COVER STORY

Sensex : Defying Gravity!

-- Amit Singh Sisodiya, Kavitha Putta and Sanghamitra Dhara

As Sensex crosses yet another milestone of 14,000 this year, it indicates strong bull grip on the market. However, soaring inflation, rising interest rates amidst concerns of overrating of Indian economy and valuations could play spoilsport.

© 2007 IUP . All Rights Reserved

INDUSTRY

Software M&As : Consolidation Round the Corner

-- N Janardhan Rao and Ravi Babu Adusumilli

While supporting their offshore requirements, these companies are also targeting the domestic markets in India and China aggressively. The low-cost advantage of offering IT services is gradually negated by the MNCs, increasing their offshore facilities.

© 2007 IUP . All Rights Reserved

INDUSTRY

Pharmaceutical Industry: Towards Healthy Future

-- N Janardhan Rao and Ravi Babu Adusumilli

Indian pharma industry is at the center stage as MNCs have renewed their interest to enter the Indian market. With price pressures remaning strong in the global generics market, to remain competitive, MNCs have been looking at M&A to fuel their growth. Therefore, consolidation in the industry is heating up.

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FINANCIAL MARKETS

QIP Route : Boosting Domestic Capital Market

-- D Satish and Y Bala Bharathi

Thanks to Sebi, corporate India has got yet another alternative fund raising option after its approval to allow Qualified Institutional Placements (QIPs). QIPs have become the flavor of the season for Indian corporates as more and more companies are favoring this route of raising funds from the domestic markets.

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FINANCIAL MARKETS

Gold ETFs : A Glittering Opportunity

-- D Satish and Y Bala Bharathi

Down the ages, Indians have always had an enduring passion for gold, as it is traditionally considered a symbol of wealth and prosperity. Currently, India has gold worth Rs. 24 lakh crore and consumes about 700 tons annually to the world's 3,200 tons. Thus, being one of the world's largest consumers of gold, India is poised to have yet another avenue to invest in it. With Sebi's approval of Gold Exchange Traded Funds (Gold ETFs) in 2005 and further amendment of its Custodians and Securities Act, mutual fund houses are gearing up to launch Gold ETFs in India.

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M&AS

IDBI - UWB Merger : Banking on Size

-- Amit Singh Sisodiya and Kavitha Putta

"Another private sector bank has fallen by the waysidethe second one since January (2006). United Western Bank (UWB), a Maharashtra-based bank which has been languishing for months now, was put on `moratorium' on Saturday (September 02, 2006) afternoon by the government, following an application from RBI," screamed a headline in The Economic Times (ET), India's leading business daily.

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BUSINESS ENVIRONMENT

Indian Retailing Sector : Opportunities and Challenges

-- Shushmul Maheshwari

The Indian retail sector is highly fragmented in nature and has the highest retail density in the world. A broad consumer base and an ever-increasing population have given the necessary push to the Indian retail industry to grow prodigiously. But the unorganized structure of the retailing was unable to tap the real potential of the Indian retail market. However, the continued economic development and the growing middle-class have fortified the position of organized retailing in the country.

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BUSINESS ENVIRONMENT

Processed Foods : Riding the Retail Revolution

-- Amit Singh Sisodiya and Madhuparna Chakraborty

Working for a well-known MNC, Mrs. Arora hardly finds any time to prepare delicious dishes for her little daughter, not to mention her husband as well, who prefers home food to eating out. The fact that she doesn't like the tedious job of searching for vegetables at the adjacent sabji mandi (vegetable market) makes it all the more difficult for her to keep her kid happy. Thanks to the retail supermarkets like the neighborhood FoodWorld and newly launched Reliance Fresh, her job has become easier.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Indo-Sino Trade : Complementary, Yet Contrary

-- Amit Singh Sisodiya and Kavitha Putta

The recent visit of the Chinese President Hu Jintao symbolizes his country's keen interest to advance the bilateral relations with India. This is because, in the milieu of increasing competition in the global environment, India has been complementing money-spinning resources such as knowledge and raw material that would benefit China to become stronger. The dramatic growth in Indo-China trade in recent years is also one of the reasons for further strengthening of bilateral economic relations. Hu considers that China and India share broad common interests both in the bilateral as well as international dimensions.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Indian Real Estate : Boom or Bubble?

-- C Parthasarathy

Like many other countries across the world, Indian real estate is booming. The property prices have skyrocketed in recent years making various schools of thought to express their opinions on this phenomenon. Is this really a boom or will it turn into a bubble?

