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MONDAY, 30 MAY 2011

Batas Villagran Out to Attract Youngsters

BUSINESS OF BRANDS 4

Hail the Emergence of a Trading Nation

VIEWPOINT 17

Stock Up on Equities Now for Long-term Gains

PERSONAL FINANCE 13

Is there another bubble building up in the internet sphere?

Dalit Entrepreneurs Add Glitter to Star Cast of India

Capitalism in sinews and jobs in their kitty, the new poster boys become the toast of Corporate India
NAREN KARUNAKARAN
MUMBAI

86%
YES

12%
NO

2%
CANT SAY

TODAYS QUESTION

Will the inflationary fears fuel negative sentiment in the market?

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Dalit capitalism, on the fringes of socioeconomic debate for a while, finally ordained its high priests, bared the material possessions and aplomb of new Dalit wealth, and basked in a serenade by officials of the Bombay Stock Exchange (BSE) at a coming out party of sorts in Mumbai on Saturday . Some of the 1,000-odd signatories to this new take on capitalism members of the fledgling Dalit Indian Chamber of Commerce and Industry (Dicci) met at The Rooftop Rendezvous of Hotel Taj
ARINDAM

Mahal in south Mumbai, the evening hiring charges of which exceed `5 lakh. The launch of Diccis Mumbai chapter, in a way heralds the willingness of this , small set to stand up and be counted among wealth creators of a new and reforming India. The deliberate choice of venue, the BMWs and limousines in the parking lot, and display of the usual trappings of wealth was to signal their arrival, as it were, in Indias financial capital, the city of opportunities, and home to some of the most distinguished industrial groups of the country . We are now in the league of jobgivers, says Milind Kamble, chairman,

Dicci. The congregation even found a poster boy in Rajesh Saraiya, CEO of the UK-based SteelMont, which has a turnover of about $400 million. Saraiya, a penurious youth from rural Uttar Pradesh, began his career in Ukraine as a Russian language interpreter to billionaire steel tycoon Laxmi Niwas Mittal. He eventually got into steel trading and is now one of the biggest buyers of steel from SAIL, the Indian public sector giant. Would he get into steel manufacturing, emulating his first employer? I have just started my India operations, he says. Its early days; but nothing can be ruled out.

CAPITAL, NOT CASTE

The confidence and resolve of the bunch of Dalit entrepreneurs at the meet was infectious as they dressed in dapper busi, ness suits and with glasses of single malt whisky, recalled their early days. The caste prejudices they confronted as struggling Dalits were, however, cast aside and not broached. Look ahead, the future belongs to us, says Ashok Khade, managing director of the `550-crore DAS Offshore Engineering. Khade employs 4,500 people, of which 152 are BTech engineers.
Access to Capital Big Hurdle 25

Inside Story
CBI Probing Violation of Licence Norms by Idea, Tatas in 2005-06
The CBI is probing Idea Cellular and the Tatas for alleged violation of licence conditions in 2005-06. CBI officials say their investigation has been spurred by the similarity of these lapses to those allegedly committed by Swan and Reliance Telecom.

Q4 Net Best in 3 Years Foreigners & PEs May But Potholes Ahead Not be Able to Exit Easily
Curbs on cross-border flows to impact pvt equity deals
SUGATA GHOSH
MUMBAI

Corporate

Southwest Monsoon Sets in Over Kerala, 3 Days Ahead of Schedule

Southwest monsoon set in over Kerala, three days ahead of schedule, bringing heavy rains in several parts of the state on Sunday, the India Meteorological Department said. All the major parameters showed the onset of monsoon over Kerala and conditions were favourable for its further advance, the Met Department said.

DLF to Mop Up `7,000 Crore From Sale of 5 IT Parks & Hotel Business
DLF plans to sell developed properties, including five IT parks and its hotel business, hoping to mop up `7,000 crore in the next two years and reduce its burgeoning gross debt of `23,990 crore.

Corporate

any foreign investors and private equity funds putting money in Indian firms will soon discover that pulling out of the country can be a lot tougher than they imagined. For years, offshore financial and strategic investors have struck deals with their Indian partners to put in place an easy exit arrangement. It gave the overseas investor the right to sell back his equity shares to the promoter of the Indian company where he had invested. The understanding between the two partners helped closely-held Indian firms attract overseas financial and strategic investors who, in turn, derived comfort from the arrangement. But now, there are clear indications that the Reserve Bank of India will soon shut the exit door. The central bank, which often has the last word on cross-border fund flows, has recently disapproved the sellback transaction by a foreign investor, said a banker familiar with the case.

