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October 2015

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CONTENTS YOUR GATEWAY TO INDIA INC. OCTOBER 2015, Rs 35 EDITOR AMIT BRAHMABHATT ASSISTANT EDITOR SHRIVATSA JOSHI 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 TESTING TIMES Easing bottlenecks, rekindling demand, kick-starting stalled projects, the government has many battles ahead to get the faltering economy back to life. 28 Viewpoint ..........4 UN’s new development goals News Round-Up ...........6 A brief on news, tie-ups, appointments and awards Spotlight ..........12 The SEEPZ Surprise: SEEPZ is defying the general gloomy trend among SEZs in more than one way. MSME ..........16 Smothering Policies: The present norms of tackling NPAs are killing small enterprises, turning people jobless and converting assets into scrap. Telecom ..........20 Big Booster: New spectrum sharing and trading norms provide huge impetus to the ailing telecom sector. Policy ..........24 The New Regime: A shift from profit-sharing model to one based on revenue sharing is likely to kindle renewed interest in the dormant oil and gas sector. Face To Face ..........26 "Quality sets us apart from the rest": Harish Sheth, Chairman & Managing Director, Setco Automotive Markets ..........34 Merger Gains: The SEBI-FMC marriage could bring investors, volumes and life back into the commodity futures market. Straight Talk ..........36 "We'll add 50 more stores by 2020": Krish Iyer, President & CEO, Walmart India INDIA BUSINESS JOURNAL Irrigation ..........38 The Big Question: Unlike past projects, can the ambitious Pradhan Mantri Krishi Sinchayee Yojana deliver the desired results on time? International Business .....40 A Viable Option: India can tap the potential of the CLMV region to correct its lopsided trade deficit with China. Corporate Report ..........42 Short-Term Pain: Sun Pharma gears up to take a hit on its FY16 profit as it integrates Ranbaxy with itself and sets the stage for a glorious run. Management Mantra ..........44 "Encourage team work": Anupam Mathur, Head (Sales & Marketing), Timex Group India 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 - To The Brink And Back - No Ordinary Disruptions - The Rich Employee 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 4 Issue date October 1-31, 2015 Released on October 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 - Ashwani Lohani, CMD, Air India - Perovskite - Spiritual Corner: Science of Karma Hot Seat ..........54 Dr Loveleen Kacker, CEO, Tech Mahindra Foundation OCTOBER 2015 3

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VIEWPOINT New Goals For A Better Planet I The new goals tackle the world's biggest problems, from eradicating poverty to reducing inequality. Now, the hard task for India, like the rest of the world, is to get down to the business of converting these lofty ideals into concrete actions on the ground. There is a need to have a strong mechanism to popularise the goals down to the last village and develop a foolproof system to implement and monitor their progress from time to time. 4 OCTOBER 2015 t was a historic occasion late last month as the United Nations (UN) unfurled a new agenda to make the world a better place to live. Leaders and diplomats from the 193 UN member States stood and applauded loudly as an ambitious 15-year plan - Sustainable Developments Goals (SDGs) - was approved and adopted. The document, titled Transforming Our World: The 2030 Agenda For Sustainable Development, outlines 17 broad goals and also sets 169 specific targets. The SDGs tackle the world's biggest problems, from eradicating poverty to preserving the planet to reducing inequality. They also include ensuring healthy lives and quality education for all, clean water, sanitation and reliable modern energy as well as making cities safe and promoting economic growth and good governance. The 17 non-binding SDGs succeed the eight Millennium Development Goals (MDGs) adopted by world leaders 15 years ago. Critics opine that the new goals are too broad and lack accountability. They do acknowledge that the SDGs are well intentioned but range from grandiose (ending hunger) to peripheral (promoting sustainable tourism) to impossible (full and productive employment and decent work for all). Yet a few optimists point out that the MDGs had been thrust on the developing world by a group of developed countries. In contrast, the SDGs have been negotiated for the past three years with all member States of the UN playing a significant role in the discussions. As the world prepares to achieve the new goals by 2030, it would be prudent to look back and see how it fared in terms of reaching the old goals. As expected, the track record is not so flattering. Only one of the eight MDGs halving the number of people living in extreme poverty - has been achieved, primarily due to economic growth in China. At least one other goal - halving the proportion of people without access to clean water - is close to be achieved, and there are three more months until the MDGs deadline expires. As the world turns enthusiastically to tackle the new goals, it cannot afford to ignore the ground realities. To start with, it will cost anywhere between $3.5 trillion and $5 trillion every year until 2030 to achieve