Big projects in limbo

The global economic crisis triggered by the sub prime mortgage crisis (housing loan crisis) in the U.S. could stifle the growth of infrastructure in India. With credit hard to come by, investments needed for the infrastructure sector such as roads, ports, power projects, steel, cement and others could all be jeopardised as they all need influx of billions of dollars.
Project financing faces problems as interest rates soar. Banks are reluctant to lend even though the RBI has reduced the cash reserve ratio, CRR, ( that is the amount banks need to retain with themselves) and the statutory liquidity ratio SLR (the amount banks need to invest in Central government bonds and securities) to inject greater liquidity into the market.
The Indian government obviously cannot match China which is doling out a massive rescue package for infrastructure of $585 billion (about Rs. 30 lakh crore).
A 4000 MW project at Jharkhand has gone for a toss as the project financiers are hard put to raise the $ 4-5 billion required for the project. Half a dozen highway projects valued at $6 billion could face delays of as much as two years. While countries around the world are shutting down projects for lack of finance, India, which is on a growth path with an anticipated GDP growth rate 7 per cent, cannot afford to do so. India was expecting around $100 billion a year in investments for putting infrastructure on fast track. It now appears that only projects with big names as developers would get finance.

Another entrepreneur turns author...

Nandan Nilekani, co-founder, Infosys Technologies Ltd, is turning an author. His book Imagining India - Ideas for the new century, was launched in New Delhi on 24 November followed by launches in his home town Bengaluru and other metros. The book is slated for release in the United States, where Infosys has most of its software contracts, in early 2009. It would be Penguin's first Indian debut non-fiction work of an author. Nilekani would join the illustrious band of authors whose works Penguin has published in India - Nobel Laureates Amartaya Sen and Joseph Stiglitz, and Thomas Friedman, all economists, journalist Malcolm Gladwell, film maker Michael Moore, biologist Richard Dawkins….
Nilekani, who has been in the forefront of India's IT revolution, has the book divided into four parts. It dwells on globalisation and its effects, demographic trends and advantages India has the changing role of the entrepreneur and technology. The second part highlights the infrastructural challenges, the third looks at issues that confront political ideologies and the fourth, issues such as democracy, technology, health, pension and entitlements, energy and environment.

The deal of the year...

Japan's largest telephone company, NTT DoCoMo, has acquired a 26 per cent stake in Tata Teleservices Ltd (TTSL) making it one of the biggest telecom deals in the country this year. The Japanese firm is buying the stake at a whopping $2.7 billion (or about Rs 13,200 crore) to become the world's sixth global telecom giant to invest in an Indian telecom venture.
DoCoMo will get a hold in the Indian market, being billed as the second largest telecom market in the world particularly for mobile phones. The mobile penetration was just 51 million in 2004 and it is a staggering 270 million today. Some of the firms to have bought stakes in Indian companies before the Japanese company are: Telenor ASA, Emirates Telecommuni-cations Corp., (Etislaat), Telekom Malaysia Bhd and AFK Sistema.

Telenor scam will not scalp DMK minister

While media may be carrying on a campaign against the A Raja, minister of telecom & IT in the UPA cabinet, for the alleged bungling in the Telenor stake sale, it is going to be difficult for the opposition to scalp the minister. Prime Minister Manmohan Singh has to suffer the infirmities of a loose coalition. The support of the DMK is essential for the survival of the UPA government and the DMK won the lucrative portfolio through hard bargaining.
What went wrong in the spectrum deal by which those involved in the Telenor deal benefited at government expense? Raja, telecom circles say, made a big mistake: He did not auction licences for mobile phone services and instead issued them on a loose first-come-first-served basis, a practise that was at least four years old. Companies were able to enter the sector paying a modest licence fee that was fair in 2004, when India had a cell phone penetration of just 51 million users. But in April 2008, when Spectrum or 3G services were allotted, India had 270 million registered subscribers for cell phone services. India has emerged as one of the biggest mobile phone markets with so many companies making a beeline for India.
The firms that got the licences on the basis of the 2004 fees were able to sell their stakes to foreign collaborators for many times the amount at which they originally bought them. With this episode, it has now become imperative for the government to overhaul the telecom policy.

TCS enters biomed market

Tata Consultancy Services (TCS) , India's largest software firm in terms of revenue, is diversifying its investments. It is following a worldwide trend and investing in biomedical companies is entering medical genetic diagnostics, TCS one of the fastest growing sectors in bio medicine.
It will not only help develop products for companies such as Sequenom and Celera Genomics, TCS is mining the multiple genomic data bases of several California-based companies. It hopes to build a large revenue base as it feels life sciences sector would generate enough business.

Demand for more creeping acquisitions

With FIIs turning heavy sellers in the wake of the global financial crisis, promoters of Indian companies who have been buying shares from the secondary market, want the stock market regulator SEBI to raise the limit on creeping acquisitions by promoters to be raised to 10-15 per cent from the existing 5 per cent a year.
Promoters of Bharti Airtel, Mahindra and Mahindra, Essar, NDTV, Phoenix Mills, Dr Reddy's Labs, Asian Paints, Bajaj Holdings and Investments have all been buying shares in their own companies. The Tatas and Aditya Birla group have bought shares in their own rights issues. Many promoters had wooed foreign investors in 2007 when the stock markets witnessed bullish trends. But they have seen their stocks virtually roiled by the continuous sale by FIIs this year.