Global Business |Update|
(A weekly update on Global Business )
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Issue 73

 

Global Business Update

(2nd January---15th January)

 

Contents

 

Global Corporate

 

1L&T bags over Rs 1,300 cr order from Cairn India

2 Maruti sales up 6.88%

3 Indiabulls to raise $1 bn from int'l market

4 Gitanjali acquires Nakshatra for Rs 100 crore

5 Vedanta to invest Rs 50,000 cr in metals, mining, power

6 M&M to acquire Italian design house

7 Infosys profit beats forecast, raises guidance

8 Posco survey suspended for second day

9 Gulf Air places $4 bn order with Boeing

10 Nano will drive Tata Motors to the top

11 Rel Pow IPO subscribed 11 times on day 2

 

Global Outsourcing

 

12 Shell's outsourcing plans face legal threat

13 Outsourcing boom predicted in 2008

14 Highways Agency invests £75m in IT outsourcing

15 IT outsourcing market to hit $11b

16 ACS buys outsourcing firm based in England

17 India favourite outsourcing destination for UK firms

18 Infosys beats forecast to gain 25% in Q3

19 Icenet eyes Rs 200cr business from KPO

 

Global Economy

 

20China’s foreign exchange reserves hit US$1.53 trillion in 2007

21 Gold climbs to new peak of Rs 11,395

22 India lagging behind China, Brazil in FDI

23 One lakh car or a one lakh cocktail

24 Gold may exceed $1k in 2008. Standard Chartered

25 Fuel prices hike decision on Jan 17

 

Global Markets

 

26 Sensex tumbles by 288 points

27 Indiabulls to raise $1 bn from int'l market

28 US SEC deepens ties with India's mkt watchdog

29 Reliance Power IPO to continue: SC

30 Rupee appreciates against dollar

Global Corporate

 

1  L&T bags over Rs 1,300 cr order from Cairn India

Engineering and construction major Larsen & Toubro (L&T) on Monday said it has bagged two contracts worth over Rs 1,300 crore from Cairn India for construction related works for the Northern Area Development Project near Barmer in Rajasthan. L&T is proud to be associated with Cairn in being able to leverage our own strengths to boost India's needs of fuel resources. Our technology and dedicated team will be able to deliver the job, on time, L&T President (Engineering & Construction Projects) K Venkataramanan said. The scope of work covers development of infrastructure facilities, detailed engineering and construction of all civil as well as electromechanical works at the Mangala and Raageshwari fields and the telecom network, L&T said in a filing to the Bombay Stock Exchange.

3^rd January 2008, www.financialexpress.com

 

2  Maruti sales up 6.88%

Car market leader Maruti Suzuki India Ltd (MSIL) on Wednesday reported a 6.88-per cent increase in its car sales in the domestic market during December at 58,401 units against 54,640 units in the corresponding month last year. In all, the company sold 62,515 vehicles in December 2007 which includes 4,114 units of exports, MSIL said in a statement. In the A2 segment comprising hatchbacks Alto, Wagon-R, Zen and Swift, the company reported a marginal increase of 2.89 per cent in sales at 39,575 units compared to 38,461 units in the same month last year. Sales of flagship Maruti 800 continued to skid, dropping by 1.35 per cent in November at 7,190 units against 7,289 units in the same month a year ago. In the MUV segment comprising Gypsy and Grand Vitara, the company reported a 29.58-per cent growth in sales during the month at 311 units.

4^th January 2008, www.economictimes.com

 

3  Indiabulls to raise $1 bn from int'l market

Domestic brokerage major Indiabulls financial Services has said it will raise one billion dollars through issue of international securities. The company would seek shareholders' approval on February 1 for the issuance of Foreign Currency Convertible Bonds (FCCBs), Global Depository Receipts and other forms of securities convertible into equity shares, Indiabulls informed the Bombay Stock Exchange. However, it did not disclose any details about the utilisation of the issue proceeds. Several Foreign fund houses including Citigroup Inc, Merrill Lynch and Goldman Sachs Group have considerable stake in the company. For the quarter ended September 30, Citigroup held 5.58 per cent, Merrill Lynch 4.99 per cent and Goldman Sachs 3.65 per cent in Indiabulls.

