Mumbai: The Securities and Exchange Board of India (Sebi), the capital market regulator, today lifted restrictions on broad-based institutions, such as insurance companies and mutual funds, subscribing to preferential issues of companies. The decision was taken at its board meeting in New Delhi today.
According to earlier regulations, these institutions were not allowed to participate in preferential allotments if they had sold holdings in the issuer companies in the preceding six months. Further, on allotment, they were required to lock in their entire pre-preferential holdings in such companies for a period of six months from the date of preferential allotment.
Both these restrictions have now been lifted. “It has been decided to exempt insurance companies and mutual funds, which are broad-based investment vehicles representing public at large, from regulations related to sale and lock-in of their pre-preferential shareholding in issuer companies,” Sebi said in a release. However, the lock-in on shares allotted in the preferential issue, will remain unchanged.
Peerless Mutual Fund MD & CEO Akshay Gupta said: “The move will benefit some of the larger asset management companies (AMCs) that already have significant holdings in companies and want to increase those further through preferential allotments. At present, not many AMCs participate in preferential allotments.”
Quantum Mutual Fund Chief Executive Officer Jimmy Patel added: “The move to ease preferential allotment norms will help promoters more than AMCs, as their investor base will increase. Mutual fund houses will now be able to invest in companies, even if they had sold shares in the companies in the past six months.”
Other key decisions
Amendment to MF Advertisement Code: To provide more flexibility to mutual fund houses, Sebi has decided to amended the advertising code to make it principle-based. “The definition of advertisement shall be broadened to include all forms of communication that may influence investment decisions of any investor,” the regulator said.
“Under the current advertisement code, there are many restrictions. More than 40 per cent of the ad space gets wasted on disclaimers and information that investors don’t even read. I hope the new code would give us more flexibility and reduce the disclaimers, so that we can advertise our products properly,” said Gupta.
PMS investment limit increased: The market regulator has increased the minimum investment amount under portfolio management services from Rs 5 lakh to Rs 25 lakh. Further, portfolio managers have been asked to ensure segregation of holdings in individual demat accounts in respect of unlisted securities, too.
“Raising the PMS limit was long overdue. The move will benefit the mutual fund industry. As portfolio managers, who have better incentive structures, used to lure relatively small high networth individuals (HNIs) away from mutual fund houses. This will bring back a lot of investors to mutual funds,” said Patel.
Reservation for holders of convertible debt securities: Sebi has clarified that reservations to convertible debt holders in rights and bonus issues shall only be available to compulsorily convertible debt holders.
Success in my Habit
Monday, January 30, 2012
Chile seeks partnership in renewable energy, lithium
Chennai: Chile wants India to partner with it in the development of renewable energy industry on its soil. Mr Guido Girardi, President of the Senate of the Republic of Chile, today said that India would be welcome to set up power plants that generate energy from renewable sources.
In an interaction with the members of the Confederation of Indian Industry – Southern Region, Mr Girardi pointed out that Chile had 4,000-km-long coastline that afforded possibilities of developing tidal energy, and being a volcanic country, geo-thermal energy was also possible.
A member of the delegation led by Mr Girardi said at the interaction that while everybody knew Chile as a producer of copper, not many knew it was also rich in lithium. Lithium is a metal that is used in the manufacture of batteries for electric vehicles. Chile would welcome any kind of partnership in this area too, he said, noting that the Japanese had formed similar partnerships in the neighbouring Argentina.
Mr Girardi said that the mining sector in Chile would need investments of about $40-50 billion. Such huge mining operations would need energy. “We foresee a tremendous need for solar energy,” he said.
Mr T.T. Ashok, Chairman, CII-Southern Region, said India was set to emerge as a hub of wind, solar, biomass and bio-fuels related manufacturing and exports because of its very strong manufacturing and R&D orientation.
“The two countries need to expedite the proposed Comprehensive Economic Cooperation Agreement that can cover protection of bilateral investments, services, and education,” Mr Ashok said.
