The Indian Economy - Page 9

Mukesh vs. Anil Ambani
Will the brothers not be able to agree on MTN without going through legal proceedings? R. Com, which to my surprise is in my building, is Anil Ambani's and is talking with MTN. Mukesh says he has a say in the sale of R.Com. Will MTN go to the Bombay high court as a defendant? Will Reliance make a claim for exemplary damages against MTN? R.Com has asked the Bombay high court not to rule on the matter. If the court rules, then MTN does not have 4 months to wait and one assumes MTN will not wait too long to announce a deal. The crunch is Anil's 66% in relaince, which MTN will swap and Reliance will be MTN's subsidiary. Talks are continuing.

Suzlon Energy
The Indian company, the world's 5th largest wind turbine maker by sales are facing mounting problems. The power grid in India where Suzlon has most of it's operations runs on a power frequency of 50 Hertz, different from in other countries. Some wind turbine rotors made by Suzlon energy have cracked. The heaters on the 264 foot tower have caused electrical problems.
Suzlon, based in Pune, India, said it was commited to fixing the troubles. To date, Suzlon has disclosed only the problems with the turbine blades which it says it is spending $30 million to fix.
Founder Tulsi Tanti shot Suzlan into the top ranks of global wind manufacturers in less than a decade through cheaper rates in India and promotes green energy in many countries. 3 years ago 90% of Suzlon's sales were in India. Today international sales account for 60% and exports will jump 75% of total sales next year. About $3 million each, Mr Tanti knew the window was open so he charged like crazypricing 25% cheaper than major competitors.In it's financial year ended Mar. 31 Suzlon revenue jumped 71% to 3.19 billion. The co. remains commited to ambitious plans to double annual production capacity to 5700 megawatts by 2010, which will make it the fastest growing wind turbine manufacturer globally.

Bollywood ties to Hollywood should help firms like Adlabs, UTV
A recent string of joint ventures and investments is cementing ties between the worlds most profitable moviemakers, hollywood and the world's most prolific, bollywood.Adlabs and UTV will become blockbusturs, they say.
Viacaom is joining Indian television, Sony is joining Indian pictures. The biggest emerging projects are with UTV and Reliance ADA group. Reliance may invest $500 million and join Steven Spielberg. Indain investor groups could profit more than most, because thy can use the new connection to make more money in India's booming market. Indian incomes have been climbing thanks to the 9% growth. The incomes have pushed up receipts from the domestic movie industry at an average clip of more than 15% a year.
Much of the growth in india is coming through smarter distribution. Using DVD's cable tv, internet and even mobile phones to moviegoers bollywood producers are able to generate more rupees for every film.
UTV realised it was losing a lot of money to pirated version of movies selling for less than $1. It launched the legal dvd version less than 2 months after a movie released in theaters and sells them for $10. UTV has a target of Rs. 871 for 2008 and as of today s at 759.75Rs., the profit of the co. rose 77% from a year ealier to 188 million Rs-$4.4 million.
Shares of adlabs plunged this year 7.2% as of monday to 440.05Rs., this year they have waned 68%.
India makes 100 odd movies a year at $3 billion. Hollywood just makes 600 and earn revenue in excess of $80 billion.

Global shares dumped by economic storms
In addition to inflation, emerging markets like India are wrestling with the aftershocks of huge stock run ups last year.
Mumbai has dropped 34% this year and took another beating for this quarter, down 14%. Double digit inflation has spooked foreign investors who have pulled out more than $6 billion this year according to the securities exchange board of India. A year ago Indian companies trading at PE multiples of 20-25 were thought to be highly valued, now multiples of 12-15 are more common.

Nuclear pact with the US
Even the US nuclear pact with Russia is not going smoothly because of counterproliferations strategies. The US is trying to pass a similar deal with Russia as it is with India. The troubled Russian agreement comes as a similar nuclear-cooperation deal signed with India in 2005 appears unlikely to be passed into law before George Bush's 2nd term, largely because of legislative opposition in Ne Delhi.

