Suresh Kalmadi, the Indian politician who presided over New Delhi’s controversial Commonwealth Games last year, has been arrested for allegedly fixing the contract for procuring equipment for the competition.
The arrest of Mr Kalmadi, a parliamentarian from the ruling Congress party, follows a long probe into preparations for last October's games, which featured teams from the 53 countries that make up the Commonwealth of Nations, mostly members of the former British empire.
Intended to showcase India as an emerging economic powerhouse, the shoddy and scandal-plagued preparations, dogged by cost overruns, delays and allegations of graft, instead cast an embarrassing spotlight on its deficiencies.
Long-time president of the Indian Olympic Association, Mr Kalmadi was the global face of debacle, blithely insisting New Delhi would be ready to host the games, even as deadlines were missed repeatedly, and foreign officials condemned the athletes’ housing as unfit for human habitation just days before the competitors’ arrival.
On Monday, the Central Bureau of Investigation arrested him for his role in awarding a $31m contract for timing and scoring equipment to a Swiss firm, Swiss Timing Ltd, saying in a statement that Mr Kalmadi was involved in “wrongfully restricting and eliminating competition from other suppliers in a premeditated and planned manner”.
The contract, which the CBI alleged in overpayments of around $21m, is but one small example of the pervasive corruption believed to have affected preparations for the games, whose cost soared to $15bn, way over the original estimates made in 2002.
Mr Kalmadi’s arrest also coincides with the CBI filing criminal charges against Kanimozhi Karunanidhi, the daughter of the chief minister of Tamil Nadu, for allegedly receiving kickbacks in the 2G telecoms scam, which saw highly coveted telecom spectrum allocated to favoured companies at throwaway prices.
Both Mr Kalmadi and Ms Karunanidhi deny any wrongdoing.
Manmohan Singh’s Congress-led government is under intense pressure to demonstrate that it is serious about rooting out corruption that has sapped much of the public goodwill it had when it returned to power after parliamentary elections in May 2009.
“The entire governance machine has just been paralysed for the past eight months or so,” said Swapan Das Gupta, an independent political analyst. “These scandals have really eroded their decision-making ability.”
However, Pratap Bhanu Mehta, director of the New Delhi-based Centre for Policy Research, said the arrest of Mr Kalmadi, and the charges against Ms Kanimozhi, whose father is a Congress party ally, would not be sufficient to reinvigorate the government.
“I don’t think it’s actually going to help them recover political ground. The perception is that they are not doing it out of their own initiative,” Mr Mehta said.
The Hindu nationalist opposition Bharatiya Janata Party welcomed Mr Kalmadi’s arrest, but suggested he was just a “small fry” and that the chain of accountability reached higher into the Congress party.
Meanwhile, India’s sports minister, Ajay Maken, said he would write to the Indian Olympic Association, demanding Mr Kalmadi’s removal as the organisation’s president.
In the months since the Commonwealth Games, seven of Mr Kalmadi’s inner circle from the organising committee, and representatives of three small companies, have been arrested for alleged wrongdoing in connection with various contracts for goods and services for the games.
Monday, April 25, 2011
Preserving a Market Symbol
When it comes to keeping the New York Stock Exchange’s trading floor open, Robert Greifeld makes a very unlikely savior.
The New York Stock Exchange, which has a 74-foot ceiling and Georgia marble walls, would remain open, bidders say.
Under its chief, Robert Greifeld, the all-electronic Nasdaq exchange seeks to dominate stock trading in the United States.
As the chief executive of the all-electronic Nasdaq exchange, Mr. Greifeld has questioned whether a physical place where human beings come together to buy and sell stocks is even necessary. He has dismissed the 219-year-old capitalist symbol of the New York exchange as “a stage prop” that ought to be taken apart “board by board.”
Now, though, with Nasdaq and the Intercontinental-Exchange in a fierce fight with the Deutsche Börse to buy the Big Board, and its parent company, NYSE Euronext, Mr. Greifeld insists that he will not only keep the floor open but reverse its long decline.
Although it might seem largely symbolic — only about 1,200 traders remain on the floor, down from more than 2,500 a decade and a half ago — both bidders are promising to keep it open, a rare point of agreement and a nod to the high-stakes public relations battle now under way.
Behind the scenes, however, starkly different strategic visions of the future of stock exchanges are being proposed. The tussle between the exchanges is a question about which model is going to compete most successfully in a global marketplace: one that straddles continents and product lines or one that stays local and focused.
The question is, what is the exchange of the future?” said Richard Repetto, an analyst at Sandler O’Neill, an investment banking and brokerage firm. “Both want to compete globally but Nasdaq is saying, hey, we think the best way to compete globally is to stay as narrowly focused as possible. NYSE is saying, hey, you need to be diversified to compete and have global capabilities.”
The strategy of the Deutsche Börse calls for the combined company to trade stocks as well as higher-margin, faster-growing derivatives in both Europe and the United States.
“It is a bigger international play,” said Patrick J. Healy, chief executive of the Issuer Advisory Group.
Nasdaq’s vision is built on dominating stock trading in the United States. It would have some international equity trading, like its current OMX operations in the Nordic and Baltic countries, as well NYSE Euronext exchanges in European centers like Paris and Amsterdam.
