I am the least-paid Fortune 500 CEO: SBI Chairman

The State Bank of India broke into the Fortune 500 club during Om Prakash Bhatt’s current five-year tenure as chairman — surely something to celebrate. And he is proud of the fact that not only did he get SBI there, but the bank has also been inching up a few notches with every passing year.

However, there is something about that list which bothers him. He points out that he is the lowest-paid CEO on the Fortune 500 list. (The SBI chairman’s compensation in the last financial year was Rs 27 lakh, while on an average a Fortune 500 CEO earns more than $10 million or Rs 47 crore a year).

Maybe Bhatt has something to look forward to when he hangs up his boots as the top boss of the bank in March 2011. Being the head of the country’s largest commercial bank, he would get a red carpet welcome from any financial services company in the private sector, which wants to fortify its position in the country and there would be a willing candidate in Bhatt.

By his own admission , he cannot afford to retire on the pension of SBI. “I need to work to support my family,” he says rather humbly over coffee in his rather spacious 18th floor office in Mumbai’s central business district — Nariman Point.

The building is like a fortress with two sets of checks and a barricade, designed to keep out a moving vehicle without credentials. And why not? It’s the headquarters of the country’s largest bank with a deposit base of over Rs 8 lakh crore and a turnover of Rs 86,000 crore.

His room has a lovely view of the Arabian Sea and parts of Marine Drive and there are at least three sets of room ACs to keep the temperature, of a place where some of the hottest decisions of the banking sector are taken, a little low.

A replica of Krishna and Arjun at the battlefield of Kurukshetra rests on a table, perhaps reminding him of the continuous battle to keep his place under the sun.

There are innumerable trophies which line a cabinet on one side of the room from the various battles won. Besides, there is a hockey stick, which adorns one wall — signed by the Indian hockey team which won the Asia Cup a few years ago.

Dressed in a black suit, looking every inch the proverbial banker, the 59-year-old from Dehradun, answers all the questions in a similar soft tone throughout the course of the two-hour-long chat.

ED takes over Raju's 4,000-acre property

HYDERABAD: Charging that the property was acquired from the proceeds of the Satyam scam, the Enforcement Directorate (ED) on Friday took possession of 4,000 acres belonging to Satyam founder B Ramalinga Raju and his family members in Loyapalli village near Ibrahimpatnam of Ranga Reddy district.

The ED, which has attached 347 such properties so far, gave some time to the Rajus for handing over these properties to them and when that didn’t happen, it began taking physical possession of the land. The property in Loyapalli is one among the 347 properties that has been attached but is the single largest asset. The ED began the process of physical attachment of the property after its adjudicating authority in Delhi last week confirmed the provisional orders issued by the ED on these properties.

Taking physical possession includes installing a board that carries a warning on it saying that this is now a property of the government and that trespassers will be prosecuted etc. Among the remaining assets which have been attached by the ED but where the physical possession is still to happen are the spacious Jubilee Hills residence of Teja Raju, son of Ramalinga Raju.

Blackstone invests Rs 1,350 cr in Moser Baer's energy biz

New Delhi : Largest investment by a single PE investor in power sector.

US-based private equity (PE) fund Blackstone has invested $300 million (Rs 1,350 crore) in Moser Baer Projects Private Ltd (MBPPL), the unlisted energy business of Delhi-based global technology company Moser Baer India.

The investment will fund MBPPL's plans of commissioning 5,000 mega watt (Mw) of power generation capacity — 4,000 Mw of thermal power, 500 Mw of solar power and 500 Mw of hydro power — over the next six years in India and Germany. The group's 1,200-Mw Annuppur Project-1 in Madhya Pradesh, which has achieved financial closure, is the most advanced one.

The largest investment by a single PE investor in the Indian power sector will help MBPPL establish, what it called, "one of the country's leading independent power generation business".

"We have an appetite of investing $1 billion (around Rs 4,500 crore) in the power sector over the next five years, provided we get good deals," said Akhil Gupta, chairman and managing director of Blackstone Advisors India Private Ltd.