5^th January 2008, www.bbc.co.uk

 

4  Gitanjali acquires Nakshatra for Rs 100 crore

The Rs 3,500-crore Gitanjali Gems on Tuesday announced the acquisition of Nakshatra in India, the premium diamond jewellery brand, promoted by the Diamond Trading Company, for more than Rs 100 crore. The Diamond Trading Company is the rough diamond distribution arm of the De Beers Group. We have acquired De Beers Groups’ flagship brand Nakshatra in India. Our investment so far has exceeded Rs 100 crore which includes brand nurturing, Nakshatra brand purchase and 100 per cent stake in Brightest Circle Jewellery Pvt Ltd (BCJPL), Gitanjali Group Chairman Mehul Choksi said in Mumbai. Nakshatra was a brand owned by the Diamond Trading Company, with manufacturing, distribution and marketing rights held by BCJPL, a joint venture between Gitanjali and two other Companies.

8^th January 2008, www.economictimes.com

 

5  Vedanta to invest Rs 50,000 cr in metals, mining, power

Anil Agarwal-promoted, Vedanta Resources, on Tuesday said it has planned to invest over Rs 50,000 crore in the next few years in metals, mining and power generation and the outlay is expected to double in the coming years in view of its growth. The group has grown in multi-fold, over 650 per cent in the last four years and has planned investment of over Rs 50,000 crore with a clear focus on metals, mining and power generation. Seeing the market growth, the spend is expected to double in the coming years, company sources said. The London Stock Exchange-listed, Vedanta, is building production capacity of one million tonnes each in aluminium, copper and zinc and lead, over 20 million tonnes of iron ore and commercial power generation capacity close to 10,000 MW in coming years.

6^th January 2008, www.economictimes.com

 

6  M&M to acquire Italian design house

Car maker Mahindra & Mahindra said it plans to acquire Italian auto design firm G R Grafica Ricerca Design Srl (GRD) for an undisclosed amount. Through this acquisition, the company intends to develop a global design centre for the group and cater to global auto original equipment manufacturers, M&M said in a communique to the Bombay Stock Exchange. The synergies resulting from this acquisition will not only help us strengthen our existing design capabilities but will also help us emerge as a global auto design powerhouse, M&M Automotive Sector President Pawan Goenka said. Complementary capabilities between Mahindra & GRD will enhance the product development capabilities and provide a strong European footprint to leverage technologies and skill sets through the available talent pool of designers and engineers, Goenka added.

8^th January 2008, www.reuters.com

 

7  Infosys profit beats forecast, raises guidance

Infosys Technologies Ltd, India's No. 2 software services exporter, beats forecasts with a 25 per cent rise in December quarter profit, helped by strong demand from Europe and a tax refund. Infosys, whose clients include ABN AMRO and Goldman Sachs, raised its earnings guidance for the fiscal year to March and said it saw several growth opportunities in a tough business climate, helping its share rise as much as 3 per cent. We believe the IT spending environment will be favourable to large offshore players like us, even though the macro environment is challenging, Ashok Vemuri, head of banking and capital Markets at Infosys, said in a statement on Friday. Indian outsourcers that offer Western firms technology and back-office services are expanding into Europe and Asia-Pacific to cut their dependence on an uncertain US market that generates more than half their revenue.

11^th January 2008, www.bbc.co.uk

 

8  Posco survey suspended for second day

Socio-economic survey at the villages located on the proposed plant site of Posco remained suspended for the second consecutive day following resistance from local people, official sources said. The survey would be resumed after a formal discussion with the people, they said. District officials said the villagers should allow the Government to undertake the survey to estimate the size of the compensation package for the people to be displaced and affected due to the proposed 12 mtpa greenfield steel project. The team of officials, including Additional District Magistrate Dilip Mohanty, were detained by villagers yesterday at Nuagaon village and they had to return.