But the merger would make the combined business the home of all the companies listed in the United States, responsible for 45 percent to 50 percent of domestic trading volume. Issuers, including overseas companies, might prefer a bigger, unified American capital market compared with the fragmented one now.
On Thursday the fate of the Big Board is likely to take center stage at the annual shareholder meeting of NYSE Euronext in Manhattan. But the final outcome may be decided only by a shareholder vote scheduled for July.
The deal with the Deutsche Börse — which went mainly electronic more than a decade ago and has only about 120 traders on its floor in Frankfurt — would give NYSE Euronext a much bigger share of the market for exchange-based derivatives trading in Europe, including interest rate derivatives as well as NYSE Euronext’s 27 percent share of cash stock market trading in the United States.
Under the Nasdaq-ICE bid, NYSE Euronext would be split into two. The NYSE Euronext’s stock-trading operations, including the NYSE floor, would go to Nasdaq, while ICE would pick up most of the derivatives businesses in the United States and Europe.
NYSE’s board has twice rebuffed the Nasdaq-ICE bid, even though Mr. Greifeld sweetened his offer last week with firmer bank financing and an offer to pay a $350 million break-up fee to NYSE Euronext if regulators veto the deal.
The NYSE Euronext board said it still prefers to merge with the Deutsche Börse, because that deal would keep the company intact, and emphasize the global cross-product strategy, while they argue an Nasdaq-ICE combination would run afoul of antitrust rules.
The Nasdaq-ICE bid is also a bet on the superiority of purely electronic trading. From its headquarters in Times Square, Nasdaq has done more than anyone else to draw business away and diminish the exchange, and in the shift to electronic trading the Big Board itself adopted ever more automation and set up its own electronic-only market, called Arca.
The New York Stock Exchange, which has a 74-foot ceiling and Georgia marble walls, would remain open, bidders say.
Under its chief, Robert Greifeld, the all-electronic Nasdaq exchange seeks to dominate stock trading in the United States.
As the chief executive of the all-electronic Nasdaq exchange, Mr. Greifeld has questioned whether a physical place where human beings come together to buy and sell stocks is even necessary. He has dismissed the 219-year-old capitalist symbol of the New York exchange as “a stage prop” that ought to be taken apart “board by board.”
Now, though, with Nasdaq and the Intercontinental-Exchange in a fierce fight with the Deutsche Börse to buy the Big Board, and its parent company, NYSE Euronext, Mr. Greifeld insists that he will not only keep the floor open but reverse its long decline.
Although it might seem largely symbolic — only about 1,200 traders remain on the floor, down from more than 2,500 a decade and a half ago — both bidders are promising to keep it open, a rare point of agreement and a nod to the high-stakes public relations battle now under way.
Behind the scenes, however, starkly different strategic visions of the future of stock exchanges are being proposed. The tussle between the exchanges is a question about which model is going to compete most successfully in a global marketplace: one that straddles continents and product lines or one that stays local and focused.
The question is, what is the exchange of the future?” said Richard Repetto, an analyst at Sandler O’Neill, an investment banking and brokerage firm. “Both want to compete globally but Nasdaq is saying, hey, we think the best way to compete globally is to stay as narrowly focused as possible. NYSE is saying, hey, you need to be diversified to compete and have global capabilities.”
The strategy of the Deutsche Börse calls for the combined company to trade stocks as well as higher-margin, faster-growing derivatives in both Europe and the United States.
“It is a bigger international play,” said Patrick J. Healy, chief executive of the Issuer Advisory Group.
Nasdaq’s vision is built on dominating stock trading in the United States. It would have some international equity trading, like its current OMX operations in the Nordic and Baltic countries, as well NYSE Euronext exchanges in European centers like Paris and Amsterdam.
But the merger would make the combined business the home of all the companies listed in the United States, responsible for 45 percent to 50 percent of domestic trading volume. Issuers, including overseas companies, might prefer a bigger, unified American capital market compared with the fragmented one now.
On Thursday the fate of the Big Board is likely to take center stage at the annual shareholder meeting of NYSE Euronext in Manhattan. But the final outcome may be decided only by a shareholder vote scheduled for July.
The deal with the Deutsche Börse — which went mainly electronic more than a decade ago and has only about 120 traders on its floor in Frankfurt — would give NYSE Euronext a much bigger share of the market for exchange-based derivatives trading in Europe, including interest rate derivatives as well as NYSE Euronext’s 27 percent share of cash stock market trading in the United States.
Under the Nasdaq-ICE bid, NYSE Euronext would be split into two. The NYSE Euronext’s stock-trading operations, including the NYSE floor, would go to Nasdaq, while ICE would pick up most of the derivatives businesses in the United States and Europe.
NYSE’s board has twice rebuffed the Nasdaq-ICE bid, even though Mr. Greifeld sweetened his offer last week with firmer bank financing and an offer to pay a $350 million break-up fee to NYSE Euronext if regulators veto the deal.
The NYSE Euronext board said it still prefers to merge with the Deutsche Börse, because that deal would keep the company intact, and emphasize the global cross-product strategy, while they argue an Nasdaq-ICE combination would run afoul of antitrust rules.
The Nasdaq-ICE bid is also a bet on the superiority of purely electronic trading. From its headquarters in Times Square, Nasdaq has done more than anyone else to draw business away and diminish the exchange, and in the shift to electronic trading the Big Board itself adopted ever more automation and set up its own electronic-only market, called Arca.
