This article was adapted from “The Corner Office: Indispensable and Unexpected Lessons From CEOs on How to Lead and Succeed,” by Adam Bryant, author of the weekly “Corner Office” column in The New York Times. The book, published Tuesday by Times Books, analyzes the broader lessons that emerge from his interviews with more than 70 leaders.
IMAGINE 100 people working at a large company. They’re all middle managers, around 35 years old. They’re all smart. All collegial. All hard-working. They all have positive attitudes. They’re all good communicators.
So what will determine who gets the next promotion, and the one after that? Which of them, when the time comes, will get that corner office?
In other words, what does it take to lead an organization — whether it’s a sports team, a nonprofit, a start-up or a multinational corporation? What are the X factors?
Interviews I conducted with more than 70 chief executives and other leaders for Corner Office in The New York Times point to five essentials for success — qualities that most of those C.E.O.’s share and look for in people they hire.
The good news: these traits are not genetic. It’s not as if you have to be tall or left-handed. These qualities are developed through attitude, habit and discipline — factors that are within your control. They will make you stand out. They will make you a better employee, manager and leader. They will lift the trajectory of your career and speed your progress.
These aren’t theories. They come from decades of collective experience of top executives who have learned firsthand what it takes to succeed. From the corner office, they can watch others attempt a similar climb and notice the qualities that set people apart. These C.E.O.’s offered myriad lessons and insights on the art of managing and leading, but they all shared five qualities: Passionate curiosity. Battle-hardened confidence. Team smarts. A simple mind-set. Fearlessness.
What follows are excerpts from chapters on each of them.
Passionate Curiosity
Many successful chief executives are passionately curious people. It is a side of them rarely seen in the media and in investor meetings, and there is a reason for that. In business, C.E.O.’s are supposed to project confidence and breezy authority as they take an audience through their projections of steady growth. Certainty is the game face they wear. They’ve cracked the code.
But get them away from these familiar scripts, and a different side emerges. They share stories about failures and doubts and mistakes. They ask big-picture questions. They wonder why things work the way they do and whether those things can be improved upon. They want to know people’s stories, and what they do.
It’s this relentless questioning that leads entrepreneurs to spot new opportunities and helps managers understand the people who work for them, and how to get them to work together effectively. It is no coincidence that more than one executive uttered the same phrase when describing what, ultimately, is the C.E.O.’s job: “I am a student of human nature.”
The C.E.O.’s are not necessarily the smartest people in the room, but they are the best students — the letters could just as easily stand for “chief education officer.”
“You learn from everybody,” said Alan R. Mulally, the chief executive of the Ford Motor Company. “I’ve always just wanted to learn everything, to understand anybody that I was around — why they thought what they did, why they did what they did, what worked for them, what didn’t work.”
Why “passionate curiosity”? The phrase is more than the sum of its parts, which individually fall short in capturing the quality that sets these C.E.O.’s apart. There are plenty of people who are passionate, but many of their passions are focused on just one area. There are a lot of curious people in the world, but they can also be wallflowers.
But “passionate curiosity” — a phrase used by Nell Minow, the co-founder of the Corporate Library — better captures the infectious sense of fascination that some people have with everything around them.
Passionate curiosity, Ms. Minow said, “is indispensable, no matter what the job is. You want somebody who is just alert and very awake and engaged with the world and wanting to know more.”
Though chief executives are paid to have answers, their greatest contributions to their organizations may be asking the right questions. They recognize that they can’t have the answer to everything, but they can push their company in new directions and marshal the collective energy of their employees by asking the right questions.
Saturday, April 16, 2011
ICICI Bank’s U.K., Canada Subsidiaries May Cut Lending to Indian Companies
The U.K. and Canada-based subsidiaries of ICICI Bank Ltd. (ICICIBC), India’s second-largest lender, may cut credit to companies from the Asian nation as regulators order banks to reduce geographical risk.
“We have followed an international growth strategy on India-backed lending,” Chief Financial Officer N.S. Kannan said in an interview today. Regulators “do not want undue concentration of assets on any single overseas geography as part of overall risk management. The balance sheet of our overseas subsidiaries in the U.K. and Canada,” may see a decline.
Western banking regulators are strengthening rules after being forced to bail out lenders during the financial crisis. Taxpayers in the U.K. spent 65.8 billion pounds ($108 billion) rescuing Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. (LLOY) Regulatory concerns may make it tougher for Indian companies to access cheaper borrowing rates overseas to expand and acquire companies.
Assets of ICICI Bank UK fell 3 percent to $7 billion in the three months ended Dec. 31 from the preceding quarter, according to a presentation on the company’s website. ICICI Bank Canada’s assets have declined 6 percent to C$4.7 billion from C$5 billion in the same period.
“We are proceeding cautiously with respect to our growth strategy for overseas subsidiaries,” said Kannan.
Regulators in the U.K. and Canada objected to ICICI Bank using deposits in the two nations to lend to Indian companies, Times of India reported earlier today.
“We have followed an international growth strategy on India-backed lending,” Chief Financial Officer N.S. Kannan said in an interview today. Regulators “do not want undue concentration of assets on any single overseas geography as part of overall risk management. The balance sheet of our overseas subsidiaries in the U.K. and Canada,” may see a decline.
Western banking regulators are strengthening rules after being forced to bail out lenders during the financial crisis. Taxpayers in the U.K. spent 65.8 billion pounds ($108 billion) rescuing Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. (LLOY) Regulatory concerns may make it tougher for Indian companies to access cheaper borrowing rates overseas to expand and acquire companies.
Assets of ICICI Bank UK fell 3 percent to $7 billion in the three months ended Dec. 31 from the preceding quarter, according to a presentation on the company’s website. ICICI Bank Canada’s assets have declined 6 percent to C$4.7 billion from C$5 billion in the same period.
“We are proceeding cautiously with respect to our growth strategy for overseas subsidiaries,” said Kannan.
Regulators in the U.K. and Canada objected to ICICI Bank using deposits in the two nations to lend to Indian companies, Times of India reported earlier today.
Indian inflation data add to rate rise pressure
India’s headline inflation jumped to just under 9 per cent in March, defying promises by the nation’s policymakers that price pressures would be brought under greater control.
The highest inflation rate among any big economy is piling pressure on India’s central bank to raise lending rates more aggressively in coming weeks and trampling on optimistic government forecasts.
Persistent inflationary pressures are also fuelling a view that Asia’s third-largest economy has made a structural shift to higher prices, a move likely to be unpopular with India’s largely poor 1.2bn population.
Figures released on Friday showed that the wholesale price index had edged up to a year-on-year rate of 8.98 per cent last month compared with 8.31 per cent in February. The data overturned many forecasts by economists, who had expected inflation to come in at a more modest 8.4 per cent last month.
Stubbornly high inflation, now increasingly spurred by rising energy prices and strengthening demand, has thwarted the best efforts of the Congress party-led government to relieve price pressures on consumers.
The government had pledged to reduce inflation to below 7 per cent by the end of March. Many economists had viewed that target as overly optimistic and way beyond the comfort zone identified by the Reserve Bank of India.
Montek Singh Ahluwalia, the deputy chairman of the government planning commission, said on Friday that inflation had “not come under control” as much as the government would have liked.
“The underlying cause of inflation remains a cause of worry,” he said.
Rising food prices have for months been a big concern in India’s fast-growing economy. Economists and industrialists are increasingly expressing fears about more general price pressure and rising fuel prices.
“Inflation is proving difficult to tame and continued Reserve Bank of India tightening is needed, with the next [likely] rate hike coming at the May meeting,” said Leif Lybecker Eskesen, HSBC’s chief economist for India.
“With inflation numbers of this magnitude, especially core inflation, [the] RBI may feel compelled to be a bit more aggressive next time around and move by 50 basis points.”
In March, price pressure came from rising energy costs which surged 12.9 per cent year on year, compared with 11.5 per cent in February. But primary food inflation slowed to 9.5 per cent year on year in March from 10.6 per cent in February.
India’s fast-growing economy has wrestled with inflationary pressures throughout the global financial crisis and its aftermath. The Reserve Bank of India has raised interest rates eight times during the past year in an effort to cool rising prices while maintaining an economic growth rate of 9 per cent this year.
While some senior policymakers, including the prime minister’s economic advisory panel, insist that India needs to return quickly to targets of modest inflation – nearer 3.5 per cent – others appear more comfortable that the country can live with high inflation so long as it maintains high levels of growth.
The latest inflation figures shook the local financial markets. Sensex, the benchmark index on the Bombay Stock Exchange, fell 252 points to 19,445 points.
The highest inflation rate among any big economy is piling pressure on India’s central bank to raise lending rates more aggressively in coming weeks and trampling on optimistic government forecasts.
Persistent inflationary pressures are also fuelling a view that Asia’s third-largest economy has made a structural shift to higher prices, a move likely to be unpopular with India’s largely poor 1.2bn population.
Figures released on Friday showed that the wholesale price index had edged up to a year-on-year rate of 8.98 per cent last month compared with 8.31 per cent in February. The data overturned many forecasts by economists, who had expected inflation to come in at a more modest 8.4 per cent last month.
Stubbornly high inflation, now increasingly spurred by rising energy prices and strengthening demand, has thwarted the best efforts of the Congress party-led government to relieve price pressures on consumers.
The government had pledged to reduce inflation to below 7 per cent by the end of March. Many economists had viewed that target as overly optimistic and way beyond the comfort zone identified by the Reserve Bank of India.
Montek Singh Ahluwalia, the deputy chairman of the government planning commission, said on Friday that inflation had “not come under control” as much as the government would have liked.
“The underlying cause of inflation remains a cause of worry,” he said.
Rising food prices have for months been a big concern in India’s fast-growing economy. Economists and industrialists are increasingly expressing fears about more general price pressure and rising fuel prices.
“Inflation is proving difficult to tame and continued Reserve Bank of India tightening is needed, with the next [likely] rate hike coming at the May meeting,” said Leif Lybecker Eskesen, HSBC’s chief economist for India.
“With inflation numbers of this magnitude, especially core inflation, [the] RBI may feel compelled to be a bit more aggressive next time around and move by 50 basis points.”
In March, price pressure came from rising energy costs which surged 12.9 per cent year on year, compared with 11.5 per cent in February. But primary food inflation slowed to 9.5 per cent year on year in March from 10.6 per cent in February.
India’s fast-growing economy has wrestled with inflationary pressures throughout the global financial crisis and its aftermath. The Reserve Bank of India has raised interest rates eight times during the past year in an effort to cool rising prices while maintaining an economic growth rate of 9 per cent this year.
While some senior policymakers, including the prime minister’s economic advisory panel, insist that India needs to return quickly to targets of modest inflation – nearer 3.5 per cent – others appear more comfortable that the country can live with high inflation so long as it maintains high levels of growth.
