India Buniess Journal October 2014

 

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India Buniess Journal Online Magazine October 2014

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CONTENTS YOUR GATEWAY TO INDIA INC. OCTOBER 2014, 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 HYDERABAD: B SATYAM KOLKATA: DIPANKAR SEN COVER STORY CAN INDIA BE WORLD'S WORKSHOP? Many big hurdles stand in the way of the country's transition from Make In India to Made In India. 22 News Round-Up A brief on news, tie-ups, appointments and awards ...........6 MSME Watch ..........20 Focused approach : The MSME Ministry has drawn up five priorities to get small industries back on track. Banking ..........40 Reining in: The RBI unveils tough norms for ARCs to bring in moderation in the overheated asset reconstruction market. Face To Face ..........42 "No trust deficit with Centre now": Saurabh Patel, Gujarat's Minister for Finance, Energy and Petrochemicals Global Wrap-Up ..........44 A quick round-up of news and current affairs across the world Readers' Lounge ..........46 Catch up with new book launches - Corporate Fraud - Not Just An Accountant - Zero To One Policy ..........14 What next?: As the Soviet-era Planning Commission gets a quiet burial, questions abound over the structure, powers and functions of the new body. Corporate Reports 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 X, No 4 Issue date October 1-31, 2014 Released on October 1, 2014 EDITORIAL ASSOCIATE Payback time: A set of winning strategies, centred on mergers and acquisitions, is yielding rich dividends to Godrej Consumer Products. ..........16 Events Calendar ..........48 An update on national and international exhibitions Star Talk ..........50 Forecast by Bejan Daruwalla Knowledge Zone ..........52 - Sachin Bansal and Binny Bansal, founders of Flipkart - Silicon - Spiritual Corner: Worries More the merrier: With a bouquet of new channels and big expansion plans, Zee Entertainment Enterprise is bullish on the fragmented audience for faster growth. ..........18 B-SCHOOL PLACEMENT SURVEY JOBS GALORE Placement season 2014 breaks a two-year spell of sluggish hiring with many companies recruiting aggressively. 28 4 OCTOBER 2014 Viewpoint Modi's diplomatic coup ..........54 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 INDIA BUSINESS JOURNAL

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NEWS ROUND-UP FINANCE ICRA sees 40% of CDR loans sinking Credit rating agency ICRA has opined that 35 to 40 per cent of the Rs 2.5-lakh crore worth of loans being recast by the Corporate Debt Restructuring (CDR) Cell may fail. The rating agency cites absence of any improvement in the operating environment and expected softening of interest rates not happening as some of the reasons for the failure of recast loans. ICRA has observed that resolution of issues in power, infrastructure, iron and steel and construction sectors, which together account for half the CDR cases, may improve the chances of an exit from CDR. director. Such branches will have officers specialised in credit disbursement to facilitate speedy lending. They will act as one-point solution to small corporate entities. The bank, which is clocking an average annual growth of 35 per cent in MSME lending, is targeting the same growth this year too. Guarantor too can be named wilful defaulter The RBI has said that if a guarantor refuses to pay lenders despite having sufficient means to pay the dues, banks can declare such a guarantor as a wilful defaulter. The RBI has also said that bankers need not knock on the doors of guarantors after having exhausted all remedies against ICICI's card-less cash withdrawal at ATMs ICICI Bank recently announced its card-less cash withdrawal service that allows its customers to transfer money from their account to anyone in India with a mobile number. The recipient can withdraw money round the clock without using a debit card from over 10,000 ATMs of ICICI Bank across the country. The sender - an ICICI Bank customer - first needs to register the recipient's name, mobile number and address. The sender will get a four-digit verification code while the recipient a 6-digit reference code over SMS. The recipient can withdraw cash from almost all ICICI Bank ATMs by entering his reference code and other details. the principal debtor. The rules are from prospective effect. consultant, EY (formerly Ernst & Young), to evolve as a new-age bank. The measures are aimed at shedding its old-generation image. The 88-year-old bank has inducted professionals from