COVER STORY

Global Inflation : Taming the Monster

- - Amit Singh Sisodiya and Sanjoy De

Inflation is raising its ugly head once again, forcing the Central banks, the world over, to get into over drive to deal with the menace. In India, the situation is more worrisome as containing inflation could come at the cost of growth which has just begun to go full steam. Central banks around the world are now leaving no stone unturned to curb the growing inflation. Apex banks from Seoul to Frankfurt to Toronto have been raising the cost of borrowing in a global wave to rein in the accelerating inflation. Federal Reserve, the US apex bank has raised the fed funds rate from 1% in mid-2004 to 5.25% to bring in the much-needed balance between sluggish growth and high inflation.

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PERSPECTIVE

BSNL : Reinventing to Revitalize

- - Romal Shetty

BSNL, in response to the challenges, must chase strategies specifically aimed at overcoming its bottlenecks. Today, India is considered to be the hub of all telecom spaces in the world. India has a growing teledensity standing at 17.8 currently; among the largest telecom base of 200 million, with the lowest wireless penetration rate in the world at 13%. The wireless market in India consists of 156 million subscribers; the GSM community being the largest and fastest growing technology accounting for 72% of this market. Bharti stands as the leader of GSM with 30% of the market share followed by state-owned Bharat Sanchar Nigam Limited with a market share of 22%.

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BUSINESS ENVIRONMENT

Global Warming : Cooler Interiors, Warmer Exteriors

- - D Satish and L Venu

The issue of global warming was kept on the back burner until the recent unseasonal climatic change in India and China. Ironically, the reason cited, apart from heavy usage of fossil fuels is the growing usage of air- conditioners in this part of the populated world.The recent Mumbai Bhubaneswar unseasonal rains, Shimla's untimely snowfall and the heat waves scorching most parts of the country even in mid-February are all warning signs of global warming. Such uneven changes in the climate have the most serious of outcomes in the form of melting glaciers, rising sea levels, higher death tolls from heat stress, outbreaks of dengue and malaria, all these and many more that are faced by humankind in the 21st century.

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BUSINESS ENVIRONMENT

Indian-Air India: Merger of Promise

- - D Satish and Y Bala Bharathi

The proposed merger of Air India and Indian marks the beginning of the consolidation era in the Indian aviation space. In line with the global trend of consolidation, the stage is all set for the Indian aviation industry to create a single mega national carrier which is also poised to become South Asia's largest airline. Touted as the mother of Indian aviation mergers, the merger of Air India and Indian is expected to form India's largest airline with a clout to take on the domestic and international competition.

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BUSINESS ENVIRONMENT

Gaming Industry : Excitement Begins, Now

- - N Janardhan Rao and B Suma

Gaming industry, one of the fastest growing entertainment segments, has emerged as a mass-market form of entertainment and is expected to grow to $46 bn by 2010. In today's information age, video games have become an integral part of our daily lives and are influencing cultures across nations. Young people are adopting this new form of entertainment quickly and even the middle-aged are being attracted to them. Against this backdrop, the video game industry has become a multi-billion dollar behemoth and traversed from university laboratories to the living rooms.

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BUSINESS ENVIRONMENT

ESOPs : Is the Party Over?

- - Y Bala Bharathi

The move to bring ESOPs into the FBT net may not only act as a spoilsport to retain the best talent but may also signal the end of the ESOPs era. In this new millennium, knowledge plays a vital role in the progress of the organizations. Hence, it becomes imperative for corporations to recruit and retain a pool of knowledgeable employees. Nonetheless, this poses a great challenge to the organizations given the backdrop of the increasing rate of attrition. Factors such as shortage of skilled manpower and increasingly competitive business landscape have compelled organizations to look out for innovative ways to retain competent employees.

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BUSINESS ENVIRONMENT

The Demographic Dividend: Is India Reaping?

- - T R Venkatesh, Shradha Pradhan

To reap the full benefit of demographic dividend, India needs to heavily invest on basic education, healthcare and vocational training so as to make its young citizens employable. The demographic dividend generally refers to a rise in the volume of working age population leading to acceleration in economic growth. This usually happens in the intermediate phase of demographic transition as a result of declined fertility rate and declined youth dependency rate.

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BUSINESS ENVIRONMENT

M&As in Japan : On the Resurgence

- - N Janardhan Rao and T Ratna

The rising sun is emerging as an attractive location for foreign investments; M&A activities will continue to grow in both the number of deals and the size. Since the collapse of the economy in 1991, Japanese corporates have virtually been unmentionable in the business world. As the economy is showing signs of recovery, it has accelerated its efforts to open further to the world economy and be freed from the horrendous clutches of recession and economic slowdown. On the corporate front, takeovers and buyouts have suddenly become rampant.