12^th January 2008, www.bbc.co.uk

 

9  Gulf Air places $4 bn order with Boeing

The Bahrain-based airline Gulf Air has ordered 16 Boeing 787 Dreamliners valued at around USD four billion and taken options for eight more, an airline official has told AFP. Gulf Air has signed with Boeing a firm order for 16 Boeing 787 aircraft and taken the right to purchase eight more of the same aircraft, Adnan Malek, acting head of corporate communication at Gulf Air said yesterday. The value of the firm order for the new long-haul jets at list price is around four billion dollars, while the total amount would go up to USD six billion if options are firmed up in the future, he added. The struggling carrier had announced during the Dubai air show that it was planning to renew its entire fleet looking to order up to 35 planes.

13^th January 2008, www.cnn.com

 

10  Nano will drive Tata Motors to the top

Tata Motors’ Rs one lakh car ‘Nano’, unveiled at the ongoing Auto Expo in New Delhi, will propel the company as the country’s biggest light vehicle manufacturer by 2013, a study by German research firm CSM World Wide said. Tata Motors would roll out nearly 1.2 million light vehicles (LVs) per annum in the next five years, of which Nano alone would contribute more than 50 per cent. The company will sell about two lakh units more than Maruti Suzuki, which is the market leader in the low-cost, small car segment, by 2013. Nano will help Tata in increasing its stake in the segment as it is expected to sell more than six lakh units per annum by 2013, CSM World Wide CEO & President Craig Cather told PTI on the sidelines of an auto summit organised by Federation of Auto Dealers Association.

14^th January 2008, www.financialexpress.com

 

11  Rel Pow IPO subscribed 11 times on day 2

The IPO of Anil Ambani group's Reliance Power was subscribed over 11 times the number of shares on offer as of 1300 hrs on Wednesday - the second day of the issue. According to the latest data available on the National Stock Exchange, the IPO got subscribed 11.29 times till 1300 hrs. It received bids for over 257 crore shares as against 22.80 crore shares on offer. The issue, which will close on January 18, has already generated demand for shares worth Rs 132,093 crore. The company is offering the equity shares at a price band of Rs 405-450 per share. The total size of the IPO is 26 crore equity shares, including the promoters contribution of 3.2 crore shares. The net issue to the public constitutes 22.8 crore shares. Reliance Power has a diversified portfolio of 13 medium and large-sized power projects under development and strategically located at various places across India, according to the company.

15^th January 2008, www.financialexpress.com

 

Global Outsourcing

 

12  Shell's outsourcing plans face legal threat

Shell is facing the threat of legal action from trade union Amicus over staff redundancy terms, which could hit the oil giant's plans to outsource up to 3,200 tech jobs. The oil multi-national is in the process of finalising contracts with AT&T, EDS and T-Systems to run the bulk of its global IT infrastructure as part of a cost-cutting drive. But the outsourcing plans may be affected by wider legal action being threatened by Amicus to force Shell to reinstate a company redundancy package worth up to £200,000. Amicus said Shell replaced the £200,000 pay-off provision in June last year with an agreement where employees who are made redundant will now only receive a package worth up to £50,000.

7^th January 2008, www.tutorial-reports.com

 

13  Outsourcing boom predicted in 2008

A weak global economy and the need for businesses to cut costs are predicted to drive outsourcing growth up in 2008. More than half (53 per cent) of companies plan to increase outsourcing spending in 2008, up from 38 per cent in 2006 and 48 per cent in 2007, according to a survey of 250 IT professionals by US-based outsourcing and business process outsourcing (BPO) company Syntel. Bharat Desai, CEO of Syntel, said outsourcing is one industry that will not suffer from the crisis in the credit markets. Desai said in a statement: "In a weak or uncertain economy, companies look for technology solutions that will increase productivity, efficiency and savings. The link between outsourcing and savings was reinforced by a separate study by BPO provider Sutherland Global Services, which found cost reduction and the ability to provide a variable cost model was in the top five reasons for outsourcing for more than 90 per cent.

