21st August 2008

Happy Independence day!

Freedom

To all those who are free….and to all those are not yet free, but in a quest to unshackle
themselves.

Freedom is indeed the most beautiful thing that could happen to you in
life….Yes…that could happen…but has it happened yet to you…?...only you can
answer…Or may be question to your conscience…

So question…do question yourself….

Dear! Are you free…?

Yes ! I am free…

Born and learnt believing something…enchanting mantras of …tradition…culture…ethos…and

all that my forefathers have left for me as legacy…

…discovering that my soil…my Ganges,Yamunas..Godawaries…would quench my thirsty

soul……………Himalayas would guardian me…..

……………………………….I was told…when I could sense and conceive….I am born

towards

free……

Am I free now…..I doubt…..somewhere down these days….i feel…..day-by-day….i am actually

losing my freedom……

When I had to do…What my conscience wouldn’t allow…..

When I had to ditch my motherland….while I still being patriotic…..

While I see myself enjoying every fun of life…while my nation….is actually in pain….
 When I should have shouted at the top of my voice……I won’t let this bullshit to be done in
my soil…to my nation…to my people…..But …..i couldn’t shout….couldn’t even murmur….

I wasn’t perhaps free, when they decided overnight….policies,lobbies,quotas…..

…when they sold my part of nation…just overnight…..

I discovered …may be I am not free……

I woke up early in the morning….unfolded morning newspaper with sipping Coffee….

just today…few Free people died in Ahmedabad,Bangalore,Ajmer,Jammu…..free..Yeah…I

Freedom

mean it…free like me…..Innocent…..

Just today…..18 crore Kids…age…less than 12 years….are breaking their bones to earn day-
time bread…

……and just today…my Government….my elected leaders….sold this great free nation in
nation…..and still selling it in installments……to whoever pays the dirty price….

I believe….I am still free….because..i am not dead yet….because…the fire in

Kashmir…those Azaadi..Azaadi..screaming…have not torn my ears apart yet…

I am still free….because I can still manage my Ferrari,my I-Pod,my Tissot watch…

I am still free….for I still spend my evening in Firangi-Paani or Barista…shopping in

malls….enjoying PVRs…

I am still free….coz..i don’t bother…that half of my nation has still not seen Thomas Alva
Edision’s Electric Bulb…..
towards

Coz I don’t bother….that just few Kilometers away from my posh City-Metro…..Naxalites are
eating away my territory of freedom….

I don’t bother….because…I am the proud citizen of World’s most corrupt free nation….

I don’t bother…if my Government could not give my fellow-countrymen basic amenities of

Roti-Kapda-Makaan…..I have Pizzas---Westsides----my Leela Palaces….

----------I don’t bother…I don’t bother…I don’t bother….just ..don’t……

My days are passing by…so smoothly……why should I bother……..I am

free…..free till Sun sets…Come the dark night…..I ask my self……Am I
free…..Yeas….may be….may be not….Or I am NOT……
 Democracy is the most beautiful thing that has happened to human civilization….It has
established the fact that all human beings are equal to all opportunities…to manifest
Freedom
themselves to their fuller potentials…..

Democracy however is also equally dangerous if come without sense of responsibility and
discipline…. It could fatally destroy the nation, society and generation…..

It is the same democracy…where everyone does not enjoy similar rights…..where opportunities
are not equal….where you start doing something good…and you will find many many hands to
stop you doing good….where people just do not wish something good, better that happen to
them….they are just happy being what they are…wherever they are….

People are ready to die…ready to be crushed….but till we breathe..we do not have time to
think….just no time to think….what is happening with us…to…us …to our children…we just don’t
think…what kind of nation ,we are making…because we just don’t make this nation…we only
live in it…unfortunately for many…and fortunately to few….

We remember….Democracy has rendered rights to us….we forget….it has bestowed few duties
as well….

Day-by-day, minute-by-minute…we are destroying every good thing that was so far with
us…polluting our rivers…sucking our groundwater, poisoning our air….chopping our
Jungles..Killing our wildlife…

….forgetting our traditions…..fighting with each

other….caste…Race…state…language…religion….killing each other…..corrupting ourselves…our
system…bribing institutions…..vulgarizing our schools…..

I would not say you Happy Independence Day….

Just that…..this independence is attained after much sacrifices…it is
still being protected by bloodstained soldiers at our borders….

Please….respect it……Our nation is very great….10, 000 years of

burning mid-night candles……
 Come together…for no time is left…just come close to each
other…even air could not pass by…..

Hold hands….together….

Lets join the caravan…lets make our nation stronger…..bring all those
who are left behind…those dirty….half-naked….empty-
stomach…illiterate...stupid…beggars, laborers….left-behind ones….put
all you intellect, strength…..appetite…together……

Feel Proud……You are an Indian….

Feel Responsible…..You have to make your India….its still in the

making….
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towards
 Heroes and Hooligans
Bihar: On a fast track of growth machine: Clears 135 proposals worth Rs 71,290
crore

The Bihar government has cleared 135 proposals worth Rs 71,290 crore submitted by big
entrepreneurs for setting up medium and large industries.

All these proposals have been approved by the State Investment Promotion Board. The
proposals approved include opening of 23 new sugar mills and the expansion of the 7 existing
ones, apart from the production of ethanol in 2 sugar mills and 5 sugar cane juice production
plants. The projects regarding 5 power plants, 12 food processing units and 15 steel processing
and cement plants have also been cleared.