ONGC gears up for Bashneft stake move
India’s Oil and Natural Gas Corporation has hired two investment banks to help it acquire a stake in Russia’s Bashneft, according to people close to the matter.
Rothchild and Citigroup will advise state-owned ONGC on its attempt to buy a 25 per cent stake in the Russian production and refining group, which has a market value of $10.5bn.
The move is part of an effort by India to secure overseas energy assets as New Delhi aspires to an economy with double-digit growth in a few years’ time.
India has been leveraging on its historic ties with Moscow to secure energy assets in Russia as it struggles to compete with financially stronger Chinese oil and gas groups in the race for energy resources.
Russia had been a close partner of India’s during the Soviet era but relations fell dormant between the two for more than two decades after the collapse of communism in 1991.
However, in the past five years the heads of the two nations have been seeking new business and closer political alignment.
Dmitry Medvedev, Russian president, last travelled to India in December with some of Russia’s largest companies in an attempt to boost trade.
During his two-day trip to New Delhi, Mr Medvedev announced 15 agreements to align India’s oil and gas companies with Russian energy groups.
One of the deals was a framework agreement between ONGC and Sistema, which owns the stake in Bashneft that the Indian company wants to buy.
It paved the way for the two companies to share equity in their Russian oil assets and consider joint operations in other countries.
ONGC, which has a market capitalisation of $52bn, acquired Imperial Energy, a London-listed company with most of its assets in Russia, for nearly $2.1bn in December 2008.
Meanwhile, Sistema, which is controlled by Russian billionaire Vladimir Yevtushenko, has large stakes in several oil producing and refining groups in Russia, including Bashneft and RussNeft.
Bashneft’s oil production in 2010 hit 276,000 barrels per day.
This is expected to grow after it won the tender to develop the Trebs and Titov oilfields in the Russian Arctic, which have an estimated 200m tonnes of reserves.
ONGC has come under fire from India’s official auditor, which questioned the group’s transparency and its ability to secure overseas assets.
The Comptroller and Auditor General of India said ONGC had had a habit of expressing intentions of buying foreign assets – in Vietnam, Australia and African countries – and failing to follow through.
The CAG added that out of 36 acquisitions, only five had been successful.
Rothchild and Citigroup will advise state-owned ONGC on its attempt to buy a 25 per cent stake in the Russian production and refining group, which has a market value of $10.5bn.
The move is part of an effort by India to secure overseas energy assets as New Delhi aspires to an economy with double-digit growth in a few years’ time.
India has been leveraging on its historic ties with Moscow to secure energy assets in Russia as it struggles to compete with financially stronger Chinese oil and gas groups in the race for energy resources.
Russia had been a close partner of India’s during the Soviet era but relations fell dormant between the two for more than two decades after the collapse of communism in 1991.
However, in the past five years the heads of the two nations have been seeking new business and closer political alignment.
Dmitry Medvedev, Russian president, last travelled to India in December with some of Russia’s largest companies in an attempt to boost trade.
During his two-day trip to New Delhi, Mr Medvedev announced 15 agreements to align India’s oil and gas companies with Russian energy groups.
One of the deals was a framework agreement between ONGC and Sistema, which owns the stake in Bashneft that the Indian company wants to buy.
It paved the way for the two companies to share equity in their Russian oil assets and consider joint operations in other countries.
ONGC, which has a market capitalisation of $52bn, acquired Imperial Energy, a London-listed company with most of its assets in Russia, for nearly $2.1bn in December 2008.
Meanwhile, Sistema, which is controlled by Russian billionaire Vladimir Yevtushenko, has large stakes in several oil producing and refining groups in Russia, including Bashneft and RussNeft.
Bashneft’s oil production in 2010 hit 276,000 barrels per day.
This is expected to grow after it won the tender to develop the Trebs and Titov oilfields in the Russian Arctic, which have an estimated 200m tonnes of reserves.
ONGC has come under fire from India’s official auditor, which questioned the group’s transparency and its ability to secure overseas assets.
The Comptroller and Auditor General of India said ONGC had had a habit of expressing intentions of buying foreign assets – in Vietnam, Australia and African countries – and failing to follow through.
The CAG added that out of 36 acquisitions, only five had been successful.
Sunday, April 24, 2011
Google, a Giant in Mobile Search, Seeks New Ways to Make It Pay
MOUNTAIN VIEW, Calif. — In early 2008, in the early days of the iPhone era, Google engineers began noticing something unusual in the search engine’s logs. Owners of these new phones were doing a huge number of Web searches.
But there was a problem: searching on a phone was less than ideal. It was hard to type on small screens. And most irritating for Google, which brags about its speed on every page of search results, was that Web pages were slow to load on phones.
So Google started a project it code-named Grand Prix. In six weeks, engineers revamped mobile searching and hatched plans for new ways to search on the go, by talking or taking photos instead of typing.
The stakes were high. Mobile phones could be a huge new market for Google. Or they could provide an opening for a competitor to pounce, or obviate the need for a search engine altogether. If people on phones could go straight to apps for information, why Google anything?
Today, Google says mobile searches are growing as quickly as Web searches were at the same stage in the company’s early days, and they are up sixfold in the last two years. Google has a market share of 97 percent for mobile searches, according to StatCounter, which tracks Web use.