The latest inflation figures shook the local financial markets. Sensex, the benchmark index on the Bombay Stock Exchange, fell 252 points to 19,445 points.
Friday, April 15, 2011
Unions Woo Airport Security Screeners
Public employee unions may be taking a shellacking in Wisconsin and Ohio, but that has not discouraged the unions representing federal employees from vying to recruit 44,000 airport screeners. It is the largest unionization effort of federal workers in the nation’s history.
By next Tuesday, the screeners, employees of the Transportation Security Administration, are to finish casting their votes on whether to unionize. Almost everyone agrees that they will choose to do so.
That may seem surprising when so many public employee unions are being forced into wage freezes and paying more toward health coverage and pensions, and when they have become the target of widespread public criticism. Many Republican leaders say public employees should not be allowed to bargain collectively, asserting that it pushes up costs for taxpayers and impedes management’s flexibility. What is more, they warn, letting airport screeners unionize could jeopardize national security if strikes and work slowdowns crippled airports and resulted in inadequate security checks.
“F.B.I., C.I.A. and Secret Service personnel do not have collective bargaining for good reason, and T.S.A. personnel should be no different,” said Senator Roger F. Wicker, a Mississippi Republican who sponsored a bill that would have stripped the screeners of the right to unionize. The Democratic-controlled Senate voted it down last February in a party-line vote.
At the same time, it is hard to see the benefit of a union for the screeners because federal employee unions, except postal workers, are generally not allowed to bargain over wages, health benefits or pensions, all of which are usually set by law.
The air traffic controllers are represented by the National Air Traffic Controllers Association, which was founded in 1987, six years after President Ronald Reagan disbanded a previous air traffic controllers’ union for engaging in an illegal strike.
But the Obama administration asserts that unionization will improve low morale and lead to better performance and service to the public from screeners, who have the often-difficult job of herding impatient passengers and deciphering X-rays.
Many T.S.A. workers are eager to have a union bargain for them over uniform allowances, parking and clearer rules on sick leave, work shifts, transfers to different airports and awarding promotions. And ask a few screeners about morale, and you will quickly get an earful.
“It’s a tough place to work, and I’ve seen a lot of people leave because of the stress,” said Marie LeClair, a screener for eight years at Logan International Airport in Boston. “We’re the black sheep of the federal government. There are no work floor regulations for us so when there’s an issue, management’s attitude is: ‘It’s our way or the highway.’ ”
Stacy Bodtmann, who earns $39,000 after nine years as a screener at Newark Liberty International Airport, said screeners “don’t have any voice on the job.”
“People are very enthusiastic about a union,” she added. “People feel the union is going to change things and help improve morale, help with scheduling and training and pay issues.”
Even though Congress sets their pay levels, many T.S.A. employees hope a union will help change the agency’s system for determining how workers get raises, a system they say is opaque and riddled with favoritism.
“What they’re looking for is fairness and transparency and not a workplace that is driven by favoritism or who you know,” said Colleen M. Kelley, president of the National Treasury Employees Union, which, along with the American Federation of Government Employees, is trying to woo the workers.
Justin Bourque, a former Army corporal and now a behavior detection officer at Newark, said T.S.A. workers were not treated with respect.
“I was treated with more respect and more like an adult when I was in the military, where I had no rights,” he said, complaining that when a worker made a mistake, there was no effort to retrain, often just a blanket admonition not to repeat the error. “The management staff treats us like we’re children.”
By next Tuesday, the screeners, employees of the Transportation Security Administration, are to finish casting their votes on whether to unionize. Almost everyone agrees that they will choose to do so.
That may seem surprising when so many public employee unions are being forced into wage freezes and paying more toward health coverage and pensions, and when they have become the target of widespread public criticism. Many Republican leaders say public employees should not be allowed to bargain collectively, asserting that it pushes up costs for taxpayers and impedes management’s flexibility. What is more, they warn, letting airport screeners unionize could jeopardize national security if strikes and work slowdowns crippled airports and resulted in inadequate security checks.
“F.B.I., C.I.A. and Secret Service personnel do not have collective bargaining for good reason, and T.S.A. personnel should be no different,” said Senator Roger F. Wicker, a Mississippi Republican who sponsored a bill that would have stripped the screeners of the right to unionize. The Democratic-controlled Senate voted it down last February in a party-line vote.
At the same time, it is hard to see the benefit of a union for the screeners because federal employee unions, except postal workers, are generally not allowed to bargain over wages, health benefits or pensions, all of which are usually set by law.
The air traffic controllers are represented by the National Air Traffic Controllers Association, which was founded in 1987, six years after President Ronald Reagan disbanded a previous air traffic controllers’ union for engaging in an illegal strike.
But the Obama administration asserts that unionization will improve low morale and lead to better performance and service to the public from screeners, who have the often-difficult job of herding impatient passengers and deciphering X-rays.
Many T.S.A. workers are eager to have a union bargain for them over uniform allowances, parking and clearer rules on sick leave, work shifts, transfers to different airports and awarding promotions. And ask a few screeners about morale, and you will quickly get an earful.
“It’s a tough place to work, and I’ve seen a lot of people leave because of the stress,” said Marie LeClair, a screener for eight years at Logan International Airport in Boston. “We’re the black sheep of the federal government. There are no work floor regulations for us so when there’s an issue, management’s attitude is: ‘It’s our way or the highway.’ ”
Stacy Bodtmann, who earns $39,000 after nine years as a screener at Newark Liberty International Airport, said screeners “don’t have any voice on the job.”
“People are very enthusiastic about a union,” she added. “People feel the union is going to change things and help improve morale, help with scheduling and training and pay issues.”
Even though Congress sets their pay levels, many T.S.A. employees hope a union will help change the agency’s system for determining how workers get raises, a system they say is opaque and riddled with favoritism.
“What they’re looking for is fairness and transparency and not a workplace that is driven by favoritism or who you know,” said Colleen M. Kelley, president of the National Treasury Employees Union, which, along with the American Federation of Government Employees, is trying to woo the workers.
Justin Bourque, a former Army corporal and now a behavior detection officer at Newark, said T.S.A. workers were not treated with respect.
“I was treated with more respect and more like an adult when I was in the military, where I had no rights,” he said, complaining that when a worker made a mistake, there was no effort to retrain, often just a blanket admonition not to repeat the error. “The management staff treats us like we’re children.”
Inflation Accelerates More Than Forecast to 8.98% Adding Pressure on Rates
India’s inflation accelerated more than economists estimated in March as the cost of fuel and manufactured goods rose, putting pressure on policy makers to raise interest rates in Asia’s third-largest economy.
The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. That exceeded all 28 estimates in a Bloomberg News survey, where the median forecast was for an 8.36 percent increase.
Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010. Inflation in the first quarter has exceeded the Reserve Bank of India’s forecast that price increases would be 8 percent by the end of March this year.
“Inflation is going to remain uncomfortably high this year,” said Leif Eskesen, Singapore-based chief economist at HSBC Holdings Plc. “The RBI needs to raise rates more aggressively and we are looking at three more rate increases this year.”
Stocks dropped the most in seven weeks, with the Bombay Stock Exchange’s Sensitive Index falling 1.6 percent. The yield on the 8.08 percent bond due in August 2022 rose 4 basis points to 8.24 percent, the highest level since Feb. 8, as of the 5 p.m. close in Mumbai. The rupee strengthened 0.4 percent to 44.33 a dollar, paring the week’s loss to 0.6 percent.
Rate Increase
Rising oil and commodity costs and sustained economic growth are escalating pressure on Asian central banks to boost borrowing costs. China on April 5 raised rates for the fourth time since mid-October. Vietnam, Taiwan, South Korea and Thailand also increased borrowing costs this year to curb inflation, and Singapore said yesterday it would allow further currency gains.
China’s economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008, with consumer prices rising 5.4 percent from a year earlier, a report showed today.
Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end. The central bank’s next monetary policy announcement is scheduled for May 3.
Food Inflation
“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.
Manufactured-products inflation was 6.21 percent in March, compared with 4.94 percent in February, today’s report showed. Fuel and power prices rose 12.92 percent, compared with 11.49 percent the previous month. India relies on imports to meet three-quarters of its annual energy needs.
Food prices rose 8.28 percent in the week to April 2, compared with 9.18 percent in the previous week, the commerce ministry said in a separate report today.
India’s economy may expand as much as 9.25 percent in the year ending March 31, 2012, the finance ministry said in February.
Production Growth
Still, India’s industrial production growth unexpectedly slowed to 3.6 percent in February, a report showed this week.
“Even as industrial production continues to be volatile, other indicators, such as the latest purchasing managers’ index, direct and indirect tax collections, merchandise exports and bank credit, suggest that the growth momentum persists,” the central bank said in the March 17 statement.
India’s industrial output has fluctuated since May, when it registered a 12.2 percent expansion. The growth eased to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.9 percent in September and then recovered in October, according to government data.
Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, plans to boost capacity by 21 percent in the current financial year as part of investment plans totaling as much as 40 billion rupees ($900 million), Chief Financial Officer Ajay Seth said in an interview on April 6. The company’s sales climbed to a record in March.
Recent data show lenders are giving loans at a faster pace than the central bank’s target. Commercial loans rose 21.4 percent from the previous year as of March 25, more than the 20 percent rate prescribed by the Reserve Bank of India.
Rising Salaries
Manufacturing grew for a 24th straight month, with the purchasing managers’ index holding unchanged at 57.9 in March from February, when it accelerated at the fastest pace in three months, HSBC Holdings and Markit Economics said April 1.
Salaries in India this year may rise the most in the Asia- Pacific region, fueling consumer demand, a survey by Aon Hewitt LLC showed March 8. Spending under the government’s National Rural Employment Guarantee Act of 2005 has surged almost fourfold to 399 billion rupees.
Demand may find more support from Finance Minister Pranab Mukherjee’s budget for the fiscal year ending March 31, 2012, which plans to spur spending and exempt incomes below 180,000 rupees from tax, higher than the previous threshold of 160,000 rupees.
The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. That exceeded all 28 estimates in a Bloomberg News survey, where the median forecast was for an 8.36 percent increase.
Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010. Inflation in the first quarter has exceeded the Reserve Bank of India’s forecast that price increases would be 8 percent by the end of March this year.
“Inflation is going to remain uncomfortably high this year,” said Leif Eskesen, Singapore-based chief economist at HSBC Holdings Plc. “The RBI needs to raise rates more aggressively and we are looking at three more rate increases this year.”
Stocks dropped the most in seven weeks, with the Bombay Stock Exchange’s Sensitive Index falling 1.6 percent. The yield on the 8.08 percent bond due in August 2022 rose 4 basis points to 8.24 percent, the highest level since Feb. 8, as of the 5 p.m. close in Mumbai. The rupee strengthened 0.4 percent to 44.33 a dollar, paring the week’s loss to 0.6 percent.