MBPPL has a 7.4-Mw operating solar farm asset in Germany and a 5-Mw solar power project under construction in Tamil Nadu. Besides, the company will invest in the country's largest solar power plant, a 45-Mw one, in Gujarat, whose financial closure is expected within a month.

"We have not done anything on the solar thermal front as yet and we will look at coal from Coal India and its subsidiaries. Our power projects will be fuelled from domestic coal," said Deepak Puri, founder of MBPPL. Moreover, Moser Baer doesn't intend to list MBPPL this year, though it is considering listing in a few years.

"We don't need more private equity and we think we will reach grid parity in three years," Puri said.

The PE fund has so far invested $1.25 billion (around Rs 5,600 crore) in 12 Indian companies. It recently secured a 12.5 per cent stake in Monnet Power Company (MPCL) for $60 million (Rs 275 crore). It also has investments in Indian companies like newspaper firm Jagran Prakashan, garment maker Gokaldas Exports, Allcargo Global Logistics, Nagarjuna Construction and Emcure Pharmaceuticals.

"The accelerated development of India's infrastructure industry in general and the power sector in particular is a pre-requisite for unlocking our country's economic potential and availability of growth capital will remain essential to enable this development. We have put together a highly qualified investment banking team to exclusively advise infrastructure companies on capital raising and mergers and acquisitions," said Venkat Ramaswamy, executive director, Edelweiss Group, which acted as the financial advisor to MBPPL.

Blackstone has said that infrastructure development continued to remain one of its key investment themes in India. Moser Baer's shares closed 6.6 per cent higher at Rs 66.45 on the Bombay Stock Exchange.

Kurl-on to invest Rs 150 cr in Saudi, India plants

Ahmedabad: After diversifying from sleep comfort to providing end-to-end home comfort solutions last year, Kurl-on Ltd will invest around Rs 150 crore in the next couple of years on setting up three mattresses manufacturing plants, one in Saudi Arabia and two more in India.

In Saudi Arabia, the Karnataka-based company, part of the Rs 2,000-crore Manipal Group, is looking to invest around Rs 60 crore, and expects to initially sell nearly 12,000 high-end mattresses a month, Mr T. Sudhakar Pai, Chairman, told Business Line here. Kurl-on is a well-known brand in West Asia.

The company's aggressive plans are aimed at giving its expansion activities a definitive direction. It is repositioning itself as a player in India's Rs 1 lakh crore home comfort industry. Thus, operating on a bigger canvass, it would manufacture a whole range of products for home comfort also.

Furniture business

Kurl-on is also focusing on furniture and furnishing. It has already signed a joint venture agreement with Mr Cesare Giacomuzzo for the manufacture of furniture and is looking for partners across India to manufacture other products.

To fund its expansion and diversification plans, which includes finding partners and franchisees across India for making various home comfort products, Kurl-on may also raise funds from the capital market next year. Based on the current market evaluation of Kurl-on at Rs 1,600 crore, the company could raise up to Rs 400 crore via an IPO and get listed on the bourses. “We have the shareholders' nod. And many a private equity (PE) player have also approached us,” he added.

India plans

In India, where the company currently has five manufacturing units, it will establish two more plants with an investment of around Rs 90 crore, to double its current production capacity.

One of these plants will be in the Jhagadia industrial hub, near Ankaleshwar, in Bharuch district of Gujarat, where the company will invest Rs 60 crore. Last week, the company was allotted 25 acres at Jhagadia for the purpose.

Mr Pai said Kurl-on is also planning to set up a new plant in the North-East, preferably in Assam, with an initial investment of Rs 30 crore. Kurl-on is expecting to increase its turnover from Rs 417 crore in 2009-10 to Rs 1,000 crore in the next two years. With this objective, he said it aims to expand its network to a total of 150 exclusive company-owned flagship showrooms, called “Kurl-on Nests”, on a partnership or franchisee basis, and also 500 other outlets on the shop-in-shop model in the next three years.