Now that it dominates the field, Google is throwing its burly computing power and heaps of data at new problems specific to mobile phones — like translating phone calls on the fly and recognizing photos of things like plants and items of clothing.
“I feel like a parent the second time around feels,” said Amit Singhal, a Google fellow who works on search. “You saw your first child grow at an amazing pace, and here we are with our second child, mobile, growing at the same pace and showing the same signs.”
Google has been slow to seize some newer Web business opportunities, most notably social networking. Investors have criticized the company for dragging its feet when it comes to figuring out how to make money in new fields.
But mobile is an exception. Last year, Eric E. Schmidt, then the company’s chief executive, said Google’s philosophy was “mobile first,” meaning it would build products for phones at the same time as versions for PCs.
“This is the place that Google is essentially betting its future on,” said Karim Temsamani, Google’s head of mobile advertising, a role created in September.
Still, Google has not consistently followed the mobile-first mantra, and some analysts, including Colin W. Gillis of BGC Partners, say it has not moved quickly enough to create new mobile products or ads.
“They’ve done a really good job of positioning themselves so they can’t get boxed out of the market,” Mr. Gillis said. “Now they just need to deliver some innovation. Let’s wring some revenue out of this platform.”
Google said in October that mobile ads were on track to generate $1 billion in revenue in the coming year. Mobile users can call a business from within a Google ad or receive coupons for nearby stores. They can take cellphone photos of movie posters to pull up a trailer. With new technologies like near-field communication, advertisers could reward customers with loyalty gifts for walking into stores, Mr. Temsamani said.
But because mobile ads generally sell for less than half the price of Web ads, Mr. Gillis said, “there’s just not a lot of profit left over.” Though Google makes Android software for phones, it does not make money from it directly because it gives it away to phone makers. Meanwhile, Apple makes money from its devices and from what appears on their screens, including its own ad network.
Still, the company’s approach to the mobile market is classic Google: take problems that computer scientists have been working on for decades, throw huge amounts of data and computing power at them and assume that if the resulting product is useful to people, it will eventually make money.
People can now snap photos of landmarks or wine labels to search for them using Google Goggles, speak to their phones using voice search and, on Android phones, translate spoken conversations between English and Spanish.
“We as an academic community would have figured this out, but we wouldn’t have been able to set it up on this kind of scale,” said Alexei A. Efros, an associate professor in computer science and robotics at Carnegie Mellon, referring to these kinds of technological feats. “That’s really the great thing about Google, the fact that it can do it on such a humongous scale and actually make it useful to the general public.”
Google trained its computers to learn spoken language based on troves of voice recordings. “Even if you’re from Brooklyn and you drop all your R’s when you park your car, it’s heard plenty of people from Brooklyn and it can do well,” said Mike Cohen, head of Google’s speech technology team.
At first, Google engineers thought people would talk to its voice search service as if they were talking to a person — “you know, it’s my anniversary, and I’d love to take my wife somewhere really romantic to eat, do you have any ideas?” — so it taught the service to filter out unnecessary words. But it turned out that Google had already trained people into thinking in keywords, so they knew to search “romantic restaurants” even when speaking instead of typing.
Goggles, the visual search tool, recognizes things that have strong visual textures, like a bar code, book cover or landmark. But it often can’t distinguish between a black cat and a black chair, for instance, or recognize food or plants, though Google is working with botanists to teach its machines the secrets of leaf-spotting. Google already has the capability to recognize faces, so people could theoretically snap a photo of a blind date and pull up an online profile, but it is not yet using that technology because it is still working out the privacy implications.
People can also snap a photo to translate a menu in a foreign country, and speak English to hear the Spanish translation. Someday Google hopes to be able to translate both sides of a phone conversation as it happens, said Franz Och, head of Google’s machine translation group.
Though the search results Google spits out might seem the same on phones as on computers, there are some behind-the-scenes differences.
For example, certain search results are ranked differently, with location factored in. Search for Wal-Mart on a computer and Google suspects you are probably looking for the e-commerce site or job openings. Search on a phone and Google assumes you are looking for the nearest store. Other search tools were built specifically for phones. Search for weather or stock prices and Google shows a scale, movable with a finger, to see results for different times.
Google says mobile search is not stealing time from computer searches. Instead, mobile searches spike during the lunch hour and evenings, when people are away from their computers. And while mobile users do search for simple things like weather and train times, engineers have been surprised at how many people also ask more complicated questions about business and politics.
“Mobile search is definitely going to surpass desktop search,” said Scott B. Huffman, who works on mobile search at Google and leads its search evaluation team. “The lines will pass, and I think they’ll pass before anyone thought they would.”
But there was a problem: searching on a phone was less than ideal. It was hard to type on small screens. And most irritating for Google, which brags about its speed on every page of search results, was that Web pages were slow to load on phones.
So Google started a project it code-named Grand Prix. In six weeks, engineers revamped mobile searching and hatched plans for new ways to search on the go, by talking or taking photos instead of typing.
The stakes were high. Mobile phones could be a huge new market for Google. Or they could provide an opening for a competitor to pounce, or obviate the need for a search engine altogether. If people on phones could go straight to apps for information, why Google anything?
