SectorSnippets Issue 21:TP4 WhitePaper A4.QXD · • Nissan to build manufacturing unit at Oragadam...
Transcript of SectorSnippets Issue 21:TP4 WhitePaper A4.QXD · • Nissan to build manufacturing unit at Oragadam...
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Sectoral Snippets
About Sectoral Snippets
Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter brought out by
KPMG in India. This newsletter provides an overview of the Indian economy in the form of
news-briefs from across key sectors.
Contact [email protected] if you are interested in receiving this newsletter on a
regular basis, or wish to unsubscribe.
Table of Contents
1. Indian Economy 3
2. Auto and Auto Components 4
3. Banking and Insurance 5
4. Consumer Markets and Retail 6
5. Hospitality 7
6. IT / ITeS 8
7. Media 9
8. Oil and Gas 10
9. Pharma 11
10. Power 12
11.Real Estate and SEZs 13
12.Telecom 14
13.Transport and Logistics 15
Sectoral Snippets, Issue 21
India’s�tourism�and�hospitality�industry�has�beenon�an�upward�curve,�with�tourism�contributingaround�6.8�percent�to�India’s�GDP,�employingapproximately�41�million�people�and�generatingaround�USD�11.96�billion�in�foreign�exchangeearnings�in�2007.�These�developments�have�hada�cascading�effect�on�the�Indian�hospitalityindustry,�enhancing�the�sector’s�attractivenessfor�investment.�Despite�facing�challenges�suchas�shortage�of�trained�manpower,�high�luxurytaxes�and�an�inadequate�tourism�infrastructure,the�hospitality�sector�has�much�room�to�grow-especially�with�heritage,�wildlife,�medicaltourism�etc.�gaining�momentum.
Against�this�backdrop,�we�have�focused�on�keydevelopments�in�the�hospitality�sector,�underthe�new�section�‘Hospitality’,�in�SectoralSnippets.�
We�hope�you�find�this�edition�useful�andinformative.
Regards,
Russell
Russell Parera
Chief Executive Officer
KPMG in India
©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
For�the�week-ended�June�28,�2008,�the�wholesale�prices-based�inflation�touched
a�new�13-year�high�of�11.89�percent�1,�much�higher�than�the�Reserve�Bank’s
tolerance�limit�of�5.5�percent�for�the�current�fiscal.�This�is�the�highest�since�the
current�series�of�inflation�numbers�became�available�in�April�1995.
The�inflationary�pressures,�primarily�an�outcome�of�the�record�crude�oil�and
commodity�prices,�had�forced�the�Reserve�Bank�to�effect�a�series�of�hikes�in�its
key-rates.�The�apex�bank�hiked�its�short-term�repo�rate�at�which�it�lends�to�banks
and�Cash�Reserve�Ratio�(CRR),�the�percentage�of�money�that�banks�are
mandated�to�keep�with�the�central�bank.�Following�the�hike,�the�CRR�and�repo
rate�presently�stands�at�8.75�percent�and�8.5�percent�respectively2.�To�anchor
inflation,�the�central�bank�could�go�in�for�further�rate�hikes�in�its�quarterly�review
of�the�monetary�policy�on�July�29,�2008.
The�yield�on�India’s�10-year�bonds�shot�up�to�9.5�percent,�a�7�year�high,�after�the
inflation�numbers�climbed�to�11.89�for�the�week�to�28�June,�2008�3.�Banks
started�raising�their�lending�rates�in�the�second�half�of�June�and�economists
expect�interest�rates�to�harden�further�as�inflation�continues�to�rise,�which�are
bound�to�affect�fresh�projects.�Due�to�the�rising�cost�of�funds,�some�companies
could�defer�their�investment�plans.�Retail�finance�and�real�estate�are�witnessing
severe�slowdown�due�to�fund�constraints.�According�to�a�report�by�Projects
Today,�investments�of�around�USD�800�billion�may�be�affected�in�the�short�–term
due�to�rising�prices.�
Industry�continued�to�bear�the�brunt�of�rising�interest�rates�as�its�growth�dipped
to�3.8�percent�in�May�2008�4,�against�10.6�percent�a�year-ago.�The�industrial
production�growth�data�points�to�a�slowdown�in�manufacturing�and�capital
goods.�Manufacturing�grew�by�a�modest�3.9�percent�in�May�against�11.3�percent
a�year-ago.�The�growth�in�capital�goods�production�slowed�to�2.5�percent�in�May
from�11.4�percent�in�the�same�month�last�year.�
The�weak�global�environment�coupled�with�portfolio�outflows�has�resulted�in�a
deceleration�in�forex�reserves.�Fiscal�YTD,�foreign�currency�assets�have�risen�by
USD�2.8�billion�vs.�USD14�billion�in�the�same�period�last�year�and�currently�stand
at�USD�302�billion5.�Forex�reserves�including�gold�are�at�USD�312�billion.�The
rupee�may�have�been�weaker,�were�it�not�for�RBI�intervention�and�recent
measures�(special�market�operations,�ECB�liberalization,�higher�FII�investment�in
debt)�taken�to�hold�up�the�unit.
Inflation�along�with�political�tensions�surrounding�Indo-US�nuclear�accord�have
added�to�the�worries�of�ruling�government.�The�Left�parties�withdrew�support�of
the�Congress-led�UPA�Government�after�four�years�of�protest�against�the
decision�to�sign�the�civilian�nuclear�deal�with�the�United�States.�However,�the
Samajwadi�Party�(SP),�a�regional�party�of�Uttar�Pradesh�has�indicated�its�support
for�the�government�and�the�government�appears�confident�of�winning�a�likely
vote�of�confidence.
Indian EconomyPage 3 of 16
Analyst: Asmita Deshmukh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Source:�Ministry�of�Industry�and�Statistics
Source: 1,4 Central Statistical Organisation2,3,5 Reserve Bank of India
• Altius Autoworld and Gulliver International Co. form a JV
India’s�Altius�Autoworld�and�Gulliver�International�Co.�of�Japan�have�reportedly
planned�to�invest�USD�234�million�over�the�next�5�years�in�the�auto�servicing
arena.�The�companies�have�planned�to�open�300�outlets�to�service�luxury�cars,
heavy�commercial�vehicles�and�automotive�machines�used�in�the�construction
industry�in�India.�Gulliver�and�Altius�are�to�hold�equity�in�the�ratio�51:49,
respectively.
