Mass grocery, apparel most favoured segments for FDI: Study

New Delhi: Mass grocery and apparel are the two most favoured segments for foreign direct investment in multi-brand retail, according to a study by Deloitte Touche Tohmatsu India.

The study, titled Indian Retail Market-Opening More Doors, which comes at time when the country has opened its doors to FDI in retail, says each policy condition is expected to have different implications on various retail sub-segments.

“A policy condition might have a low impact in one segment but could be a major stumbling block for another segment. Mass grocery and apparel are two of the fastest growing organised retail segments in India today. In both these segments, there are large domestic retailers who could be potential joint venture partners for foreign retailers,” Gaurav Gupta, Senior Director, Deloitte Touche Tohmatsu India, said in a statement.

He said foreign retailers could enter India by forming a joint venture company that could have multi-brand retail stores. “Alternatively, the foreign investor may also consider acquiring 51 per cent stake in the existing business set-up of the potential Indian joint venture partner,” he added.

The report stated that the fact that mass grocery retailers already source many products directly from producers or food processing units was an advantage for this segment. But to meet sourcing guidelines and have better margins, foreign retailers would need to cultivate relationships with local manufacturers, it added.

The study said the condition on sourcing would continue to be a major bottleneck for various segments such as consumer electronics, footwear, furniture and furnishing, among others.

Imperial Servcorp to invest $5 m in India expansion

Hyderabad: Imperial Servcorp plans to add three more centres in India by next year investing about $ 5 million in developing them to offer unbranded serviced office space and virtual office services.

Part of the Australian company Serve Corp with presence in over 50 countries, and operating out of two locations in India through a venture with K. Raheja Corp, is now embarking on expansion. “We have identified Gurgaon, Delhi, Bangalore and Pune for setting up offices,” said Meenal Sinha, Country Head Imperial Servcorp India.

She told Business Line that the last few years in India through its presence in Raheja Mindspace in IT hub of Hyderabad and in Mumbai, has been exciting and Servcorp venture serves over 400 clients, which includes start ups, service providers and multi-national companies looking to expand in India.

Through the venture with K. Raheja Corp, the company has been offering serviced office space to clients. “We are now in the process of finalising deals with other developers in Gurgaon, Bangalore, Delhi and expect to begin operations during the year,” she said.

“Most companies, who identify a city for expansion, begin operations as start ups using our serviced office space facilities. This enables them to complete their task and then move on to their own facility. They get advantage of a full office using our facilities,” she said.

Apart from this, the $40-million investment by Serve Corp has enabled these clients to access latest technologies and use virtual office spaces. The secretarial services respond to their customers as if they were their own staff.

These facilities enable clients to commence operations in less than 24 hours offering access to board rooms and conference facilities. The market for such services will get bigger and spread to tier II cities too, she said.

Ford sees India as major export hub

Ahmedabad: With India being projected as the emerging third largest automobile market in the world, after China and the US, Ford India is looking at the country at a major export hub in this sector, Joginder Singh, the new President and Managing Director, said here on Thursday.

The global automaker, which sold 5.3 million vehicles in 2010, expects to increase the number to eight million by 2015.

The Asia-Pacific region is expected to account for 70 per cent of this market.

“By 2020, one out of every six cars sold in the region would be a Ford,” he said on the eve of Vibrant Gujarat 2013, which begins in Gandhinagar on Friday.

Manufacturing, Export
By mid-decade, Singh said Ford India will have seven new factories working in China, Thailand and at Sanand, near Ahmedabad, where it is currently investing $1 billion (Rs 5,300 crore) at the car and engine manufacturing facilities.

The company has already invested $140 million to expand capacities at its existing Chennai-based plant. Its total investment in India so far was $2 billion.

New Products
In the next few years, Ford India will launch eight new products and double the number of dealers to 250 and customer touch-points to 500, mainly in Tier-II and III towns and cities in northern and western India, which account for 60 per cent of its sales, he said.

While Ford India has created 10,000 jobs in Chennai, it will create 5,000 at the upcoming Sanand plant by 2014, when it is commissioned next year.

The company’s manufacturing capacity at these two plants will increase from the existing three million units to five million by mid-decade and nine million by 2020.

Ford India plans to manufacture 4.40 lakh vehicles at these two plants, and export 20-25 per cent of these.

It will also increase engine-making capacities to 6.10 lakh, 40 per cent of which would be exported.

“We would initiate talks with the authorities soon to export our products from Mundra port,” Singh said.