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BUSINESS ENVIRONMENT

Cellulosic Ethanol : Towards a Greener Future

- - Y Bala Bharathi

Cellulosic Ethanol has the potential to become the fuel of the future, provided sustained efforts are made to make it more cost-effective. Crude oil has been one of the major resources of energy for the nations across the globe. Nevertheless, in recent decades, these nations are increasingly getting panicky over diminishing oil reserves and soaring oil prices. This concern has been of paramount interest to America which consumes oil like no other nation in the world. It almost consumes a quarter of the world's oil irrespective of the fact that it represents just a meager 5% of the world population.

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MONETARY MUSINGS

Monetary Policy

- - GRK Murty

"The worth of that is that which it contains" A hike in repo rate - the rate at which banks can borrow from the Reserve Bank of India - by yet another 20 bps taking it to 7.75%, a 50 bps hike in Cash Reserve Ratio - a cash deposit that banks have to maintain with the RBI at the prescribed percentage of their net demand and time-liabilities - taking it to 6.5% so as to suck out about Rs14,000 cr from the market, and a reduction in interest rate that the RBI pays to banks on deposits maintained with it under CRR are what constitutes the monetary prescription of the RBI.

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INTERNATIONAL FINANCE

US Subprime Mortgage Market : Boon to Bane

- - Y Bala Bharathi

The booming US subprime mortgage market has hit a roadblock after witnessing a series of delinquencies and foreclosures. Home ownership has always been a cornerstone of the Great American dream. As Americans reckon it as a risk-free growth investment, many of them prefer owning a house to renting. Against this backdrop, Subprime mortgages emerged as a boon for many, especially for those who couldn't afford to buy a home. It may not be an exaggeration to say that many low income and minority families would not have realized their dream of owning a house without the tremendous growth of this new kind of mortgage business called subprime lending. It long seemed like a winning proposition for all parties.

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CORPORATE STRATEGY

Motorola : Sound of a Slump!

- - Amit Singh Sisodiya and Sanghamitra Dhara

Amidst sluggish performance and a proxy battle with billionaire investor Carl Icahn, the world's second largest maker of mobile handsets faces a tough future ahead. For the Motorola Inc., the Schaumburg, Illinois-based company that once revolutionized the mobile communications landscape with its pathbreaking invention of the wireless phone and dominated the industry for long, these are surely not the best of the times. The company, to the horror of millions of Moto (as its handsets are popularly known) fans and market analysts, recently announced that it incurred losses to the tune of $181 mn during the first quarter ending March 31, 2007 as against profits of $686 mn in the corresponding quarter in the previous fiscal year.

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FINANCIAL SERVICES

Mobile Money : Money Transfer Made Easy

- - N Janardhan Rao and B Suma

With the introduction of mobile money, the money transfer industry will transform the way it operates. With an upsurge in overseas employment, the need for secure and efficient money transfer has grown in the recent past. The existing money transfer system, suffers from limitations and bottlenecks created by cash, cheques and credit cards. Besides, when it comes to online business transactions, selecting a payment gateway is one of the major obstacles faced by the merchants as the payment mode options are very limited and less cost-effective.

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APOLITICAL

SEZs : Or, Industrial Dharavis in the Making?

- - grk

"Wealth, like knowledge, grows in spots and spreads out," so postulated William James, the philosopher. And Deng Xiaoping-the Chinese statesman for whom "It does not matter what color is the cat, so long as it catches the mouse" -proved William James right by establishing SEZs at Shenzhen, Xiamen, Zhuhai, and Shantou that have today become economic powerhouses, besides acquiring a place among the largest manufacturing bases in the world and turning China into a global economic power next only to the US and Japan.

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FINANCIAL MARKETS

SRI Funds : Making Money Morally

- - Y Bala Bharathi

With the launch of India's first socially responsible mutual fund by ABN AMRO MF, the Indian investors would be poised to score fair returns and stay socially responsible at the same time. Do you ever feel uncomfortable investing in companies which damage the environment? Do you try to avoid investing in tobacco, liquor, or weapons companies? Do social, ethical and environmental issues matter to you more than other parameters when it comes to investing? Then, here is a fund, recently launched by ABN Amro Mutual Fund that might suit your ethical investment criteria.

