Infosys Technologies Ltd has given away stock options worth Rs 50,000 crore, or over $10.5 billion (at current market prices), to its employees since its inception 30 years ago.
“I do not think any other company has given away” so much of shares to its employees, said Mr N. R. Narayana Murthy, Chairman and Chief Mentor, Infosys, in his last article, in the company's annual report for 2010-11. Every Indian employee at every level who joined the company on or before March 2010 is a stakeholder of Infosys.
ESOPs
The IT giant had put in place the 1994 Employees Stock Option Scheme (ESOP), which along with the 1998 American Depository Receipt scheme and the 1999 scheme, gave shares to over 18,000 employees. This created hundreds of dollar millionaires and thousands of rupee millionaires. Drivers, office assistants and secretaries got shares along with others and became millionaires. It soon became the most successful scheme in India and set a benchmark for other companies.
“It [ESOP] gave us a unique positioning, democratised wealth and suddenly the professionals realised that they too could become wealthy by ethical means early in their careers,” Infosys' annual report said.
The 1994 ESOP scheme was sought to be taxed in the hands of the employees and after a legal battle, the Supreme Court held in 2008 that the scheme did not create a taxable event, allowing all grantees the benefit of no tax, helped the course by the abolition of capital gains tax on sale provided the shares are held for more than 12 months.
Completing 30 years
Come July 2, Infosys will be a 30-year-old IT company, which was incorporated on July 2, 1981, with Mr Narayana Murthy borrowing Rs 10,000 from his wife. The company has now a balance-sheet of Rs 26,000 crore with Rs 11,623 crore paid out as dividend, according to the annual report.
Since inception it has been a remarkable journey so far for Infosys in all major factors. In the last 30 years, the company has grown from 50 customers to 620 customers; from 10 projects to 6,500 projects; from 100 employees to 1,30,820 employees; from 100 sq ft to 28 million sq ft; from 100 investors to nearly 4.50 lakh investors.
The company said that such a scalability exercise has been successful due to its PSPD (Predictability of revenue; sustainability of such predictability; profitability of such realised revenue and de-risking).
Separation
On separation from Infosys, Mr Murthy, who is retiring as the company's chairman and chief mentor on August 21, wrote: “The best analogy that I can think of for this separation between Infosys and me is that of one's daughter getting married and leaving her parents' home. Yes, the parents will be there when she needs them and they will be happy that she is starting a new life in an exciting new environment.”
“The Infosys journey has been an integral part of my life. Most of my colleagues say that Infosys is an inseparable part of me and I am an inseparable part of Infosys. I have been the number one actor in every major decision taken in the company,” he said.
Mr Murthy said: “It is not easy for me to write my last article in the annual report of the company. As I write this, a mosaic of images from the past whizzes through my mind. The list seems endless and it would be difficult to narrate them all in this article.”
Wednesday, May 18, 2011
Expect a limited downside from here
Barring major surprises, the market is likely to remain range-bound over the next quarter, say experts.
Macro headwinds like rising interest rates, firm input costs (including metal and crude oil prices), slowing earnings growth and relatively higher valuations have taken a toll on domestic markets in recent months. They are likely to continue hurting the markets for some more time.
From being among the top 10 performers in calendar year 2010, the Indian market has been among the worst performers this year. But the bad news may end here. If experts are to be believed, the good news is that barring major unpleasant surprises, the markets may not go down significantly from current levels.
Ramesh Damani, member, BSE and a known investor, says: “Earnings have been decent. The total lack of retail participation and speculators moving to commodities has kept the stock markets range-bound. Interest rates are the biggest worry. The Sensex is likely to remain in range of 18,000-20,500. If at all it breaks out, I see it breaking upwards.”
UPSIDE CORRECTION?
The fact that the market is trading a little below its long-term average valuation of 15 times one-year forward earnings and that India Inc’s earnings in 2011-12 are seen growing at 12-15 per cent provides comfort that the downside could be limited from current levels.
Nilesh Shah, president, corporate banking, Axis Bank, says: “Today, a lot of bad news is already priced in, so we are seeing a range-bound movement. So, this is more of a time correction than a price correction.”
To answer the question on where the markets would bottom out, Manishi Raychaudhuri, managing director, BNP Paribas Securities, said in a report, “If we assume four per cent downside to our EPS estimates in FY12 and FY13, and the Sensex trading down to a 10 per cent discount to its long-term average (i.e to a PE of 13.5 times), it would imply a near-term ‘floor’ Sensex level of 17,000.”