Rate Increase
Rising oil and commodity costs and sustained economic growth are escalating pressure on Asian central banks to boost borrowing costs. China on April 5 raised rates for the fourth time since mid-October. Vietnam, Taiwan, South Korea and Thailand also increased borrowing costs this year to curb inflation, and Singapore said yesterday it would allow further currency gains.
China’s economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008, with consumer prices rising 5.4 percent from a year earlier, a report showed today.
Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end. The central bank’s next monetary policy announcement is scheduled for May 3.
Food Inflation
“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.
Manufactured-products inflation was 6.21 percent in March, compared with 4.94 percent in February, today’s report showed. Fuel and power prices rose 12.92 percent, compared with 11.49 percent the previous month. India relies on imports to meet three-quarters of its annual energy needs.
Food prices rose 8.28 percent in the week to April 2, compared with 9.18 percent in the previous week, the commerce ministry said in a separate report today.
India’s economy may expand as much as 9.25 percent in the year ending March 31, 2012, the finance ministry said in February.
Production Growth
Still, India’s industrial production growth unexpectedly slowed to 3.6 percent in February, a report showed this week.
“Even as industrial production continues to be volatile, other indicators, such as the latest purchasing managers’ index, direct and indirect tax collections, merchandise exports and bank credit, suggest that the growth momentum persists,” the central bank said in the March 17 statement.
India’s industrial output has fluctuated since May, when it registered a 12.2 percent expansion. The growth eased to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.9 percent in September and then recovered in October, according to government data.
Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, plans to boost capacity by 21 percent in the current financial year as part of investment plans totaling as much as 40 billion rupees ($900 million), Chief Financial Officer Ajay Seth said in an interview on April 6. The company’s sales climbed to a record in March.
Recent data show lenders are giving loans at a faster pace than the central bank’s target. Commercial loans rose 21.4 percent from the previous year as of March 25, more than the 20 percent rate prescribed by the Reserve Bank of India.
Rising Salaries
Manufacturing grew for a 24th straight month, with the purchasing managers’ index holding unchanged at 57.9 in March from February, when it accelerated at the fastest pace in three months, HSBC Holdings and Markit Economics said April 1.
Salaries in India this year may rise the most in the Asia- Pacific region, fueling consumer demand, a survey by Aon Hewitt LLC showed March 8. Spending under the government’s National Rural Employment Guarantee Act of 2005 has surged almost fourfold to 399 billion rupees.
Demand may find more support from Finance Minister Pranab Mukherjee’s budget for the fiscal year ending March 31, 2012, which plans to spur spending and exempt incomes below 180,000 rupees from tax, higher than the previous threshold of 160,000 rupees.
Infosys Forecasts Profit Margin May Drop to Record Low Amid Rising Wages
Infosys Technologies Ltd. (INFO) forecast higher wages will erode profitability as India’s second-largest software developer grapples with its highest annual rate of employee turnover in at least 13 years.
The operating profit margin will probably drop by 2.9 percentage points this fiscal year after it declined to 29.5 percent last year, Chief Operating Officer S. Dinesh Shibulal said today in Bangalore, where the company is based. That would result in the company’s lowest annual margin since at least 2003, according to data compiled by Bloomberg.
Employee attrition accelerated to 17 percent last year as competitors including Tata Consultancy Services Ltd. (TCS) stepped up hiring efforts. Profits at Indian software exporters will be under pressure as they boost wages to attract talent in the world’s second-fastest growing major economy, analysts said.
“Attrition is going to be stubborn,” said Vihang Naik, an analyst at MF Global-Sify Securities Pvt. “Post recession, the volume growth was sudden, the clamor for resources has been high. Companies had to recruit new employees to fuel their growth. I am a bit skeptical right now on Infosys’s ability to maintain margins.”
Infosys had its biggest intraday plunge in almost two years today after forecasting sales that lagged behind analysts’ estimates and fourth-quarter profit that missed expectations. Earnings will also be damped by a stronger rupee, Shibulal said.
Infosys Vs Tata
Infosys, which had 127,000 employees at the end of December, said attrition rose from 13.4 percent in March 2010. That’s the biggest rate of departures since at least 1998, according to Bloomberg calculation from company annual reports. Hiring of employees and salary raises for existing staff will probably dent margins by 1.1 percentage points, Shibulal said.
In January, Tata Consultancy, India’s biggest software exporter, had reported a 14.4 percent attrition rate in its fiscal third quarter. The company will announce its full-year results next week in Mumbai.
Infosys, which added a net 3,041 employees in the fourth quarter, said the operating margin in the fourth quarter was 29 percent, compared with 30 percent in the third quarter. Salaries are expected to rise by between 10 percent and 12 percent this fiscal year, while for workers outside of India, it may be about 1 percent to 2 percent, Shibulal said.
“Utilization actually came down,” Shibulal said of using the company’s workers. “That is why the impact on margins happened.”
The operating profit margin will probably drop by 2.9 percentage points this fiscal year after it declined to 29.5 percent last year, Chief Operating Officer S. Dinesh Shibulal said today in Bangalore, where the company is based. That would result in the company’s lowest annual margin since at least 2003, according to data compiled by Bloomberg.
Employee attrition accelerated to 17 percent last year as competitors including Tata Consultancy Services Ltd. (TCS) stepped up hiring efforts. Profits at Indian software exporters will be under pressure as they boost wages to attract talent in the world’s second-fastest growing major economy, analysts said.
“Attrition is going to be stubborn,” said Vihang Naik, an analyst at MF Global-Sify Securities Pvt. “Post recession, the volume growth was sudden, the clamor for resources has been high. Companies had to recruit new employees to fuel their growth. I am a bit skeptical right now on Infosys’s ability to maintain margins.”
Infosys had its biggest intraday plunge in almost two years today after forecasting sales that lagged behind analysts’ estimates and fourth-quarter profit that missed expectations. Earnings will also be damped by a stronger rupee, Shibulal said.
Infosys Vs Tata
Infosys, which had 127,000 employees at the end of December, said attrition rose from 13.4 percent in March 2010. That’s the biggest rate of departures since at least 1998, according to Bloomberg calculation from company annual reports. Hiring of employees and salary raises for existing staff will probably dent margins by 1.1 percentage points, Shibulal said.
In January, Tata Consultancy, India’s biggest software exporter, had reported a 14.4 percent attrition rate in its fiscal third quarter. The company will announce its full-year results next week in Mumbai.
Infosys, which added a net 3,041 employees in the fourth quarter, said the operating margin in the fourth quarter was 29 percent, compared with 30 percent in the third quarter. Salaries are expected to rise by between 10 percent and 12 percent this fiscal year, while for workers outside of India, it may be about 1 percent to 2 percent, Shibulal said.
“Utilization actually came down,” Shibulal said of using the company’s workers. “That is why the impact on margins happened.”
Thursday, April 14, 2011
India eyes cap on imported telecoms equipment
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By James Fontanella-Khan in Mumbai
Published: April 14 2011 20:27 | Last updated: April 14 2011 20:27
India’s telecoms regulator proposed a series of measures on Thursday to cap the amount of equipment made outside India used in its telecoms industry.
The protective move is an attempt to boost domestic manufacturing and keep foreign suppliers out of the country’s lucrative telecoms sector.
The Telecom Regulatory Authority of India said that by 2020 it wanted at least 50 per cent of all equipment – including mobile handsets, internet data cards and chips – to be manufactured by Indian groups and at least 80 per cent produced domestically.
The move, intended to turn India into an equipment manufacturing hub, could have serious repercussions for global hardware makers such as Nokia, Ericsson and Huawei.
India is the world’s second-biggest mobile market, after China, with 826m mobile subscribers as of February this year, and is adding about 20m subscribers every month.
The market is dominated by global companies, which supply more than 85 per cent of the equipment used by Indian operators and consumers. Among the 10 biggest hardware makers only one is Indian, according to analysts.
Nokia, whose biggest production plant is in India, clocked up Rs141bn ($3.2bn) in revenues last year from the subcontinent, making it the largest telecoms supplier there. It was followed by Huawei, the Chinese group, with Rs110bn. Wipro, India’s biggest equipment supplier, ranked only seventh, generating Rs64bn in revenues.
“The telecom ecosystem has so far failed to adequately spur the manufacturing segment and as a result . . . much of the equipment used for expansion of the Indian network is being imported from other countries,” the regulator said in its recommendation to the government.
“The proposed policy aims to significantly enhance the share of the domestic manufactured products . . . to cater to at least 50 per cent of the demand by the year 2019-20,” it added.
The regulator plans to introduce a number of incentives to boost domestic production, including special economic zones and 10-year tax holidays for Indian manufacturers.
The plan will be welcomed by small domestic equipment makers, such as VMC, Tejas Networks and UTL, which have complained about the government’s lack of support.
But it is likely to be strongly opposed by mobile operators, which depend on cheap and high-quality equipment produced by Chinese and European makers.
“It makes sense that the regulator wants to promote Indian equipment makers but it will take time and we might become the ones paying the consequences of this move to curb the entry of foreign equipment [in the country],” said a senior executive of an Indian mobile operator.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web
By James Fontanella-Khan in Mumbai
Published: April 14 2011 20:27 | Last updated: April 14 2011 20:27
India’s telecoms regulator proposed a series of measures on Thursday to cap the amount of equipment made outside India used in its telecoms industry.
The protective move is an attempt to boost domestic manufacturing and keep foreign suppliers out of the country’s lucrative telecoms sector.
The Telecom Regulatory Authority of India said that by 2020 it wanted at least 50 per cent of all equipment – including mobile handsets, internet data cards and chips – to be manufactured by Indian groups and at least 80 per cent produced domestically.
The move, intended to turn India into an equipment manufacturing hub, could have serious repercussions for global hardware makers such as Nokia, Ericsson and Huawei.
India is the world’s second-biggest mobile market, after China, with 826m mobile subscribers as of February this year, and is adding about 20m subscribers every month.
The market is dominated by global companies, which supply more than 85 per cent of the equipment used by Indian operators and consumers. Among the 10 biggest hardware makers only one is Indian, according to analysts.
Nokia, whose biggest production plant is in India, clocked up Rs141bn ($3.2bn) in revenues last year from the subcontinent, making it the largest telecoms supplier there. It was followed by Huawei, the Chinese group, with Rs110bn. Wipro, India’s biggest equipment supplier, ranked only seventh, generating Rs64bn in revenues.
“The telecom ecosystem has so far failed to adequately spur the manufacturing segment and as a result . . . much of the equipment used for expansion of the Indian network is being imported from other countries,” the regulator said in its recommendation to the government.
“The proposed policy aims to significantly enhance the share of the domestic manufactured products . . . to cater to at least 50 per cent of the demand by the year 2019-20,” it added.
