Sweden's Ikea pitches to enter India

NEW DELHI: Swedish home furniture giant Ikea pitched on Monday for fast-growing India to open up its huge retail market to foreigners and said it planned more stores in emerging market giant China.

India's tight investment rules restrict overseas retail firms to "back-end" wholesaling -- except for single-brand outlets such as Nokia or Reebok -- to protect local, family-run stores which fear being driven out of business.

Ikea chief executive Mikael Ohlsson urged the government to relax the strict regulations to allow the company to open its superstores in India, saying there was "room for all players."

The furnishings chain, which sources 500 million euros (655 million dollars) in textiles and other goods from India annually, plans to boost that figure to one billion euros "within three to four years," he said.

And if Ikea -- famed for its flat pack stylish furniture -- could open up stores in India it could supply at least half the volume of goods from Indian production sources as it does in China and Russia, he added.

"We believe we can create employment -- jobs in cities and outside cities, we can be part of transforming industry," Ohlsson said in New Delhi.

The privately-held Ikea, which uses its profits as a means to invest in social programmes, could also help with upgrading Indian production technologies in such areas as textiles, plastic goods and other products, Ohlsson said.

Ikea sees huge potential in India's burgeoning middle class, estimated at around 300 million and set to climb, whose "wallet is still thin" but who want "inexpensive but nice home furnishings," Ohlsson said.

Ikea believes it could replicate in India its success in neighbouring China where Ikea stores are "highly appreciated," said Ohlsson who is visiting India to inspect Ikea's 125-million-euro South Asia development programme helping children and women.

"If you go to Ikea stores in Beijing or Shanghai, they are as busy as London," he said. "That's a scenario I can see in India."

Ikea, which has annual global sales of around 30 billion dollars, already has 10 stores in China and is looking at opening around five more in the next few years to meet demand, Ohlsson said.

Foreign retailers are seeking to develop new sales outlets in the face of saturated Western markets, and India and China with populations of more than one billion loom large in their sights.

Ohlsson met with India's Commerce Minister Anand Sharma during his visit to press for changes in the retail ownership legislation.

"It was fantastic to have an opportunity to describe what we could see for the future and how we could participate," he said.

The left-leaning Congress party-led government recently kicked off public debate on opening up the 500-billion-dollar-a-year retail market to foreign investors.

Ikea has a long-term business model which makes it hard to conform to Indian rules requiring foreigners to set up joint ventures, Ohlsson said.

The company shelved plans to enter India's retail market in 2009, saying it would wait until the country allowed it to "fully own its retail operations."

Ikea is one of a slew of global retailers that include France's Carrefour and Wal-Mart of the United States pushing the Indian government to open up its retail sector to serve consumers in the country whose economy is growing by nearly 9 per cent.

Azure Power plans Rs 300-cr investment

New Delhi: Azure Power, an independent power producer in solar energy, is targeting an investment of Rs 300 crore to set up about 20 MW power capacity under phase-I of the National Solar Mission (up to 2013).

“We are looking at a total investment of Rs 1,500 crore to set up 100 MW capacity by 2015. Out of this, an investment of Rs 300 crore for a capacity of 20 MW, is what we are targeting under the phase-I of the National Solar Mission,” Mr Inderpreet S. Wadhwa, Chief Executive Officer, Azure Power said.

PV projects

He told Business Line that the company will remain focused on solar photo-voltaic (PV) projects.

“We are not looking for any outside investments. We have already tied up our funds. The funding would be met through internal accruals, private equity, besides assistance from International Finance Corporation (IFC),” he said.

Photo-voltaic devices are arrays of cells containing a solar PV material that converts solar radiation into direct current electricity.

Under the phase-1 of the National Solar Mission, Azure proposes to make an expression of interest (EoI) for a 5 MW project in Rajasthan. The other States on the radar are Punjab, Haryana, and Karnataka.

NTPC Vidyut Vyapar Nigam (NVVN), which is the power trading arm of NTPC, has been designated as the nodal agency to purchase solar power generated by independent solar power producers, at rates fixed by the Central Electricity Regulatory Commission (CERC), and for a period of 25 years.

NVVN will procure the solar power from the project developers, and the developers offering the best discount on a tariff notified by the CERC will figure higher in the pecking order for the allocation of identified projects.

The tariff rate notified by the CERC for 2010-11 for PV projects is Rs 17.90/ unit.

In phases

The National Mission envisages implementation of solar programmes including utility grid solar power in three phases – first phase up to 2013 (1,100 MW), second phase up to 2017 (4,000 MW), and third phase up to 2022 (20,000 MW).

Maruti Suzuki to invest Rs 1,925 cr on third plant

New Delhi: To capitalise on the rapid growth of the Indian auto industry, Maruti Suzuki India Ltd (MSIL) announced on Tuesday an investment of ¥35 billion, or Rs 1,925 crore for setting up its third plant at Manesar. This new production line – Maruti's sixth overall would have 2.5 lakh units annual capacity.

