B-Gyan

Weekly Newsletter

20 October 2010 – 26 October 2010

Power & Energy | Finance | FMCG | IT & Telecom | Manufacturing

 POWER & ENERGY
NTPC to invest `20K crore in MP
NTPC executed a MoU with Madhya Pradesh and MP Power Trading Company for setting up a
3,960MW thermal power project at Barethi, the company informed the NSE. The project is likely to
be commissioned during the Twelfth Five-Year Plan Period (2012-17). For generating 1MW of
thermal power, an investment of about `5 crore is required.

NTPC, with a power generation capacity of over 30,000MW from all sources, is planning to augment
it to 50,000MW by March 2012.

< http://profit.ndtv.com/news/show/after-adag-ntpc-to-invest-rs-20k-cr-in-mp-112572?cp >

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Higher uranium imports to fuel record nuclear power output

Owing to increased imports of Uranium and improvement in domestic fuel supplies too, a record
nuclear power generation of 32,000 million units has been set for 2011-12, 45% higher than the
22,000 million units set for this fiscal.

Power generation from five nuclear reactors has increased three-fold, consequent to India receiving
imported natural uranium fuel from Russia and France. Besides, increase in supply of indigenous
uranium has also helped.

India currently produces around 400 tonnes of uranium a year. With the expansion of existing mines
and the opening of new ones, the production is set to increase to 1,000 tonnes by the end of 2013.

< http://www.thehindubusinessline.com/2010/10/20/stories/2010102052510400.htm >

< http://www.business-standard.com/india/news/fresh-uranium-imports-save-nuke-power-
programme/405893/ >

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ONGC's first commercial power project to start next year

ONGC’s first ever 726 MW commercial power project at Palatana would start generating electricity
from December next year. The project is being commissioned at a cost of `9,000 crores.

The Bangladesh government had allowed India access to its waterways to transport the turbines and
heavy machines for the power project, for which Prime Minister Manmohan Singh had laid the
foundation stone in October 2005. A consortium of GE and BHEL was awarded the contract to supply
gas turbines for the plant.

< http://www.psuindia.in/component/content/article/2691 >

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Essar eyeing oil and gas blocks in Africa
India's second-largest private refiner, Essar Oil, plans oil and gas exploration blocks in Africa to
secure crude oil supplies for its refineries in India and Kenya. It is reported that Essar had identified
at least six blocks in Nigeria, Libya and Madagascar where it may buy stakes or entire assets.

< http://in.reuters.com/article/idINSGE69K02O20101021 >

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No duty on imported power equipment news

We had seen last month, a report regarding the Union Cabinet considering duty on imported gear on
power projects.

< http://www.thehindubusinessline.com/2010/09/23/stories/2010092353500100.htm >

In a major setback to domestic power equipment manufacturers such as BHEL and Larson & Toubro
(L&T), the Ministry of Finance has now rejected the proposal of levying duty on the import of foreign
equipment. The domestic capital goods manufacturers were lobbying hard with the government to
get this proposal passed for over 2 years. The proposal was approved by a committee of secretaries
(CoS), based on the recommendations made by a committee headed by Planning Commission
member Arun Maira.

A duty was mooted earlier to strike a balance between protecting local manufacturers and the need
to import equipment to boost power production. However, the finance ministry's latest decision
takes into account the view that domestic manufacturers are not able to plug the demand-supply
gap for power equipment.

< http://findarticles.com/p/news-articles/dna-daily-news-analysis-
mumbai/mi_8111/is_20101022/duty-foreign-power-equipment/ai_n55850527/ >

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B-Gyan Newsletter 20.10.2010-26.10.2010 2

 FINANCE
Banks borrow `89000 cr as liquidity tightens
Banks borrowed `89,900 crore from the Reserve Bank of India’s (RBI’s) repo window on Monday to
cope with the liquidity shortage. The liquidity is still tight in the system and most fund houses are
eyeing the policy next week. There are expectations that the short-term rates could rise next week
on view that RBI would raise key policy rates by 25 basis points.

< http://www.silobreaker.com/call-money-rate-11_18363248 >

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SBI to start merchant acquiring biz soon

State Bank of India (SBI) has said it will soon start facilitating payments through debit or credit cards
at retail outlets and was finalizing the shareholding pattern with foreign partners. Merchant
acquiring involves the facilitation of payments through debit or credit cards at retail outlets. SBI is
planning to place about 1.5 lakh point of sale (PoS) terminals for debit and credit card payments
across the country. It plans to deploy six lakh of these terminals in the first five years of its
operations.