Ashok Leyland wins order for buses from Sri Lanka

Chennai: Ashok Leyland has bagged an order for 1,000 buses from the People's Leasing Company in Sri Lanka, according to a press release from Ashok Leyland. The $26-million order represents Ashok Leyland's largest single order for buses from Sri Lanka.

The delivery of the ‘Viking' model buses, of 42-58 seats, is to commence immediately and is to be completed before March 2011. The order is being part funded by the Asian Development Bank.

Ashok Leyland of the Hinduja group is a leader in the Sri Lankan bus market with sales of more than 8,000 over the past six-seven years.

Tata-Sikorsky venture to roll out aerospace components from Nov

Hyderabad: The Tata-Sikorsky joint venture to manufacture aerospace components and systems at the Aerospace Park on the outskirts of Hyderabad will start rolling out products from November.

Announcing this at MAN'EXE, the 7th leadership series on manufacturing excellence organised by the CII here on Wednesday, Mr Kanna Lakshminarayana, Minister of Industries, Andhra Pradesh, said the new industrial policy (2010-15) announced by the State would give a big thrust to manufacturing.

The State has come up with several incentives, has the lowest power tariff for industries and the largest number of notified SEZs (Special Economic Zones), over 50. It is also looking at the National Manufacturing Investment Zones, being proposed by the Centre, he said.

Tata Advanced Systems, the Tata Group company, formed the venture with Sikorsky Aircraft, US, to manufacture aerospace components in India. As part of it, they set up a manufacturing unit at the Aerospace & Precision Engineering SEZ (special economic zone) at Adibatla village to begin making components and assembling Sikorsky S-92 helicopter cabins. It will also make components for other aerospace OEMs.

Transforming india

In his keynote address, Dr V. Sumantran, Executive Vice-Chairman, Hinduja Automotive and Board of Director of Ashok Leyland said a “Combination of planning and entrepreneurship was a must for India to achieve the goal of transforming into a happy, developed country.”

He cited two recent headlines: By 2015, Indian GDP will cross China's and India to emerge a Detroit of the East.

While they read great and achievable, there is cause of concern, because we tend to celebrate too early. These are goals which need tremendous work and effort to achieve. India needs relentless investments in infrastructure, especially power and energy to drive the high growth rates.

He listed several advantages the country has in terms of the large youth force and low cost demand driving innovation and frugality, an old world virtue internalised amongst the people that could be channelized for the growth story.

Trump card

Dr Sumantran said India's trump card would be IT-enabled manufacturing. Cloud competing, he said, makes small and medium enterprises competitive. However, he expressed concern about the general lack of high quality across industries. This has to be addressed.

Earlier, the Chairman of CII-AP, Mr Shakthi Sagar, in his welcome, said India was emerging as a manufacturing hub with more companies shifting their units.

The national manufacturing policy and the manufacturing investment zones should provide an impetus.

Domestic airlines registered a 17 per cent growth during January-July 2010

New Delhi: India’s domestic airlines witnessed a surge of nearly 500,000 passengers in July 2010 in comparison to the corresponding period in 2009.

It is the 7th consecutive month for the domestic airline industry to report an increase in the passengers flown in comparison with the same period in 2009.

As per the latest data collated by the Directorate-General of Civil Aviation (DGCA), the domestic airlines flew 17.56 million passengers during January-July 2010 as against 14.53 million passengers carried during the same period in 2009, thereby, registering a 17 per cent growth.

India to witness 9-9.5 per cent growth rate over 2013-15: Morgan Stanley

New Delhi: Witnessing continuing structural reforms, globalisation and a sterling demographic dividend, India is bound to increase its growth rate to 9-9.5 per cent over 2013-15, even as China will moderate down to 9 per cent by 2012 and to 8 per cent by 2015, as per a new report by Morgan Stanley, authored by Chetan Ahya (managing director for Asia and India economist) and Tanvee Gupta.