In an interaction with the members of the Confederation of Indian Industry – Southern Region, Mr Girardi pointed out that Chile had 4,000-km-long coastline that afforded possibilities of developing tidal energy, and being a volcanic country, geo-thermal energy was also possible.
A member of the delegation led by Mr Girardi said at the interaction that while everybody knew Chile as a producer of copper, not many knew it was also rich in lithium. Lithium is a metal that is used in the manufacture of batteries for electric vehicles. Chile would welcome any kind of partnership in this area too, he said, noting that the Japanese had formed similar partnerships in the neighbouring Argentina.
Mr Girardi said that the mining sector in Chile would need investments of about $40-50 billion. Such huge mining operations would need energy. “We foresee a tremendous need for solar energy,” he said.
Mr T.T. Ashok, Chairman, CII-Southern Region, said India was set to emerge as a hub of wind, solar, biomass and bio-fuels related manufacturing and exports because of its very strong manufacturing and R&D orientation.
“The two countries need to expedite the proposed Comprehensive Economic Cooperation Agreement that can cover protection of bilateral investments, services, and education,” Mr Ashok said.
India signs multilateral pact for tax co-operation
New Delhi: India has signed an international agreement that could be an effective tool to help it combat tax avoidance and evasion.
This agreement — Multilateral Convention on Mutual Administrative Assistance in Tax Matters — is being seen as the ‘gold standard' for co-operation in tax administration.
This pact was signed at the OECD headquarters in Paris by Mr Sanjay Mishra, Joint Secretary, Central Board of Direct Taxes, in the presence of the OECD Deputy Secretary-General, Mr Rintaro Tamakio.
Mr Jeffrey Owens, Director of the OECD Centre for Tax policy and Administration, said India had moved very quickly since its commitment to the convention at the November G20 meet in Cannes. “I expect that India will be the first non-OECD G20 country where the updated Convention is in force,” he said in a statement.
The multilateral convention covers all taxes (direct and indirect), all forms of exchange of information and provides for assistance not just in tax assessment but also in the actual collection.
At the G20 leaders' Summit at Cannes in November last year, India had signed a letter of intent on the multilateral convention.
By signing the convention, India and the other 31 signatories will encourage more countries to join, sending a strong signal that they are acting in unison to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place.
Signatories to the amended convention are Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the UK, and the US.
This agreement — Multilateral Convention on Mutual Administrative Assistance in Tax Matters — is being seen as the ‘gold standard' for co-operation in tax administration.
This pact was signed at the OECD headquarters in Paris by Mr Sanjay Mishra, Joint Secretary, Central Board of Direct Taxes, in the presence of the OECD Deputy Secretary-General, Mr Rintaro Tamakio.
Mr Jeffrey Owens, Director of the OECD Centre for Tax policy and Administration, said India had moved very quickly since its commitment to the convention at the November G20 meet in Cannes. “I expect that India will be the first non-OECD G20 country where the updated Convention is in force,” he said in a statement.
The multilateral convention covers all taxes (direct and indirect), all forms of exchange of information and provides for assistance not just in tax assessment but also in the actual collection.
At the G20 leaders' Summit at Cannes in November last year, India had signed a letter of intent on the multilateral convention.
By signing the convention, India and the other 31 signatories will encourage more countries to join, sending a strong signal that they are acting in unison to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place.
Signatories to the amended convention are Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the UK, and the US.
Thursday, January 26, 2012
Reliance Dreamworks' movies bags 11 Oscar nominations
MUMBAI: War Horse, The Help and Real Steel, Hollywood films produced by Reliance Dream-Works, have bagged 11 nominations at this year's Oscars, making it the first time films produced by an Indian company have been nominated in such a big way.
The Steven Spielberg-directed War Horse has been nominated in six categories including the best picture, sound editing, sound mixing, original score (John Williams), art direction and cinematography. War Horse will be released in India on February 10.