Thanks for the posts, Jagdu. Haven't been able to keep up as I had a friend in town over the weekend and I had to co-teach a course with him for two days earlier this week.

In addition to moving into Hollywood, Reliance also appears poised to make inroads into the FM radio business in Singapore. Didn't catch the details but I think they are planning a 24-hour station with Hindi and Indipop music and news. At present, we have only a 24-hour Tamil radio station here, so Reliance will be filling a gap and finding a niche to serve the growing north Indian expatriate population in Singapore.

Thanks Bon. One would also appreciate your thoughts on the windpower industry in India. And any other short stories on industry or Indian personalities, which the Indian economy is all about.

MTN, Reliance to close deal?
Since late May, R.Com controlled by Anil Ambani has been in exclusive talks with MTN over a possible combination that would create a telecommunications empire strectching from Africa through the middle east to India. The deal will be worded in such a way that it would be likely to avert a lawsuit from being filed. In any case, the co.s will move forward and challenge Mukesh Ambani i and when it comes. The exclusive period in which R.com and MTN can hold talks ends July9.
Talks between the 2 are centered on Anil Ambani likely to sell his 66% in R.com to MTN in a share swap. MTN wants the 74% stake that is allowed by Indian regulators in .com, but since a close 10% stake is already held by foreign investors MTN may have to settle for 64%. MTN my make a general offer and buy the remaining stake.

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The fortunes of India's PM Manmohan Singh and a landmark nuclear technology deal's fate hangs in balance. PM Singh's Congress party which has ruled for most of th nation's 61 years since independence has been seeking colorful allies of late. Apart from it's coalition, the Indian congress needs 44 seats if it's power is challenged.
75 year old Singh is expected to deliver a final decision on proceeding with the nuclear deal to George Bush in next week's G8 summit. Under the terms of the deal, the US would share nuclear technology with energy strapped India and India would allow inspection of it's facilities.
US officeials have repeatedly said it is too late to get approval for the pact from the US congress before Bush leaves. India must still get approval from the international atomic energy agency and a group of nations that monitor the sales of nuclear technology called the nuclear suppliers group.
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Truck drivers go on strike seeking fuel relief.
Millions of truck drivers went on strike across India to protest rising fuel prices and road tolls. The all India Motor Transport Congress which represents 4. million truckers is demanding lower taxes on diesel and repeal of a recent increase in toll-road fees. With 70% of goods transported by truck, a prolonged strike could have serious implications for the Indian economy. And would add to India's coalition govt. which is battling 13 year high inflation rates.

Jagdu, I can't really comment on your windpower industry story; too technical for me. I have a suggestion regarding these pages. Instead of writing on macroeconomic issues and the hard facts and figures that go with them (which most of us may not be able to relate to), why don't you concentrate on business, focusing on the new industry players and their new directions, inspiring tycoons and their business philosophies, developments at the state level and the like. Stories such as the one on Reliance and its foray into Hollywoood above, on strikes, etc.

I recently saw a CNN video clip focusing on Anand Mahindra and was highly impresssed by his business philosophy. Unlike the businessman of the past who micromanaged, he seems to be focusing on empowering his workers, firing their imaginations and building a sense of commitment and vision. Such leadership styles, I think, go a longer way in inspiring workers and contributing to the bottomline than the old style management.
Edited by Bonheur - 15 years ago

thanks jadgu for the PM

will go thru fully for sure

Truck drivers halt strike.
Indian truck drivers called off their strike Friday after the govt. met their demands to roll back rising road tolls, ending a stanoff that could have paralyzed much of The Indian Economy. The transportation ministry confirmed the agreement pledging not to increase toll taxes on national highways at least for a year. Gurinder Pal Singh AIMTC leader, said the officals promised to consider their other demand, a lower tax on diesel.
With 70% of goods trasnported by truck, a prolonged strike could have had serious implications for The booming Indian Economy.

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India is still mulling a move to conusmmate a nuclear deal because a socialist party has asked for more time to support it. Without it's support, the govt. could topple. Mulayam singh said he needs to consult nuclear scientists before making a final decision.