• Ashok Minda group acquires Schenk Plastic Solutions, a German
firm
The�Ashok�Minda�group�has�acquired�a�plastic�automobile�component
manufacturer;�Schenk�Plastic�Solutions,�a�German-based�firm.�The�deal�is
expected�to�be�completed�by�August�2008.�Schenk�has�annual�sales�of�USD
118.25�million�and�about�500�employees.�This�could�turn�out�to�be�a�strategic
acquisition�for�the�Minda�Group�as�Daimler�accounts�for�60�percent�of�Schenk’s
total�business�and�could�help�the�Ashok�Minda�group�enter�European�markets.�
• Nissan to build manufacturing unit at Oragadam
Nissan�Motor�Co.�has�announced�the�setting�up�a�manufacturing�plant�at
Oragadam�with�French�car�manufacturer�Renault�with�an�investment�of�USD
1.1�billion.�The�plant�is�expected�to�be�operational�in�2�years�and�is�expected�to
roll�out�400,000�cars�annually.
• Mahindra and Mahindra acquire an Italian motorcycle designing
firm
Mahindra�and�Mahindra�(M&M)�has�acquired�a�controlling�stake�in�a�leading
two-wheeler�designing�firm,�Engines�Engineering�SpA�of�Italy.�According�to�the
agreement,�between�M&M�subsidiary�Mahindra�Systech�and�the�Engines
Engineering�SpA,�a�new�entity�called�Engines�Engineering�S.r.L�has�been
formed,�with�M&M�holding�a�100�percent�stake�in�it.�The�Italian�firm’s�revenue
is�around�USD�12�million.�This�acquisition�could�help�Mahindra�penetrate�the
European,�Chinese�and�Russian�markets.
• Reva Electric Car Company to invest USD 20 million
The�Bangalore-based�electric�car�manufacturer�Reva�Electric�Car�Company
(RECC)�has�launched�its�REVAi�two-seater�hatchback�a�revised�version�of�its
earlier�car.�With�the�growing�prices�of�petrol�and�increase�in�the�popularity�of
electric�and�hybrid�vehicles,�RECC�has�planned�to�invest�USD�20�million�in�its
Bangalore�unit�to�increase�the�production�from�6,000�units�to�30,000�units
annually.�Also�to�popularize�the�car,�the�Delhi�government�has�announced�a�15
percent�subsidy�on�its�base�price,�12.5�percent�exemption�of�Value-Added�Tax
(VAT),�and�a�refund�of�road�tax�and�registration�charges.
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Auto and Auto Components
Analyst: Rajiv Somani©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
New Launches in June 2008
MODEL PRICE (USD)
New�Ford�Fiesta 14,245-16,900
Revai 6,980-�8,750
Mercedes�E�230� 97,000
Mercedes�E�220�CDI� 91,000
Honda�Civic�Hybrid 47,000
CBF�Stunner�(HondaMotorcycle�and�Scooters�India) 1,100-1,200
Skoda�Fabia�1.2�Mpi 11,700-13,900
Maruti�800�Duo�(LPG) 4,800-5,280
TYZF-R15,�Yamaha� 2,280
Source:�Collated�from�various�press�articles�in�themonth�of�June,�2008
• Indian banks raise lending rates
With�the�Reserve�Bank�of�India�(RBI)�hiking�the�short-term�repo�rate�to�8.5percent�and�cash�reserve�ratio�(CRR)�to�8.75�percent,�as�part�of�its�on-goingeffort�to�contain�rising�inflation,�public�and�private�sector�banks�have�hiked�theirinterest�rates�across�the�board.�Leading�banks�like�State�Bank�of�India,�PunjabNational�Bank,�ICICI�Bank�and�HDFC�Bank�have�hiked�their�respective�primelending�rates�in�the�range�of�0.25�percent�to�1�percent�to�protect�their�margins.
• GIC Re signs cooperation deal with Hannover Re
German�reinsurer�Hannover�Re�and�Indian�government-owned�GeneralInsurance�Corporation�of�India�(GIC)�have�entered�into�an�exclusive�cooperationagreement�regarding�the�joint�development,�marketing�and�underwriting�of�lifereinsurance�business�in�India.�Under�the�five�year�agreement,�the�twocompanies�will�be�sharing�underwriting�revenues�from�new�businesses.�Thiscooperation�is�expected�to�provide�Hannover�with�faster�access�to�the�rapidlyexpanding�Indian�insurance�market,�while�GIC�Re,�which�currently�providesnon-life�reinsurance,�is�likely�to�profit�from�Hannover�Re’s�long-standingexpertise�in�life�reinsurance.
• Societe Generale plans private bank expansion in India
French�bank�Societe�Generale�is�planning�to�expand�its�private�bankingoperations�in�India,�as�it�is�also�intends�to�double�its�staff�and�expand�its�reachto�8�to�10�Indian�cities�from�existing�offices�in�Mumbai�and�New�Delhi.�SocieteGenerale�is�also�gearing�up�to�launch�its�Non-Banking�Finance�Company�(NBFC)operations�in�India,�having�received�the�regulatory�approval.�The�group�expectsto�offer�a�wider�portfolio�of�products�to�its�rapidly-growing�customer�base�inIndia�through�the�NBFC�route.�Societe�Generale�follows�a�host�of�other�foreignmajors�like�HSBC�and�Deutsche�that�are�looking�at�enhancing�their�NBFCpresence�in�India.
• RBI draft norms for mobile banking
As�a�first�major�step�towards�mobile�payment�framework�in�India,�the�ReserveBank�of�India�(RBI)�has�issued�draft�guidelines�for�mobile�banking�with�a�long-term�goal�that�is�expected�to�enable�funds�transfer�across�different�bankaccounts�on�a�real�time�basis,�irrespective�of�the�mobile�network.