The regulator plans to introduce a number of incentives to boost domestic production, including special economic zones and 10-year tax holidays for Indian manufacturers.
The plan will be welcomed by small domestic equipment makers, such as VMC, Tejas Networks and UTL, which have complained about the government’s lack of support.
But it is likely to be strongly opposed by mobile operators, which depend on cheap and high-quality equipment produced by Chinese and European makers.
“It makes sense that the regulator wants to promote Indian equipment makers but it will take time and we might become the ones paying the consequences of this move to curb the entry of foreign equipment [in the country],” said a senior executive of an Indian mobile operator.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web
Tuesday, April 12, 2011
High Prices Sow Seeds of Erosion
When prices for corn and soybeans surged last fall, Bill Hammitt, a farmer in the fertile hill country of western Iowa, began to see the bulldozers come out, clearing steep hillsides of trees and pastureland to make way for more acres of the state’s staple crops. Now, as spring planting begins, with the chance of drenching rains, Mr. Hammitt worries that such steep ground is at high risk for soil erosion — a farmland scourge that feels as distant to most Americans as tales of the Dust Bowl and Woody Guthrie ballads.
Long in decline, erosion is once again rearing as a threat because of an aggressive push to plant on more land, changing weather patterns and inadequate enforcement of protections, scientists and environmentalists say.
“There’s a lot of land being converted into row crop in this area that never has been farmed before,” said Mr. Hammitt, 59, explaining that the bulldozed land was too steep and costly to farm to be profitable in years of ordinary prices. “It brings more highly erodible land into production because they’re out to make more money on every acre.”
Now, research by scientists at Iowa State University provides evidence that erosion in some parts of the state is occurring at levels far beyond government estimates. It is being exacerbated, they say, by severe storms, which have occurred more often in recent years, possibly because of broader climate shifts.
“The thing that’s really smacking us now are the high-intensity, high-volume rainstorms that we’re getting,” said Richard M. Cruse, an agronomy professor at Iowa State who directs the Iowa Daily Erosion Project. “In a variety of locations, we’re losing topsoil considerably faster — 10 to as much as 50 times faster — than it’s forming.”
Erosion can do major damage to water quality, silting streams and lakes and dumping fertilizers and pesticides into the water supply. Fertilizer runoff is responsible for a vast “dead zone,” an oxygen-depleted region where little or no sea life can exist, in the Gulf of Mexico. And because it washes away rich topsoil, erosion can threaten crop yields. Significant gains were made in combating erosion in the 1980s and early 1990s, as the federal government began to require that farmers receiving agricultural subsidies carry out individually tailored soil conservation plans.
Those plans often included measures such as terracing steep ground or sowing buffer strips with perennial grasses to stabilize areas prone to erosion, such as the edges of fields near streams or borders between crops.
Many farmers, such as Mr. Hammitt, who is on the board of the Harrison County soil and water conservation district, also do little or no plowing and leave crop residues on harvested fields, techniques that reduce runoff.
But environmentalists claim that enforcement of conservation plans by the United States Department of Agriculture is not as strict as it should be and that the gains in fighting erosion have stalled or are being undercut.
U.S.D.A. data shows that the amount of farmland erosion nationwide from water fell substantially from the early 1980s to the mid-1990s, then largely stagnated.
Enforcement is needed more than ever, environmentalists say, because high crop prices provide a strong incentive for farmers to plant as much ground as possible and to take fewer protective measures like grass buffer strips.
Other factors are also at work. Farmers increasingly rent the land they cultivate, which can mean they are less familiar with areas at risk for erosion or are less invested in caring for the land over the long run. In addition, farmers using modern supersize tractors, built to efficiently cover swaths of land, can find it inconvenient to break up land into smaller sections through buffer areas or terraces. Widely used herbicides can kill the grass in buffer strips, leaving them more vulnerable to erosion. And government biofuels policies that have increased the demand for corn have encouraged farmers to plant more. “You’ve got all these market forces and public policies and biofuel mandates and more severe storms,” said Craig Cox, senior vice president of the Environmental Working Group, an advocacy group that will release a report on erosion Wednesday. “It’s all coming together, and we’re asleep at the switch.”
Mr. Cox said that he flew over parts of Iowa in a helicopter last spring after a severe storm and found that deep gullies had formed in unprotected farmland, becoming conduits for soil runoff. Farmers frequently level off such gullies after harvesting in the fall, he said, and then replant the same low-lying areas year after year, leaving them susceptible to further erosion.
Thomas W. Christensen, an Agriculture Department regional conservationist, disagreed, saying, “Conservation compliance is working,” and adding that improvements to its enforcement program were in the works. Last year, however, the agency reviewed fewer than 1 percent of the tracts nationwide that it considered highly erodible to make sure that farmers were following conservation plans. About 1 percent of those reviewed were found to be in violation. But the new federal budget deal cuts 12 percent from the agency’s conservation spending, which could hamper soil efforts. Agency officials said they were still assessing the impact.
The information from the Iowa Daily Erosion Project paints a grimmer picture than a recent assessment by federal officials. The U.S.D.A’s 2007 National Resources Inventory, released last year, estimated that erosion in Iowa averaged 5.2 tons an acre each year. That was slightly higher than the five tons per acre that the department estimated was a tolerable annual rate of erosion for most Iowa soils, meaning that it allowed a high level of crop productivity to be maintained indefinitely.
Five tons of soil would fill a small dump truck; spread over an acre it would make a layer slightly less than the thickness of a dime, Mr. Cruse said.
While the federal report estimates average rates of erosion for states and regions over a full year, the Erosion Project uses detailed information on rainfall and field conditions to estimate soil loss in 1,581 Iowa townships — nearly all of them — after each storm. Last year, according to Erosion Project data analyzed by the Environmental Working Group, the average estimated rate of erosion exceeded the sustainable level in 133 townships. In 2009, an estimated 641 townships exceeded the sustainable rate, including nearly 400 that had double or more that rate.
The project also provides a picture of the erosion caused by severe storms, like the one that dumped more than seven inches of rain in parts of southwest Iowa in May 2007. In a single day, the figures show, 69 townships had average estimated soil losses of more than 10 tons an acre. Of those, 14 townships were estimated to have an average loss between 20 tons and nearly 40 tons per acre. The 2007 storm was exceptionally damaging, but severe storms are becoming more frequent, according to a state report on climate change submitted in January to the Iowa Legislature and governor.
Despite the concerns, Iowa is not on the brink of becoming a new Dust Bowl. Many farmers use good conservation practices, and the state’s rich topsoil in many areas is deep enough to last decades with moderate amounts of erosion.
But agronomists say that heavy erosion in unprotected areas can significantly diminish crop yields, and, over time, land that is not well cared for can become depleted. That means farmers must use more fertilizer to increase yields.
Erosion also does major harm to water quality.
More than anything else this year, farmers are making decisions based on how they can best take advantage of corn and soybean prices, which have soared in recent months.
Dr. Cruse said that creates a paradox. When crop prices are low and farmers are scraping by, many say they cannot afford to take steps to protect their fields from erosion. Now, he said, they say they still cannot afford it because there is too much profit to be made from farming every bit of land.
The same incentives have landowners clearing steep hillsides or converting pasture to cropland to cultivate or rent out.
“The requests to farm the marginal areas and the pressure on our noncropped areas have really increased with these commodity prices,” said Todd G. Duncan, an Agriculture Department district conservationist in Winneshiek County in northeast Iowa, another area of the state with steep hills. “We have some people that are making bad land-use decisions right now.”
Long in decline, erosion is once again rearing as a threat because of an aggressive push to plant on more land, changing weather patterns and inadequate enforcement of protections, scientists and environmentalists say.
“There’s a lot of land being converted into row crop in this area that never has been farmed before,” said Mr. Hammitt, 59, explaining that the bulldozed land was too steep and costly to farm to be profitable in years of ordinary prices. “It brings more highly erodible land into production because they’re out to make more money on every acre.”
Now, research by scientists at Iowa State University provides evidence that erosion in some parts of the state is occurring at levels far beyond government estimates. It is being exacerbated, they say, by severe storms, which have occurred more often in recent years, possibly because of broader climate shifts.
“The thing that’s really smacking us now are the high-intensity, high-volume rainstorms that we’re getting,” said Richard M. Cruse, an agronomy professor at Iowa State who directs the Iowa Daily Erosion Project. “In a variety of locations, we’re losing topsoil considerably faster — 10 to as much as 50 times faster — than it’s forming.”
Erosion can do major damage to water quality, silting streams and lakes and dumping fertilizers and pesticides into the water supply. Fertilizer runoff is responsible for a vast “dead zone,” an oxygen-depleted region where little or no sea life can exist, in the Gulf of Mexico. And because it washes away rich topsoil, erosion can threaten crop yields. Significant gains were made in combating erosion in the 1980s and early 1990s, as the federal government began to require that farmers receiving agricultural subsidies carry out individually tailored soil conservation plans.
Those plans often included measures such as terracing steep ground or sowing buffer strips with perennial grasses to stabilize areas prone to erosion, such as the edges of fields near streams or borders between crops.
Many farmers, such as Mr. Hammitt, who is on the board of the Harrison County soil and water conservation district, also do little or no plowing and leave crop residues on harvested fields, techniques that reduce runoff.
But environmentalists claim that enforcement of conservation plans by the United States Department of Agriculture is not as strict as it should be and that the gains in fighting erosion have stalled or are being undercut.
U.S.D.A. data shows that the amount of farmland erosion nationwide from water fell substantially from the early 1980s to the mid-1990s, then largely stagnated.
Enforcement is needed more than ever, environmentalists say, because high crop prices provide a strong incentive for farmers to plant as much ground as possible and to take fewer protective measures like grass buffer strips.
Other factors are also at work. Farmers increasingly rent the land they cultivate, which can mean they are less familiar with areas at risk for erosion or are less invested in caring for the land over the long run. In addition, farmers using modern supersize tractors, built to efficiently cover swaths of land, can find it inconvenient to break up land into smaller sections through buffer areas or terraces. Widely used herbicides can kill the grass in buffer strips, leaving them more vulnerable to erosion. And government biofuels policies that have increased the demand for corn have encouraged farmers to plant more. “You’ve got all these market forces and public policies and biofuel mandates and more severe storms,” said Craig Cox, senior vice president of the Environmental Working Group, an advocacy group that will release a report on erosion Wednesday. “It’s all coming together, and we’re asleep at the switch.”
Mr. Cox said that he flew over parts of Iowa in a helicopter last spring after a severe storm and found that deep gullies had formed in unprotected farmland, becoming conduits for soil runoff. Farmers frequently level off such gullies after harvesting in the fall, he said, and then replant the same low-lying areas year after year, leaving them susceptible to further erosion.
