cautious experiment to create more competition in a sector dominated by State lenders. RBI chief may not have a say over rates The SIDBI's Rs 2,000-crore fund for start-ups Small Industries has asked banks to treat credit card accounts as nonperforming if the minimum amount due is not paid fully within 90 days of the payment due date mentioned in the credit card statement. This represents a tightening of the earlier norms when credit card accounts were classified as NPA if the minimum amount was overdue for 120 days. Credit card dues after 90 days to be NPA The RBI Development Bank of India (SIDBI) has set aside Rs 2,000 crore for a fund-of-funds to pick up equity in start-ups under the Rs 10,000-crore corpus announced in the Budget. SIDBI will use a part the remaining Rs 8,000 crore of the Budgetary allocation to extend soft loans to micro, small and medium enterprises (MSMEs) at concessional rates. Under the scheme, start-ups and MSMEs can get soft loans at 10 to 12 per cent interest, which is lower than what banks offer. SIDBI will be prioritising lending to those companies that take the Make In India initiative ahead. SBI mulls profit sharing with employees State Bank of India (SBI) is planning to offer up to 3 per cent of annual profit to employees as a part a talent retention and motivation initiative. The bank has sought permission ate with the New Development Bank, promoted by the BRICS nations. Central Bank of India has signed an MoU with National Skill Development Corporation to arrange for distribution of monetary rewards to trainees under the Pradhan Mantri Kaushal Vikas Yojana. Online recharge and payment company Paytm has tied up with Aditya Birla Finance to offer hassle-free finance options to more than 50,000 smalland medium-size sellers on its platform. APPOINTMENTS Global financial services hub Gujarat International Finance Tec-City has appointed Ajay Kumar Pandey, a former senior executive of Tata Telecommunications, as its new managing director and group CEO. from the Finance Ministry in this regard. Besides, the bank is also considering a sharepurchase scheme for all employees, numbering about 2,30,000, irrespective of their posts. The bank expects to raise between Rs 800 crore and Rs 1,200 crore through this scheme. "Incentivisation is a good way of ensuring that people meet up to whatever the challenges are," SBI Chairperson Arundhati Bhattacharya has noted. proposed Monetary Policy Committee (MPC) will have three members from the RBI instead of two proposed earlier, under a revised draft of the Indian Financial Code released by the Finance Ministry last month. The code, supposed to be a sector-neutral legislation for the entire financial sector, will enable a shift from the present system of the RBI governor solely deciding the monetary policy actions, such as interest rate, to one where an MPC would take such decisions by majority. The first draft code was submitted by the Financial Sector Regulatory Reforms Commission in March 2013. BoI posts Q1 net profit of Rs 130 crore Bank of India After Bandhan, IDFC gets banking licence IDFC has TIE-UPS EXIM Bank of India has signed a multilateral cooperation agreement with other development banks of BRICS (Brazil, Russia, India, China, and South Africa) nations to cooper- said that the RBI has granted a banking licence to the financial company, making it the second lender to enter the banking sector after more than a decade. Microfinance company Bandhan Financial Services and Mumbai-based IDFC were the only two companies to be granted preliminary bank permits last year. Yes Bank was the last bank to be set up in 2004. Bandhan will be launching (BoI) posted a bigger-thanexpected 84 per cent fall in quarterly net profit as bad loans surged. The Mumbaiheadquartered bank’s net profit fell to Rs 130 crore for the first quarter ended June 2015 from Rs 806 crore reported a year earlier, the bank said in a statement to the stock exchanges. The bank’s gross non-performing assets (NPAs) as a percentage of total loans rose to 6.8 per cent in the June 2015 quarter from 5.39 per cent in the previous three months and 3.28 per cent a year earlier. The bank’s net interest and non-interest incomes for the period under review were Rs 2,913 crore and Rs 840 crore respectively. INDIA BUSINESS JOURNAL 8 AUGUST 2015

