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The Indian Economy (Page 15)

jagdu IF-Dazzler
jagdu
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Posted: 16 July 2008 at 10:29am | IP Logged

The Indian economy update for today

Is India's real estate sector really battered?
A few other good investments such as blue chip companies maybe alterntives that are relatively stable, adequately capitalized, have good business models, had steady sales in housing, retail and multiplexes such as DLF-India's biggest real estate company and Unitech,
India's market for initial public offerings is lackluster, and both Unitech and DLF have delayed plans to raise money through real-estate-investment-trust issues in Singapore.
This has been a miserable year for The Indian Economy. Rising inflation and interest rates have delivered a double whammy: Capital is more expensive, and consumers are scaling back spending. So far in 2008, shares of key players DLF and Unitech have skidded 58% and 61%, respectively. In comparison, India's benchmark index, the Bombay Stock Exchange's Sensex, is down 33%. Property companies have been hit hard because they are vulnerable to a downturn from two directions. Borrowing is becoming more expensive as interest rates rise. At the same time, raising fresh funds in equity markets isn't easy either.
 More expensive credit can be a particular problem for property companies, because they often borrow a large portion of their land-development outlays up front and depend on advance sales to repay loans. But on the demand side, rising inflation -- running at an annual rate of 11.89% for the week ended June 28 -- and higher interest rates, which have jumped to 11% from 7.5%-8% three years ago, mean many consumers are putting real-estate purchases on the back burner. A rise in mortgage rates would affect residential-property purchases and lead to delay in some project launches.Meanwhile, costs for steel and cement, two key building materials, have been rising.
Given that gloomy environment, some sector watchers say investors should stick with India's biggest real-estate companies, whose performance they expect to improve over the longer term.
DLF's board approved an 11 billion rupee ($257 million) share-buyback plan aimed at boosting investor confidence for an attractive investment at Rs.800 a share-his company has a good price to earnings ratio . The plan involves a buyback of 22 million shares at a maximum price of 600 rupees each,  
Unitech, India's second-biggest real-estate company by revenue, that you can buy a peice of at 375 -454 rupees, closed Friday, 189.15 rupees. Unitech net profit fell 52% from a year earlier, to 3.6 billion rupeeshas aP/E ratio at 17.6 times for 2009 and 12.8 times for 2010, which they consider attractive. Unitech sold a larger percentage of its shares, has steadily had a higher P/E ratio than DLF.
In India, there are bears who think things could get even worse for property investments. Companies need to lower the selling prices of homes in order to revive demand,  then the situation for property companies is likely to become more stable.

girivanam IF-Rockerz
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Posted: 16 July 2008 at 11:50am | IP Logged
Inflation Control - Be the change
 

A man eats two eggs each morning for breakfast.  When he goes to the Kirana store he pays Rs. 12 a dozen.  Since a dozen eggs won't last a week he normally buys two dozens at a time. One day while buying eggs he notices that the price has risen to Rs. 16. The next time he buys groceries, eggs are Rs. 22 a dozen.

When asked to explain the price of eggs the store owner says, "The price has gone up and I have to raise my price accordingly". This store buys 100 dozen eggs a day.  He checked around for a better price and all the distributors have raised their prices. The distributors have begun to buy from the huge egg farms.  The small egg farms have been driven out of business.  The huge egg farms sell 100,000 dozen eggs a day to distributors.  With no competition, they can set the price as they see fit. The distributors then have to raise their prices to the grocery stores. And on and on and on.

As the man kept buying eggs the price kept going up. He saw the big egg trucks delivering 100 dozen eggs each day. Nothing changed there.   He checked out the huge egg farms and found they were selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs.

Then week before Diwali the price of eggs shot up to Rs. 40 a  dozen. Again  he asked the grocery owner why and was told, "Cakes and baking for the holiday".  The huge egg farmers know there will be a lot of baking going on and more eggs will be used. Hence, the price of eggs goes up. Expect the same thing at Christmas and other times when family cooking, baking, etc. happen.

This pattern continues until the price of eggs is Rs. 60 a dozen. The man says, " There must be something we can do about the price of eggs".

He starts talking to all the people in his town and they decide to stop buying  eggs. This didn't work because everyone needed eggs.

Finally, the man suggested only buying what you need.  He ate 2 eggs a day. On the way home from work he would stop at the grocery and buy two eggs. Everyone in town started buying 2 or 3 eggs a day.

The grocery store owner began complaining that he had too many eggs in his cooler.  He told the distributor that he didn't need any eggs.
Maybe wouldn't need any all week.

The distributor had eggs piling up at his warehouse.  He told the huge egg farms that he didn't have any room for eggs would not need any for at least two weeks.

At the egg farm, the chickens just kept on laying eggs.   To relieve the pressure, the huge egg farm told the distributor that they could buy the eggs at a lower price.

The distributor said, " I don't have the room for  the %$&^*&% eggs even if they were free".   The distributor told the grocery store owner that he would lower the price of the eggs if the store would start buying
again.

The grocery store owner said, "I don't have room for more eggs. The customers  are only buying 2 or 3 eggs at a time.  Now if you were to drop the price of eggs back down to the original price, the customers
would start buying by the dozen again".

