Global Business |Update|
(A weekly
update on Global Business )
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
Issue 96
Global
Business Update
(24th Dec.’08---30th Dec.’08)
Contents
Global Corporate
1 HBOS and RBS 'were near collapse'
2 Npower fined over doorstep sales
3 Rolls-Royce lands £258m MoD deal
4 TNK-BP elects entirely new board
5 Microsoft asked to lay off over 9,000 employees
6 Toshiba plans bike battery plant
7 Toyota sales plunge in November
8 EDF allowed to buy British Energy
Global Outsourcing
9 ACS buys Argentine outsourcing firm
10 Wipro says buying Citigroup unit will boost IT infrastructure outsourcing in India
11 Service outsourcing to drive Shanghai's economy
12 BPOs thrive as firms take to outsourcing in trying times
13 Indian banks, real estate, and IT outsourcing pull down Sensex
14 Bookkeeping Outsourcing has helped many businesses to boom
15 Indian Company Looks at Options After Stock Plunge
Global Economy
16 Oil falls back below $39 a barrel
17 IMF approves bail-out for Latvia
18 Cocoa prices hit a 23-year-high
19 IMF criticises the UK's VAT cut
20 Mutual Funds lose Rs 1,50,000 cr in 2008
21 Gold rises to more than two-and-a-half month high
Global Market
22 Rupee depreciates to 48.20 against dollar
23 Govt approves Suzlon's Rs 1,800 cr Rights Issue
24 Satyam hires Merrill to mollify shareholder outcry
25 RPL soars nearly 13 pct in morning trade
26 GM’s financial arm receives $5 bn in bailout
27 Storm clouds gather for world economy in 2009 as growth dips
28 Nikkei up 0.4%, Toyota rebounds
Global Corporate
1 HBOS and RBS 'were near collapse
Two British bank giants, HBOS and Royal Bank of Scotland, were on the verge of
collapse in the second week of October, the BBC's Panorama has revealed. The
banks were having problems getting short-term funding amid the global credit
crunch. Without this funding, which is easy to access in non-crisis times, the
banks would collapse, authorities believed. The banks were forced to receive
additional capital by getting loans and guarantees from taxpayers. After
crisis talks, the Treasury and the Bank of England provided banks with £350bn
in loans and guarantees, stabilising the banking system and preventing HBOS
and RBS from collapsing.
24th December 2008, www.bbc.co.uk
2 Npower fined over
doorstep sales
The energy regulator Ofgem has announced that it will fine energy supplier Npower £1.8m. It said the company had not taken sufficient action to prevent the mis-selling of contracts to its customers. Npower dismissed six members of its sales team in May following its own investigation into allegations that potential customers had been misled. Rules state that customers must be fully aware that they are entering into a contract. Ofgem ruled that Npower had breached the conditions of its supply licence by failing to take sufficient action after complaints from customers about door-to-door salespeople. It said that Npower had procedures in place to follow up the complaints, but that managers had not applied them properly. As a result, mis-selling went unchecked. This decision sends a clear message to energy suppliers that failing customers and falling short of licence standards will lead to Ofgem action, said Sarah Harrison at Ofgem.
25th December 2008, www.bbc.co.uk
3 Rolls-Royce lands
£258m MoD deal
Rolls-Royce has been awarded a £258m engine contract for the UK's fleet of Royal Navy and Royal Air Force Sea King helicopters over the next 10 years. The agreement will be managed at Yeovilton, Somerset, and Rolls Royce Bristol at the MoD's defence equipment and support sites. The deal provides a guaranteed delivery of Gnome turboshaft engines and includes provision of spares. The work will be carried out in Coventry, Ansty and Germany. Minister for Defence Equipment and Support, Quentin Davies, said: "The Sea Kings are an integral part of the UK Support Helicopter Force and are delivering a sterling effort in current operations in Afghanistan as well as in its high profile search and rescue tasks within the UK.
26th December 2008, www.bbc.co.uk
4 TNK-BP elects
entirely new board
BP's joint venture, TNK-BP,
has elected a new board at an extraordinary meeting in Moscow. The new board
includes an equal number of representatives from the Russian shareholder group
AAR and BP, and one independent director. It brings to a close a festering
dispute between BP and the Russian billionaires who own AAR. Under the deal
reached at the beginning of September, Robert Dudley had to step down as TNK-BP's
chief executive. TNK-BP's Russian partners had long called for Mr Dudley's
departure and Mr Dudley left Russia in July in the face of what he said was
"sustained harassment". The Russian shareholders had accused BP of running TNK-BP
like a subsidiary and Mr Dudley of favouring the British shareholder. The
company is now managed by interim chief executive Tim Summers.
