CA Newsletter July 28 to 03 Aug

8/2/2019 CA Newsletter July 28 to 03 Aug

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11 Pages 28th

JULY 2011 03rd

AUG 2011 www.xedintellect.com

BUSINESS NEWS

ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4 BUSINESS NEWS 5-8

INTERNATIONAL NEWS 9 MISCELLANEOUS NEWS 10 GENERAL AWARENESS 11

NEWS DIGEST

IN BRIEF

PERSONALITIES OF TH

WEEK

COMPILED BY

CORPORATE

INTELLEGENCE

BSE SENSEX 17,940

NSE NIFTY 5,402

RS/$ 44.37

(as on 03rd AUG 2011)

ECONOMIC

INDICATOR

India set to fund

European bailouts

COVER STORY

MISCELLANEOUS NEWS

Lokpal bill cleared,

PM not in ambit

INTERNATIONAL NEWS

Iran says oil

payment row with

India resolved

XED NEWSLETTER a weekly news bulletin

US: SUBMERGED IN DEBT


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TOP 10 HEADLINES OF THE WEEK

1. India set to fund European bailouts.2. Indians do not like to be indebted: Keki Mistry, CEO, HDFC.3. ITC to invest Rs 5,000 crore for buying shares of rival FMCG: YC Deveshwar.4. Air Indias 38,000 staff not paid salaries for months, forced to borrow, sell assets.5. Burgernomics and Indian Exports.6. Just a Day to Start a Business.7. Iran says oil payment row with India resolved.8. Foxconn assembles iPads & iPhones in China plans use 1 mn robots in 3 yrs to cut labor cost.9. Lokpal bill cleared, PM not in ambit.10.New draft Land Acquisition Bill

ECONOMIC INDICATORS

THE GLOBAL TOURISM

As the northern hemisphere passes through theheight of summer, millions of tourists are jetting offon holiday.

International tourist arrivals last year reached theihighest total yet of 940m, according to the UnitedNations World Tourism Organization.

Data gathered by the organization, fromnational statistics, give France as the mostcommon destination for foreign tourists,

with 76m visitors in 2010. But the $46bnit makes from them is not enough for a

place on our list of countries that makethe most from each tourist.

When calculated as the total of touristreceipts divided by the total number ofarrivals, several geographically isolatedcountries fare well. This may be becauseholidaymakers will stay longer and fork outmore on a long-distance trip.

Stock Market Indices as on 03rdAug11 Values

BSE SENSEX 17,940

NSE (NIFTY) 5,402

Current Market Rates as on 03rdAug11 Values

Rupee/US Dollar 44.37

Rupee/Pound 72.20

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COVER STORY-US: SUBMERGED IN DEBT

What is Debt ceiling: To start at the most basic level, countries like individuals are able to borrow money to financespending. A government debt is held in the form of bonds, and the governmentsells these bonds in the market, promising to pay a level of interest over a setperiod of time, after which they repay the money to the person or company whoowns that bond.

US Government has a borrowing limit of $US14.3 tn and interest repayments of

about $US200 bn a year. That limit was reached in May but extended until Aug

2. The current proposal is to lift the debt ceiling by $US2 tn of which $900 bn wilbe raised immediately and in return to cut up to $US2.5 tn in spending by 2021.

What does the US do with all the money it borrows: The US Governmenincreased its mandatory spending by 15 % ($US2.17 tn) last year mainly on social security, Medicare and Medicaid

programs as well as interest repayments. Discretionary spending increased by 14 % ($US1.34 tn) with increasedspending on defence the biggest item ($US663 bn). As the US population ages, spending on health and social securityas a percentage of GDP is expected to rise from about 5 % to between 6 and 10 % of GDP in the next 20 years.

How the crisis occurred: The 2008 global financial crisis created a fragile US economy and caused governmentspending to soar while tax revenues dropped. This has caused a big rise in the government's deficit (its annual debt).The crisis is a political one. Republicans control the House of Representatives and they want to bring the deficit backunder control through spending cuts but without raising taxes. President Barack Obama's Democrats want to shieldhealthcare and pension programs from cuts and raise taxes.

Where US gets its money from: China is the biggest lender to the US, owning $US1.16tn worth of US Treasury bonds at May 2011. This is followed by Japan ($US912 bn),Britain ($US346 bn) and oil exporting countries such as Saudi Arabia, Ecuador, Venezuela,Indonesia, Bahrain, Iran and Iraq. US taxpayers own Government bonds throughinvestment funds, banks, major securities brokers & through most of the world's biggestfinancial institutions that use US Treasuries with their AAA rating as collateral to borrow.

Why US cant live without Debt? Though the debt ceiling has been raised, the equalamount of cut in the spending mandated can put US on the back foot at a time when it issuffering from one of its biggest employment crisis ever. It desperately needs to inject more money in the economyinstead of strangulating it with its austere measures like spending cuts. Supposedly US doesnt have enough money.In such scenario it is left with two choices. The first is to start prioritizing which payments the governmentmakes; currently only 60% of US spending is financed by taxation while 40% coming from debt. Therefore the Obama

administration would have to find a way of delaying 40% of their expenditure, by cutting back on the healthcarereforms and delaying the payment of benefits, which leaves the government open to significant legal challenges bythose entitled to benefits.

The other option is however even more scary, the possibility that the US defaults on its payments. This works ina very similar way to your credit card. You are required to pay off a certain amount each month,if you simply don't have the money to, however, you can default and not pay but this comeswith severe penalties and a downgrading of your credit score. In a similar way, if the Obamaadministration is unable to continue paying the interest on the bonds its issued, then it facescatastrophic problems, with its perfect triple A credit rating lost which means that any futuredebt becomes more expensive.

And this isn't just a risk for America, everyone right across the world will be hit by it. If youneed evidence, look at the 2008 economic crisis. It wasn't problems in England, Britain or even

Europe which caused the recession; it was a collapse in confidence in the US financial market. Adefault on debt by the US government would do exactly the same thing, plunging scores of countries back intorecession. However, if the US administration responds to the alarming sluggishness of the US economy with morequantitative easing (that is, printing money by buying back assets such as bonds to inject cash and confidence intothe financial system) then all bets may be off. Quantitative easing may, or may not, have succeeded in saving thefinancial system butit surehas distorted investment markets by creating a bubble in UK and US government bonds.

