Ahmedabad: Narendra Modi would not have thought of Gujarat International Finance Tec-City (GIFT) as the test-bed for future city technologies, but his dream project in Gandhinagar may well have this interesting spillover. Work on the proposed Rs 78,000-crore nano city has now started, and the first occupant may move in by March.
By the time the first phase is completed in three-and-a-half years, this special economic zone (SEZ) would have tried out, on a small scale, some contemporary urban design ideas.
GIFT would have a command and control centre to monitor the IT infrastructure and respond quickly during emergencies (a fire anywhere, for example, will trigger an automatic response). The city will use the energy-efficient district cooling system instead of air-conditioning. It will also use an automated waste collection system that sucks away garbage from buildings at high speed. Says GIFT Director Ramakant Jha: "We will now try on a pilot scale many technologies that will be used when the city is developed fully."
District cooling, which uses chilled water to cool buildings, is being tried in a few places such as Toronto, Cornell University and Masdar City in Abu Dhabi. Its proponents say the technology consumes 90% less energy compared with traditional air-conditioning.
In automated vacuum waste collection systems, garbage is sorted out and then sucked away at high speed through underground tubes to a central location, which can be as far as 20 km away. It is being used in cities such as London, Montreal, Stockholm and Barcelona. No Indian city has these technologies yet.
These concepts may be widely used in smart cities of future as they are considered sustainable. District cooling, for example, can be used easily with renewable energy. Automated waste collection can be combined with biomass energy generation systems, so GIFT will burn waste to generate energy. Greenfield cities such as GIFT have an opportunity to test new technologies before they are adopted in existing Indian cities.
Top-Notch Global Fin Centre
GIFT was conceived in 2007 and the idea was developed initially by a set of consultants such as McKinsey and urban development specialist Fairwood Consultants. It is being planned as a top-notch global financial centre to rival London, New York and Hong Kong.
On a more immediate time scale, it is being built to attract companies from Mumbai, Gurgaon and even Bangalore. After the initial flurry of announcements, the project entered a stage of lull due to the global economic meltdown in 2008. With the city being granted permission last November to operate as a multi-services SEZ, the Gujarat government is keen to take it forward quickly.
The stock exchanges of London, Tokyo and Singapore have evinced interest in setting up offices in GIFT, as have many Indian banks. Singapore Co-operation Enterprises, a government agency, has just signed an agreement with GIFT to develop a banking enclave.
"Liberty to transact in foreign currency at the IFSC in GIFT will significantly raise foreign firms' investment and participation in India," says SS Thakur, former chairman of HDFC and former controller of foreign exchange in the Reserve Bank of India. Similar financial centres in Hong Kong, Dubai, China, Malaysia, the UK (London) and the US (New York) contribute 5-60% of GDP of their respective countries. GIFT is expected to create 10 lakh jobs in 10 years.
Fairwood Consultants, which developed the first master plan, had envisaged a 'next-class city'. It proposed 110 buildings with the tallest being 88 stories. "God does not give us land anymore," says Vikas Chopra, senior vice-president of Fairwood, which is no longer associated with the project. Concentrating urban life into a small area was an eminently 21st Century concept as it made many services cost-effective and environment-friendly.
However, GIFT will have to wait a while to go vertical. Currently, it has clearance to build only up to 122 metres since the airport is seven km away. In 6-7 years, the airport will shift to a new location, allowing GIFT to soar high.
GIFT had made changes to the original plan, which had proposed subterranean roads and four levels of underground parking, leaving the surface purely for pedestrians. It had also envisaged a Personal Rapid Transit System similar to the one operational at London's Heathrow airport and one planned for Amritsar. Now, the parking will be on the surface since underground parking and roads are too expensive.
The Personal Mass Rapid Transit System has been dropped as the Metro would come right up to GIFT. However, cars will remain in the periphery as residents and visitors will use district-cooled, moving walkways to get to the city centre. The city is being planned in such a way that future planners do not have to dig for 100 years.
The first phase of GIFT would experiment with new technology concepts to see if they can be replicated on a larger scale. It would involve two 30-storey buildings with around 10,000 people working inside. The investment for infrastructure in this phase would be Rs 1,400 crore, and around Rs 10,000 crore for all the three phases. The city would need a total investment of Rs 78,000 crore.
Success in my Habit
Friday, January 6, 2012
India keen on participating in Saudi Arabia's oil, gas sectors
New Delhi: India on Wednesday expressed keen interest in participating in the petroleum and gas sectors in Saudi Arabia, including upstream and downstream.
In return, it has invited Saudi Arabia to invest in the Indian petroleum and gas-based mega industrial estates, fertilisers, petrochemical plants and refineries.
Stating this during a meeting with his Saudi Arabian counterpart Dr Tawfiq bin Fawzan Al-Rabiah, the Commerce and Industry Minister, Mr Anand Sharma, observed that the focus of the two countries should now be on investment and joint ventures to enhance bilateral trade and services.
Mr Sharma also said the two sides have to develop strategies to increase the trade volume in traditional items and diversify the trade basket.
He noted that both countries have pledged to elevate the current buyer-seller relationship into one of strategic energy co-operation.
Ease visa rules
Earlier in the day, speaking at a FICCI function, the Saudi Arabian Commerce and Industry Minister sought an easing of visa rules by India to facilitate greater movement of people between the two countries and to help boost bilateral ties.
Dr Al-Rabiah, who is accompanied by a 35-member business delegation, said there was “huge potential” for more trade with India and enhanced bilateral engagement in sectors such as information technology, infrastructure, and education.