The Help has been nominated for the best picture, best actress (Viola Davis), best supporting actress (Jessica Chastain and Octavia Spencer). Hugh Jackman-starrer sci- fi thriller Real Steel has been nominated for Best achievement in Visual Effects. The most prestigious best film category has two films from the Reliance DreamWorks stable.
Reliance DreamWorks is an equal joint venture between Anil Ambani-owned Reliance Entertainment and Steven Spielberg's DreamWorks Studios. The deal was preceded by Reliance Entertainment's foray into Hollywood in early 2009, which saw the company signing a deals with A-list stars including Brad Pitt, George Clooney, Tom Hanks, Jim Carrey and Julia Roberts.
The Steven Spielberg-directed War Horse has been nominated in six categories including the best picture, sound editing, sound mixing, original score (John Williams), art direction and cinematography. War Horse will be released in India on February 10.
The Help has been nominated for the best picture, best actress (Viola Davis), best supporting actress (Jessica Chastain and Octavia Spencer). Hugh Jackman-starrer sci- fi thriller Real Steel has been nominated for Best achievement in Visual Effects. The most prestigious best film category has two films from the Reliance DreamWorks stable.
Reliance DreamWorks is an equal joint venture between Anil Ambani-owned Reliance Entertainment and Steven Spielberg's DreamWorks Studios. The deal was preceded by Reliance Entertainment's foray into Hollywood in early 2009, which saw the company signing a deals with A-list stars including Brad Pitt, George Clooney, Tom Hanks, Jim Carrey and Julia Roberts.
Essar Projects bags a Rs 286 crores contract from Gujarat Water Infrastructure Limited
NEW DELHI: Essar Projects, India's second largest EPC company and part of the Essar Group, was awarded Rs 286 crores Contract from Gujarat Water Infrastructure Limited to Engineer, Procure, Construct & Commission (EPCC) a water pipeline system.
This is part of the ambitious Bulk Water Transmission System Project being implemented by the Gujarat Government. The project is scheduled for completion in 12 months.
It is one of the eight packages of Sardar Sarovar Narmada Canal-based drinking water supply project, which aims at supplying water to all the rural and urban areas of the seven districts of Saurashtra, Kachchh region and parts of Ahemdabad, Sabarakantha, Mehsana districts of North Gujarat and Panchmahals.
"Essar Projects has been successfully bidding and winning new business in the open market. This award from GWIL is a testimony to our competitive capabilities in the EPC space in India," said Mr MS Ambegaonkar, Director Business Development, Essar Projects.
Essar Projects is increasingly expanding its global footprint. Currently the company is bidding as well as executing multi-million dollar contracts in SE Asia, Australasia, Middle East & Africa.
The company's revenue for FY2011 was US$ 1.7 billion and Order Book stood in excess of US$ 6 billion.
This is part of the ambitious Bulk Water Transmission System Project being implemented by the Gujarat Government. The project is scheduled for completion in 12 months.
It is one of the eight packages of Sardar Sarovar Narmada Canal-based drinking water supply project, which aims at supplying water to all the rural and urban areas of the seven districts of Saurashtra, Kachchh region and parts of Ahemdabad, Sabarakantha, Mehsana districts of North Gujarat and Panchmahals.
"Essar Projects has been successfully bidding and winning new business in the open market. This award from GWIL is a testimony to our competitive capabilities in the EPC space in India," said Mr MS Ambegaonkar, Director Business Development, Essar Projects.
Essar Projects is increasingly expanding its global footprint. Currently the company is bidding as well as executing multi-million dollar contracts in SE Asia, Australasia, Middle East & Africa.
The company's revenue for FY2011 was US$ 1.7 billion and Order Book stood in excess of US$ 6 billion.
Only 53% of Indian businesses aware of new international accounting standards
NEW DELHI: Only 53 per cent of Indian businesses are aware of the impending global changes in the existing accounting standards that will impact the way they recognise and report revenue, according to a survey.