The distributors sent that proposal to the huge egg farmers but the egg farmers liked the price they were getting for their eggs but, those chickens just kept on laying.  Finally, the egg farmers lowered the
price of their eggs.  But only a few paisa.

The customers still bought 2 or 3 eggs at a time. They said, "when the price of  eggs gets down to where it was before, we will start buying by the dozen."

Slowly the price of eggs started dropping.  The distributors had to slash their prices to make room for the eggs coming from the egg farmers.

The egg farmers cut their prices because the distributors wouldn't buy at a higher price than they were selling eggs for. Anyway, they had full warehouses and wouldn't need eggs for quite a while.

And those chickens kept on laying.

Eventually, the egg farmers cut their prices because they were throwing away eggs they couldn't sell.

The distributors started buying again because the eggs were priced to where the  stores could afford to sell them at the lower price.

And the customers starting buying by the dozen again.

Now, transpose this analogy to the gasoline industry.

What if everyone only bought Rs 200.00 worth of Petrol each time they pulled to the pump?  The dealer's tanks would stay semi full all the time.  The dealers wouldn't have room for the gas coming from the huge tanks.  The tank farms wouldn't  have room for the petrol coming from the refining plants. And the refining plants wouldn't have room for the oil being off loaded from the huge tankers  coming from the oil fiends.

Just Rs 200.00 each time you buy gas. Don't fill up the tank of your car. You may have to stop for gas twice a week, but the price should come down.

Think about it.


Also, don't buy anything else at the fuel station; don't give them any more of your hard earned money than what you spend on gas, until the prices come down..."

...just think of this concept for a while.

(I was sent this by a friend, don't know if this strategy works, but giving it a try)

jagdu IF-Dazzler
jagdu
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Posted: 17 July 2008 at 8:07am | IP Logged
Demand for Iron ore used in metalurgical coal processed for steelmaking in India has caused an increase in prices. India's steel magnate Mittal's company Arcelor Mittal in Europe accounts for 44% of Cleveland Cliff's, US largest Iron ore producer's sale in North America.

Edited by jagdu - 17 July 2008 at 8:14am
jagdu IF-Dazzler
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Posted: 18 July 2008 at 9:00am | IP Logged
The Indian Economy does and Bollywood.
"Bollywood calls in Rambo for strike on U.S. cinema." So screamed a recent headline in India about Sylvester Stallone's contract to star in a local movie. Indians are excited not only about the prospect of American influence in Bollywood, India's Hindi-language movie industry, but also that of Indian influence in Hollywood. It will take more than Rambo, however, for the world's two largest movie industries to smash cultural barriers in each other's nations.

Signing an American movie star is a coup for producer Sajid Nadiavala and a first for Bollywood. But Mr. Stallone isn't the first American in the movie business to have discovered India. Steven Spielberg's DreamWorks studio is negotiating a $500 million partnership with Mumbai-based Reliance Big Entertainment. Reliance Entertainment announced earlier at Cannes that it would also bankroll eight Hollywood studios owned by Nicholas Cage, George Clooney and others.

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Associated Press/Kobal Collection
Aishwarya Rai (l) and Sylvestor Stallone.

There are high expectations on both sides. "Substance" is not a word usually associated with Mr. Stallone, who is best known for shoot-'em-up roles like Rambo and Rocky. But any import from Hollywood may very well bring fresh air to an industry saturated with sequins and song-and-dance routines.

On the flip side, Bollywood's growing ambitions accompany Indian investment in Hollywood. Amit Khanna, chairman of Reliance Big Entertainment, says that his firm will "approve what goes into production" at the eight studios the Indian multinational is financing. Add to that Reliance's investment in 240 movie screens around the U.S., and suddenly India seems ready to deliver its product in America. Two Reliance-financed Bollywood productions, "Broken Horses" and "Kite," are slated for limited releases in the U.S. within the next two years.

But how real are these expectations? When it comes to globalization, cultures operate differently than economies. The India's fast-growing Economy may be receptive to foreign investment, but this doesn't mean its movie business is too. The "Rocky" star is unheard of in rural parts of India and is unlikely to prove much of an attraction to the millions of fans who follow their Bollywood stars almost as obsessively as they follow their cricket stars.

Conversely, while the notion of India may charm American investors, moviegoers are a different market. Indian productions may fascinate film studies majors and Manhattan art-house audiences, but it's unclear whether they'll appeal more broadly.

Movies are about familiarity. "A feeling of comfort has to be there" for a movie to succeed. That is the reason that "Americans don't like foreign movies. A Bollywood movie with Indian cultural themes and actors sells tickets with the Subcontinent's three-million strong diaspora in the U.S., but not with the average American.

Indian moviegoers, too, are seeking familiarity. So far Hollywood seems to understand that in India, one must do as the Indians do. In November, Sony Pictures released "Saawariya," the first Indian movie financed from abroad. "Saawariya" has Bollywood written all over it: song, dance, love story -- all the usual ingredients. Hollywood knows what sells in India; it is not about to replace a formula that sells 3.6 billion tickets annually.