Held to Ransom:To most Americans and the rest of the world, the policies of Tea party which orchestrated the dealis beyond comprehension and referred to as voodoo economics. The intent behind deficit-reduction is no doubtpragmatic but the means to achieve so- i.e., through spending cuts- is being considered outrageous. Punditscomment, If you really want to cut debt, you need to put more money to spur growth which eventually will generaterevenue and cut the deficit. However, it remains to be seen who is proved right. Only problem is, its not just the USthat will face the consequences but the whole world.

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PERSONALITIES OF THE WEEK

C.K. Prahalad: Management guru with varied interests-Known for being a management guru the late C.K.Prahalad had varied interests from writingto teaching to business. As a thinker, his contribution to the field of management isirreplaceable. He is the father of concepts like Core Competence and Bottom of thePyramid that became the guiding force for many business ventures. His major ideas are

about core competencies of the organization and leveraging on it and the idea of looking atthe poor as a source of profit than as an object of charity.

Getting a foothold:C.K.Prahalad was born in the town of Coimbatore in Tamil Nadu. He studied physics at theUniversity of Madras. He worked as a manager in a branch of the Union Carbide batterycompany, before continuing his education in the United States, and earning a PhD fromHarvard. He taught in India and America, eventually joining the faculty of the University ofMichigan's Business School, where he held the Harvey C Fruehauf chair of Business Administration.

Carving the path ahead:At Ann Arbor, University of Michigan, he met Gary Hamel, then a young international business student. Theircollaboration ultimately resulted in the bestselling, Competing for the Future (1994). In his book (written with VenkatRamaswamy), The Future of Competition (2004), C.K. Prahalad argued that companies have not made enough use ofthe opportunities provided by globalization. There is an inability to realize that not only have the rules of the gamechanged but the role of the players has been transformed too. The 'customer' is a more powerful and pro-activefigure. Customers are no longer abstractions that have to be satisfied. Thanks to the internet, they are agents

creating and participating in transactions. The concept of value has also changed. It is not inherent in products orservices. It can't be instilled by producers or providers. It has to be co-created with consumers. They build this byexperiencing it. The only way companies can compete successfully is through building new strategic capital.Alongside this work, Prahalad had been wrestling with the perplexingly complex and political issue of poverty. This led

him to write The Fortune at the Bottom of the Pyramid (2004) in which he identified the world's poor (the 'bottom othe pyramid') as a potential untapped market for companies, worth anything up to $13 trillion a year. He believed"The real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income consumers. It is the billions of aspiring poor who are joining the market economy for the first time"

C.K.Prahalad was insightful and definitely provocative resulting, in an interesting combination of an academic and apractitioner.

Joseph Eugene Stiglitz: The HonorableJoseph Stiglitzan American economist and a professor at Columbia University is a recipient of

the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates ClarkMedal (1979). He has been the former Senior Vice President and Chief Economist ofthe World Bank. He is known for his critical view of the management of globalization, free-

market economists (whom he calls "free market fundamentalists") and some internationalinstitutions like the International Monetary Fund and the World Bank.

Against the consensus:Stiglitz did research on efficiency wages, and helped create what became known asthe "Shapiro-Stiglitz model"to explain why there is unemployment even in equilibrium, whywages are not bid down sufficiently by job seekers (in the absence of minimum wages) so

that everyone who wants a job finds one. Stiglitz joined the Clinton Administration in1993, serving first as a member during 1993-1995, and then as Chairman of the Council ofEconomic Advisers during 1995-1997, in which capacity he also served as a member of the cabinet.

Along with his technical economic publications (he has published over 300 technical articles), Stiglitz is the author ofbooks on issues from patent law to abuses in international trade. He has authored books like Globalization and ItsDiscontents where he argues that what are often called "developing economies" are, in fact, not developing at all, andputs much of the blame on the IMF. The book The Three Trillion Dollar War examines the full cost of the Iraq Warincluding many hidden costs. The book also discusses the extent to which these costs will be imposed for many yearsto come, paying special attention to the enormous expenditures that will be required to care for very large numbers ofwounded veterans. Stiglitz was openly critical of George W. Bush at the time the book was released.

Another book written by Stiglitz is Making Globalization Work in which he surveys the inequities of the globaeconomy, and the mechanisms by which developed countries exert an excessive influence over developing nationsDr. Stiglitz argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is beingboth economically and politically destabilized. Joseph Stiglitz has always challenged traditional western thinkers andhis literature generally tends to support the East.

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BUSINESS NEWS

1) India set to fund European bailouts- TOI 3 AugIndia is set to fund bailouts in financially-stricken Europe, marking a dramatic rolereversal from 20 years ago when it went knocking on the doors of the InternationalMonetary Fund to avert a balance of payments crisis. The government on Tuesdaysought parliamentary approval to provide over Rs 9,003 crore (over $2 billion) inloans to the multilateral agencys New Arrangements to Borrow, a fund whosecorpus was raised to over $500 billion in March when the crisis in Europe showed no

signs of abating.

So, from Greece, which has received $300 billion so far, to Portugals $100 billionbailout, India could be playing a part in the international rescue operations. Thereare already suggestions that more funding would be required from the European

Union as well as multilateral bodies.

2) Indians do not like to be indebted: Keki Mistry, CEO, HDFC- TOI 31 JulyIndia has a huge shortage of housing & mortgages are only 9% of GDP. In the US everyone has ahouse & mortgages are 84% of their GDP. On the face of it little has changed at HDFC from thetime of liberalization . But at the same time, the subtle changes are hard to miss as well. Forinstance, what began as a metro-centric lender in the '70s today generates most of its businessfrom smaller cities with average loans of little over Rs 18 lakh. The biggest change is, however, inthe scale of business without a corresponding increase in costs, which has made the company thedarling of investors. In the '90s, its 727 employees manned 24 branches and brought in an

average profit of Rs 3.3 lakh per employee. Today, its headcount is 1,607-a little more thandouble-but branch network has grown nine times and the profit per employee stands at around Rs 2.44 crore. As onJune 2011, the company's loan book amounted to Rs 1,24,100 crore. Even with this scale the company has beengrowing loans at an average of 25%.