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NEWS ROUND-UP CORPORATE Directorate General of Civil Aviation (DGCA) recently granted a regional air operator's permit to Turbo Megha to operate a regional airline Trujet. With this permit, Trujet is the fourth airline to take to Indian skies since the new government assumed office in May last year. As many as 20 companies have applied to the Ministry of Civil Aviation for a no-objection certificate (NOC) since 2009. Of these, 16 companies managed to secure NOCs. However, only four airlines Air Costa, AirAsia India, Vistara and Air Pegasus have managed to start operations. Turbo Megha to take to Indian skies soon The as one of the world's largest privately-held design companies with an employee base of about 300. US bans drugs from Emcure's Hinjewadi unit controlled United Spirits (USL) has exited Vijay Mallya-led United Breweries (UB) by selling its entire 3.21 per cent stake in the company for Rs 872 crore. USL sold its stake to Heineken International at a price of Rs 1,030 per share last month. In November 2012, Diageo had bought a controlling 55 per cent stake in USL for over Rs 11,000 crore from the UB Group. Earlier this year, USL asked Mr Mallya, its erstwhile USL sells 3.21% in UB, exits brewer Diageo- Lupin snaps up Gavis, Temmler's drugs Lupin will be paying around Rs 5,600 crore to buy Gavis Pharmaceuticals, a littleknown, New Jersey-based, pharmaceutical company. The Mumbai-based drug company's Gavis purchase is aimed at buoying sales in the all-important US market, which contributes nearly half of Lupin's revenue. The deal, if and when concluded, will be the biggest buyout of a foreign asset by an Indian pharmaceutical company after Dr Reddy's purchase of Germany's Betapharm in 2006. A day after announcing its Gavis acquisition, Lupin announced that it would buy Germany-based Temmler Pharma's speciality product portfolio. The two deals may help Lupin expand its US presence with a strong pipeline of generics and speciality drugs. promoter, to quit the board alleging fund diversion to the tune of Rs 1,337 crore to Kingfisher and other UB Group entities. strategy to tap opportunities in the digital segment. The all-cash deal will have a component of deferred payment, to be payable through the next three years, upon the acquired entity achieving certain milestones. The acquisition is expected to strengthen Wipro Digital, the company's digital business unit set up in March this year. Founded in 1991, Designit is considered managing director of Tata Hitachi Construction Machinery Company. The US Food and Drug Administration (USFDA) has banned drug imports from Emcure Pharmaceuticals' Hinjewadi manufacturing plant in Maharashtra. The ban followed after an inspection by the USFDA revealed that the company was not meeting manufacturing quality standards. Emcure has nine manufacturing plants, including one in the United States, and exports to a number of countries, including the US, Brazil, Japan and other European countries. Emcure, one of the country's top-20 drugmakers, is the latest among some of the country's largest pharmaceutical companies to have come under fire for similar violations in the last few years. Wipro to buy Designit for Rs 595 crore Wipro is acquiring Designit, a Denmark-based global strategic design company, for Rs 595 crore. The acquisition is in line with the soaps-tosoftware conglomerate's has plans to use India for exporting its buses manufactured in the country to developed markets in Europe. The first bus made by Volvo Bus Corporation in Hoskote near Bengaluru will be unveiled later this year in 240-acre township in Chennai. HCL Technologies has formed a joint venture with CSC to cater to its global banking clients. US-based solar power company SunEdison has entered into a 20-year power supply agreement with Tata Power Delhi Distribution to supply 180 mw of solar energy. Volvo's India unit to be global export hub Volvo APPOINTMENTS Samina Vaziralli, the daughter of Vice-Chairman M K Hamied, has assumed charge as executive director of Cipla. Realty portal Housing.com has appointed its COO Rishabh Gupta as its interim CEO. Hero Motors Group, which includes flagship company Hero Cycles, has elevated Pankaj Munjal as its chairman and managing director. Suresh Narayanan, the former chairman and CEO of Nestle Philippines, has been named as CEO of Nestle India. Sandeep Singh, the former executive managing coordinator of Toyota Motors Thailand, has taken over as TIE-UPS Snapdeal has tied up with Tata Capital to provide unsecured loans to offline sellers ranging from Rs 5 lakh to Rs 2 crore. Unitech has joined hands with e-commerce major Snapdeal to sell plots in its 10 AUGUST 2015 INDIA BUSINESS JOURNAL

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Europe. The company's Asia Leverage Strategy aims to utilise its manufacturing presence in India and China to cater to demands from other global markets. The inter-city coaches and city buses from the Swedish busmaker's Hoskote facility are currently being exported to countries in South Asia and South Africa. The company is confident of leveraging the skills in India to meet Europe's requirements. Jaipur. It will look at setting up a manufacturing facility later based on the market's response. M&M is also planning to foray into other oil segments, like sunflower, soya and rice bran, at a later date. CORPORATE Mindtree buys two companies for Rs 482 cr Mindtree has acquired two companies based in the US and the UK for around Rs 482 crore. The mid-tier IT services company has signed a definitive agreement to acquire a 100 per cent equity