As�per�the�draft,�even�those�with�the�most�basic�mobile�phones�may�be�able�topay�for�transactions�through�their�mobile�in�the�future.�RBI�has�permitted�theuse�of�SMS-based�mobile�payments�for�small�transactions�up�to�USD�38.Banks�which�are�licensed�and�supervised�in�India�and�have�a�physical�presencein�India�are�to�be�permitted�to�offer�mobile�payment�services�to�residents�ofIndia.�
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Banking and Insurance
Analyst: Kunal Jain©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Source: RBI
• GIC to invest USD 214 million in Reid and Taylor
The�private�equity�investment�arm�of�Government�of�Singapore�InvestmentCorporation�(GIC�SI)�is�expected�to�acquire�25.4�percent�in�Reid�&�Taylor,�asubsidiary�of�Indian�apparel�firm�S�Kumars�Nationwide,�for�USD�214�million.GIC�SI�plans�to�make�this�investment�through�its�affiliate,�Indivest�Pte.�Ltd.�Theinvestment�is�expected�to�help�Reid�&�Taylor�further�strengthen�its�ability�togrow�in�the�luxury�fabric�and�apparel�and�other�textile�segments.�S�Kumars�hasfive�manufacturing�facilities�with�the�capacity�to�produce�over�200,000�metersper�day.�It�has�30,000�outlets�across�the�country
• Triumph to set up 450 stores across India
Global�women's�innerwear�maker�Triumph�is�expected�to�invest�around�USD47�million�to�set�up�450�stores�in�100�cities�across�India�over�the�next�fiveyears.�Of�the�450�stores,�10�are�to�be�flagship�stores�while�the�remaining440�are�to�be�set�up�through�the�franchisee�route.�The�company�has�alreadyinvested�USD�30�million�to�set�up�a�large�manufacturing�facility�in�Chennai.The�facility,�which�currently�employs�1,300�people,�is�expected�to�employmore�than�5,000�people�when�fully�operational.�
• LG to expand its handset manufacturing facility in India
Consumer�durables�major,�LG�Electronics�is�planning�to�expand�its�handsetmanufacturing�facility�in�India.�The�facility�is�to�be�used�to�export�mobile�phonesfrom�India�to�European�countries�and�the�Commonwealth�of�IndependentStates.�The�company�also�plans�to�expand�LG's�line�of�mobile�accessories�suchas�blue�tooths�and�ear�phones.�LG�has�manufacturing�hubs�in�China,�Brazil,Mexico�and�India.�LG’s�manufacturing�facility�which�is�located�in�India�exportshandsets�to�countries�in�the�Middle�East,�Africa�and�Asia�and�alsomanufactures�mobile�phones�for�the�local�market.
• Reebok to increase retail presence to 225 Indian cities
Reebok�India�has�firmed�up�plans�to�expand�its�retail�presence�in�India�by�theend�of�2008.�The�number�of�exclusive�Reebok�stores�in�the�country�is�expectedto�go�up�from�675�to�800�by�December�2008.�The�company�which�is�present�inall�major�cities�has�plans�to�tap�tier-II�and�tier�III�towns�and�cities�across�India.As�a�strategy,�Reebok�focuses�on�blending�sports�technology�with�lifestyleproducts.�From�being�the�first�athletic�footwear�brand�to�use�soft�garmentleather,�Reebok�is�now�planning�to�venture�into�denim�manufacture.�Their�ideais�to�leverage�on�the�synergy�between�music,�fashion�and�sport.
• Adidas plans retail expansion
German�sportswear�and�apparel�major�Adidas�is�planning�for�a�major�expansionacross�India�in�2008,�which�would�involve�setting�up�around�160�new�stores.Post�the�planned�expansion,�Adidas�would�have�450�franchise�stores�andpresence�in�140�cities�as�against�119�cities�currently.�The�company�recentlylaunched�its�premium�range�of�products�called�'Adidas�Originals’�in�Delhi�andChandigarh,�and�also�has�plans�to�add�6�such�stores�in�select�cities�by�2009.
Page 6 of 16
Consumer Markets and Retail
Analyst: Sonia Topiwala ©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Source:�Images�India�Retail�Report,�2007
Growth of Indian Footwear retail (USD
million)
• Marriott plans expansion in Hyderabad
Marriott�International�Inc.�(Marriott),�one�of�the�leading�global�hospitalitycompanies�in�India,�plans�to�open�3�more�properties�in�Hyderabad�by�2010.Marriott�intends�to�set�up�an�186-room�budget�hotel,�‘Courtyard’�behind�itsexisting�property�in�Hyderabad�and�executive�apartments�in�Banjara�Hills.�Theexecutive�apartment�would�have�150-175�rooms.�These�properties�are�expectedto�be�developed�by�the�Viceroy�group.�Marriott�also�plans�to�open�a�premiumJW�Marriott�near�HITEC�City�to�be�developed�by�Emaar�MGF.
• Hilton hotels to expand in Asia
Hilton�hotel�Corporation�plans�to�open�300�hotels�in�Asia�by�2017.�The�focus�ofthis�development�project�is�expected�to�be�in�India�and�China.�Hilton�intends�todevelop�about�17�hotels�in�India�in�partnership�with�Indian�property�developers,DLF�Limited�by�2017.�Hilton�Hotels�is�a�leading�global�hospitality�company�withmore�than�3,000�hotels�in�74�countries�and�territories.
• Accor plans serviced residence project
Accor�Hospitality,�a�French�hospitality�chain�has�entered�into�an�agreement�witha�Bangalore-based�property�developer,�Brigade�Enterprises�for�themanagement�of�the�serviced�residences�project�in�Bangalore.�The�servicedresidence�project�is�reportedly�branded�as�Mercure�and�is�scheduled�to�openby�the�end�of�2008.�It�is�primarily�targeted�towards�the�business�travelermarket�in�Bangalore.
Accor�is�also�planning�to�expand�the�presence�of�its�existing�brands�by�settingup�100�budget�hotels�under�its�brand�name�-�Formule1�and�about�25�hotelsunder�its�Ibis�brand�in�India.
• Raheja Developers to enter the hospitality sector
Raheja�Developers,�an�Indian�real�estate�company,�is�foraying�into�hospitalityprojects�to�develop�five�hotels�in�the�next�two�years.�The�company�expects�tocater�to�business�travelers�in�and�around�the�NCR�region�with�its�proposedbusiness�hotels,�five-star�hotels�and�budget�hotels�in�this�region.