< http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/SBI-to-
start-merchant-acquiring-business-soon/articleshow/6809047.cms >

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Coal India IPO price fixed at `245

The government on Monday fixed Coal India’s (CIL’s) initial public offer (IPO) price at `245 per share,
the upper end of the range. The government will fetch `15,100 crore by selling 631.6 million shares,
or 10 per cent stake, at `245 per share. It will offer retail investors a discount of five per cent. The
company is expected to list on stock exchanges on November 4, a day before Diwali. CIL’s IPO, which
closed on October 21, was subscribed 15.17 times, and mopped up `2.35 lakh crore.

< http://economictimes.indiatimes.com/markets/stocks/market-news/CIL-IPO-priced-ar-Rs-245-per-
share/articleshow/6812522.cms >

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Gold, silver decline on lack of support

Silver and gold prices fell in the bullion market on Tuesday on reduced offtake by retailers and
stockists amid a weak global trend. While the gold fell by `70 to `19,710 per ten gram, the prices of
silver fell by `100 to `36,000 per kg on reduced offtake by industrial units and coins makers.

< http://economictimes.indiatimes.com/markets/commodities/Gold-silver-decline-on-lack-of-
support/articleshow/6816003.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 3

SKS shares continue to bleed, close just above IPO issue price
Shares of SKS Microfinance continued on their downward slide for a second session on Tuesday,
shedding 1.57 per cent to close just above their IPO issue price of `985 apiece on the Bombay Stock
Exchange. Earlier this week, SKS tanked by 15 per cent to an intra-day low of `894.70, the lowest
level since the Hyderabad-based firm was listed on the bourses in August, before recovering some
ground. On Monday, SKS closed with a loss of 4.61 per cent.

< http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/SKS-shares-continue-to-
bleed-close-just-above-IPO-issue-price/articleshow/6816532.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 4

 FMCG
FMCG firms on launch spree as demand revives
As many as 140 products entered the FMCG market between January and August, Hindustan
Unilever set the pace with 36 new products and variants as total launches in the first eight months
increased 13% year-on-year. With consumption going up across specific categories, there’s room for
specialised variants — and these are easier and less expensive to launch compared to completely
new brands. Dabur launched 11 products during the period, including Fem gold bleach, Odomos oil,
Odonil air fresheners and new variants of Pudin Hara, Hajmola digestives and Vatika shampoo.

Another reason for the high number was a low base. If Hindustan Unilever launched Sure to break
into the deodorant market, PepsiCo brought its global fizzy drink Pepsi Max to take on leading cola
brand Thums Up in India. GlaxoSmithKline has launched Sensodyne toothpaste for sensitive teeth
and Foodles noodles, though the company’s focus is mainly on extending its core brand Horlicks.
While Marico introduced oats, Emami entered segments such as edible oil, baby care products and
soaps.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/FMCG-firms-
on-launch-spree-as-demand-revives/articleshow/6795925.cms >

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Coca-Cola, Nestle extend global JV to tea in India

Coca-Cola is extending its global joint venture with Nestle for ready-to-drink tea — Beverage
Partners Worldwide — to India, at a time when a joint venture between its archrival PepsiCo India
and Tata Tea for functional beverages is on the verge of being kicked off.

Coca-Cola India will start selling ready-to-drink iced tea under the Nestea brand in bottles within the
next two months. This calendar, it has already entered two new categories — nimbu pani under
Minute Maid in January and Maaza Milky Delite flavoured milk two months back.

As part of the 19-year-old global agreement between the two giants, the rights to manufacture,
distribute and market the Nestea brand in powdered and vending machine formats are with Nestle,
while the rights to make distribute and market Nestea in glass and PET bottles and cartons are with
Coca-Cola.

This would be the first time that the same brand, in different formats, will be sold and marketed by
two separate companies in India

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/food/Coca-Cola-
Nestle-extend-global-JV-to-tea-in-India/articleshow/6806029.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 5

Indian ayurvedic body slams Colgate for patenting lal dant manjan
Lal dant manjan, or ‘red herbal dentifrice’, is now patented in the US by Colgate Palmolive, and
Indian ayurvedic companies have sought government intervention to cancel it. Colgate received
patent for red herbal dentifrice in the United States in June this year on the basis of an application
dated 2005, filed in India.