For now, most experts believe that given the domestic macro concerns and uncertainties on the global front, the Indian market could remain range-bound for the next few months—at least, till inflation declines to comforting levels. This, they believe, is more likely to happen in the second half of calendar year 2011. In the interim, the investment cycle is expected to slow, as capital costs remain at elevated levels due to the many rate increases by the RBI.
Morgan Stanley India’s strategy report says the rate rises mean greater vigilance on private capex. "The downside risk is that capex slows, creating further supply bottlenecks as we head into 2012, and higher inflation – not a pleasant situation for equities. That said, a lot of these risks may be in the price of industrials. The Nifty remains in the 5,300-6,300 range, given the current macro.” In this scenario, how should investors position their portfolios? Here, experts believe individuals should focus on picking the right stocks than on themes.
Shah says: “This is a fairly priced market . There is not much to choose from a sector point of view with a big weight. Sectors where growth is visible have high valuations. Those with growth concerns have low valuations. Pharma stands out as a high visibility sector. Buyouts provide an inherent floor to the prices. The focus should be more on stock selection than sector selection. Free cash flow generating companies will be a better bet in the time ahead.”
With contributions from Sundaresha Subramanian & Malini Bhupta
Macro headwinds like rising interest rates, firm input costs (including metal and crude oil prices), slowing earnings growth and relatively higher valuations have taken a toll on domestic markets in recent months. They are likely to continue hurting the markets for some more time.
From being among the top 10 performers in calendar year 2010, the Indian market has been among the worst performers this year. But the bad news may end here. If experts are to be believed, the good news is that barring major unpleasant surprises, the markets may not go down significantly from current levels.
Ramesh Damani, member, BSE and a known investor, says: “Earnings have been decent. The total lack of retail participation and speculators moving to commodities has kept the stock markets range-bound. Interest rates are the biggest worry. The Sensex is likely to remain in range of 18,000-20,500. If at all it breaks out, I see it breaking upwards.”
UPSIDE CORRECTION?
The fact that the market is trading a little below its long-term average valuation of 15 times one-year forward earnings and that India Inc’s earnings in 2011-12 are seen growing at 12-15 per cent provides comfort that the downside could be limited from current levels.
Nilesh Shah, president, corporate banking, Axis Bank, says: “Today, a lot of bad news is already priced in, so we are seeing a range-bound movement. So, this is more of a time correction than a price correction.”
To answer the question on where the markets would bottom out, Manishi Raychaudhuri, managing director, BNP Paribas Securities, said in a report, “If we assume four per cent downside to our EPS estimates in FY12 and FY13, and the Sensex trading down to a 10 per cent discount to its long-term average (i.e to a PE of 13.5 times), it would imply a near-term ‘floor’ Sensex level of 17,000.”
For now, most experts believe that given the domestic macro concerns and uncertainties on the global front, the Indian market could remain range-bound for the next few months—at least, till inflation declines to comforting levels. This, they believe, is more likely to happen in the second half of calendar year 2011. In the interim, the investment cycle is expected to slow, as capital costs remain at elevated levels due to the many rate increases by the RBI.
Morgan Stanley India’s strategy report says the rate rises mean greater vigilance on private capex. "The downside risk is that capex slows, creating further supply bottlenecks as we head into 2012, and higher inflation – not a pleasant situation for equities. That said, a lot of these risks may be in the price of industrials. The Nifty remains in the 5,300-6,300 range, given the current macro.” In this scenario, how should investors position their portfolios? Here, experts believe individuals should focus on picking the right stocks than on themes.
Shah says: “This is a fairly priced market . There is not much to choose from a sector point of view with a big weight. Sectors where growth is visible have high valuations. Those with growth concerns have low valuations. Pharma stands out as a high visibility sector. Buyouts provide an inherent floor to the prices. The focus should be more on stock selection than sector selection. Free cash flow generating companies will be a better bet in the time ahead.”
With contributions from Sundaresha Subramanian & Malini Bhupta
Software exporters not to be denied credit for service tax on inputs in SEZs
NEW DELHI: The IT industry stands to gain hundreds of crores as the finance ministry has decided not to deny software exporters credit for service tax on inputs because they had operations both inside and outside special economic zones.
So far, the tax department has held that it could not determine if the input service was used in SEZ or not and denied them credit.