3) ITC to invest Rs 5,000 crore for buying shares of rival FMCG: YC Deveshwar- ET 30 JulyITC plans to invest up to Rs 5,000 crore buying shares of its rivals across sectors itoperates in, its chairman YC Deveshwar said. "We currently have liquidity in ourbooks to the tune of Rs 4,000-5,000 crore of funds. We would like to deploy it asequity investments in sectors where we operate, have a thorough understandingand hence feel safer about our investment," he told newsmen after the company's100th AGM here on Friday. The cigarettes-to-hotels conglomerate will look at awide range of rival companies in FMCG, IT and agri-products for treasuryinvestment. ITC also plans to get into dairy business, making pasteurised milk,

milk powder, cheese, milk chocolates and butter, Deveshwar told the AGM. "It'sactually a compliment to rivals if we invest in them. As far as I know, some othem are actually happy with our investment," said Deveshwar. ITC's investmenin East India Hotels (EIH) and Hotel Leela venture have yielded handsome returns.

4) Air Indias 38,000 staff not paid salaries for months, forced to borrow, sell assets- ET 28 JulyAir India staff forced to borrow, sell assets & brace for tougher times as salaries are notpaid. The 40-year-old Air India Staff Colony Consumers Cooperative Society providesmonthly household goods to some 8,000 employees of the national carrier residing in thesuburban Mumbai colony. In good times, the cooperative would provide credit, includingfunds to take capital goods on hire purchase, to the tune of . 35 lakh every month to some4,000 members. The money would be deducted from monthly salaries. But these areturbulent times for Air India, which is bleeding losses of a little over . 20 crore a day.Employees have not been paid for two monthsand the salary for July looks uncertain.

Some are selling gold and jewellery, two-wheelers and even considering selling homes to make ends meet.

5) Burgernomics and Indian Exports- ET 1 AugWhy are Indian exports surging (up 46% during Apr-Jun 2011) when the rupee is at a3-year high against the US dollar? Its because the most quoted exchange rate of the

rupee ( versus $) is also the most misleading right now. In real terms, the rupee isactually one of the most undervalued currency in the world. The famous Big Mac indexproves this conclusively.

Developed by The Economist 25 years ago, the Big Mac index uses the price ofMcDonalds burger in different countries to construct an informal (but surprisingly accurate) indicator of real exchangerate. India, which makes a debut in the index this week, has one of the most undervalued currencies vis-a-vis the

dollareven more than the Chinese Yuan. As The Economist says, its fast food for thought.

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6) Just a Day to Start a Business- ET 29 JulyFrom August 1 it will take just 24 hours to start a company doing everything thats neededonline. As India completes 20 years of reforms, another barrier comes down. India has eased itsrules to allow companies to be set up in a day. In starting businesses, we may come up to speed

with the best (see graphic). Kishore Biyani took almost three months to incorporate PantaloonRetail; Tulsi Tanti a month to float Suzlon Energy; Ramesh Chauhan took ages. Kiran MazumdarShaw says she did it in a record time of three months in 1978. But come August 1, reportsApurv Gupta from Mumbai, entrepreneurs dreaming about walking in their footsteps can float acompany in exactly 24 hours, doing everything thats needed online.

7) Bharti Airtel proposes up to Rs 70 crore pay package for Sunil Mittal- ET 1 AugTelecom giant Bharti Airtel today proposed an annual pay package of up to Rs 70 crore for its chiefSunil Mittal, besides other benefits, while seeking its shareholders' nod for his remuneration. Theproposed package would be more than double his last fiscal remuneration of Rs 27.5 crore, which isnearly three-fourth or about 76 per cent of the combined pay package of the company's aldirectors in fiscal ended March 31, 2011.

As per Bharti Airtel's annual report, released today, Mittal's remuneration rose by about Rs 4 croreor 17 per cent from his 2009-2010 fiscal's package of Rs 23.5 crore. Bharti Airtel also sought itsshareholders' approval for re-appointment of Mittal as its Managing Director for another five years

with effect from October 1, 2011, at a remuneration package of up to Rs 70 crore besides other benefits.

8) Jhunjhunwala to Give Away 25% of Wealth- ET 3 JulyRakesh Jhunjhunwala, Indias most famous investor, has pledged to g ive away 25% of his wealth

during his lifetime. He is the fourth Indian businessperson after Azim Premji, Shiv Nadar andGM Rao to make a statement of intent to give away a substantial part of their personal wealthto philanthropy.

Announcing this on Monday evening at an event organized by GiveIndia, a giving facilitator, the51-year-old said he planned to route all his charity through his R Jhunjhunwala Foundation. Hehas set a 2020 corpus target of $1 billion (about 4,400 crore) for his foundation, which is currently inactive.Jhunjhunwala declined to quantify his net worth, but Forbes magazine, in 2008, had ranked him 1,062 among theworlds richest, with an estimated wealth of $1 billion.Often referred to as Indias Buffett, Jhunjhunwala picks uplarge stakes in companies he thinks have a competitive advantage, ability to scale up, and good management. In hisgiving, he now joins Buffett.

9) Those who were buying 2-wheelers are now purchasing bicycles'- The Hindu Business Line 31 JulyMr Pankaj C. Munjal, Managing Director of one of the oldest bicycle manufacturers in India, is upbeat

about the growth in demand for the common man's vehicle'. The 49-year-old head of Hero MotorsLtd and Hero Cycles Ltd graduated in science and went on for specialized training in automotivemanufacturing at General Motors Institute, Flint, US. In an interview with Business Line, Mr Munjatalks about his company's journey so far and future plans.

From a modest beginning of mere 639 bicycles in 1956, Hero Cycles now produces over 18,500cycles a day and has an annual turnover of Rs 1,700 crore. The company employs close to 5,500people and is the market leader, with 48 per cent share of the Indian market. We are known for fair

bargain and reliability. Our huge service network is a big plus. Our manufacturing plant in Ludhiana is the largesbicycle manufacturing plant in the world we sell 5.4 million cycles out of current Indian market size 12 million cycles,manufactured at Ludhiana.