India has one of the lowest median ages among the major economies and with the large working age population, India is bound to reap twin effects. One, it will allow people to save a large proportion of their income, thereby increasing the country’s rate of savings and two, it will boost the number of people who work and contribute to growth. With structural reforms the additional workers will find work and the sheer rise in the number of workers would increase gross domestic product (GDP) growth. Also with reforms, productivity per worker would increase raising the GDP even faster.

Moreover, globalisation gives additional job opportunities, extra capital to augment rising domestic savings and additional know-how. Basing its analysis on the above cited factors, the report expects India to become the world's fastest-growing economy. Kaushik Basu, Chief Economic Advisor to the Government has also been forecasting similar formats of development.

Underlying the forecast is the assumption that India will significantly increase its expenditure on infrastructure and in plant and machinery. Infrastructure expenditure has gone up from 5.4 per cent of GDP in 2005 to 7.5 per cent in 2009 and is poised to go up to 8 per cent of GDP in 2010. Over 2012-17, the forecast is that India's infrastructure spend would be US$ 1 trillion as compared with US$ 530 million over the previous five-year period.

Another assumption is on the quantity and quality of the young people coming into the workforce. While India will be the largest contributor to the world's workforce — all of 136 million people — over the next 10 years (fully a quarter of the entire world's additional workforce) in comparison China will add just 23 million.

The report also assumes that there would be an increase in the number of young people completing their education, making India the largest contributor to the pool of tertiary educated workforce in the world.

All these changes would be supported and complemented by further reform by the government in fiscal consolidation, opening up of retail to foreign direct investment, public sector reform and divestment, and improvement in governance that would reduce transaction costs.

Steelmaker Corus to invest 185 million pounds in Britain

LONDON: Indian-owned steelmaker Corus will invest 185 million pounds to rebuild a blast furnace in south Wales, the company announced on Monday in a move that is set to safe-guard jobs.

The investment at the Port Talbot steelworks, equivalent to 225 million euros or $289 million, will begin in July 2012 and aims to increase the facility's output by up to 400,000 tonnes a year, Corus said in a statement.

The company is owned by India's Tata Steel -- the world's eighth-biggest steelmaker.

"This investment is a major step in achieving Tata Steel's ambition to position Port Talbot as a producer of high-quality strip products on a global scale and an internationally competitive cost base," said Kirby Adams, chief executive of Tata Steel Europe.

Union bosses welcomed the move.

"This investment shows that Corus believe that there is a strong future for the British steel industry," said Michael Leahy, head of the Community union.

A Corus spokesman added that the investment may see building contractors take on new staff.

Tata Steel, part of India's sprawling Tata Group conglomerate, bought Anglo-Dutch company Corus for $13.7 billion in 2007.

Transgene Biotek acquires US-based Marillion

Hyderabad: Transgene Biotek Ltd has said that it has entered into an agreement to acquire Marillion Pharmaceuticals Inc, a US Oncology Biopharmaceuticals company based in Exton, Pennsylvania, in an all-share deal.

The Director of the Hyderabad-based Transgene Biotek, Mr S.S. Marthi, in a statement to the stock exchange, said the transaction would accelerate growth of the company business and broaden scope of drug development.

Marillion Pharmaceuticals, a clinical stage bio-pharmaceuticals company, engaged in development and commercialisation of novel therapeutics in oncology, has presence in the US and manufacturing and licensing partners in the UK and Europe.

New entity

The merger of the two companies and Marillion's products with Transgene's own drug pipeline are expected to create an oncology platform and products for the new merged company. The new entity will be able to play a role in licensing deals with multinational pharmaceutical companies as also develop and commercialise drugs. The revenues are likely to come from Marillion's presence in the US and network of collaborators in Europe. Both the companies see significant expansion of drug development right from the early stage and pre-clinical trials to late stage clinical trials. The merged entity will have a research and business platform and an expanded presence in major markets.

According to the statement, Marillion's portfolio includes three clinical stage products useful in oncology and complements Transgene's portfolio. The latter has earlier out-licensed a manufacturing process to Dr Reddy's Laboratories and its recombinant Hepatitis B vaccine technology to vaccine producer Serum Institute of India.