As per the report, a sum of INR 603 crore had already been spent on various activities pertaining
to the cleared projects, which are likely to create job opportunities for over 0.114 million people.

Amarnath Shrine issue: It’s more than just a few acres……

Kashmir is burning and so is Jammu….The issue is odd 180 Hectare of land that was about to be
transferred to Amarnath Shrine board. The decision was initially taken by the then PDP
Government in J&K. The issue was then taken up by fundamentalist and separatist, pro-Pakistan,
pro-Taliban forces who purposefully wanted to vitiate the peaceful environment of valley.
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So far, it is not strange, Mr.Mirwaiz Umer Farooq,Mr Gilani,Hurriyat Conference,JKLF and their
rank and file were always Pakistani interest on Indian soil, They were eagerly waiting for an
opportunity to poison the environment and fuel separatist sentiments among common
Kashmiries…And eventually they got chance.

But there is a catch in the drama here. And there are people to be exposed…these are the
towards

people more dangerous than Pakistan or terrorist outfits like APHC and JKLF.

And these are the people who swear by being Indian. The role of Ms. Mehbooba Mufti, Mr
Farooq Abdullah and their political cousins need to be scruitinised. They are the real villains
backstabbing Indian interest and fuelling common Kashmiries sentiments against Indian
mainstream.
 An era ends/begins in our neighborhood: Musharraf
dethroned
General Pervez Musharraf, President of Islamic Republic of Pakistan has finally resigned from
his premiership after a month old political tussle with the democratically elected government
and its core forces.
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Departure of Mr. Musharraf from the political landscape of Pakistan has closed a great chapter,
not just in the Pakistani History but in Global power circles, especially in the Indian context and
much hyped US-Global war on terror.

Mr. Musharraf has played a very crucial role in Terror-corridor, from Saudi-to –Iran –to –
Afghanistan-Libya-Egypt and most of the Muslim dominated world. Here is the man who has
sailed his country prudently in its most difficult time and transformed (or tried to transform,
but failed) a fast-getting-Talibanised country to a country, which has visibly shown its
determination in global war against terrorism.

If you follow the statistics in last 10 years, you can easily understand that his was the time,
when terrorism and infiltration dropped substantially and acrimonious gesture of Pakistan
towards India moderated a bit.

While looking little deeper in Pakistan, for recent years, one also can observe the positive
changes, Mr. Musharraf had tried to bring in the mindset of Pakistan.

Here was a dictator who, with all his human weaknesses, mistakes and ill-intentios, had
towards

something, substantial to contribute not just to his country, but to the global mainstream.

What failed Mr. Musharraf?

Musharraf seems to be more secular, pro-developmental and more modern than any other
ruler, Pakistan ever had in its history. He was a great opportunity for Pakistan to come out of all
those stupid medieval aged mindset and become a modern developed state of respect, repute
and prosperity.

Pakistan failed, but who is responsible? Onus lies with the man himself. Mr. Musharraf failed to
deliver, what he promised for or rather what he had thought he would have achieved.

He could not change the psyche of Pakistani intelligentsia. He lost it to Taliban. Pakistan of
today is , sadly much more talibanised than ever before. It is well said…”You can kill an
institution, millions of people, but you can never kill an idea, a thought. Taliban has resurrected
 itself in common People of Middle East, London, USA and Islamic world. Taliban now is much
much stronger that it ever was.

Recent bomb blasts and terrorist activities in India are evidence that the so called democratic
regime and forces in Pakistan are actually people and philosophy of Taliban and Al-Qaeda
resurfacing with a legal face. Its as soon world realizes the fact that political power of Pakistan
has actually in hands of Taliban and faces like Mr. Gilani, Asif Zardari and Nawaz Sharif are just
puppets being played by very strong invisible hands who are very soon going to be surfaced.

What are the takes from the saga of Pervez Musharraf?

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Number one is that it zeroes in to the Leadership ultimately. Mr. Musharraf failed to deliver
what he promised for. Leaders, who do not hold on the promises they make are bound to be
thrown into dust, no matter how strong legacy they assume.

The second lesson is for the world and people in so called democratic society about the
potential weaknesses of democracy as an institution.Democracy, per se, does not guarantee
freedom and prosperity. Democracy must have elements of Discipline, Responsibility and
sociological character, for, without them it is bound to fail and succumb to fundamentalist and
destructive forces.

Third and the most important lesson are for India to learn….

We need to be over cautious and prepared about coming forces in Pakistan. People in power
de-fecto represent Taliban and Al-Qaeda and their very survival depends on their acrimonious
attitude towards us…..