10) 98.5% of inhabited Indian villages have public telephones: TRAI- ET 1 AugNew data released by telecom regulator Trai shows that 98.5 per cent of the inhabited villages

in the country had village public telephone connections as of the end of the quarter endedMarch 31, 2011. There are 5,93,731 inhabited villages in India as per the Census 2001. At theend of March, 2011, 98.5 per cent of the total inhabited villages in India were connected tophone networks through VPTs, as per the Trai report.

The number of VPTs increased from 5.81 lakh in December, 2010, to 5.85 lakh as of thequarter ended March, 2011. Himachal Pradesh has the highest rural tele-density of 70.23(connections per 100 people), followed by Punjab (56.92), Kerala (53.25), Haryana (51.23) and Tamil Nadu (48.92,including Chennai). Bihar continues to have the lowest rural tele-density of 21.86, followed by Madhya Pradesh(22.92). Idea continues to be the service provider with the highest proportion of rural subscribers to its totasubscriber base and this proportion rose to 51.62 per cent at the end of the March quarter from 49.73 per cent at theend of December, 2010.

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11) Sebi makes it easier to take over companies-TOI 29 JulyA slew of new rules by SEBI make it easier to acquire a company and make iteasier & safer for small investors to access the markets. Market regulatorSecurities and Exchange Board of India (Sebi) has announced a slew of

measures that can have far-reaching implications for the market, making iteasier to acquire a company, helping mutual funds get more retail investorsand making it easier and safer for small investors to access the markets.

The game changer for India Inc, however, is the change in the almost 15-year-old takeover rules, which will now enable companies to buy up to 25%

in another company without triggering the mandatory open offer. Currently,this trigger is at 15%. The regulator also said that after the new takeoverrules become effective, the acquirer will have to buy a further 26% stake in

the acquiring company through an open offer, up from 20% now.

12) Hang on inactive users- The Hindu Business Line 27 JulyThe Department of Telecom will ask telecom operators to weed out inactive mobile users in

a bid to free up mobile numbers. According to the telecom regulator, there are 840 millionmobile subscribers of whom only about 588 million users are active. However, the operatorscontinue to count the inactive users as subscribers, thus blocking the numbers allocated tothem. DoT wants mobile companies to cancel 252mn inactive users out of 840 mn users tofree up mobile numbers or else we move to the 11digit series. But the problem is that thecurrent National Numbering Plan 2003 was designed for 750 million connections, including450 million mobile users, and was expected to last till 2030. This has come under severe

strain, with mobile numbers crossing the mark in 2009 itself. We are going to allocatenumbering resources based on the active subscriber base.

13) Cos junk videoconferencing for life-like experience offered by new tech- ET 29 JulyIndia Inc boardrooms and workspaces are using telepresence applications that arebecoming less expensive (as low as . 20 lakh), more accessible (available ondesktops, tablets and handhelds) and more intuitive (through the use of robotics)Companies such as L&T, Vedanta, Infosys and P&G are slowly junkingvideoconference systems in favour of full-fledged telepresence suites. To theuninitiated, telepresence provides an immersive communications experience to theparticipants complete with high-definition video and audio, multiple cameras withmotion sensors, life-sized images of participants, and a controlled environmentThis simulates a face-to-face encounter far better than any videoconference evermanaged to. Simply put, telepresence is the super-deluxe version o

videoconferencing. Telepresence systems now cost $200,000-500,000 and thereturns kick in from savings in air tickets and hotel expenses and higher productivity.

14) Online survey firm dupes investors of 1,300 crore- ET 31 JulyIn an operation that unfolded in Indore, the economic offences wing of theMumbai police arresteda Singapore-based pyramid-marketing companyinthe wee hours of Friday for allegedly perpetrating a nationwide scamamounting to Rs 1,320 crore. Three other senior members of the companywere also arrested but not the CEO who, the police say, is hiding in Dubai. Thefirm, which claims to have 12 lakh clients across the country, has also beenaccused of transferring more than Rs 700 crore to Singapore.

15) Bad roads a pain in the back: Docs- TOI 29 JulyBack problems and slipped discs caused or aggravated by the citys abominable roads have

become the bane of Mumbaikarsexistence. Orthopaedics in public hospitals say that everyday at least 10% of their patients are being treated for bad backs caused because they haveto commute for long hours on pothole-ridden roads. Orthopaedics, gynaecologists andgeneral practitioners have noticed a rise in the number of Mumbaikars complaining ofmoderate to severe back aches. Dr Hemant Thacker, who consults in many south Mumba

hospitals, says every rainy season the number of back problem cases rises. Motorists fromthe city and the larger metropolitan region are expressing their anger at the poor conditionof the roads by refusing to pay toll. Mumbai: Its not just the elderly, those with existingback problems, or pregnant women who have to be extra careful. The condition of our roadsis so bad that even people who never felt a twinge of pain in their backs have begun to

suffer from slipped discs.

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16) Girl child campaign may get star support-TOI 31 JulyThe state government, in a bid to bolster its girl child campaign, has approached star BollywoodcoupleKajol and Ajay Devgnto be the brand ambassadors for the state health departmentsdrive. Ajay and Kajol are believed to have consented to the proposal informally.

Minister for public health Suresh Shetty, said sources, wanted a Bollywood couple with a girlchild and a noncontroversial image. There has been a sharp decline in the girl-boy ratio in thestate in the last decade. The child sex ratio figures of 1991 Census show 946 girls per 1,000boys. In 2011, this dropped to 833 girls per 1,000 boys. Beed district in Marathwada region registered a drop of 93girls per 1,000 boys in the last decade. The child sex ratio in Beed was 894 girls per 1,000 boys in 2001 as against

801 girls in 2011. Besides Ajay and Kajol, the state government has already roped in prominent Marathi film industryactor Sachin Pilgaonkar and wife Supriya as brand ambassadors for save the girl child campaign. They are popularin rural parts of the state, said an official.