these noble goals. The hefty expenditure, though imperative, would undoubtedly be onerous amid the global economic slowdown. But be that as it may, the world should push forth to reach these goals as their long-term benefits far outweigh their shortterm costs. Addressing the august audience at the UN General Assembly last month, Prime Minister Narendra Modi welcomed the SDGs and reiterated the country's commitment to eliminating poverty. Interestingly, India's own goals, such as housing and electricity for all, drinking water in all houses and road and digital connectivity, by 2022 align with the UN's new goals. Besides, the hallmark year for achieving many of India's goals - 2022 - marks 75 years of the country achieving its independence and is almost in the middle of the 2015-30 SDG period. Now, the hard task for India, like the rest of the world, is to get down to the business of converting these lofty ideals into concrete actions on the ground. The government needs to more than simply adopt the goals on paper. There is a need to have a strong mechanism to popularise the goals down to the last village, get people to own these goals and develop a foolproof system to implement and monitor their progress from time to time. Or else, India - and the world too - will only end up moving from one set of goals to another every 15 years with no concrete results. INDIA BUSINESS JOURNAL

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NEWS ROUND-UP MISCELLANEOUS MAT relief for foreign portfolio investors In a big relief to FIIs, the government last month accepted recommendation of a highlevel panel that Minimum Alternative Tax (MAT) should not be imposed on overseas portfolio investors retrospectively. Finance Minister Arun Jaitley noted that the panel headed by Law Commission of India Chairman A P Shah had submitted its final report on the issue of applicability of MAT on capital gains made by FIIs prior to April 1, 2015. He added that the report had been accepted and said that an amendment to the Income Tax Act to reflect the same would be made soon. put the total investments finalised during the meet at Rs 2,42,160 crore. The investment proposals have come through 98 MoUs, with manufacturing accounting for Rs 1,04,286 crore, energy Rs 1,07,136 crore and rest of the investment spread across a range of sectors. Generic drug market to double to $27 bn by 2020 Tamil Nadu (TN) Global Investors Meet 2015 that concluded last month not only exceeded its target but tied up more investments than the State had done Manufacturing, energy hold sway at TN meet The UP meet gets Rs 33,000-cr investment proposals A daylong investors' summit organised by the Uttar Pradesh government in Mumbai last month was able to attract about Rs 33,000 crore of investment proposals from various sectors into the northern State. Presiding over the meet, Uttar Pradesh Chief Minister Akhilesh Yadav assured the best infrastructure facilities in the State, including uninterrupted power, to industries and enterprises. "We have signed investment intentions worth Rs 32,963 crore, resulting in an employment generation of more than 1,50,000 people," Mr Yadav added. The chief minister disclosed that many top Indian and global companies, such as Toshiba, Reliance Jio, Godrej Agrovet, ITC and Idea Cellular, were either setting up new facilities or expanding existing ones. through similar MoUs in the last two decades. Announcing the numbers at the valedictory function of the two-day event, Tamil Nadu Chief Minister J Jayalalithaa The domestic generic drug market may touch $27.9 billion by 2020 from the current $13.1 billion on the back of USFDA approvals to Indian pharmaceutical companies and many drugs losing their patent status, says a study. Generics would account for 85 per cent share in the domestic pharmaceutical market by 2020, fuelled by cheap labour, patent cliff of blockbuster drugs and prevalence of lifestyle diseases, according to the study by industry body ASSOCHAM and market research firm RNCOS. Generic drugs currently account for 75 per cent of the domestic pharmaceutical market by value. APPOINTMENTS Hasmukh Adhia, a former financial services secretary, has taken charge as revenue secretary. Anjuly Chib Duggal, who was corporate affairs secretary until recently, assumed office as secretary in the Department of Financial Services. The Automotive Component Manufacturers' Association of India (ACMA) has appointed Lucas-TVS Joint Managing Director Arvind Balaji and Mark Exhaust Systems Chairman and Managing Director Rattan Kapur as 6 OCTOBER 2015 INDIA BUSINESS JOURNAL