Watch on the newer stage for newer players to play with?

towards
 MAKETS FORTNIGHTLY
Amar Saboo

date sensex

25-Jul 14274.94
26-Jul 14274.94
Sensex….too sensitive to cues
27-Jul 14274.94
15500
28-Jul 14349.11
29-Jul 13791.54
15000
30-Jul 14287.21
31-Jul 14355.75
14500
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1-Aug 14656.69
2-Aug 14656.69
14000 Sensex….too
3-Aug 14656.69
sensitive to cues
4-Aug 14577.87
13500
5-Aug 14961.07
6-Aug 15073.54
7-Aug 15117.25
13000

2-Aug
4-Aug
6-Aug
8-Aug
25-Jul
27-Jul
29-Jul
31-Jul

10-Aug
12-Aug
14-Aug
16-Aug
18-Aug
20-Aug
8-Aug 15167.82
11-Aug 15,223
12-Aug 15,212.13
13-Aug 15,093.12
14-Aug 14,724.18
18-Aug 14,645.66
19-Aug 14,543.73
20-Aug 14,678.23
towards

21-Aug 14244

20th Aug: 14th Aug:

Firming trend in Asian region boosted
the trading sentiment. Hong Kong stocks rose,
with the benchmark index rebounding from a
one-year low on speculation that China will
introduce measures to support the economy.
19th Aug:
The domestic market had shown smart
recovery during final trading hours to came off
from the day’s low but closed with marginal
losses. Weak European markets also added to
the negative sentiments. Along with this, fears of
more losses from the US mortgage crisis globally
mulled over the sentiment.
Domestic market ended the day with
heavy losses as witnessed a sharp fall during the
trading session on the back of sustained selling
activity over the counters. The market extended
losses for the third session in a row as a bounce
back in crude oil prices stroked fears of increase
in inflationary pressures.
13th Aug:
on a subdued note as investors are
waiting for the outcome of SEBI`s board meet
regarding participatory notes. Weak global cues.
 12th Aug: Friday. Major focus was on RBI’s monetary policy
on short term rates scheduled for release on
broke its winning trend to close the 29thjuly, Tuesday. On Tuesday RBI hiked not only
session with heavy losses on sustained selling hiked CRR by 25 basis points as expected but it
pressures due to disappointing IIP numbers that also hiked repo rate by ’50 basis points’ against
were down at 5.4% YoY and negative cues from the investor expectation. This again lead
European and Asian markets.
weakening of sensex by over 500 points closing
11th Aug: at 13791.54. The market sentiments for the
whole period was negative due to high inflation,
The Sensex witnessed the awaited rate hike by RBI, monsoon forecast etc. But all
correction today, as meltdown in major global these news were out weighted by cues form US
indices turned the domestic market upside markets and falling crude prices. That’s why on
down. After rallying for the past few sessions, 30th July, Wednesday, market gained 495 points
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the Sensex lost 292 points on sustained selling in due to fall in crude prices by $3/barrel amid hike
heavyweights, metal and banking stocks. in rates by RBI just the previous day. US indexes
were up DJIA by 2.4% and NASDAQ by 2.5%.
8th Aug—25th July
The crude oil prices dropped by $10 this
This fortnight the markets opened dull
th
fortnight. This has led to a rally in US markets.
on 28 July-08, Monday aftermath Bangalore
The Dow Jones which was at 11370.69 on 25th
and Ahmedabad bomb blast which had already
July climbed to 11734.32 ‘up by 3.19%’.
knocked 500 points off the sensex on 25thjuly,
Date crude
25-Jul 125.93 crude
26-Jul 125.93
128
27-Jul 125.93 126
28-Jul 125.05 124
122
towards

29-Jul 124.71 120

30-Jul 125.19 118
31-Jul 122.03
116
114 crude
1-Aug 125.19 112
2-Aug 125.19 110
3-Aug 125.19
108
4-Aug 122.07
5-Aug 117.42
6-Aug 117
7-Aug 118.2
8-Aug 115.11

The reactions of sensex to cues from US
markets were notable. In fact sensex almost
followed the same trends as the US markets.
This trend is visible only in short run, in
absence of any positive news and
uncertainty. For most part sensex was similar
to US markets except few days when local
news was strong. Like on 1 st Aug, Friday the
markets went up irrespective of weak global
cues because of expectation that IAEA will
give green signal to Indo-US nuclear deal.
Stocks of infrastructure companies- L&T, JP
Associates; power companies-NTPC; power
equipment supplier-BHEL, ABB, Siemens
were up because of the positive news on
nuclear deal. Rcom on the same day was
badly hit trading 13% below at Rs.436.8 due
to lower that expected Q1 results.
 Table 1: comparison of sensex and DJIA

date DJIA
25-Jul 11370.69 %change in sensex and djia
28-Jul 11131.08 4
29-Jul 11379.56
30-Jul 11583.69 2
31-Jul 11378.02
0
1-Aug 11326.32
4-Aug 11284.15 -2
5-Aug 11615.77
-4
6-Aug 11656.07
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7-Aug 11431.43 -6
8-Aug 11734.32
%senxex %djia

Table 1 shows the movement of sensex in
comparison to DJIA (Dow jones industrial
average). X-axis is dates and Y axis is %
change in indexes. Due to time difference
the US markets lag behind our markets i.e.
US markets on 1st Aug will act as cue for
Indian markets on 2nd Aug(US markets open
at 7.30pm IST).
towards
compared to 25th July. The positive signs
were only in the form of falling crude prices.
Due to slowing down of US economy as
evident from low GDP growth of 1.9% less
demand for crude is expected. For India it
may act as a signal of lowering of inflation
and thus, no further hike in RBI rates.

The most active sectors in this period were

Now to sum up the overall story sensex this Banks (because of RBI policies, inflation and
fortnight was a big gainer. On 25th July it was crude), Capital goods (because of Indo-US
at 14274.94 but on 8th ague it was at deal), Sugar (because of monsoon), oil and
15167.82 up 892.88 points (6.25%) gas (because of falling crude).
 Sector Watch
Real Estate: CB Richards Ellis views

Investment in country's real estate sector remained subdued in the second quarter this year
amid global economic slowdown, which has also cast its shadow on the property markets
across the world.