in Bluefin Solutions, a UKbased IT solutions provider specialising in SAP HANA solutions, in an all-cash transaction for Rs 419 crore. Mindtree's acquisition of Bluefin is a part of its latest strategy to strengthen presence in the European market and also bid for transformation deals. Apart from Bluefin, Mindtree has also decided to buy US-based Relational Solutions for Rs 63.5 crore. Rajesh Exports acquires Swiss gold refiner Bengalurubased Rajesh Exports, the country's largest bullion and jewellery house by revenue, has acquired Valcambi, the world's largest precious metals refinery, in an all-cash deal of about Rs 2,600 crore. Switzerland-headquartered Valcambi's erstwhile promoter and banking partner, Credit Suisse, has agreed to part-finance the acquisition by providing around 35 per cent of the cost. The rest of the acquisition cost will be funded through internal accruals. With this purchase, Rajesh Exports will strengthen its backward integration and get gold from Valcambi cheaper than other jewellery players in India. result of deviations in current good manufacturing practice norms laid down by the American health regulator. All the drugs being recalled by the company have been manufactured at its Mumbaibased facility and distributed in the US by its subsidiary, Wockhardt USA. The company is recalling Famotidine tablets, used to treat ulcers in stomach and intestines, Amlodipine Besylate and Lisinopril tablets, used to treat high blood pressure protests stalled the over Rs 75,500-crore project for a decade. "The project in Odisha has been tentatively postponed. Until Indian Prime Minister Narendra Modi offers better deals, we won't resume, and for now we will head to the west (its another plant in Maharashtra) and do more downstream work," said Posco CEO Kwon Oh Joon recently. The South Korean steel-maker's 12-mtpa plant failed to take off also because it was not able to secure iron ore mining leases. investor Prem Watsacontrolled Fairfax India Holdings Corporation has agreed to acquire a 74 per cent stake in National Collateral Management Services (NCMS). The Toronto Stock Exchangelisted company will shell out about Rs 800 crore for the majority stake in the agricultural commodities warehouse and collateral management services provider. The acquisition of the stake in NCMS would be done through its whollyowned subsidiary FIH Mauritius Investments. Fairfax India is also looking at collaborating with NCMS shareholders for future ventures. Fairfax India buys major stake in NCMS Canadian Pride Hotels checks into Vadodara Pride Group of Wockhardt to recall drugs from USA Wockhardt is recalling 1,62,142 cartons of various drugs from the US market. The recall of medicines, used to treat ailments like high blood pressure and ulcer, is a Posco's Odisha plant on the backburner Posco has put on hold plans to build a steel plant in India after land acquisition and farmer Think of MSME, Think of us National Small Industries Corporation A Government of India Enterprise www.nsic.co.in INDIA BUSINESS JOURNAL Mahindra's (M&M) agrobusiness division entered the edible oil business last month and plans to get into dairy and pulses retail segments as well. The company recently launched the NuPro brand of mustard oil in the premium segment for sale in Kolkata and its vicinity. The company will initially get the mustard oil produced through contract manufacturing in M&M forays into edible oil business Mahindra & Hotels entered Vadodara last month by taking over a hotel in Gujarat's thriving city. The deal follows signing of a joint venture agreement between Vadodara Sunshine Hotels Managing Director Vinkle Chawla and Pride Group of Hotels Managing Director S P Jain. The hotel, which has been renamed The Pride Biznotel, Vadodara, is centrally located in the city's commercial and entertainment hubs. "We are excited about the opportunity to manage a property in one of the largest and fastest developing cities in India," noted Pride Group of Hotels CEO Satyen Jain after the deal was struck. AUGUST 2015 11

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NEWS ROUND-UP PUBLIC SECTOR 7 PSUs to raise Rs 40,000 crore via bonds The Union government has allowed seven State-owned entities, including NHAI, IRFC and NTPC, to raise Rs 40,000 crore through tax-free bonds in the current financial year. Retail investors, who include Hindu undivided families and non-resident Indians investing on a repatriation basis, can invest up to Rs 10 lakh in such bonds. Those investing higher amount will be classified as high net worth individuals. The bonds will have a tenure of 10, 15 or 20 years and interest rates are to be decided with reference to the rates of government securities. of Rs 5,000 crore through asset monetisation - Rs 1,200 crore in 2013-14, Rs 2,000 crore in 2014-15 and Rs 1,800 crore in 2015-16 is yet to take off due to legal issues over title deeds and ownership clauses. OVL loses bid for Mexico's two oil blocks the PFC