The Central Board Excise and Customs had issued a circular clarifying the issue on March 1.
The department has prescribed a new mechanism for claiming exemption on taxable services consumed in authorised operations within SEZs.
Service wholly consumed in a SEZ will be totally exempt from tax. Experts say the clarification is consistent with the SEZ laws.
"In an ideal situation, service supplies to SEZ should be treated as export and the principles determining exports should apply in this case," said Bipin Sapra, partner, Ernst & Young.
The SEZ Act exempts from tax services that are used in producing services or goods that are exported. Service tax is levied at the rate of 10% on over 100 services.
Services 'not wholly consumed' within the SEZ will be segregated into two categories i.e. services 'shared' between the SEZ and the regular operations, or technically domestic tariff area units, and services 'exclusively used' by the SEZ.
In these cases, there will not be any exemption but the units will be allowed to claim refund. If it is exclusively used for SEZ operation then full refund will be available.
On some services, the units located outside SEZs are not eligible for refunds. In these cases, SEZ unit will only be allowed refund on a proportionate basis depending on turnover.
The service tax refund rules were first notified in 2009 but have gone through many changes.
After providing for a blanket exemption to input services, the finance ministry switched to a refund mechanism for tax paid on services consumed in SEZs.
But subsequently it buckled under pressure from commerce department and spared units in SEZs from paying tax on services consumed inside the zones.
However, IT units located outside SEZs still had to claim tax refunds on services exported from the units located outside the zone.
Since most big software exporters have SEZ and non-SEZ operations, it created problem of identifying where an input service such as a software purchased by the company was being used.
So far, the tax department has held that it could not determine if the input service was used in SEZ or not and denied them credit.
The Central Board Excise and Customs had issued a circular clarifying the issue on March 1.
The department has prescribed a new mechanism for claiming exemption on taxable services consumed in authorised operations within SEZs.
Service wholly consumed in a SEZ will be totally exempt from tax. Experts say the clarification is consistent with the SEZ laws.
"In an ideal situation, service supplies to SEZ should be treated as export and the principles determining exports should apply in this case," said Bipin Sapra, partner, Ernst & Young.
The SEZ Act exempts from tax services that are used in producing services or goods that are exported. Service tax is levied at the rate of 10% on over 100 services.
Services 'not wholly consumed' within the SEZ will be segregated into two categories i.e. services 'shared' between the SEZ and the regular operations, or technically domestic tariff area units, and services 'exclusively used' by the SEZ.
In these cases, there will not be any exemption but the units will be allowed to claim refund. If it is exclusively used for SEZ operation then full refund will be available.
On some services, the units located outside SEZs are not eligible for refunds. In these cases, SEZ unit will only be allowed refund on a proportionate basis depending on turnover.
The service tax refund rules were first notified in 2009 but have gone through many changes.
After providing for a blanket exemption to input services, the finance ministry switched to a refund mechanism for tax paid on services consumed in SEZs.
But subsequently it buckled under pressure from commerce department and spared units in SEZs from paying tax on services consumed inside the zones.
However, IT units located outside SEZs still had to claim tax refunds on services exported from the units located outside the zone.
Since most big software exporters have SEZ and non-SEZ operations, it created problem of identifying where an input service such as a software purchased by the company was being used.
Investors can place bids in public issues at a discount
MUMBAI: Retail investors will be able to buy more shares of companies in public offerings, with the Securities and Exchange Board of India (Sebi) al-lowing them to place bids at a discounted price, instead of paying the full amount.
In the recent past, most state-owned companies which had launched either an IPO or a FPO had offered a 5% discount to retail investors. But the impact of such a differential pricing is felt by retail investors only at the time of allotment of shares and not at the time of filing an application. That is because investors have to pay the full amount up-front. Issuers refund the differential because of a discount only after the pricing is finalised.
"This takes away certain benefits from the investors such as lower cash outflow at a price net of discount and the ability to apply for more shares with the same cash outlay," Sebi said in a statement posted on its website on Wednesday.
A few bankers and analysts said that the Sebi move was investor friendly and will do away with the refund process, after the recent decision by the regulator to raise the investment limit to 2 lakh for retail investors. "Investors would block their money only for the discounted amount and they can now apply for greater number of shares," said Prithvi Haldea, managing director of Prime Database and a former member of Sebi's primary market advisory committee. "Issuers will benefit as the number of shares applied will go up," he said.