Like most property markets around the world, Asian markets have been affected by slowing
economic growth and unsettled capital markets. The cautious attitude was largely because
many investors expect the ripple effect of the global credit crunch to continue unfolding in
Asia. Investors have been exercising restraint in launching new developments and projects
intended to support new emerging commercial hubs. Developer’s profitability was also
impacted by rising construction costs, escalating interest rates and tighter lending measures.

However, financially-sound institutional investors, including pension and sovereign wealth

funds, remained active across major cities in Asia. Direct commercial property transactions in
Asia were up moderately in the first half of 2008, as compared to the corresponding period
last year.

Cement: prices to fall on surplus output

Cement makers feel their margins will remain under pressure for the next several quarters as
excess capacity build up in the country is expected to keep prices from moving up. This is
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despite various infrastructure development projects which is keeping demand alive even as
real estate development has witnessed a slowdown. The bullishness surrounding the cement
sector has ended due to overcapacity. The economy’s performance is below expectation and
will result in lower demand for cement. Overcapacity alone will not result in decline in prices.
If input costs keep rising and cement makers still reduce prices, many of them will just go out
of business. Therefore, it’d be difficult to say if prices will surely decline in a year.
towards

The cement industry has added around 20 million tonnes of capacity in the Q1 of calendar
year 2008 taking the existing installed capacity to 203 million tonnes per annum. The industry
is expected to increase its capacity to 254 million tonnes by the end of next calendar year,
which may create a huge supply demand mismatch. Last year, the capacity utilization of the
industry was over 90% with several plants working at over 100% capacity.

Fertilizers: New Policy: A bullet fired so closed, yet missed

The new rules would promote joint ventures abroad, which in turn will help meet India's
domestic demand through imports at competitive prices.

According to the new investment policy, additional urea from the revamp of existing units will
be recognized at 85 per cent import parity price with the floor and ceiling price of $250 and
$425 per tonnes respectively. The urea from the expansion of existing units would be
recognized at 90 per cent of import parity price with a floor price of $250 per tonnes. The
new policy also provides that coal gasification-based urea projects will be treated at par with
other new and existing plants, which will encourage use of local coal.
 Iron ore prices likely to rise in near term

The domestic price of iron ore is once again rising, after experiencing a marginal slip last
month. Prices are likely to shoot up even further, with steelmakers indicating a 5 percent
hike in prices which they had kept in check till now.

On the global front, iron ore prices have been declining, which has affected Indian iron ore
exports adversely. In fact, miners in India are on the back-foot and have said that export of
iron ore has slipped by as much as 20 percent in just the past month. Steel production in the
country has been slow and is expected to pick up once the Olympics are over. Therefore, the
current lower freight rate is nothing but a temporary phenomenon and stands to get
corrected soon. According to a source, f.o.b price of 63.5 grade iron ore is currently ranging
between $128 and $130. Change in prices is unlikely to occur before the first week of
October.

Core Sector Research:

Indian production at 6 key sectors grew by 3.4% in June

India's production at six key industries, which account for a quarter of the nation's industrial
production, rose by 3.4% in June 2008. The Ministry of Commerce and Industry said in a
release that the index for the six key industries rose to 232.5 in June from 224.8 a year earlier.
Production in the three months ended June 30 rose by 3.5% as compared with a 6.4% a year
earlier.

The following is the percentage change in production

Sector Jun'08
Electricity 2.6
Coal 6.2
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Steel 4.4
Crude oil -4.7
Refined petroleum 5.6
Cement 3.8
Overall 3.4
towards
 1st Quarter result Analysis: Devil lies in details:
Sales grew at a record pace (37%); profit growth was the slowest in the past 11
quarters.
Fertilizer companies showed an unexpected 60 per cent jump in sales as the
government increased the subsidy to compensate for the higher raw material prices.
Food processing, pesticides, agrochemicals, industrial gas and explosives, computer
education and cement firms, recorded a healthy 40 per cent growth due to higher
income and increased industrial activity.
The software sector, after growing at a scorching pace of more than 35 per cent for
the past five years, grew at a moderated pace of 25 per cent in the period after a
slowdown in the US.
Power cables grew at a higher rate of 25 per cent helped by demand from
telecommunication and power companies.
Passenger cars, diversified companies, paints, pharmaceuticals and tyre
manufacturers posted 20 per cent-plus revenue growth.
Commercial vehicle sales grew by 18 per cent driven by tractors and LCVs. Motorcycle
producers saw sales rising 12 per cent even after hardening of interest rate. Auto
ancillary makers, which derive demand from automobile sector and original
equipment manufacturer, posted a modest revenue growth of 15 per cent.
Foods products (manufacturers of biscuit and dairy products), tea, personal care
products, sugar, consumer durables, cigarettes, textiles and retailers, which faced
price competition, expanded revenue by 10-15 per cent.
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towards
om
towards
 Economy: Would the Elephant still be dancing…?
CAPEX increased to Rs 1,050,950 crore in 6 months

Despite global slowdown, the capacity expansion plans announced by Indian corporate
surged to INR 10, 50,950 crore in the first 6th months of the current calendar year as against
INR 5, 67,851 crore between August to December 2007.