25th December
2008,
www.bbc.co.uk
5 Microsoft asked to
lay off over 9,000 employees
The
world's top software firm Microsoft has been asked to cut its workforce by
10%, or about 9,100 employees, to tell the market that profits are more
important than revenue growth in difficult times. Brokerage firm Oppenheimer
and Co's analyst Brad Reback has said in a report on Microsoft that such
layoff exercise "would be a healthy move for the company. The move would be
well received by the market and would "signal that profitability is more
important than revenue growth during this very difficult time," Reback added.
Calling for a 10% reduction on the company's payrolls, Reback said in his
report for the institutional investors of Microsoft, this would result in an
approximately 10% gain in its earnings per share. The software giant had close
to 91,000 employees on its payrolls at the end of July-September quarter.
Earlier in October, Microsoft had put in place a hiring freeze on some of its
divisions, such as entertainment and devices businesses that make products
like X-Box and Zune.
29th
December 2008,
www.in.news.yahoo.com
6 Toshiba plans bike
battery plant
Toshiba has announced plans
to build a new factory to make its new super charge ion battery (SCiB), which
can be used in electric vehicles. Toshiba said it had selected a site in
northwest Japan for the plant. Local media reports say it will cost up to 30bn
yen ($332m; £224m). SCiBs charge more quickly than lithium ion and are
supposed to retain their charge for longer. They were first sold in April and
are being used on electric bicycles. Toshiba is in talks with other companies
that might use the batteries, including a major carmaker, according to a
company spokesperson. Schwinn, which makes the SCiB-powered Tailwind bicycle,
says that it will fully recharge in 30 minutes, compared with a normal
charging time of four hours for electric bicycles. Whoever wins the race to
design a lightweight, high-capacity, quick-charging battery for electric cars
will make a great deal of money from it.
27th December 2008, www.bbc.co.uk
7 Toyota sales plunge in November
Toyota has reported a big drop in global vehicle sales for November, just days after forecasting its first annual loss in 71 years. Japan's biggest carmaker only sold 618,000 cars last month, which is 21.8% down on November 2007. On Monday, Toyota predicted it would make a full year operating loss of 150bn yen ($1.7bn; £1.1bn).
24th December 2008, www.bbc.co.uk
8 EDF allowed to buy
British Energy
French Energy company EDF has won permission from the European Union competition authorities to buy British Energy, subject to certain conditions. EDF has to sell one plant it owns and one that British Energy (BE) owns, and sell a minimum amount of electricity to the British wholesale market. It also has to end a connection agreement with the National Grid. Earlier this month, EDF raised its stake in BE to 89%, after offering £12.4bn for the company in September. The commission concluded that the transaction, as modified by these commitments, would not significantly impede effective competition, the competition authority said. EDF is the world's biggest operator of nuclear facilities - 58 reactors in France supply 80% of the country's electricity. It will now take over BE's eight nuclear power plants and has unveiled plans to build four new nuclear reactors in the UK. An initial deal for EDF to buy BE in July was called off after shareholders protested.
28th December
2008,
www.bbc.co.uk
Global Outsourcing
9 ACS buys Argentine
outsourcing firm
Dallas-based Affiliated Computer Services Inc.
said Tuesday that it has purchased Argentina-based Grupo Multivoice, a
customer service outsourcing firm, for an undisclosed amount. The deal is a
major expansion into the South American market for ACS, which does outsourcing
projects for corporate and government customers. Grupo Multivoice has about
6,000 employees, and revenue for the last 12 months was about $40 million.
Shares of ACS lost 97 cents to close at $43.20.
25th December 2008,
www.dallasnews.com
10 Wipro says buying
Citigroup unit will boost IT infrastructure outsourcing in India
Offshore outsourcing and IT services provider Wipro Ltd. is buying Citigroup
Inc.'s IT subsidiary in India for $127 million, under a deal that also gives
Wipro a six-year contract worth at least $500 million to provide technology
services to Citi. But as Soumitro Ghosh, senior vice president of finance
solutions at Wipro, explains it, one of the major benefits that the Bangalore,
India-based vendor expects to gain from the acquisition of Citi Technology
Services Ltd. is the Citigroup unit's ability to deliver infrastructure
outsourcing services to other customers.