Today, Google says mobile searches are growing as quickly as Web searches were at the same stage in the company’s early days, and they are up sixfold in the last two years. Google has a market share of 97 percent for mobile searches, according to StatCounter, which tracks Web use.
Now that it dominates the field, Google is throwing its burly computing power and heaps of data at new problems specific to mobile phones — like translating phone calls on the fly and recognizing photos of things like plants and items of clothing.
“I feel like a parent the second time around feels,” said Amit Singhal, a Google fellow who works on search. “You saw your first child grow at an amazing pace, and here we are with our second child, mobile, growing at the same pace and showing the same signs.”
Google has been slow to seize some newer Web business opportunities, most notably social networking. Investors have criticized the company for dragging its feet when it comes to figuring out how to make money in new fields.
But mobile is an exception. Last year, Eric E. Schmidt, then the company’s chief executive, said Google’s philosophy was “mobile first,” meaning it would build products for phones at the same time as versions for PCs.
“This is the place that Google is essentially betting its future on,” said Karim Temsamani, Google’s head of mobile advertising, a role created in September.
Still, Google has not consistently followed the mobile-first mantra, and some analysts, including Colin W. Gillis of BGC Partners, say it has not moved quickly enough to create new mobile products or ads.
“They’ve done a really good job of positioning themselves so they can’t get boxed out of the market,” Mr. Gillis said. “Now they just need to deliver some innovation. Let’s wring some revenue out of this platform.”
Google said in October that mobile ads were on track to generate $1 billion in revenue in the coming year. Mobile users can call a business from within a Google ad or receive coupons for nearby stores. They can take cellphone photos of movie posters to pull up a trailer. With new technologies like near-field communication, advertisers could reward customers with loyalty gifts for walking into stores, Mr. Temsamani said.
But because mobile ads generally sell for less than half the price of Web ads, Mr. Gillis said, “there’s just not a lot of profit left over.” Though Google makes Android software for phones, it does not make money from it directly because it gives it away to phone makers. Meanwhile, Apple makes money from its devices and from what appears on their screens, including its own ad network.
Still, the company’s approach to the mobile market is classic Google: take problems that computer scientists have been working on for decades, throw huge amounts of data and computing power at them and assume that if the resulting product is useful to people, it will eventually make money.
People can now snap photos of landmarks or wine labels to search for them using Google Goggles, speak to their phones using voice search and, on Android phones, translate spoken conversations between English and Spanish.
“We as an academic community would have figured this out, but we wouldn’t have been able to set it up on this kind of scale,” said Alexei A. Efros, an associate professor in computer science and robotics at Carnegie Mellon, referring to these kinds of technological feats. “That’s really the great thing about Google, the fact that it can do it on such a humongous scale and actually make it useful to the general public.”
Google trained its computers to learn spoken language based on troves of voice recordings. “Even if you’re from Brooklyn and you drop all your R’s when you park your car, it’s heard plenty of people from Brooklyn and it can do well,” said Mike Cohen, head of Google’s speech technology team.
At first, Google engineers thought people would talk to its voice search service as if they were talking to a person — “you know, it’s my anniversary, and I’d love to take my wife somewhere really romantic to eat, do you have any ideas?” — so it taught the service to filter out unnecessary words. But it turned out that Google had already trained people into thinking in keywords, so they knew to search “romantic restaurants” even when speaking instead of typing.
Goggles, the visual search tool, recognizes things that have strong visual textures, like a bar code, book cover or landmark. But it often can’t distinguish between a black cat and a black chair, for instance, or recognize food or plants, though Google is working with botanists to teach its machines the secrets of leaf-spotting. Google already has the capability to recognize faces, so people could theoretically snap a photo of a blind date and pull up an online profile, but it is not yet using that technology because it is still working out the privacy implications.
People can also snap a photo to translate a menu in a foreign country, and speak English to hear the Spanish translation. Someday Google hopes to be able to translate both sides of a phone conversation as it happens, said Franz Och, head of Google’s machine translation group.
Though the search results Google spits out might seem the same on phones as on computers, there are some behind-the-scenes differences.
For example, certain search results are ranked differently, with location factored in. Search for Wal-Mart on a computer and Google suspects you are probably looking for the e-commerce site or job openings. Search on a phone and Google assumes you are looking for the nearest store. Other search tools were built specifically for phones. Search for weather or stock prices and Google shows a scale, movable with a finger, to see results for different times.
Google says mobile search is not stealing time from computer searches. Instead, mobile searches spike during the lunch hour and evenings, when people are away from their computers. And while mobile users do search for simple things like weather and train times, engineers have been surprised at how many people also ask more complicated questions about business and politics.
“Mobile search is definitely going to surpass desktop search,” said Scott B. Huffman, who works on mobile search at Google and leads its search evaluation team. “The lines will pass, and I think they’ll pass before anyone thought they would.”
Indian bank scraps ‘teaser’ home loans
The State Bank of India, the country’s largest commercial bank, has been forced to withdraw “teaser” mortgage loans amid fears of repeating the lending follies of the US subprime crisis.
Under pressure from the Reserve Bank of India to curb what the regulator considered potentially reckless lending, the SBI said last week that it would scrap the home loans from May.
The loans, launched two years ago, quickly gained popularity with first-time buyers and accounted for as much as half of new mortgage business.
