Jaipan forays into mobile handset business

MUMBAI: Home appliances major Jaipan Industries on Sunday disclosed its plans to foray into the mobile handsets business where it is eyeing up to five per cent market share in a year's time.

"We are coming out with 12 mobile handset models, of which three hi-tech models will be launched by December. We are targeting a sale of 50,000 pieces per month," Jaipan Industries' Director Atin Agarwal told media here.

The handsets would range from Rs 1,099-Rs 4,000 a piece, he said, adding the company was eyeing a four to five per cent marketshare in a year's time. "Once we sustain in the market, the profitability will go up to 14-15 per cent," he said.

The total mobile handset market in India is around 75 lakh handsets per month, of which Nokia leads with more than 30 lakh handsets, followed by Samsung with 15-18 lakh pieces per month, he said. The company aims to be among the top 10 players and is eyeing the 6th-7th spot initially, he said.

Jaipan has spent around Rs seven crore in building-up inventory, he said.

Initially, the company will assemble the handsets in China. "After two-years, we plan to start manufacturing them from our existing home appliance manufacturing facilities," he said.

ADAG plans to invest Rs 70,000 crore in MP over five years

KHAJURAHO: Unveiling mega investment plans for Madhya Pradesh which almost compete with the state's plan outlay, ADAG chairman, Anil Ambani , today said the group would invest Rs 70,000 crore over the next five years in various sectors making it the largest investor in the state.

Speaking at a Global Investors' Summit here, he said that his group would invest in sectors like power, mining, cement, Coal Bed Methane (CBM) and telecommunication.

The state's plan outlay over the next five years would be Rs 1,00,000 crore whereas RADAG's investment in the same period would be over Rs 70,000 crore, he pointed out.

Giving details about the slew of projects the group has chalked up, The Reliance Anil Dhirubhai Ambani Group chairman said it would set up 12,000 MW power plant using ultra super-critical technology.

In case of coal, he said the group would develop the country's largest private sector mine in the state with a production capacity of 25 million tonnes of coal per annum.

As regards cement, he said that the group would set up 10 MTPA of cement capacity in the state which would be enhanced to 20 MTPA.

Anil said that his group was committed to education and plans to build Dhirubhai Ambani Institute of Information and Communication Technology (DAIICT), a world class institute in Bhopal.

UltraTech readies Rs 5,000-cr capacity expansion plan

MUMBAI: Ultratech Cement , India’s largest cement maker, has kick-started the next round of its capacity expansion which is likely to cost `5,000 crore, immediately after execution of its earlier plan of adding nearly 20 million tonne over the past four years.

The Aditya Birla Group company has placed orders for two 3.3-million tonne kilns on KHD Humboldt Wedag of Germany as part of its plan to add 9.4-million tonne capacity by 2012-13, said a company official who did not wish to be named. The Aditya Birla group spokesperson declined to comment as the company was in the silent period ahead of the September quarter earnings announcement.

These orders are for expansion at its Rawan plant in Chhattisgarh and Rajashree unit in Karnataka, Alchemy Share & Stock Brokers said in a note to its clients.

The 52-million tonne company has already stated its plan to add 25 million tonne capacity over the next five years to maintain its market share. The Birla company has a 19% share of the `1,00,000 crore market, world’s second largest market after China.

UltraTech has emerged as the single largest cement company in India with an annual cement capacity of 48.8 million tonne, thanks to the merger of the cement division of Grasim Industries with itself. It also has captive power of 504 MW. It recently bought the 3-million tonne ETA Star in Dubai.

UltraTech’s closest rival Holcim Group’s ACC and Ambuja Cement with 30.6 million tonne and over 25 million tonne capacity, respectively, are yet to finalise and announce any further expansion plan. ACC has expanded its manufacturing capacity by nearly 10 million tonne in over 3 years, while Ambuja will be a 27-million tonne company by December-end against 18 million tonne in 2007.

Polaris to set up school of financial technology in Hyderabad

CHENNAI: City-based banking software company Polaris Software Lab on Friday announced it has acquired a 50-acre facility in Hyderabad to house its School of Financial Technology from Catalytic Software Ltd.

Though listed in the Indian stock exchange, Polaris declined to reveal the deal size.

An company official said that the major shareholder of the seller is an American company and hence the terms of deal is not being shared with the company's Indian shareholders.

According to Polaris, the school aims at generating over 1,000 highly skilled "techno-bankers" a year for the company's growing needs to service its clients.