• IHC to buy hotel chains
Indian�Hospitality�Corporation�(IHC),�a�joint�venture�of�Gordon�House�Hotels,Mars�Restaurant�and�SkyGourmet�Catering,�plans�to�acquire�and�rebrand�theirhotel�groups�and�restaurant�chains.�IHC�intends�to�add�2,000�hotel�roomsacross�17�cities,�including�metros�and�towns�such�as�Lucknow,�Amritsar,Raipur,�and�Chandigarh.�
• Royal Orchid to invest USD 121 million in setting up six hotels
Royal�Orchid�Hotels�Ltd�(ROHL),�a�Bangalore-based�group�plans�to�develop�sixnew�five-star�hotels�in�Ahmedabad,�Mumbai,�Hyderabad�and�Jaipur�by�the�endof�2010�with�an�investment�of�USD�121�million�(INR�5,200�million).�ROHL�isalso�adding�a�leisure�resort�at�its�USD�18.62�million�(INR�800�million)�beachfrontproperty�in�Dar�es�Salaam�in�Tanzania.�It�is�expected�to�spend�USD�12.1�million(INR�520�million)�to�develop�a�leisure�resort�and�5-star�hotel�by�December�2010
Page 7 of 16
Analyst: Pallavi Phatak
Hospitality
©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
"India is poised for a bumpergrowth in tourism over the nextfew years. For Accor, this is atremendous beginning for theMercure brand in India. Webelieve Mercure, a mid-scalebrand, has a great future in Indiaand we do expect that we willreach a number of otheragreements this year to developMercure hotels and are activelyseeking business opportunitiesthroughout India to further expandour network," Michael Issenberg, Chairman and COO, Accor AsiaPacific (Source: Financial Express, June 10, 2008)
• KPO sector to reach USD 10 billion by 2012
According�to�report�by�the�Associated�Chambers�of�Commerce�and�Industry�ofIndia�(ASSOCHAM),�the�Indian�Knowledge�Process�Outsourcing�(KPO)�industryis�estimated�to�grow�at�the�rate�of�25-27�percent�and�reach�USD�10�billion�by2012.�Currently,�the�size�of�the�KPO�sector�is�estimated�at�USD�4�billion�and�ithas�grown�at�around�15�percent�in�the�last�few�years,�dominated�byprofessionals�from�the�management,�engineering�and�medical�fields.�Thesector�is�estimated�to�employ�over�100,000�people�by�2012�as�against�thecurrent�number�of�about�40,000.
• WNS buys BIZAPS
WNS�(Holdings)�Limited,�a�global�Business�Process�Outsourcing�(BPO)�serviceprovider,�has�acquired�Business�Applications�Associates�(BizAps)�for�anundisclosed�sum.�Based�in�the�UK�and�US,�with�development�capability�inChina,�BizAps�provides�SAP�solutions�to�optimize�Enterprise�Resource�Planning(ERP)�functionality�for�finance�and�accounting�processes.�WNS�believes�thatthe�acquisition�is�in�line�with�its�strategy�of�enhancing�service�offerings�andexpanding�its�global�footprint.
• TCS bags contract from Uganda authority
Tata�Consultancy�Services�(TCS),�India’s�largest�IT�company�has�won�a�contractfrom�the�Uganda�Revenue�Authority�to�design�and�install�an�integrated�taxadministration�system.�Under�the�contract,�TCS�would�develop�a�suite�ofapplications�for�key�tax�activities�like�registration,�returns,�payments,assessment,�audit,�investigations�etc.�TCS�would�also�provide�a�humanresource�management�system,�document�management�system�and�casetracking�system�as�part�of�the�project.�The�USD�11.5�million�project�has�beenfunded�by�the�UK,�the�Netherlands,�Belgium�and�Uganda.
• Tanla acquires 85 percent in Openbit
Tanla�has�acquired�a�stake�in�Finland-based�Openbit,�a�leading�provider�ofglobal�on�device�payments�for�mobile�applications.�Tanla�is�acquiring�85�percentfrom�the�outgoing�financial�investors,�in�an�all�cash�deal.�The�remaining�15percent�held�by�the�management�is�agreed�to�be�purchased�by�Tanla�in�twotranches�of�5�percent�and�10�percent�after�the�first�and�second�yearrespectively.�With�this�acquisition,�Tanla�expects�to�extend�its�payment�portfoliobeyond�operator�billing�products�to�address�the�emerging�market�for�rich�mediaand�business�applications�on�handsets.
• Indian IT market to grow by 18 percent in 2008
As�per�the�study�conducted�by�Forrester,�The�Indian�IT�market�is�estimated�togrow�by�18�percent�in�the�year�2008�to�reach�USD�38�billion,�the�secondhighest�growth�rate�after�China�which�is�likely�to�attain�a�20�percent�growthand�touch�USD�138�billion.�Indian�firms�are�likely�to�make�the�greatest�leaps�inapplication�integration,�ERP,�customer�relationship�management,�unifiedcommunication,�and�security�and�regulatory�compliance.�
Page 8 of 16
Analyst: Parnika Patil
IT / ITeS
©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
"The IT sector has long looked toIndia for top-drawer technologytalent. But India is poised tobecome an increasingly importantmarket for technology vendors asits population comes of age (halfof India's population today isunder 20), its rural areas becomeincreasingly developed, and itsengagement with the USincreases".Jonathan Brown, Senior Analyst, Forrester.(Source: The Economic Times, June 13, 2008
• Warburg Pincus acquires stake in Laqshay Media
Global�private�equity�firm,�Warburg�Pincus�has�acquired�15�percent�stake�in�anIndian�outdoor�advertising�firm�Laqshay�Media�for�USD�64.5�million.�LaqshyaMedia�has�a�strong�national�and�international�presence�and�ownsadvertisement�assets�ranging�from�digital�media�networks,�transit�mediaconcessions,�street�furniture�and�traditional�unipoles�and�billboards.�LaqshayMedia�plans�to�expand�its�international�presence�across�Middle�East,�Africa�andSouth�East�Asia.�The�outdoor�advertising�industry�is�estimated�at�around�USD350�million�to�USD�470�million�with�a�growth�rate�of�20�percent�and�isexpected�to�account�for�10-15�percent�of�the�country’s�total�ad�spend�by�2010.
• Times Group acquires UK’s Virgin Radio
TIML�Golden�Square�Ltd.,�a�wholly-owned�subsidiary�of�Bennett�Coleman�&Company�Ltd�(BCCL),�acquired�Virgin�Radio�Holdings�Ltd.�and�its�subsidiaries�inthe�UK�from�SMG�Plc�for�USD�105.04�million.�Virgin�radio�operates�a�FMlicense�in�London�and�AM�license�in�the�rest�of�UK.�TIML�Golden�Square�Ltd.along�with�an�Irish�company�Absolute�Radio�plans�to�invest�approximately�USD30�million�in�re-launching�and�developing�the�brand.�BCCL�owns�two�of�theleading�media�brands�in�India�such�as�The�Times�of�India�and�The�EconomicTimes.�
• HDIL acquires 51 percent in Broadcast Initiative Ltd.
