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NEWSLETTER 12 Pages 22nd Nov 2012 – 28th Nov 2012 www.xedintellect.com

BUSINESS NEWS

ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4

CORPORATE INTELLIGENCE 5 NEWS ANALYSIS 6 NEO CORNER 11

NEWS DIGEST…

IN BRIEF

PERSONALITIES OF

THE WEEK

CORPORATE INTELLIGENCE

BSE Sensex

18,842.08 (Up 305.07 points)

Gold Prices

Rs.32, 975/10 gm (as on 27 Nov)

ECONOMIC

INDICATORS

From December, 5% ethanol to be mixed in petrol

COVER STORY

Direct cash transfer of

subsidies through Aadhaar from January 1

GLOBAL NEWS

Hollande’s nationalisation threat to Mittal

Kirthiga Reddy

… a weekly news bulletin

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MISCELLANEOUS NEWS

Join us on Facebook…

Deep

Kalra

INDIAN PHARMACEUTICAL COMPANIES

PART TWO

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Sponsored stories are an advertising product category used by social media sites. In relation to Facebook per se, Sponsored stories are messages coming from friends about them engaging with a user‘s (individual‘s) Facebook Page, app or event. These stories are already eligible to be in the user‘s news feed. An advertiser (business, organization or individual) has paid to show the activity as a sponsored story so there‘s a better chance that the user will see it. They are displayed higher in the news feeds or on the right-hand side of Facebook. A sponsored story can be created when someone likes a page; likes or comments on a page‘s post; RSVPs to a page‘s event; votes on a page‘s question; checks in to a place; uses an app or plays a game; and likes or shares a website. Sponsored stories abide with the privacy settings of the user. Only the people with whom the user is sharing his/her activity can see the sponsored story linked to his profile. Sponsored stories are very different from Facebook ads. With Facebook Ads, an advertiser creates a message they want to share and chooses who they want to reach. Ads are sometimes paired with news about actions your friends have taken (such as liking a Page or RSVPing to an event).

BSE Sensex - 18,842.08 (Up 305.07 points) as on 27 Nov Source: Hindu Business Line The 30-share BSE index Sensex was up 305.07 points (1.65 per cent) at 18,842.08 on heavy buying by funds and retail investors on the back of global cues. Bharti Airtel (up 5.22 per cent), Sterlite (3.56 per cent), HDFC (2.79 per cent), HDFC Bank (2.69 per cent) and Hindalco (2.55 per cent) were the top performers. Gold Prices - Rs.32, 975/10 gm (Up Rs. 25) as on 27 Nov Source: NDTV Profit Gold prices rose by Rs. 25 to set a new record of Rs.32, 975 per 10 gm today on brisk seasonal buying amid firming global trends. Gold prices gained Rs. 575 in the last five trading sessions on brisk buying by stockists and retail customers for the ongoing marriage season. A firming global trend further supported the prices, they said.

Post-recession demand has bounced back more slowly than usual in rich countries It has taken four years for domestic demand across the OECD, a rich-country club, to return to its level at the height of the recession—far longer than previous recoveries, according to the organisation's latest Economic Outlook. The report, released this week, blames the usual suspects for sluggish growth: uncertainty, fiscal consolidation and the ongoing euro crisis. It notes that the boost to the Japanese economy from reconstruction after the Fukushima disaster is fading. And in euro-zone countries (which are all, bar Cyprus and Malta, part of the OECD) higher taxes and economic uncertainty have hit demand for durable goods like fridges and furniture particularly hard. Car sales, for instance, fell 23% in the third quarter compared with the same period last year. The other side of the Atlantic may offer hope in 2013, though. American households, some of which will be pulled out of negative equity by rising house prices, are likely to save a bit less and spend a bit more.

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Life seems to be coming full circle for British carmaker Aston Martin. After being owned in the 1950s and 60s by Yorkshire tractor magnate David Brown, it is set to be part owned by Mahindra & Mahindra, the Indian automotive giant and world‘s top producer of farm tractors by volume. Mahindra & Mahindra (M&M), which also owns South Korea‘s SsangYong Motor Company, has bid around $400 million for a 50% stake in the iconic brand. Although Aston Martin‘s Kuwaiti owners Investment Dar and M&M have not officially confirmed the developments, reports suggest that M&M has already trumped rival Italian bidder InvestIndutrial and a deal may be finalized as early as this weekend. If completed, it would be the second acquisition of a luxury car brand by an Indian company after Tata Motors‘ buy-out of Jaguar Land Rover in 2008. It is not clear whether the buyout bid from M&M was helped by a lack of interest from other major carmakers, but M&M does not seem to be bothered about it either. Bonding with the best Movie fan Anand Mahindra may love to own the company that makes James Bond‘s cars, but it is not the first time that he has tried to take over an international brand. M&M was one of the three bidders for acquiring JLR in 2008 before being outbid by Ratan Tata‘s company. After completing a majority stake purchase of SsangYong in March 2011, he was again on the scene early this year trying to buy least a part of Swedish automaker Saab, which was later bought out by a Chinese-Japanese investment group. M&M has lately been looking to spruce up its image in the SUV segment with the XUV 5OO and the Rexton models. The bid for Aston Martin can be seen in similar context taking the quest for rebranding a step further, in the luxury segment. What it means for M&M Buoyed by its success in turning around the fortunes of SsangYong Motors and the story of JLR helping Tata Motors

remain in the green, M&M would be forgiven for thinking the same about Aston Martin. The acquisition, if completed, may finally give M&M a distribution footing in the American car market where its entry has been stalled due to legal wrangling with a previous distributor. One prized asset would be the technology that goes into an Aston Martin, given that M&M has never had its hands on a luxury car maker before. The diversification in its portfolio is, not to mention, an important aspect for a group that makes farm equipments, SUVs, small transport vehicles and even two wheelers. However, the biggest gain that analysts have predicted for M&M is its image makeover, with the Aston Martin brand enjoying a cult status for long in part due to its relation with James Bond movies. The acquisition has the potential to make