Thomas W. Christensen, an Agriculture Department regional conservationist, disagreed, saying, “Conservation compliance is working,” and adding that improvements to its enforcement program were in the works. Last year, however, the agency reviewed fewer than 1 percent of the tracts nationwide that it considered highly erodible to make sure that farmers were following conservation plans. About 1 percent of those reviewed were found to be in violation. But the new federal budget deal cuts 12 percent from the agency’s conservation spending, which could hamper soil efforts. Agency officials said they were still assessing the impact.
The information from the Iowa Daily Erosion Project paints a grimmer picture than a recent assessment by federal officials. The U.S.D.A’s 2007 National Resources Inventory, released last year, estimated that erosion in Iowa averaged 5.2 tons an acre each year. That was slightly higher than the five tons per acre that the department estimated was a tolerable annual rate of erosion for most Iowa soils, meaning that it allowed a high level of crop productivity to be maintained indefinitely.
Five tons of soil would fill a small dump truck; spread over an acre it would make a layer slightly less than the thickness of a dime, Mr. Cruse said.
While the federal report estimates average rates of erosion for states and regions over a full year, the Erosion Project uses detailed information on rainfall and field conditions to estimate soil loss in 1,581 Iowa townships — nearly all of them — after each storm. Last year, according to Erosion Project data analyzed by the Environmental Working Group, the average estimated rate of erosion exceeded the sustainable level in 133 townships. In 2009, an estimated 641 townships exceeded the sustainable rate, including nearly 400 that had double or more that rate.
The project also provides a picture of the erosion caused by severe storms, like the one that dumped more than seven inches of rain in parts of southwest Iowa in May 2007. In a single day, the figures show, 69 townships had average estimated soil losses of more than 10 tons an acre. Of those, 14 townships were estimated to have an average loss between 20 tons and nearly 40 tons per acre. The 2007 storm was exceptionally damaging, but severe storms are becoming more frequent, according to a state report on climate change submitted in January to the Iowa Legislature and governor.
Despite the concerns, Iowa is not on the brink of becoming a new Dust Bowl. Many farmers use good conservation practices, and the state’s rich topsoil in many areas is deep enough to last decades with moderate amounts of erosion.
But agronomists say that heavy erosion in unprotected areas can significantly diminish crop yields, and, over time, land that is not well cared for can become depleted. That means farmers must use more fertilizer to increase yields.
Erosion also does major harm to water quality.
More than anything else this year, farmers are making decisions based on how they can best take advantage of corn and soybean prices, which have soared in recent months.
Dr. Cruse said that creates a paradox. When crop prices are low and farmers are scraping by, many say they cannot afford to take steps to protect their fields from erosion. Now, he said, they say they still cannot afford it because there is too much profit to be made from farming every bit of land.
The same incentives have landowners clearing steep hillsides or converting pasture to cropland to cultivate or rent out.
“The requests to farm the marginal areas and the pressure on our noncropped areas have really increased with these commodity prices,” said Todd G. Duncan, an Agriculture Department district conservationist in Winneshiek County in northeast Iowa, another area of the state with steep hills. “We have some people that are making bad land-use decisions right now.”
Rajaratnam Was ‘Amazingly Educated’ on Stocks, Galleon Research Chief Says
Raj Rajaratnam’s defense to insider trading charges opened yesterday with witnesses who contradicted key government testimony and told the jury how extensive Galleon Group LLC’s research operation was.
Richard “Rick” Schutte, the former president and chief of research at Galleon, testified that Rajaratnam, who co-founded the hedge fund, reviewed dozens of analyst reports each week and was “amazingly educated” about stocks, research and investment strategies.
Schutte said Galleon employed 35 analysts at its peak in early 2008 and each was expected to be expert in as many as 15 companies. The analysts had to file weekly reports to Rajaratnam, he said. Every morning, Rajaratnam led a meeting of dozens of Galleon employees to review new “data points” -- news accounts, regulatory filings and research -- that might influence stock prices, he said.
“He was the most prepared of any of us,” Schutte said of Rajaratnam yesterday in Manhattan federal court. “He’s amazingly educated on the issues at hand.”
The testimony is designed to support Rajaratnam’s claim that his trades were based on Galleon research and not on inside information, as prosecutors allege. Rajaratnam, 53, is on trial in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of trading on tips leaked by corporate insiders and hedge-fund traders.
Defense lawyers said in court last week that Rajaratnam would present at least five witnesses and that his case may be completed by today. They didn’t say whether Rajaratnam would testify.
‘Information Sharing’
Schutte testified that Galleon analysts and portfolio managers engaged in a “continuous process of information sharing” as part of its strategy of “arbitraging consensus,” or identifying where Wall Street’s consensus was wrong. Galleon had a “very disciplined, very methodical” process of analyzing research, he said.
“There’s all sorts of information,” he said.
Analysts arrived at work at 7 a.m. and had to be prepared to field questions about the companies they covered at the 8:30 a.m. meeting that Rajaratnam led, Schutte said. Employees who showed up late were fined $25, he said. Rajaratnam then retreated to his office where he fielded phone calls, reviewed data on his six computer screens and met with analysts, he said.
‘Event-Driven Investing’
Schutte, who joined Galleon in 2004 and became president in October 2009, shortly before Rajaratnam’s arrest on Oct. 16, 2009, said the company would practice “event-driven investing,” increasing the size of a position in anticipation of some event. He said he sometimes joined Rajaratnam for meetings with corporate executives.
“Did you ever see him ask for inside information?” defense attorney Michael Starr asked.
“No,” Schutte said.
Starr showed jurors news articles, analyst reports and internal Galleon research data relating to Advanced Micro Devices Inc. (AMD) and Akamai Technologies Inc. (AKAM), two companies on whose stocks Rajaratnam is accused of getting illegal tips.
Rajaratnam, according to prosecutors, got tips on AMD’s planned acquisition of ATI Technologies Inc. in 2006 and on plans that AMD, a Sunnyvale, California-based maker of microprocessors for personal computers, would spin off part of the company in 2008. Rajaratnam also received illegal information that Akamai, based in Cambridge, Massachusetts, would lower its earnings forecasts in 2008, prosecutors said.
Akamai
Starr showed jurors reports by a Galleon analyst who covered Akamai showing that she continued to see “more data points of softness in their business” in the weeks before the company reported earnings that were lower than expected.
At about the same time that the analyst was writing the reports, Rajaratnam was taking a bearish position on the stock, Starr said.
Earlier, the defense called two witnesses to challenge the testimony of former Galleon portfolio manager Adam Smith, who pleaded guilty to insider trading and is testifying for prosecutors. Smith told jurors that he shared inside tips with Rajaratnam.
John Pernell, who runs the Polaris Prime Technology Fund, said he met Smith for breakfast about a week after Smith pleaded guilty in January. According to Pernell, Smith denied using inside information to trade on several of the stocks at issue, contrary to what he said at his guilty plea.
Lawyer Testifies
On cross-examination, Assistant U.S. Attorney Jonathan Streeter asked Pernell whether he had been communicating with Rajaratnam’s lawyers at the time he met with Smith at the Cornell Club in Manhattan. Pernell, who testified that Smith was a “dear friend” who managed the Polaris fund, said he had been.
“Did you tell him you had written a memo to Mr. Dowd?” Streeter asked, referring to John Dowd, one of Rajaratnam’s lawyers.
“No,” Pernell said.
Also testifying for Rajaratnam was Robert Hotz, a lawyer at Akin Gump Strauss Hauer & Feld LLP who represented Rajaratnam until August. Hotz said Smith had denied trading on inside information when Smith was interviewed by defense lawyers in February and July 2010.
“His representation was he was not aware of any insider trading at Galleon,” Hotz said.
“Waiting for Superman”
The defense plans to call as witnesses Gregg Jarrell, the top economist for the U.S. Securities and Exchange Commission from 1984 to 1987, and Galleon analyst Stephen Granoff. Jarrell will serve as an expert witness for the defense.
Rajaratnam’s next witness will be Geoffrey Canada, the creator of the Harlem Children’s Zone, a New York City nonprofit group. Canada was featured last year in the documentary, “Waiting for Superman,” about charter schools. The defense wants him to testify about Rajaratnam’s good character and generosity.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).
Richard “Rick” Schutte, the former president and chief of research at Galleon, testified that Rajaratnam, who co-founded the hedge fund, reviewed dozens of analyst reports each week and was “amazingly educated” about stocks, research and investment strategies.
Schutte said Galleon employed 35 analysts at its peak in early 2008 and each was expected to be expert in as many as 15 companies. The analysts had to file weekly reports to Rajaratnam, he said. Every morning, Rajaratnam led a meeting of dozens of Galleon employees to review new “data points” -- news accounts, regulatory filings and research -- that might influence stock prices, he said.
“He was the most prepared of any of us,” Schutte said of Rajaratnam yesterday in Manhattan federal court. “He’s amazingly educated on the issues at hand.”
The testimony is designed to support Rajaratnam’s claim that his trades were based on Galleon research and not on inside information, as prosecutors allege. Rajaratnam, 53, is on trial in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of trading on tips leaked by corporate insiders and hedge-fund traders.
Defense lawyers said in court last week that Rajaratnam would present at least five witnesses and that his case may be completed by today. They didn’t say whether Rajaratnam would testify.
‘Information Sharing’
Schutte testified that Galleon analysts and portfolio managers engaged in a “continuous process of information sharing” as part of its strategy of “arbitraging consensus,” or identifying where Wall Street’s consensus was wrong. Galleon had a “very disciplined, very methodical” process of analyzing research, he said.
“There’s all sorts of information,” he said.
Analysts arrived at work at 7 a.m. and had to be prepared to field questions about the companies they covered at the 8:30 a.m. meeting that Rajaratnam led, Schutte said. Employees who showed up late were fined $25, he said. Rajaratnam then retreated to his office where he fielded phone calls, reviewed data on his six computer screens and met with analysts, he said.
‘Event-Driven Investing’
Schutte, who joined Galleon in 2004 and became president in October 2009, shortly before Rajaratnam’s arrest on Oct. 16, 2009, said the company would practice “event-driven investing,” increasing the size of a position in anticipation of some event. He said he sometimes joined Rajaratnam for meetings with corporate executives.
“Did you ever see him ask for inside information?” defense attorney Michael Starr asked.
“No,” Schutte said.
Starr showed jurors news articles, analyst reports and internal Galleon research data relating to Advanced Micro Devices Inc. (AMD) and Akamai Technologies Inc. (AKAM), two companies on whose stocks Rajaratnam is accused of getting illegal tips.
Rajaratnam, according to prosecutors, got tips on AMD’s planned acquisition of ATI Technologies Inc. in 2006 and on plans that AMD, a Sunnyvale, California-based maker of microprocessors for personal computers, would spin off part of the company in 2008. Rajaratnam also received illegal information that Akamai, based in Cambridge, Massachusetts, would lower its earnings forecasts in 2008, prosecutors said.