Wadhawan�Group’s�real�estate�arm�Housing�Development�and�InfrastructureLtd.�(HDIL)�has�acquired�51�percent�stake�in�Broadcast�Initiative�Ltd.�(BIL)�foran�undisclosed�amount.�Through�this�acquisition,�HDIL�also�get�majorityownership�in�Sri�Adhikari�Brothers�Media�(SABML)�and�Technocraft�Media(TMPL),�the�wholly�owned�subsidiaries�of�BIL.�This�acquisition�is�expected�toenable�HDIL�to�expand�into�the�broadcasting�segment.�HDIL�had�recentlyentered�in�the�film�exhibition�segment�through�the�launch�of�Broadwaymultiplexes�in�Mumbai.�The�acquisition�is�subject�to�regulatory�approvals.
• Private Equity firms invest USD 28 million in PVR Pictures
The�Private�Equity�arm�of�JP�Morgan�and�ICICI�Venture�Fund,�have�investedclose�USD�28�million�in�PVR�Pictures�Ltd.,�a�wholly�owned�subsidiary�of�PVRLtd.�Through�this�investment,�PVR�Ltd.�expects�to�become�a�fully�integratedfilm�company�with�interests�across�production,�exhibition�and�distribution.�Thecompany�is�expected�to�generate�20-25�percent�of�its�revenues�annually�fromfilm�production�and�distribution�from�the�current�10�percent.�
• BIG 92.7 FM forays into Singapore
BIG�92.7�FM,�a�part�of�Reliance�Anil�Dhirubhai�Ambani�Group�(R-ADAG)�is�allset�to�launch�a�24-hour�FM�radio�station�in�Singapore�in�a�venture�with�localMediaCorp�Radio.�The�FM�station�plans�to�broadcast�Indian�film�music,�news,Bollywood�celebrity�interviews,�quizzes�and�other�live�entertainment.�Thestation�is�expected�to�be�launched�on�July�1,�2008�and�is�called�BIG�Bollywood96.3�FM.
Page 9 of 16
Media
Analyst: Mehul Desai©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Source:�TAM�Media�Research
Genrewise Share of Channels for Last 4
weeks as on June 21, 2008
• OVL consortia proposes to invest USD Three billion in Iran gas
block
ONGC�Videsh�Limited�(OVL)�and�its�partners�Indian�Oil�Corporation�(IOC)�and
Oil�India�Limited�(OIL)�have�proposed�to�invest�about�USD�three�billion�to
develop�the�Farsi�block�in�Iran.�The�consortium�has�found�12.8�trillion�cubic�feet
(tcf)�of�gas.�As�per�the�group’s�service�contract�for�the�block�they�would�be
reimbursed�35�percent�plus�the�investment�made�during�their�exploration
phase�of�about�USD�90�million.�If�the�consortium�gets�the�developmental�rights
then�they�are�likely�to�be�paid�an�additional�15�percent�rate�of�return�over�and
above�the�investments�made.�The�company�also�stated�that�the�oil�and�gas
would�belong�to�National�Iranian�Oil�Company�(NIOC).�OVL�and�IOC�hold�40
percent�stake�each�in�the�block,�while�OIL�owns�the�remaining�20�percent.
• Sevan Marine bags contract from ONGC
Norwegian�firm�Sevan�Marine�ASA�has�bagged�a�contract�from�state-run�Oil
and�Natural�Gas�Company�(ONGC)�for�deepwater�drilling�rigs.�The�drilling
contract�is�expected�to�have�a�fixed�term�of�three�years.�Sevan�marine�expects
to�generate�revenues�worth�USD�569�million.�The�company�specializes�in
building,�owning�and�operating�floating�units�for�offshore�applications.
• ONGC-Mittal Energy gets permit to drill for oil in Trinidad
ONGC-Mittal�Energy�Limited�(OMEL)�has�become�the�first�Indian�energy
company�to�be�involved�in�oil�exploration�in�Trinidad�and�Tobago.�OMEL�is
awarded�Block�NCMA�2�which�is�located�off�Trinidad�and�west�of�Tobago.�The
block�comprises�of�1,000�square�meters.�The�discovery�and�recovery�of�the
mineral�wealth�trapped�below�the�seabed�in�that�area�would�require�that�the
company�drill�five�wells.
• Cairn India gets approval to explore oil and gas in Sri Lanka
Cairn�India,�a�unit�of�British�exploration�firm�Cairn�Energy�Plc,�has�received
approval�to�explore�oil�and�natural�gas�deposits�off�Sri�Lanka's�coast.�The�area,
block�one,�covers�around�3,400�square�kilometers�off�Sri�Lanka's�northwest
coast.�Besides�Cairn,�the�other�two�companies�that�bid�for�the�same�block
were�India's�ONGC�Videsh�and�Canada's�Niko�Resources.
• Reliance in cooperation agreement with UAE petro company
Reliance�Exploration�and�Production,�a�subsidiary�of�Reliance�Industries�Limited
(RIL)�has�entered�into�a�cooperation�agreement�with�the�UAE-based�petroleum
company�Crescent�Petroleum.�The�deal�aims�at�establishing�a�framework�for
jointly�developing�industrial�projects�of�mutual�interest�in�the�region's�energy
sector�that�would�include�upstream�development,�midstream�pipelines�as�well
as�downstream�industrial�and�petrochemical�projects.
Page 10 of 16
Oil and Gas
Analyst: Rajiv Parekh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Petrol* Diesel* Kerosene* LPG#
India (Delhi) 45.56 31.8 9.09 294.75
Pakistan
(Karachi)42.38 30.88 25.53 415.05
Bangladesh
(Dhaka)37.74 23.84 23.84 406.21
Sri Lanka
(Colombo)48.2 30.36 26.57 742.05
Nepal
(Kathmandu)49.97 35.13 31.98 687.02
Source:http://ppac.org.in/OPM/rspneighbouring_jun.pdfNote:�*�Indian�Rs�per�Litre#�Indian�Rs�per�Cylinder
Exchange�rate�per�USD�considered�as�on�06.05.2008
Pakistan:�Rs�66.55,�Bangladesh:�Taka�68.73,�Sri�Lanka:Rs�107.92,�Nepal:�Rs�65.58�&�India:�Rs�40.96
Retail Price Comparison with Neighboring
Countries - May-08
• Daiichi Sankyo acquires stake in Ranbaxy, India’s largest
pharmaceutical company
Daiichi�Sankyo�Company�Limited,�one�of�Japan’s�leading�pharmaceuticalcompanies,�is�acquiring�a�majority�equity�stake�in�Ranbaxy�LaboratoriesLimited,�India’s�largest�pharmaceutical�company�and�one�of�the�top�tengenerics�companies�in�the�world.�Both�companies�have�entered�into�a�bindingShare�Purchase�and�Share�Subscription�Agreement,�according�to�which,�DaiichiSankyo�is�expected�to�acquire�the�entire�shareholding�of�the�Singh�family,�oneof�the�largest�and�controlling�shareholders�in�Ranbaxy�and�further�seek�toacquire�a�majority�of�Ranbaxy’s�voting�capital.�The�total�transaction�value�isexpected�to�be�in�the�range�of�USD�3.4�billion�to�USD�4.6�billion.�Thistransaction�is�expected�to�value�Ranbaxy�at�USD�8.5�billion�on�the�post�closingbasis.�This�deal�is�expected�to�enhance�Ranbaxy’s�expertise�in�drugdevelopment�and�manufacturing�and�expand�its�global�presence.