sell-off last month, the government has set the ball rolling on its disinvestment programme. As many as 10 State-owned corporations, including OIL, NTPC, ITDC and others, are lined up for stake sales that would help raise over Rs 22,000 crore. The Department of Disinvestment (DoD) also plans to launch a follow-on offer for exchange traded fund of Central public sector enterprises (CPSE-ETF) that will raise at least another Rs 3,000 crore. The total disinvestment target, including residual stake sale in private companies and the SUUTI stake sale, is projected at Rs 69,500 crore for FY16. PSU stake sale kicks off with PFC divestment With ONGC to invest Rs 55,500-cr in KG basin State-owned ONGC plans to invest over $8.8 billion (about Rs 55,500 crore) in bringing to production its much-touted KG basin oil and gas discoveries by 2018-19. ONGC has divided 12 oil and gas finds in the block, KG-DWN-98/2 or KG-D5, and gas discovery in an adjacent G-4 block in the Bay of Bengal into three clusters to bring them to production quickly. The investment will be used for drilling 45 development wells, an array of sub-sea pipelines carrying gas to a fixed platform for processing and a pipeline to carry gas from it to an onshore terminal. owned subsidiary of the State-owned miner, was allotted two leasehold licences for extraction of coal of about 224 sq km in Tete province of Mozambique in August 2009. The company's board has approved retaining 54 sq km of leasehold licence area, which will be of actual interest with coal-bearing horizon occurring within a 500-metre depth and decided to relinquish the remaining 170 sq km area. manipulation by the insurers in the bidding process initiated by the Kerala government for selecting service provider for the Rashtriya Swasthya Bima Yojna for 2010-11, 2011-12 and 2012-13. The final order was passed by the completion regulator last month in a matter that was taken up suo moto, following an anonymous complaint received by the commission. ONGC Videsh (OVL), the overseas subsidiary of Stateowned explorer ONGC, has lost out in its bid for two oil blocks in Mexico's first licensing round in 88 years. OVL had bid for two out of the 14 shallow-water blocks offered. The company's bids were rejected by the Mexican government's upstream regulator as they were below the floor for share of profit, which ranged from 25 to 40 per cent. "The company was the sole bidder for Areas 6 and 12, but the bids were rejected as it was considered too low," noted Mexico's National Hydrocarbons Commission. GAIL's LNG swap plan to cut travel time, cost GAIL CCI slaps Rs 671-cr fine on 4 general insurers The Air India eyes Rs 250 crore via asset sale Air CIL to give up 170 sq km of Mozambique mines Coal India (CIL), the world's biggest coal miner, has decided to relinquish about three-fourths of two blocks it was allotted in Mozambique in 2009 for exploration and development. Coal India Africana (CIAL), a fully- Competition Commission of India (CCI) has imposed a total penalty of Rs 671.05 crore on four public sector insurance companies National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance company. The penalty is related to alleged India is looking to sell properties worth Rs 250 crore to raise funds. The mop-up exercise is a part of its larger plan to sell and rent out idle assets to reduce debt and losses. The national carrier's asset monetisation plan has already been delayed by almost a couple of years. The beleaguered airline's plan to raise a total India plans to swap over one-thirds of LNG it has contracted from the US with a gas seller nearer to India to save on transportation costs. GAIL, in two deals, has contracted 5.3 mtpa of LNG from the US starting 2018. Of this, it reckons that 3-3.5 mt will be shipped to India for consumption by local industries, like power and fertiliser plants. Transporting LNG in cryogenic ships from the US will not just be time-consuming but will add a little extra to the cost. GAIL plans to swap 1-2 mt of LNG with a seller in Africa or West Asia. 12 AUGUST 2015 INDIA BUSINESS JOURNAL

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STRAIGHT TALK "About 40% growth possible in agro vertical" ahindra & Mahindra (M&M) is gearing up for a big play in agriculture, leveraging on the brand equity of its tractors. The Mumbai-based conglomerate, which forayed into the farm segment towards the end of 2010, is working on various initiatives, including selling of grapes, apples, banana, seed potato, pulses, oilseeds, dairy and micro-irrigation. The about Rs 1,10,000-crore Mahindra Group has presence in various sectors, including automobile, information technology, financial services, aerospace, defence, real estate, energy, retail, industrial equipment and logistics. One of the largest automobile brands in India, M&M sells a range of tractors under the Mahindra range, like Yuvraj, Arjun, Bhoomiputra, Sarpanch and Shaan at a horse power range of 15 hp to over 50 hp. Besides, under