The regulator said merchant bankers will have to disclose the discounted price for retail investors in rupee terms and not in percentage in the offer document and application forms. They will also have to clearly disclose under what circumstances application for shares would be liable for rejection in case of errors. Investment bankers are worried about how to implement this proposal and on creating awareness about this among investors.
"This circular is taking care of only the top end of the band, pricing can happen at any point. Pricing is dynamic, this is not a very practical proposal and will take some time to settle," said a senior investment banker who declined to be identified.
The 6,000-7,000-crore SAIL follow-on offering, which is likely to hit the market next month may be the first issue where the discounted price would be disclosed in the offer document, said a banker handling the issue. Stock exchange platforms and syndicate banks, where bids are logged in, will have to change their software by making provisions for discount adjustment.
Registrars, who handle public offerings, say 30% of the retail applications for public offerings has been coming through Application Sup-ported by Blocked Amount (ASBA) - wherein the investors' application money will be debited from their bank account only after the shares are allotted. While 95% of the qualified institutional buyers and high net worth individuals bids come through ASBA.
In the recent past, most state-owned companies which had launched either an IPO or a FPO had offered a 5% discount to retail investors. But the impact of such a differential pricing is felt by retail investors only at the time of allotment of shares and not at the time of filing an application. That is because investors have to pay the full amount up-front. Issuers refund the differential because of a discount only after the pricing is finalised.
"This takes away certain benefits from the investors such as lower cash outflow at a price net of discount and the ability to apply for more shares with the same cash outlay," Sebi said in a statement posted on its website on Wednesday.
A few bankers and analysts said that the Sebi move was investor friendly and will do away with the refund process, after the recent decision by the regulator to raise the investment limit to 2 lakh for retail investors. "Investors would block their money only for the discounted amount and they can now apply for greater number of shares," said Prithvi Haldea, managing director of Prime Database and a former member of Sebi's primary market advisory committee. "Issuers will benefit as the number of shares applied will go up," he said.
The regulator said merchant bankers will have to disclose the discounted price for retail investors in rupee terms and not in percentage in the offer document and application forms. They will also have to clearly disclose under what circumstances application for shares would be liable for rejection in case of errors. Investment bankers are worried about how to implement this proposal and on creating awareness about this among investors.
"This circular is taking care of only the top end of the band, pricing can happen at any point. Pricing is dynamic, this is not a very practical proposal and will take some time to settle," said a senior investment banker who declined to be identified.
The 6,000-7,000-crore SAIL follow-on offering, which is likely to hit the market next month may be the first issue where the discounted price would be disclosed in the offer document, said a banker handling the issue. Stock exchange platforms and syndicate banks, where bids are logged in, will have to change their software by making provisions for discount adjustment.
Registrars, who handle public offerings, say 30% of the retail applications for public offerings has been coming through Application Sup-ported by Blocked Amount (ASBA) - wherein the investors' application money will be debited from their bank account only after the shares are allotted. While 95% of the qualified institutional buyers and high net worth individuals bids come through ASBA.
Hotel maid to testify, IMF chief Strauss-Kahn pressured to quit
NEW YORK/PARIS: A hotel maid who says IMF chief tried to rape her was due to testify before a New York grand jury on Wednesday, as the French presidential hopeful faced growing pressure to resign.
A lawyer for the 32-year-old African widow dismissed a suggestion by Strauss-Kahn's defence counsel that the incident at the luxury Times Square Sofitel last Saturday might not have been a sexual assault.
"There's nothing consensual about what took place in that hotel room," attorney Jeffrey Shapiro told NBC's "Today" show, adding he believed she would testify "at some point today".
The arrest dashed Strauss-Kahn's prospects for the French presidency and raised broader questions over the future of the International Monetary Fund. Developing countries, looking to a succession, have questioned Europe's hold on the post.
The United States, the IMF's biggest shareholder, said Strauss-Kahn was clearly unable to go on running the global lender from a prison cell, whatever the legal outcome.
"I can't comment on the case, but he is obviously not in a position to run the IMF," treasury secretary Timothy Geithner said on Tuesday, calling for an interim head to be named.
European Commission president Jose Manuel Barroso said Europe would naturally put forward a candidate to replace him if Strauss-Kahn decided to step down.
Germany, which wants a European to keep the job, said the IMF should deal with its immediate leadership internally and it was too early to discuss a successor to Strauss-Kahn.