• Zydus acquires a 70 percent stake in a South Africa-based
company
Zydus�Cadila,�one�of�India’s�leading�pharmaceutical�companies,�has�acquired�a�70percent�stake�in�Simayla�Pharmaceuticals,�a�South�Africa-based�generics�company.The�acquisition�is�expected�to�strengthen�Zydus’�presence�in�the�South�Africangenerics�market,�which�is�expected�to�grow�at�a�Compounded�Annual�GrowthRate�(CAGR)�of�almost�19�percent�till�2011.�Simayla�currently�has�a�presence�in�thecardiovascular,�respiratory,�anti-infectives,�central�nervous�system,�gastrointestinaland�women-related�healthcare�therapeutic�segments.�Zydus�plans�to�launch�about50�products�in�this�market�in�the�next�3�years.
• Intas Biopharmaceuticals acquires US-based Biologics Process
Development Incorporated
Intas�Biopharmaceuticals�Limited,�an�Indian�biopharmaceutical�company,�isacquiring�Biologics�Process�Development�Incorporated�(BPD�Inc.),�abiotechnology�company�in�the�US.�BPD�Inc.�is�a�Contract�ResearchOrganization�(CRO)�providing�services�in�the�area�of�Molecular�Biology.�Theacquisition�is�expected�to�support�Intas’�entry�into�the�US�market�andstrengthen�its�presence�in�the�Contract�Research�and�Manufacturing�Services(CRAMS)�segment.
• Maneesh Pharma acquires 51 percent stake in US-based Synovics
Pharmaceuticals
Maneesh�Pharmaceuticals,�an�Indian�pharmaceutical�company,�has�acquired�51percent�stake�in�Synovics�Pharmaceuticals�Inc.,�a�specialty�pharma�companywith�a�focus�on�Over-The-Counter�(OTC)�and�branded�drugs�segment,�for�anundisclosed�amount.�This�acquisition�is�expected�to�facilitate�Maneesh’spresence�in�the�US�market�through�Synovics’�distribution�set-up.�
• Arch Pharmalabs acquires majority stake in Benzochem
Lifesciences
Arch�Pharmalabs�Limited,�an�Indian�pharmaceutical�company�with�a�presencein�the�Active�Pharmaceutical�Ingredients�(API)�and�intermediates�segments,�hasacquired�a�majority�stake�in�Benzochem�Lifesciences�Pvt.�Limited,�an�Indiancompany,�for�an�undisclosed�amount.�The�acquisition�provides�Arch�Pharmalabsaccess�to�a�cGMP�compliant�facility�for�oncology�products�and�enhances�itsportfolio�to�cover�almost�all�therapeutic�segments.�
Page 11 of 16
Pharma
Analyst: Nandita Kudchadkar©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
“Together with our pool ofscientific, technical andmanagerial resources and talent,we would enter a new orbit tochart a higher trajectory ofsustainable growth in the mediumand long term in the developedand emerging markets organicallyand inorganically. This is asignificant milestone in ourmission of becoming a researchbased internationalpharmaceutical company.”Malvinder Mohan Singh, CEO and ManagingDirector, Ranbaxy Laboratories Limitedcommenting on Ranbaxy’s acquisition by DaiichiSankyo (Source:http://www.ranbaxy.com/news/newsdisp.aspx?cp=889&flag=ARC)
• GMR acquires 50 percent stake in Intergen
Hyderabad-based�GMR�Infrastructure�Limited�has�acquired�50�percent�stake�inUS-based�power�company,�Intergen�for�USD�1.1�billion.�The�stake�was�acquiredfrom�the�AIG�Highstar�Capital�II�fund.�Intergen�is�an�independent�powerproducer�with�operations�in�the�UK,�Mexico,�Philippines,�Australia�and�theNetherlands.�It�has�an�ownership�interest�in�12�operating�power�plants�withgross�capacity�of�8258�MW�and�4822�MW�of�assets�under�development.�
• BHEL wins 1750 MW NTPC deal
Utility�major,�National�Thermal�Power�Corporation�(NTPC)�and�its�joint�venturesubsidiary,�Nabinagar�power�plant�have�awarded�boiler-turbine-generatorcontracts�of�1750�MW�(7x250�MW)�units�to�Bharat�Heavy�Electricals�Limited(BHEL)�at�an�estimated�value�of�USD�875�million.�The�deal�is�for�two�differentprojects.�The�first�one�includes�3�units�of�250�MW�at�an�investment�of�USD375�million�at�Bongaigaon�in�the�North-East.�The�other�project�worth�USD�500milion�will�be�for�4�units�of�250�MW�at�Navinagar�in�Bihar’s�Aurangabad�district.
• Indiabulls signs MoU for power project with Jharkhand
government
Indiabulls�power�services�has�signed�a�Memorandum�of�Understanding�(MoU)with�the�Jharkhand�government�for�setting�up�1320�MW�power�project�in�thestate.�The�power�project�is�expected�to�entail�a�capital�expenditure�of�USD1650�million�and�would�be�operational�within�4�years�from�the�date�of�financialclosure.�The�government�would�have�the�right�to�claim�25�percent�of�powerdelivered�by�the�proposed�power�plant�and�Indiabulls�would�sell�the�remaining75�percent.