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Verbatim... Geojit BNP launches trading platform Selfie Geojit BNP Paribas' customdesigned trading and investment platform, branded Selfie, was launched by stock market investor Rakesh Jhunjhunwala last month. The trading platform gives users absolute control over their investments with timely research inputs to make sound investment decisions. The company said that Selfie was the first of its kind in India to have an exhaustive range of features on a single platform. Apart from the Selfie Web release, the company also launched its feature-rich tablet edition. The tablet's exclusive edition for Android and iOS is available in app stores for download. a presentation on filming in Iceland in Mumbai last month, drawing the attention of the Indian film and television industry to many benefits of shooting in Iceland. Mr Ibsen disclosed that Iceland would provide Indian filmmakers with a single-window solution with a range of varied professional services. He also added that producers could get reimbursement of 20 per cent of their production cost for shooting in the country. MISCELLANEOUS "We need moderate nominal interest rates that satisfy not just vocal borrowers but also silent savers." Raghuram Rajan GOVERNOR, RBI Gujarat tops businessfriendly States' list invited Indian television and film industry to shoot in the picturesque European country with a number of facilities and incentives. Thorir Ibsen, the ambassador of Iceland in India, provided president and vicepresident of ACMA respectively for 2015-16. Shashidhar Sinha, the CEO of IPG Mediabrands, and I Venkat of Eenadu have been unanimously elected as chairman and deputy chairman of the Audit Bureau of Circulation respectively. Iceland woos Indian film, TV producers Iceland has Gujarat has topped a World Bank-compiled ranking of Indian States for bringing in reforms to improve ease of doing business. The western Indian State, three other BJPruled States and one led by a party ally occupied the topfive places on the list. Gujarat got a score of 71.14 per cent. However, the score was short of the minimum 75 per cent needed for a leadership status. Chandrababu Naidu-headed Andhra Pradesh was second on the list, followed by the central Indian States of Jharkhand, Chhattisgarh and Madhya Pradesh, all ruled by the Bhartiya Janata Party. "The leverage level should be like blood pressure in the body. It should neither be too high nor too low. Both are injurious to health." S S Mundra DEPUTY GOVERNOR, RBI "You have to be a quasi-optimist to do business in India." Mayank Ashar MD & CEO, CAIRN INDIA "Ease of doing business is still a slogan in India." Irfan Razack CMD, PRESTIGE GROUP TIE-UPS The NSE has entered into an MoU with the Stock Exchange of Mauritius for knowledge sharing and developing mutual synergies for growth and development of both the bourses. INDIA BUSINESS JOURNAL Centre has further eased FDI norms by allowing partlypaid shares and warrants as eligible capital instruments. This means an Indian company looking to bring in funds can now issue such instruments without any approval. Earlier, the consolidated FDI policy had stipulated that these instruments could be issued to a non-resident only after approval through the government route. Now, non-residents can be issued warrants The "Exporters cannot blame free trade agreements for their own lack of competitiveness in the international markets." Rita Teaotia UNION COMMERCE SECRETARY "At current prices, the toughest challenge is exploration and production in deepwater gas fields." D K Sarraf CMD, ONGC OCTOBER 2015 7

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NEWS ROUND-UP CORPORATE Cipla has agreed to buy two US-based companies InvaGen Pharmaceuticals and Exelan Pharmaceuticals for $550 million (about Rs 3,630 crore). The acquisition, Cipla's second in 80 years, will increase its footprint in the US generics market, bringing into its fold an expanded portfolio, a manufacturing base and a research centre. The US is billed as the world's largest pharmaceutical market, according to IMS Health. But Rs 11,000-crore Cipla is a late entrant in the US, a market that has been the mainstay for Indian drug majors for over several years now. Cipla snaps up 2 US cos for Rs 3,600 cr Drug-maker Australia for about Rs 23 crore cash. It will also receive further staggered payments based on the LME copper price. The deal is expected to be completed by the end of next month. The mine was put under care and maintenance in April 2013 after copper prices crashed below the cost of production. JSW buys Himachal Baspa for Rs 9,275 crore Sajjan Jindalcontrolled JSW Energy has said that it has fully acquired Himachal Baspa Power Company, a subsidiary of Jaiprakash Power Ventures, for Rs 9,275 crore. JSW has also signed an agreement to buy a 500-mw thermal power plant in Bina, Madhya Pradesh. The proceeds will help Jaiprakash Power Ventures and its parent Jaypee Group pare their huge debt levels. The deal, in the works since November 2014, gives JSW Energy a foothold in the hydroelectric business as Himachal Baspa runs the 300-mw Baspa II and the 1,091-MW Karcham Wangtoo hydroelectric projects on the Sutlej in Himachal Pradesh. conventional white sugar, the company is planning to roll out more such products. Sugar companies are competing on volumes and pricing in conventional sugar. EID Parry is keen on product differentiation as a competitive edge. The company was among the earliest to launch branded sugars, beginning with refined sugar over 15 years ago. Arvinds enters cosmetics, eyes Rs 500-cr sales Arvind Lifestyle is targeting Rs 500-crore turnover in five years from cosmetics brand Sephora, owned by Moet Hennessy Louis Vitton (LVMH). Arvind Lifestyle, known for retailing textile brands, last month announced entry into the cosmetics sector with franchise agreement with Sephora to manage its operations in India. Arvind plans to open about 45 Sephora stores across 15 cities in five years. Arvind will take over four