The bilateral trade increased from $15.9 billion in 2006-07 to $25.6 billion in 2010-11.
Exports, imports
The exports to Saudi Arabia have doubled from $2.6 billion in 2006-07 to $5.2 billion in 2010-11. The main items of export to Saudi Arabia are petroleum, basmati rice, dyes, machinery and instruments, iron and steel. Imports from Saudi Arabia have jumped from $13.35 billion in 2006-07 to $20.4 billion in 2010-11. The major items of imports are petroleum, chemicals, artificial resin and plastics. India imports almost a quarter of its crude oil requirements from Saudi Arabia.
In return, it has invited Saudi Arabia to invest in the Indian petroleum and gas-based mega industrial estates, fertilisers, petrochemical plants and refineries.
Stating this during a meeting with his Saudi Arabian counterpart Dr Tawfiq bin Fawzan Al-Rabiah, the Commerce and Industry Minister, Mr Anand Sharma, observed that the focus of the two countries should now be on investment and joint ventures to enhance bilateral trade and services.
Mr Sharma also said the two sides have to develop strategies to increase the trade volume in traditional items and diversify the trade basket.
He noted that both countries have pledged to elevate the current buyer-seller relationship into one of strategic energy co-operation.
Ease visa rules
Earlier in the day, speaking at a FICCI function, the Saudi Arabian Commerce and Industry Minister sought an easing of visa rules by India to facilitate greater movement of people between the two countries and to help boost bilateral ties.
Dr Al-Rabiah, who is accompanied by a 35-member business delegation, said there was “huge potential” for more trade with India and enhanced bilateral engagement in sectors such as information technology, infrastructure, and education.
The bilateral trade increased from $15.9 billion in 2006-07 to $25.6 billion in 2010-11.
Exports, imports
The exports to Saudi Arabia have doubled from $2.6 billion in 2006-07 to $5.2 billion in 2010-11. The main items of export to Saudi Arabia are petroleum, basmati rice, dyes, machinery and instruments, iron and steel. Imports from Saudi Arabia have jumped from $13.35 billion in 2006-07 to $20.4 billion in 2010-11. The major items of imports are petroleum, chemicals, artificial resin and plastics. India imports almost a quarter of its crude oil requirements from Saudi Arabia.
Banks must acknowledge, streamline MSME loan applications: RBI
Mumbai: The Reserve Bank of India has asked banks to mandatorily acknowledge all loan applications, submitted either manually or online, by micro, small and medium enterprise (MSME) borrowers. The central bank has reiterated the above directive following complaints from industry associations/ chambers that banks are not acknowledging loan applications.
Banks have been asked to ensure that a running serial number is recorded on the loan application form as well as the acknowledgement receipt. Further, banks are encouraged to start a central registration for loan applications, the RBI said. The same technology may be used for online submission of loan applications to enable online tracking.
Better design
The RBI emphasised that loan application forms have to be so designed that all documents required to be executed by the borrower on sanction of the loan form a part of it. The forms should have a checklist of the documents required to be submitted by the applicant and the formalities to be completed, post-sanction.
For micro enterprises, simplified application-cum-sanction form, printed in regional language, should be introduced for loans up to Rs 1 crore.
Banks should consider introducing a committee approach for sanction of new loans as also rehabilitation cases. This will improve the quality of decision as the members' collective wisdom will be utilised, especially while taking decision on loan applications for greenfield projects in the sector or rehabilitation proposals.
The RBI said banks should give it an ‘action taken report' on compliance with these directives by the end of this month.
Banks have been asked to ensure that a running serial number is recorded on the loan application form as well as the acknowledgement receipt. Further, banks are encouraged to start a central registration for loan applications, the RBI said. The same technology may be used for online submission of loan applications to enable online tracking.
Better design
The RBI emphasised that loan application forms have to be so designed that all documents required to be executed by the borrower on sanction of the loan form a part of it. The forms should have a checklist of the documents required to be submitted by the applicant and the formalities to be completed, post-sanction.
For micro enterprises, simplified application-cum-sanction form, printed in regional language, should be introduced for loans up to Rs 1 crore.
Banks should consider introducing a committee approach for sanction of new loans as also rehabilitation cases. This will improve the quality of decision as the members' collective wisdom will be utilised, especially while taking decision on loan applications for greenfield projects in the sector or rehabilitation proposals.
The RBI said banks should give it an ‘action taken report' on compliance with these directives by the end of this month.
India Inc raises $1.6 bn via ECBs in Nov 2011
Mumbai: India Inc raised raised $ 1.6 billion via external commercial borrowings (ECBs) in November, 2011. According to the Reserve Bank of India (RBI), the ECB borrowing dipped by $900 million as against $2.5 billion in October 2011.
Under the automatic route, 78 companies raised $ 1.3 billion. ONGC Mangalore Petrochem raised $250 million and Tata Teleservices borrowed $200 million for financing of new project and import of capital goods respectively. Infrastructure Development Finance Corporation (IDFC) also raised $100 million for onward lending to infrastructure projects via ECB.
Currently, the government allows the companies to raise up to $750 million under the automatic route in a year. Beyond $750 million, approval by the RBI is required.
A total of $253 million was raised under the approval route that requires case-by-case nod by the regulator. Under the approval route, Dredging Corporation of India raised $253 million for development of ports, while The India Hotels Company borrowed $95 million. No foreign currency convertible bonds (FCCB) were issued.