various public and private sector banks at the top management level. With focus on fine-tuning its facilities to attract the youth, the bank is strengthening its technology-enabled products, such as internet and mobile banking. PSBs will need Rs 2.2 lakh cr by FY19 Moody's has said that the 11 public sector banks (PSBs) rated by it will need to raise up to Rs 2.2 lakh crore in external capital to meet Basel-III norms by March 2019. This assessment is based on an assumption of a moderate recovery in economic growth and a gradual decline in new non-performing asset formation from the currently elevated levels. According to this, the PSBs will have to mop up between Rs 1.5 lakh crore and Rs 2.2 lakh crore as tier-I capital by FY19, notes the Global rating agency. These PSBs represent 62 per cent of net loans in the Indian banking system. LVB hires EY to turn into new-age bank Lakshmi Vilas Bank (LVB) has strengthened its top management and signed on a Mumbai-based RML Information Services for providing SMS-based services to its over 5 lakh farmer customers. Punjab National Bank has signed an MoU with Origo Commodities India, a post-harvest solutions and warehouse management services company, to provide financing via warehouse receipts issued by the latter. The bank has also tied up with Honda Motorcycle and Scooter India to provide retail finance for the latter's twowheeler customers. APPOINTMENTS American Express has appointed Manoj Adlakha as chief executive officer of its Indian business unit, American Express Banking Corp India. Andhra Bank unveils tech-based facilities Andhra Bank has firmed up plans to open 450 new branches across the country during this financial year. The bank, now a lead bank for Andhra Pradesh, has leveraged technology to expand its facilities. The State-owned lender, a pioneer in credit cards, has opened customer service kiosks near its branches. Apart from the ATMs, these kiosks will house self-cash depositing machines and pass book printing machines to make all basic banking services available to customers round the clock. Besides, these kiosks have trained personnel who will guide customers. INDIA BUSINESS JOURNAL Syndicate Bank to open 50 MSME branches Syndicate Bank plans to open 50 mid-corporate branches with specialised officers exclusively to cater to micro, small and medium enterprises (MSMEs) by this financial year-end. The Manipal, Karnatakaheadquartered bank's midcorporate branches can lend up to Rs 100 crore and beyond under direct monitoring of field general manager and executive TIE-UPS NABARD and NetApp have come together to enable India's cooperative banking sector to provide basic rural banking facilities, such as anybranch banking , NEFT and ATM-based transactions. State Bank of Mysore has signed an MoU with 6 OCTOBER 2014

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NEWS ROUND-UP MISCELLANEOUS Supreme Court scraps 214 of 218 coal blocks The Supreme Court last month quashed allocation of 214 out of 218 coal blocks which were allotted to various companies since 1993. The apex court saved only four blocks - one each belonging to NTPC and SAIL and two allocated to Reliance Power's ultra mega power projects from being cancelled. The court granted six months breathing time to mining companies to wind up their operations in the coal blocks and allowed the Centre to take over operation of 42 cancelled blocks which are functional. The order will pave the way for the Centre to put the remaining 172 blocks for auction. The verdict will have an adverse impact on the power sector and banks and affect investors' sentiment. unsolicited sovereign credit ratings on India. Its peers Moody's and Fitch have already raised their outlook to positive. The positive rating will improve investors' confidence and improve companies' access to international funds. Following the rating, the Finance Ministry announced a Rs 8,000-crore cut in overall market borrowing, indicating its commitment to fiscal consolidation. Mangalyaan enters Mars' orbit, India in elite club India last month created space history by successfully placing its low-cost Mars spacecraft in orbit around the red planet. Watched by Prime Minister Narendra Modi, ISRO scientists successfully slowed down the speed of Mars Orbiter Mission (MOM) spacecraft Mangalyaan for it to slip into a smooth orbit around the Mars after almost a year-long voyage. With the success of Mangalyaan, India has become the first country to go to Mars in the very first attempt. European, American and Russian probes have managed to orbit or land on the