Cabinet nod for 2 road projects worth Rs 5,000 cr

New Delhi: The Union Cabinet on Thursday approved proposals for two highway projects with project cost of over Rs 5,000 crore, paving the way for taking the bidding process forward.

One is the Rs 2,015.6-crore highway proposal in Bihar, to be implemented with financial assistance from Japan, while the other is to four-lane 368.2-km-stretch in Odisha.

The Cabinet Committee on Economic Affairs (CCEA) also approved the implementation to four-lane the Patna-Gaya-Dobhi section in Bihar with Japan International Cooperation Agency (JICA) loan assistance.

The total length of the project will be 127.2 km with total capital cost of Rs 2015.6 crore, which includes cost of civil construction, supervision works, land acquisition, rehabilitation and pre-construction activities. The project will be completed within three years of signing the contract agreement.

The road will provide smooth connectivity to Gaya/Bodhgaya, Rajgir and Nalanda both from Patna and in turn connecting the East-West corridor and Golden Quadrilateral at Dobhi.

Odisha-Jharkhand Project
The other project involves four-laning of Baharagora-Sambalpur section in Odisha and Jharkhand under NHDP Phase IV on Design, Build, Finance, Operate and Transfer basis. The total length of the road will be 368.20 km.

The total cost of the project, including land acquisition, rehabilitation and pre-construction activities, is estimated at Rs 3,636.43 crore. The concession period will be 30 years, including a construction period of 36 months.

South Eastern Railway records 7.43% jump in iron ore loading in April-December'12

Kolkata: South Eastern Railway (SER) loaded 92.16 million tonnes (mt) of freight during the April -December period of 2012-13, registering a growth of 4.56% against 88.14 mt loaded during the previous corresponding period.

SER's performance surpassed the target laid down by Railway Board till December 2012. having loaded 5.75 mt more than the Railway Board target, an increase of 6.65%.

During the period, SER's loading of iron ore, the main commodity it carries, stood at 50.33 mt, a 7.43% jump over 46.85 mt of iron ore loaded during the same period last year.

Significantly, total loading of iron ore went up despite a fall in demand for export of iron ore from 7.81 mt last year to 2.80 mt during the current year. Also, SER's iron ore loading registered a growth of 13.23% over the target set by Railway Board.

SER also recorded a positive growth in loading of coal, other raw materials to steel plants, pig iron & finished steel, cement, food grains and fertilizers. Earnings from freight traffic also went up 5.91% during the first nine months of the current financial year in comparison to the corresponding period of last year.

During April to December of the current financial year, SER earned Rs 6397.94 crore from freight traffic as against Rs.6040.84 crore earned from freight during the same period last year.

3 working groups set up to boost trade with China

New Delhi: India and China have set up a working group to consider co-operation over five years in various strategic sectors, including investment, a senior Government official said on Thursday. The working group is among the three set up to boost bilateral trade. “The working group will look at investment of Chinese companies in Special Economic Zones and National Investment and Manufacturing Zones. It is looking at larger participation. We are looking at China, Japan and Korea not only for trade in goods, but services and investments, too. These two aspects will be handled by the two working groups. The contact points have been nominated and they are likely to meet in February,” said Asit Tripathy, Joint Secretary, Ministry of Commerce. The working group on trade statistics anomalies has been set up to see how the Chinese side values trade at $27 billion, while India pegs it at $40 billion during 2010-11. Tripathy said this sub-group would examine the modalities employed by both sides to calculate trade. On the volume of bilateral trade, the official said this year trade with China had decelerated.

IMFA commissions 60 MW captive unit

Mumbai: Indian Metals and Ferro Alloys said it has commissioned the first of two 60 MW units at its 120 MW captive power plant. The total cost of the power plant is Rs 600 crore. Headquartered in Bhubaneswar, the company is an integrated producer of value-added ferro chrome with capacity of 2.75 lakh tonnes a year. It has captive mines in Sukinda and Nausahi and manufacturing facilities in Therabali and Choudwar. Prem Khandelwal, Chief Financial Officer, said the company has an existing capacity of 138 MW and the current addition will raise it to 198 MW. He said the power from the 120-MW plant was for IMFA’s production requirement. However, in the short-term there would be a surplus of 50 MW which would be fed to the grid. In the long run, plans were on to increase smelting capacity and utilise the entire generation, he said. Power fed to the grid at Choudwar would help stabilise system parameters in the area, including Bhubaneswar and Cuttack. IMFA would lay the second circuit from Choudwar to Salepur, which would be part of the distribution system, as also high temperature low sag conductors between IMFA complex and Choudwar grid. The plant’s boiler and pollution control equipment are from Thermax, while the turbine and generator are from China.