existing Sephora stores, managed by DLF, and also open new stores beginning next year. Kesoram sells unit to JK Tyre for Rs 2,230 cr Singhania family-promoted JK Tyre has agreed to acquire a tyre manufacturing unit from BK Birla's Kesoram Industries for Rs 2,200 crore. The acquisition will help JK Tyre, the country's third-largest player by revenue, to strengthen its position in the industry and enter the two- and threewheeler tyre markets. Kesoram Industries will be able to reduce its debt, which currently stands at about Rs 4,000 crore. The company has reported losses for the last four years due to high interest burden. With the deal, JK Tyre's capacity will go up by 27 per cent to 25.4 million tyres a year. Hindalco arm sells copper mine to Lighthouse Aditya Birla Minerals, a subsidiary of Hindalco Industries, has signed a binding agreement with Lighthouse Minerals Holdings to sell the Mt Gordon Copper mine in subsidiary of Vedanta, has irrigation systems (MIS). Balco to close down Korba units by December Balco, a APPOINTMENTS Mike Omar, the CEO of Reliance Global Energy Services, a subsidiary of Reliance Industries, has taken charge as president of business development. Rahul Gugaliya, a former executive of Godrej Properties and Kolte Patil Developers, has joined Suyojit Group, a Nashikbased diversified business conglomerate with interests in real estate and infrastructure development, as its CEO. US cult bike-maker HarleyDavidson has appointed Vikram Pawah as managing director of its India operations. TIE-UPS Tata Motors has roped in subsidiary Tata Technologies to optimise its capabilities and also accelerate new product development. Starwood Hotels & Resorts Worldwide has tied up with Palazzio Hotels & Leisure to launch its first ultra-luxury brand, St Regis, in Mumbai. Singapore's wealth fund GIC and DLF Home Developers, a wholly-owned subsidiary of DLF, have formed a projects-specific joint venture with GIC investing INDIA BUSINESS JOURNAL AWARDS Priyanka Behera, the CSR head of RSB Transmissions, recently received the CSR Excellence Award on behalf of her company from Haribhai Parthibhai Chaudhary, the minister of state for home affairs, at a function in Pune. Jain Irrigation Systems has won six top exporter awards of Plexcouncil, Mumbai, for 2013-2014 and 2014-2015 for its PVC foam sheet, pipes and hoses, drip Parry is betting on increasing its product range of branded, value-added sugar to gain an edge over competitors in the conventional sugar business. Launching Parry's Amrit, a semi-processed cane sugar, as a healthier alternative to EID Parry focusing more on branded sugar EID 8 OCTOBER 2015

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begun the official procedure to close down its sheetrolling division and foundry in Korba, Chhattisgarh. The closure of the rolling mill is in the backdrop of a crash in global aluminium prices and prohibitive cost of coal to run its power plants. The shutdown of the rolling division is also a part of a restructuring exercise by Balco. The closure will result in loss of around 1,000 direct and indirect jobs. Mirchi, has won 17 radio frequencies, while Anil Ambani's Reliance Broadcast Network has grabbed 14 new radio frequencies. Music Broadcast, which operates Radio City, has won 11 frequencies. CORPORATE InSite buy to boost Sun Pharma's US business A Godrej Consumer buys out Chilean company Godrej Consumer Products (GCPL) will be acquiring the remaining 40 per cent stake in Chilean hair colour and cosmetics company Cosmetica Nacional to gain full control of the company. The company did not give financial details of the deal. GCPL, a part of the Godrej Group, had in January 2012 acquired a 60 per cent stake in Cosmetica Nacional. The company has added that the buyout is in line with its strategy to enter new geographies, first with a joint venture and then take full control of the asset after Rs 1,990 crore in the JV. Auto component-maker Bagla Group has inked a strategic pact with Italy's Fontana Group to scale up fasteners business in India. Anil Ambani-backed Reliance Defence has entered into a partnership with Abu Dhabi Ship Building to construct warships such as frigates and destroyers for Persian Gulf nations. Dr Reddy's Laboratories has entered into a pact with Australia's Hatchtech to commercialise the latter's Xeglyze Lotion, a head lice product, in the US, Canada, INDIA BUSINESS JOURNAL HUL sells Modern, exits bakery business Hindustan Unilever (HUL) has exited the bread and bakery business by selling the Modern brand to Nimman Foods, owned by private equity fund Everstone Capital. While the companies did not disclose the consideration, analysts estimate that HUL's bread and bakery business is worth Rs 250 crore. Modern Foods was the first PSU to be sold under the government's disinvestment programme. In January 2000, Hindustan Lever (HUL's earlier avatar) had paid Rs 105.45 crore for a 74 per cent stake in the PSU with a commitment to invest an additional Rs 20 crore to revive the company. it has learnt about the company. channels. After about a month long e-auctioning process, the government last month allocated frequencies to the winners of the first batch of the private FM phase-III channels. The auctions have earned the government Rs 1,157 crore. Entertainment Network, which