The decision can have far-reaching implications. Eight out of 10 private equity deals have such underlying agreements, said Anup Shah, partner at Mumbai-based chartered accountancy firm Pravin P Shah & Co. Till now, the RBI has been objecting to such deals, particularly by real estate firms, where securities issued by Indian firms (to foreign investors) are debt or quasi debt in nature, such as convertible This is the debentures, optionally first time RBI convertible bonds, comhas objected pulsorily convertible pato sell-back pers and preference transactions shares. But this is the in a plain first time it has objected equity deal to sell-back transactions in a plain equity deal. Its an extreme view, said the banker. Legally a right to sell back securities is , executed by giving the foreign investor a put option that he can exercise to sell the shares back to the Indian promoter.
Most FDI Against Rights 24

The Tough Regime & Its Implications...

Whats the Message to Foreign Investors?
An investment has to be either debt or equity. Do not cut deals with Indian partners where debt is made to look like equity. This was done through a put option to foreign investor

Data for 1,965 companies indicate no impact of rising interest rates, inflation on Indian Inc earnings
RAMKRISHNA KASHELKAR
ET INTELLIGENCE GROUP

In the Right Quarter

Net Profit Margins: Net profit margin at 9.3% during Q4 of FY11 is the best in almost 3 years Interest cost: Interest costs rose 33.6% over year-ago figure. Still, at 2.34% of net sales, impact on profitability was least among 4 quarters of FY11

23.6%
Y-o-Y net sales growth. Demand was strong though firms passed on a part of cost hikes

Are Rules Being Tightened?

Yes. Till now RBI has banned put options on convertible debentures and preference shares. Now it is disapproving put options on plain equity shares

Are Regulators Taking a Case-by-Case Approach?

RBI as well as Sebi seem uncomfortable with put/call options (on Indian shares) given to non-resident investors

India Inc seems to be in the pink of health if one goes by the results of the quarter ended March. There appears to be no sign, so far, of inflation or rising interest rates biting into corporate earnings. But analysts say the future may not be as rosy . Data compiled for 1,965 companies shows they earned higher net profits per rupee of sales during the March quarter, the best performance in almost three years. These firms exclude banking, finance and staterun petroleum companies. The operating profit margins of these firms, too, were better than the year-ago figures, indicating that rising borrowing costs have not pinched their profits yet. Rising inflation, which is pushing up the cost of raw materials, also did not impact the profit margins, as was expected.

Effective Tax Rate: Proportion that firms pay towards tax out of pre-tax profits has hit a 2-year low of 23.5%

The proportion of raw material costs to net sales did go up to 43.4%, the highest since the quarter ended September 2008. It was 110 basis points higher than the March 2010 quarter. This means India Inc was largely able to pass on the rising cost of raw materials to customers.
Rising Prices Didnt Hit Demand 21

Intelligence Bureau Wants Mobile Cos to Store Call Data Records for 5 Years
The Intelligence Bureau wants all mobile phone companies to store call data records, or details of all phone calls made by their customers, for five years, a move is set to be vehemently opposed by companies.

CORE ISSUE: 65% OFFSHORE FUNDS TRAIL BENCHMARKS

Corporate

Slack in Policy Crimps India-Focused Funds

SHAILESH MENON
MUMBAI

PSU Employees Shifting to Sick Units May Get Additional Benefits

Board-level officials and employees in staterun companies may get extra benefits if they agree to serve in sick public enterprises as part of efforts to enlist good talent to help turn around such entities.