Akamai
Starr showed jurors reports by a Galleon analyst who covered Akamai showing that she continued to see “more data points of softness in their business” in the weeks before the company reported earnings that were lower than expected.
At about the same time that the analyst was writing the reports, Rajaratnam was taking a bearish position on the stock, Starr said.
Earlier, the defense called two witnesses to challenge the testimony of former Galleon portfolio manager Adam Smith, who pleaded guilty to insider trading and is testifying for prosecutors. Smith told jurors that he shared inside tips with Rajaratnam.
John Pernell, who runs the Polaris Prime Technology Fund, said he met Smith for breakfast about a week after Smith pleaded guilty in January. According to Pernell, Smith denied using inside information to trade on several of the stocks at issue, contrary to what he said at his guilty plea.
Lawyer Testifies
On cross-examination, Assistant U.S. Attorney Jonathan Streeter asked Pernell whether he had been communicating with Rajaratnam’s lawyers at the time he met with Smith at the Cornell Club in Manhattan. Pernell, who testified that Smith was a “dear friend” who managed the Polaris fund, said he had been.
“Did you tell him you had written a memo to Mr. Dowd?” Streeter asked, referring to John Dowd, one of Rajaratnam’s lawyers.
“No,” Pernell said.
Also testifying for Rajaratnam was Robert Hotz, a lawyer at Akin Gump Strauss Hauer & Feld LLP who represented Rajaratnam until August. Hotz said Smith had denied trading on inside information when Smith was interviewed by defense lawyers in February and July 2010.
“His representation was he was not aware of any insider trading at Galleon,” Hotz said.
“Waiting for Superman”
The defense plans to call as witnesses Gregg Jarrell, the top economist for the U.S. Securities and Exchange Commission from 1984 to 1987, and Galleon analyst Stephen Granoff. Jarrell will serve as an expert witness for the defense.
Rajaratnam’s next witness will be Geoffrey Canada, the creator of the Harlem Children’s Zone, a New York City nonprofit group. Canada was featured last year in the documentary, “Waiting for Superman,” about charter schools. The defense wants him to testify about Rajaratnam’s good character and generosity.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).
Asia's Central Banks Want to Add Yuan to Foreign Reserves, Tetangco Says
Asia’s central banks want to diversify their growing foreign-exchange reserves into yuan- denominated debt issued by China’s government, according to Bangko Sentral ng Pilipinas Governor Amando Tetangco.
Tetangco, who met with People’s Bank of China as part of an economic road show, said Asian central banks have agreed to “look for new avenues for diversification,” according to an e- mailed statement from the Philippine Department of Finance. “Given, however, the traditional investment constraints of central banks, I suggest that the Chinese government may consider issuing more yuan-denominated bonds,” he was quoted as saying.
Premier Wen Jiabao is seeking to promote use of the yuan as an alternative to the dollar in global trade and investment, while avoiding a buildup of speculative capital. Cross-border transactions in the yuan totaled $58.7 billion in 2010, 13 times the amount a year earlier, Xinhua News Agency reported April 1, citing the State Administration of Foreign Exchange.
Tetangco’s “comments are ground-breaking as this is the first time that a regional central bank openly stated the intention of emerging Asia to diversify foreign-exchange reserves into yuan-denominated assets,” said Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB. “This is a coup for China, which has been working hard to internationalize its currency.”
Weaker Dollar
The yuan slid 0.1 percent to 6.5448 per dollar as of 1 p.m. in Shanghai, extending yesterday’s retreat from a 17-year high of 6.5350 reached April 8, according to the China Foreign Exchange Trade System. It has strengthened 0.8 percent this year, while the Dollar Index, a gauge of the greenback’s strength, has dropped 4.9 percent and yesterday recorded its lowest close since December 2009.
Central banks in Hong Kong and Thailand have won approval to invest in China’s interbank bond market this year.
The Hong Kong Monetary Authority can invest up to 15 billion yuan, Chief Executive Norman Chan said Jan. 26. The Bank of Thailand can buy as much as 200 million yuan of debt denominated in China’s currency and will use its own assets rather than the nation’s foreign-exchange reserves to finance purchases, Chairman Chatumongol Sonakul said Feb. 24.
Malaysia, which imposed capital controls after the 1998 Asian Financial Crisis, will see increasing use of the yuan in trade with China, while keeping the dollar as its key reserve currency, Prime Minister Najib Razak said in an interview in March. The country eased regulations last August to allow exporters and imports to use the ringgit and other currencies to settle trade with foreign companies.
Bursa Malaysia Derivatives Bhd., which sets the global benchmark for crude palm oil, started accepting yuan as margin collateral for trading in November.
Tetangco, who met with People’s Bank of China as part of an economic road show, said Asian central banks have agreed to “look for new avenues for diversification,” according to an e- mailed statement from the Philippine Department of Finance. “Given, however, the traditional investment constraints of central banks, I suggest that the Chinese government may consider issuing more yuan-denominated bonds,” he was quoted as saying.
Premier Wen Jiabao is seeking to promote use of the yuan as an alternative to the dollar in global trade and investment, while avoiding a buildup of speculative capital. Cross-border transactions in the yuan totaled $58.7 billion in 2010, 13 times the amount a year earlier, Xinhua News Agency reported April 1, citing the State Administration of Foreign Exchange.
Tetangco’s “comments are ground-breaking as this is the first time that a regional central bank openly stated the intention of emerging Asia to diversify foreign-exchange reserves into yuan-denominated assets,” said Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB. “This is a coup for China, which has been working hard to internationalize its currency.”
Weaker Dollar
The yuan slid 0.1 percent to 6.5448 per dollar as of 1 p.m. in Shanghai, extending yesterday’s retreat from a 17-year high of 6.5350 reached April 8, according to the China Foreign Exchange Trade System. It has strengthened 0.8 percent this year, while the Dollar Index, a gauge of the greenback’s strength, has dropped 4.9 percent and yesterday recorded its lowest close since December 2009.
Central banks in Hong Kong and Thailand have won approval to invest in China’s interbank bond market this year.
The Hong Kong Monetary Authority can invest up to 15 billion yuan, Chief Executive Norman Chan said Jan. 26. The Bank of Thailand can buy as much as 200 million yuan of debt denominated in China’s currency and will use its own assets rather than the nation’s foreign-exchange reserves to finance purchases, Chairman Chatumongol Sonakul said Feb. 24.
Malaysia, which imposed capital controls after the 1998 Asian Financial Crisis, will see increasing use of the yuan in trade with China, while keeping the dollar as its key reserve currency, Prime Minister Najib Razak said in an interview in March. The country eased regulations last August to allow exporters and imports to use the ringgit and other currencies to settle trade with foreign companies.
Bursa Malaysia Derivatives Bhd., which sets the global benchmark for crude palm oil, started accepting yuan as margin collateral for trading in November.
Monday, April 11, 2011
Indian drugmaker invests in UK arm
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By Andrew Jack in London
Published: April 11 2011 19:04 | Last updated: April 11 2011 19:04
One of India’s largest generic medicines groups has inaugurated a new headquarters for its expanding Cambridge-based subsidiary Chirotech, affirming its belief in the UK as Europe’s most attractive location for life sciences.
Dr Reddy’s has pledged further investment in Chirotech, a specialist biotech company on the Cambridge Science Park.
Chirotech has increased by a third to 40 employees since the purchase in 2008, and will have the space to double staffing again on the new site.
The decision marks a rare boost for the UK’s medicines sector.
The industry has suffered substantial recent job losses in research and development from AstraZeneca, GlaxoSmithKline, Novartis and Pfizer, which is in the process of closing its research unit in Sandwich, south-east England.
All the multinational companies have stressed that their decisions are the result of global restructuring rather than disappointment with the UK.
However, the reduction in staff has sparked fresh concern over the ability of the country to maintain its position as a leading international centre for drug development and medical innovation.
GV Prasad, Dr Reddy’s chief executive, told the Financial Times: “After a time focused on acquisitions, we are now building our technological edge again.
“The UK is an expensive location, but it has talent we could not attract to India.”
He said Dr Reddy’s had considered alternative sites for European expansion in Germany and in Switzerland.
However, the company judged the UK more appealing because of its “ecosystem” of links to universities and biotech companies, as well as the shared use with India of the English language.
Mr Prasad said he had not considered moving to Pfizer’s Sandwich site, but that the new location in Cambridge had previously been occupied by a division of AstraZeneca which has been restructured.
Chirotech provides a range of specialist services to Dr Reddy’s and third-party pharmaceutical companies.
It has already applied its technologies to substantially reduce manufacturing costs for its Indian parent’s products, including atorvastatin, a cholesterol-lowering drug, and Abacavir for HIV patients.
Mr Prasad said that Dr Reddy’s was repositioning Chirotech as a “centre of excellence” in chemistry for the group, to complementing its traditional strength in biology, and would “incrementally” build its workforce.
He said the company had spent £20m ($32.7m) on the acquisition and invested “several million” pounds since.
In an unusual display of solidarity with one of his Indian rivals, Dr Anji Reddy, founder of the company, opened the new headquarters on Monday jointly with Yusuf Hamied, head of the Indian generics business Cipla, and a former chemistry student at Cambridge university.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
By Andrew Jack in London
Published: April 11 2011 19:04 | Last updated: April 11 2011 19:04
One of India’s largest generic medicines groups has inaugurated a new headquarters for its expanding Cambridge-based subsidiary Chirotech, affirming its belief in the UK as Europe’s most attractive location for life sciences.
Dr Reddy’s has pledged further investment in Chirotech, a specialist biotech company on the Cambridge Science Park.
Chirotech has increased by a third to 40 employees since the purchase in 2008, and will have the space to double staffing again on the new site.
The decision marks a rare boost for the UK’s medicines sector.
The industry has suffered substantial recent job losses in research and development from AstraZeneca, GlaxoSmithKline, Novartis and Pfizer, which is in the process of closing its research unit in Sandwich, south-east England.
All the multinational companies have stressed that their decisions are the result of global restructuring rather than disappointment with the UK.
However, the reduction in staff has sparked fresh concern over the ability of the country to maintain its position as a leading international centre for drug development and medical innovation.
GV Prasad, Dr Reddy’s chief executive, told the Financial Times: “After a time focused on acquisitions, we are now building our technological edge again.
“The UK is an expensive location, but it has talent we could not attract to India.”
He said Dr Reddy’s had considered alternative sites for European expansion in Germany and in Switzerland.
However, the company judged the UK more appealing because of its “ecosystem” of links to universities and biotech companies, as well as the shared use with India of the English language.
Mr Prasad said he had not considered moving to Pfizer’s Sandwich site, but that the new location in Cambridge had previously been occupied by a division of AstraZeneca which has been restructured.
