15 euro nations face credit downgrade threat
Maximum complaints against state-run telcos
Coal India told to meet output target
IOB plans to restructure corporate, SME loans
Cyrus Mistry The Last Word
The mystery man's work is cut out
The fdi debate
The elusive phantom of Bombay House
London, December 6
The move overshadowed the optimism over the Franco-German meeting that mulled ways to bolster the sagging economic conditions in the euro area, a grouping of 17 countries that share the euro currency.
S&P has put 15 nations on “credit watch” with negative implications, amid spiralling European debt turmoil that poses threat to the very existence of the currency union.
“Credit watch placements are prompted by our belief that systemic stresses in the euro zone have risen in the recent weeks to the extent that they now put downward pressure on the credit standing of the euro zone as a whole,” S&P Ratings Services said today. Tightening credit conditions, disagreements among European policy makers, high levels of government and household indebtedness, are among the reasons cited by S&P for keeping sovereign ratings under watch.
Among the 15 nations on the list, Austria, Finland, France, Germany, Luxembourg and The Netherlands have ‘AAA’ tags, the highest investment grade ratings.
“There is a rising risk of economic recession in the euro zone as a whole in 2012. At present, we expect output to decline next year in countries such as Spain, Portugal and Greece, but we now assign a 40 per cent probability of a fall in output for the euro zone as a whole,” S&P noted.
Further, S&P pointed out that ratings could be lowered by up to one notch for Austria, Belgium, Finland, Germany, The Netherlands, and Luxembourg. For the remaining nations, the ratings could be cut by two notches.
Other countries in the "credit watch" list are Estonia, Ireland, Italy, Malta, Portugal, Slovak Republic, Slovenia, Spain and Cyprus.
“We expect to conclude our review of euro zone sovereign ratings as soon as possible following the EU summit scheduled for December 8 and 9, 2011,” it said. — PTI
Maximum complaints against state-run telcos
New Delhi, December 6
According to the information provided to Parliament, more than 41,000 telecom subscribers filed complaints against various service providers over poor network and other service grievances in the first half of the 2011-12 fiscal.
From April 1 to September 30 this year, 1,418 service-related complaints, which include complaints relating to poor network services against various telecom service providers, have been received by TRAI, Telecom Minister Milind Deora informed Parliament.
According to him, a total of 41,341 complaints against various telecom service providers, including grievances related to poor network and services, have been received in the public grievances cell of the DoT between April 1 and October 31, 2011.
The public sector operators, BSNL and MTNL, topped the chart of the complaints with both TRAI and the DoT. Over 24,000 complaints were received against MTNL and 11,000 against BSNL.
Already facing a major exodus under the mobile number portability (MNP) scheme launched earlier in the year, private sector operator Reliance Communications led the pack of the other telecom operators. A total of 1,859 complaints were filed against RCom with the DoT and 232 with TRAI.
Airtel was the next in the list of maximum complaints, with 1,392 grievances lodged against the company with the DoT and 391 with TRAI.
The minister also provided Parliament with the latest Quality of Service report prepared by TRAI for the quarter ended June, 2011.
Here again, the state-run BSNL leads the pack for not being able to meet quality benchmarks for most parameters as specified by TRAI.
Aircel led the private operators in poorest credibility with respect to pre-paid and post-paid billing of mobile phone connections in most telecom circles.
The minister said Aircel, in its clarification, had attributed the poor performance to system configuration, system errors, segmented promotional offers, complaints related to value-added services etc.
In addition, he said TRAI had found a severe problem of call drops on the networks of Tata Teleservices (TTSL), Idea Cellular, Unitech Wireless and Etisalat, among private operators.
TTSL in its reply to the government said the benchmark of the parameter worst-affected cells having more than 3 per cent TCH (calls) drop were reported mainly from rural areas due to low call volumes and customers moving beyond the covered areas of the rural sites.
The company added that the issue was being addressed through optimisation methods. A similar clarification was provided by Etisalat DB.