Current Account deficit widening…

India's current-account deficit, which includes trade and investment flows, widened to a
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record $17.4 billion in the financial year ended March 31, from $9.8 billion in the previous 12
months, partly because of increased spending to keep fuel prices below international levels.

The deficit is the amount the government needs to borrow to bridge the difference between
spending and receipts. A narrower budget gap may lead to lower government borrowing in
Asia's third-largest economy, allowing reductions in interest rates.

Finance Minister undeterred….Inflation crosses 12%

India's Finance Minister P. Chidambaram believes that the central bank's tight monetary
policy stance would help tame inflation in 3-6 months.

India's annual inflation topped 12 % for the first time in 13 years in late July, and analysts said
it was yet to peak and the central bank was not done with monetary tightening.
towards

The wholesale price index, India's most widely watched price measure, rose 12.01 pct in the
12 months to July 26, above the previous week's 11.98 % and the highest since the current
series became available in 1995.

Expert Speaks: Double digit inflation to continue till December - Dun &
Bradstreet

Inflation is projected to remain in double digits till the end of this year as the fiscal measures
initiated by the government are expected to yield results only by December.

Given the supply driven nature of the current inflation, the RBI's measures are likely to have
limited impact towards controlling inflation in the short run."

The fiscal measures initiated by the government to augment supply are expected to begin
yielding results from December. As such, we expect inflation to continue to remain elevated
and in double digits till December 2008."

The report stated high input costs and rising interest rates have impacted industrial growth
 with IIP growth slowing down to 5.23% in Q1 of FY 2009 against a growth of 10.28% in the
same period last year. However, with inflation continuing to be in double digits and the
money supply growing well above target, RBI further tightened its monetary stance,
increasing the CRR and repo rates.

Recent increase in policy rates could lead to upward movement in banks' lending rates,
thereby increasing pressure on corporate margins. Also, high interest rates would further
dampen the demand in interest sensitive sectors. We may witness deferment in investment
decisions by companies. Industrial growth is therefore, expected to be subdued in the months
to come and average at around 6.8% during FY 2009.

OPEC oil production up in July

OPEC pumped an average of 32.77 million barrels per day of crude oil in July an increase of
300,000 barrels per day on collective production.

OPEC 12, excluding Iraq exceeded their 29.673 million barrels per day target by 637,000
barrels per day. An increase in the daily production of 390,000 barrels per day by Saudi
Arabia, Iran, Nigeria and Kuwait was said to be offset by shortfalls in Libyan and Iraqi outputs.

The biggest increase in OPEC production came from Saudi Arabia which increased output
from 9.45 million barrels per day to 9.7 million barrels per day as it had pledged to do. Nigeria
increased its crude oil output by 100,000 barrels per day in July to an average of 1.9 million
barrels per day. Libyan output volume, which had declined in May and June because of repair
work on Total’s al-Jurf field decreased further in July after maintenance work commenced on
the Waha-Defa oil pipeline. Iraqi crude production was down by 30,000 barrels per day in July
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to 2.46 million barrels per day.

…and the crude tumbled…..

Crude oil is on a falling streak for this fortnight mainly on signs that a U.S. economic slump will
extend into 2009, paring fuel demand in the world's biggest oil consumer. Hedge funds and
other speculators are increasing their net-short positions in futures contracts.
towards

Speculative short positions, or bets that prices will fall, have actually outnumbered long
positions by 5,550 contracts on the New York Mercantile Exchange in the week ended Aug. 5,
the Commodity Futures Trading Commission said in its Commitments of Traders report on
Aug. 8. Net-short positions rose by 4,890 contracts, or 741 percent, from a week earlier.

China's July crude-oil imports fell 7 % from a year earlier after global prices increased to a
record, discouraging refiners from purchasing raw material to process into fuels. The
country's 15 biggest oil refineries increased their operating rates to boost fuel supplies for the
Beijing Summer Olympic Games that started on Aug. 8.

Clashes between Russia and Georgia threatened alternative export routes from Azerbaijan,
needed because of a pipeline fire. A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan
 pipeline was extinguished following an explosion last week. Georgia is a key link in a U.S.-
backed southern energy corridor that connects the Caspian Sea region with world markets,
bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.

Testimony of an optimist: Mr. L.N. Mittal

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The shock of credit crunch should moderate by early next year, with the crisis mainly affecting
the financial and consumer sectors. I am sure that there will be some calmness in the whole
turmoil in the next six to nine months. Large parts of manufacturing industry would not suffer
the same problems as those parts of the world economy more closely linked to banking and
finance such as housing and consumer goods. The world has to differentiate between the
industrial and consumer parts of the global economy and recognize that they would behave
differently as a result of today's difficult conditions, including tightness in credit markets and
commodity and food inflation.

The substantial parts of the broad industrial sector across the world would perform in a
satisfactory way in the next one to two years. Much of this related to the demand for
manufactured products in emerging economies such as China and India. They are continuing
to grow and they need to grow. They are not stopping even if they have slowed down their
progress.