French officials said John Lipsky, the IMF's American number two, whose term expires in August, would represent the Fund at next week's Group of Eight summit in Deauville, France.
China, Brazil and South Africa questioned Europe's right to the top job but Europeans said it made sense for them to retain the post while the Fund plays such a crucial role in helping to ease the euro zone debt crisis.
Strauss-Kahn, who denies the charges, is expected to remain in New York's Rikers Island jail, known for gang violence, at least until his next court appearance on Friday, when lawyers may again request bail. Any trial could be six months away.
If convicted, he could face 25 years in prison. A law enforcement source said he had been placed on suicide watch, but purely as a precautionary measure.
In the US legal system, a grand jury convenes in secret to hear evidence and decide whether to indict the defendant.
In the only public hint of Strauss-Kahn's possible line of defence, his attorney Benjamin Brafman told his arraignment hearing on Monday: "The evidence we believe will not be consistent with a forcible encounter."
However, Shapiro said his client, an asylum seeker from the West African nation of Guinea with a 15-year-old daughter, told Reuters she had not been aware of Strauss-Kahn's identity until a day after the alleged attack.
"She didn't have any idea who he was or have any prior dealings with this guy," the personal injury lawyer said.
"She wants to remain anonymous because she's very much afraid that something could happen to her physically, she feels very threatened by this," he said of the global attention.
SET-UP?
An opinion poll in France, taken before his first court appearance on Monday and released on Wednesday, showed that more than half the population believe Strauss-Kahn was set up.
The CSA poll found that 57 per cent of respondents thought that the Socialist politician, who had been frontrunner for the 2012 election, was definitely or probably the victim of a plot.
Fully 70 per cent of Socialist sympathisers took that view. Most French media have dismissed conspiracy theories.
The poll findings highlighted a cultural divide, with French Socialist politicians and commentators denouncing the public parading of Strauss-Kahn, unshaven and in handcuffs, before he has had a chance to defend himself.
New York mayor Michael Bloomberg agreed such a display was humiliating and would be unfair if a defendant were to be found innocent. "But if you don't want to do the 'perp walk', don't do the crime," he told reporters.
U.S. media have criticised the French for a tradition of secrecy on politicians' sex lives, and for showing more compassion for Strauss-Kahn than for the alleged rape victim, whose identity some French newspapers have published.
The French daily Liberation said the IMF chief had told its editors in off-record comments last month that he had just the right qualities to lead France, notably a calm manner, in contrast to conservative President Nicolas Sarkozy.
"Today I fit with everything the French people want -- recognised competence, calm, international experience," he was quoted as having said at an April 28 meeting.
EUROPEAN JOB
The IMF said it had not been in touch with Strauss-Kahn since his arrest but it would be important to do so "in due course". Two IMF board sources told Reuters the board would ask Strauss-Kahn whether he planned to continue in his post.
In Strauss-Kahn's absence, Lipsky is temporarily in charge of the institution which manages the world economy and is in the midst of helping euro zone states like Greece, Ireland and Portugal tackle debt woes.
The White House is considering proposing David Lipton, President Barack Obama's international economic adviser and a former deputy treasury secretary, to replace Lipsky, whose term ends in August, sources familiar with the matter said.
Strauss-Kahn began to lose European support on Tuesday.
"Given the situation, that bail has been denied, he has to consider that he would otherwise do damage to the institution," Austrian Finance Minister Maria Fekter said.
A European has held the post of managing director since the IMF was created in 1945, and four of them have been French.
French finance minister Christine Lagarde is thought to be interested in the post but her prospects have been clouded by a decision this month by a Paris public prosecutor to recommend a full-scale inquiry into her role in awarding financial compensation to a prominent businessman in 2008.
Emerging countries are starting to flex their muscle over who should succeed Strauss-Kahn, who had been expected to leave soon anyway to run for the French presidency.
China said on Tuesday the selection of the next IMF boss should be based on "fairness, transparency and merit". It marked the first time that the fund's third largest member has weighed in so publicly on an IMF selection debate.
South African finance minister Pravin Gordhan and a senior Brazilian government official, who asked not to be named, said the next chief should be from a developing country, pressing a case to give emerging economies a greater say in world affairs.
But Brazilian finance minister Guido Mantega said the affair should not be used to press for changes in the way the IMF head is picked, telling GloboNews TV the discussion "is too premature at this point" and Strauss-Kahn was "probably one of the best IMF chiefs that we had in the past years".