While Unitech Wireless said it was facing problems due to a sudden surge in the traffic on its network and spectrum constraints, Idea said the call drop problem on its network in Bihar was due to power problems and heavy storms in the state.
n During April to September, DoT and TRAI received over 42,000 complaints from subscribers for poor service and network n
Over 24,000 complaints were received against MTNL and 11,000 against BSNL n
RCom led the pack of other telecom operators with 2,091 complaints
n During April to September, DoT and TRAI received over 42,000 complaints from subscribers for poor service and network
n Over 24,000 complaints were received against MTNL and 11,000 against BSNL
n RCom led the pack of other telecom operators with 2,091 complaints
Coal India told to meet output target
New Delhi, December 6 "The Coal Ministry has rejected the proposal of Coal India
(CIL) for bringing down the coal production target," Coal Minister Sriprakash Jaiswal said. Fearing that it will not be able to make up the slippage in output that occurred during the first half of 2011-12, the state-run firm, which accounts for 81 per cent of domestic production, had asked the Coal Ministry to revise the
target. Jaiswal said he had, however, instructed the company to surpass the target, which was possible and required given the paucity of coal. — PTI
New Delhi, December 6
"The Coal Ministry has rejected the proposal of Coal India (CIL) for bringing down the coal production target," Coal Minister Sriprakash Jaiswal said.
Fearing that it will not be able to make up the slippage in output that occurred during the first half of 2011-12, the state-run firm, which accounts for 81 per cent of domestic production, had asked the Coal Ministry to revise the target.
Jaiswal said he had, however, instructed the company to surpass the target, which was possible and required given the paucity of coal. — PTI
IOB plans to restructure corporate, SME loans
Chandigarh, December 6
Talking to The Tribune, on the sidelines of a seminar on micro, small and medium enterprises (MSME), organised by the Chandigarh Management Association here today, AK Bansal, executive director of Indian Overseas Bank, said the bank was in the process of rescheduling loan payments on a case-to-case basis, wherever the cause was genuine. “In case of retail loans, we are elongating the repayment period so as to provide a cushion to debtors against rising interest rates and ensuring that these loans do not go bad,” he said.
The bank, which has a total business of Rs 2,90,000 crore, has witnessed a sharp hike in its NPA. The gross NPAs have gone up from Rs 3,200 crore in March this year to Rs 3,898 crore now. Though the bank has been able to recover Rs 800 crore of non-performing assets between April and September, many of its commercial real estate loans, SME loans and corporate loans have gone bad.
“Since we are seeing a lot of stress in many sectors, a lot of accounts need to be restructured in the SME sector, especially as the cash-to-cash cycle is getting longer. This has impacted the loan repayment, leading to high NPA levels for lending agencies,” said Bansal. He added that other than the above category of loans, the loans extended to power boards/ corporations, too, needed to be rescheduled, because loan repayment was poor.
Bansal informed The Tribune that this year, the bank had added 116 new branches and would add another 300 branches by March 2012. He said the bank would also open 11 new branches in Punjab, Haryana, Chandigarh and Himachal Pradesh. “This will help us improve our CASA (current account saving account ratio) to 31 per cent, from the present 28 per cent. We are looking at a growth of 20 per cent in our total business and we hope to have total business of Rs 3,20,000 crore by March 2012,” he added.
Cyrus Mistry The Last Word
For many old Parsis in Mumbai, the appointment of Cyrus Mistry as Ratan Tata's heir-apparent was a foregone conclusion. For more than five decades, members of the community watched Mistry's grandfather Shapoorji Pallonji and father Pallonji gradually tighten their grip on the Tata empire.
Shapoorji, who began life as the son of a small contractor went on to corner chunks of Tata Sons Ltd, the holding company which holds shares in all the Tata companies, from various community trusts. His son Pallonji deepened the engagement further. Not only did he raise the stake of the family in the Tata company to 18.5 per cent, Pallonji also forged familial ties with the country's premier industrial house when his daughter Aloo went on to marry Noel Tata, half-brother of Ratan Tata. Along the way he ensured that Cyrus was inducted on the board of Tata Sons five years ago - at 37 among the youngest to assume a seat at the high table.