planet but after several attempts. The mission aims to study Mars' surface and mineral composition and scan its atmosphere for methane, a chemical strongly tied to life on earth. stable from negative. The rating acknowledges efforts by the government to maintain fiscal discipline while reviving the economy and drumming up investment. The agency affirmed the BBB long-term and A-3 short-term Madhya Pradesh grows fastest in 2013-14 Madhya Pradesh outpaced all the major States to top the economic growth charts with a scorching 11 per cent growth in 2013-14. Incidentally, it was the same year when India recorded its second successive year of sub-5 per cent growth in GDP. The highlight of the high growth in the central Indian State is despite its industrial growth slipping to a new low during the year under review. Led by largely an agricultural boost and expansion by the services sector, Madhya Pradesh S&P upgrades India rating outlook to stable Standard & Poor's (S&P) has lifted India's rating outlook to APPOINTMENTS McCann Worldgroup has elevated Prasoon Joshi as its chairman for the AsiaPacific region, bringing both Greater China and Australia under his purview. Narendra Ambwani, the director of Agro Tech Foods, has been elected as the chairman of the Advertising Standards Council of India. The United Planters' Association of Southern India has elected Vijayan Rajes of MSP Plantations and N Dharmaraj, the CEO and director of Harrisons Malayalam, as 8 OCTOBER 2014 INDIA BUSINESS JOURNAL

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Verbatim... MISCELLANEOUS dislodged Bihar from the top position. Bihar was pushed to the third spot by Uttarakhand. BSE gets SEBI, CCI nod for USE merger The SEBI and the CCI India have approved the merger of the United Stock Exchange of India (USE) with the BSE, making it the first merger of two exchanges in the country. For the merger to go ahead, however, the exchanges will have to secure approval from the Bombay High Court as well where the proposal is pending. The merger of the struggling currency bourse USE will see BSE adding 27 State-run banks and some private and foreign lenders as its shareholders. The move will boost BSE's own currency trading business. most tumultuous phase from 1983 to 1993 and had been associated with various capital market reforms and institutions in various capacities. During his term at BSE's helm, he took on the highly undisciplined broking community at a time when there was no regulator, such as the SEBI, to tackle such situations. “Democracy, demographic dividend and demand will power India to greater heights.” Narendra Modi PRIME MINISTER India signs nuclear deal with Australia India recently inked a bilateral civil nuclear agreement with Australia, enabling the country to secure uranium from Australia to meet its energy requirements. The deal was announced by visiting Australian Prime Minister Tony Abbott after talks with Prime Minister Narendra Modi last month. Talks had been under way since Australia lifted a longstanding ban on selling uranium to power-starved India in 2012. India operates 20 nuclear reactors with a capacity of 4,780 mw. The government is planning to increase the nuclear capacity to 63,000 mw by 2032. CEO and chief investment officer of Birla Sun Life Mutual Fund, has been elected as AMFI's vicechairman. Amit Mathew, the resident editor of Malayala Manorama, has been elected as chairman of Audit Bureau of Circulations (ABC) for FY15 while Shashidhar Sinha, the CEO of IPG Mediabrands, has been elected as deputy chairman of ABC. Former McKinsey India chief Adil Zainulbhai has been appointed as chairman of the Quality Council of India. "When you talk to an Indian company about OTC, they get worried. But the US OTC market is very different, SEC-regulated and electronic-traded." Jason Paltrowitz MD, OTC MARKETS GROUP Former BSE ED Mayya passes away M R Mayya, 83, a doyen of the Indian capital market and former executive director of the BSE, passed away in a hospital last month. Mr Mayya had served the BSE during its president and vice-president of the association respectively for 2014-15. A N Sahay, the CMD of Mahanadi Coalfields, has been elected the new president of the Mining, Geological and Metallurgical Institute of India. Viji Krishnan, the former COO of BNP Paribas AMC India, has taken over as the interim CEO of the fund house. Sundeep Sikka, the CEO of Reliance Mutual Fund, has been re-elected as chairman of the Association of Mutual Funds in India (AMFI) for a second term. A Balasubramanian, the INDIA BUSINESS JOURNAL "If we consider all brokers as crooks, since a few are, the country will not able to attract retail investors into the equity markets." C J George MD, GEOJIT BNP PARIBAS "The very reason for our being is that we looked at the new world and new technologies." CHAIRMAN HCL TECHNOLOGIES Shiv Nadar "India produces about 200 mt of horticultural products but barely has 30 mt of cold storage capacity." R Purushothaman PRESIDENT DANFOSS INDUSTRIES OCTOBER 2014 9