Besides, of the 2,800 businesses surveyed by Grant Thornton, nearly 60 per cent believed that existing accounting standards, which are almost two decades old, need to be improved or replaced.
The new accounting standard IFRS is scheduled to be implemented next year. Areas that may be affected because of the new rules include multiple element arrangements, sales incentives, contingent pricing arrangements and contracts with a significant financing element.
Sai Venkateshwaran, Partner and IFRS Practice Leader of Grant Thornton India, said: "The proposals will change the amount or timing or revenue in some cases, although the impact will differ for companies applying IFRS, US GAAP and Indian GAAP."
He added, "The changes could be more significant for Indian companies considering that they are moving from a state where there is diversity in practice due to the limited guidance available under Indian GAAP."
Meanwhile, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are developing a joint proposal for converged revenue recognition standard.
The IASB and FASB's joint latest proposal was published in November, 2011, following a previous Exposure Draft in June 2010 and a Preliminary Views document in 2008.
However, more than three quarters (78 per cent) of the survey respondents believe that the latest joint proposals would lead to increased costs and 57 per cent said it would lead to more complexity.
Support for change was lowest in the US, the UK, and South Africa, while support was greatest in India, the ASEAN countries and Latin America.
Ed Nusbaum, CEO of Grant Thornton International said: "Revenue is a key performance measure for every business and a single, global accounting standard in this area is critical.
"The US literature suffers from the opposite problem of excessive guidance - much of which is specific to particular industries. The regional variations in attitude to the Boards' proposals are no doubt affected by these different starting points."
Besides, of the 2,800 businesses surveyed by Grant Thornton, nearly 60 per cent believed that existing accounting standards, which are almost two decades old, need to be improved or replaced.
The new accounting standard IFRS is scheduled to be implemented next year. Areas that may be affected because of the new rules include multiple element arrangements, sales incentives, contingent pricing arrangements and contracts with a significant financing element.
Sai Venkateshwaran, Partner and IFRS Practice Leader of Grant Thornton India, said: "The proposals will change the amount or timing or revenue in some cases, although the impact will differ for companies applying IFRS, US GAAP and Indian GAAP."
He added, "The changes could be more significant for Indian companies considering that they are moving from a state where there is diversity in practice due to the limited guidance available under Indian GAAP."
Meanwhile, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are developing a joint proposal for converged revenue recognition standard.
The IASB and FASB's joint latest proposal was published in November, 2011, following a previous Exposure Draft in June 2010 and a Preliminary Views document in 2008.
However, more than three quarters (78 per cent) of the survey respondents believe that the latest joint proposals would lead to increased costs and 57 per cent said it would lead to more complexity.
Support for change was lowest in the US, the UK, and South Africa, while support was greatest in India, the ASEAN countries and Latin America.
Ed Nusbaum, CEO of Grant Thornton International said: "Revenue is a key performance measure for every business and a single, global accounting standard in this area is critical.
"The US literature suffers from the opposite problem of excessive guidance - much of which is specific to particular industries. The regional variations in attitude to the Boards' proposals are no doubt affected by these different starting points."
HR industry grows at 21% over 4 years: Executive Recruiters Association and E&Y report
BANGALORE: The human resource industry in India has grown at a compounded annual growth rate of 21% over the past four years and is pegged to be around Rs 22,800 crore, according to a report by Executive Recruiters Association and Ernst & Young. As the industry gets more organised, new players, emerging sectors and multinationals are dropping anchor, and a changing mindset in traditional companies makes space for HR firms rather than referrals for hiring, it adds.
The 'Human Resource Industry Solutions Report 2012' indicates a maturing industry which is moving from being fragmented to getting more organised. The industry has players that are segregated into recruitment , temporary staffing and executive search. HR consultants' image has moved many notches up from being a vendor to that of a partner who plays a key role in the company's growth trajectory , says the report.