the industry sit up and take notice as M&M makes its mark on the world stage. The buy would also help M&M in its domestic rivalry with Tata Motors which owns British brand JLR and may also be a ―If you can, so can I‖ moment. Markets react cautiously For all the frenzy the bid has created in the media, M&M‘s shares fell by 3.5% as news regarding the offer trickled in, after having touched a record high earlier in that day. Analysts have been largely cautious of the possible deal owing to the risk of trophy acquisitions. Some analysts have failed to see anything beautiful in the merger of an iconic car brand with a company known largely for its farm Tractors. Others have questioned whether the deal will lead to any viable synergies between Aston Martin and Mahindra‘s existing operations that would help either of the two along with the fact that Aston martin would require additional funding for its R&D. Mahindra‘s lack of experience with such a brand is also a cause of concern among many. Concern regarding Aston Martin‘s own state has also fuelled skepticism, with the company having a lot of debt although not facing losses. One additional factor is the uncertainty over who will have operational control over the entity if the deal goes through. Long road ahead Even as commentators analyzed the pros and cons of the deal, Investment Dar went as far as denying completely that it was considering any bids at all. There is lack of clarity on how much operational control will M&M have on Aston Martin and will that be of any benefit to it. How much of Aston Martin‘s technology will M&M be able to use also remains to be seen, given the gap between the segments they operate in. Meanwhile, the trade union representing Aston Martin workers has already supported the bid from the Indian company. However, tractors have historically been associated with famous brands with Porsche once powering German ploughmen in the 1950s and Ferrucio Lamborghini‘s name still visible on thousands of tractors. David Brown once posed with F1 driver Juan Manuel Fangio sitting in a tractor. It can be 007‘s turn next.

Kirthiga Reddy-Head of Operations, Facebook India

Web is a virtual space marked by the characteristic- Change. This trait is essential to survive in the medium. History stands evidence to the doom of the companies, giants at their peak, who failed to practice change. Some companies however irrespective of their products and services do come and prevail. Longer than most think they could. Facebook is one such name. And if there is a person who has embraced this philosophy and made a change, it is Kirthiga Reddy. Kirthiga holds a master's in business administration from Stanford University and an M.S. in computer engineering from Syracuse University. She has worked with Motorola and Silicon Graphics. At Silicon Graphics, she was the youngest director of engineering and the only woman in this role in her team. She displayed true leadership and stunned everyone at Silicon Graphics when she went beyond the call of duty for a software project and played a much larger role. In July 2010, Reddy joined Facebook as its first employee in India. India woke up to the immense potential of social networking late and vastly misunderstood it as a mere medium for social mingling in its seed years. Kirthiga was the one who married the concept of social networking with virtual marketplace and made Facebook every marketer‘s darling. Under her leadership Facebook also emerged as the platform for bringing about social justice. She tied up with Government initiatives to bring about a change in society. Through Facebook, Sangli farmers were able to reverse the price drop of turmeric. Facebook also leveraged support to NGOs like Olympic Gold Quest to groom future Olympic Champs. Since she joined Facebook in 2010, the user base went up from 8 million to over 40 million in just 2 years. India is now Facebook's third-largest market and has an average growth rate of more than one million people per month. Kirthiga wants to broaden Facebook‘s India vision through innovation and leadership. She wants to promote app developers, advertisers and global users to be a part of the process. She also wants to mentor women leaders and trek to the Everest base camp.

Deep Kalra – Founder & CEO of MakeMyTrip.com

Deep Kalra nurtured his simple idea to empower the Indian traveller, and founded MakeMyTrip, which went on to pioneer the online travel industry in India. After much research, the visionary found that the booming travel industry lent itself seamlessly to the Internet and had tremendous potential as a sector, thus MakeMyTrip.com was conceptualized. He has the demeanor of a sincere academic though he is a thorough professional with a string of successful stints with top financial players. The sharp minded leader made the travel portal the undisputed online leader within a decade, with its share of the travel market extending to more than 50% of all online sales, a fact evinced by the trust placed in it by millions of happy customers. Kalra holds a Bachelor's degree in Economics from St. Stephen's College, Delhi and a post graduation in management from IIM-A. He joined ABN AMRO after his MBA and within a year realized that ―banking was not his cup of tea!!!‖ After a three year stint, he chose to do something ―crazy‖ and switched to AMF Bowling Inc where he established and managed the company‘s South Asian Operations. The idea of bowling alleys in India in 1995 was ahead of its time with no shopping malls or multiplexes, and led to slower career growth with limited career options. As GE Capital‘s V.P. Business Development, his role was to develop and partner new distribution channels for financial products, which provided him the opportunity to be closely involved with the nascent internet industry in India. The spark to kick-off his own venture helped Kalra overcome the difficulty to escape the golden handcuffs of big corporates. He realized internet was going to change our lives fundamentally and that he shall use cutting edge technology to his advantage. Two models came to his mind – one was online stock broking, which made perfect sense given his training and experience, and the other was an online travel portal. His affinity towards the travel industry came from home, with the fact that his wife was a travel show anchor for a private TV channel, and he chose to invest in the travel portal business. It is a popular myth that Kalra jotted down his business plan for MakeMyTrip on a paper napkin with his venture capitalist friend. But contrary to the belief, the business plan was already well written when they met and that the deal was closed in a café in Crossroads Mall in Mumbai on a paper napkin. The globetrotter who has facilitated holidays for millions, states that his favourite holiday destination still remains Goa.

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“From

Hackathons to

new traditions

like Bollywood

dancing,

culture was

the fabric that

wove us

together.”

“The minute

you start

thinking you

are cool and

something big,

that’s the end.”

Ranbaxy Laboratories The company is one of the largest pharmaceutical giants in the world and was named after its founders – Ranbir & Gurbax. It is known worldwide for manufacturing and marketing generic, value added and branded medicines. Apart from this, it is also known for its active pharmaceuticals called as APIs and intermediates. The product portfolio focuses on therapeutic segment – treatment of both chronic and acute diseases. Due to aging population and changes in lifestyle, chronic diseases will outpace acute diseases in coming years. Ranbaxy has a strong product mix for the treatment of chronic diseases which gives it a competitive advantage over other pharmaceutical companies. Started as a medicines distributor in 1930‘s, Ranbaxy saw a rapid expansion when Parvinder Singh (father of Shivinder & Malvinder Singh of Apollo Hospitals) took over in 1960‘s. In 2008, Ranbaxy was acquired by Japanese pharmaceutical company - Daiichi Sankyo in a deal worth $4.6 billion. In 2011, it got an approval from the US Food and Drug Administration to sell generic version of Pfizer‘s cholesterol cutting drug – Liptor in the US. This year, Ranbaxy has recalled drugs like Pantoprazole and Liptor from the Netherlands and the United States due to impurities.