17) As Media Ratchets up Pressure 24x7, UPA Brings on Its G7- TOI 1 AugBetween them, these seven ministers run nine ministries. Yet, at noon every weekday, theyleave their ministries and assemble at the conference room on the fifth floor of Shastri Bhavan,

home to the information and broadcasting ministry, to take on an additional responsibility:Managing the media. They meet for about an hour to decide issues of the day, who will handlewhat, and what will they say to the media. For the rest of the day, whenever needed, theseministers represent the government on their respective issues in the media, be it at pressbriefings or in TV debates.

The group was formed in early-May in the aftermath of the Anna Hazare anticorruption agitation. This is the first time

an Indian government has institutionalized media management in this manner, where a group of ministers discussand present a collective front. Home Minister P Chidambaram, one of the seven ministers, says the objectives havebeen partially met.

18) IT, ITeS Workers Running Out of Space- TOI 3 AugIts 9.30 am and theres near commotion at a building in Gurgaon that houses off shoringunits of US firms. The parking is full employees are being turned away and there are longqueues that snake their way to the elevators. The lifts themselves are packed to the gills.Inside an office, employees sit within sniffing distance of each other. Cubicles have made wayfor linear sitting, and the office does not look too different from a factory shop floor.

Lavatories are few, and it isnt uncommon to spot a line outside them. The scene at thecafeteria is not much different from that at the parking lot. Welcome to just another day at a typical small or medium-sized IT outsourcing company. Under pressure from their clients, or parent organizations, to reduce bills amid

increasing rentals and employee salaries, these IT-enabled services (ITeS) firms are taking stringent measures to cutcosts. They are reducing space per employee, and decreasing the size of common areas like cafeterias and conferencerooms. At a clutch of ITeS companies, office space is being shared between IT workers and the call centre workforce(as the latter work the late shift to synchronize with US timings).

19) India tells EU Nations to commit visa numbers for Indian professionals- ET 3 AugIndia has sought a commitment from each of the 27 member-nations of the European Union on thenumber of Indian professionals they would allow to migrate every year in sectors of its interest.While India has agreed to bring down duties on a large number of goods from the EU countries,including automobiles and liquor, as part of the free trade agreement, it is conditional upon thecountry gaining "substantially" in the services pact, the official said. For instance, India sees a lot ofscope for Indian accountants in the UK and IT professionals in France, and it has sought access forthem accordingly.

Countries in Europe have their own numerical limits on foreign workers and tax structure, but mostgive visas only to corporate transferees and business visitors and do not allow access to individual professionals andcontractual service providers. European countries do not recognize qualifications gained in India and also apply theeconomic needs test (ENT) in many cases where the hiring company has to prove that the post cannot be filled byEuropean citizens.

20) Tata Motors launches three variants of crossover SUV Aria-TNN 02 AugThe country's largest auto player Tata Motors today rolled out three variants of its recentlylaunched crossover SUV, the Aria. "The Aria 4x2 is launched in three trim levels - the AriaPrestige at the top-end, the Aria Pleasure and the Aria Pure at the lower-end," Tata Motorsmanaging director Indian operations PM Telang said in a release here today. The Aria 4x2 rangewill be available from Rs 11.61 lakh onwards (ex-showroom, Delhi). The Aria range along with

the 4x2 range is being made available, in 85 cities through 150 showrooms, the release said.

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INTERNATIONAL NEWS

21) Iran says oil payment row with India resolved- Reuters31 JulyIran's oil payments row with India has been resolved before any interruption in crude exports toits second-biggest customer, the Iranian Oil Ministry's website SHANA said on Sunday.Halkbank, Indian refiners are expected to clear over $5 billion of debts built up with Iran duringa lengthy U.S.-inspired payment impasse. "After intensive talks between India and Iran, both

sides agreed to clear the debt promptly," Ahmad Ghalebani, head of the National Iranian Oil Co(NIOC), told SHANA.

India and Iran have been looking for ways for New Delhi to pay for some 400,000 barrels per day of Iranian crude, or12 percent of India's oil demand, since the Reserve Bank of India halted a clearing mechanism under U.S. pressurelast December.

22) Foxconn assembles iPads & iPhones in China plans use 1 mn robots in 3 yrs to cut labor cost- ET 3 AugTaiwan's Foxconn Technology Group, known for assembling Apple's iPhones and iPads in China,plans to use more robots, with one report saying the company will use one million of them in thenext three years, to cope with rising labor costs. Fox conn's move highlights an increasing trendtoward automation among Chinese companies as labor issues such as high-profile strikes andworkers' suicides plague firms in sectors from autos to technology.

Contract manufacturers such as Foxconn, which also counts Dell, Hewlett-Packard and Nokiaamong its clients, are moving parts of their manufacturing to inland Chinese cities or otheremerging markets. Foxconn, which has been plagued by a spate of workers' suicides in its Chinese factories since lastyear, plans to use the robots for simple assembly line procedures, the statement quoted its chairman Gou as saying.

23) US is 'parasite' on global economy: Russian Prime Minister Vladimir Putin- ET 3 AugRussian Prime Minister Vladimir Putin accused the United States on Monday of living beyond itsmeans "like a parasite" on the global economy and said dollar dominance was a threat to thefinancial markets. US President Barack Obama earlier announced a last-ditch deal to cut abou$2.4 trillion from the US deficit over a decade avoid a crushing debt default and stave off therisk that the nation's AAA credit rating would be downgraded.

Putin, who has often criticized the United States' foreign exchange policy, noted that Russiaholds a large amount of US bonds and treasuries. US-Russian ties soured during Putin's 2000-2008 presidency but have warmed significantly since his protege and successor President

Dmitry Medvedev responded to Obama's stated desire for a "reset" in bilateral relations.

24) DEBT RIPPLE IMFs lending corpus has grown 10-fold on G20 push- TOI 3 AugOver the past two years, amid increased stress in the global economy, the InternationalMonetary Fund has been pressed into service on several occasions and has financedbailouts in European countries facing a crisis due to high levels of debt.