In India, Hollywood simply cannot be itself. It is unable to compete with a local industry that already churns out more than 1,000 movies a year. With a mere 5% share of the market's revenue, Hollywood's regular American products are considered second-tier. As Mr. Khanna puts it, Hollywood is forced to play by Bollywood's rules. "The days of cultural imperialism are over," he says.

With such limited cultural prospects, the Hollywood-Bollywood story is limited to a financial side. Yet, some predict that as India liberalizes, the movie landscape may alter. "If India becomes like Bangalore then more Indians will start watching Hollywood with the whiz-bang technology capital of India, populated by upper- and middle-class youth. As more Indians get wealthier, their tastes will reflect that currently exhibited only by the upper classes.

Even then, it is unlikely one industry may replace the other. In India, Hollywood will become at most an alternative form of cinema for a greater number of Indians. Bangalore may love Rambo, but there is no shortage of fanfare for Aishwarya Rai, Bollywood's premier actress, in the city. Americans, too, may start warming to Indian culture, but the long reign enjoyed by the likes of Mr. Stallone is not about to end. Globalization can wage a long war to remove barriers between nations, but this is one battle it is not going to win anytime soon.

jagdu IF-Dazzler
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Posted: 20 July 2008 at 1:49am | IP Logged

Good for Mukesh Ambani: MTN backs off

A bitter rivalry between a pair of Indian billionaire brothers has scuttled negotiations to combine two of the developing world's largest mobile-phone carriers.South Africa's MTN Group Ltd. and India's Reliance Communications Ltd. called off talks Friday over a potential multi-billion-dollar deal that would have created an emerging-markets wireless giant. Behind the collapse of the talks is the long-running feud between Mukesh and Anil Ambani, heirs to the Reliance empire of companies founded by their father. Since the father's death six years ago, the two have been trying to best each other in the highest echelons of Indian business.
jagdu IF-Dazzler
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Posted: 21 July 2008 at 8:40pm | IP Logged
Indian sibling rivalry scuttles The Indian Economy's largest overseas deal. MTN R.com
A company of $50 billion and 110 million customers never happened just like to Bharti Airtel. R.Com's stock went down 24% since May. Still Anil Ambani is in talks to invest more than $500 million to form a movie making joint venture with Steven Spielberg.
Mukesh is meanwhile trying to define a moment in history by starting a nationwide retail chain and pushes into energy.
jagdu IF-Dazzler
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Posted: 26 July 2008 at 1:50am | IP Logged
Terrorists try to derail The Indian Economy
A series of seven explosions across Bangalore, India's high-technology capital, killed one person and injured more than 15 Friday.
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Reuters
A series of small explosions Friday rocked Bangalore, India's high-tech capital, which has been relatively sheltered from terrorist attacks.

The attack served as a reminder of how the country, despite its economic expansion in the past few years, remains vulnerable to terrorism. Officials say the explosions were small but well-coordinated, taking place within minutes of each other early Friday afternoon.

There were no early claims of responsibility for the blasts, which police say they are treating as a terrorist attack. Bangalore, a city of about six million, is the home of many of India's outsourcing and software super powers, including Infosys Technologies Ltd. and Wipro Ltd. Both companies said none of their employees were affected but they are considering tightening security. There were no reports of business operations being affected. Bangalore is also the home of large back-office research and programming operations for big international names such as Microsoft Corp., Intel Corp. and International Business Machines Corp.

Indian cities have been targets of attacks for years from Islamic terrorists as well as other violent movements across the diverse nation. While Bangalore has been relatively sheltered from terrorism, this wasn't the first time it was targeted. In 2005, a retired professor was killed when gunmen opened fire on a group of people leaving a research convention at Bangalore's Indian Institute of Science.

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Getty Images
Indian police officers with a sniffer dog searched for evidence at a blast site in Bangalore Friday.

Other cities have seen much bloodier attacks. In May, a series of blasts in the popular tourist destination of Jaipur in northern India killed more than 60. In July 2006, bomb blasts tore through crowded commuter trains in Mumbai, killing more than 100. The most deadly attack was in 1993, when bombs exploded across Mumbai, targeting symbols of wealth such as hotels, offices and the Bombay Stock Exchange.

Terrorists may be targeting the motors of India's expansion such as finance, technology and tourism in hopes of discouraging investment and growth in the country.

Terrorists target The Indian Economy  where India's economic growth is symbolically centered to undermine investor confidence and send out the message that they can hit anywhere.



Edited by jagdu - 26 July 2008 at 1:55am
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Posted: 27 July 2008 at 9:21pm | IP Logged
Kamal Nath frustrates the West
Success or failure of the Doha talks revolve around Kamal Nath for the West, who are trying to attain a good trade deal from the Indian Economy. Since 2001 India's imports have risen to 217 billion from 57 billion and the West wants acces to India's billion customers whilst dealing with a global Indian leader for trade negotiations in India's minister, the only one that belongs to the G-20 and G-33 group. Kamal Nath is not willing to negotiate the lives at the expense of poor people for the benefit of the rich west and it's non-competitive industries.

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