Cipla Limited

Cipla is known worldwide for developing low cost drugs for AIDS/HIV. The company has been globally lauded for its socially-conscious approach of developing medicines affordable to every individual on this planet. Cipla, in the span of last 78 years, has achieved many feats in developing low cost drugs for chronic diseases like cancer and AIDS among others. The drug manufacturer also works with other institutes and companies on consulting, engineering, quality control, technological transfer & plant management. Cipla was the first company to break the monopoly of global

pharmaceutical giants selling anti-cancer and anti-AIDS drugs. The company launched AIDS treatment drugs for just $100 per year; generally the cost for treatment of AIDS was around $12,000 per annum. Cipla‘s move helped millions of middle class and under-privileged individuals from Third World Nations gain access to the medicines. In 2012, Cipla again created stir in the pharmaceutical industry, by reducing prices of cancer drugs by 75%. In the past decade Cipla has radically decreased the cost of many biotech drugs & for this achievement it received Thomson Reuters India Innovation Award in 2012.

Sun Pharmaceutical Sun Pharma is the largest Indian pharmaceutical company with respect to market capitalization. It was started in the ‗80s as a manufacturer of drugs for psychiatric treatments. It slowly increased its portfolio in other therapeutic areas and today the company is the third largest drug manufacturer in India with a strong presence in the generic medicines segment worldwide. The Sanghvi family holds majority stake in the company which created a record when it was oversubscribed by 55 times during its IPO in 1994. The company‘s growth can be attributed to numerous inorganic acquisitions of domestic and international companies like Knoll Pharma, Caraco Pharma, Milmet Labs, Valeant Pharma etc. A part of Sun Pharma‘s long term strategy focuses on sensibly priced acquisitions every year. Currently, it has over 20 manufacturing units in three countries and earns around 60% of its revenues from international markets. Sun Pharma‘s acquisition of US based Taro Pharma in 2010 has doubled its business in the country and added a range of medicines in its dermatological product line.

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1) Esprit loses its Spirit in India – BS/ET IMPACT: Hong Kong based international retailer Esprit has recently ended its agreement with Madura Mills and will shut its operations in India owing to annual losses of up to ₨ 25 crores. The decision comes in the wake of mounting differences between executives of Aditya Birla Nuvo owned Madura Mills and Esprit. Both the companies had started an alliance in 2005. Experts state that there was mismatch between expectations and plans of both the companies. The reasons for the brand‘s failure in India were wrong positioning of products, over-pricing and over scaling of stores. Esprit is globally a mid-segment brand, but due to high dollar to rupee conversion rate and high imports duty, it was priced as a premium product. Madura Mills was eager to renew the contract and had chalked out a ten year business plan which included local manufacturing, expansion in Tier II cities and reducing the prices. However, Esprit‘s management had other plans; they did not agree to the new terms and decided to wrap up the business by end of this month. KEY PLAYERS: Esprit, Madura Mills, Aditya Birla Nuvo WHY IT IS IMPORTANT? The Indian retail business has witnessed several international brands breaking up their alliances with local companies. UK‘s Mark & Spencer ended its alliance with Planet Retail and formed a JV with Reliance, few years ago. Italy‘s GAS ended its collaboration with Raymond and started cash and carry operations. Tommy Hilfiger is set to acquire a majority stake in its 50:50 JV with the Murjani group. 2) GlaxoSmithKline to invest around ₨ 5,215cr in Indian arm – TOI/Livemint.com

IMPACT: British pharmaceutical giant GlaxoSmithKline (GSK) has recently announced that it will acquire another 31.8% stock in its Indian arm GlaxoSmithKline Consumer Healthcare (GSKCH) in an open offer. GSK currently holds 43.2% stake in GSKCH and the latter is an associate company of the pharma giant. GSK has offered to buy back shares at a premium of 28% for ₨ 3,900 per share. After the buyback GSK will hold 75% stake in GSKCH making its Indian

arm a subsidiary. GSK earns around 40% of its revenues through emerging markets and the company is bullish about its growth in the coming years. The company has made a similar buyback offer in its Nigerian arm to increase its

shareholding up to 80%. GSK India is growing at a CAGR of 17% since the past few years and has earned revenues which are in excess of ₨ 2,800 crores. The company‘s famous brands include Horlicks, Boost, Iodex, Eno & Crocin among others. GSK has a strong distribution network in the country covering around 2.7 lakh retailers. Although, slowdown in the global economy has resulted in substantial reduction in consumer spending, the executives of GSK are optimistic about the company‘s growth and plan to launch new products in 2013. Till now, GSK has focussed on building its existing brands & adopted organic growth route. KEY PLAYERS: GlaxoSmithKline, HUL, P&G WHY IT IS IMPORTANT? Until now, GSK was the only global pharmaceutical giant

holding less that 51% stake in its Indian arm. P&G holds 70% stake in its Indian subsidiary. Similarly, Nestle holds 63%; Unilever holds 52% and Colgate-Palmolive has 51% stake in its respective Indian companies. 3) Jet Set – Go Etihad. Jet Airways to sell 24% stake to Etihad Airways – Moneycontrol.com/TOI IMPACT: The Indian government‘s FDI reform to allow foreign airlines to hold 49% stake in domestic carriers has got its first benefiter. Naresh Goyal owned Jet Airways is in talks with Gulf carrier Etihad Airways to sell its 24% stake. The deal is valued at ₨ 2,200 crores. Naresh Goyal holds 80% stake in Jet Airways, and sources claim that the promoter is

likely to sell his stake to Etihad. Cash strapped Jet is in expansion mode and needs capital urgently to realize its ambitious goals to start operating on new international routes. International air carriers are eager to invest in India but the high operating costs (jet fuel and airport charges) scare them off. This deal if signed will be a win-win situation for both the airlines. Jet Airway‘s funding issues will be resolved and Etihad will gain greater access to the Indian market. Due to mounting operational losses, Jet Airways had stopped operating flights to international destinations like Milan, Johannesburg etc. So, Etihad will acquire certain debt of Jet. In return, Jet will help route passenger traffic from all over the country to a particular hub – from where Etihad can fly them to Europe and America. KEY PLAYERS: Jet Airways, Etihad Airways WHY IT IS IMPORTANT? European carriers have shied away from entering the domestic market since the returns on investments are very low. Any international airline company is bound to make losses for a couple of years of entering into India. European carriers are accountable to their promoters and shareholders for entering a market which is loss making. This is not in the case of gulf carriers, which are funded by Arab oil barons. So Gulf carriers can take the risk of entering the domestic airline market.