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NEWS ROUND-UP PUBLIC SECTOR DoT sets deadline for BSNL-MTNL merger The Department of Telecom (DoT) has fixed June 2015 as deadline for merging Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTBL). The proposal has been hanging fire for three years in the face of vehement opposition by employees of the two State-owned companies. However, the DoT has instructed the human resource managers at the two telecom PSUs to engage with employees and find a solution to their concerns. The HR departments have been asked to submit a report by January next year, which will be followed by consultations with various employees' unions in March. exploration company, is expected to use it for both domestic and global operations. The State-run miner is on course to achieve production of 32 mt per annum by the end of 201415. It currently produces about 30 mt of iron ore from three fully-mechanised mines - Bailadila (Chhattisgarh), Donimalai and Kumaraswamy (Karnataka). ONGC sets 2018 target for east coast output Oil and Natural Gas Corporation (ONGC) is targeting 2018 to start production from its east coast oil and gas block, adjacent to RIL's KG-D6 block. The public sector oil explorer has been facing flak from the government for delay in bringing the east coast finds in the KG-DWN98/2 block on stream. The area has been in the news because ONGC's allegation of RIL drawing gas from its find. The two companies have asked Texas-based DeGolyer and MacNaughton to assess ONGC's claim. Of the 15 prospective projects, ONGC has already completed seven and eight are under various stages of implementation. CSL's new dry dock to build LNG ships Cochin Shipyard (CSL) has received an approval from the Shipping Ministry to invest Rs 1,200 crore for setting up a dry dock to build LNG carriers. CSL will also be building cargo and passenger vessels as well as dredgers for the inland water transport sector. The company is looking at equity markets, debt funds and internal accruals to raise funds for the investment. The new dry dock will be much larger than the existing one. The State-run shipbuilder is in the process of reaching a tie-up with French engineering firm GTT for construction of LNG vessels. for retail investors. Visakhapatnam. The Andhra Pradesh government has allotted 1,200 acres to the State-run thermal power producer for the project that has been in the pipeline for the past several years. The project, which entails an outlay of Rs 20,000 crore, is based on imported coal and requires about 19.8 mt of coal per annum. NTPC has also signed up another MoU with the State government to set up of a 1,000-mw solar park in Anantapur district at an investment of Rs 7,000 crore. Nod for CIL, ONGC, NHPC share sale The Union government has decided to dilute its stake in three PSUs - ONGC, CIL and NHPC - giving its disinvestment programme a big push. At the current market price, the government can mobilise around Rs 43,000 crore, close to this year's disinvestment target of Rs 43,425 crore. The government is set to offload about 11.36 per cent of its holding in NHPC, 10 per cent in CIL and 5 per cent in ONGC through Offer For Sale of Shares route. About 20 per cent of the share on sale will be reserved NRL, Chempolis in pact for ethanol study Numaligarh Refinery (NRL) signed an agreement with Finland-based Chempolis last month for carrying out a feasibility study for production of ethanol from bamboo biomass. According to the MoU, NRL and Chempolis will jointly undertake an assessment study for ascertaining availability of the required feedstock in north-eastern India. The two companies will coordinate with various government and private agencies to identify the main feedstock supply areas in the North-East and explore tieups with prospective suppliers to access feedstock for the proposed plant. HCL to foray into copper products market Hindustan Copper (HCL) is set to form a joint venture with a domestic player to make value-added products. The company plans to get into the about Rs 600-crore copper product market through a minority joint