A lawyer for the 32-year-old African widow dismissed a suggestion by Strauss-Kahn's defence counsel that the incident at the luxury Times Square Sofitel last Saturday might not have been a sexual assault.
"There's nothing consensual about what took place in that hotel room," attorney Jeffrey Shapiro told NBC's "Today" show, adding he believed she would testify "at some point today".
The arrest dashed Strauss-Kahn's prospects for the French presidency and raised broader questions over the future of the International Monetary Fund. Developing countries, looking to a succession, have questioned Europe's hold on the post.
The United States, the IMF's biggest shareholder, said Strauss-Kahn was clearly unable to go on running the global lender from a prison cell, whatever the legal outcome.
"I can't comment on the case, but he is obviously not in a position to run the IMF," treasury secretary Timothy Geithner said on Tuesday, calling for an interim head to be named.
European Commission president Jose Manuel Barroso said Europe would naturally put forward a candidate to replace him if Strauss-Kahn decided to step down.
Germany, which wants a European to keep the job, said the IMF should deal with its immediate leadership internally and it was too early to discuss a successor to Strauss-Kahn.
French officials said John Lipsky, the IMF's American number two, whose term expires in August, would represent the Fund at next week's Group of Eight summit in Deauville, France.
China, Brazil and South Africa questioned Europe's right to the top job but Europeans said it made sense for them to retain the post while the Fund plays such a crucial role in helping to ease the euro zone debt crisis.
Strauss-Kahn, who denies the charges, is expected to remain in New York's Rikers Island jail, known for gang violence, at least until his next court appearance on Friday, when lawyers may again request bail. Any trial could be six months away.
If convicted, he could face 25 years in prison. A law enforcement source said he had been placed on suicide watch, but purely as a precautionary measure.
In the US legal system, a grand jury convenes in secret to hear evidence and decide whether to indict the defendant.
In the only public hint of Strauss-Kahn's possible line of defence, his attorney Benjamin Brafman told his arraignment hearing on Monday: "The evidence we believe will not be consistent with a forcible encounter."
However, Shapiro said his client, an asylum seeker from the West African nation of Guinea with a 15-year-old daughter, told Reuters she had not been aware of Strauss-Kahn's identity until a day after the alleged attack.
"She didn't have any idea who he was or have any prior dealings with this guy," the personal injury lawyer said.
"She wants to remain anonymous because she's very much afraid that something could happen to her physically, she feels very threatened by this," he said of the global attention.
SET-UP?
An opinion poll in France, taken before his first court appearance on Monday and released on Wednesday, showed that more than half the population believe Strauss-Kahn was set up.
The CSA poll found that 57 per cent of respondents thought that the Socialist politician, who had been frontrunner for the 2012 election, was definitely or probably the victim of a plot.
Fully 70 per cent of Socialist sympathisers took that view. Most French media have dismissed conspiracy theories.
The poll findings highlighted a cultural divide, with French Socialist politicians and commentators denouncing the public parading of Strauss-Kahn, unshaven and in handcuffs, before he has had a chance to defend himself.
New York mayor Michael Bloomberg agreed such a display was humiliating and would be unfair if a defendant were to be found innocent. "But if you don't want to do the 'perp walk', don't do the crime," he told reporters.
U.S. media have criticised the French for a tradition of secrecy on politicians' sex lives, and for showing more compassion for Strauss-Kahn than for the alleged rape victim, whose identity some French newspapers have published.
The French daily Liberation said the IMF chief had told its editors in off-record comments last month that he had just the right qualities to lead France, notably a calm manner, in contrast to conservative President Nicolas Sarkozy.
"Today I fit with everything the French people want -- recognised competence, calm, international experience," he was quoted as having said at an April 28 meeting.
EUROPEAN JOB
The IMF said it had not been in touch with Strauss-Kahn since his arrest but it would be important to do so "in due course". Two IMF board sources told Reuters the board would ask Strauss-Kahn whether he planned to continue in his post.
In Strauss-Kahn's absence, Lipsky is temporarily in charge of the institution which manages the world economy and is in the midst of helping euro zone states like Greece, Ireland and Portugal tackle debt woes.
The White House is considering proposing David Lipton, President Barack Obama's international economic adviser and a former deputy treasury secretary, to replace Lipsky, whose term ends in August, sources familiar with the matter said.
Strauss-Kahn began to lose European support on Tuesday.