The school will offer certificate full syllabus courses at both the "primer" and "practitioner" levels, executive fast-track modules in retail banking, core banking, investment banking and corporate banking as well as customised enterprise training workshops.

The courses are offered to Polaris associates and will be extended to the company's key accounts.

Indian ad industry likely to grow 10-15%, says Mudra chief

MUMBAI: With the domestic economy back on the growth track, the Indian advertising industry is poised to grow in double-digits and growth is likely to hover around the 10-15 per cent mark, an industry official said.

"The industry (advertising) is expected to grow in double-digits in the current year. It may clock a 10-15 per cent growth," advertising major, Mudra Group's Chief Executive Officer and Managing Director, Madhukar Kamath, told reporters here today.

However, the growth will not be comensurate with the industry's potential, which is gennerally four times of the gross domestic product (GDP), Kamath said.

Mudra is eying a good share of this growh, he said adding, "we are targetting a revenue of Rs 2,500-crore in the fiscal with an anticipated growth of 15-20 per cent in the business."

The Group has has four agency networks--Mudra India (Branding & Communication ), DDB Mudra (Influence & Behavioural change), Mudra MAX (Integrated Engagement & Experience) and Ignite Mudra (Partnerships for Entrepreneurs).

Earlier, Kamath inaugurated the Group's integrated bulding, Mudra House in the western suburb of Santa Cruz with a LEED Gold certification.

LEED (Leadership in Energy and Environmental Design) is the US Green Building Council's certification system for the design, construction, and operation of green building.

Spread over an area of one-lakh sq feet, the eight- storey structure with two basement parking space for 120-cars, will house all the Mudra Group employees based in Mumbai, which numbers over 460.

Rajinikanth overseas market doubles from Sivaji’s

When a dubbed version of the Rajinikanth starrer Muthu (1995) became a surprise hit in Japan, it was little more than a quirky footnote in the career of the South Indian star. The performance of his latest film Endhiran is another matter entirely. Fans across the globe have been lining up at theatres, voting with their wallets several times over.

K Karunamoorthy, CEO, Ayngaran International, (a subsidiary of Eros International that specialises in taking Tamil and Telugu films overseas) believes, “The combination of Rajinikanth and Aishwarya Rai raised the expectation beyond imagination. The curiosity factor saw a lot of people come to the theatres.” This includes a surprisingly huge non-Tamil audience which opted to go for the Tamil Endhiran, because they were drawn in by the English subtitling. It has justified Endhiran’s ambitious global distribution strategy.

Singapore, a market with a sizable Tamil speaking population, saw the film hit 22 screens with 16 prints; a record for an Indian production. “Not even My Name Is Khan had such a wide release,” says Krishnamoorthy.

The film has already collected S$2.5 million. Figures from Eros International put the overseas collections at Rs 61 crore so far.

According to S Ramanathan, head of the Tamil Nadu Theatre Owner’s Association and a distributor on Sivaji, “Endhiran is doing as expected. It opened in as many theatres as possible to avoid piracy — when you can easily get a ticket, why go in for a pirated CD? That idea worked very well.” While Sivaji started off on 18 screens across Chennai, Endhiran began on 32. The almost 24-hour screening schedules lasted only through the first week.

However, the 8:30 early morning show continued to be a draw at both Ramanathan’s Abirami theatre complex and at the Sathyam multiplex chain in Chennai. The market was rife with rumours about theatres cranking up their prices to cash in on the craze for the film, but Ramanathan disagrees: “I don’t think any theatre raised ticket rates. Many charitable organisation bought tickets and gave it as a return for donations. It went to a good end somewhere.”

Previously, a film hitting a silver jubilee or managing to be on screens for over 100 days was a definitive measure of its success. But according to Ramanathan, “That’s no longer a view the filmmaker has. It’s more about the money that can be raised out of the film and not how long it runs. Has it made or crossed a box office collections record? That’s what’s important.”

However, he adds, “It will complete 100 days but in one or two theatres.” What’s worked for Endhiran is the fact that it is an unusual film in the Rajinikanth canon. ‘Rajini’ Dilli, the head of a rasigar mandram (or fan club) in Chennai has already seen the film 10 times.

He observes, “It’s not just the hardcore fans driving the success of this film. It’s a huge hit with the family audiences as well.” The record to beat though is Rajinikanth’s previous blockbuster, Sivaji which earned an estimated Rs 128 crore worldwide.

According to Karunamoorthy’s estimates Endhiran has made 2.5 times as much as Sivaji and is the highest grosser in Ayngaran’s 13-year history, through the course of which it has distributed approximately 600 Tamil and Telugu films in the overseas market.