venture to manufacture downstream copper products, such as rods, sheets, strips, foils and extrusions. The joint venture initially aims at 10,000 tonnes of copper rods a year. HCL did not name its joint venture partner that it has already identified. INDIA BUSINESS JOURNAL TIE-UPS ONGC Videsh has entered into an MoU with Argentina's YPF to explore opportunities for cooperation in the upstream sector in Argentina, India and other countries. NMDC ups exploration to meet FY15 target NMDC is intensifying mineral exploration in its mines to expand its output. The country's largest iron ore miner is also looking at tapping new mines on its own or in joint venture with State governments. The company, which recently bought a substantial stake in an Australian mineral NTPC plans 4,000-mw Andhra plant NTPC has drawn up plans to set up a 4,000-mw ultra mega power project in Pudimadaka near 10 OCTOBER 2014

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NEWS ROUND-UP CORPORATE Cipla products to hit US market next year Cipla, which is pursuing an aggressive overseas expansion plan, expects to have its products in the US by 2015. The pharmaceutical company, which recently launched anti-asthma inhalers in Germany and Sweden and is gearing up to unveil many more products, is in the process of building its own team in the US. A Cipla release adds that the company is at "the middle of the beginning" of the blueprint it had drawn up early last year. The company plans to have a geographically balanced portfolio, with Europe accounting for about 20 per cent of its total business by 2020. Now, JSW Energy to buy Jaypee's power plants The Jaypee Group has inked a binding pact with Sajjan Jindal-led JSW Energy to sell three projects, including two hydropower plants 300 mw Baspa-II hydropower plant, 1,091 mw Karcham Wangtoo hydropower plant and 500 mw Bina thermal power plant. This is the Jaypee Group's third attempt to strike a deal for its power assets. The announcement comes a day after Jaiprakash Power's proposed sale of three hydropower projects to Reliance Power fell through. In July, the Jaypee Group had announced that Abu Dhabi National Energy Company (TAQA) had withdrawn from nearly Rs 10,000-crore deal to acquire its two hydropower projects. hospitality sector. The company currently has an installed capacity of 30 mw of solar power. The company is targeting to take its revenue from Rs 1,500 crore to about Rs 2,500 crore over the next two years. business in India. Petrochemicals has set up a joint venture in Australia with local partners to provide mining services and will invest about Rs 160 crore over the next two years. Deepak Fertilisers' subsidiary, Smartchem Technologies (STL) recently announced the launch of its overseas venture for mining services in Brisbane, Australia, as a part of its forward integration initiative. STL has set up Platinum Blasting Services, a joint venture with local Australian partners, to provide valueadded services in mining. STL will hold 65 per cent in the JV while the local partners will own the remaining 35 per cent. Maruti, Suzuki see gains in rupee royalty Maruti Suzuki India will now pay royalty to its parent Suzuki Motor in rupees instead of Japanese yen. This, according to analysts, will benefit both the companies. Since its inception, the Indian company has been paying royalty in yen. Maruti will not have to hedge any more as the royalty will be paid in rupees. Since Suzuki will reinvest it in India, in the Gujarat plant, this will be a win-win situation for both. Analysts note that the major benefits of this move will be known only after the Gujarat plant starts in 2017. Mahindra First Choice on expansion drive Multibrand chain Mahindra First Choice Wheels is planning to expand its chain of network of retail franchises rapidly and expects to take it past company. Earlier, he was a whole-time director of the company. Warren Harris, the former president and chief operating officer of Tata Technologies, has taken over as its CEO and MD. Puma India has appointed Abhishek Ganguly as its new managing director. Tata International, the global trading and distribution arm of the Tata Group, has appointed G K Pillai, the former Union home secretary, as its chairman. Deepak Fertilisers starts mining JV in Australia Deepak Fertilisers and APPOINTMENTS Ramesh Tainwala has taken over as CEO of Samsonite, the world's largest travel luggage company. Japan-based information and communication technology provider Fujitsu has appointed Andy Stevenson as managing director for India and territory leader for