"Given the situation, that bail has been denied, he has to consider that he would otherwise do damage to the institution," Austrian Finance Minister Maria Fekter said.
A European has held the post of managing director since the IMF was created in 1945, and four of them have been French.
French finance minister Christine Lagarde is thought to be interested in the post but her prospects have been clouded by a decision this month by a Paris public prosecutor to recommend a full-scale inquiry into her role in awarding financial compensation to a prominent businessman in 2008.
Emerging countries are starting to flex their muscle over who should succeed Strauss-Kahn, who had been expected to leave soon anyway to run for the French presidency.
China said on Tuesday the selection of the next IMF boss should be based on "fairness, transparency and merit". It marked the first time that the fund's third largest member has weighed in so publicly on an IMF selection debate.
South African finance minister Pravin Gordhan and a senior Brazilian government official, who asked not to be named, said the next chief should be from a developing country, pressing a case to give emerging economies a greater say in world affairs.
But Brazilian finance minister Guido Mantega said the affair should not be used to press for changes in the way the IMF head is picked, telling GloboNews TV the discussion "is too premature at this point" and Strauss-Kahn was "probably one of the best IMF chiefs that we had in the past years".
Ssangyong SUVs to hit Indian roads by FY12 end
CHENNAI: Korean automaker Ssangyong will focus on its core business of SUVs as it kicks off product development and network expansion under new parent Mahindra & Mahindra (M&M). According to a top M&M official, Ssangyong will also look at sourcing componentsfrom India, and M&M will roll out its Korean subsidiary's products in India by the end of the financial year.
Speaking to TOI, M&M president (auto & farm equipment division) Pawan Goenka said: "Our priority for Ssangyong right now is product development and expansion of the network. We will focus on SUVs because that's our core business. Ssangyong has a single car – Chairman – in its portfolio and it is not really part of our focus."
Ssangyong will alsosource components from India in a "win-win" arrangement but so far parent M&M has not put a time frame to that. "It's not top priority now but it will happen," said Goenka.
M&M is planning to launch Ssangyong products in the Indian market by the end of this financial year. The Rexton and Korando have been shortlisted for the Indian market but there are no plans to introduce the Chairman. When asked whether M&M will roll out Ssangyong productsin theUS,Goenka refused to comment.
Ssangyong, he said, is on way to overcoming the parts shortage caused by the Japan twin disasters."Although we lost a few hundred numbers due to this in April, it was lesser than March," he said. "By May, Ssangyong should be back to normal numbers."
Speaking to TOI, M&M president (auto & farm equipment division) Pawan Goenka said: "Our priority for Ssangyong right now is product development and expansion of the network. We will focus on SUVs because that's our core business. Ssangyong has a single car – Chairman – in its portfolio and it is not really part of our focus."
Ssangyong will alsosource components from India in a "win-win" arrangement but so far parent M&M has not put a time frame to that. "It's not top priority now but it will happen," said Goenka.
M&M is planning to launch Ssangyong products in the Indian market by the end of this financial year. The Rexton and Korando have been shortlisted for the Indian market but there are no plans to introduce the Chairman. When asked whether M&M will roll out Ssangyong productsin theUS,Goenka refused to comment.
Ssangyong, he said, is on way to overcoming the parts shortage caused by the Japan twin disasters."Although we lost a few hundred numbers due to this in April, it was lesser than March," he said. "By May, Ssangyong should be back to normal numbers."
Tuesday, May 17, 2011
BSNL, MTNL begin talks on synergising operations
The move gives opportunity to the PSUs to expand in the face of dipping revenue and market share.
Bharat Sanchar Nigam Ltd (BSNL) has started talks on synergising operations with Mahanagar Telephone Nigam Ltd (MTNL), which offers telecom services in Delhi and Mumbai.
The first area that has been identified is the high-margin enterprise business. The move could be a precursor to the merger of the two state-owned companies. BSNL runs fixed line and mobile services throughout the country, except in Delhi and Mumbai.
For the first time, BSNL will also open up its tower base to private players to generate a new stream of revenues. It has about 40,000 towers all across the country. “We have signed initial agreements with many private players for renting out towers. It will help us increase revenues,” BSNL Chairman and Managing Director R K Upadhyay told Business Standard. He, however, refused to share the details.
The move to rent out towers is in BSNL’s interest, as there are already several infrastructure providers who will lease out towers to the telecom players, if not BSNL, he said.