Chirotech provides a range of specialist services to Dr Reddy’s and third-party pharmaceutical companies.
It has already applied its technologies to substantially reduce manufacturing costs for its Indian parent’s products, including atorvastatin, a cholesterol-lowering drug, and Abacavir for HIV patients.
Mr Prasad said that Dr Reddy’s was repositioning Chirotech as a “centre of excellence” in chemistry for the group, to complementing its traditional strength in biology, and would “incrementally” build its workforce.
He said the company had spent £20m ($32.7m) on the acquisition and invested “several million” pounds since.
In an unusual display of solidarity with one of his Indian rivals, Dr Anji Reddy, founder of the company, opened the new headquarters on Monday jointly with Yusuf Hamied, head of the Indian generics business Cipla, and a former chemistry student at Cambridge university.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Sunday, April 10, 2011
JPMorgan Accused of Breaking Its Duty to Clients
In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier.
Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon.
While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit. That’s because as Sigma’s troubles worsened, JPMorgan lent the vehicle billions of dollars and received valuable assets in the form of a security deposit.
After Sigma came undone in September 2008, many of those assets ultimately became JPMorgan’s and eventually appreciated in value, giving the bank a large profit, the suit says.
The case, which is filed as a class action and includes several pension funds as named plaintiffs, accuses JPMorgan of breaching its responsibility to keep its clients in safe investments, and it sheds new light on one of Wall Street’s oldest problems — whether banks treat their clients’ money with the same care that they treat their own.
Joseph Evangelisti, a spokesman for JPMorgan, called some of the suit’s accusations “ludicrous” and said the bank lent more than $8 billion to Sigma to try to help the vehicle survive, not to profit from its failure. He said the bank did its best to protect its clients’ money and that its dealings with Sigma were to the clients’ benefit.
The suit, however, asserts that JPMorgan workers developed a “grand scheme” to profit from Sigma in the event of a collapse, even though employees at another part of the bank left client money invested in the vehicle.
One internal e-mail between top executives, for instance, states that the firm needed to protect its own interests in its dealings with Sigma, without taking into account the clients’ position. The suit also contends that the bank’s loans to Sigma gave it access to the vehicle’s best assets, at a discount, which proved to be a profitable trade for the bank.
JPMorgan has said in a court filing that no such scheme existed and that it acted properly in the way it managed client money.
The bank argues that by law, different units of the company that dealt with Sigma could not share information, because of so-called Chinese walls, which are meant to prevent the spread of nonpublic information within the firm. According to this argument, the unit that invested client money in Sigma could not confer with the arm that lent the vehicle money.
But because the information rose to executives who oversee the entire company and were in a position to intervene, analysts say the issue is trickier.
“In one sense, I don’t think it’s good enough to say, ‘We’re a large organization, we can’t relay information.’ That, in many respects, is a cop-out,” said William Fitzpatrick, a banking analyst at Manulife Asset Management, a Canadian insurance company that is not party to the case. “Does Jamie Dimon have some sort of veto power where he can overrule it? That gets very gray.”
But he added, “I can see where the banks would come back and say, ‘The Chinese walls are there for a reason. We don’t want to put in manual overrides.’ ”
In many cases, the rules and practices banks follow are based on nonpublic information they receive.
It’s not as clear what a bank’s obligations are with insights that are based on public information, like some of the information related to Sigma.
Within the financial services industry, the case is being closely watched. A victory by JPMorgan’s clients may mean that banks will have to be more careful about deciding whether to share — or silo — information that affects their clients’ investments. The Securities Industry and Financial Markets Association, a prominent trade group, wrote a brief in support of JPMorgan last month saying that the pension funds that are suing had an “unprecedented and novel theory” that “contradicts decades of Congressional and regulatory guidance.” The trade group said that if the plaintiffs won, it would impose greater costs on banks.
Whatever the legal outcome, the new documents paint a picture of how one of Wall Street’s strongest players profited in its deals with the weak.
Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon.
While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit. That’s because as Sigma’s troubles worsened, JPMorgan lent the vehicle billions of dollars and received valuable assets in the form of a security deposit.
After Sigma came undone in September 2008, many of those assets ultimately became JPMorgan’s and eventually appreciated in value, giving the bank a large profit, the suit says.
The case, which is filed as a class action and includes several pension funds as named plaintiffs, accuses JPMorgan of breaching its responsibility to keep its clients in safe investments, and it sheds new light on one of Wall Street’s oldest problems — whether banks treat their clients’ money with the same care that they treat their own.
Joseph Evangelisti, a spokesman for JPMorgan, called some of the suit’s accusations “ludicrous” and said the bank lent more than $8 billion to Sigma to try to help the vehicle survive, not to profit from its failure. He said the bank did its best to protect its clients’ money and that its dealings with Sigma were to the clients’ benefit.
The suit, however, asserts that JPMorgan workers developed a “grand scheme” to profit from Sigma in the event of a collapse, even though employees at another part of the bank left client money invested in the vehicle.
One internal e-mail between top executives, for instance, states that the firm needed to protect its own interests in its dealings with Sigma, without taking into account the clients’ position. The suit also contends that the bank’s loans to Sigma gave it access to the vehicle’s best assets, at a discount, which proved to be a profitable trade for the bank.
JPMorgan has said in a court filing that no such scheme existed and that it acted properly in the way it managed client money.
The bank argues that by law, different units of the company that dealt with Sigma could not share information, because of so-called Chinese walls, which are meant to prevent the spread of nonpublic information within the firm. According to this argument, the unit that invested client money in Sigma could not confer with the arm that lent the vehicle money.
But because the information rose to executives who oversee the entire company and were in a position to intervene, analysts say the issue is trickier.
“In one sense, I don’t think it’s good enough to say, ‘We’re a large organization, we can’t relay information.’ That, in many respects, is a cop-out,” said William Fitzpatrick, a banking analyst at Manulife Asset Management, a Canadian insurance company that is not party to the case. “Does Jamie Dimon have some sort of veto power where he can overrule it? That gets very gray.”
But he added, “I can see where the banks would come back and say, ‘The Chinese walls are there for a reason. We don’t want to put in manual overrides.’ ”
In many cases, the rules and practices banks follow are based on nonpublic information they receive.
It’s not as clear what a bank’s obligations are with insights that are based on public information, like some of the information related to Sigma.
Within the financial services industry, the case is being closely watched. A victory by JPMorgan’s clients may mean that banks will have to be more careful about deciding whether to share — or silo — information that affects their clients’ investments. The Securities Industry and Financial Markets Association, a prominent trade group, wrote a brief in support of JPMorgan last month saying that the pension funds that are suing had an “unprecedented and novel theory” that “contradicts decades of Congressional and regulatory guidance.” The trade group said that if the plaintiffs won, it would impose greater costs on banks.
Whatever the legal outcome, the new documents paint a picture of how one of Wall Street’s strongest players profited in its deals with the weak.
Gold Gains to Record $1,476.22 Per Ounce; Cash Silver Reaches 31-Year High
Gold advanced to record and cash silver rose to the highest level since 1980.
Gold for immediate delivery climbed 0.1 percent to an all- time high of $1,476.55 an ounce before trading at $1,476.22 in Singapore. Bullion futures for June delivery also touched a record $1,478 an ounce. Spot silver rose as much as 0.5 percent to $41.1225 an ounce.
Gold for immediate delivery climbed 0.1 percent to an all- time high of $1,476.55 an ounce before trading at $1,476.22 in Singapore. Bullion futures for June delivery also touched a record $1,478 an ounce. Spot silver rose as much as 0.5 percent to $41.1225 an ounce.
Asian Stocks Rise as Energy Producers Gain on Oil Rally: Woodside Jumps
Asian stocks rose, driven by energy producers, as crude oil futures gained for a fourth day and on speculation BHP Billiton Ltd. will bid for Woodside Petroleum Ltd. (WPL)
Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, jumped 7.3 percent after the Sunday Times reported yesterday BHP is in talks to buy Royal Dutch Shell Plc’s 24 percent stake in Woodside and make a takeover offer. Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi nuclear plant, surged 17 percent after a report said it plans to buy gas turbines to boost power supply in Japan. Qantas Airways Ltd., Australia’s biggest carrier, slipped 1.4 percent, while Korean Air Lines Co. dropped 2.3 percent on concern high energy costs may slow the economic recovery and damage corporate earnings
“Higher oil prices have a negative effect on corporate earnings,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.
The MSCI Asia Pacific Index gained 0.2 percent to 136.77 as of 10:03 a.m. in Tokyo, erasing losses of as much as 0.2 percent earlier. About the same number of stocks rose as fell in the index. The gauge has risen for three weeks as Japanese companies resumed production after last month’s earthquake, and as an improving U.S. economy bolstered optimism the global recovery can be sustained.
Japan’s Nikkei 225 (NKY) Stock Average fell 0.3 percent. The nation’s machinery orders dropped for the first time in three months in February before the record earthquake and a tsunami devastated the northeastern region.
South Korea, Australia
South Korea’s Kospi Index climbed 0.2 percent, Australia’s S&P/ASX 200 Index advanced 0.2 percent and New Zealand’s NZX 50 Index increased 0.4 percent.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. In New York, the index dropped 0.4 percent to 1,328.17 on April 8 as oil’s rally to a 30-month high drove down transportation shares and investors speculated a fight in the U.S. Congress over the federal budget may shut the government for the first time since 1996.
Crude oil for May delivery rose 2.3 percent to $112.79 a barrel in New York on April 8, the highest settlement since Sept. 22, 2008. Oil extended gains today, increasing as much as 0.6 percent, as the North Atlantic Treaty Organization escalated its air campaign over Libya and on concern unrest may spread to other energy-exporting countries in the Middle East.
The MSCI Asia Pacific Index lost 0.8 percent this year through April 8, compared with gains of 5.6 percent by the S&P 500 and 2.1 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.4 times for the Stoxx 600.
Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, jumped 7.3 percent after the Sunday Times reported yesterday BHP is in talks to buy Royal Dutch Shell Plc’s 24 percent stake in Woodside and make a takeover offer. Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi nuclear plant, surged 17 percent after a report said it plans to buy gas turbines to boost power supply in Japan. Qantas Airways Ltd., Australia’s biggest carrier, slipped 1.4 percent, while Korean Air Lines Co. dropped 2.3 percent on concern high energy costs may slow the economic recovery and damage corporate earnings
“Higher oil prices have a negative effect on corporate earnings,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.
The MSCI Asia Pacific Index gained 0.2 percent to 136.77 as of 10:03 a.m. in Tokyo, erasing losses of as much as 0.2 percent earlier. About the same number of stocks rose as fell in the index. The gauge has risen for three weeks as Japanese companies resumed production after last month’s earthquake, and as an improving U.S. economy bolstered optimism the global recovery can be sustained.