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4) Walmart’s troubles continues, Top executives of Bharti Walmart under probe for bribery – ET/BS IMPACT: Five senior executives of the joint venture between Bharti Enterprises and Walmart Inc – Bharti Walmart have been suspended on allegations of bribery. These executives include the Chief Financial Officer, and the Legal Counsel team consisting of three managers and a retainer. The probe is being held by global auditing firm KPMG and American law firm GreenbergTraurig. It is not clear whether it is a common procedure to terminate the employment of executives under probe or not but the recent developments points to inappropriate practices followed by the executives in order to set up new outlets. Bharti Walmart commenced operations in 2009, with its first store in Amritsar and currently has 18 stores in India. Walmart is in the news globally since allegations of bribery first surfaced in its Mexico unit. US based

Walmart was summoned by American Securities and Exchange Commission (SEC) to investigate wrong doings in its global outlets that violates the US Foreign Corruption Practice Act (FCPA). In compliance, with the orders, Walmart started investigations into its subsidiaries in India, Brazil, China and other countries. KEY PLAYERS: Walmart Inc, Bharti Walmart, SEC, FCPA WHY IT IS IMPORTANT? News surfaced earlier this year that Walmart was lobbying with the American government for reforms in multi-retail FDI in

India. The Indian government allowed 51% FDI in Multi-brand retail few months ago much to the opposition of the cabinet members and state governments. According to Retailers Association of India, a company requires around 51 approvals from various agencies in order to start a store. Many retailers have so far admitted that they have bribed officials to get approvals and save their time. 5) Harley Davidson launches Fat Bob in India – Livemint.com/Indian Express IMPACT: US based motorcycle manufacturer Harley Davidson has launched a new bike – Fat Bob in India priced at ₨ 12.8 lakhs. Fat Bob is Harley-Davidson‘s fourteenth model in India and it is the sixth model that was assembled in its plant in Haryana. The company has a completely knocked down (CKD) unit at Bawal, Haryana. Apart from the US, Harley Davidson has assembly units only in Mexico and India. Fat Bob is priced at ₨ 8.5 lakhs in the US but the imports

duty of 110% has significantly increased the bike‘s cost in India. Given the absence of any other player in the premium motorcycle segment in India, the company can afford to charge a premium for its bikes. It‘s a brand lineage for which customers are ready to pay a premium. The company‘s MD, Anoop Prakash has also revealed plans of expanding the company‘s operations to Tier II cities and introducing new affordable bikes in 2013. KEY PLAYERS: Harley Davidson, Fat Bob WHY IT IS IMPORTANT? Harley Davidson started its operations in India two years ago and has seen a 40% growth annually. It is further looking to set up around 13 showrooms across the nation by 2015. Harley Davidson organizes Harley Owners Group (H.O.G) rallies and music concerts, which target potential buyers. So far the general response for these events is encouraging and the executives are confident of optimistic growth in the coming years. 6) From December, 5% ethanol to be mixed in petrol – Moneylife IMPACT: Ethanol is a type of alcohol-the same type of alcohol found in alcoholic beverages. Bio-ethanol is a form of renewable energy which can be produced from very common crops such as sugarcane, potato and corn. In India, ethanol is a by-product of sugarcane. As ethanol prices are lower than those of petrol, blending petrol with 5% ethanol will lower India‘s fuel import bill, cause a dent in the country‘s dependence on fossil fuels and reduce costs for Indian Oil

Marketing Companies (OMCs). According to a ministry official, ―While a litre of petrol costs around 70, ethanol costs 40 a litre. Besides, ethanol gives better mileage to the consumer. A study by Indian Oil Corporation says that it also lowers emissions cutting down pollution levels.‖ KEY PLAYERS: GoI, OMCs ethanol manufacturers WHY IT IS IMPORTANT? The Government had earlier tried to implement this move in 2007 but was unsuccessful because of sharp opposition from the Department of Chemicals (which is a major user of ethanol) who argued that it would hurt the chemical industry by diverting its share of ethanol to the OMCs. 13 out of 19 states in the country have already been using a blend of petrol mixed with 2% ethanol. To ensure that OMCs implement this rule to the ‗T‘, the Cabinet Committee on Economic Affairs (CCEA) has also

allowed OMCs to import ethanol if in-case they face any shortage of the bio-fuel (an unlikely scenario as India produced 220 crore litres of ethanol in 2010-11 and has the capacity to produce more). Ethanol manufactures are of the view that petrol prices can reduce by ₨ 3 if the central government allows 10% of ethanol to be mixed in petrol and by ₨ 7 if it

allows 20% of an ethanol-petrol blend. By this decision, India hopes to reduce its import bill which jumped by 43% and cost the Exchequer ` 726,386 crore in FY12.