India’s mortgage market is growing fast as property prices strengthen. Developers in the fastest-growing large economy after China are marketing apartment complexes heavily to offer modern city living to a growing middle class.
Teaser loans offer initially low repayment rates over one to three years that then escalate. They were also initially provided by HDFC and ICICI banks, but later withdrawn.
Critics say the tiered pricing is often not well understood by borrowers, who are unprepared for higher repayments as the loan matures. They also worry about rising defaults at a time when the RBI is raising interest rates to rein in the highest inflation of any large Asian economy.
Teaser loans were promoted aggressively by O.P. Bhatt, former chairman of state-owned SBI. He argued that the RBI had not understood their benefit to the bank and its customers. They were withdrawn soon after Mr Bhatt’s retirement from the bank and replacement by Pratip Chaudhuri.
The loans were extended to about 300,000 customers, and accounted for about Rs100bn ($2.2bn).
Mr Chaudhuri said the bank’s teaser loans had not complied with central bank guidelines, but their withdrawal would not affect his bank’s performance.
“We are changing the interest rate structure which will be compliant with RBI’s guidelines on tiered loans but will not result in a higher interest pay-out for the borrower,” he said.
In its Economic Survey, published this year, the finance ministry praised SBI for its Happy Home Loan and Easy and Advantage Home loan. The “terraced” lending instruments had encouraged first-time buyers into the market.
Both held interest constant for the first 12 months of repayment. About 90 per cent of the home loan borrowers were first-time buyers. Yet defaults – still early in the life of the mortgages – were “negligible”.
“It is worthwhile giving banks and financial institutions the freedom to introduce new products and thereby expand the options available to consumers and firms,” the ministry had recommended.
Financial authorities have been in a state of high alert about new widely marketed products and complex structured finance in the country’s housing market. Although the global financial crisis hardly touched India, the central bank is highly sensitive to risks similar to the subprime housing mortgage market and its failure in the US.
Two products have come under scrutiny in what is already a highly regulated economy. Alongside the teaser loans, collateralised debt obligations have drawn concern.
CDOs package up different mortgages of varying risk, slices of which are then sold off to financial institutions. They are notorious for being difficult to rate for risk and have a big “handle with care” sign stamped all over them after wreaking destruction in the world’s financial markets.
Under pressure from the Reserve Bank of India to curb what the regulator considered potentially reckless lending, the SBI said last week that it would scrap the home loans from May.
The loans, launched two years ago, quickly gained popularity with first-time buyers and accounted for as much as half of new mortgage business.
India’s mortgage market is growing fast as property prices strengthen. Developers in the fastest-growing large economy after China are marketing apartment complexes heavily to offer modern city living to a growing middle class.
Teaser loans offer initially low repayment rates over one to three years that then escalate. They were also initially provided by HDFC and ICICI banks, but later withdrawn.
Critics say the tiered pricing is often not well understood by borrowers, who are unprepared for higher repayments as the loan matures. They also worry about rising defaults at a time when the RBI is raising interest rates to rein in the highest inflation of any large Asian economy.
Teaser loans were promoted aggressively by O.P. Bhatt, former chairman of state-owned SBI. He argued that the RBI had not understood their benefit to the bank and its customers. They were withdrawn soon after Mr Bhatt’s retirement from the bank and replacement by Pratip Chaudhuri.
The loans were extended to about 300,000 customers, and accounted for about Rs100bn ($2.2bn).
Mr Chaudhuri said the bank’s teaser loans had not complied with central bank guidelines, but their withdrawal would not affect his bank’s performance.
“We are changing the interest rate structure which will be compliant with RBI’s guidelines on tiered loans but will not result in a higher interest pay-out for the borrower,” he said.
In its Economic Survey, published this year, the finance ministry praised SBI for its Happy Home Loan and Easy and Advantage Home loan. The “terraced” lending instruments had encouraged first-time buyers into the market.
Both held interest constant for the first 12 months of repayment. About 90 per cent of the home loan borrowers were first-time buyers. Yet defaults – still early in the life of the mortgages – were “negligible”.
“It is worthwhile giving banks and financial institutions the freedom to introduce new products and thereby expand the options available to consumers and firms,” the ministry had recommended.
Financial authorities have been in a state of high alert about new widely marketed products and complex structured finance in the country’s housing market. Although the global financial crisis hardly touched India, the central bank is highly sensitive to risks similar to the subprime housing mortgage market and its failure in the US.
Two products have come under scrutiny in what is already a highly regulated economy. Alongside the teaser loans, collateralised debt obligations have drawn concern.
CDOs package up different mortgages of varying risk, slices of which are then sold off to financial institutions. They are notorious for being difficult to rate for risk and have a big “handle with care” sign stamped all over them after wreaking destruction in the world’s financial markets.
Jaguar considers UK engine factory
Jaguar Land Rover is considering building an engine factory that would most likely be based in the UK, its existing manufacturing base, as the Indian-owned carmaker prepares to expand production.
The company made no comment on reports that Wolverhampton and south Wales had been shortlisted as possible sites for a new engine plant that might employ 1,000 people.
It also declined to comment on suggestions that a site in India was being considered as a low-cost location in spite of the logistical challenges.
But the company had “ambitious plans for growth”, a representative confirmed on Sunday. Tata, its owner, could make a decision about whether to build a UK engine factory as soon as next month.