Kavveri Telecom in pact with Canada's Valcom Manufacturing

MUMBAI: Kavveri Telecom Products Ltd said on Friday it has tied up with Valcom Manufacturing group of Canada to provide high-technology products to the defence industry .

Financial details of the agreement were not disclosed in the statement to stock exchanges. Kavveri Telecom produces radio frequency products and antennas, while Valcom Manufacturing makes defence products for the wireless industry.

Hutch deal: I-T Dept asks Vodafone to pay Rs 11,218 cr as tax

NEW DELHI: Indian tax authorities on Friday asked Vodafone to pay Rs 11,218 crore ($2.53 billion) tax on its 2007 purchase of Hutchison Whampoa Ltd's mobile business in the country.

"The tax demand is to be paid within 30 days of the receipt of the notice of demand," the tax office said in a statement.

Supreme Court had asked the tax department to determine by Oct. 25 the potential tax liability over the deal. The Supreme Court will set a date on October 25 for hearing Vodafone's appeal challenging a lower court ruling that Indian tax authorities had jurisdiction over tax bills in cross-border deals.

An earlier High Court judgement had identified two parts of the transaction, the transfer of shares between Vodafone and Hutch and an additional transfer of the 15% interest held by Analjit Singh and Ashim Ghosh.

Vodafone argues that only the 15% is subject to tax, according to its reading the judgement. The IT department disagrees with this analysis of HC ruling.

But, if the company is viewed as an acting agent to pay tax on behalf of Hutch, its liability and the method for calculating outstanding tax will be different.

For now, the Bombay High Court has given a stay order for any action against Vodafone. The case will be heard on October 27 after the Supreme Court hearing on October 25.

Vodafone, whose joint venture with India's Essar group is one of India's largest mobile operators, maintains that it does not owe tax on the $11 billion transaction because it took place between two foreign entities.

"Vodafone strongly disagrees with the tax calculation," the company said in a statement Friday. "The tax authority is attempting to interpret Indian law as it has never been interpreted for the past 50 years, and this interpretation also goes against internationally recognized tax norms."

Telcos to feel profit squeeze this quarter

NEW DELHI: Telecom operators Bharti Airtel, Reliance Communications and Idea Cellular are expected to report a fall in profits and a squeeze on margins in the July-September quarter, say analysts.

The quarter is seasonally weak with no major festivals or harvest season. Companies are also expected to face stiff interest charges on borrowings. So far, telecom companies have been capitalising — or accumulating on the balance sheet without providing funds in the cash flow — the cost of debt they raised to buy third-generation radio waves from the government.

With 3G launches impending, some may start debiting factoring the cost of this debt on profit-and-loss accounts from this debt in the September quarter. The monthly average revenue per user — a key indicator of profitability — is also expected to drop between 3% and 5% for the operators, despite a stable pricing environment, analysts said.

The softening of competition will continue to moderate declines in average revenue per minute (ARPM) for the incumbents, Religare said in a note on October 4. “However, Q2 is seasonally soft for traffic growth resulting in modest 2QFY11,” the note prepared by analysts Rumit Dugar, Manoj Singh and Udit Garg said.

An analyst, who asked not to be named, said, “The main aspect to watch out for in the quarter is usage on the network. That’s the only indicator of future consumption remaining after most companies pulled out free usage plans last quarter.”

In August, Reliance Communications had said its minutes of usage fell because some schemes in which it offered free minutes of calling had ended. Usage rose for the other two major listed players.

Bharti Airtel: Analysts expect the company to post a 50% rise in revenues compared with the same quarter a year ago, boosted by revenue from its acquisition in Africa. Bharti’s last year figures did not include numbers from its Africa operations. However, comparable revenue is expected to be almost flat, as per an average of five brokerages.

Since Zain, the company Bharti acquired in Africa, is still making loss, profit for the July-September quarter is expected to drop almost 20% from a year ago. Compared with the earlier quarter, however, profit is expected to rise 21%, as per average estimates.

The telco had recorded a profit of Rs 1,662 crore for the first quarter ended June on sales of Rs 12,231 crore. The African company functioned for only 23 days in June under Bharti’s ownership.

“Growth figures are not on a like-to-like basis, as 2QFY11 numbers would show full consolidation of Zain financials. On the domestic business front, revenue, EBITDA margin and PAT changes y-o-y would be 7.5%, -442 bps and -8.3%, respectively,” research and securities firm IIFL said in a note.