26th December 2008,
www.tutorial-reports.com
11 Service outsourcing to drive Shanghai's economy
China's economy has made
tremendous achievements since the reform and opening-up policy that began some
30 years ago. Shanghai, the country's financial hub on the front line in the
opening up, has undoubtedly become a major engine of domestic economic growth,
helping propel in the whole country. Today's Shanghai is a prosperous city
full of vigor and with an abundance of development. The 6,340-sq-km city is
located on the Yangtze River Delta, the most affluent area in China. Bordering
Jiangsu and Zhejiang provinces to the west, Shanghai is also on East China Sea
and Hangzhou Bay. Shanghai has a central location along China's coastline that
has long made it a crucial gateway to the world. There are 13.7 million people
living in the city. As the former international financial center of the Far
East, Shanghai remains the foremost financial city in the country. In
addition, as the core city in the economic circle in the Yangtze River Delta,
the "oriental pearl" also serves as a major traffic artery and foreign trade
port in China.
26th December
2008,
www.tutorial-reports.com
12 BPOs thrive as firms
take to outsourcing in trying times
The global economic slowdown
is beginning to spell a windfall for some BPO firms. Companies such as WNS,
EXL, Steria and Quatrro are Cities that are IT hubs IT service megavendors
finding new opportunities as clients aggressively pursue cost-cutting. With
reality dawning that these are going to be tough times, companies have become
more aggressive on outsourcing, said WNS (Holdings) CEO Neeraj Bhargava. The
BPO firm recently renewed its contract with Centrica that includes a new,
three-year transformational plan for streamlining the energy firm’s
operations. WNS, which is witnessing traction in utilities, telecom and
insurance, is in active discussions for 5-6 deals that it expects to close in
the next quarter.
26th December
2008,
www.economictimes.com
13 Indian banks, real estate, and IT outsourcing pull down Sensex
Sensex is maintaining its bearish down ward trend in its journey below 3,000 by end of 2009. Ina volatile session, the index finally ended with a loss of 240 points at 9,329. The selling intensified in late noon deals amid talks of a possibility of war with Pakistan. The index tumbled to a low of 9,295 - down 411 points from the day's high. The market breadth was fairly negative - out of 2,532 stocks traded so far, 1,598 declined, 865 advanced and 69 were unchanged. The BSE IT and Realty indices dropped nearly 4% each to 2,149 and 2,201, respectively. The Bankex shed 3% at 5,211.
27th December 2008, www.indiadaily.com
14 Bookkeeping
Outsourcing has helped many businesses to boom
If your organization is smaller and you have less accounting task then you can hire accounts clerk to make your task done by them. You will have to hire trained and talented professionals for your accounts task and will have to set up a separate department. If you do not want to go through all these procedure then you can hire bookkeeping outsourcing services. Outsourcing has become a powerful management tool that makes any businesses efficiently working in any department and so bookkeeping outsourcing is one such. It is this strategy that has helped many businesses in making big revenue and has brought huge reputation. And as a result they are widely popular in the market.Bookeeping outsourcing needs careful handling of its data as they are precious documents of an organization. Any business has its ambition to earn large revenue and fame, and so proper maintenance of accounts will save a lot of your revenue and time.
28th December 2008, www.potterworld.com
15 Indian Company
Looks at Options After Stock Plunge
The outsourcing company Satyam Computer
Services postponed its board meeting until Jan. 10 to give itself time to
consider a series of options to shore up investor confidence. Shares of Satyam,
which is listed on the New York Stock Exchange, have plummeted by about 40
percent since a botched effort two weeks ago to buy two infrastructure
companies. The board was expected to meet on Monday to consider a share
buyback, but news last week that the company had been barred from doing
business with the World Bank added to its woes. Satyam, based in Hyderabad,
India, said in a statement issued late on Saturday night its board would
consider measures to strengthen the company’s governance structure, including
increasing the size of the board and altering its composition.
30th December 2008,
www.tutorial-reports.com
Global Economy
16 Oil falls back below $39 a barrel
More bad economic news from the US has sent oil prices falling back below $39 a barrel. US light, sweet crude for February delivery fell to $38.53 a barrel in electronic trading on Nymex. Data on Tuesday showed that US new home sales had fallen to a near 18-year low in November. Bad economic data in the US has been making traders worry about how much the demand for oil will fall in the world's biggest economy. Attention now turns to the weekly inventories figures from the US Energy Department, which are due out later on Wednesday. The inventories figures give an indication of how much consumption of oil has declined. Oil prices have fallen 74% from their peaks in July.