7) Volkswagen to invest €50 bn in drive to be world’s No.1 – Live Mint IMPACT: To reach its long-term goals, Volkswagen is planning to invest €50 billion in manufacturing plants around the world and in building and rolling out new technology by 2015. The figure is credible because it is more than quadruple the company‘s operating profit of €11.3 billion in 2011. The investment plan also includes the newly-consolidated MAN and Porsche brands for the first time. To achieve its objective of becoming the world‘s biggest automaker by 2018, the company is increasingly focusing on China (the country‘s less developed cities are Volkswagen‘s ‗bread and butter‘) as the population does not follow any hard-core brand loyalty and are witnessing a boom in their purchasing power. KEY PLAYERS: Volkswagen Group WHY IT IS IMPORTANT? Volkswagen has not suffered as much as its rivals PSA Peugeot Citroen and Fiat in austerity hit Europe. In a shrinking European market, many car makers have slowed or shelved vehicle programmes, engine technologies and platform revamps as a result of sky rocketing fixed costs. But Volkswagen has emerged more-or-less unscathed as its‘ strong sales elsewhere has allowed it to offer ‗best of the lot‘ price deals and thus increase its share of the continent‘s car market to almost a quarter. However, in order to achieve its goal the company needs to keep a balance between its short-term costs and its need to develop new products. 8) Suzlon to recast its humongous debt – DNA/The Hindu Business Line IMPACT: Suzlon Energy is seeking to restructure 80% of its total debt which is around Rs 11,000 crore. The wind turbine manufacturer has been under heavy losses and defaulted on foreign currency convertible bonds just a month a ago. Still the domestic lenders have accepted its proposal on restructuring of debt. According to the sources, in addition to an eight-year payback period, the company has sought a two-year moratorium on all repayments and interest costs. Analysts have however claimed that this will leave very little incentive for equity investors. Generally, getting a

moratorium on interest payment is hard as it kills the incentive of banks to lend. Usually, the restructuring involves a moratorium on the principal, and even this temporary loss for banks is offset by charging additional 200-300 basis points of interest from the clients. At the same time, there are reports suggesting that Suzlon is discussing reduction of interest on the loans from about 14 per cent now to 11 per cent. KEY PLAYERS: Suzlon Energy WHY IT IS IMPORTANT? Suzlon‘s projects in 32 countries around the globe

have more than 20 GW of installed capacity. The company started its operations in 1995. It has turbines ranging from 300 KW to the largest commercially available offshore turbine of 6.15 MW. However, being an export-oriented company, it has incurred losses in the last three years due to weakness in the European and US economies. 9) Frost & Sullivan: India may become 2nd largest crude steel producer - ET/BS/The Hindu Business Line IMPACT: Frost & Sullivan has come up with a report on Indian Steel Industry. It expects India to become the second largest producer of crude steel by 2015. Currently, India is the fourth largest crude steel producer after China, Japan & the US. However, there are very few people taking this report seriously. Domestic Steel producers are struggling with the Indian government‘s policies. According to estimates, in past few years at least 35-40 million tonnes of capacity has been cancelled or postponed by the government. It was planned that around Rs 630,000 crore, would be invested to increase the capacity. A majority of this was to be invested by private steel producers. In this direction, since 2005, the government signed 222 MoUs with steel companies. But, seven years later, land acquisition & environmental delays, controversies over allocation of raw material and a huge shortage of iron ore have held up a majority of these projects. KEY PLAYERS: Indian private steel producers WHY IT IS IMPORTANT? Incidentally, figures show that during April-October this year, production grew 3 per cent, whereas real consumption grew by 4.7 per cent. Still Domestic players couldn‘t cash in on the consumption growth to full extent. This is because of the acute shortage of iron ore. Many feel that, NMDC (National Mineral Development Corporation), the largest producer of iron ore in the country, is subsidising the Japanese steel industry at the expense of India‘s domestic steel industry. Japanese producers have to pay around Rs 1,527 per tonne of iron ore whereas domestic sponge iron producers pay Rs 5,390 for the same. This is because of the free trade agreement India has signed with other countries. South Korea is the other nation benefiting from the FTA agreement. These duty benefits have made Japan and South Korea the leading exporters of steel to India. China remains the largest exporter of steel products to India.

10) Datawind denies reports that Aakash is “Made in China”- ET/ Firstpost/ NDTV IMPACT: India‘s much acclaimed Aakash tablet is in the news these days for all the wrong reasons. A report by ET and some other global media claims that the company Datawind fooled Indian government by directly picking the China-made tablets and rebranding them to be their own. Documents reviewed by HT show DataWind founders and NRI brothers Suneet and Raja Singh Tuli may have procured these devices off-the-shelf from manufacturers in China for

$42 (Rs 2,263 then), exactly the price at which they sold these to the Indian government. This puts big questions about India‘s claim of developing an indigenous tablet. People claim that Aakash isn‘t an India made tablet as the parts of Aakash-1 were sourced from South Korea, China, US and other countries. Its OS, an altered version of Android, has nothing to do with India. Undeterred by these allegations, Ministry of External Affairs (MEA) has decided to go ahead with the planned showcase of Aakash 2 tablets citing it as India's technology innovation at the United Nations. Meanwhile, Datawind has denied all these allegations. KEY PLAYERS: Datawind, Indian government WHY IT IS IMPORTANT? The MEA claims that with its cost competitiveness Aakash has been successful in bridging the digital divide by providing access to

quality education for all. The newer versions of the tablet have a better battery life and are much faster than the previous one. The Aakash has been hailed a major success for India, which is also famous for producing the Tata Nano - the world's cheapest car, priced at about $2,500. 11) Hollande’s nationalisation threat to Mittal – FT/Live Mint IMPACT: Lakshmi Mittal is facing unprecedented pressures in France these days as his plans to close down two of its blast furnaces have received opposition from the socialist government. The first attack came from the Industry minister Arnaud Montebourg who said that ―We no longer want Mittal in France because they haven‘t respected France.‖ This raised concerns that the government is in the mood to permanently nationalise Florange - which includes steel rolling and other processes besides the blast furnaces. The government however clarified its stand later when Francois Hollande met Lakshmi Mittal. Though, nationalisation is on the cards, it will be temporary, says the government. ArcelorMittal had given the government until December 1 to find a buyer for the two furnaces. However, by bringing in the nationalisation threat, the French government has cleverly put Mittal in a fix. In absence of private buyers, ArcelorMittal cannot take the nationalisation risk as Florange site is critical for the rest of its French operations. KEY PLAYERS: ArcelorMittal, Francois Hollande WHY IT IS IMPORTANT? When he took over Arcelor, Lakshmi Mittal had promised that massive job cuts would not be carried out. But a lot has changed. The financial crisis of 2008 had a strong impact on the company‘s performance. European demand for steel is 25 per cent below 2007 levels and a slowdown in demand from China has also taken its toll. Ratings agencies have cut ArcelorMittal‘s debt to junk status. Apart from the Florange site, it has shut sites in Gandrange in France and Liège in Belgium. 12) Rising manufacturing costs in China offers opportunities for India – The Hindu Business Line