The ECB borrowings have slowed over the past few months as the global economic outlook is weak and firms are following a wait and watch policy with respect to their investment activities, economists said.
Under the automatic route, 78 companies raised $ 1.3 billion. ONGC Mangalore Petrochem raised $250 million and Tata Teleservices borrowed $200 million for financing of new project and import of capital goods respectively. Infrastructure Development Finance Corporation (IDFC) also raised $100 million for onward lending to infrastructure projects via ECB.
Currently, the government allows the companies to raise up to $750 million under the automatic route in a year. Beyond $750 million, approval by the RBI is required.
A total of $253 million was raised under the approval route that requires case-by-case nod by the regulator. Under the approval route, Dredging Corporation of India raised $253 million for development of ports, while The India Hotels Company borrowed $95 million. No foreign currency convertible bonds (FCCB) were issued.
The ECB borrowings have slowed over the past few months as the global economic outlook is weak and firms are following a wait and watch policy with respect to their investment activities, economists said.
Wednesday, January 4, 2012
Auto Expo 2012: Ford sees China, India fuelling auto market growth
NEW DELHI: The global automobile market is likely to grow by 5 percent a year for the next two years, led by China and India, Ford Motor Co CEO Alan Mulally said, after the U.S. automaker launched a global compact sports utility vehicle in India.
The EcoSport is the second of eight new global models that Ford plans to launch in India, the company said in a statement earlier, as it targets Asian and African markets in a push to increase annual global sales to 8 million vehicles by 2015.
"The global automobile market is expected to grow by 5 percent in the next two years and most of it will come from the Asia Pacific region," Mulally told reporters in the Indian capital after unveiling the EcoSport.
"There is some slowdown in Asia Pacific but it is a very good market with a huge potential. In the Asia Pacific market, China and India will drive the growth," he said.
Ford, which sold just under 100,000 cars in India in 2011, a rise of 15 percent from the previous year, has said it expects Asian sales volumes to double to account for a third of the carmaker's global sales by 2020.
"The Indian market will be the third largest by the end of the decade behind the U.S. and China," Joe Hinrichs, group vice-president and Asia Pacific and Africa president told reporters.
"We are still bullish on India and we expect significant growth as per capita income rises in tier-II and -III cities."
India's car sales, which grew 30 percent in the year that ended in March 2011, are expected to be flat in the current financial year, an industry body said last month, as high interest rates and rising input costs bite.
Despite slowing economic growth, India's young population, rising salaries and low penetration makes it a key market for global carmakers such as Ford as economic turmoil continues to keep developed markets sluggish.
Renault said on Tuesday it would announce plans for low-cost cars in India this year with Japanese affiliate Nissan, after weighing the alliance's technologies against those of potential partners.
Ford will invest $142 million in its 200,000 vehicles-a-year plant in Chennai in south India, where the carmaker builds its Figo and Fiesta models, to buy equipment to manufacture the EcoSport, said Michael Boneham, managing director of Ford India.
Ford, the only U.S. automaker not to take a federal bailout in 2009, said it will make the EcoSport for the domestic and export markets. It, however, did not disclose the price of the vehicle.
The car was launched a day ahead of the start of India's Auto Expo where fuel-efficient cars and a slew of new SUV models will be unveiled as global carmakers continue to rev up their activity in one of the world's few growth engines.
The 2012 India Auto Expo, held once every two years, begins on Thursday in New Delhi.
The EcoSport is the second of eight new global models that Ford plans to launch in India, the company said in a statement earlier, as it targets Asian and African markets in a push to increase annual global sales to 8 million vehicles by 2015.
"The global automobile market is expected to grow by 5 percent in the next two years and most of it will come from the Asia Pacific region," Mulally told reporters in the Indian capital after unveiling the EcoSport.
"There is some slowdown in Asia Pacific but it is a very good market with a huge potential. In the Asia Pacific market, China and India will drive the growth," he said.
Ford, which sold just under 100,000 cars in India in 2011, a rise of 15 percent from the previous year, has said it expects Asian sales volumes to double to account for a third of the carmaker's global sales by 2020.
"The Indian market will be the third largest by the end of the decade behind the U.S. and China," Joe Hinrichs, group vice-president and Asia Pacific and Africa president told reporters.
"We are still bullish on India and we expect significant growth as per capita income rises in tier-II and -III cities."
India's car sales, which grew 30 percent in the year that ended in March 2011, are expected to be flat in the current financial year, an industry body said last month, as high interest rates and rising input costs bite.
Despite slowing economic growth, India's young population, rising salaries and low penetration makes it a key market for global carmakers such as Ford as economic turmoil continues to keep developed markets sluggish.
Renault said on Tuesday it would announce plans for low-cost cars in India this year with Japanese affiliate Nissan, after weighing the alliance's technologies against those of potential partners.
Ford will invest $142 million in its 200,000 vehicles-a-year plant in Chennai in south India, where the carmaker builds its Figo and Fiesta models, to buy equipment to manufacture the EcoSport, said Michael Boneham, managing director of Ford India.
Ford, the only U.S. automaker not to take a federal bailout in 2009, said it will make the EcoSport for the domestic and export markets. It, however, did not disclose the price of the vehicle.
The car was launched a day ahead of the start of India's Auto Expo where fuel-efficient cars and a slew of new SUV models will be unveiled as global carmakers continue to rev up their activity in one of the world's few growth engines.