Japan’s Nikkei 225 (NKY) Stock Average fell 0.3 percent. The nation’s machinery orders dropped for the first time in three months in February before the record earthquake and a tsunami devastated the northeastern region.
South Korea, Australia
South Korea’s Kospi Index climbed 0.2 percent, Australia’s S&P/ASX 200 Index advanced 0.2 percent and New Zealand’s NZX 50 Index increased 0.4 percent.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. In New York, the index dropped 0.4 percent to 1,328.17 on April 8 as oil’s rally to a 30-month high drove down transportation shares and investors speculated a fight in the U.S. Congress over the federal budget may shut the government for the first time since 1996.
Crude oil for May delivery rose 2.3 percent to $112.79 a barrel in New York on April 8, the highest settlement since Sept. 22, 2008. Oil extended gains today, increasing as much as 0.6 percent, as the North Atlantic Treaty Organization escalated its air campaign over Libya and on concern unrest may spread to other energy-exporting countries in the Middle East.
The MSCI Asia Pacific Index lost 0.8 percent this year through April 8, compared with gains of 5.6 percent by the S&P 500 and 2.1 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.4 times for the Stoxx 600.
Avendus expands in Europe as deals ‘increase’
Avendus, one of India’s biggest homegrown investment banks, is appointing its first London-based Europe head in the latest attempt by an Indian merger and acquisition advisory group to expand globally.
In an interview with the Financial Times, Ranu Vohra, chief executive of Avendus, and Robert Davis, the bank’s new Europe head, said the decision to expand the bank’s reach from Reykjavik to the Urals followed a significant rise in Indo-European deals.
Investment banks in India are seeking to build overseas networks to serve their mid-cap Indian clients, which are eyeing deals in developed markets, and overseas groups want to buy in India’s power, retail and IT industries.
“The market for Indo-European M&A is picking up,” said Mr Vohra. “Indian companies are desperately looking for opportunities outside India.”
In 2010 the number of cross-border deals between India and Europe rose to 94 deals compared with 74 in the previous year, according to Avendus data.
The bank, which has helped in big transactions recently, including advising India’s Patni Computer Systems on its $1.22bn acquisition of America’s iGate and the sale of IT outsourcer Satyam to Tech Mahindra, said it would target deals of $100m and above.
Mr Vohra said that Indian IT groups were aggressively scouting for opportunities in eastern Europe, Germany and the UK to service their clients in India.
Mr Davis, Nomura’s former head of European M&A, said he expected more deals between India and Russia in the consumer and industrial sectors, as well as more European companies buying in India.
“Five years ago everyone wanted a China strategy . . . now everyone needs an India or Brics strategy,” he said.
Avendus, which has its headquarters in Mumbai, is not the only Indian bank looking to build an international network.
Religare Capital Markets, backed by the Indian billionaire Singh family, has been expanding its operations in London, New York, Brazil, Turkey and South Africa, over the past year as it seeks to become a global emerging markets investment bank.
Other smaller Indian investment banks, which have been unable to establish a presence overseas, have started setting up joint ventures and alliances with counterparts in other emerging economies.
Edelweiss, a fast-growing Indian financial services group, has ties in South Africa, Latin America and with some boutique houses in Europe.
Indian banks are expanding overseas to service their domestic clients as they face more competition from global banks such as Citigroup and HSBC, which have significantly expanded their advisory operations in India over the past decade.
In an interview with the Financial Times, Ranu Vohra, chief executive of Avendus, and Robert Davis, the bank’s new Europe head, said the decision to expand the bank’s reach from Reykjavik to the Urals followed a significant rise in Indo-European deals.
Investment banks in India are seeking to build overseas networks to serve their mid-cap Indian clients, which are eyeing deals in developed markets, and overseas groups want to buy in India’s power, retail and IT industries.
“The market for Indo-European M&A is picking up,” said Mr Vohra. “Indian companies are desperately looking for opportunities outside India.”
In 2010 the number of cross-border deals between India and Europe rose to 94 deals compared with 74 in the previous year, according to Avendus data.
The bank, which has helped in big transactions recently, including advising India’s Patni Computer Systems on its $1.22bn acquisition of America’s iGate and the sale of IT outsourcer Satyam to Tech Mahindra, said it would target deals of $100m and above.
Mr Vohra said that Indian IT groups were aggressively scouting for opportunities in eastern Europe, Germany and the UK to service their clients in India.
Mr Davis, Nomura’s former head of European M&A, said he expected more deals between India and Russia in the consumer and industrial sectors, as well as more European companies buying in India.
“Five years ago everyone wanted a China strategy . . . now everyone needs an India or Brics strategy,” he said.
Avendus, which has its headquarters in Mumbai, is not the only Indian bank looking to build an international network.
Religare Capital Markets, backed by the Indian billionaire Singh family, has been expanding its operations in London, New York, Brazil, Turkey and South Africa, over the past year as it seeks to become a global emerging markets investment bank.
Other smaller Indian investment banks, which have been unable to establish a presence overseas, have started setting up joint ventures and alliances with counterparts in other emerging economies.
Edelweiss, a fast-growing Indian financial services group, has ties in South Africa, Latin America and with some boutique houses in Europe.
Indian banks are expanding overseas to service their domestic clients as they face more competition from global banks such as Citigroup and HSBC, which have significantly expanded their advisory operations in India over the past decade.
Tata chief warns of India unrest
The $39bn telecoms corruption scandal in India is threatening to trigger popular discontent among the country’s 1.2bn people like no other scandal in the country’s post-independence history, the Tata Group, India’s largest company, is warning.
In an interview with the Financial Times, Kishor Chaukar, executive director of Tata Sons, the holding group of the Tata Group, said civil society’s growing frustration with widespread corruption threatened to lead to nationwide protests inspired by the recent popular uprisings in Tunisia, Egypt and Libya.
Mr Chaukar’s comments come days after Ratan Tata, the chairman of the Tata Group, appeared before parliament to face questions about his group’s participation in the controversial award of 2G telecoms licences three years ago. The mishandling of the auction was estimated by an official audit to have cost the national exchequer $39bn in lost revenues. Mr Tata denies wrongdoing.
“The dimensions of this [corruption scandal] are so large. The wrongdoing is being brought into focus in such a large manner,” Mr Chaukar said. “A large number of youth are saying: ‘This is enough’. To crony capitalism, they are saying: ‘Let’s get rid of it.’”
“It will lead to something that is big for India’s economic and political system ... What’s happened in Tunisia, Libya, Egypt is giving people encouragement. [They are saying] if we can demonstrate and network and we are unified then things can change.”
Others too have drawn parallels between the activist mood in the world’s largest democracy and the Middle East. Justice Santosh Hegde, a former Supreme Court judge, warned of an Egypt-like revolt if a public campaign against graft went unheeded.
R. Gopalakrishnan, another director of Tata Sons, said the Mumbai-based group was “bothered” by the threat to its reputation posed by the telecoms scandal. “It can happen to anyone to be caught up in a street brawl,” he said.
The Tata Group’s comments also came as a hunger strike by Anna Hazare, a veteran social activist, in New Delhi drew thousands of protesters on to the streets in the capital and Mumbai and received support from business lobby groups.
Over the past year India has been hit by a series of high-profile corruption scandals affecting the telecoms sector, the top brass of the military and the Commonwealth Games. Economists have voiced open concern about the rising level of crony capitalism over the past decade.
Mr Chaukar said Tata was responding to an “alarming” and deteriorating business environment in India by encouraging its companies to explore overseas opportunities in more stable markets to reduce “one-country risk”.
He said India’s troubles were part of an unavoidable phase of “regulatory arbitrage” that affected fast-growing developing economies as they liberalised. Opening up the economy was leading to some people making “humungous, unjustified profits”.
India was unlikely to be able to address the ills of corruption in the short term, he said, arguing that business leaders in a transitional economy would face ethical challenges for years.
Senior politicians, such as Sonia Gandhi, Congress party president, and her opposition counterpart, Nitin Gadkari, have bemoaned the lack of scruple in their ranks.
“The credibility of politics and politicians is very low. There are a lot of people who have reservations about [Indian] politics,” said Mr Gadkari, a leader of the Hindu nationalist Bharatiya Janata party.
In an interview with the Financial Times, Kishor Chaukar, executive director of Tata Sons, the holding group of the Tata Group, said civil society’s growing frustration with widespread corruption threatened to lead to nationwide protests inspired by the recent popular uprisings in Tunisia, Egypt and Libya.
Mr Chaukar’s comments come days after Ratan Tata, the chairman of the Tata Group, appeared before parliament to face questions about his group’s participation in the controversial award of 2G telecoms licences three years ago. The mishandling of the auction was estimated by an official audit to have cost the national exchequer $39bn in lost revenues. Mr Tata denies wrongdoing.
“The dimensions of this [corruption scandal] are so large. The wrongdoing is being brought into focus in such a large manner,” Mr Chaukar said. “A large number of youth are saying: ‘This is enough’. To crony capitalism, they are saying: ‘Let’s get rid of it.’”
“It will lead to something that is big for India’s economic and political system ... What’s happened in Tunisia, Libya, Egypt is giving people encouragement. [They are saying] if we can demonstrate and network and we are unified then things can change.”
Others too have drawn parallels between the activist mood in the world’s largest democracy and the Middle East. Justice Santosh Hegde, a former Supreme Court judge, warned of an Egypt-like revolt if a public campaign against graft went unheeded.
R. Gopalakrishnan, another director of Tata Sons, said the Mumbai-based group was “bothered” by the threat to its reputation posed by the telecoms scandal. “It can happen to anyone to be caught up in a street brawl,” he said.
The Tata Group’s comments also came as a hunger strike by Anna Hazare, a veteran social activist, in New Delhi drew thousands of protesters on to the streets in the capital and Mumbai and received support from business lobby groups.
Over the past year India has been hit by a series of high-profile corruption scandals affecting the telecoms sector, the top brass of the military and the Commonwealth Games. Economists have voiced open concern about the rising level of crony capitalism over the past decade.
Mr Chaukar said Tata was responding to an “alarming” and deteriorating business environment in India by encouraging its companies to explore overseas opportunities in more stable markets to reduce “one-country risk”.
He said India’s troubles were part of an unavoidable phase of “regulatory arbitrage” that affected fast-growing developing economies as they liberalised. Opening up the economy was leading to some people making “humungous, unjustified profits”.
India was unlikely to be able to address the ills of corruption in the short term, he said, arguing that business leaders in a transitional economy would face ethical challenges for years.
Senior politicians, such as Sonia Gandhi, Congress party president, and her opposition counterpart, Nitin Gadkari, have bemoaned the lack of scruple in their ranks.
“The credibility of politics and politicians is very low. There are a lot of people who have reservations about [Indian] politics,” said Mr Gadkari, a leader of the Hindu nationalist Bharatiya Janata party.
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