Credit Suisse said it expects the telco’s average revenue per user to fall 4.5% to Rs 306 in the September period, while brokerage Alchemy said its revenue per minute, another key indicator of profitability, is likely to decline 4% sequentially to Rs 0.43.

Bharti’s greatest challenge would be to turn around its loss-making African unit and also expand its footprint across the 15 geographies in that continent where the average telecom penetration is only 32% against 56% for India , analysts said.

Reliance Communications: The country’s second-largest wireless operator will see a profit drop of over 50%, as per consensus estimates from analysts and brokerage firms. For the period ended June, RCOM had a profit of Rs 250 crore against sales of Rs 5,109 crore. On a sequential basis, its profit is expected to witness a 75% increase from its June quarter earnings when it reported its worst-ever profit fall.

Brokerages Karvy and Nomura said that the Anil Dhirubhai Ambani Group-owned telco lags its peers in operating performance. The company already has amongst the lowest ARPU in the industry, yet it is likely to slip further 5% to Rs 128 as well as a 3% decline on the average number of minutes used per subscriber, brokerage ICICI direct said in a note.

Reliance Communications is also expected to gain from the rise in the rupee against the dollar. The company has foreign debt that is restated at current dollar price and adjusted in profits every quarter. This is a notional profit, not one the company actually gains till the loans are repaid.

In the earlier quarter, depreciation in the rupee hurt company profits.

Idea Cellular: Analysts say that Idea’s net profit is expected to decline by a little over 12% (y-o-y) as its bottomline will be impacted by higher interest costs and depreciation, while its revenues are slated to jump 26%. The reduced severity of tariff wars will enable revenue resilience, research analyst Harit Shah of Karvy said in a note. The contribution of Indus Towers will grow at a strong pace. Margins will remain flat, but higher interest and depreciation will reduce bottomline, the note said.

“Idea’s revenues (is) likely to be up 2% q-o-q. Idea has outperformed Bharti in terms of traffic growth in the last four quarters, while RCOM has consistently lagged behind and we expect this trend to continue. We build in traffic growth of 6.5% q-o-q for Idea and 3% q-o-q for RCOM. Revenue per minute in the quarter could be down 3% q-o-q for RCOM and 2.3% QoQ for Idea as a result of erosions in tariffs,” the IIFL note said

Solar energy to become must for telecom towers

NEW DELHI: The government will make it mandatory for mobile phone towers to be powered by solar energy, hoping to cut pollution and tamp down a key driver of diesel consumption in the country. But this would raise construction costs by up to 50% for cellphone operators such as Bharti, Vodafone and Reliance Communications .

“We are working on a new scheme that will support adoption of greener practices by telecos while rolling out their services for customers,” secretary with the ministry of new and renewable energy (MNRE), Deepak Gupta, told ET.
Over 200 crore litres of diesel are used every year by up to 3,50,000 cell towers across the country, and their numbers are increasing by the day.

The solar power initiative for cell towers will help cut the use of noisy, smoke-spewing diesel gensets in tower operations and prevent flow of government subsidy on diesel for unintended activities.
“A test project on adoption of solar power panels is being carried out in 600 towers. This will be completed by second half of the next year. Based on the inputs we get from it, the initiative will be rolled out nationally and a new funding scheme may be worked out,” he said.

The new scheme is being spearheaded under the recently launched Jawaharlal Nehru National Solar Mission (JNNSM) that aims to increase solar power capacity in the country by 20,000 mw by 2022.

The MNRE has already started discussing the proposal with various stakeholders and may seek Cabinet approval for the scheme. The ministry wants to initially ask only the new cell towers to use solar power, but all existing towers would also be covered under the scheme in phases.

The country currently has about 3,50,000 cell towers. Each tower costs about Rs 40 lakh, and the additional cost of installing a 10-kw solar power panel would be Rs 16 lakh, officials say. “The government’s proposed move may almost double the cost of laying towers. This could significantly impact the margins for companies already under pressure due to rising spectrum costs,” said an official of a major private sector telecom company, who did not want to be identified.

While the proposed government scheme will limit direct capital support to telecom companies to a basic minimum for laying solar power panels, it may offer soft loans to companies under refinancing schemes of Indian Renewable Energy Development Agency (IREDA). “Diesel-based electricity is both expensive — costs as high as Rs 15 per unit — and polluting. It is in this situation the solar imperative is both urgent and feasible,” said another government official involved in JNNSM. “Companies could recover their full investment in a span of 10 years,” he added.