• Jindal Steel & Power has signed an agreement with Jharkhand
government for power project
Jindal�Steel�&�Power�has�signed�an�agreement�with�the�Jharkhand�governmentfor�setting�up�2640�MW�power�project�in�Jharkhand�at�an�estimated�cost�ofUSD�2920�million.�As�per�the�MoU,�the�state�government�would�provide�all�thenecessary�assistance,�including�providing�state-level�clearances,�selecting�coalblocks�within�the�state�and�recommending�Jindal�Steel�to�the�center�forallocation�of�coal�blocks.�
• IPGCL to set up 2000 MW power station in MP
The�Delhi�government�owned�Indraprastha�Power�Generation�Company�Limited(IPGCL)�will�set�up�2000�MW�coal�fired�power�plant�in�Mara�II�Mahan�coalblock�in�Madhya�Pradesh�(MP).�For�this�purpose�the�centre�has�allotted�Mara-Mahan�coal�block�jointly�to�Delhi�and�Haryana�governments.�The�infrastructurework�for�mining�is�expected�to�take�three�years�while�the�same�for�power�plantis�expected�to�be�four�years.�The�power�will�be�equally�shared�by�Haryana�andDelhi.
Page 12 of 16
Power
Analyst: Rajiv Parekh©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
Source:�Ministry�of�New�and�Renewable�Energy
• Sobha Developers to develop projects in Mysore
Sobha�Developers,�a�Bangalore-based�real�estate�developer,�plans�to�foray�into
the�Mysore�real�estate�market�with�three�projects.�The�company�aims�to
develop�a�villa�project�on�14.5�acre�plot�in�at�Jattihundi�village;�and�a�residential
and�commercial�project�of�5�lakh�square�feet�apiece�on�a�7�acre�plot�in�Belvatha
grama�near�Mysore.�The�company�believes�that�the�entry�in�Mysore�is�in�line
with�its�strategy�of�developing�projects�in�tier�II�cities�of�Karnataka.�The
company�currently�has�a�presence�in�Mysore�through�a�contractual�project�for
Infosys�Technologies.�These�3�projects�are�a�part�of�the�company’s�plan�of
developing�12�million�square�feet�property�in�the�financial�year�2008-09�with�a
budget�of�around�USD�514�million.
• Actis invests in Vaishnavi group
Actis,�the�UK-based�private�equity�firm,�has�invested�USD�25�million�in�Vaishnavi
Group,�a�Bangalore-based�infrastructure�company.�Actis�is�investing�in
Vaishnavi’s�special�purpose�vehicle�that�is�developing�a�9,25,000�square�feet
residential�cum�retail�project�in�Yeshwantpur,�a�suburb�of�Bangalore.�This�is�the
first�investment�by�Actis�India�Real�Estate�Fund,�a�USD�300�million�fund
sponsored�by�Actis.�O3�capital�advised�Vaishnavi�Group�on�the�private�equity
transaction.
• Man forays in Real Estate
MAN�Industries�India,�a�pipe�manufacturer�and�part�of�UK's�MAN�Group,�has
forayed�in�the�real�estate�segment�in�India.�The�company�has�floated�a�new
subsidiary�called�MAN�Infraprojects�in�Mumbai�to�undertake�real�estate
projects.�The�company�plans�to�invest�about�USD�233�million�to�develop�7
projects�totaling�10�million�square�feet�of�construction�in�the�next�3�to�5�years.
The�company�expects�a�realization�of�over�USD�934�million�through�these
projects.�In�the�first�phase,�it�plans�to�develop�two�commercial�projects�in
Mumbai�and�one�mixed-use�township�in�Navi�Mumbai,�with�a�total�built-up�area
of�over�a�million�square�feet.
• Ruchi group to set up real estate project
Ruchi�group,�a�Kolkata-based�company�known�for�its�soya�and�steel
manufacture,�has�forayed�in�the�real�estate�segment�by�setting�a�new
subsidiary�Ruchi�Realty�Holdings�Pvt.�Ltd.�The�company�has�launched�a�sports-
based�residential�condominium�project�comprising�of�6�towers�on�17�acre�plot
with�an�investment�of�about�USD�105�million.�The�project’s�initial�work�has
started�and�it�is�expected�to�be�completed�by�2010.�The�company�has�fixed�the
maximum�price�of�the�apartments�at�USD�233,427�(INR�1�crore).
Page 13 of 16
Real Estate and SEZs
Analyst: Nitin Dehadraya ©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
“Actis has taken a significantminority stake in Vaishnavi’sBangalore project as it is situatedat the perfect location. Withcurrent realty market conditions,private equity players prefer toinvest in projects as they can getthe right valuations”. T R Srinivas, Director, O3 Capital.(Source: DNA, June 24, 2008 )
• Idea acquires stake in Spice Telecom for USD 645 million
Aditya�Birla�group’s�Idea�Cellular�has�signed�an�agreement�to�acquire�a�40.8percent�stake�in�Spice�Communications�for�USD�645�million�from�McorpglobalCommunications.�Besides,�Idea�also�intends�to�make�an�open�offer,�along�withTelekom�Malaysia�International�(TMI),�to�acquire�a�further�20�percent�stake�inSpice.�Telekom�Malaysia�is�to�be�allotted�over�464.73�million�Idea�shares�onpreferential�basis�for�about�USD�1705�million,�representing�14.99�percent�ofIdeas�equity�capital�post�allotment.�
These�acquisitions�are�expected�to�help�Idea�to�consolidate�its�position�with�anall-India�subscriber�market�share�of�11.1�percent,�from�the�current�9.5�percent.Idea’s�operations�would�increase�from�the�current�7�service�areas�to�9�serviceareas,�which�is�expected�to�drive�scale�economies�and�operational�synergies.Idea�would�also�pay�USD�127�million�as�a�non-compete�fee�to�Mcorpglobal.
• Tata Communications to acquire stake in Neotel and China
Enterprise Communications
Tata�Communications�Ltd.�(TCL)�has�entered�into�an�agreement�with�the�SouthAfrican�government�owned�Eskom�Holdings�Ltd.�and�Transnet�Ltd.,�to�acquiretheir�30�percent�stake�in�South�Africa's�Neotel�Ltd.�After�the�acquisition,�TCLalong�with�Tata�Africa�is�expected�to�own�nearly�56�percent�in�Neotel�Ltd.�
Tata�Communications�has�also�signed�a�joint�venture�(JV)�agreement�withChina�Enterprise�Communications�(CEC)�for�the�acquisition�of�a�50�percentstake.�Headquartered�in�Beijing,�China,�CEC�is�a�value�added�telecom�servicesand�IT�solutions�provider�and�has�recently�acquired�a�nation�wide�Virtual�PrivateNetwork�(VPN)�license.�The�JV�is�expected�to�focus�on�providing�a�high-qualitynetworking�service�in�China.�
• Sintex acquires Digvijay Communications
Sintex�Industries�Ltd.,�through�its�74�percent�subsidiary�Zeppelin�MobileSystems�India�Ltd.�has�acquired�the�network�services�and�tower�manufacturingbusiness�of�Digvijay�Communications�and�Network�Pvt.�Ltd.�(DCNPL)�forapproximately�USD�12.5�million.�Sintex�is�expected�to�benefit�from�DCNPL’smarket�reach�and�product�portfolio.�DCNPL�is�a�provider�of�telecominfrastructure�services�and�has�a�pan-India�presence�with�more�than�11�officesin�the�country.�
• Sujana Towers acquires Telesuprecon Ltd.