8^th January 2008, www.tutorial-reports.com

 

14  Highways Agency invests £75m in IT outsourcing

The Highways Agency has invested £75 million in an IT outsourcing deal which experts say will save it up to 15 per cent annually. IT services company Atos Origin has been signed up for the five year contract with the agency to manage its infrastructure and provide applications management services. Chris Price, Highways Agency service review manager, said: As a public sector organisation, it is essential that the Highways Agency makes the best use of public funds. Following a thorough procurement and evaluation process, Atos Origin demonstrated the capability to deliver improved services - and service levels - to staff, along with demonstrable efficiencies resulting from technological innovations.

11^th January 2008, www.cnn.com

 

15  IT outsourcing market to hit $11b

Australia’s technology outsourcing market will swell almost 5 per cent to $10.9 billion this year, market researcher Gartner has reported But vendors and customers alike will struggle with skills shortages and local outsourcing market growth will be substantially slower than the 8.1 per cent increase tipped for IT outsourcing worldwide. Similarly, India is set to face increased competition as a low-cost outsourcing destination as staff attrition and rising salaries erode the country's competitive advantage. Global companies continue to accelerate their demands for a presence in countries other than India, and providers are seeking to expand their geographic footprint of delivery centres accordingly, Gartner research vice president Ian Marriott said. Although India's offshore revenue will continue to grow, the country's share of total offshore spending will decline slightly in 2008. Gartner also tipped a shakeout in multi-sourcing practices this year with early adopters of the strategy expected to cull the number of suppliers they work with while maintaining a diverse stable.

11^th January 2008, www.tutorial-reports.com

 

16  ACS buys outsourcing firm based in England

Dallas-based Affiliated Computer Services Inc. said Wednesday that it has purchased Syan Holdings Limited, an information technology outsourcing firm based in England, for about $60 million in cash. ACS said the deal expands its presence in Europe. Syan specializes in managing and supporting technology from IBM and had revenue of about $75 million in the last 12 months. Roughly 200 Syan employees will join ACS, and the new ACS Syan division will be run by Syan's existing management team.

12^th January 2008, www.tutorial-reports.com

 

17  India favourite outsourcing destination for UK firms

India emerged as the favourite outsourcing destination for businesses in UK, as organisations rated India-based outsourcing firms highest in terms of satisfaction, placing them above ‘traditional’ global providers in a survey of UK’s public and private sector firms. According to the Outsourcing Service Provider Performance Study 2007, conducted by sourcing advisory firm EquaTerra, all UK businesses currently offshoring all or part of their IT functions use India as one of their locations, and plan to continue with this strategy. The study, undertaken annually, evaluates £34 billion (or about $66.7-billion) worth of UK IT sourcing contracts, about three-quarters of the total UK IT sourcing market. Satisfaction levels were found to be highest for India-based outsourcing providers, with ‘traditional’ global providers ranking low, the study said.

10^th January 2008, www.tutorial-reports.com

 

18  Infosys beats forecast to gain 25% in Q3

Infosys Technologies, India’s No 2 software services exporter, beat forecasts with a 25 per cent rise in December quarter profit, helped by strong demand from Europe and a tax refund. Infosys, whose clients include ABN AMRO and Goldman Sachs, raised its earnings guidance for the fiscal year to March and said it saw several growth opportunities in a tough business climate, helping its share rise as much as 3 per cent. We believe the IT spending environment will be favourable to large offshore players like us, even though the macro environment is challenging, Ashok Vemuri, head of banking and capital markets at Infosys, said in a statement on Friday. Indian outsourcers that offer Western firms technology and back-office services are expanding into Europe and Asia-Pacific to cut their dependence on an uncertain US market that generates more than half their revenue.

13^th January 2008, www.economictimes.com

 

19  Icenet eyes Rs 200cr business from KPO

After its acquisition by Citigroup-owned Internet service provider, YOU Telecom, Ahmedabad-based Icenet has new plans up its sleeve.  The company has launched Gujarat’s first technical support outsource KPO (knowledge process outsourcing) and expects revenues of Rs 200 crore from the business in the next three years.  The new venture under the brand name of Icenet will offer consumer and enterprise test support to small and medium enterprises (SMEs) in the US and Europe from the company’s 50-seater facility in Ahmedabad. It will also look at exploring opportunities in engineering design outsourcing in the coming months.  We plan to scale up this venture up to Rs 200 crore in the next three years for which we will employ 1,000 engineers for technical support, said Chirag Mehta, CEO and managing director of Icenet.  He added that there was a tremendous market for the technical support outsourcing business and just three to four players in India. Icenet has signed up with its first client, US-based Verso Technologies, a provider of next generation network solutions