The 2012 India Auto Expo, held once every two years, begins on Thursday in New Delhi.
Jet cuts trainee co-pilots’ pay from Rs 1.3L to Rs 50k
NEW DELHI: India's largest private airline Jet Airways has reduced the monthly salary of its trainee co-pilots by almost 60% from about Rs 1.3 lakh to Rs 50,000 in the New Year. The decision was conveyed to its trainee co-pilots in last week and is among a series of steps that the airline is taking to cut costs and survive the life-threatening phase that Indian carriers are passing through due to a mix of high operating cost environment at home and a slowing down economy.
"The company is going through turbulent times as a result of low fares, ever-rising crude oil process, high airport levies, rupee devaluation and a recessionary economic scenario... we are reducing costs through re-negotiation of all contracts with our vendors, service providers and curtailing expenditure. As a part of the austerity measures effective January 1, 2012, it is proposed that you would continue to draw Rs 50,000 per month till you are released to fly online on the fleet..." the letter sent by S B Srivastava, Jet's V-P (HR), to the trainee first officer says, while adding that other terms of their employment remain unchanged.
During the last slowdown also Jet had reduced salaries of its employees to survive the tough economic conditions and then restored them to pre-cut levels when the environment improved. Its two full service peers - Air India and Kingfisher - have been unable to pay salaries to employees in time for months now. "We last got paid in first week of November and have got nothing since then. Now our five months' salary and allowances are due. There is no light at the end of this tunnel and it seems the government expects us to work without pay. How long can this continue? Our stress levels is dangerously high as the topic of conversation is mainly unpaid bills and EMIs in cockpit of any stressed airline like AI or Kingfisher," said an agitated Air India commander.
While AI and Kingfisher are drowning under the weight of their losses and debt, Jet has also run into losses due to the high cost environment. In the quarter ended September 30, 2011, it posted a loss of Rs 713.6 crore versus a profit of Rs 12.4 crore in same period last year.
Trainee co-pilots join an airline after getting type rated (certified) to fly a particular aircraft. They are first trained to fly by being seated on the co-pilot's seat with a commander and a co-pilot on the third seat in the cockpit (called jump seat).
"The company is going through turbulent times as a result of low fares, ever-rising crude oil process, high airport levies, rupee devaluation and a recessionary economic scenario... we are reducing costs through re-negotiation of all contracts with our vendors, service providers and curtailing expenditure. As a part of the austerity measures effective January 1, 2012, it is proposed that you would continue to draw Rs 50,000 per month till you are released to fly online on the fleet..." the letter sent by S B Srivastava, Jet's V-P (HR), to the trainee first officer says, while adding that other terms of their employment remain unchanged.
During the last slowdown also Jet had reduced salaries of its employees to survive the tough economic conditions and then restored them to pre-cut levels when the environment improved. Its two full service peers - Air India and Kingfisher - have been unable to pay salaries to employees in time for months now. "We last got paid in first week of November and have got nothing since then. Now our five months' salary and allowances are due. There is no light at the end of this tunnel and it seems the government expects us to work without pay. How long can this continue? Our stress levels is dangerously high as the topic of conversation is mainly unpaid bills and EMIs in cockpit of any stressed airline like AI or Kingfisher," said an agitated Air India commander.
While AI and Kingfisher are drowning under the weight of their losses and debt, Jet has also run into losses due to the high cost environment. In the quarter ended September 30, 2011, it posted a loss of Rs 713.6 crore versus a profit of Rs 12.4 crore in same period last year.
Trainee co-pilots join an airline after getting type rated (certified) to fly a particular aircraft. They are first trained to fly by being seated on the co-pilot's seat with a commander and a co-pilot on the third seat in the cockpit (called jump seat).
Air India may cut salaries of 5,000 employees
NEW DELHI: The debt-ridden Air India may slash salaries of about 5,000 of its employees, including pilots and engineers, following a rationalisation of wages.
A committee constituted to look into issues of integration of the national airline with the state-owned domestic carrier Indian Airlines is likely to recommend wage cuts in its report due by the end of the month.
"Almost 85% of the employees won't see a change in their pay, but 15%, including licensed categories and some flying staff, would," Justice DM Dharmadhikari, a retired judge of the Supreme Court who heads the committee set up last April, told ET. "We are trying to bring the wage structure of the organisation strictly under legal parameters, so that it conforms with the guidelines of the Department of Public Enterprises."
Air India, saddled with a debt of Rs 43,000 crore, has not been able to pay its 33,000 employees for the past three months.
Another member, who did not wish to be named, said that since several pilots have quit Air India due to delayed payment of salaries, the committee will have to ensure that salaries of this group remain competitive. A senior member of a pilots union, however, said on the condition of anonymity that the pilots could cooperate if there is a sound rationale and the proposed salary cuts are marginal.
Even five years after the merger of the two airlines, there is much heartburn among the staff over the lack of uniformity in pay scales and career progression paths. Pilots of the domestic operations of the erstwhile Indian Airlines had resorted to a 10-day strike shortly after the constitution of the Dharmadhikari committee, demanding parity with the commanders on international flights.
The national auditor, Comptroller and Auditor General, in its report on Air India, observed that the airline did not follow any set procedure for pay revision or for fixing performance linked incentives. "Audit observed that allowances and PLI ranged from 62% to 919% of the Basic Pay against the maximum of 5% as per Department of Public Enterprises guidelines and the company made excess payment of allowances and PLI amounting to Rs 315.78 crore during the years 2007-08 and 2008-09," the CAG said in its report.