25th December 2008, www.bbc.co.uk
17 IMF approves bail-out for Latvia
The International Monetary Fund (IMF) has approved a 1.68bn euro ($2.35bn; £1.59bn) rescue loan for Latvia. It is part of a 7.5bn euro package that includes funding from the European Union, World Bank and other countries. It will allow Latvia to maintain its currency's peg to the euro, but there will be sacrifices such as cuts in public sector wages and state spending. Value added tax will be raised from 18% to 21%, which has prompted protests in the capital, Riga. Latvia has also agreed to keep its budget deficit below 5% of gross domestic product next year and reduce it to 3% by 2011. The other countries involved in the bail-out are the Czech Republic, Poland, Estonia and the Nordic countries. The Nordic states, and especially Sweden, are involved because their banks have loaned a lot of money in Latvia, and so would be damaged if its economy were to deteriorate any further.
26th December 2008, www.bbc.co.uk
18 Cocoa prices hit
a 23-year-high
London cocoa futures have hit a 23-year-high as cocoa turned out to be the most lucrative commodity in 2008. Cocoa for delivery in May peaked at £1,820 per tonne in London, which was its highest price since October 1985. Cocoa traded in the US has also been rising, although not as strongly because of the strength of the dollar. Most commodities are priced in dollars, even in London trading, but London cocoa is priced in sterling, so traders can benefit from the weaker currency.
27th December 2008, www.bbc.co.uk
19 IMF criticises
the UK's VAT cut
An International Monetary Fund (IMF) economist
has criticised the UK's 2.5-percentage-point cut in spending taxes. Olivier
Blanchard, the IMF's chief economist, said that the temporary cut in VAT would
not significantly influence shoppers' behaviour. In an interview with French
newspaper Le Monde, Mr Blanchard said he did not think the cut was "a good
idea". He also reiterated the IMF's call that governments should be ready to
spend more to stimulate their economies. Mr Blanchard's comments were seized
on by Britain's opposition Conservative politicians, who have argued against
the effectiveness of the VAT cut. Shadow chancellor George Osborne described
Mr Blanchard's remarks as Prime Minister Gordon Brown's "nightmare before
Christmas". Conservative leader David Cameron has previously warned that the
UK cannot afford to borrow to provide the funding for the temporary cut, which
is due to remain in place until January 2010.
28th December 2008, www.bbc.co.uk
20 Mutual Funds lose
Rs 1,50,000 cr in 2008
They used to be an avenue of
mutual gains for investors in both good and bad times for years, but incurred
heavy losses in 2008, when mutual funds became poorer by about Rs 1,50,000
crore or about one-third of their total size. Such has been the impact of
these losses – which accounted for nearly three-fourths of the overall gains
in the previous year 2007 -- that investor confidence got shattered in just a
few months of downturn. In contrast, it had taken five years to gauge the
success of the world's first mutual fund, launched by Massachusetts Investment
Trust, in 1925, and to gain the confidence to grow beyond a single fund.
Moreover, this confidence came only after the first fund survived the stock
market crash of 1929 and came out with positive returns for the investors.
26th December 2008, www.financialexpress.com
21 Gold rises to more than two-and-a-half month high
Gold prices strengthened to a more than two-and-a-half month high at Rs 13,440 per 10 gram on the bullion market here today on fresh stockists demand, triggered by a sharp rise in the global markets. Silver also shot up on good industrial demand. Gold prices rose the most in a week in the overseas market as mounting tensions in the Middle East and South Asia boosted the appeal of the precious metal as a haven. Gold futures for February delivery climbed by USD 23.20 an ounce to USD 871.20 an ounce on Comex division of the New York Mercantile Exchange, the biggest gain for a most-active contract since December 17.
29th December
2008,
www.financialexpress.com
Global Market
22 Rupee depreciates
to 48.20 against dollar
The Indian rupee after appreciating by 26 paise in the opening trade, turned weak to trade 32 paise down against the US currency at 1100 hrs on capital outflow concerns in line with weak trend on the domestic bourses. In quiet trade at the Interbank Foreign Exchange (forex) market, the domestic currency strengthened to Rs 48.20 after steady opening at 48.45/47 a dollar from its last close of 48.45/46 against the greenback and later fell by 32 paise to 48.78 at 1100 hrs. Forex dealers said the rupee failed to get any support from lower crude oil prices in view of increased possibility of a rate cut in the near future. Global crude oil prices traded below USD 40 a barrel level at around USD 39 in Asian trade on Monday.