IMPACT: Cheap labour helped China become the manufacturing hub of the world, but rising wages in the Communist nation present an opportunity for India. Chinese workers‘ wages rose by 16 per cent to almost $1.8 an hour during the 2003-10 period, whereas Indian labourers – who earned more than the Chinese till 2007 – have only witnessed an eight per cent rise in pay to approximately $1.4 an hour. While the wage hike resulted in a 14 per cent improvement in value addition per employee in China, Indian workers‘ productivity rose by 17 per cent, according to a report by McKinsey. Moreover, the size of middle class in India is almost equal to that of China. This means inexpensive labor is present along with a huge consumer market, which is expected to fuel India‘s growth in long term. Although, the lower manufacturing labour costs give India an advantage over China, it will need to

find other advantages over countries such as Vietnam, Nigeria and Indonesia, where labour costs are far more cheaper. KEY PLAYERS: India, China WHY IT IS IMPORTANT? India‘s position in the list of global manufacturing majors has improved substantially over the past three decades. In 1980, India was ranked 15th on the list of the world‘s largest manufacturing nations in terms of gross nominal value added to manufacturing output. And as of 2010, it was 10th on the list, surpassing Russia and Canada. Similarly, China has risen from 7th to 2nd in the rankings during the 30-year period, surpassed only by the US.

ax, transaction fees etc and that they were not recovering losses incurred previously. 13) Direct cash transfer of subsidies through Aadhaar from January 1 – The Hindu/ET IMPACT: A move widely perceived to be a huge gamble both in its administrative scope and political ambition, the direct transfer of cash subsidies through the Aadhaar card would be rolled out in 51 districts across 15 states from January 1, 2013. The scheme aims to put ₨3.2 lakh crore per year in the bank accounts of 10 crore poor families. Thus, the transfer per BPL family, per year would be almost three times its annual average earnings. The non-availability of banks in most of the remote areas, confusion under which family member‘s name the no-frills bank account would be opened and high risks of duplication of accounts are some of the major problems pointed out. The fact that the beneficiaries may misuse the money can also cause problems. The Prime Minister‘s Office has consistently maintained that the cash transfer scheme will be ―fiscally neutral‖.

KEY PLAYERS: GoI, BPL families

WHY IT IS IMPORTANT? Prominent economists and several government figures have maintained that cash transfers are the best way to provide subsidies to the poor as they help in plugging the various leakages. Supporters believe that as a result of this move, poor families will have much more cash at their disposal. The timing of this welfare reform is such that its entire rollout is expected to be completed by April 2014-just before the General Elections are due. However, Aadhaar‘s coverage has so far only been limited to urban areas where the percentage of BPL families is small. The manner in which the Government implements this ambitious reform is of importance.

14) Future Cadbury chocolates wont melt even in the summers- Popular Science/The Indian Express IMPACT: The Cadbury Silk ad campaign in India might require a major overhaul as the molten chocolates shown prominently in these ads are going to be things of the past. The company has filed a patent for the new variety of chocolates that don‘t melt even at 40 degree Celsius, unlike the regular ones that start melting at around 34 degree Celsius. These ―temperature-tolerant chocolates‖ were developed at Cadbury‘s R&D facility in Birmingham, UK. According to the patent filing, Cadbury has found a way to reduce fat content in the chocolates, which is responsible for early melting. This is done by grinding sugar particles to a much finer level, so that these don‘t get completely coated with fat. However, it remains to be seen what impact it will have on the taste of the chocolate. Chocolate lovers believe that one of the key factors affecting a chocolate‘s taste is its ability to melt as soon as it is put in the mouth. These

chocolate lovers may find it difficult to accept company‘s claims that the new Chocolates that don‘t melt at 40 degree Celsius will do so once they are consumed. KEY PLAYERS: Cadbury, Kraft Foods WHY IT IS IMPORTANT? With its new-improved chocolates, Cadbury can now sell more chocolates in warmer climates, particularly in the developing world where, it claims ―the supply chain is ill-equipped to handle significant temperature/humidity fluctuations and where product quality is compromised.‖ Moreover, the company has no plans to sell these chocolates in UK or other colder regions.

15) Importance of day-dreaming – ET/ Jagran Post IMPACT: Finally, researchers have confirmed what countless workers, office-goers and even students have been claiming for long – daydreaming is good for work. According to a new study by the University of California, Santa Barbara, daydreaming is key to solving trickier questions. They found that some of the most important discoveries made by scientists like Albert Einstein and Isaac Newton came when they engaged in some simpler tasks allowing their minds to wander. The study showed that people who returned to a difficult task after taking a break and doing an easy task boosted their performance by around 40 percent. However, there was little or no improvement for people who did another demanding task during the break, used it to rest or did not have a break at all. "Many influential scientific thinkers claim to have had their moments of inspiration while engaged in thoughts or activities not directly aimed at solving the problem they were trying to solve," said lead author of the study Benjamin Baird. "The findings arguably provide the most direct evidence to date that conditions that favour mind wandering also enhance creativity," said Baird. KEY PLAYERS: University of California, Santa Barbara

WHY IT IS IMPORTANT? Einstein is believed to have begun his theory of relativity while he daydreamed about riding or running beside a sunbeam to the edge of the universe. That he did after he was expelled from school for rebelling against rote learning. Newton also discovered gravity in a similar event of doing some not-so-worthy job of sitting in the garden. Mind wandering as a cognitive tool needs to be taken up seriously as it has been shown that it can actually improve performance and problem-solving by as much as 40%. This becomes even more compelling when one considers earlier data showing that human minds tend to wander 47% of the time anyway.