15^th January 2008, www.tutorial-reports.com

 

Global Economy

 

20  China’s foreign exchange reserves hit US$1.53 trillion in 2007

China’s foreign exchange reserves hit US$1.53 trillion at the end of 2007, up 43 percent from the end of the previous year, the central bank said Friday. The bank said in a statement on its Web site that US$461.9 billion was added to the country’s foreign exchange reserves in 2007. The reserves come from China’s booming trade surplus, which rose to a record US$262.2 billion (euro178.8 billion) in 2007, the General Administration of Customs said separately Friday.

11^th January 2008, www.bbc.co.uk

 

21  Gold climbs to new peak of Rs 11,395

Gold prices climbed to a new peak of Rs 11,395 on the bullion market on persistent stockists buying in view of marriage season triggered by rising trend in the global Markets. Gold futures breached the psychologically important $900-per-ounce benchmark on Friday in New York as participants sought a hedge against inflation and safe haven from falling equities, analysts said. After setting a new contract high of $900.10 an ounce, most-active February gold rose by $4.10 to $897.70 on the Comex division of the New York Mercantile Exchange. Nearby January gold set a fresh all-time record of $899.70. Comex March silver rose by 9.5.

3^rd January 2008, www.financialexpress.com

 

22  India lagging behind China, Brazil in FDI

Despite the global standing of its high-tech industries and big pool of skilled manpower, India is grappling with slow adoption and limited penetration of new technologies, attracting far less foreign direct investment than countries like China, a new World Bank report said. Foreign direct investment, an important source of business process technology, represents only 0.8 per cent of Indian GDP, compared with 3.5 per cent of GDP in China and 1.9 per cent in Brazil. High technology imports represent only 2.3 per cent of GDP as compared with 7.9 p.c in China, the report, ‘Global Economic Prospects 2008: Technology Diffusion in the Developing World’, said.

6^th January 2008, www.economictimes.com

 

23  One lakh car or a one lakh cocktail

With valentines season just round the corner, youngsters are saving up to woo their better halves this winter. But for all those with extra cash, the season offers an alternative. Either one can now go in for newly launched 'People's car' costing just Rs one lakh or buy a drink for your lady for the same amount. Yes, a drink worth Rs one lakh. Called the "Cupid's Love Punch", it is probably the most exclusive and expensive wine cocktail available for the Delhiites launched by a leading Indian wine maker. The speciality of this drink apart from its key ingredient, Sauvignon Blanc and Peach Schnapps(Italian sweet liquor) along with orange juice and aerated drink is a diamond ring at the bottom of the drink served in an Italian crystal glass.

8^th January 2008, www.economictimes.com

 

24  Gold may exceed $1k in 2008. Standard Chartered

Gold, which reached a record 897.90 dollar an ounce in Asian Markets today, may top 1,000 dollar this year, concerns over the weakening dollar and global inflation, Standard Chartered said in a report. Gold will average 900 dollar in the year, London-based analyst Dan Smith wrote in an e-mailed note to clients. The price may average $855 this quarter, $870 in the second, $925 in the third and $950 in the last three months of the year. The precious metal rose in Asian Markets to a record and silver matched its highest level since 1980 as a weakening dollar increased the allure of the metals as alternative investments.

11^th January 2008, www.financialexpress.com

 

25  Fuel prices hike decision on Jan 17

A decision on fuel price hike will be taken on January 17, Union Petroleum Minister Murli Deora said on Monday. On January 17, Group of Ministers (GoM) is meeting under the chairmanship of Pranab Mukherjee in Delhi and that time it will be decided what will happen to the prices, he said. Nobody can say now whether the prices will be increased or not, Deora told reporters after inaugurating an international conference of petroleum geo-physicists in Hyderabad.

14^th January 2008, www.financialexpress.com