With the new plant, the car market leader hopes to increase its total capacity 46 per cent to 17.5 lakh units a year. Facing a major capacity constraint and huge demand for its products, MSIL currently manufactures 12 lakh units a year. However, the installed combined annual capacity across the existing Gurgaon and Manesar facilities is around 10 lakh units.

Addressing a shareholders' meeting, Mr Osamu Suzuki, Chairman and CEO, Suzuki Motor Corporation (SMC), said that the company had earlier not correctly estimated the current pace of growth of the Indian car industry. Japan-based SMC owns a 54.2 per cent stake in MSIL.

Mr R.C. Bhargava, Chairman, MSIL, told Business Line, “Now that the in-principle approval has been given by Mr Suzuki, the investment will have to be approved by the board at its meeting in October. Some work will already start now though.”

Manesar Expansion

He added that the Rs 1,700-crore ongoing expansion project for a second line at the existing Manesar plant will be accelerated by about six months. It was earlier expected to be operational only by April 2012. This expansion project will be completed before the new third plant opens at Manesar and will provide Maruti a similar annual capacity of 2.5 lakh units.

“We are trying to start the assembly line in the expansion of Manesar by September 2011. Since there is so much demand, we are trying to advance it as much as we can,” he said.

As part of its plan to increase production capacity, Maruti is also upgrading and modernising its Gurgaon facility. This is expected to help by adding further capacity and in meeting the 17.5 lakh production target of the next few years. No investment for this was, however, announced.

“Out of the three plants (production lines) at Gurgaon, the machinery at the first and the oldest plant is being scrapped and modernised,” said a company official.

The Indian auto market – Asia's third largest and the second fastest growing globally – accounted for sales of 15.26 lakh units of passenger cars in 2009-10, marking a growth of 25 per cent.

Of the total, Maruti's share was around 50 per cent with sales of 7.65 lakh units. Industry body SIAM predicts annual car demand to grow to 30 lakh units by 2015.

Maruti Suzuki's Rs 5 shares closed nearly one per cent up on the NSE on Tuesday at Rs 1,314.90.

RPG firm buys 10% in Aussie coal company

Mumbai: The RPG Group-promoted Integrated Coal Mining Ltd, an affiliate company of power producer CESC Ltd, has acquired 10 per cent stake in Resource Generation (RG), an Australian coal mining company, for $10.5 million (Rs 45 crore).

Integrated Coal Mining will purchase a million tonnes of thermal coal per annum for three years and two million tonnes per annum for a further 17 years from RG’s Boikarabelo mine in South Africa. RG has agreed, it said in a statement, to place 18,268,053 shares with Integrated Coal Mining at a share price of $0.575.

RG is a public company dual-listed on the Australian and Johannesburg stock exchanges, with coal mining assets in Tasmania in Australia and in South Africa. It also has uranium exploration projects in central-west Africa’s Cameroon.

CESC is India’s third largest power utility, with an installed generating capacity of 1,225 Mw. It serves nearly 2.5 million consumers across Kolkata and Howrah. It is increasing this generating capacity to 5,745 Mw. Its officials could not be spoen to for their views.

The coal purchases will begin when the Boikarabelo mine commences production, scheduled for early 2013. The price will be agreed annually, based on the international benchmark price at the time. The mine is in the Waterberg region of South Africa, one of the country’s largest remaining coal deposits It is estimated to have 603 million tonnes of reserves, about 40 per cent of South Africa’s untapped coal mines, according to RG.

Tata Steel picks up 80% in Canadian ore project for $279 m

Mumbai: Tata Steel has exercised its rights to acquire 80 per cent interest in the Direct Shipping Ore project of New Millennium Capital Corp, Canada (NML).

Tata Steel is the largest shareholder with 27.4 per cent in New Millennium. It has now exercised its exclusive option to participate in the DSO project and has a commitment to take the resulting production.

According to the joint venture agreement, Tata Steel will reimburse 80 per cent of NML's cost to date on the DSO project and arrange funding up to CDN $300 million (about $279 million) of capital costs for the project to earn its 80 per cent share of the venture.

Tata Steel will also get to buy 100 per cent of the DSO project's iron ore products of specified quality, at world market prices, for the life of the mining operation. It is expected that the venture will produce four million dry tonnes per year of iron ore products commencing in 2012.

Mr H.M. Nerurkar, Managing Director, Tata Steel, said, "We are hopeful that along with our partner, we would be able to move forward on various aspects of the project and commission the project in 2012, while we continue to analyse opportunities to increase the percentage of raw material security."

The DSO project contains 64.1 million tonnes of proven and probable mineral reserves at an average grade of 58.8 per cent Fe.