So it was virtually taken for granted that management control of the Tata group would move to the Mistrys some day. Only, a few bets were laid on the affable Noel taking charge. For too long, Tata watchers kept an eagle eye on Noel's not to successful forays into the retail
business. The similarities between the lacklustre performance of Noel's venture Trent and Nelco under Ratan Tata before he donned the mantle of the late JRD were cited as parallels for their respective career paths.
However in the end, say insiders, veteran Pallonji Mistry decisively swung the casting vote in favour of his son. The senior Mistry is said to have vociferously championed the cause of his son at the board meeting of Tata Sons that was to decide on Ratan Tata's successor. But deferring to propriety, the construction tycoon quietly agreed to a global talent-hunt in order to find Tata's successor.
The committee formed to find Tata's heir found no one suitable enough and thus zeroed in on Cyrus himself who was also part of the search team. According to the grapevine, Cyrus Mistry is winding down his affairs at Shapoorji Pallonji and Company ahead of his move to Bombay House in downtown Mumbai where the Tata group is headquartered. The construction and civil engineering business Cyrus headed will now be under brother Shapour's watch.
Known to be a workaholic who shuns the limelight, Cyrus is seldom seen at Page 3 dos. Neither is he seen at Parsi community events or at the Mahalaxmi race course where his father occasionally cuts a dashing figure. Cyrus is however known to be close to his old friends many of who date back to his school days at the Cathedral and John Connon School in South Mumbai where the city's oldest families were educated. He even hosted a reunion of old school mates at his home. However typical of the family, Mistry's friends are keeping their lips sealed. The buzz is that people have been barred from speaking about Cyrus Mistry.
According to publicly available information Mistry studied commerce in Mumbai before he went on to acquire an engineering degree from the Imperial College, London and management at the London School of Business. Like scions of old Parsi families, Cyrus is believed to have been taught Western Classical music as a child is known to make quiet appearances at concerts in Mumbai. He also plays golf and heads a few trusts.
Taking over as the Managing Director of Shapoorji Pallonji group in 1994, Cyrus is credited with taking his family firm into the civil engineering business. From putting up buildings and undertaking small construction projects, Shapoorji Pallonji ventured into big-ticket construction under Cyrus. According to information available on the group, its turnover increased from US $ 20 million in 1994 to around US$ 1.5 bn in 2010.
The privately-held group went on to venture into record-breaking projects. Among the firsts of the SP group include India's tallest towers in Mumbai, the country's largest bio-tech park in Hyderabad, the Chenab bridge in Jammu and Kashmir, and the country's largest dry dock. The group has now ventured into the affordable housing sector and is planning to set up the country's biggest plays in this space.
The group has also emerged as major construction company in the Middle East following its acquisition of Afcons in the year 2000. Known as hands-on man, Cyrus is known to hit the field and supervise construction of projects if required. Under him the group has gone on to expand its presence to more than ten countries.Its global forays include a bio-fuels park in Ethiopia where it has leased 50,000 hectares of land for the purpose.
With the group almost entirely in private hands, it is hard to estimate the worth of the SP group of companies. However Pallonji Mistry is rated among India's richest men with a net worth of US $ 8.8 billion. Like his father and brother, Cyrus holds Irish nationality though he spends much of his time in India unlike the elder Pallonji who divides his time between his mansion in Ireland and Mumbai. Multiple national affiliations are not new to the Tata group however. The late JRD Tata, who was born a French national, surrendered his French citizenship to become an Indian citizen well before Indian's Independence.
n Irish national n
Born July 4, 1968 n BE in Civil Engineering from Imperial College, London n
Master's degree from London Business School n
At 23, became the youngest director of Shapoorji Pallonji Group in 1991 (the same year when Ratan Tata became the Chairman) n
In 2006, became the youngest director of Tata Sons
n Irish national
n Born July 4, 1968
n BE in Civil Engineering from Imperial College, London
n Master's degree from London Business School
n At 23, became the youngest director of Shapoorji Pallonji Group in 1991 (the same year when Ratan Tata became the Chairman)
n In 2006, became the youngest director of Tata Sons
n At present, Deputy Chairman, Tata Sons; Managing Director, Shapoorji Pallonji Group; and Non-Executive Director, Forbes & Co.