The Association of Manufacturers of Ayurvedic Medicines (Amam), which represents 200 companies
including Dabur, Himalaya , Hamdard and Baidyanath, has accused the American personal care giant
of patenting an Indian traditional knowledge in the US, India and elsewhere. The Controller General
of Patents, which grants patents in India, has yet to decide on Colgate’s application. In fact, the US
and the European Union have cancelled patents on turmeric and neem following opposition from
India.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Indian-
ayurvedic-body-slams-Colgate-for-patenting-lal-dant-manjan/articleshow/6777436.cms >

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HUL's appetite- experiments in marketing

HUL has managed to get 50 million consumers to sample its foods products in 2009 and the number
is likely to be higher this year. The idea is to hit at source; influence purchase decisions and propel
the foods business, which has historically been a weak spot in its portfolio. In a segment that has
major players such as Britannia, Nestle, Amul, ITC Foods , Parle, Kellogg’s, GlaxoSmithKline, Wrigley
and Frito-Lay, besides hundreds of smaller firms, HUL’s processed foods business (excluding
beverages) share is less than `1,000 crore. Because 78% of purchase decisions are made at the point
of sales, HUL is taking its experiential marketing strategy everywhere—from trains to shops to
homes. HUL’s beverages, foods and ice-creams businesses account for only 18% of its `17,524-crore
revenues, while parent Unilever earns 50% of its e10.1 billion revenues from foods.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/HULs-
appetite--experiments-in-marketing/articleshow/6790074.cms >

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Conscious Capitalism: HUL

HUL is working closely with key tea plantations and Rainforest Alliance (RA), an international
certification body in the area of sustainable agriculture. The 'Sustainable Estates' certification is
currently sought for 52 other tea estates in Assam and Darjeeling.

HUL wants to source raw materials from agriculture and forestry in a sustainable manner. It is
following the Unilever Sustainable Agriculture Code for growers of key crops — this covers 11
indicators, including water, energy, pesticide use, biodiversity, social capital and animal welfare. HUL
has also begun putting a ‘Healthy Choices’ stamp on its food products.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Conscious-
Capitalism-HUL/articleshow/6790113.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 6

 IT & TELECOM
TCS notches $2 billion revenue
Tech giant Tata Consultancy Services (TCS) reportedly notched whooping revenue of $2 billion.
Moreover, a 30%-plus growth in net profit for the second quarter of FY11 has been recorded. TCS
has concretized its hold and is looking forward to expanding its base as reported. This is the season
of acquisitions and TCS also wants to get hold of a medium sized European company. More business
in China and Europe and growth in non-linear initiatives are some of the engines that will continue
to deliver growth beyond $6 billion for TCS according to analysts. The company is focusing on
smoothening out large variations in some revenue streams and also improving profitability.

< http://itvoir.com/portal/news/News/TCS-notches-2-billion-revenue-8-472.asp >

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Google sued for alleged privacy violations

Google is being targeted in a class action suit that alleges it violates the privacy of its users by sharing
personal information and Internet search queries of its users with third parties. "User search
queries, which often contain highly-sensitive and personally identifiable information, are routinely
transferred to marketers, data brokers, and sold and resold to countless other third parties," the
complaint said.

< http://economictimes.indiatimes.com/tech/internet/Google-sued-for-alleged-privacy-
violations/articleshow/6816595.cms >

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Bharti splits $500 mn Africa deal among IBM, Tech Mahindra and
Spanco
India’s top mobile phone firm Bharti Airtel said it will award call centre contracts for its African
operations to IBM, Tech Mahindra and Spanco, marking the second significant step in replicating its
hugely-successful outsourcing model in that continent. Bharti Airtel’s international CEO Manoj Kohli
and other officials with the world’s fifth-largest telco by customers declined to divulge the deal size,
but an industry executive with direct knowledge of the development said the five-year contract was
worth around $500 million, with IBM and Spanco sharing most of the spoils.

< http://economictimes.indiatimes.com/tech/ites/Bharti-splits-500-mn-Africa-deal-among-IBM-
Tech-Mahindra-and-Spanco/articleshow/6812374.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 7

Indian domestic IT market to be worth $13.6 bn by 2014
Indian domestic IT market is growing at a rapid pace and it expected to be worth a whooping worth
$13.6 bn by 2014.Basically, this market includes products and professional services. The country's
domestic IT services market is expected to see a Compounded Annual Growth Rate (CAGR) of 16 per
cent in the next four years as per reports. Large government spending in areas such as e-governance
will catalyze speedy development of the domestic IT market in the country.