"Now that we have set a course for DSO production, we can look forward to working with Tata Steel on the much larger Taconite project," said Mr Robert Martin, President and CEO, NML.

GSM operators add 13.5 million users in Aug

New Delhi: GSM operators added a whopping 13.5 million mobile subscribers in August taking the total tally to 481 million. The growth was led by Vodafone Essar which added 2.3 million new subscribers followed by State-owned Bharat Sanchar Nigam Ltd with 2.29 million new users. Uninor, which is among the new players to get licences in 2008, managed to get 2.2 million new subscribers in August beating even market leader, Bharti Airtel.

“These numbers come from only the 13 circles where Uninor is commercially present today. While it is early days yet, we believe our strategy is taking us in the right direction.,” said Uninor.

Bharti Airtel added a little over two million users to take its total user base to 141.25 million. Vodafone is at second place with a subscriber base of 113.77 million at the end of August. IDEA cellular continues to be the third largest GSM mobile operator with a subscriber base of 72.7 million and State-owned BSNL is in fourth position in terms of GSM mobile user base with total subscribers of about 70.4 million.

Organised sector adds 3.2 lakh new jobs in July-Sept: Survey

Boom time

There is optimism in the economic scenario across all sectors.

In the services sector, healthcare and hospitality are seen to add the maximum number of jobs, the survey says.

Chennai: It is boom time in new hiring in the organised sector with the addition of nearly 3.2 lakh jobs during July to September and the services sector leading the way.

In the first six months of the calendar year the organised sector added 4.18 lakh jobs, according to a survey by Ma Foi Randstad Employment Trends.

There is optimism in the economic scenario across all sectors. In the services sector, healthcare and hospitality are seen to add the maximum number of jobs, the survey says.

The survey was conducted among 650 companies across 13 industry segments in eight Indian cities.

The top management and senior HR personnel at these companies were queried on their hiring intentions in the present quarter as compared with the previous quarter and their views for the whole year.

The survey shows 4,18,564 jobs were created between January and June 2010 with 1.21 lakh jobs in healthcare and 63,000 jobs in hospitality. The top five sectors leading the boom are healthcare, hospitality, real estate and construction, IT and ITeS, and education, training and consulting.

New Delhi, Mumbai and Chennai are the leading job generators — 112,987 jobs during January to September 2010. Kolkata, Bengaluru and Hyderabad follow closely with 30,000-plus jobs during the same period, says the survey that tracks Indian employment trends and opportunities.

Mr Ben Noteboom, CEO and Chairman of the Executive Board, Randstad Holding, said, “We see positive trends across many economies such as US, Germany, France, Asia Pacific and parts of Europe which are clearly growing. I expect India to continue its economic growth and employment generation fuelled by its domestic consumption and stabilising global economy.”

Key findings

The real estate and construction sector leads the pack with the highest growth in the number of people employed; not surprisingly, this sector expects growth in average salary by about 4 per cent, followed by pharmaceutical (3.5 per cent) and healthcare (3.4 per cent) during the third quarter.

Amongst cities, Bengaluru expects increase in average salary by about 4.9 per cent followed by Delhi (3.5 per cent) and Pune (3.5 per cent) during the third quarter.

Estimated proportion of experienced workforce is the highest in the pharmaceutical sector at 87 per cent. The healthcare sector is estimated to have the highest percentage of freshers at 38 per cent.

Kolkata has the highest estimated percentage of experienced workforce (82 per cent) and New Delhi has the highest estimated percentage of freshers (35 per cent).

India becomes the seventh largest vehicle producing country globally

New Delhi: The government has claimed that the country has become the seventh largest vehicle producing nation in the world, six years ahead of the set target.

According to Mr B S Meena, Secretary, Ministry of Heavy Industry, "When we were making the Auto Mission Plan (AMP) in 2006, we had projected India to become the seventh largest vehicle producing country in the world by 2016. We have already achieved this milestone good six years ahead of the set target."

Meena added during April-August 2009-10, the cumulative production of vehicles grew at 32.4 per cent over the year ago period. "The passenger vehicles, commercial vehicles and two-wheeler segments have all recorded impressive growth rates of 32 per cent, 49 per cent and 31 per cent, respectively, during this period," said Meena.

He further added that Indian passenger vehicle market is estimated to grow to 9 million units by 2020, while the two-wheeler market is likely to reach 30 million units. "The realisation of these volumes would position India as one of the top five vehicle producing countries in the world by 2020 with the domestic consumption growing by 4-folds to USD 120 billion," Meena said.

Furthermore, according to Society of Indian Automobile Manufacturers (SIAM), the country vehicle production has increased to 14.1 million units in 2009-10, a jump of over 25 per cent from 11.2 million units in the previous fiscal.

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