GVK Bio, Onconova to develop new cancer drugs

New Delhi: GVK Bio, a contract research and development organisation and Onconova Therapeutics, a US-based biopharmaceutical company, have entered into a partnership to develop new drugs for cancer.

The joint partnership will be based in the US. It will align research priorities and technological expertise from both companies to facilitate moving certain Onconova’s oncology assets from early discovery to clinical development stage.

E. Premkumar Reddy, the Founder and Director of Onconova, will oversee the biology and biomarker aspects. Onconova will provide two discovery targets with early chemical equity, while GVK Bio will use its multi-disciplinary discovery platform to advance these programmes. As per the terms of partnership, GVK Bio will gain an increasing share of the programmes as they advance, up to a 50/50 split based on achievement of milestones/funding. Onconova retains the rights to buy back the programmes.

Mahindra to invest $900 m in SsangYong over four years

New Delhi: Mahindra & Mahindra has said it will invest $900 million over the next four to five years in SsangYong Motor of Korea on developing three new vehicles and six engines. M&M bought a majority stake in the Korean company for $463.6 million in 2010.

Pawan Goenka, President – Automotive & Farm Equipment sectors, M&M, said the investment would be from internal accruals, fresh equity and debt.

After being acquired by M&M, SsangYong’s sales have improved and have grown by 6-7 per cent in the Korean market. Break-even will happen in another year-and-a-half, according to Goenka.

“That will happen over the next year-and-a-half. Beyond that, we have not made complete plans on how the investments will take place,” he added.

On M&M’s utility and sports utility vehicles, Goenka said the company was working on full capacity expansion and fresh versions of Scorpio and XUV500 were expected in future.

M&M, which had announced buying out Navistar in its truck joint venture, expects to close the deal by January 31, for which it has applied for various Government approvals.

“It will be a 100 per cent subsidiary of M&M and naming of the new company and its product lines will take some time,” Goenka, told reporters here.

He said Navistar was still interested in exporting trucks and would do so on its own branding (Navistar).

India to grow at 6.7% in 2013-14: Crisil

Coimbatore: The Indian economy would grow at a higher rate of 6.7% in 2013-14 compared to the estimated growth of 5.5% for the current financial year (2012-13) due to a revival in consumption, ratings agency Crisil has said.

"A pick-up in agriculture, predicated on a normal monsoon, lower interest rates and higher government spending will support private consumption demand," Crisil said. "The improved agricultural output, along with a stronger rupee and lower crude oil prices will also help in reducing Wholesale Price Inflation (WPI) to around 7% from 7.7% projected for 2012-13," it said.

"India's GDP growth in 2013-14 will be supported by the revival of private sector consumption growth aided by higher growth in agriculture, high government spending and lower interest rates," said Roopa Kudva, Managing Director and CEO, Crisil.

A normal monsoon will boost agricultural GDP growth to an above-trend rate of 3.5% in 2013-14, albeit on a lower base of 2012-13. "With the easing of inflation, RBI is expected to cut interest rates by 75-100 basis points (0.75%-1%) starting January 2013, thereby lowering retail lending rates and boosting demand in interest (rate) sensitive segments," Crisil said.

The likely increase in government spending in the form of higher expenditure on social sector schemes and rural development will be driven by the upcoming general elections in 2014. Increased welfare expenditure by the government, lower interest rates, moderation in inflation and high farm incomes (assuming a normal monsoon) will boost household spending and thereby, benefit sectors such as consumer durables, hotels and restaurants and financial services, Crisil said.

Further, improved external demand, as a result of marginal recovery of global growth, could raise India's exports, especially in the IT/ITes sector. "We, therefore, expect the services sector to remain healthy at 8% in the next fiscal," Crisil said.

"An improvement in private consumption will create demand for goods and services, which in turn will raise industrial growth to 5.4%. Although this is an improvement over the current fiscal, industrial growth will still lag its last ten-year average of 7.9%," said Dharmakirti Joshi, chief economist, Crisil.

Despite higher consumption growth, average WPI inflation is projected to be lower at 7% in 2013-14, as against 7.7% forecast for 2012-13 on back of normal monsoon, a stronger rupee, and lower crude oil prices. However, the likely upward revision of fuel prices and persistent excess demand for food articles are likely to limit the further decline in WPI inflation.