While the permanent recruitment in India is estimated at Rs 3,000 crore, the search industry is pegged to have a market size of Rs 600 crore to Rs 700 crore. The search sector gets its boost from foreign players entering Indian markets and expanding into different geographies and industries. Companies that deal with the automobile, luxury , agricultural and food business that have entered India in the past few years have used search firms to expand further.
"The Indian economic, social and cultural landscape is in the middle of unprecedented change. The need for solutions for complex problems of growth, innovation, and professionalisation is driving the opportunity for the HR solutions industry in a way that has never been seen before," says Amit Zutshi, Partner in Ernst & Young's Transaction Advisory Services practice. Temporary hiring has a 73% market share while permanent staffing has 13% of the pie, says the report.
The temporary recruitment industry is expected to be at around Rs 17,200 crore in which professional staffing accounts for Rs 5,300 crore and general staffing is at Rs 11,900 crore. Firms that are into professional staffing have a margin as high as 30% to 35%. Temporary staffing globally is at $140 billion but on the domestic front, with more companies leasing out job requirements, 2.5% to 3% of the workforce is expected to be on contracts in India in the near future.
The 'Human Resource Industry Solutions Report 2012' indicates a maturing industry which is moving from being fragmented to getting more organised. The industry has players that are segregated into recruitment , temporary staffing and executive search. HR consultants' image has moved many notches up from being a vendor to that of a partner who plays a key role in the company's growth trajectory , says the report.
While the permanent recruitment in India is estimated at Rs 3,000 crore, the search industry is pegged to have a market size of Rs 600 crore to Rs 700 crore. The search sector gets its boost from foreign players entering Indian markets and expanding into different geographies and industries. Companies that deal with the automobile, luxury , agricultural and food business that have entered India in the past few years have used search firms to expand further.
"The Indian economic, social and cultural landscape is in the middle of unprecedented change. The need for solutions for complex problems of growth, innovation, and professionalisation is driving the opportunity for the HR solutions industry in a way that has never been seen before," says Amit Zutshi, Partner in Ernst & Young's Transaction Advisory Services practice. Temporary hiring has a 73% market share while permanent staffing has 13% of the pie, says the report.
The temporary recruitment industry is expected to be at around Rs 17,200 crore in which professional staffing accounts for Rs 5,300 crore and general staffing is at Rs 11,900 crore. Firms that are into professional staffing have a margin as high as 30% to 35%. Temporary staffing globally is at $140 billion but on the domestic front, with more companies leasing out job requirements, 2.5% to 3% of the workforce is expected to be on contracts in India in the near future.
World Economic Forum Davos 2012: HCL Technologies to create 10,000 jobs in US & Europe over 5 years
DAVOS: In one of the biggest announcements related to job creation here at the World Economic Forum, Indian IT major HCL Technologies on Thursday said the company will create 10,000 local jobs in Europe and the US over the next five years.
Terming it a socially responsible business model for growth, HCL Tech Vice Chairman and CEO Vineet Nayar said the company would create these jobs for fresh engineers through partnerships with educational institutes, local governments, local communities, customers and others in these regions.
The announcement came a day after German Chancellor Angela Merkel said here at the WEF Annual Meeting 2012 that Europe would work toward becoming a benchmark investment destination on the global arena, but she would want foreign companies coming there to create jobs as well.
"In the context of a rapidly changing world, the expectation from businesses is evolving to balance pursuits of profit with social and individual imperatives in order to create a sustainable growth model," Nayar said.
"HCL is now taking those efforts to the next level by positively impacting the communities through local job creation and development of an ecosystem to support and encourage innovation. This initiative inverts some fundamental operational assumptions of the industry. HCL operates in by changing the prevalent dynamics around cost, skill base and innovation," he added.
"As our unique 'Employees First' culture has continued to grow and evolve, we've seen more and more HCL employees expressing the desire to see a truly socially responsible business model," he noted.