MMMIIISSSCCCEEELLLLLLAAANNNEEEOOOUUUSSS NNNEEEWWWSSS

China’s social face – Renren

Continued from last week…

Financing:

Joseph Chen and team had managed to raise roughly $

37 million initially to fund Renren. Softbank later acquired

a stake of around 30-35% for $430 million. The company

went for its IPO on NYSE and raised more than $ 700

million at around $14 per share. The company earns its

revenues via online advertising, games and other internet

value added services. The company announced net

revenues of $44.8 million in the second quarter of 2012,

up by around 47% compared to 2011.

However, the company also announced a loss of $24.9

million due to challenges in the ad industry. Nearly half of

the company‘s revenues or $ 22.5 million came from

online gaming. Renren also operates group buying site

Nuomi.com trying to maintain a significant presence in the e-commerce space and a car enthusiast site called

chenwen.com which aims to exploit the car craze that afflicts most Aspirational Chinese.

Competition:

Renren plays in a crowded field. Kaixin001, Tencent, Qzone,

Sina amongst others create a continuously changing picture.

Unlike the rest of the world where social media is dominated

by a select few like Facebook and Twitter, China has multiple

active players each with its own loyal followers. Competition

apart from China‘s restrictive free speech policies of the

Chinese government is perhaps the biggest barrier to entry for

any social media player in the country. The toughest

competition to Renren comes from micro-blogging sites called

weibos which are uniquely popular in China. Qzone is popular

among teens and Kaixin amongst white collars, both are

segments which Renren is eyeing.

The move to Mobile:

Apart from big cities like Shanghai and Beijing, the rest of the

Chinese mainland for the most part does not house a

economically powerful citizenry. PCs and laptops are still

expensive and the first interaction with the web for the vast

majority of the Chinese is via smart phones which are far more

affordable. This has led to a large group of users accessing

social media, primarily via their mobile devices. Monetizing

these users has been a major focus point for not just Renren

but other social media websites in China. Globally as well, this

phenomenon is driving new developments in social media and

a cause for worry for Facebook. Renren intends to capture this

opportunity via its games which are easy to monetize and lend

themselves to a mobile environment. Renren has dedicated

nearly half of its workforce to mobile operations.

NNNEEEOOO CCCOOORRRNNNEEERRR PART TWO

Part 2

Final Word:

China‘s social media space is unlikely to feel Facebook‘s looming presence anytime soon, thanks to China‘s draconian

policies on free speech. This leaves the existing players including Renren to battle it out amongst themselves. With the

current economic scenario impacting the ad market, revenues are likely to be hit. Unless effective monetization models

are developed and implemented, tough times are in store for all involved. Renren‘s stock is trading at barely $5 per

share, reflecting the current scenario. A cohesive and effective mobile strategy along with exploiting its successes in the

gaming arena can create a win-win situation for the site, however, it must also realize that other players in China are

not going to just sit still. What happens to the world economy is going to determine the kind of financing these

companies can look at, for Renren that might not be a concern but ensuring it maintains its position in a fickle market

would put its innovation abilities to the test, and the world would be watching closely.

SOURCES

Charts & Graphs: http://www.economist.com/node/21563412

SOURCES FOR COVER STORY http://articles.timesofindia.indiatimes.com/2012-10-28/india/34779455_1_mm-pallam-raju-new-ministers-cabinet-ministers

http://www.ndtv.com/article/india/cabinet-reshuffle-upa-s-team-2014-takes-charge-285510 http://www.ndtv.com/article/cheat-sheet/cabinet-reshuffle-today-salman-khurshid-to-be-the-new-external-affairs-minister-285177

http://thestar.com.my/columnists/story.asp?col=indiadiary&file=/2012/11/4/columnists/indiadiary/12258578&sec=India%20Diary

SOURCES FOR PERSONALITIES OF THE WEEK: http://www.livemint.com/2011/01/07193437/Deep-Kalra--A-trip-down-the-v.html

http://www.makemytrip.com/about-us/deep-kalra.php http://en.wikipedia.org/wiki/MakeMyTrip

http://www.outlookindia.com/article.aspx?235561 http://forbesindia.com/interview/zen-garden/deep-kalra-making-his-own-trip/11462/1

http://business-standard.com/india/news/qa-deep-kalra-founder-ceo-makemytrip/427382/

CORPORATE INTELLIGENCE: http://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/pharmaceuticals.html

http://www.moneycontrol.com/financials/ranbaxylaboratories/balance-sheet/RL#RL http://www.moneycontrol.com/company-facts/cipla/locations/C#C

http://www.moneycontrol.com/annual-report/sunpharmaceuticalindustries/directors-report/SPI#SPI http://en.wikipedia.org/wiki/Ranbaxy_Laboratories

http://en.wikipedia.org/wiki/Cipla

http://en.wikipedia.org/wiki/Sun_Pharmaceutical

http://www.ranbaxy.com/Products/Products.aspx http://www.cipla.com/Home/About-Us/Doing-Business-Globally.aspx?mid=1289

http://www.sunpharma.com/index.jsp

SOURCES FOR NEWS ANALYSIS (1-15)

1) Esprit loses its Spirit in India – BS/ET http://www.business-standard.com/india/news/lessons-to-be-learntesprit-madura-divorce/493873/

http://articles.economictimes.indiatimes.com/2012-11-27/news/35385556_1_ashish-dikshit-madura-fashion-india-retail-story 2) GlaxoSmithKline to invest around ₨ 5,215cr in Indian arm – TOI/Livemint.com

http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIPU/2012/11/27&PageLabel=17&EntityId=Ar01700&ViewMode=HTML

http://www.livemint.com/Companies/ZNrb4M00qdohBIVG6RjfsJ/We-have-no-desire-to-delist-the-company.html 3) Jet Set – Go Etihad. Jet Airways to sell 24% stake to Etihad Airways – Moneycontrol.com/TOI

http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIPU/2012/11/27&PageLabel=17&EntityId=Ar01701&ViewMode=HTML

http://www.moneycontrol.com/news/business/eithad-jet-deal-to-be-beneficial-for-both-parties-bhargava_787555.html 4) Walmart’s troubles continues, Top executives of Bharti Walmart under probe for bribery – ET/BS

http://articles.economictimes.indiatimes.com/2012-11-23/news/35317347_1_bharti-walmart-investigation-legal-team

http://www.business-standard.com/india/news/bharti-walmart-play-down-buzzfissures-in-retail-venture/493769/ 5) Harley Davidson launches Fat Bob in India – Livemint.com/Indian Express

http://www.livemint.com/Companies/tBUXbRAhSev3BzvKAepU1J/Harley-Davidson-launches-Fat-Bob-at-128-lakh.html?facet=print http://www.indianexpress.com/news/harley-davidson-bets-big-on-india/1034722/0