The CAG also found Air India Board guilty of approving an increase in various allowances, including PLIs, by up to 50% with effect from January 2005, even though the airline was dependant on loans for working capital.
A committee constituted to look into issues of integration of the national airline with the state-owned domestic carrier Indian Airlines is likely to recommend wage cuts in its report due by the end of the month.
"Almost 85% of the employees won't see a change in their pay, but 15%, including licensed categories and some flying staff, would," Justice DM Dharmadhikari, a retired judge of the Supreme Court who heads the committee set up last April, told ET. "We are trying to bring the wage structure of the organisation strictly under legal parameters, so that it conforms with the guidelines of the Department of Public Enterprises."
Air India, saddled with a debt of Rs 43,000 crore, has not been able to pay its 33,000 employees for the past three months.
Another member, who did not wish to be named, said that since several pilots have quit Air India due to delayed payment of salaries, the committee will have to ensure that salaries of this group remain competitive. A senior member of a pilots union, however, said on the condition of anonymity that the pilots could cooperate if there is a sound rationale and the proposed salary cuts are marginal.
Even five years after the merger of the two airlines, there is much heartburn among the staff over the lack of uniformity in pay scales and career progression paths. Pilots of the domestic operations of the erstwhile Indian Airlines had resorted to a 10-day strike shortly after the constitution of the Dharmadhikari committee, demanding parity with the commanders on international flights.
The national auditor, Comptroller and Auditor General, in its report on Air India, observed that the airline did not follow any set procedure for pay revision or for fixing performance linked incentives. "Audit observed that allowances and PLI ranged from 62% to 919% of the Basic Pay against the maximum of 5% as per Department of Public Enterprises guidelines and the company made excess payment of allowances and PLI amounting to Rs 315.78 crore during the years 2007-08 and 2008-09," the CAG said in its report.
The CAG also found Air India Board guilty of approving an increase in various allowances, including PLIs, by up to 50% with effect from January 2005, even though the airline was dependant on loans for working capital.
Reliance Industries to invest over Rs 1,500 crore in TV18 Group
MUMBAI: Reliance Industries is embarking on a major diversification into the media and entertainment sector with the Mukesh Ambani firm agreeing to fund a transaction that will result in a sizeable stake for itself in a company controlling two of the industry's largest businesses, the Network18 Group and the Eenadu Group of channels run by the Hyderabad-based Ramoji Rao.
People close to the transaction, which has a number of stages, told ET that an RIL subsidiary will help the promoter group of Network18 fund the rights issues of its two listed entities, Network18 Media and Investments, which runs the portal moneycontrol.com, and TV18 Broadcast Ltd, which operates a number of business and general news channels, notably CNBC TV18 and CNN-IBN.
ET was not able to independently verify the amount to be invested by RIL, but people with direct knowledge of the transaction estimated it to be more than Rs 1,500 crore. The money from RIL will help Raghav Bahl, the promoter of the TV18 Group, subscribe to the rights issues of both the listed companies, Network18 and TV18. The full amount expected to be raised through the rights issues is estimated at over Rs 3,500 crore.
The boards of TV18 Broadcast and Network18 Media will meet on Tuesday to discuss plans for a rights issue. Raghav Bahl did not respond to an email questionnaire; a Reliance group spokesperson also remained silent, while B Sai Kumar, the CEO of Network18, declined comment.
Times NOW and ET NOW, owned by Bennett, Coleman & Co. Ltd, the publisher of this paper, compete with some of the television channels owned by Bahl. The strategic investment by RIL will be used by the Network18 Group to retire debt and eventually buy out RIL's stake in Eenadu, the pan-India vernacular language channels owned by Ramoji Rao.
RIL sources said they had invested Rs 2,600 crore in the Eenadu Group through a subsidiary giving it ownership of all businesses apart from its Telugu channel, in which it owns 49%. The transaction, once complete, will result in RIL recovering most of its investments in Eenadu. Messages and an email sent after business hours to the office of Ch Kiron, the managing director of Ushodaya Enterprises, the holding company of the Eenadu Group, did not elicit any response.
By its own admission before the Andhra Pradesh High Court, Reliance Industries has said it has invested Rs 2,600 crore in entities of Nimesh Kampani-led JM Financial Group, which in turn had invested in Ushodaya Enterprises. The AP High Court is hearing a petition alleging the investment was a payoff to N Chandrababu Naidu, the former chief minister of Andhra Pradesh, an allegation RIL has denied in its affidavit. RIL's deal with Bahl, likely to be announced on Tuesday, is expected to create a powerful national news and entertainment company spanning several regional languages as well as English and Hindi.
RIL to get Exclusive Rights to Content
RIL, people close to the transaction said, is expected to hold an economic interest equivalent to a 30% stake in the promoter group of companies, with the original promoter Bahl owning 51% and all voting rights.
Further, RIL will have exclusive rights to content from 30 channels and web properties of the two media houses, which will lend a competitive edge to its broadband services to be rolled out later this year.
RIL is laying the groundwork for national 4G broadband services expected to be launched sometime this year. Content for broadband services is generally outsourced, but RIL will have an advantage over others with this transaction which will give its subscribers a wide variety of channels ranging from general entertainment to news and movies.
Earlier on Monday, Sai Kumar, in a letter to all employees of TV18, hinted at a solution to the group's debt problems. "Let me also take this opportunity to tell you that we are very close to addressing our debt levels and related issues which have been reported by various media in the last few weeks. We will learn the details from Raghav pretty soon," said Sai Kumar, who took over as CEO after the sudden resignation recently of long-time CEO Haresh Chawla.