© 2007 IUP . All Rights Reserved

FINANCIAL MARKETS

IPO Grading : Advantage Investors

- - Amit Singh Sisodiya and Sanjoy De

The decision of mandatory IPO grading augurs well for retail investors but don't over depend on it. In a move that could benefit investors, the capital market regulator, Sebi, has now made grading of Initial Public Offering (IPO) mandatory. From now on, Sebi-registered credit rating agencies, such as CRISIL, ICRA and CARE will grade the various forthcoming IPOs on a five-point scale-from grade 5 (indicating healthy fundamentals) to grade 1 (indicating weak fundamentals). An IPO will be graded based on a particular agency's assessment of a company's fundamentals.

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FINANCIAL MARKETS

Institutional Investors : Enter Short Selling

- - Amit Singh Sisodiya and Kavitha Putta

Sebi's decision to allow short selling by institutional investors is expected to not only help reduce market volatility but also facilitate better price discovery for investors. Soon, short selling (the strategy of selling a stock without actu- ally owning it) will become a reality for institutional players like Foreign Institutional Investors (FIIs) and mutual funds as they have long since craved for a level playing field (with retail investors) and a mechanism to hedge their risk in the spot market; institutional investors, at the moment, can hedge their risk only in the derivatives market.

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FINANCIAL MARKETS

Indian Depository Receipts : Efforts towards Globalization

- - Y Bala Bharathi

With the launching of the Indian Depositories Receipts (IDRs), the investors might see many of the well-known companies coming and listing here. It is quite an undisputable fact that the era of globalization and integration has opened up many new market opportunities for India. Post liberalization, Indian companies are able to access global markets to raise funds through depository receipts like American Depository Receipts/Global Depository Receipts (ADRs/GDRs). Now, in yet another stride towards globalization, Indian equity markets are gearing up to soon float Indian Depository Receipts (IDRs) positively in the year 2007. This move will also provide yet another avenue for Indian investors to share the wealth of foreign companies.

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TECHNOLOGY

Microsoft Windows : Opening Up Exciting Vistas

- - R Venkatesan Iyengar

Windows Vista is all that Microsoft says it is, and much more. Its state-of-the-art interface and features are sure to leave you searching for words. And, if its impressive debut is anything to go by, Vista would prove to be a worthy successor to XP. Microsoft Vista is making waves. That's the impression one gets if one goes by the claim made by the Microsoft Corporation. The sales of Vista, in its very first month in the market, were "more than double the sales that Windows XP racked up in twice the time." Microsoft has reportedly sold more than 20 million Vista licenses in its very first month compared to the 17 million Windows XP licenses sold in the first two months of XP sales.

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TECHNOLOGY

Digital Rights Management : Making Business Sense

- - D Satish

Digital Rights Management (DRM) technology is allowing the content creator to make a viable business model built around his content. There are numerous instances where high value content kept online is viewed and distributed by others who essentially do not own the content. Eventually, the owner of the content, who spent a considerable amount of time and money in generating the content, is robbed of the revenue which has come out of his hard work.

© 2007 IUP . All Rights Reserved

ARTS AND ARTISTS

Games Indians Play : Why We are the Way We are

- - Author : V Raghunathan Reviewed by Amit Singh Sisodiya

Playing games (of breaking rules, jumping signals and queues) remains a favorite pastime of average Indians. However, it's time to introspect and ask ourselves-why we are the way we are!-suggests the book. To the outside world, especially, the western world, the mention of the very word India immediately would conjure up images of elephants and snake charmers. That perception, however, has begun to change, of late, thanks to India's now-proven prowess in Information Technology (IT) and the growing clout and successes of NRIs in businesses and in politics-from London to Los Angeles, Singapore to Chicago, Canada to Kazakhstan.

© 2007 IUP . All Rights Reserved

ARTS AND ARTISTS

Swing Trading : A Guide to Profitable Short-term Investing

- - Author: Marc Rivalland Reviewed by N Janardhan Rao

The aim of the book is to introduce swing charts and enable traders to harness their power. With the growing volatility in the global financial markets, swing trading is gaining momentum. The fundamental part of swing trading is to sell short as prices fall almost twice as fast as they rise. There are some perceived drawbacks associated with selling short such as the idea of losing more than 100% of capital and hope of an upswing, if it is not realized then the stock becomes a long-term investment.

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ARTS AND ARTISTS

Imperial Persia

- - Dr. P G Nirmala

Tales from ancient Persia have come down to us in the form of numerous myths and legends of heroes. What we know of ancient Persia is to a great extent derived from that mighty epic poem-Shahnameh (`Book of Kings'). This poetical history of old Iran brings together myths and legends of national heroes-mythical, semi-mythical and historical-the most popular being the tragic story of the great Persian hero-knight Rustam and his son Sohrab.

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