< http://itvoir.com/portal/news/News/Indian-domestic-IT-market-to-be-worth-13-6-bn-by-2014-8-
476.asp >

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Nokia to Cut Jobs as It Tries to Catch Up to Rivals

Nokia, the largest cell phone maker in the world, said Thursday that it would cut 1,800 jobs as it tries
to streamline operations and speed up delivery of new software and better Web services for its
besieged smartphones. The job cuts, which amount to 3 percent of the core work force, came as
Nokia, the leader in basic cell phones and smartphones, reported third-quarter earnings of €529
million, or $742 million, a figure that was much better than expected.

< http://www.nytimes.com/2010/10/22/technology/22nokia.html?_r=1&ref=companies >

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B-Gyan Newsletter 20.10.2010-26.10.2010 8

 MANUFACTURING
Maruti plans to add 1,500 service outlets by 2015
The country's largest car maker Maruti Suzuki India is planning to ramp up its service centres by a
massive 1,500 outlets by 2015 in line with its expansion of production capacity to over 17 lakh units
annually. The company currently has 2,784 service points and it is planning to increase it to over
4,200 outlets in the next five years, a jump of more than 50 per cent. As per the company's network
expansion plan, MSI will add the new outlets in over 1,300 cities and small towns with an aim to
provide car servicing facility for every 25 km across the country. MSI's service network currently
handles a load of 11.8 lakh cars every month and it is expecting it to grow to 14.5- 15.0 lakh units by
2015. Subsequently, the current strength of about 33,000 employees at the service outlets will go up
to 55,000 in order to meet the additional demand.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Maruti-plans-to-
add-1500-service-outlets-by-2015/articleshow/6802333.cms >

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Air fares set to climb 10% this festive season

All those who are planning air travel in the next four months might have to shell out more for their
tickets as high demand caused by strong financial markets, festive season and good economic
growth are expected to push up air fares. Consumers may get to see a 10-15% increase on all
domestic sectors till January. Every airline allocates a certain number of seats at a certain price band.
The first few seats are priced towards the lower band so that airlines can get a sense of how a
particular aircraft is filling up. That is why tickets booked earlier usually cost less. In that sense, there
is the possibility that airlines may allocate more seats towards the higher price band to cash in on
the demand.

< http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-
aviation/Air-fares-set-to-climb-10-this-festive-season/articleshow/6806268.cms >

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Tata Motors pips RIL to emerge as India's top brand

The Tata Motors-Jaguar-Land Rover combine, with a valuation of $8.45 billion, has over taken
Reliance to top the list of the 50 most valuable corporate brands in India in the 2010 edition of
India’s Most Valuable Brands survey. BrandFinance, a London-based global brand valuation firm, did
the study in exclusive partnership with The Economic Times. The brand valuation of Tata Motors-JLR
grew 172% over its 2009 value of $3.1 billion when it was at No. 5 in the pecking order. Reliance, the
petrochemicals-to-retail major, saw a10% erosion in its brand value at $7.04 billion, down from $7.8
billion in 2009.

< http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/Tata-Motors-
pips-RIL-to-emerge-as-Indias-top-brand/articleshow/6805949.cms >

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B-Gyan Newsletter 20.10.2010-26.10.2010 9

Hero Electric to expand in North America, Europe
Electric two-wheeler maker Hero Electric is stepping up efforts to expand presence in global markets
with a focus on North America and Europe. The company that sells a total of 30,000 units of electric
two wheelers annually is also looking for technology transfer from international companies for
product enhancement. As per industry estimates, about 1.1 lakh electric two wheelers are sold in
India every year by companies, including Hero Electric, Avon Cycles and Electrotherm along with a
host of other regional players.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/Hero-Electric-to-
expand-in-North-America-Europe/articleshow/6802285.cms >

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Google TV Dead without NBC, CBS, ABC Broadcasts

Major networks pull the plug on Google TV’s web service just as plans escalate to take the design to
the living room. After announcing one of the biggest phenomena’s of the year for the search engine,
it looks like the celebration was a bit short lived. Google Inc.’s web-TV service won’t be featuring
some of the best shows on television after ABC, CBS and NBC began blocking programs from the
website. Google TV supposedly allows viewers to check out the Internet’s web videos through their
television, in addition to searching live, but it looks like just a few weeks after Logitech International
S.A. and Sony Corp. began selling them, things have come to a halt.

< http://www.manufacturingdigital.com/business/technology/google-tv-dead-without-nbc-cbs-abc-
broadcasts >

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