The 10-fold rise in the New Arrangements to Borrow (NAB) corpus was the result of thenew global financing order created by G20, a group of the worlds most powerfuleconomies, in the post-financial crisis era. Along with the jump in corpus, membership tothe elite club of NAB contributors was also expanded to include 13 emerging economies,which included India. While the US was the principal donor, chipping in with $100 billion, its largesse was notappreciated at home when the funding was given. Since then, the worlds largest economy has itself had to deal witha crisis over the Obama administration and Congress logjam on borrowing ceiling and spending cuts.

25) Pakistan relying too much on China against U.S.-Reuters 02 AugPakistan's quick response to charges by China that militants involved in attacks in Xinjianghad trained on its soil shows the importance of its ties with Beijing, but it could be a

mistake for Islamabad if it relies too much on China.Pakistan immediately dispatched Lieutenant-General Ahmed Shuja Pasha, director generaof Pakistan's powerful Inter-Services Intelligence (ISI) spy agency, to Beijing after Islamicmilitants mounted a weekend attack that left 11 people dead in the western region ofXinjiang, according to media reports.

"We cannot allow Pakistani territory to be used for any activities against any neighbour,especially a close ally like China," said Mushahid Hussain Sayed, Chairman of the Pakistan-China Institute. The United States rarely gets that level of cooperation when it presses

Pakistan on militants operating in its border regions. American officials for years said al Qaeda leader Osama binLaden, killed in a U.S. raid in Pakistan in May, was hiding in the country.

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MISCELLANEOUS NEWS

26) Lokpal bill cleared, PM not in ambit Asian Age 29 JulyThe Union Cabinet on Thursday decided to keep the office of the prime minister outside thefold of the proposed Lokpal, overruling Prime Minister Manmohan Singh himself. Thedeliberations spread over two hours saw Singh make a strong argument for the inclusion ofhis office in the Lokpals ambit, only to run into resistance from the overwhelmingmajority. The governments decision met with a sharp attack from civil society activist AnnaHazare who announced that he would go ahead with his fast from August 16 and demanded

that the government bill be withdrawn.

The revised draft provides for the majority of the 9-member Lokpal to be drawn fromamong people with a legal background: a concession to the argument that the quasi-judicialbody will require people with understanding of law and legal practices. In another significant addition, any trust orbody, including NGOs that receive public funds, will come under the Lokpals scrutiny.

27) New draft Land Acquisition Bill -Business Today 30 JulyThe new draft Land Acquisition Bill proposes that the Government will not acquire land for privatecompanies for private purposes or multi-cropped irrigated land. Companies will have to buy itthemselves at 6 times the market rates The draft Bill says that the public purpose once statedcannot be changed. But it also says that if the land is not used in five years for the purpose forwhich it is acquired, it should be returned to the original owner. Most of such land is in Punjab,Haryana, West Bengal, Bihar and poll-bound Uttar Pradesh, which has become a political hotspot onland acquisition issues. Called the Draft National Land Acquisition and Rehabilitation & ResettlementBill, 2011, it proposes a comprehensive compensation policy. In the urban areas, the amount

should be not less than twice that of the market rate, whereas in the rural areas, it should be notless than six times the original market value. Among its other salient features is a comprehensiverehabilitation package for land-owners and livelihood losers, including the landless, particularly theScheduled Tribes that are primarily dependent on the land being acquired.

28) Abbreviated expressions make their way into everyday communication- ET 28 JulyTwitter lingo like, TMI (too much information), IMHO (in my humble opinion) & TBH (to behonest) now part of Oxford Dictionary. If you thought TMI and IMHO are abbreviations used onlyby Facebook-obsessed Gen Z, you are wrong, TBH. Such Internet usages are now part of the

official Oxford English Dictionary and are creeping into corporate communication. For the Twitteruninitiated, TMI is too much information, IMHO is in my humble opinion and TBH is to behonest. And they are getting into corporate lingo, as PepsiCo India Executive Director(Marketing) Deepika Warrier says. Languages change with time. Such words are beingfrequently used in our internal informal communication as it saves time, Warrier says.

She expects these words to gradually make their way into formal communication. With the cult ofsocial networking sites such as Facebook, Twitter and now Google+ catching up, abbreviated expressions used widely

in chats and Tweets started making into the online format of Oxford English Dictionary in March.

29) Job Satisfaction Just Temporary- TOI 30 JulyYoung Indian employees have no hang-ups about job security and are increasingly switchingpermanent jobs for temporary roles offering better money, career profile and quicker rise tothe top. As many as 15% new recruits of temp staffing firm Teamlease are permanentemployees switching to temp jobs, company officials say. The development suggests that forthe first time, the Indian workforce is putting opportunity ahead of security. The carrots better career profile, money and organisation brand. Younger employees have a higher riskappetite in terms of job movement. A shift such as this can give the employee exposure tonew growth areas, experience of working on cutting-edge technology and an opportunity toget absorbed as a permanent employee eventually, says Sudhakar Balakrishnan,

managing director & CEO of Adecco India

30) Mining mafia paid of Karnataka CM Yeddyurappas family- TOI 28 JulyIn a stunning finding that could blunt the BJPs attack on the Congress on corruption, KarnatakaLokayukta, Justice Santosh Hegde, has said chief minister B S Yeddyurappas family got illegalpayoffs from a mining company to hasten clearance of pending applications. Not just this, hehas recommended criminal proceedings against Yeddyurappa and some of hisministers. Lokayukta pegs loss to Exchequer at Rs16,000cr. BJP Asks CM to resign. JusticeHegdes second report, released on Wednesday, pegs losses suffered by the state exchequerdue to illegal mining over four years (2006-2010) at Rs 16,085 crore and recommends that theamount be recovered from those who caused itpoliticians, officials and companies. The reportalso seeks criminal action against three ministersG Janardhana Reddy, G Karunakara Reddy and B Sriramulu.

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CORPORATE INTELLIGENCE

THE ESSAR GROUP

Head Quarters: Mumbai

Revenue:US$20 billion

Group Statistics: The Essar Group has operations in more than 25 countries across five continents and employs75,000 people. The group companies are well diversified across core economic sectors of steel, oil & gas, power,

communications & business process outsourcing (BPO), shipping, ports & logistics, projects and minerals. Otherventures include those in publishing, agribusiness, realty and financial services.