Tata Steel is the tenth largest steelmaker in the world. Tata Consultancy Services is Asia's largest software company. Tata Power is India's largest power company while Tata Global Beverages is the world's second largest tea company. Cyrus Mistry will be expected to consolidate the empire and even extend it.
Earlier this year, long before the announcement on Cyrus Mistry as the chosen successor of Ratan Tata was made, a business journal painted a rather grim picture about the challenges to be faced by the new man.
" The challenge is to rationalise Tata's 98 companies , most of which are loss-making. The total Group profit is modest and the telecom scandal has marred Tata's high ethics image. What is more, after an expensive acquisition spree of companies abroad, the Tata Group is saddled with debts." Indeed, the Group had a staggering debt of Rs 1.86 lakh crore at the end of March this year.
Ratan Tata's acquisition spree can be better understood by the fact that as many as 36 acquisitions were made by the Group in Europe, the US, Thailand, Singapore and elsehwre between 2006 and 2010. In 2005 alone, the Group acquired 17 companies, prompting some analysts to suggest that the acquisitions could have been a costly mistake. The more charitable believe the acquisitions to be visionary and say that results would show in the long-run.
Others downplayed the challenges, pointing out that the successor would not have to wrestle with satraps like Dadiseth, Ajit Kerkar and Russi Mody as Ratan Tata was forced to do when he unexpectedly became the chairman. Corporate observers held that since 1991, Ratan Tata had steered the Group to greater heights. The Group's revenue increased from Rs 14,092 crore in 1991-92 to over Rs 32,000 crore in 2010. During the same period, the Group's profits increased from 752.61 crore to Rs 10,177 crore.
Remarkably, two-third of the Group's turnover and profits now come from the Group's overseas operations. What is more, Ratan Tata had inherited as many as 250 companies in 1991 and he had brought it down to a more manageable 98. A lot more obviously needs to be done to make the Group more lean and mean.
The observers were also quick to note that in the last few years, Ratan Tata has been able to appoint able and relatively younger men to head the key companies. The new incumbent, therefore, would not be saddled with the task of head hunting. Indeed, they suggested, the new Chairman's key task would be to consolidate the operations and increase profits.
But then Cyrus Mistry's work is cut out. In the face of intense competition, neither Tata Telecom nor Ratan Tata's dream-car, the Nano, have quite taken off. While the target was to produce one million Nanos every year, according to available date less than 1.5 lakh Nanos have been sold so far. Similarly, barring the blue chip companies like Tata Steel, Tata Consultancy Services and Tata Motors, a majority of the companies have been reporting losses.
Therefore, the challenge before Mistry will be to manage the group's debt servicing and either go in for mergers to make some of the companies more viable or to sell them. A third option open to him is to list some of the companies on the stock exchange at an opportune time and raise the capital needed to fend off competition. — TNS
The fdi debate
I remember when de-reservation of small scale industries was introduced in India, there was speculation about the gradual decline of SSIs. Since then several studies have shown that the sector continues to demonstrate a robust growth in the number of units, output and employment.
The growth for the early period of liberalisation (AM1994 -99) which was 16%, fell slightly for the next 5 years (AM1998-05) to 12%, before accelerating to 19% in the last 5 years (AM2005 -09). The same trend will be witnessed in exports in the present decade.
A Boston Consulting Group (BCG) study estimates that building modern retail supply chain in India requires an investment of US $ 30 billion. FDI in retail will facilitate this fund inflow in an environment which is otherwise investment negative.
FDI inflows will also help in arresting weakening of the Rupee as well. The stability of the Rupee and less volatility will not only benefit our economy but will also have a soothing effect on exports.
A minimum of 30% of sourcing from domestic small units, artisans, craftsmen, tiny and cottage units would provide further boost to exports. Units, which are presently catering to the domestic market and subsequently supplying to large retailers will achieve requisite quality and price competitiveness to graduate to exports.