The development is significant as BSNL has towers in remote areas that could be used by other companies to expand. Most new operators are not looking to invest in towers, while most incumbents such as Bharti Airtel and Vodafone-Essar have spun off tower businesses.
To gain market share and improve revenue, BSNL has decided to focus on four areas — mobility, broadband, enterprise business and infrastructure sharing (leasing). “We have started discussions with MTNL to exploit synergies for mutual benefit. For instance, there can be rationalisation of traffic,” he said. He did not rule out merger. “The merger of BSNL and MTNL can be considered, but only at a later stage,” he said.
The department of telecommunications has been considering such a move for two-three years. It has not been able do so due to opposition from employee unions and because MTNL is a listed entity while BSNL is not.
MTNL Chairman and Managing Director Kuldeep Singh, confirmed the move. “This could become a significant part of our business.”
It is already a key area for most telecom companies such as Bharti, Reliance Communications and Vodafone-Essar. Under enterprise business, BSNL offers fleet management and customer services, among others. MTNL, on its part, plans to appoint a consultant for a brand revamp. It has already invited expressions of interest. The contract would involve development, roll out and management of the new brand, said a senior MTNL official.
Increased competition and dipping rates have hit the sector. But BSNL and MTNL have been losing revenue and market share at a faster pace than others. The two together have only 12 per cent of the mobile market. For the first time since its inception in 2000, BSNL posted a loss (of Rs 1,823 crore) in financial year 2009-10. MTNL’s loss was Rs 1,099.5 crore in the fourth quarter ended March. Its net continued to be dragged down by retirement benefits, an increase in dearness relief for pensioners and wages.
BSNL and MTNL also could not take advantage of third generation (3G) mobile services, where both were allotted spectrum one year before the private players. Both have also been hit the hardest by mobile number portability.
Bharat Sanchar Nigam Ltd (BSNL) has started talks on synergising operations with Mahanagar Telephone Nigam Ltd (MTNL), which offers telecom services in Delhi and Mumbai.
The first area that has been identified is the high-margin enterprise business. The move could be a precursor to the merger of the two state-owned companies. BSNL runs fixed line and mobile services throughout the country, except in Delhi and Mumbai.
For the first time, BSNL will also open up its tower base to private players to generate a new stream of revenues. It has about 40,000 towers all across the country. “We have signed initial agreements with many private players for renting out towers. It will help us increase revenues,” BSNL Chairman and Managing Director R K Upadhyay told Business Standard. He, however, refused to share the details.
The move to rent out towers is in BSNL’s interest, as there are already several infrastructure providers who will lease out towers to the telecom players, if not BSNL, he said.
The development is significant as BSNL has towers in remote areas that could be used by other companies to expand. Most new operators are not looking to invest in towers, while most incumbents such as Bharti Airtel and Vodafone-Essar have spun off tower businesses.
To gain market share and improve revenue, BSNL has decided to focus on four areas — mobility, broadband, enterprise business and infrastructure sharing (leasing). “We have started discussions with MTNL to exploit synergies for mutual benefit. For instance, there can be rationalisation of traffic,” he said. He did not rule out merger. “The merger of BSNL and MTNL can be considered, but only at a later stage,” he said.
The department of telecommunications has been considering such a move for two-three years. It has not been able do so due to opposition from employee unions and because MTNL is a listed entity while BSNL is not.
MTNL Chairman and Managing Director Kuldeep Singh, confirmed the move. “This could become a significant part of our business.”
It is already a key area for most telecom companies such as Bharti, Reliance Communications and Vodafone-Essar. Under enterprise business, BSNL offers fleet management and customer services, among others. MTNL, on its part, plans to appoint a consultant for a brand revamp. It has already invited expressions of interest. The contract would involve development, roll out and management of the new brand, said a senior MTNL official.
Increased competition and dipping rates have hit the sector. But BSNL and MTNL have been losing revenue and market share at a faster pace than others. The two together have only 12 per cent of the mobile market. For the first time since its inception in 2000, BSNL posted a loss (of Rs 1,823 crore) in financial year 2009-10. MTNL’s loss was Rs 1,099.5 crore in the fourth quarter ended March. Its net continued to be dragged down by retirement benefits, an increase in dearness relief for pensioners and wages.
BSNL and MTNL also could not take advantage of third generation (3G) mobile services, where both were allotted spectrum one year before the private players. Both have also been hit the hardest by mobile number portability.
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