The money is likely to be invested directly in companies controlled by Raghav Bahl, such as RB Holding Pvt Ltd and RB Investments Pvt Ltd. These companies own 30.34% stake in Network18 Media while Bahl holds 9.03% in his name. Network18, in turn, is the main shareholder in TV18 Broadcast with a 49.98% stake. The two companies have suffered heavily in the downturn triggered by the financial crisis of 2008-09. While revenue growth has been strong, profits have plummeted and borrowings have soared.
At the end of March 2011, Network18 had debt of Rs 1,777.89 crore. Its profit for that year fell 87.27%. TV18's debt stood at Rs 550.54 crore while profit fell 17.40%. The markets have punished the two companies. Network18' s market cap is down 171.57% since January 5, 2009 while TV18's has fallen 560.23% in the same period. Bahl's companies also have a distribution joint venture with the Chennai-based Sun Group, called Sun18. It is not known if Sun's channels, among the strongest in the south, are a part of this arrangement. American giant Viacom too has a joint venture with Bahl for producing movies.
People close to the transaction, which has a number of stages, told ET that an RIL subsidiary will help the promoter group of Network18 fund the rights issues of its two listed entities, Network18 Media and Investments, which runs the portal moneycontrol.com, and TV18 Broadcast Ltd, which operates a number of business and general news channels, notably CNBC TV18 and CNN-IBN.
ET was not able to independently verify the amount to be invested by RIL, but people with direct knowledge of the transaction estimated it to be more than Rs 1,500 crore. The money from RIL will help Raghav Bahl, the promoter of the TV18 Group, subscribe to the rights issues of both the listed companies, Network18 and TV18. The full amount expected to be raised through the rights issues is estimated at over Rs 3,500 crore.
The boards of TV18 Broadcast and Network18 Media will meet on Tuesday to discuss plans for a rights issue. Raghav Bahl did not respond to an email questionnaire; a Reliance group spokesperson also remained silent, while B Sai Kumar, the CEO of Network18, declined comment.
Times NOW and ET NOW, owned by Bennett, Coleman & Co. Ltd, the publisher of this paper, compete with some of the television channels owned by Bahl. The strategic investment by RIL will be used by the Network18 Group to retire debt and eventually buy out RIL's stake in Eenadu, the pan-India vernacular language channels owned by Ramoji Rao.
RIL sources said they had invested Rs 2,600 crore in the Eenadu Group through a subsidiary giving it ownership of all businesses apart from its Telugu channel, in which it owns 49%. The transaction, once complete, will result in RIL recovering most of its investments in Eenadu. Messages and an email sent after business hours to the office of Ch Kiron, the managing director of Ushodaya Enterprises, the holding company of the Eenadu Group, did not elicit any response.
By its own admission before the Andhra Pradesh High Court, Reliance Industries has said it has invested Rs 2,600 crore in entities of Nimesh Kampani-led JM Financial Group, which in turn had invested in Ushodaya Enterprises. The AP High Court is hearing a petition alleging the investment was a payoff to N Chandrababu Naidu, the former chief minister of Andhra Pradesh, an allegation RIL has denied in its affidavit. RIL's deal with Bahl, likely to be announced on Tuesday, is expected to create a powerful national news and entertainment company spanning several regional languages as well as English and Hindi.
RIL to get Exclusive Rights to Content
RIL, people close to the transaction said, is expected to hold an economic interest equivalent to a 30% stake in the promoter group of companies, with the original promoter Bahl owning 51% and all voting rights.
Further, RIL will have exclusive rights to content from 30 channels and web properties of the two media houses, which will lend a competitive edge to its broadband services to be rolled out later this year.
RIL is laying the groundwork for national 4G broadband services expected to be launched sometime this year. Content for broadband services is generally outsourced, but RIL will have an advantage over others with this transaction which will give its subscribers a wide variety of channels ranging from general entertainment to news and movies.
Earlier on Monday, Sai Kumar, in a letter to all employees of TV18, hinted at a solution to the group's debt problems. "Let me also take this opportunity to tell you that we are very close to addressing our debt levels and related issues which have been reported by various media in the last few weeks. We will learn the details from Raghav pretty soon," said Sai Kumar, who took over as CEO after the sudden resignation recently of long-time CEO Haresh Chawla.
The money is likely to be invested directly in companies controlled by Raghav Bahl, such as RB Holding Pvt Ltd and RB Investments Pvt Ltd. These companies own 30.34% stake in Network18 Media while Bahl holds 9.03% in his name. Network18, in turn, is the main shareholder in TV18 Broadcast with a 49.98% stake. The two companies have suffered heavily in the downturn triggered by the financial crisis of 2008-09. While revenue growth has been strong, profits have plummeted and borrowings have soared.
At the end of March 2011, Network18 had debt of Rs 1,777.89 crore. Its profit for that year fell 87.27%. TV18's debt stood at Rs 550.54 crore while profit fell 17.40%. The markets have punished the two companies. Network18' s market cap is down 171.57% since January 5, 2009 while TV18's has fallen 560.23% in the same period. Bahl's companies also have a distribution joint venture with the Chennai-based Sun Group, called Sun18. It is not known if Sun's channels, among the strongest in the south, are a part of this arrangement. American giant Viacom too has a joint venture with Bahl for producing movies.