West Asia and India. Rampraveen Swaminathan will assume charge as president of International Paper India from November. TVS Motor Company has appointed Sudarshan Venu as joint managing director of the automobile Fortis to sell Singapore arms for Rs 655 crore Fortis Healthcare has decided to divest its 100 per cent stake in healthcare service provider RadLink-Asia and its arm RadLink Singapore to Medi-Rad Associates for over Rs 655 crore. Owned by brothers Malvinder Singh and Shivinder Singh, the executive chairman and executive vicechairman of Fortis Healthcare respectively, Fortis has been on a divestment spree since last year to cut down debt. HJJ Healthcare Berhad will buy the companies, which are engaged in providing diagnostic and molecular imaging services. The latest sale is in line with Fortis' decision to focus on its core hospital and diagnostics Jakson to invest Rs 700 cr in solar projects Jakson Power has outlined the company's plans to invest about Rs 700 crore in setting up solar power farms, taking the company's installed capacity to 200 mw over the next two years. A part of the Jakson Group, Jakson Power is engaged in manufacture of diesel generator sets, solar energy-based products, solar power farms and the TIE-UPS Snapdeal has formed a 50:50 joint venture with Den Networks, India's largest cable TV distribution 12 OCTOBER 2014 INDIA BUSINESS JOURNAL

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CORPORATE the 450 mark by the financial year-end from the current 380. Mahindra's expansion drive coincides with fast growth in the country's usedcar market, which is outpacing the new car market in terms of volumes. The used-car market is growing at about 20 per cent per annum, and the company sees this trend continuing. The other trend likely to emerge is gradual shift of the used-car market from the unorganised to the organised sector. Jabong to be merged with 4 global firms Investment AB Kinnevik and Rocket Internet, investors in Jabong, will merge the Indian online fashion retailer with four other firms to create a new global fashion e-commerce group. The new entity, to be called Global Fashion Group (GFG), will combine five fashion e-commerce businesses, namely Dafiti (Latin America), Jabong (India), company, to extend its reach to television home shopping audience. GenNext Ventures, a venture capital fund sponsored by RIL, has signed an agreement with Microsoft India to incubate start-ups and set up innovation hubs in the country. IT solutions provider Tech Mahindra has signed an agreement with Bombardier Aerospace to provide engineering solutions to the Canadian company. Apollo Hospitals has tied up with US-based AliveCor to provide mobile electrocardiogram devices to patients suffering from arrhythmias. Tata Motors has joined Cognizant to buy TriZetto for Rs 16,200 cr Cognizant Technology Solutions will acquire US-based healthcare IT service provider Trizetto for $2.7 billion (about Rs 16,200 crore) in cash and debt. The deal makes it the largest acquisition in value terms among the WITCH group of Technology companies Wipro, Infosys, TCS, Cognizant and HCL. With the Trizetto deal, Cognizant's North America revenues are expected to exceed those of TCS. The deal vaults Cognizant to the second slot in terms of overall revenues after TCS and gives it a pipeline into what is becoming an increasingly consolidated healthcare system marketplace in the US. Lamoda (Russia & CIS), Namshi (West Asia) and Zalora (South-East Asia & Australia). The deal is expected to close later in the hands with UK-based Microlise to launch advanced telematics and fleet management services in the Indian market. Budget carrier IndiGo has entered into a Rs 15,384crore deal with Industrial and Commercial Bank of China for financing purchase of over 30 aircraft. Drug-maker Sun Pharmaceutical has entered into an exclusive licensing agreement with Merck for the worldwide rights of the latter's experimental psoriasis drug Tildrakizumab. Reliance Jio Infocomm, a unit of RIL, has entered into a tower-sharing deal with GTL Infrastructure. year. GFG, which will focus on growth markets in 23 countries, will bring economies of scale in sourcing international brands. chain of Hyderabad-based Hetero Med Solutions for Rs 146 crore. The deal will see the hospital chain taking over 320 outlets of Hetero Med in Telangana, Andhra Pradesh and Tamil Nadu. Apollo plans to have speciality pharmacies that focus on specific diseases, such as diabetes, and Hyderabad will be the testing ground for the initiative. Hetero Med is selling its drug