Group Companies: Essar Steel a steel manufacturing company with fully integrated operations from iron-oremining to steel retail outlets; Essar Energy plc a low-cost, integrated energy company with US$12 billion worth ofassets across the power and oil & gas industries; Essar Oil & Gas involved in exploration, production and retail ofOil with offshore and onshore oil & gas blocks worldwide; Essar Power Indias second largest power generationcompany in the private sector; Essar Shipping Limited an integrated logistics solution provider with investmentsin logistics services, sea transportation and oilfield drilling; Essar Ports Limited develops, owns and operates portsand terminals and is Indias second-largest private sector port and terminal company by capacity; Essar ProjectsLimited an engineering, procurement and construction (EPC) company; Essar Communications a global playewith presence in telecom services, consumer durables and IT and BPO services; Essar Minerals owns iron ore andcoal mines in India, Indonesia, Mozambique and the USA.

Key People:Shashi Ruia (Chairman);Ravi Ruia (Vice-Chairman)

Essars Humble Beginnings:In 1956, Nandkishore Ruia, father of Shashi and RavRuia, began undertaking independent contract works (mostly in the construction andshipping businesses) under the name of Essar Construction and Carriers Ltd. namedEssar after the first letters of his sons' names S and R. After the death of NandkishoreRuia in 1969, his sons laid the foundation of the Essar Group which began its operationswith the construction of an outer breakwater in Chennai port. Capitalizing on emerging

business opportunities, it became Indias first private company to buy a tanker in 1976. The Group also invested in adiverse shipping fleet and oilrigs, when the Government of India opened up the shipping and drilling businesses toprivate players in the 1980s. In the 1990s, Essar began its steelmaking business by setting up Indias first spongeiron plant in Hazira, a coastal town in Gujarat. The Group went on to build a pellet plant in Visakhapatnam, andeventually a fully integrated steel plant in Hazira. Through the 1990s, with the gradual liberalization of the Indian

economy, Essar diversified its shipping fleet, started oil & gas exploration and production, laid the foundation of its oirefinery at Vadinar, Gujarat, and set up a power plant near the steel complex in Hazira. Essar also entered the GSMtelephony business in 1995, establishing Indias first mobile phone service in Delhi (branded Essar Cellphone) withSwiss PTT as the joint venture partner.

The Essar Group Today: Having started out as a construction company, theEssar group today is a multinational conglomerate growing through strategicglobal acquisitions & partnerships. Its flagship Essar Steel is a global steel

producer having manufacturing facilities in India, Indonesia, Canada & NorthAmerica and a capacity of 14 million tonnes per annum. It operates specializedplants to manufacture value-added products like plates and pipes. It is also aleader in cold rolled, galvanized and pre-coated steel products. Essar Power hasa current generation capacity of 1,600 MW spread across five power plants inIndia and Canada. While Essar Communications has over 140 million subscribers

in India, Kenya, Uganda and Congo, Aegis - Essar's BPO arm - serves Fortune500 companies across 10 countries through 47 delivery centers.

INTELLIGENCE BYTES:

Essar Energy plc, was listed on the London Stock Exchange in 2010 following a highly successful Initial Public Offer(IPO), the second largest overseas IPO ever floated by a company of Indian origin.

Essar Oils 300,000 barrels-per stream-day refinery located at Vadinar, Gujrat has processed more than 32 varietiesof crude (Vadinar receives almost 70% of Indias crude imports).Essar has brought all its retailing arms -- The MobileStore and The ElectronicStore which retail mobile & consumerdurables and IT products, Essar Hypermarket which retails steel and fuel retail operations of Essar Oil under EssarRetail, having a combined turnover of $1.5 billion.On 1 Aug, 2011, Essar Energy completed the $350 million takeover of UK's second-largest refinery, popularly knownas Stanlow refinery, from global major Shell. The acquisition gives Essar direct access to the UK market.

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CURRENT AFFAIRS QUIZ

1. From August 1 it will take just ________________ to start a company doing everything thats needed online.a. 24 hoursb. 1 monthc. 1 weekd. 1 year

2. What is untrue about Russian Prime Minister Vladimir Putin's accusations against the United States?a. He has accused the United States of living beyond its means "like a parasite" on the global economy.b. He has said that dollar dominance is a threat to the financial markets.c. He has often criticized the United States' foreign exchange policy and noted that Russia holds a large

amount of US bonds and treasuries.

d. He said that Chinese and Indian economies are much healthier than the U.S. economy.

3. Which of the following is not a product of the new business venture planned by ITC?a. Energy drinksb. Pasteurized milkc. Chocolatesd. Cheese and butter

4. Which one of the following is incorrect regarding HDFC Bank?a. It has been growing loans at an average of 25%.b. In the 90's, 727 employees brought in an average profit of Rs 3.3 lakh per employee.c. It began as a metro-centric lender in the '70s.d. It's scale of business has increased with a corresponding increase in costs.

5. Which of the following is incorrect about the Lokpal Bill ?a. In a significant change, any trust or body, including NGOs that receive public funds, will not come

under the Lokpals scrutiny.b. The office of the Prime Minister has been kept outside the fold of the proposed Lokpal.c. Being a quasi-judicial body, the 9-member Lokpal will have a majority of people from a legal

background.

d. Civil society activist Anna Hazare has demanded that the government bill be withdrawn.

6. Which of the following is not true regarding the new Draft Land Acquisition Bill ?a. The Government will not acquire land for private companies for private purposes or multi-cropped

irrigated land.b. While the purpose stated can be changed, if the land is not used in 10 years for the purpose for which

it is acquired, it should be returned to the original owner.c. There is comprehensive rehabilitation package for land-owners & livelihood losers including the

landless, particularly the Scheduled Tribes.d. The compensation amount should not be less than twice the market rate in urban areas & six times

the original market value in rural areas.