Andhra Pradesh government seeks tie-up with Tesco, Bharti-Walmart
HYDERABAD: The Andhra Pradesh government is drawing up plans to open swanky supermarkets, venturing into the multi-brand retail territory that multinational retailers such as Walmart and Tesco are desperate to enter but forbidden from doing so.
It is also seeking partnerships with the wholesale units of Germany's Metro AG and Walmart, a minister said, to create a hybrid retail model that combines the best attributes of the public and private sectors.
The first store will open by the end of March in an upmarket area in Andhra Pradesh's capital Hyderabad. Eventually, the Congress government will spend some Rs 2,000 crore to set up a retail chain that covers all the main towns and cities in India's fourth-largest state.
"Our retail stores will look like any other supermarket, with hygiene assured. We will offer quality packaged food products at reasonable rates," state Food and Consumer Affairs Minister D Sridhar Babu told ET, adding the main aim of the stores is to provide succour from inflation to the middle and lower-middle classes.
The stores will begin by stocking everyday staples such as rice, pulses and commodities before adding a broad range of consumer goods. The outlets will be operated by the government at wafer-thin profit margins so that prices are kept low.
In November, the Congress-led United Progressive Alliance government at the Centre gave permission to foreign companies to invest up to 51% in India's $450-billion multi-brand retail sector but backtracked in the face of protests by traders and many political parties.
Other states such as Tamil Nadu, Kerala and Maharashtra have opened retail stores to sell food products, but with little expertise in the area, these businesses ran into severe losses. Maharashtra had to sell its ailing Sahakari Bhandar outlets in Mumbai to Reliance Retail.
Andhra Pradesh, the minister said, wants to learn from the mistakes of other states. That is why it wants to partner with the likes of Metro and Bharti-Walmart that have expertise the government lacks in areas such as procurement and logistics.
India allows 100% FDI in wholesale trade, where Metro and Bharti-Walmart operate. AP has started talks with the two for tie-ups, Babu said.
A 'Revolutionary' Idea Faces Challenges
Metro declined comment while Bharti Walmart said it is not in talks at present with the Andhra Pradesh government. "However, we will be happy to partner with the government on such an initiative, if invited," the cash and carry JV between Bharti Enterprises and Walmart said in a statement. The Andhra Pradesh government led by Kiran Kumar Reddy has been under pressure dealing with a separatist agitation in the Telangana region and a rebellion by the son of the late former chief minister YS Rajasekhara Reddy.
To win back public support the government recently said it will provide rice to the poor at Rs a kg, a populist move it said was necessary to ease the burden of rising food prices. Kumar Rajagopalan, the chief executive of the Retailers' Association of India, described Andhra Pradesh's supermarket store idea as 'revolutionary' but was sceptical about its chances of success.
While governments have expertise running the public distribution system, their abilities in areas such as procurement, logistics and retailing are limited, posing a big challenge to Andhra Pradesh's plan, he said. But Babu was confident the hybrid model, which will also incorporate lessons from the failures of other states, would work well. The government has some inherent advantages that it can make use of to keep costs low, he said.
It is also seeking partnerships with the wholesale units of Germany's Metro AG and Walmart, a minister said, to create a hybrid retail model that combines the best attributes of the public and private sectors.
The first store will open by the end of March in an upmarket area in Andhra Pradesh's capital Hyderabad. Eventually, the Congress government will spend some Rs 2,000 crore to set up a retail chain that covers all the main towns and cities in India's fourth-largest state.
"Our retail stores will look like any other supermarket, with hygiene assured. We will offer quality packaged food products at reasonable rates," state Food and Consumer Affairs Minister D Sridhar Babu told ET, adding the main aim of the stores is to provide succour from inflation to the middle and lower-middle classes.
The stores will begin by stocking everyday staples such as rice, pulses and commodities before adding a broad range of consumer goods. The outlets will be operated by the government at wafer-thin profit margins so that prices are kept low.
In November, the Congress-led United Progressive Alliance government at the Centre gave permission to foreign companies to invest up to 51% in India's $450-billion multi-brand retail sector but backtracked in the face of protests by traders and many political parties.
Other states such as Tamil Nadu, Kerala and Maharashtra have opened retail stores to sell food products, but with little expertise in the area, these businesses ran into severe losses. Maharashtra had to sell its ailing Sahakari Bhandar outlets in Mumbai to Reliance Retail.
Andhra Pradesh, the minister said, wants to learn from the mistakes of other states. That is why it wants to partner with the likes of Metro and Bharti-Walmart that have expertise the government lacks in areas such as procurement and logistics.
India allows 100% FDI in wholesale trade, where Metro and Bharti-Walmart operate. AP has started talks with the two for tie-ups, Babu said.
A 'Revolutionary' Idea Faces Challenges
Metro declined comment while Bharti Walmart said it is not in talks at present with the Andhra Pradesh government. "However, we will be happy to partner with the government on such an initiative, if invited," the cash and carry JV between Bharti Enterprises and Walmart said in a statement. The Andhra Pradesh government led by Kiran Kumar Reddy has been under pressure dealing with a separatist agitation in the Telangana region and a rebellion by the son of the late former chief minister YS Rajasekhara Reddy.
To win back public support the government recently said it will provide rice to the poor at Rs a kg, a populist move it said was necessary to ease the burden of rising food prices. Kumar Rajagopalan, the chief executive of the Retailers' Association of India, described Andhra Pradesh's supermarket store idea as 'revolutionary' but was sceptical about its chances of success.