retailing arm to focus on the core business of manufacturing bulk drugs and finished dosages. Kingfisher gets stay on wilful defaulter tag Kingfisher Airlines has said that it has secured a stay from the Calcutta High Court on United Bank of India (UBI) declaring the airline and its directors, including promoter Vijay Mallya, as wilful defaulters. The airline spokesperson said that bank had been directed to file its affidavitin-opposition by November 3 and that the petitioners had been directed to file their reply a week thereafter. The next date of hearing has been fixed for November 10. UBI, which had lent Rs 430 crore, was the first lender to declare KFA promoter Vijay Mallya and its three other directors as wilful defaulters. Mastek to demerge insurance business IT solutions company Mastek is set to demerge its insurance business into a new company, Majesco, which will focus on software products. Mastek shareholders will get one equity share of Majesco for every equity share held in Mastek. The new company will be eventually listed on the Bombay Stock Exchange and the National Stock Exchange. The key rationale behind the move is for each part of the business to grow and capitalise on the market opportunities. Mastek, which is known as MajescoMastek in the US, will retain its existing solutions businesses. Pidilite acquires Blue Coat's adhesive business Pidilite Industries has acquired the adhesive business of Blue Coat for Rs 264 crore. Ahmedabadbased Blue Coat is engaged in manufacturing and selling wide range of adhesives and textile chemicals. Blue Coat, which has a manufacturing plant in Baddi in Himachal Pradesh, has brands such as Bluecoat Plus, Bluecoat Marine and Bluecoat Aqua, among others. OCTOBER 2014 Apollo Hospitals to buy Hetero's drug stores Apollo Hospitals Enterprises is acquiring the drug retail INDIA BUSINESS JOURNAL 13

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POLICY CHANDRA SHEKHAR he Planning Commission is being relegated to history. Prime Minister Narendra Modi broke this news in his maiden Independence Day speech. The Modi government will be replacing the institution with a new body. It is still not clear what shape the Plan panel's successor will take. "The internal situation of the country and the global environment has changed. If we have to take India forward, States will then have to be taken forward. The importance of the federal structure is more today than it was in the last 60 years," stressed Mr Modi from the ramparts of the Red Fort on August 15. The prime minister's decision to scrap the Planning Commission has created a flutter in intellectual circles. The commission has been allocating funds to States annually based on their performance of project implementation. Of course, sometimes, many other considerations - especially the political party in power in the State - other than the pure merit of performance did play a role in States getting higher allocation. However, the opponents of scrapping the Plan panel argue that not all States have the same ability to manage funds or execute projects. If the proposed body favours automatic fund allocation to States, there is no guarantee that they will spend it well in the absence of a Central oversight mechanism. Bygone era The Plan panel was set up in March 1950 to promote a rapid rise in the standard of living of people by efficient exploitation of the country's resources, increasing production and offering opportunities to all for employment in the service of the community. Greatly impressed by the erstwhile Soviet Union's planning system, the country's first prime minister, Jawaharlal Nehru, had set up the com14 OCTOBER 2014 T What next? As the Soviet-era Planning Commission gets a quiet burial, questions abound over the structure, powers and functions of the new body. mission to steer the nation's economic destiny. It was established by a Cabinet Resolution and enjoyed immense power and prestige as it had always been headed by the prime minister. Its most important function was to fix targets for sectoral growth and allocate resources to achieve them. The deputy chairman of the commission has often been a political stalwart, holding the rank of a Cabinet minister. Gulzarilal Nanda, V T Krishnamachari, C Subramaniam, P N Haksar, Manmohan Singh, Pranab Mukherjee, K C Pant, Jaswant Singh, Madhu Dandavate, Mohan Dharia and Ramakrishna Hegde were some of the stalwarts who had held the post of the deputy chairman of the Plan panel. The last deputy chairman was Montek Singh Ahluwalia. The panel was charged with the responsibility of making assessment of all the country's resources, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities. India launched the first Five-Year Plan in 1951, and two subsequent Five-Year Plans were formulated till 1965. There was a break soon after because of the Indo-Pakistan war. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of reINDIA BUSINESS JOURNAL Narendra Modi: Rebooting economic planning