operates Radio Taiwan and Mitsui & Co Asia Pacific of Singapore to set up its third automotive steel processing centre in Pune with an investment of Rs 110 crore. HCL Technologies has collaborated with IBM to develop internet of things solutions for customers jointly. Steel Strips Wheels, a leading manufacturer of automotive steel wheels, has tied up with South Korea's Kalink Co to come up with a new alloy wheel manufacturing facility in Mehsana, Gujarat, FM radio auction nets government Rs 1,157 cr Entertainment Network, DB Corp, Reliance Broadcast, Music Broadcast, HT Media and Rajasthan Patrika were among the winners in the auction for 97 FM radio India, Russia and the CIS, Australia, New Zealand and Venezuela. Jubilant DraxImage, a subsidiary of Jubilant Life Sciences, has signed an agreement with Australia's Cyclopharm for exclusive licence to market imaging agent Technegas in the US. Mindtree has partnered with US-based MetricStream to develop solutions to help finance companies meet their regulatory compliances. Mahindra Auto Steel, a subsidiary of Mahindra Intertrade, has tied up with China Steel Global Trading Corporation of Sun Pharma subsidiary has entered into an agreement to acquire US-based eyecare company InSite Vision. The equity value of InSite Vision's acquisition was pegged at $48 million in addition to related debt. InSite Vision focuses on developing speciality ophthalmic products. The acquisition will help Sun Pharma establish a branded ophthalmic business in the US. The acquisition gives Sun Pharma access to four late-stage branded ophthalmic products in the US. Under the terms of the merger, the US subsidiary of Sun Pharma will make a tender offer for all of the issued and outstanding common stock of InSite. ESDS gets Uptime's TierIII Certification Uptime Institute has awarded ESDS, a managed cloud and data centre service provider with subsidiaries in the US and the UK, with a Tier-III Certification of Design for its upcoming Navi Mumbai data centre. ESDS is perhaps the first managed cloud and managed data centre service provider in India to receive recognition from Uptime Institute, a global data Centre authority. Considering the rapidly evolving IT scenario, which is further backed by the Digital India initiative, certified data centre facilities, such as ESDS, will ensure reliability and availability for enterprise businesses. OCTOBER 2015 9

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NEWS ROUND-UP PUBLIC SECTOR be buying a 15 per cent stake in a unit of Russia's OAO Rosneft, the world's largest publicly traded oil company, for $1.3 billion (around Rs 8,635 crore). The acquisition in CSJC Vankorneft, an OAO Rosneft subsidiary, will give OVL, the global arm of Stateowned oil and gas explorer ONGC, access to the crude oil being produced by the company. Vankorneft operates the Vankor field in the Turukhansky district of Krasnoyarsk province, which has an output of 22 mtpa. Vankor is Russia's secondlargest oilfield by production, accounting for 4 per cent of the country's totaL production. OVL buys 15% in Rosneft arm for Rs 8,635cr ONGC Videsh (OVL) will IOCL Chairman B Ashok board for taking part in solar power projects announced by various States. The company is implementing a 10-mw solar photovoltaic project in Neyveli at an estimated cost of Rs 77.89 crore, and the plant is ready for commissioning. The company is also setting up a 25-mw solar power project in Barsingsar, Rajasthan, at an investment of Rs 167.29 crore. SBI sees recovery in asset quality in Q2 State Bank of IOCL unveils Rs 1,75,000-cr capex for 7 years Indian Oil High Court last month disposed of ONGC's petition, accusing Reliance Industries (RIL) of deliberately disgorging natural gas worth Rs 30,000 crore from the PSU's well in the Krishna-Godavari (KG) basin. The court asked the Centre to take a decision once it gets the report of an expert panel set up to examine the issue. Justice R S Endlaw directed the government to take a decision within six months of receiving the report and added that if no action, as required, was taken, ONGC could revive its petition as the PSU had raised apprehension over the matter. Court dismisses ONGC's plea against RIL The Delhi Corporation (IOCL) will be investing Rs 1,75,000 crore over the next seven years to expand output by 54 per cent to around 100 mtpa from the current 65 mtpa. "We have a capex plan of Rs 1,75,000 crore over the next seven years. Out of this, Rs 50,000 crore will be for brownfield expansion at existing facilities," reveals IOCL Chairman B Ashok. The country's largest oil refiner will also be investing Rs 35,000 crore into marketing, Rs 15,000 crore in pipelines, Rs 35,000 crore in exploration and production, Rs 30, 000 crore in petrochemical projects and Rs 7,000 crore in gas. hyper-competition in the market, BSNL's announcement may also let private operators to offer higher speed at lower cost. offers a minimum speed of 512 kbps, and the move is a part of its efforts for revival. BSNL is losing customers in mobile as well as landline phones to private operators. The company lost about 1.78 crore wireless and over 20 lakh wireline subscribers between March 2014 and March 2015. Given the NLC ventures into solar plants across States India (SBI) is hopeful of its asset quality improving in the