NYSE Euronext 2009 CEO Report: ‘Managing During Economic Turbulence’,

The current US and global economic conditions will separate the best companies from great
ones.[NYSE Euronext operates the world's leading exchange group with 4,000 listed
companies representing a combined USD 28.5 trillion in total global market capitalization
more than 4 times that of any other exchange group.]
towards

For the fourth consecutive year, the US is the most important region with 66%, followed by
China with 9% and Western Europe with 9%. In fact, most CEOs view the US as crucial or
important to their businesses. Nearly two thirds of CEOs view BRIC countries as opportunities.
This is particularly true of CEOs from non US companies, of which nearly 8 in 10 see BRICs
countries as an opportunity. Sensible acquisitions and expansions are targeted in BRICs
countries with the majority saying they would maximize their opportunity by establishing or
expanding local marketing and sales activity. Half of CEOs from NYSE Euronext listed
companies plan to establish or expand local marketing and sales activities in BRIC countries
through 2009. One quarter will seek or expand local partnerships.

Also, a vast majority of CEOs believe that changes to the US legal and regulatory systems
would have a positive impact in the competitive position of the US capital markets. US based
CEOs are more optimistic about the impact these will have, compared to non US based CEOs.
US based CEOs are less likely to believe a convergence of international accounting standards
would have the same positive impact.
 Global Stage: Shiva Tankha

Russia Georgia spat

Georgia declared a "state of war" as Russia bombed the country and their armies battled for
control of the separatist region of South Ossetia.
Georgia is under a state of total military aggression by the Russian navy, air force, large-scale
ground operations.
The Georgian parliament approved the emergency decree, which will last for 15 days and is
equivalent to declaring martial law.
Within hours of the Russian bombing of the second separatist region, the Abkhazians
announced they had begun a military operation against Georgian troops in their territory.

THE BROADER IMPLICATIONS-------

Russian President Dmitry Medvedev ordered a halt to military operations in Georgia on
Tuesday, saying Moscow had achieved its objectives by punishing Tbilisi , after five days of air
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and land attacks that sent Georgia's army into headlong retreat and left towns, military bases
and homes in the U.S. ally smoldering. Georgia insisted that Russian forces were still bombing
and shelling.

Senators McCain and Obama are both trying to demonstrate their leadership capacities in
their strong statements on the conflict between Russia and Georgia. Senators McCain and
Obama are both trying to demonstrate their leadership capacities in their strong statements
on the conflict between Russia and Georgia

EFFECT ON CRUDE OIL ----------------------

towards

Oil fell to a three-month low today, dropping for the third day in a row, after the International
Energy Agency (IEA) predicted supplies would be more adequate and Russia called a halt to
the conflict in Georgia.US crude fell to a session low of $112.48.
 Energy Outlook: EIA perspective
World energy demand and carbon dioxide emissions will grow by about 50 percent over the
next two decades despite soaring oil prices as developing countries outpace rich ones in
consumption, the U.S. government predicts.

World marketed energy consumption is projected to increase by 57 % from 2004 to 2030,"

the Energy Information Administration (EIA) says in its International Energy Outlook 2008
report..

During the same period, total energy demand in the non-OECD countries increases by 95 %,
compared with an increase of 24 % in the OECD countries."
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The non-OECD countries' share of world energy consumption is seen rising from 47.9 % in
2005 to 58.8 % in 2030.

Oil and coal -- both regarded as major culprits in global warming because of the carbon
dioxide they spew into the atmosphere when burned -- will continue to dominate global
energy supply, says the U.S. Energy Department's statistical wing.

As a consequence, and assuming no new measures are enacted to curb climate change, the
annual amount of heat-trapping carbon dioxide flowing from energy use will have ballooned
by 51 % between 2005 and 2030.
towards

It sees demand for oil and other liquid fuels growing to nearly one-third more than today's
consumption, topping 113 million barrels a day by 2030. Crude oil will retain its 40 percent
market share throughout thanks to stepped up production by members of the Organisation of
Petroleum Exporting Countries (OPEC) cartel.

The EIA also expects alternative liquid fuels -- including environmentally controversial oil
shale and biofuels such as ethanol, which has been assailed as contributing to runaway food
prices -- to grow to supply nearly 10 percent of total liquid fuel consumption by 2030.

The United States is expected to account for nearly half the growth in global biofuels
production. This is expected to rise from 1.3 million barrels a day in 2010 to 2.7 million barrels
a day in 2030, with U.S. production increasing from 500,000 barrels a day to 1.2 million
 barrels a day in the same period.
The EIA sees nuclear power leading growth in alternatives to fossil fuels. It anticipates that
nuclear-generated electricity will grow by about one-third and that 124 new nuclear power
plants will be built by 2030. Around 45 would be erected in China, with another 18 in Russia,
17 in India, and 15 in the United States, the agency predicts.

"Electricity generation from nuclear power is projected to increase from about 2.6 trillion
kilowatt-hours in 2005 to 3.8 trillion kilowatt-hours in 2030, as concerns about rising fossil
fuel prices, energy security, and greenhouse gas emissions support the development of new
nuclear generation," the report says.

"Issues that could slow the expansion of nuclear power in the future include plant safety,
radioactive waste disposal, and the proliferation of nuclear weapons, which continue to raise
public concerns in many countries and may hinder the development of new nuclear power
reactors," it says. "Moreover, high capital and maintenance costs may keep some nations
from expanding their nuclear power programmes."