Jaguar Land Rover – bought by Tata Motors in 2008 from Ford’s luxury venture Premier Automotive Group – continues to source its engines from the US carmaker. But the company’s plan to expand production volumes as it develops new models independently of Ford could see it continue to buy engines from its previous owner while it also branches out into building its own engines, it is understood.
Production of Jaguars and Land Rovers, all of which are made in the UK, have recovered since the worst months of the 2009 recession. The company has also reversed cuts in its workforce prompted by the general collapse in car demand, expanding from about 14,500 two years ago to almost 18,000 today.
Talk of the possible addition of another major UK factory comes months after the company said it would maintain production at all three of its existing assembly plants. JLR announced in October last year that it was reversing a decision announced in September 2009 to shut one of its factories in Castle Bromwich in Birmingham or at Solihull within 10 years.
That decision effectively safeguarded jobs of 7,000 jobs in the Midlands and the survival of assembly at Solihull, Castle Bromwich and Halewood on Merseyside. Suggestions that a new plant may be built in the UK also comes after an apparent rapprochement between JLR and the British government.
Last month, Ralf Speth, chief executive, accompanied Vince Cable, UK business secretary, around the Halewood plant as the company outlined its commitment to support UK suppliers over the next five years.
Mr Cable praised JLR for awarding £2bn ($3.3bn) worth of contracts to UK businesses.
The company made no comment on reports that Wolverhampton and south Wales had been shortlisted as possible sites for a new engine plant that might employ 1,000 people.
It also declined to comment on suggestions that a site in India was being considered as a low-cost location in spite of the logistical challenges.
But the company had “ambitious plans for growth”, a representative confirmed on Sunday. Tata, its owner, could make a decision about whether to build a UK engine factory as soon as next month.
Jaguar Land Rover – bought by Tata Motors in 2008 from Ford’s luxury venture Premier Automotive Group – continues to source its engines from the US carmaker. But the company’s plan to expand production volumes as it develops new models independently of Ford could see it continue to buy engines from its previous owner while it also branches out into building its own engines, it is understood.
Production of Jaguars and Land Rovers, all of which are made in the UK, have recovered since the worst months of the 2009 recession. The company has also reversed cuts in its workforce prompted by the general collapse in car demand, expanding from about 14,500 two years ago to almost 18,000 today.
Talk of the possible addition of another major UK factory comes months after the company said it would maintain production at all three of its existing assembly plants. JLR announced in October last year that it was reversing a decision announced in September 2009 to shut one of its factories in Castle Bromwich in Birmingham or at Solihull within 10 years.
That decision effectively safeguarded jobs of 7,000 jobs in the Midlands and the survival of assembly at Solihull, Castle Bromwich and Halewood on Merseyside. Suggestions that a new plant may be built in the UK also comes after an apparent rapprochement between JLR and the British government.
Last month, Ralf Speth, chief executive, accompanied Vince Cable, UK business secretary, around the Halewood plant as the company outlined its commitment to support UK suppliers over the next five years.
Mr Cable praised JLR for awarding £2bn ($3.3bn) worth of contracts to UK businesses.
Reliance Profit Growth May Slow as Refining Margins Set to Drop
Reliance Industries Ltd. (RIL), India’s biggest company by market value, may see profit growth slow as earnings from processing crude oil drop from a two-year high, investors said.
The company’s 14 percent increase in net income in the three months ended March 31 to 53.8 billion rupees ($1.2 billion) was the slowest growth in six quarters. Profit missed the 54.3 billion rupee average estimate of 18 analysts in a Bloomberg survey after output of natural gas fell.
Refining margins at Reliance, controlled by billionaire Mukesh Ambani, rose 23 percent in the quarter and helped counter an 8 percent decline in earnings from exploration. That may change as refineries in Japan and China ramp up output, adding supply and reducing profitability of turning crude into fuels. Reliance runs the world’s largest refining complex and got 87 percent of its revenue last year from processing oil.
“Profit will be flattish from quarter to quarter as refining margins may be near a peak and gas production is not increasing,” said Peter Varga, who helps manage about $300 million of emerging market corporate debt in Vienna at Erste Sparinvest KAG and owns Reliance bonds. “As capacity will come live in Asia, margins will slowly fall.”
Reliance sold 30 percent in 23 oil and gas areas to BP Plc to boost output from its biggest gas area and increase earnings.
Reliance has declined 1.7 percent this year in Mumbai compared with a 4.4 percent drop in the benchmark Sensitive Index. The shares rose 1.4 percent to 1,040.60 rupees at the close of trading on April 21 before the earnings were announced. Reliance, with a market value of about $77 billion, has the highest weighting in the benchmark index
Singapore Margins
Margins of complex refiners in Singapore processing Dubai crude rose to a record of $7.47 a barrel on March 4, the highest level since Dec. 2. They fell to $3.60 a barrel on April 20, the lowest since March 9, according to data compiled by Bloomberg.
Reliance’s pretax profit from refining rose 26 percent to 25.1 billion rupees in the quarter, according to the earnings statement. The company’s two adjacent refineries in the western state of Gujarat earned $9.20 on every barrel of crude oil turned into fuels compared with $7.50 barrel a year earlier.