July-September 2015 quarter. According to Rajnish Kumar, the managing director (compliance and risk) of SBI, "The stress seen in asset quality of earlier quarters is likely to level out." In the April-June quarter of the current financial year, the country's largest lender's fresh slippages from standard to bad loans stood at Rs 7,318 crore, down from Rs 9,932 crore in the first quarter of FY15. The bank's asset quality improved with gross bad loans declining to Rs 56,420 crore from Rs 60,434 crore a year ago. Neyveli Lignite Corporation (NLC) recently received inprinciple approval from its executive of GAIL India, has taken the reins of LNG importer Petronet LNG as its managing director and CEO. Singareni Collieries clocks record output APPOINTMENTS Atul Sobti will take charge as chairman and managing director of State-run power equipment-maker BHEL on January 1. Dinesh Kumar Likhi, the production and marketing director of Mishra Dhatu Nigam, has been promoted as its chairman and managing director. Prabhat Singh, a former TIE-UPS Two public sector undertakings Bharat Dynamics and Electronics Corporation of India have joined hands to develop missile electronics and weapon support systems for major defence projects. will be offering a minimum broadband speed of 2 mbps to its customers from October 1 onwards at no extra cost. The State-run telecom company currently BSNL's 2-mbps broadband speed from Oct 1 BSNL Singareni Collieries Company (SCCL) has produced 25.20 mt of coal up to September in the current financial year as against 18.88 mt it achieved during the corresponding period last year. The company has said that this is the best-ever production in the history of the State-owned mining company. SCCL has supplied 26.35 mt of coal to its consumers during the first half of the current financial year against 22.85 mt during the same period of 2014-15. This also marks a record in supplies during the history of the company. INDIA BUSINESS JOURNAL 10 OCTOBER 2015

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RBI rolls out new norms for pricing loans The RBI has issued draft guidelines, prescribing a uniform method for banks to arrive at interest rates for providing loans. The guidelines are aimed at ensuring that banks' lending rates are more sensitive to changes in the monetary policy rates. The central bank has said that the marginal cost of funds should be arrived at by taking into account all sources of funds other than equity. Cost of deposits should be calculated using the latest interest rate payable on deposits (current, savings and term) of various maturities. The norms could ring in transparency in pricing of loans. Baroda Mudra Card to fund unfunded Bank of Baroda MD Export-Import Bank of India (EXIM bank) is planning to get shipping companies and shipyards to float special purpose vehicles (SPVs) for each ship, with investors, including banks, investing in the financial instruments issued by these SPVs. If the plan goes through, it could change funding mechanism in the country to acquire or build ships. Exim Bank will seek to establish a Maritime Financing Facility (MFF) at the International Financial Services Centre (IFSC), Ahmedabad, in association with commercial banks. New funding system in works to build ships The and CEO Ranjan Dhawan launched the Baroda Mudra Card last month. The card can be utilised as a debit card for withdrawals from cash credit or overdraft account at ATMs and point of sales. The card is a part of the Pradhan Mantri Mudra Yojana (PMMY), which was launched by the Central government in April to fund the unfunded. This scheme aims at non-farm enterprises in manufacturing, trading and services, whose credit needs are up to Rs 10,00,000. Bank of Baroda will not obtain collateral securities for Mudra loans. by a bank beyond the permissible period. Banks can permit trade credit up to $20 million equivalent per import transaction. The allin-cost of such rupeedenominated trade credit should be commensurate with prevailing market conditions. PPP model, IDBI Bank expects its business to double in the next three years. launched Gold Monetisation Scheme (GMS) and Sovereign Gold Bonds Scheme (SGBS). The two schemes have been designed to ensure that idle gold is used for productive purposes, and that use of gold as a savings instrument gets a viable replacement. There will be no compromise on Know Your Customer (KYC) norms in the schemes. For the GMS, the minimum quantity of gold required is 30 grams. The Centre has sweetened the deal for those opting to purchase SGBS by promising to extend indexation benefits and Capital Gains Tax exemption on redemption of such bonds. FINANCE Fullerton arm eyes Rs 500-cr home loan biz Two schemes unveiled for effective gold use The government last month IDBI to set up 10 branches in Asia, Africa IDBI Bank is focusing on project appraisal and advisory services, mainly for upcoming public-private partnership (PPP) projects. The decision is expected to consolidate the public sector lender's position further as a development finance institution. Having an operational branch in Dubai's International Finance Centre, IDBI Bank now plans to have at least 10 branches in the next three years, covering Africa, the Gulf Cooperation Council and Asia regions. Following the Centre's push for infrastructure development - particularly urban infrastructure - under the APPOINTMENTS Ravi Venkatesan, the former chairman of Microsoft India, has taken over as chairman of Bank of Baroda. Sanjeev Mantri, who handled rural markets for ICICI Bank, has assumed charge as executive director of ICICI Lombard GIC. Fullerton India Credit Company, owned by Singapore's State-run investment company Temasek Holdings, aims to disburse around Rs 500 crore through its home loan arm in 2016-17. Fullerton's whollyowned subsidiary, Fullerton India Housing Finance Company, is expected to start operations by November. The housing finance company is set to start with equity base of Rs 100 crore and expected to break even in two years. 