7. Which of the following is not among the commonly used Twitter abbreviations, to be now included in theOxford Dictionary ?

a. TMI (too much information)b. IMHO (in my humble opinion)c. HOH (head over heels)d. TBH (to be honest)

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8. Which of the following is incorrect in the context of changing job perceptions among Indian employees ?a. Shift from a permanent job to a temporary one can give employees exposure to new growth areas &

experience of working on cutting-edge technology.b. Opportunity is put ahead of security for benefits like a quick rise to the top, better money and

organization brand.c. Younger employees have a higher risk appetite in terms of job movement.d. Excessive work pressure and long office hours are pushing employees to increasingly switch from

permanent jobs to temporary roles.

9. Which of the following is not correct regarding B S Yeddyurappa and the accusations against him by JusticeSantosh Hegde ?a. B S Yeddyurappa, the Chief Minister of Andhra Pradesh, is from the Congress party.b. B S Yeddyurappa's family got illegal payoffs from a mining company to hasten clearance on pending

applications.c. Justice Santosh Hegde has recommended criminal proceedings against B S Yeddyurappa and some of

his ministers.

d. Justice Hedge's second report pegs losses suffered by the state exchequer due to illegal mining overfour years (2006-2010) at Rs 16,085 crore.

10.Which of the following is not among the actions to be taken by the Department of Telecommunications (DoT)in respect of inactive users?

a. DoT wants mobile companies to cancel the 252mn inactive users out of 840 mn users.b. DoT is going to allocate numbering resources based on the inactive subscriber base.c. DoT wants inactive users to free their mobile numbers.d. Inactive mobile users will have to move to the 11digit series if they do not free their numbers.

11.Which of these statements is false?a. Temporary jobs are remunerated well.b. Temporary jobs give a quick rise to the top.c. Career profile of temporary jobs is promising.d. Temporary jobs are more secure.

12.What is untrue about Russian Prime Minister Vladimir Putin's accusations against the United States?a. He has accused the United States of living beyond its means "like a parasite" on the global economy.b. He has said that dollar dominance is a threat to the financial markets.c. He has often criticized the United States' foreign exchange policy and noted that Russia holds a large

amount of US bonds and treasuries.d. He said that Chinese and Indian economies are much healthier than the U.S. economy.

13.Which of the following is not a product of the new business venture planned by ITC?a. Energy drinksb. Pasteurized milkc. Chocolatesd. Cheese and butter

14.Which of the following is not among the actions to be taken by the Department of Telecommunications (DoT)in respect of inactive users?

a. DoT wants mobile companies to cancel the 252mn inactive users out of 840 mn users.b. DoT is going to allocate numbering resources based on the inactive subscriber base.c. DoT wants inactive users to free their mobile numbers.d. Inactive mobile users will have to move to the 11digit series if they do not free their numbers.

15.Which of these statements is false?a. Temporary jobs are remunerated well.b. Temporary jobs give a quick rise to the top.c. Career profile of temporary jobs is promising.d. Temporary jobs are more secure.

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16.ITC, the cigarettes-to-hotels conglomerate, has plans not to compete with rivals in which of the followingsector?

a. FMCGb. Energyc. ITd. Agriculture

17.What is incorrect about Air India Staff Colony Consumers Cooperative Society?a. The cooperative provides monthly household goods to some 8,000 employees of the national carrier

residing in the suburban Mumbai colony.b. In good times the cooperative provides credit to the tune of Rs 35 lakh.c. In good times the cooperative provided funds to take FMCG goods on hire purchase.d. In good times, the cooperative would provide credit, every month to some 4,000 members.

18.What is false about the new measures, undertaken by SEBI, which can have a major impact on the market?a. New SEBI measures have made it easier to acquire a company.b. The new SEBI measures will help mutual funds to get more retail investors.c. The new SEBI measures make it easier and safer for small investors to access the markets.d. As per the new SEBI measures, the acquirer will have to buy a further 50% stake in the acquiring

company up from the 20% now.

19.What is not one of the benefits, of India Inc boardrooms and workspaces, using telepresence applications?a. It is faster (as compared to videoconferencing).b. Telepresence is becoming less expensive (as low as Rs 20 lakh).c. Telepresence is more accessible (available on desktops, tablets and handhelds).d. Telepresence is more intuitive (through the use of robotics).

20.Which of the following is untrue regarding a scam involving a Singapore based pyramid marketing company?a. The company has allegedly perpetrated a nationwide scam amounting to Rs 1,320 crore.b. The CEO is believed to be hiding in Singapore.c. The company has been accused of transferring more than Rs 700 crore to Singapore.d. The firm claims to have 12 lakh clients across the country.

21.Which of the following is not a resultant problem of Mumbai's bad road?a. Bad roads have resulted in back pains and slip disc injuries.b. Orthopedics in public hospitals say that every day at least 10% of their patients are being treated for

bad backs.c. Bad roads have lead to a 20% rise in accidents.d. Bad roads have an adverse effect on pregnant women.

22.Which of the following states of India has the highest rural tele-density of 70.23 (connections per 100people)?

a. Punjabb. Haryanac. Tamil Nadud. Himachal Pradesh

23.The state government, in a bid to bolster its girl child campaign, has approached star Bollywood couple to bethe brand ambassadors for the state health departments drive. Choose correct pair of Bollywood couple fromthe following?

a. Kajol & Ajay Devgnb. Saif Ali Khan & Kareena Kapoorc. Aishwarya & Abhishek Bachchand. John & Bipasha Basu

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24.Which of the following continues to be the service provider with the highest proportion of rural subscribers toits total subscriber base and this proportion rose to 51.62 per cent at the end of the March quarter from 49.73per cent at the end of December, 2010?

a. Vodafoneb. Ideac. Relianced. Airtel

25.ITC, the cigarettes-to-hotels conglomerate, has plans not to compete with rivals in which of the followingsector?

a. FMCGb. Energyc. ITd. Agriculture

ANSWER KEY:

Q A Q A Q A Q A Q A

1 A 6 b 11 d 16 b 21 c

2 d 7 c 12 d 17 c 22 d

3 a 8 d 13 a 18 d 23 a

4 d 9 a 14 b 19 a 24 b5 a 10 b 15 d 20 b 25 b

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CA Newsletter July 28 to 03 Aug

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Transcript of CA Newsletter July 28 to 03 Aug