29th December 2008, www.financialexpress.com
23 Govt approves Suzlon's Rs 1,800 cr Rights Issue
The government on Friday said that it has approved Suzlon Energy's plan to raise Rs 1,800 crore via allotment of shares to the existing shareholders including non-resident Indians through a rights issue, which the wind power major has apparently suspended. The Cabinet Committee on Economic Affairs (CCEA) on Friday gave its approval to Rs 1,800 crore Rights Issue of equity of Suzlon Energy to its existing shareholders, on recommendations by Foreign Investment Promotion Board. However, when contacted, a company official told PTI, We have suspended the Rights Issue and the approval from CCEA would not change our decision. In September, Suzlon received board approval for raising up to Rs 1,800 crore through allotment of shares to the existing shareholders on rights basis. But it later suspended the plans due to choppy market conditions.
27th December 2008, www.financialexpress.com
24 Satyam hires Merrill to mollify shareholder outcry
Under pressure from the investors, Satyam Computer Services, India’s fourth largest software exporter, has engaged the services of DSP Merrill Lynch to look at the available options to enhance shareholders’ value. The company, which is under fire ever since its aborted bid to acquire two promoter-related firms for $1.6 billion, could also see a change in the composition of its board when it meets on January 10 as against the earlier date of December 29. The company on late Saturday evening postponed its December 29 meeting and also broadened the agenda, which earlier was only to discuss the buyback option. There’s been intense speculation that the company’s chairman B Ramalinga Raju may step down from the board. However, another independent director BS Raju came out in support of the present regime. I am not looking for a change in management, he told a news agency.
26th December 2008, www.economictimes.com
25 RPL soars nearly 13 pct
in morning trade
Shares of Mukesh Ambani-led Reliance Petroleum on Friday surged as much as 12 per cent on the bourses after the company commissioned the world's largest refining hub at Jamnagar in Gujarat. On the Bombay Stock Exchange, Reliance Petroleum on Friday opened on a firm note at Rs 85.15, and touched an intra-day high of Rs 89.45, up 12.30 per cent from its previous close. RPL commissioned a 580,000 barrel a day (29 million tonnes a year) refinery adjacent to its parent Reliance Industries' existing 33 million tonne per annum refinery. The two units together will be the world's largest refining complex with an aggregate processing capacity of 1.24 million barrels of oil per day.
24th December 2008, www.financialexpress.com
26 GM’s financial arm receives $5 bn in bailout
The Treasury Department said on Monday that it will provide $5 billion to GMAC Financial Services LLC, the ailing financing arm of General Motors Corp., from the $700 billion bank rescue program. The government will receive preferred shares that pay an 8% dividend and warrants to purchase additional shares in return for the money, the department said. Treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise additional capital. Last week, the Federal Reserve approved GMAC’s application to become a bank holding company, which made it eligible to receive money from the financial rescue fund. The Fed’s approval was contingent on GMAC raising additional funds. The assistance is part of a larger government effort to aid the auto industry and is on top of the $17.4 billion in loans the Bush administration agreed to provide to the industry 19 December, a Treasury Department official said. Separately, GMAC said late on Monday that it has accepted all the bonds tendered in a debt-for-equity swap that was also part of its capital-raising efforts. The company released few details about the results of the swap.
30th December 2008, www.livemint.com
27 Storm clouds
gather for world economy in 2009 as growth dips
If you thought 2008 was bad for the world economy, just wait for 2009. After a year when leading economies slid into recession, the forecasts paint an even grimmer picture for the 12 months ahead. The slowdown in global demand will mean more job cuts, factory closures and bankruptcies, as well as budget-stretching rescue plans and government bailouts running into hundreds of billions of dollars, economists said. We see 2009 as really being a bad year, with recession for most advanced economies and growth decreasing for emerging economies, the head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, said earlier this month.
28th December 2008, www.livemint.com
28 Nikkei up 0.4%,
Toyota rebounds
The Nikkei share average rose 0.4% in holiday-thinned trade on Thursday, with Toyota Motor Corp and other battered stocks rebounding after the US Dow snapped a five-day losing streak. But Isuzu Motors Ltd fell nearly 2% after a newspaper reported the Japanese truck maker plans to implement temporary pay cuts for all of its 8,000 full-time workers in Japan in response to a steep sales decline. The automaker denied the report.
This is simply a rebound, and even small orders can exaggerate market moves as the number of participants is so small,” said Tsuyoshi Segawa, an equity strategist at Shinko Securities. The yen may be a bit softer against the US dollar, but the stock market is paying little attention to the currency market now as it also lacks enough participants. Both markets are in the holiday mood. The benchmark Nikkei edged up 36.03 points to 8,553.13, after losing 2.4% the previous day.
26th December 2008, www.livemint.com
Compiled by:
Himanshu Gupta
BBA (MAHE) L3,S2 - 3rd Year
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
www.SkylineCollege.com