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BUSINESS ENVIRONMENT

CRR Hike : A Stitch in Time

-- D Satish and Siba Prasad Pothal

In the recent mid-term review of the annual policy statement, RBI has taken a bold and significant step. It has decided to increase CRR of the scheduled commercial banks, Regional Rural Banks (RRBs), scheduled state cooperative banks and scheduled primary (urban) cooperative banking system by 50 basis points of their Net Demand and Time Liabilities (NDTL) in two stages. CRR was increased by 25 basis points with effect from the fortnight beginning December 23, 2006 and a further increase of 25 basis points effective from the fortnight beginning January 6, 2007.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Europe's Investment Regulation : Towards More Transparency

-- N Janardhan Rao and Ravi Babu Adusumilli

The prosperity of London as a regional financial hub for more than two decades is an example of how the deregulation of financial markets would create more open and efficient markets. The European Union's (EU's) latest move is another step towards integrating the financial markets across Europe. The Markets in Financial Instruments Directive, known as MiFID, will come into effect from November 2007. This is an important development in the financial service industry of EU's plan for a single market.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Indian Gems and Jewelry : Enter Foreign Brands

-- N Janardhan Rao and Pratichi Samal

In the gems and jewelry industry, gold and diamond are two major segments. While gold jewelry is meant for domestic consumption, a major chunk of rough and uncut diamonds are processed and diamond jewelry is exported. Though India is a global leader in this area, exports are dependent entirely on the import of rough diamonds (imports around $8 bn of rough diamonds), gold and other gemstones. The sector has got its importance in the economy, and particularly the diamond segment accounts for 80% of total exports of the sector and is providing employment for close to 10 lakh artisans and workers, both directly and indirectly.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Entertainment Galore : Mushrooming Multiplexes

-- N Janardhan Rao and Ravi Babu Adusumilli

As the Indian economy has entered a new growth phase, the entertainment industry is witnessing unprecedented growth. To leverage on the present day consumer's lavish spending habits, many multiplexes have come up in metros and tier II cities too. The changing lifestyle of the Indian consumer is the paramount factor for the current multiplex boom and the consumption trends are slowly converging with global standards. The propensity of the Indian middle-class consumers and rising disposable income are the other important drivers. In addition, rising affordability and changing demographics and mode of spending such as using credit cards in the urban area is further fueling the consumer spending.

© 2007 IUP . All Rights Reserved

INTERNATIONAL FINANCE

FDI in Bourses : Attracting Global Attention

-- D Satish and Y Bala Bharathi

Of late, consolidation and alliance have become the order of the day for the stock exchanges across the globe. New York Stock Exchange (NYSE), the world's largest stock exchange, taking a stake in India's largest stock exchange, National Stock Exchange (NSE), signals that the global consolidation frenzy has reached Indian shores as well. In just less than a month of RBI's announcement of FDI regulations, NSE could attract foreign holding of 20% from NYSE along with three other financial institutions, namely, Goldman Sachs, General Atlantic, and Softbank Asian Infrastructure Fund.

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INTERNATIONAL FINANCE

EU's Enlargement : Bigger, the Better?

-- Amith Singh Sisodiya and Sanjoy De

Throughout the world, New Year's eve is celebrated with joyous revelry. The year 2006 was no exception. However, for EU, the New Year eve was special, this time, as it waited to welcome two new member countriesRomania and Bulgaria. The two former communist nations celebrated the night with added enthusiasm for their much sought-after entry into the big league, which fructified on January 1, 2007, ending 11 long, painful years of waiting.

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INTERNATIONAL FINANCE

China's Foreign Reserves : Problems of Plenty

-- N Janardhan Rao and Ravi Babu Adusumilli

China has crossed yet another milestone: Its foreign exchange reserves have reached the $1 tn mark in the month of November 2006. It is now the largest holder of foreign exchange reserves in the world. The reserves exceed the level of the safety motive and keeping its currency yuan undervalued level. Thus, the global economies, specifically the US, have fear of China's act of piling up huge reserves. The sheer size of the reserves has been the trigger for the new debates on how else the money might be deployed.

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INTERNATIONAL FINANCE

Russia's WTO Accession : Opportunities and Challenges

-- N Janardhan Rao and Indu Prasad

A trade agreement signed by the US and Russia clears a major hurdle for the former communist country's entry into the WTO. Adopting the global standards will streamline Russia's domestic economy, thus making the businesses more attractive to foreign investors.