Nayar said HCL is taking various initiatives led by its investments in building Global Centres of Excellence, running dedicated recruitment and training programmes for college graduates and providing platforms for developing IT skill pool in local communities through collaboration with anchor customers and universities.
"In the months ahead, HCL will be working with 12 universities to offer a six-month elective course, as well as workshops on technology and management, and encouraging innovation through contests," he said.
"HCL's technology partners will also join hands in this initiative to provide training in upcoming technologies so that the talent deficit in these areas gets addressed. The company is working closely with government agencies to enlist their support in developing these ecosystems," he added.
The company said that a pilot programme started on these lines across five HCL centres in the US and EU has already shown early signs of success.
HCL group is a USD 6 billion, leading global technology and IT enterprise comprising two companies listed in India, HCL Technologies and HCL Infosystems.
Terming it a socially responsible business model for growth, HCL Tech Vice Chairman and CEO Vineet Nayar said the company would create these jobs for fresh engineers through partnerships with educational institutes, local governments, local communities, customers and others in these regions.
The announcement came a day after German Chancellor Angela Merkel said here at the WEF Annual Meeting 2012 that Europe would work toward becoming a benchmark investment destination on the global arena, but she would want foreign companies coming there to create jobs as well.
"In the context of a rapidly changing world, the expectation from businesses is evolving to balance pursuits of profit with social and individual imperatives in order to create a sustainable growth model," Nayar said.
"HCL is now taking those efforts to the next level by positively impacting the communities through local job creation and development of an ecosystem to support and encourage innovation. This initiative inverts some fundamental operational assumptions of the industry. HCL operates in by changing the prevalent dynamics around cost, skill base and innovation," he added.
"As our unique 'Employees First' culture has continued to grow and evolve, we've seen more and more HCL employees expressing the desire to see a truly socially responsible business model," he noted.
Nayar said HCL is taking various initiatives led by its investments in building Global Centres of Excellence, running dedicated recruitment and training programmes for college graduates and providing platforms for developing IT skill pool in local communities through collaboration with anchor customers and universities.
"In the months ahead, HCL will be working with 12 universities to offer a six-month elective course, as well as workshops on technology and management, and encouraging innovation through contests," he said.
"HCL's technology partners will also join hands in this initiative to provide training in upcoming technologies so that the talent deficit in these areas gets addressed. The company is working closely with government agencies to enlist their support in developing these ecosystems," he added.
The company said that a pilot programme started on these lines across five HCL centres in the US and EU has already shown early signs of success.
HCL group is a USD 6 billion, leading global technology and IT enterprise comprising two companies listed in India, HCL Technologies and HCL Infosystems.
Wednesday, January 25, 2012
Stronger Rupee brings relief to Paint companies
KOLKATA: The strengthening of the rupee has brought some respite to paint manufacturers. The price of titanium dioxide, one of the key ingredients of paint, is expected to come down which will bring some relief to paint companies. In December 2011, most of the paint companies had taken a price hike between 2%-4 %.
The size of the Indian paint industry is around Rs 23,000 crore. Of this, decorative paint constitutes Rs 17,000 crore while the industrial paint constitutes Rs 7,000 crore. On an average , raw materials constitute 56% of the total expenditure in paint companies. Titanium dioxide is one of the major raw materials and fluctuations in its prices have a direct impact on the cost of production.
Talking to ET, Ramanath V Akula, president (decorative) at Nippon Paint (India), said: "The strengthening of the rupee has to some extent brought some relief but the impact will not much at this level. If rupee comes down to Rs 45-46 level against dollar, we will have considerable benefit. The currency has depreciated by 15% in the October-December 2011 period , which has significantly affected the third quarter performance of the companies."
The companies had witnessed a 20-22 % growth in the first half. "But in the third quarter, demand slumped due to inflation and a high interest rate. A high input cost added to the woes which forced the companies to take a price hike. This had an impact on demand in the third quarter and it went down to 18%," said Akula, the president of Indian Paints Association.