Electricity generated by renewable energy sources will rise by about 2.1 percent a year. Most
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of this growth will stem not from sources favoured by conservationists -- the sun, wind, or
heat trapped under Earth's surface -- but from new mid- to large-sized dams in Asia and Latin
America.
towards
 Our Debutants: Young Bloods
Mukesh Kr. Mangal

SHOULD INDIA GO FOR FULLER CAPITAL ACCOUNT CONVERTIBILITY ?

edo
When the Prime Minister asking the Finance in services. Capital account convertibility is
Fre

ministry and the RBI to sketch the road map for restricted and full capital account convertibility
Capital Account Convertibility (CAC), once again would allow free conversion of Indian assets into
the expectation that the rupee is close to full foreign currency assets and vice versa. While

m convertibility has become a reality. Presently,

current account convertibility is allowed to make
and receive payments in foreign currency for
exports, imports, education, travelling and trade
asking the RBI to prepare the roadmap, the Prime
Minister said that India is more comfortable both
externally and internally and that the time is ripe
now for full capital account convertibility.

S.S.Tarapore

In 1997, a committee on 2009. In 2007-08, Gross Fiscal Deficit to GDP

CAC, headed by former RBI ratio was 3.1% and revenue deficit was 1.4%. The
deputy governor S.S. average inflation for the period 1997-2000 was
Tarapore, had spelt out the maintained between 3 to 5%. But presently, the
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conditions under which full
convertibility could be ushered in. These are
manageable fiscal deficit, moderate rate of
inflation, strong financial sector and ample forex
reserves.
Government aimed at reducing the Gross Fiscal
Deficit to GDP ratio from 4.5% in 1997 to 2.5% by
towards
inflation is hovering around 12% and also the
Cash Reserve Ratio (CRR) is 9%, so these may
hamper progress towards full capital account
convertibility. The banking system has done well
to bring NPAs down and now the Gross NPAs of
all banks in India averaging close to 2% mark.
India’s foreign exchange reserves are over $ 300
bn. So situations are favorable for India to

2009 and estimated revenue deficit at 1% by introduce full CAC.

PROBLEMS WITH CAC

Several economists are of the view that the full Capital Account Convertibility has serious
consequences on the wellbeing of the country, and this may even lead to extreme sufferings
of the common masses. Some of the reasons are highlighted below.

During the good years of the economy, it might experience huge inflows of foreign capital,
but during the bad times there will be an enormous outflow of capital. This has serious
impact on the economy and can even lead to an economic crisis as in South-East Asia in 1997.
There arises the possibility of misallocation of capital inflows. Such capital inflows may fund
low-quality domestic investments, like investments in the stock markets or real estates, and
desist from investing in building up industries and factories, which leads to more capacity
creation and utilisation, and increased level of employment. This also reduces the potential of
the country to increase exports and thus creates external imbalances.
 International finance capital today is “highly volatile”, i.e. it shifts from country to
country in search of higher speculative returns. In this process, it has led to economic
crisis in numerous developing countries.
Entry of foreign banks can create an unequal playing field, whereby foreign banks
pick the most creditworthy borrowers and depositors. This aggravates the problem of
the farmers and the small-scale industrialists, who are not considered to be credit-
worthy by these banks. In order to remain competitive, the domestic banks too refuse
to lend to these sectors, or demand to raise interest rates to more “competitive”
levels from the ‘subsidised’ rates usually followed.
Under flexible exchange rates, capital inflows lead to an appreciation of the domestic
currency directly. On the other hand, in a fixed exchange rate regime, increased
capital inflows lead to monetary expansion and price inflation, which also causes a
real appreciation. In both cases, capital inflows tend to cause a real appreciation and
the possibility of current account deficits because of cheaper imports and
uncompetitive exports which, if not controlled in time, will lead to loss of confidence
and capital flight.

A study conducted by Dani Rodrik (1998), finds little evidence of any

significant impact of capital account convertibility on the growth rate of a country.
A 1999 World Bank survey of 27 capital inflow surges between 1976 and 1996 in 21
emerging market economies found that in about two-thirds of the cases, there was a
banking crisis, currency crisis or twin crises in the wake of the surge.

BACKGROUND OF CAC IN INDIA

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By August 1994, India was forced to adopt full capital account convertibility under the
obligations of IMF. The committee on Capital Account Convertibility, under Dr S S Tarapore’s
chairmanship, submitted its report in May 1997 and observed that international experience
showed that a more open capital account could impose tremendous pressures on the
financial system. Hence, the committee recommended certain signposts or preconditions for
towards

Capital Account Convertibility in India. The RBI over a period of time has accepted the point
that the South East Asian crisis was a bad example for Capital Account Convertibility and that
India had been insulated from the crisis because it had not allowed Capital Account
Convertibility.

There are four benefits to India from CAC:

(1) Rates of return on debt and equity in India are high by world standards. With
convertibility, foreign money will come into India to reduce these rates of return:
i.e., the cost of capital faced by the companies of India in equity and debt financing
will drop. At a lower cost of capital, more investment projects would be viable,
which would generate a faster pace of investment and growth in the economy.
(2) With convertibility, Indians would be able to diversify their portfolios
internationally. Instead of being constrained to only hold Indian real estate, equity
and debt, we will reduce our risk by diversifying internationally. This means that in
a bad year in India, when Indian financial assets generate a poor return, foreign
assets owned by Indians would continue to generate good returns.
 (3) CAC also has important ramifications for taxation. Convertibility opens up new
avenues for a narrowing of the tax base, and hence upgrades the priority of a
harmonization of taxation in India with international standards.
(4) Finally, CAC puts new pressures upon macroeconomic management of the
economy, in the sense that poor macroeconomic policies will swiftly generate
large outflows of funds, and price volatility. Financial markets will constantly
monitor economic policy; this will constrain the behavior of policymakers, and
diminish the likelihood of irresponsible policy choices.