10 companies get RBI's nod to start small banks Importers can raise trade credit in rupees The RBI has decided to allow resident importers to raise trade credit in rupees with riders. The credit can be raised after entering into a loan agreement with a foreign lender. The RBI has said that the trade credit period for import of capital goods can be up to five years from the date of shipment. No rollover or extension can be permitted INDIA BUSINESS JOURNAL TIE-UPS ICICI Lombard GIC has tied up with Thrissurbased Catholic Syrian Bank to sell insurance products to the bank's customers. Ten entities, including Ujjivan Financial Services and Equitas Holdings, last month got the RBI's approval to set up small finance banks to provide basic banking services to small farmers and micro industries. The other entities to get the RBI's nod are Au Financiers, Capital Local Area Bank, Disha Microfin, ESAF Microfinance, Janalakshmi Financial, RGVN Microfinance, Suryoday Micro Finance and Utkarsh Micro Finance. OCTOBER 2015 11

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SPOTLIGHT The SEEPZ Surprise SEEPZ is defying the general gloomy trend among SEZs in more than one way. hese are turbulent times for Indian exporters. The country's monthly shipments have contracted for nine straight months, thanks to poor demand in global markets. The monthly data come on the back of year-on-year 1.2 per cent decline in overall merchandise exports during 2014-15. The gloom on the export front has taken its toll on the country's special economic zones (SEZs), which too have borne the brunt of a global economic slump. But amid rising despair, SEEPZ, an SEZ in the heart of the country's commercial capital, Mumbai, is sparkling with hope. Like all other SEZs, SEEPZ too shares the pain that the country's exporters are experiencing, with a mar12 OCTOBER 2015 T SHRIVATSA JOSHI SEEPZ: A Snapshot Origin 1973-74 Location Mumbai Total area 111 acres Major sectors Gem and jewellery, electronics hardware and software No. of units 316 FY15 exports Rs 16,272 crore Total employment 93,000 ginal drop in its overall shipments for 2014-15. However, there is a glimmer of hope even in this darkness. A chunk of exports from SEEPZ is literally shining, with gem and jewellery shipments (Rs 13,150 crore in FY15) - accounting for over 80 per cent of its total exports (Rs 16,272 crore in FY15) - gaining lustre in otherwise-dismal times. The 183 jewellery units in SEEPZ among the 316 total operating units have outshined their peers by posting 3 per cent growth in jewellery exports in 2014-15 even as the country's gem and jewellery exports shrank by 0.6 per cent during the same period. "The units in SEEPZ supply jewellery to global retail chains, like Wal-Mart. Global chains won't dump these reliable, high-quality, long-term suppliers just because of recession," reasons out N P S Monga, the development commissioner (DC) of SEEPZ, who is in charge of all SEZs in INDIA BUSINESS JOURNAL

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SPOTLIGHT Besides gems and jewellery, many reputed IT companies are operating in SEEPZ, and the segment is the second-highest export earner in the zone. Maharashtra, Goa, Diu and Daman. The high credentials of jewellery units in SEEPZ further stand out as about 90 per cent of their exports are headed to the USA and Europe -the regions that have borne the brunt of global economic slump. Mr Monga one of the country's senior-most officers of the Indian Trade Service, belonging to its first batch of 1986 adds that the gem companies in his SEZ are ultra-modern jewellery-mak- ers, using high-tech machinery that can replicate ornaments manifold even as it maintains intricate designs and high quality. No wonder, SEEPZ alone accounts for a whopping 21 per cent share of the 23 per cent US jewellery market share that India commands! Refreshing change The SEEPZ story was not all about glittering gems and jewellery when it began operations way back in 1973- 74. Starting off as Santacruz Electronics Export Processing Zone (better known as SEEPZ), the special zone was especially designed to push electronics exports. A few electronics hardware and software units did set up shop in SEEPZ, and quite a few of them flourished too. Like their gem and jewellery counterparts, some of the electronics units have built a formidable reputation for themselves. Mr Monga points out how a unit, which has been operating in the zone for the past 18 years, is an important supplier to US giant Cisco. But all said and done, the electronics segment has not been able to make its mark in SEEPZ. And