6) From December, 5% ethanol to be mixed in petrol – Moneylife http://www.moneylife.in/article/from-december-5-ethanol-to-be-mixed-in-petrol/29798.html

http://articles.economictimes.indiatimes.com/2012-11-23/news/35300815_1_cent-ethanol-crore-litres-ebp-programme http://en.wikipedia.org/wiki/Ethanol_fuel

http://www.dnaindia.com/mumbai/report_10pct-ethanol-mix-to-reduce-petrol-cost_1544607 http://www.business-standard.com/india/news/gom-to-look-into-issues-over-ethanol-petrol-mixing/89613/on

http://articles.economictimes.indiatimes.com/2012-08-24/news/33366768_1_import-bill-oil-import-total-import 7) Volkswagen to invest €50 bn in drive to be world’s No.1 – Live Mint

http://www.livemint.com/Industry/dBw14zSaRJoJUdkE658WiN/Volkswagen-to-invest-50-bn-in-drive-to-be-worlds-No1.html http://economictimes.indiatimes.com/news/international-business/volkswagen-to-invest-50-bn-euros-over-next-three-

years/articleshow/17336912.cms http://www.businessweek.com/news/2012-11-25/for-vw-the-path-to-global-dominance-leads-through-china#p1

http://www.dnaindia.com/money/report_volkswagen-to-invest-65-billion-worldwide_1769191 8) Suzlon to recast its humongous debt – DNA/The Hindu Business Line

http://www.dnaindia.com/money/report_suzlon-to-recast-rs11000-crore-of-debt_1770361 http://www.thehindubusinessline.com/companies/suzlon-global-installlations-cross-20-gw/article4142753.ece

9) Frost & Sullivan: India may become 2nd largest crude steel producer - ET/BS/The Hindu Business Line http://www.business-standard.com/india/news/why-steel-is-goinghot-to-cold/493796/

http://www.thehindubusinessline.com/industry-and-economy/by-2015-india-may-become-2nd-largest-crude-steel-

producer/article4127284.ece

http://economictimes.indiatimes.com/news/economy/foreign-trade/no-demand-from-steel-companies-to-ban-import-from-japan-south-korea-anand-sharma/articleshow/17378605.cms

http://www.thehindubusinessline.com/companies/domestic-steel-makers-paying-more-for-nmdc-ore-than-japanese-industry/article4122500.ece

10) Datawind denies reports that Akash was “Made in China”- ET/ Firstpost/ NDTV

http://economictimes.indiatimes.com/tech/hardware/undeterred-by-china-made-allegations-india-to-showcase-aakash-2-at-un/articleshow/17385055.cms

http://gadgets.ndtv.com/tablets/news/aakash-tablet-not-cheap-chinese-import-datawind-297190 http://www.firstpost.com/tech/aakash-tablet-what-datawind-claims-and-what-the-facts-are-537388.html

11) Hollande’s nationalisation threat to Mittal – FT/Live Mint http://www.livemint.com/Companies/RPgqFBehgVVjrEclZefs3N/Hollande-urges-Mittal-to-keep-idle-furnaces-running.html

http://www.ft.com/cms/s/0/0742b814-38c3-11e2-bd13-00144feabdc0.html#axzz2DUzfIK9E 12) Rising manufacturing costs in China offers opportunities for India – The Hindu Business Line

http://www.thehindubusinessline.com/industry-and-economy/rise-in-chinese-manufacturing-costs-offers-opportunities-for-india/article4137319.ece

13) Direct cash transfer of subsidies through Aadhaar from January 1 – The Hindu/ET http://www.thehindu.com/news/national/direct-cash-transfer-from-january-1-chidambaram/article4129971.ece?homepage=true

http://articles.economictimes.indiatimes.com/2012-11-24/news/35332518_1_cash-transfer-welfare-reform-aadhar-number http://www.financialexpress.com/news/direct-cash-subsidy-transfer-from-jan-1/1035765/0

http://www.deccanherald.com/content/294433/confusion-clouds-govt-plan-direct.html 14) Future Cadbury chocolates wont melt even in the summers- Popular Science/The Indian Express

http://www.popsci.com/science/article/2012-11/cadburys-chocolate-future-doesnt-melt-even-104-degrees http://www.indianexpress.com/news/new-cadbury-chocolates-that-don-t-melt-in-hot-weather/1036452/0

15) Importance of day-dreaming – ET/ Jagran Post http://economictimes.indiatimes.com/opinion/editorial/daydreaming-is-actually-an-important-tool-to-improve-

performance/articleshow/17367363.cms http://post.jagran.com/daydreaming-behind-einstein-and-newtons-genius-1353903106

SOURCES FOR NEO-CORNER

http://www.techinasia.com/china-facebook-renren-story/

http://en.wikipedia.org/wiki/Renren

http://techcrunch.com/2011/05/03/renren-big-but-not-the-facebook-of-china/ http://www.seoconsult.com/seoblog/social-networking-and-search-engine-optimization/are-we-close-to-seeing-renren.html

http://www.huffingtonpost.com/2011/02/21/renren-ipo-2011-rumors_n_826112.html http://www.afaqs.com/news/story/34404_Cannes-2012:-Renren:-Chinas-own-social-networking-growth-story

http://memeburn.com/2012/09/why-renrens-mobile-and-ecommerce-pivot-might-just-make-sense/ http://www.forbes.com/sites/rebeccafannin/2012/05/18/the-facebook-effect-on-chinas-renren/

http://socialtimes.com/chinas-renren-looking-to-hit-200-million-users-this-year_b89634 http://seekingalpha.com/article/335241-renren-social-networking-top-pick-initiating-with-6-target

http://www.bloomberg.com/news/2012-05-18/renren-declines-most-on-record-as-facebook-ipo-optimism-fades.html http://socialfresh.com/the-worlds-other-social-networks/