Abhijit Roy, chief operating officer of Rs 2,500-crore Berger Paints, said that though the price of titanium dioxide had cooled off in November last, it started firming up from the middle of December. "The price of titanium dioxide is hovering around $3,600 per tonne, which is on the higher side.
Though we had expected that the strengthening of rupee would have some impact on input cost but a sudden price rise in titanium dioxide is likely to negate that. Even price of pthalic anhydride, which is also imported, is on the rise. If rupee strengthens further it will be good for us. Otherwise we will have to take a price hike in April depending on the impact of Union budget which will be tables in March.
Already our margins are under pressure." Roy said.Sandeep Sarda, executive director and CEO of Shalimar Paints feel that an appreciating rupee will definitely have a positive impact on the company's import bill. "If this trend continues, the fourth quarter will be a better one," Sarda said.
The size of the Indian paint industry is around Rs 23,000 crore. Of this, decorative paint constitutes Rs 17,000 crore while the industrial paint constitutes Rs 7,000 crore. On an average , raw materials constitute 56% of the total expenditure in paint companies. Titanium dioxide is one of the major raw materials and fluctuations in its prices have a direct impact on the cost of production.
Talking to ET, Ramanath V Akula, president (decorative) at Nippon Paint (India), said: "The strengthening of the rupee has to some extent brought some relief but the impact will not much at this level. If rupee comes down to Rs 45-46 level against dollar, we will have considerable benefit. The currency has depreciated by 15% in the October-December 2011 period , which has significantly affected the third quarter performance of the companies."
The companies had witnessed a 20-22 % growth in the first half. "But in the third quarter, demand slumped due to inflation and a high interest rate. A high input cost added to the woes which forced the companies to take a price hike. This had an impact on demand in the third quarter and it went down to 18%," said Akula, the president of Indian Paints Association.
Abhijit Roy, chief operating officer of Rs 2,500-crore Berger Paints, said that though the price of titanium dioxide had cooled off in November last, it started firming up from the middle of December. "The price of titanium dioxide is hovering around $3,600 per tonne, which is on the higher side.
Though we had expected that the strengthening of rupee would have some impact on input cost but a sudden price rise in titanium dioxide is likely to negate that. Even price of pthalic anhydride, which is also imported, is on the rise. If rupee strengthens further it will be good for us. Otherwise we will have to take a price hike in April depending on the impact of Union budget which will be tables in March.
Already our margins are under pressure." Roy said.Sandeep Sarda, executive director and CEO of Shalimar Paints feel that an appreciating rupee will definitely have a positive impact on the company's import bill. "If this trend continues, the fourth quarter will be a better one," Sarda said.
Bihar emerging as brewery hub
JAIPUR: Bihar is emerging as a brewery hub with major domestic and foreign firms setting up production units in the state due to availability of cheap labour and raw materials coupled with improved law and order and investment-friendly government policies.
"Big investments are coming up in this sector. In the coming years we will emerge as a big player in brewery business," said C.K. Mishra, principal secretary, department of industries, Bihar.
He said major domestic and foreign brewery firms are in the process to set up new production units in the state.
"Three major firms - United Breweries, Danish Brewery Company Carlsberg Group and Cobra Beer - are in the process to set up new units and will start production this year," Mishra told reporters. Mishra was in Jaipur to attend the three-day Pravasi Bharatiya Divas, the annual congregation of the Indian diaspora.
Vijay Mallya-promoted United Breweries (UB), which controls nearly half of India's beer market, is setting up a new unit near Bihar capital Patna.
"Construction on the new unit has already started," said Mishra.
United Breweries is also setting up a production unit to make litchi-flavoured wine. The company has leased litchi gardens and is setting up processing units in Muzaffarpur district of Bihar.
Almost 70 per cent of litchis produced in India come from Muzaffarpur and neighbouring districts. Litchi is a sweet, pulpy and juicy fruit. The most popular variety of the fruit called "shahi litchi" is largely grown in the Muzaffarpur area.