Hyderabad-based�Sujana�Towers,�a�telecom�infrastructure�company,�acquired�51percent�stake�in�Mauritius-based�telecom�infrastructure�company�TelesupreconLtd.�for�an�undisclosed�amount.�Telesuprecon,�has�branches�in�various�east�andcentral�African�countries�and�is�in�the�advanced�stages�of�negotiations�forsecuring�telecom�infrastructure�contracts�aggregating�to�USD�40�million,�whichare�expected�to�be�executed�over�the�next�2�years.
Page 14 of 16
Telecom
Analyst: Mehul Desai©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
"The talks are on between AnilAmbani-led RelianceCommunications and SouthAfrican telecom major MTN andthe significant premium in Idea-Spice transaction proves theinherent value that Indian telecomspace offers for such deals."
Saurabh Agarwal, Managing Director, DSP MerrillLynch.(Source: Financial Express, June 26, 2008)
• Mumbai-Ludhiana freight corridor on the anvil
The�Centre�has�reportedly�agreed�in�principle�to�allot�another�railway�freightcorridor�from�Mumbai�to�Ludhiana,�the�industrial�hub�of�Punjab,�in�addition�tothe�already-�approved�corridor�from�Kolkata�to�Ludhiana.�The�freight�corridorsare�likely�to�boost�industrial�growth�in�the�state�with�better�transportation�ofmanufactured�goods�and�raw�materials.
• Deccan Cargo and MADC sign MoU to set up world class air cargo
hub at Nagpur
Deccan�Cargo�and�Express�Logistics�Pvt.�Ltd.�have�signed�a�Memorandum�ofUnderstanding�(MoU)�with�the�Maharashtra�Airports�Development�Company(MADC)�to�set�up�a�state-of-the-art�cargo�hub�at�the�Multimodal�InternationalPassenger�and�Cargo�Hub�at�Nagpur�(MIHAN).�The�hub�is�expected�to�startfunctioning�by�January�2009.�MADC�is�to�provide�Deccan�Cargo�with�50�acresof�land�at�MIHAN�to�set�up�the�cargo�base,�including�a�parking�facility.
• Three airlines in the race to become the North East region air
carrier
Apart�from�Alliance�Air,�a�wholly�owned�subsidiary�of�Indian�Airlines,�two�othercompanies�-�Universal�Empire�and�Ace�Airlines�-�have�submitted�offers�for�theregional�carrier.�The�winning�bidder�will�then�be�eligible�for�subsidies�from�theNorth�Eastern�Council.�The�new�dedicated�regional�airline�is�expected�to�startoperations�by�the�end�of�this�year�with�Guwahati�as�its�hub.�At�present,�thereare�11�operational�airports�in�the�region,�including�Dibrugarh,�Tezpur,�Jorhat,Silchar,�Dimapur,�Imphal,�Agartala,�Aizawal�and�Bagdogra.�The�Ministry�forDevelopment�for�North-Eastern�Region�is�aiming�for�as�many�as�400�flightsevery�month�internally�connecting�the�region�by�the�end�of�2009.�
• VRL Logistics to invest USD 258 million in expansion
VRL�Logistics,�which�owns�a�fleet�of�2,446�trucks,�is�planning�a�majorexpansion�of�its�facilities�with�an�estimated�investment�of�around�USD�258million�over�two�years.�The�company�has�filed�a�red-herring�prospectus�with�theSecurities�and�Exchange�Board�of�India�(SEBI)�to�bring�out�an�Initial�PublicOffering�(IPO).�It�plans�to�invest�USD�126�million�on�the�development�oftransshipment�hubs�in�Gurgaon�(Haryana),�Solapur�(Maharashtra)�and�Bijapur(Karnataka).�VRL�proposes�to�invest�another�USD�123�million�on�the�expansionof�its�truck�and�bus�fleet.�A�booking�and�delivery�office�at�Gadag,�involving�aninvestment�of�USD�9�million�is�also�on�the�agenda.�The�company�envisagesentering�the�air�cargo�business�through�chartered�jets.�It�also�proposes�to�startthe�transportation�of�iron�ore�from�Karnataka,�for�which�it�needs�300�truckswith�a�higher�tonnage�capacity�(more�than�15�tonnes).
• TCI to sell 10 percent stake to fund growth plans
Transport�Corporation�of�India�(TCI)�is�all�set�to�dilute�promoter�holding�by�about10�percent�to�raise�capital�for�its�expansion�plan.�This�is�the�second�time�thecompany�is�looking�at�fund�managers�to�finance�its�growth�plans.�Last�year,Fidelity�picked�up�6-7�percent�stake�in�the�company.�With�this�dilution,promoter�holding�in�the�company�is�expected�to�be�around�57�percent�at�theend�of�the�current�fiscal.�The�company�plans�to�raise�between�USD�11-17million�in�the�third�quarter�of�the�financial�year�2008-09.�The�company�plans�touse�the�funds�to�expand�its�shipping�fleet�and�trucking�fleet�and�develop�morewarehousing�centers�across�the�country.
Page 15 of 16
Transport and Logistics
Analyst: Preeti Sitaram©�2008�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.
“The air cargo connectivity in thecountry is limited to only sevencities as of now, leaving out cargoin the smaller cities that accountsfor 85 percent of the GDP.Increase in the velocity ofbusiness cargo will put India inleague of five top globaleconomies in the next ten years.”
Capt. G. R. Gopinath , CEO, Deccan Cargo (Source:http://in.news.yahoo.com/43/20080710/836/tbs-deccan-cargo-to-set-up-hub-at-nagpur.html)
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Indian Brand Equity Foundation (IBEF)
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Infraline
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Mergerstat
NASSCOM
Oil Asia Magazine
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Pharma Biz
Press Trust of India
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