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sources disrupted the planning process, and after three Annual Plans between 1966 and 1969, the fourth Five-Year Plan was started in 1969, followed by three more Five-Year Plans in subsequent years. The eighth Plan could not take off in 1990 due to the fast-changing political situation at the Centre. The years 1990-91 and 1991-92 were treated as Annual Plans. The eighth Plan was finally launched in 1992 after initiation of structural adjustment policies. For the first eight Plans, the emphasis was on the growing public sector with massive investments in basic and heavy industries. But since the launch of the ninth Plan in 1997 the emphasis on the public sector has become less pronounced Currently, the 12th Five-Year-Plan is on and will end in March 2017. Finding relevance In recent years, the commission's working has come in for criticism from many chief ministers. They have resented being called by the deputy chairman every year for approval of their State plans. "We have come to Delhi just to be told by the commission how we should spend our own money," Tamil Nadu Chief Minister J Jayalalithaa had said in 2012 after a meeting with Mr Ahluwalia. Welcoming Mr Modi's decision to do away with the Plan panel, former Planning Commission member Bimal Jalan notes: "It is very good idea. Planning has become an outdated concept now. There is a need to modernise it. We have to see the blueprint of the new concept. But change was very much required." Expressing a similar opinion, another former Plan panel member Abhijit Sen opine that Mr Modi has cleared the air about the future of the commission. "It is not still clear what the structure of the new body will be. But the Planning Commission will not be the Planning Commission it was," he adds. Describing the commission a "hangover of the Soviet era", former INDIA BUSINESS JOURNAL "It is still not clear what the structure of the new body will be. But the Planning Commission will not be the Planning Commission it was." ABHIJIT SEN Former Member, Plan Panel "Planning has become an outdated concept now. There is a need to modernise it. We have to see the blueprint of the new concept." BIMAL JALAN Former Governor, RBI Arguments Against Plan Panel Steeped in socialist-era elitism Smacked of overbearing attitude of the Centre Charged with often discriminated States based on political allegiance Accused of being a parking lot for senior bureaucrats and influential people Often setting unachievable targets not grounded in reality Cabinet minister Subramaniam Swamy has tweeted: "In 1972, I wrote that the Planning Commission needs to be restructured as a Finance Commission." Industry chamber Confederation of Indian Industry too has welcomed the decision. It notes: "We would be happy to work closely with the government to offer ideas on the outline of the new development and implementation institution." With the Planning Commission set to be a thing of the past, all eyes are now focused on its successor. Vital questions are being raised over what should be the structure, power and functions of the new institution. The government has invited comments from the public and experts, including Yashwant Sinha, the former finance minister, have held meetings with the country's top planners to elicit their views on the proposed new body. There are different ideas on the shape and structure of the new body. But it is very important to ensure that its powers and functions should be in line with the needs and requirements of the current times. It should not be a mere parking lot for senior bureaucrats and people close to the government in power. Instead of making the new body top heavy, the government would do better in creating a thinking laboratory to come out with new ideas and models to test the impact of the ongoing and new policies on the lives of people. It should be an economic think-tank, manned by economists, sociologists and experts from other walks of life. The 20th-century, socialist-era institution should make way for the 21st-century, new India. OCTOBER 2014 15

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