While governments have expertise running the public distribution system, their abilities in areas such as procurement, logistics and retailing are limited, posing a big challenge to Andhra Pradesh's plan, he said. But Babu was confident the hybrid model, which will also incorporate lessons from the failures of other states, would work well. The government has some inherent advantages that it can make use of to keep costs low, he said.
Tata seeks extension of lease for Taj Mansingh; NDMC asks IDFC to chart private-public partnership of hotel
NEW DELHI: New Delhi's municipal body has appointed a financial advisor to select a partner for operating a hotel on the property that currently houses the iconic Taj Mahal Hotel in the heart of the city even as the Tatas have sought a long-term extension of their licence agreement to manage the hotel.
The Tata-owned Indian Hotels has been in charge of the marquee property on Mansingh Road since 1978 under a 33-year agreement with the New Delhi Municipal Council (NDMC), the body that owns both the land as well as the building. The lease expired in October 2011 and was renewed in favour of Indian Hotels on a short-term basis.
"The Indian Hotels Company Ltd has sought an extension of the collaboration agreement and licence deed between NDMC and IHCL in respect of the Taj Mahal Hotel. IHCL has enjoyed a cordial and beneficial association with NDMC over the past three decades. They look forward to continuing this business relationship in a mutually beneficial manner," said a person close to the Tatas.
NDMC has tasked the Mumbai-based Infrastructure Development Finance Company (IDFC) with the responsibility of developing a private-public partnership structure that would optimise revenues for the municipal body and assist it in finalising a private sector partner.
An IDFC spokesman said it was yet to start formal work on its mandate and it would be premature to comment on the process it would follow. "Best practices would ensure maximising both competition and transparency in the bidding for selection of the O&M (operation & maintenance) partner," said the spokesman.
The eventual outcome of this process is far from clear. The Taj Mansingh, as it is popularly known, is arguably Indian Hotels' most prized possession after the fabled Taj Mahal Hotel in Mumbai and the company is expected to try its best to retain it. A person close to the company said Indian Hotels had enjoyed excellent relations with NDMC and hoped to renew the agreement.
A government official, who did not wish to be named, said NDMC had the right to renew Indian Hotels' licence but could not give it the right of first refusal in case of an auction.
NDMC Chairman Archana Arora said the municipality had extended the agreement with Indian Hotels for one year. "We had appointed advisers for the property after the contract with Taj was renewed in October. We will explore the future course of action later," she said.
Another person close to the Tata Group said its hotel arm would be willing to participate in the bidding process if one were to take place.
Under the current agreement, Indian Hotels pays 10.5% of its annual gross revenues to NDMC as revenue share. The eventual outcome could be that this figure would go up substantially, industry officials said.
"In case this property goes for bidding on a revenue-share model, the operators may bid upward of 40% share for the government," said Kishor Ostwal, CMD of CNI Research, pointing to Delhi's Indira Gandhi International Airport, where GMR Infrastructure agreed to a gross revenue share of 45.99%.
Taj Mansingh is one of the capital's top hotels and an auction, if one were to take place, is likely to attract bids.
The Tata-owned Indian Hotels has been in charge of the marquee property on Mansingh Road since 1978 under a 33-year agreement with the New Delhi Municipal Council (NDMC), the body that owns both the land as well as the building. The lease expired in October 2011 and was renewed in favour of Indian Hotels on a short-term basis.
"The Indian Hotels Company Ltd has sought an extension of the collaboration agreement and licence deed between NDMC and IHCL in respect of the Taj Mahal Hotel. IHCL has enjoyed a cordial and beneficial association with NDMC over the past three decades. They look forward to continuing this business relationship in a mutually beneficial manner," said a person close to the Tatas.
NDMC has tasked the Mumbai-based Infrastructure Development Finance Company (IDFC) with the responsibility of developing a private-public partnership structure that would optimise revenues for the municipal body and assist it in finalising a private sector partner.
An IDFC spokesman said it was yet to start formal work on its mandate and it would be premature to comment on the process it would follow. "Best practices would ensure maximising both competition and transparency in the bidding for selection of the O&M (operation & maintenance) partner," said the spokesman.
The eventual outcome of this process is far from clear. The Taj Mansingh, as it is popularly known, is arguably Indian Hotels' most prized possession after the fabled Taj Mahal Hotel in Mumbai and the company is expected to try its best to retain it. A person close to the company said Indian Hotels had enjoyed excellent relations with NDMC and hoped to renew the agreement.
A government official, who did not wish to be named, said NDMC had the right to renew Indian Hotels' licence but could not give it the right of first refusal in case of an auction.
NDMC Chairman Archana Arora said the municipality had extended the agreement with Indian Hotels for one year. "We had appointed advisers for the property after the contract with Taj was renewed in October. We will explore the future course of action later," she said.
Another person close to the Tata Group said its hotel arm would be willing to participate in the bidding process if one were to take place.
Under the current agreement, Indian Hotels pays 10.5% of its annual gross revenues to NDMC as revenue share. The eventual outcome could be that this figure would go up substantially, industry officials said.
"In case this property goes for bidding on a revenue-share model, the operators may bid upward of 40% share for the government," said Kishor Ostwal, CMD of CNI Research, pointing to Delhi's Indira Gandhi International Airport, where GMR Infrastructure agreed to a gross revenue share of 45.99%.
Taj Mansingh is one of the capital's top hotels and an auction, if one were to take place, is likely to attract bids.
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