the Swaraj badge, which it acquired from Punjab Tractors in 2007, the company sells models with horse power ranging from less than 30 hp to over 50 hp. The company recently bought a 33 per cent stake in Mitsubishi Agricultural Machinery for over Rs 155 crore. The company is looking to bring products from the Mitsubishi stable in the coming years, reveals M&M Executive Director Pawan Goenka. In a wide-ranging interview, Mr Goenka hints at the company's plans of smallticket acquisitions in the farm sector and its target of turning its agribusiness vertical into a significant 14 AUGUST 2015 M MUNISH SHEKHAVAT revenue and profit generator in the next five years. How is the tractor market poised amid concerns of a poor monsoon this year? Last year, there was de-growth in the tractor segment. If the monsoon is alright this time around, I don't think there is any reason that the industry should not grow by at least 5 per cent. Meanwhile, a shift towards higherpowered tractors in the domestic market is happening at a very slow pace against expectations set earlier. There is a gradual shift towards the higher horse power (hp) range, but that's very slow. The horse power peak in India at the moment is 60 hp, and the most popular range is the one between 40 and 45 hp. So, the new products will be in the horse power range where the company already has products. Would you throw light on new tractor launches? The company plans to launch six new tractors in the next three years, three each under Mahindra and Swaraj brands. Basically, it will be one new product each year for the next three years on the Mahindra side. I think it will be similar on the Swaraj side too. We will be launching Dhruv in the volume segment towards the end of the financial year. One more product will be launched some time in FY17. Besides, a new introduction under the Swaraj range will be coming up soon. Are there any plans to bring products from the Mitsubishi Agricultural Machinery stable? There are no immediate plans to launch Mitsubishi products. How- "The company will not go in for any larger-ticket acquisitions. But we will look at buyouts in the range of Rs 100 crore to Rs 150 crore." PAWAN GOENKA Executive Director, Mahindra & Mahindra ever, in future, we are looking at applications from Mitsubishi where we are not present such as those used to cater to orchards. What strategy is behind M&M's recent big push in the farm sector? We have fairly high brand equity in the Indian agricultural space as we are the largest brand in tractors. Therefore, what we are doing is taking our tractor knowledge and expanding it to complete the agriculture INDIA BUSINESS JOURNAL

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"We have fairly high brand equity in the Indian agricultural space as we are the largest brand in tractors. Therefore, we are taking our tractor knowledge and expanding it to complete the agriculture value chain." a meaningful player in terms of size. Then from there, see what we can get into. Are there any big acquisitions planned in the near term? The company will not go in for any larger-ticket acquisitions. But we will look at buyouts in the range of Rs 100 crore to Rs 150 crore. How do you see the potential of the farm sector in the years to come? Around one lakh farmers are associated with Mahindra across the country. There is a certain level of comfort that comes into the farmer who is using the Mahindra brand. We are able to unify the logistics backbone into all our new businesses. The way I look at it, five years from now, the agribusiness will become a significant revenue and profit generator for Mahindra & Mahindra. When the agri division started at the end of 2010, it had a revenue of about Rs 100 crore, which has grown to about Rs 600 crore in four years. The agri sector is small compared with the auto sector, which contributes about Rs 60,000 crore. But it has huge potential to grow in the future. The potential in the sector is so huge that 30 to 40 per cent growth is possible if we continue to grow each new vertical and enter new segments. AUGUST 2015 value chain. Would you briefly touch upon the company's new forays in the agriculture sector? M&M has a joint venture with Belgium-based Univeg to develop a supply chain and sell fresh fruits in the domestic and international markets under the Saboro brand. It also has a joint venture with Dutch company HZPC to produce high-quality seed potatoes for both domestic and exINDIA BUSINESS JOURNAL port markets. We will soon start trade with Kenya this year by importing pulses and exporting rice. M&M recently launched a mustard oil brand, NuPro, as a pilot project in West Bengal. It will also kick off its dairy business soon, most probably in Madhya Pradesh. Similarly, the company will start its own crop care formulation plant in about three months. In the next few years, we are going to consolidate these segments and become 15

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