This will largely benefit export of textiles, leather, gems and jewellery, handicrafts, carpets, processed food, jute, coir and other life style products. This will also create millions of jobs in these sectors and enhance their capabilities as retail buyers buy in bulk for their global re-distribution .
I have been recently to Chile, where I saw how the country has benefited with multi brand retail in pushing its export of wine and fruits across the globe.
The strengthening of supply chains will address the problem of storage, lack of refrigerated facilities and transportation, thus facilitating export of fruits, vegetables and food grains. State-of-the-art infrastructure, right from post-harvest, packaging, warehousing and cold storages are urgently required today for processed food and agri exports.
Farmers will be able to access the world market as linkage will be established with efficient producers sellers, which will be more remunerative for producers. Indian farmers receive only 30% of the price paid by consumers as compared to 50 to 70% in developed markets. 25% of their produce is spoiled due to absence of efficient logistics. A structured retail would therefore, enable better quality and price realisation .
There are issues requiring redressal also. Many of the farmers have marginal holdings. Central/ State Governments may evolve appropriate policies so that the marginal holdings can be combined for contract farming for large retailers to ensure economies of scale /usage of technical and productivity tools to enable higher productivity levels.
A suitable clause may also be inserted in the provisions while it is still being deliberated so that FDI in the sector may contribute in terms of technical inputs/financing, keeping in view the sensitive nature of subsistence farming in the country and ensure that they are part of the inclusive growth agenda of the Government. This would also assuage the concerns of those opposing the implementation of the same.
( The writer is President of the Federation of Indian Export Organisations)
The elusive phantom of Bombay House
The Mistry family has been very closely associated with Tatas for more than 80 years since they first purchased Tata shares in 1930. Pallonji Mistry, apart from being the single largest shareholder, was also on the board of Tata Sons till 2006 when he turned 75. He nominated Cyrus to the board in 2006 and Cyrus has also been on the board of Tata Power and Tata Elxsi in the past.
Pallonji, as reclusive as his now better-known son, was known as the Phantom of Bombay House. He kept a low profile, rarely socialised, was occasionally seen at the race course but he steadily built his stakes in Tata Sons. Last year, Pallonji is believed to have handed over 9 per cent of his shares in Tata Sons to Cyrus and the other 9 per cent to the other son, Shapoor.
Pallonji, it is now well known, was the largest shareholder of Tata Sons. Even Ratan Tata never held more than one per cent.
But very little is known about either Pallonji or Cyrus. They are rarely seen fraternising and are clearly happy to keep the media at arm's length. A fortnight after Cyrus was anointed Ratan Tata's successor, he is yet to appear on TV. There are no sound bytes from him and a TV crew which allegedly chased his car, could get nothing, not even good footage.
What the Shapoorji Pallonji website reveals is that Cyrus Mistry is a voracious reader, mostly of business books. Friends have dropped hints that he is a foodie. His employees say he is meticulous and a good listener. His peers say he is a workaholic. Others claim he is a 'technophile' and a photography buff and he is known to have an interest in music.
Media reports indicate that he positively does not have any obsession with either cars or horses. Indeed, horror of horrors, some reports have exclaimed that he has not changed his car even once during the last five years. Apparently he is one of those who believe that cars are contraptions which help you move from one place to another.
The youngest chairman-in-waiting of the Tata Group also does not suffer fools easily. He is likely to give one or two warnings but is unsparing if the same mistake is made twice. He is said to read every scrap of paper that he receives. He apparently prepares for every meeting and comes ready with pointed questions. And it is an eloquent testimony to his no-nonsense approach that nobody, absolutely nobody, is willing to go on record and speak about the man, except admitting that yes, he hosted an Old Boys' get-together at his home.
Mistry will work with Ratan Tata over the next year and take over from him, when Tata retires in December 2012. Tata has said that he will work with Mistry "over the next year to give him the exposure, the involvement and the operating experience to equip him to undertake the full responsibility of the Group on my retirement."