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CORPORATE STRATEGY

Online Search Offensive : Gang against Google

-- Amit Singh Sisodiya and Madhuparna Chakraborty

A slew of small start-ups from Europe are working on launching search engines that could not only cater to regional markets but also provide alternatives to Google in mainstream online search. These private entrepreneurs are not alone. As they step up efforts in their quest to find ways to challenge Google's supremacy, some governments are also joining them. For instance, Jacques Chirac, the President of France seems to be firm on his stand against "Big G" as he spoke, "We must take the offensive and muster a massive effort".

© 2007 IUP . All Rights Reserved

CORPORATE STRATEGY

Unilever : Leveraging on India

-- Amit Singh Sisodiya and Sanjoy De

Coming straight from the mouth of the CEO of the world's second largest consumer goods major, these words clearly set the agenda for HLL, Unilever's Indian subsidiary, to go ahead. For, Unilever, India, along with other emerging markets that include China, now holds hope for the future as the Anglo-Dutch, food-to-personal care behemoth struggles to catch up with rivals like P&G, the world's largest FMCG company, Swiss Nestlè, and France's Danone.

© 2007 IUP . All Rights Reserved

CORPORATE STRATEGY

Moser Baer : Redefining Home Entertainment

-- N Janardhan Rao and Suma B

Amidst the strong economic growth and rising income levels, the Indian entertainment industry is one of the fastest growing sectors. Indian films and music have become global phenomena. The country produces 1,000 movies a year; about 10 times the films generated in Hollywood. Today, the industry is witnessing a paradigm shift in distribution, going by new distribution channels such as broadband, Internet access and wireless communications. All the factors are driving towards significant growth and the industry is gearing up to outperform GDP growth by a noteworthy margin in the coming years.

© 2007 IUP . All Rights Reserved

FINANCIAL SERVICES

Credit Risk Model : Quantifying Risk

-- Amith Singh Sisodiya and Sanghamitra Dhara

Over the past decade, banking and financial services have undergone a dramatic transformation. In the present era of globalization, where industries are keen in spreading beyond their domestic horizon by adapting to international standards, the Indian banking sector is nowhere behind. With RBI's deadline for migration to Basel-II drawing close, there's a sort of urgency for banks to speed up and adopt improved techniques before March 2007.

© 2007 IUP . All Rights Reserved

FINANCIAL SERVICES

Indian Banking Industry: Challenging Times Ahead

-- D Satish and Y Bala Bharathi

In the post-Independence era, the Indian banking industry has evolved significantly undergoing various phases of development. The success of the industry can be greatly attributed to the spate of economic reforms initiated since early 1990s which have resulted in the much needed Liberalization, Privatization and Globalization (LPG) model. The sector's assets contribute to around 65% of the country's GDP and hence the sector plays a pivotal role in the growth of the economy.

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ARTS AND ARTISTS

Hieroglyphics from the Nile

-- Dr. P G Nirmala

To get into the spirit of another age and to have a genuine emotional encounter with art from another era or culture demands an expansiveness of mind and spirit. John Dewey rightly insisted, "Art is a universal language" and urged people to strive to achieve the internal experience of another culture, which in turn required an "immediate encounter". Put together the Great Sphinx, the pyramids of Giza, the treasures of Tutankhamen and the temple city of Karnak, we have one of the most elegant and enduring of the world's civilizationsancient Egypt.

© 2007 IUP . All Rights Reserved

ARTS AND ARTISTS

Unravelling the China Miracle : A Comparative Study with India (1950-2005)

-- Dr. A Besant C Raj Reviewed by Rajeshwer Chigullapalli

The book systematically demystifies the story of how China was transformed under the leadership of Deng Xiaoping from a poverty-stricken nation to a major world power. Dr. Raj shows how the steps taken by China in the areas of agriculture, industry and services can be useful to other developing countries, including his native India, to provide answers to their pressing economic problems.

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APOLITICAL

Infrastructure Development : FM's Call for Forex Reserves

-- grk

Sometime back, we have had a nationwide debate on whether or not to use the surging foreign exchange reserves that are lying idle for infrastructure development in the country. One section of the economists led by the Planning Commission, believing that the current level of foreign exchange reserves is pretty good to meet the import requirements and all other external payment obligations of the country for more than normally accepted periods, and as maintenance of reserves of such magnitude is costing the country dearly, opined that usage of foreign exchange reserves to augment infrastructure development in the country is a viable alternative.

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