On Bad Roads
High Hopes, Poor Growth
AUM * RETURN

AA udited Financial Results for the period ended 31-03-2011

Economy

15

With Todays Edition

Investors Guide
INDIAS BEST EQ UITY BROKER 2010

S llC f
www.smc l ndiaon line, corn

T r i

More than 65% of the top India-focused offshore funds trail their benchmarks as their bet on infrastructure burnt holes in portfolios, dealing a setback to hopes of attracting a trillion dollars to build roads, ports and power plants. HSBC India Infra Equity Fund, with $94 million in assets, is the worst performer in the India fund category with a loss of over 17% in dollar terms. Triple-star rated Swedish fund Carnegie Indienfond, with $188 million, has lost 10% in base currency Swedish Krona; the Swedish fund returned just about 14% in dollar terms. Four-star rated Danish fund Jyske Invest Indiske Aktier is down 1% in Denmark Krone terms and Japans PCA India Equity fund with $1.4 billion corpus lost a percentage in Japanese yen terms and just over 8% when converted into dollar terms. Some 76 of the top 117 offshore funds, investing exclusively in India, have underperformed the MSCI India index, data from fund tracker Morningstar shows. These funds together manage $43,500 million in investments. The MSCI index has gained over 15% over the past year. The 30-share

BGF India 1057 Amundi Funds India 828

SI.

Particulars Parti j lars

13.3%

_________

3 mmnth s Correspp nding months o o ended 3 months 31.03.2011 31.03.2011 ended In the previo us year 31.032010
40,565.92
-

fear to date
gur s for cun nt pellod ended

Co.Yes onding

(Rs.inlakhs) For the

31 03 2011
( i s

r ot 18r uiff ) 174 1, 74,912.69

-

18 months Financial perIod Year ended ended on 30.092009 31 .03.2010 ( tk oI 12r1um ) 1,14 1 , 14 ,924.02
-

1. ncome
13.2%

________

First State Indian Subcontinent 439.5 12.27% Aberdeen Global India Equity 4724.1 9.9% Aberdeen SP India Opportunities 588.6 9.63%
Returns converted to USD denominations
(* Million) SOURCE: MORNINGSTAR

Net Sales I Income from Operations Other Operating Income

23,432.77 432.77 , 8297 82.97 23,51574

69,886.15 69 ,886.15 226.87 226.87 70113.02 2,674.57

54 ,762.62

Total 2. Expenditure (Increase)IDecrease in Stock in Trade and Work in Progress C un picn of Raw Wated s I Cost of Traded Geads
Employees CosI Depreciation

40,56592 40,565 92
________

1 74912.69 1,74912.69 (2,625.97)

I 1,45,761.42

1,14,924.02 3 028.49 91,801.61 971.41

565.30
34, 34,69 143 5 5 5 36,553 36, ,

(534.29)
19 ,2%.97

178.90

381.48
1,705.13 21 ,028.19

Sensex has gained 11% during the period. Among large funds with assets over $2 billion, Finlands Nordea Intia Kasvu India Equity Luxembourg-based FF India , Focus Fund, HSBC GIF Indian Equity Fund and Aberdeen Global Indian Equity Fund have returned 1-10% in a year in their respective local base currencies.
Poor show by infra, realty stocks 22

States Should Pay Cash If They Fail to Provide Grain: Draft Food Bill
National food commission on cards
livery of grain to targeted public distribution system outlets. The National Food Security Act, 2011, is the most expansive politicians have called it showpiecelegislation of the UPA government in its second term in office. It covers all India, except Jammu and Kashmir. The priority households, the main beneficiaries of this bill, will be selected from the poorest 46% in rural areas and 26% in urban areas. Another 29% and 22% of the population from rural and urban areas, respectively will be treated as general category . The bill also guarantees 7 kgs of grain to every person belonging to priority households and 3 kgs to individuals from general households every month at subsidised prices.
Landmark scheme 25

Big Mummy of All Welfare Schemes

The Food Security Bill is ambitious in size and detail

BINOY PRABHAKAR
NEW DELHI

Who will benefit?

Priority Households To be selected from the poorest 46% in rural and 26% in urban areas General Households Another 29% and 22% from rural and urban areas

The draft Food Security Bill makes it compulsory for state governments to pay a food security allowance to targeted sections in case of failure to supply foodgrain through a sweeping welfare scheme targeted at nearly three-fourths of the population. The amount will be decided by the central government. The draft bill also presses for a radical overhaul of the food distribution system by giving incentives to independent agencies that procure foodgrain, according to the draft, viewed by ET. The bill calls for improved modern and scientific storage and doorstep de-

How much foodgrain will they get?