the reasons are several for its dismal performance, right from India's own lack of prowess in electronics manufacturing to severe competition from China and other countries. Despite the impediments, 102 electronics hardware and software units are operating in SEEPZ, and the segment is the second-highest export earner in the special zone. Upgraded to an SEZ from an export processing zone in 2000, SEEPZ management and ensures that waste is turned to wealth. The special zone has roped in Stree Mukti Sanghatan, a women's organisation, to collect waste from all its units and canteens. The waste from the canteens is fed into its bio-methanisation plant, converted into gas and re-used as energy to run the canteens. The solid waste collected by the organisation is segregated and sold to recyclers, while only a small portion of waste is handed over to the municipal corporation. With several green islands, a natural lake, rooftop solar plants connected to the grid and an overall eco-friendly environment, the SEZ stands out as a shining example of sustainable development. INDIA BUSINESS JOURNAL Unique Development Model ver the past four decades, SEEPZ has scripted an inspiring story. Economic prosperity apart, the special zone is instrumental in ushering in social harmony, progress and eco-friendly, sustain- O With several eco-friendly measures, SEEPZ stands out as a shining example of sustainable development. able development. The special zone is playing a vital role in women's empowerment, with over 50 per cent of workforce across its units consisting of women. SEEPZ is in the forefront of waste Bio-methanisation plant Rooftop solar plant 14 OCTOBER 2015

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is one of the seven SEZs (the others being Kandla, Cochin, Noida, Falta, Vishakhapattnam and Chennai) promoted by the Central government for export promotion. Spread across a sprawling 111 acres, the SEZ boasts of an enviable location, world-class infrastructure and business-friendly environment. In recent years, the special zone in the heart of Mumbai has shed its government image and donned a corporate identity. Incidentally, much of the recent changes at SEEPZ have coincided with Mr Monga's tenure which began from July 2012. The former additional director general of foreign SEEPZ alone accounts for a whopping 21 per cent share of the 23 per cent trade has brought a whiff of fresh air US jewellery market share that India commands. into SEEPZ, which, a few years ago, instances of land grabbing and impoMeanwhile, boom or bust, SEEPZ was quite staid and officious. has been growing unfazed. It makes a sition of Minimum Alternative Tax The grand lobby at SEEPZ aptly (MAT) and Dividend Distribution Tax lot of business sense to be located in reflects this changed atmosphere. Be- (DDT) on SEZ developers, have SEEPZ. The special zone, hardly 5 km sides, the friendly, inviting nature of ended the dream run of SEZs. from Mumbai international airport's SEEPZ officials, a definite timeline cargo complex and 30 km from the for a range of services on offer and bustling port, scores high in terms a digitised system enabling online of logistics. Besides, it offers a facilities, like online applications unique combination of urban infraand clearances make the special structure, skilled labour and vast zone truly an attractive business talent pool. destination. Naturally, there is a big demand "Single-window clearance is the for setting up units in SEEPZ. USP (unique selling proposition) of "There is no vacant space in the SEZs. All Central government clearSEZ. We are expanding our infraances have been delegated to destructure. A seven-storey building velopment commissioners. But is coming up which will be ready States are gradually delegating by next March. Plans are underway powers, especially those related to to demolish one of our existing labour and taxation," notes buildings and erect a multi-storey Mr Monga, who earlier handled the building by making use of a higher Anti-Dumping Duty Cell in the Floor Space Index," discloses Union Ministry of Commerce and Mr Monga. Industry. SEEPZ is surprisingly defying On an expansion the general gloomy trend among SEEPZ chief N P S Monga: The concept of SEZs, designed to Expanding to cater to rising demand SEZs in more than one way. It has usher in export-based growth in a no doubt registered healthy export "MAT and DDT are minor irritants. growth in the past two most difficult hassle-free environment, got a major fillip a decade ago with the SEZ law However, for entities in export busi- years for exports. Besides, it is on an coming into force. The special zones ness, SEZs are the best as they facili- expansion spree when many SEZs soon became a rage across the coun- tate ease of doing business. The across the country are closing down. try with almost every business house single-window clearance in SEZs may Perhaps SEEPZ, with its unique busientering the nascent segment. Unfor- not be in a perfect form, but many of ness and socio-economic tunately, a few factors, like the global the clearances are granted from a model, could lead the way in reviving economic slowdown of 2008, a few single platform," stresses Mr Monga. the SEZ story. INDIA BUSINESS JOURNAL OCTOBER 2015 15

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