“We probably are going to see refining margins in Asia moderate from the highs of the first quarter as diesel cracks begin to ease in the region,” said Vivek Mathur, a Boston-based oil market analyst at Energy Security Analysis Inc. “Japan’s refineries are also coming back up after the earthquake and we see a fuel surplus.”
Gold in Ground
Refiners in Japan, including Cosmo Oil Co., are ramping up production after the nation’s biggest earthquake idled about 29 percent of processing capacity.
Lower than estimated gas production is also weighing down on Reliance’s profit growth. Pretax profit from selling crude oil and gas declined 8 percent to 15.7 billion rupees in the quarter, Reliance said in an e-mailed statement.
“The cost of energy makes this gas like gold in the ground,” said Chokkalingam G., chief investment officer at Centrum Wealth Managers Ltd. in Mumbai. “Even if there’s a moderation in refining margins, at some point of time gas output will rise again and profit growth will pick up.”
Reliance produced 161.9 billion cubic feet of gas from the KG-D6 block in the three months ended March 31 compared with 190.1 billion cubic feet a year earlier, according to a presentation on its website.
Complex Reservoirs
“Based on over two years of production data, the reservoirs appear to be more complex than earlier envisaged,” Reliance said in the presentation. The company hasn’t said when output will rise.
The government isn’t satisfied with Reliance’s explanation for the decline, S.K. Srivastava, director general at India’s oil regulator, told reporters in New Delhi April 21, without elaborating.
BP agreed in February to pay $7.2 billion for a 30 percent interest in 23 blocks in India from Reliance and to form a venture to market gas.
Reliance had outstanding debt of 674 billion rupees as of March 31 and cash and equivalents of 423.9 billion rupees, the company said in its earnings statement of April 21.
The company’s 14 percent increase in net income in the three months ended March 31 to 53.8 billion rupees ($1.2 billion) was the slowest growth in six quarters. Profit missed the 54.3 billion rupee average estimate of 18 analysts in a Bloomberg survey after output of natural gas fell.
Refining margins at Reliance, controlled by billionaire Mukesh Ambani, rose 23 percent in the quarter and helped counter an 8 percent decline in earnings from exploration. That may change as refineries in Japan and China ramp up output, adding supply and reducing profitability of turning crude into fuels. Reliance runs the world’s largest refining complex and got 87 percent of its revenue last year from processing oil.
“Profit will be flattish from quarter to quarter as refining margins may be near a peak and gas production is not increasing,” said Peter Varga, who helps manage about $300 million of emerging market corporate debt in Vienna at Erste Sparinvest KAG and owns Reliance bonds. “As capacity will come live in Asia, margins will slowly fall.”
Reliance sold 30 percent in 23 oil and gas areas to BP Plc to boost output from its biggest gas area and increase earnings.
Reliance has declined 1.7 percent this year in Mumbai compared with a 4.4 percent drop in the benchmark Sensitive Index. The shares rose 1.4 percent to 1,040.60 rupees at the close of trading on April 21 before the earnings were announced. Reliance, with a market value of about $77 billion, has the highest weighting in the benchmark index
Singapore Margins
Margins of complex refiners in Singapore processing Dubai crude rose to a record of $7.47 a barrel on March 4, the highest level since Dec. 2. They fell to $3.60 a barrel on April 20, the lowest since March 9, according to data compiled by Bloomberg.
Reliance’s pretax profit from refining rose 26 percent to 25.1 billion rupees in the quarter, according to the earnings statement. The company’s two adjacent refineries in the western state of Gujarat earned $9.20 on every barrel of crude oil turned into fuels compared with $7.50 barrel a year earlier.
“We probably are going to see refining margins in Asia moderate from the highs of the first quarter as diesel cracks begin to ease in the region,” said Vivek Mathur, a Boston-based oil market analyst at Energy Security Analysis Inc. “Japan’s refineries are also coming back up after the earthquake and we see a fuel surplus.”
Gold in Ground
Refiners in Japan, including Cosmo Oil Co., are ramping up production after the nation’s biggest earthquake idled about 29 percent of processing capacity.
Lower than estimated gas production is also weighing down on Reliance’s profit growth. Pretax profit from selling crude oil and gas declined 8 percent to 15.7 billion rupees in the quarter, Reliance said in an e-mailed statement.
“The cost of energy makes this gas like gold in the ground,” said Chokkalingam G., chief investment officer at Centrum Wealth Managers Ltd. in Mumbai. “Even if there’s a moderation in refining margins, at some point of time gas output will rise again and profit growth will pick up.”
Reliance produced 161.9 billion cubic feet of gas from the KG-D6 block in the three months ended March 31 compared with 190.1 billion cubic feet a year earlier, according to a presentation on its website.
Complex Reservoirs
“Based on over two years of production data, the reservoirs appear to be more complex than earlier envisaged,” Reliance said in the presentation. The company hasn’t said when output will rise.
The government isn’t satisfied with Reliance’s explanation for the decline, S.K. Srivastava, director general at India’s oil regulator, told reporters in New Delhi April 21, without elaborating.
BP agreed in February to pay $7.2 billion for a 30 percent interest in 23 blocks in India from Reliance and to form a venture to market gas.
Reliance had outstanding debt of 674 billion rupees as of March 31 and cash and equivalents of 423.9 billion rupees, the company said in its earnings statement of April 21.
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