The company plans to produce litchi-flavoured wine by mixing pulpy extracts of the fruit with various types of spirits.
Cobra Beer, a company run by London-based NRI Lord Karan Bilimoria, is in an advanced state of setting up a new unit and targets more than tripling its production capacity in the state by next year.
"We are upgrading and expanding our brewery in Bihar. We are increasing the capacity to four million cases by February from two million now. By the same time next year the capacity will more than triple to seven million cases," Bilimoria told IANS.
Danish brewing company Carlsberg Group also plans to set up a production unit in the state.
"Carlsberg is looking for land near Hajipur in Vaishali district," said Mishra, adding the government was helping the company in getting land and setting up the unit.
On proposed investments by these companies, Mishra said, "Normally Rs.300 crore to Rs.400 crore investments is required for setting up a brewery plant in the state. In each of these plants, the investment will be in this range."
Brewery companies are investing heavily in Bihar because of abundance of grains and cheap labour available in the state. Grains like barley and wheat, largely used in brewing beer, is produced in abundance in the state.
Chief Minister Nitish Kumar's effort to improve law and order in the state has sent a positive signal to investors.
Companies like Cobra Beer plan to make Bihar its production hub and supply the produce in other states.
Beer consumption in domestic markets in Bihar has increased sharply in the last few years. Beer consumption in the state has risen 10 times in the past seven years. As per industry estimates, annual consumption is 700,000 cases.
"Big investments are coming up in this sector. In the coming years we will emerge as a big player in brewery business," said C.K. Mishra, principal secretary, department of industries, Bihar.
He said major domestic and foreign brewery firms are in the process to set up new production units in the state.
"Three major firms - United Breweries, Danish Brewery Company Carlsberg Group and Cobra Beer - are in the process to set up new units and will start production this year," Mishra told reporters. Mishra was in Jaipur to attend the three-day Pravasi Bharatiya Divas, the annual congregation of the Indian diaspora.
Vijay Mallya-promoted United Breweries (UB), which controls nearly half of India's beer market, is setting up a new unit near Bihar capital Patna.
"Construction on the new unit has already started," said Mishra.
United Breweries is also setting up a production unit to make litchi-flavoured wine. The company has leased litchi gardens and is setting up processing units in Muzaffarpur district of Bihar.
Almost 70 per cent of litchis produced in India come from Muzaffarpur and neighbouring districts. Litchi is a sweet, pulpy and juicy fruit. The most popular variety of the fruit called "shahi litchi" is largely grown in the Muzaffarpur area.
The company plans to produce litchi-flavoured wine by mixing pulpy extracts of the fruit with various types of spirits.
Cobra Beer, a company run by London-based NRI Lord Karan Bilimoria, is in an advanced state of setting up a new unit and targets more than tripling its production capacity in the state by next year.
"We are upgrading and expanding our brewery in Bihar. We are increasing the capacity to four million cases by February from two million now. By the same time next year the capacity will more than triple to seven million cases," Bilimoria told IANS.
Danish brewing company Carlsberg Group also plans to set up a production unit in the state.
"Carlsberg is looking for land near Hajipur in Vaishali district," said Mishra, adding the government was helping the company in getting land and setting up the unit.
On proposed investments by these companies, Mishra said, "Normally Rs.300 crore to Rs.400 crore investments is required for setting up a brewery plant in the state. In each of these plants, the investment will be in this range."
Brewery companies are investing heavily in Bihar because of abundance of grains and cheap labour available in the state. Grains like barley and wheat, largely used in brewing beer, is produced in abundance in the state.
Chief Minister Nitish Kumar's effort to improve law and order in the state has sent a positive signal to investors.
Companies like Cobra Beer plan to make Bihar its production hub and supply the produce in other states.
Beer consumption in domestic markets in Bihar has increased sharply in the last few years. Beer consumption in the state has risen 10 times in the past seven years. As per industry estimates, annual consumption is 700,000 cases.
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