to every person of priority households every month

7kgs

to every person from general households every month

3 kgs

Other Expenditure Total 3. refIt from Operations before Other Income, 4,0 nterest & Exceptional Items (1 - 2) 4. Other Income 1 7 5. refit before Interest & Exceptional Items (S i- 4) 4,1 14 4,1 6. terest 2.4 5 7, rotlt after Interest but betore Exceptional Items (5-6) 1 1,689 00 8. Exceptional Items ties tiefore Tax(7+8) 9. Pmflt(+)&oss (-) fr r Ac 1.68 1.68 168 0. ax Expenses 2 2 t Proltt(+)/ Loss (-) hcni OnJnaiyP bes alterlax(9.10) / 1,43 143 2. Extraordinary Items (Net of Tax Expenses) 3. et Profit (+) I Loss (-) for the period (11 - 12) 1,437.30 44. .aid up Equity Share Capital (Face Value of Re, 1 each) 49 16 4 9 4,91649 5. eserves excltxting Revaluation Reserves 62 30814 16. Earnings_Per _Share_(EPS) Basic and DiIuted EPS before Extraordinary items 0.34 for the period, for the year to date and for the previous year (not to be annualized) 0.32* Basic and Diluted* EPS after Extraordinary itms e 0.34 034 for the period, for the year to date and for the previous year (not to be annualized) 0.32* 17. ublic Sharehclding c. of Shares 27,, 64 ,47,830 27 , ercentage of Shareholding 56.23 18. romoters and Promoter Group Share holding a)_Redg&I I Enwmbered Number of Shares 5,04,59,950 Percentage of Shares (as a % of the Total 23.45 Stlareholding_of _Promoter _and _Promoter _Group) Percentage of Shares (as a % of the Total 10.26 Share_Capit _of the _Company) al b) Non - Encumbered Number of Shares 16,47,41 450 6, 47 Percentage of Shares (as a % of the Tot al 76.55 Stiareholding_of_Promoter and_Promoter_Group) Percentage of Shares (as a % of the Tot Share al 33.51 Capital of the Company)

______ _________ _________

2,487.55
.

1 037.20 1,037.20 2,678.54 2 , 678 54 7,146.73 7, 146 . 73 153,997.91 1,53,997.91 20,914.78 20 ,914.78 432.19
21 ,346.98

2,081.88
5 240.33
1,03,123.12

626.56 1,343.89 1 343.89 2,703.96 62,111.60 62,111.60 8,001.42

-

11,80O. 3O 46.21
11 ,846.51

2 487.55 1 246.28 1 241.27 1,241.27

271 78

9,953.81 9,95381
11 ,393.16 11,39316 11 ,393.16 11,393.16 3,532.17 3,532.17

5 095.69 6 750.82 6,750.82 2,329.85 4 420.97

-

8,001.42 3,066.41 4,935.01 4,935.01 1,736.68 3, 1g8 . 33 3,1g8.33

-

969.4 498.00 471.49 4 516. 49 51 483.69 0.23 0.31* 0.23 0.31*

5,52 ,89,566

7,860,99 7,860 99
-

7,860.99 4,916.49 62 ,308.14 308.14 1.88 1.88

1.77* 1.88
_____________

4 420.97 4516 . 49 51,483 69 1.15 1.15*

3, 198.33 3,198.33 2 ,071.65 2,071.65 2 7, 355 35 27,355.35 1.54 1.54* 1 54* 1.54 1.54
1 54*

_________

0.56
1.56*
5,52 , 89 ,566

1 77*

61.21

27 ,64 , 47 ,,830 , 47 56.23 56.23

61.21

2, 2 , 73, 91 ,,155 66.11 66.11

_________

_______

114 ,28915

504 504 ,59 950

114 ,28,915

12 ,91 ,000

v.62 12.65

23.45 1O.2 1O.2

32.62 12M5

9.18 3.12

_________

_______

236 , 11 ,365

1647 ,,4 1450 41450

2 , 361 1365

127 , 50,,880

67.38 26.14

76.55 33.51

67.38 26.14

90.81 30.77 O.

_________

Comoarision between Consolidated Results 2011 & 2010

What is the National Food Security Commission?

A proposed advisory body to help the centre implement the scheme. To comprise chairperson, vice-chairperson and five other members It must include at least two women and at least one person each from the scheduled caste & scheduled tribes

Note: This publication is for information purpose Only and not a statutoly pitlica tion

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EAC

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