WHO BENEFITS FROM “CAC”?

The class which benefits from the CAC primarily comprises the big business
houses and the finance capitalists, who invest in the stock market for speculations. The
policies like CAC are pursued mainly to gain the confidence of the speculators and punters in
the Stock Markets, and do not have any beneficial effects on the real sector of the economy,
like increasing the employment level, eliminating poverty and decreasing the inequality gap.
However, the irony is that under a crisis, the burden is borne primarily by the common
masses. This may come in the form of a sharper reduction in subsidies, less investment for
social welfare projects by the government and an increase in the privatisation process.
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An interesting fact is, in the BRIC countries (Brazil, Russia, India and China), only India has a
trade deficit. And if there are again spikes in crude prices, not only will the deficit widen, but
inflation will raise more. If India goes ahead with its full CAC, then it would go down the
history as a major step taken by the Indian government after the onset of the liberalization
program in the early 1990s. It is seen that if the financial development of a country is not
strong and that country goes in for full CAC, then it would experience volatility in economic
towards

growth. That is why the government has to be very much sure of India’s economic strength
before going in for full CAC. The government should lower the import tariff and allow foreign
competition and then the resistance of the economy should be evaluated. The government
should also monitor the flow of short term foreign debt and see to it that there is no
misallocation of the foreign funds into low grade investments. At the same time, inflation and
fiscal deficit should be according to the targets set.

Moving forward on this path the steps should be cautious and gradual so that when
full convertibility happens there is no looking back and events like South East Asian crises do
not occur. Because any such crash would hurt the economic sentiments, question the
economic strength and throw the economy back at least by a couple of years. The
government should link full CAC with the economic reform process, especially in the public
debt area and also to the strength of the economic development.
 Our Debutant: Young Bloods

--Leena Agarwal
RETAIL INDUSTRY IN
INDIA Industry Watch
luxury brands and other specialized retail
“ ALL THE POWER IS WITHIN YOU, YOU
chains.
CAN DO ANYTHING AND EVERTHING”

This positive atmosphere has been prevailing

Retail today has changed from selling a
in India from quite a few time with all the big
product or a service to selling a hope, an
players like Reliance, Aditya Birla group, the
aspiration and above all an experience that a
Pantaloon retail of Future group, subhikha
consumer would like to repeat again and
group, The Tata and shoppers stop, RPG, Vishal
again.
mega mart, Godrej etc entering and foraying
into retail sector. The industry has seen such a transformation
over the past decade that its very definition
The growing India’s GDP at 8%, increase in the
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has undergone a sea change. No longer can a

disposable income of middle class in India,
manufacturer rely on sales to take place by
shift in consumer demand to foreign brands,
ensuring mere availability of his product.
flexible government policies, the spread of
visual media making consumer more aware of The major investment areas in retail supply
advancements in the industry are a few factors chains lie in the area of sourcing, distribution
driving these players towards the retail sector. centers (warehouse, cold
towards

The Indian retail market, which is the fifth
largest retail destination globally, according to
industry estimates is estimated to grow from
the US$ 330 billion in 2007 to US$ 427 billion
by 2010 and US$ 637 billion by 2015.
Simultaneously, modern retail is likely to
increase its share in the total retail market to
22 per cent by 2010.
Apart from the domestic players the
announcement of tie ups with the foreign
giants like Wal-mart, Woolworth , etc has also
brought out sea change in this sector.
The Government allows 100 per cent foreign
direct investment (FDI) in cash and carry
through the automatic route and 51 per cent in
single brand. Besides, the franchise route is
available for big operators. To further attract
global retailers, the economic survey 2007-08
has suggested a share for foreign equity in all
retail trade and 100 per cent in respect of
storage),transportation networks,
inventory(both store level and warehouse),
supply chain information systems such as
warehouse management systems, planning,
forecasting, inventory management, etc.
Strategies in retailing
Retail chains can choose to own or outsource
one or more areas in the back end starting
from inbound transportation, distribution
centers, or even further upstream, value
adding operations. Currently, some of the
retail chains like Subhiksha have outsourced
most of their back end, while some, such as
Reliance, are investing heavily in the supply
chain network. Others are positioned in
between owning part of the activities in the
back end. Outsourcing is done mostly in
inbound transportation to independent
trucking companies, or to 3PLs, who may also
provide other services as warehousing.
 Retailing inherently is a difficult business.
Forecasting is merely 65% accurate, up to
20% of the orders are filled imperfectly,
30% of the merchandise is sold on
markdowns, 75% of the new products fail
to meet expectations, net margins are low
(2-3%) and inventory is high. However,
even beyond that, the Indian retail
scenario has a number of deficiencies.
Supply chain and logistics costs currently in
some cases go up to 10% of the organized
retail sales, to the tune of INR 50 bn, while
it is less than 5% in mature retail markets
such as US.
Thus, there is a current improvement
opportunity of up to INR 25 bn. In the next
10 years, this gap of INR 25 bn could go up
to INR 300 bn., and hence a lot more
investment and effort would have to be
put in to reduce this.
On other measures of supply chain
effectiveness also, Indian retailers lag
behind that of mature markets. Indian
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retail chains turn their inventory much
slower, and stock out levels are also
higher. Even the more established retail
chains are able to turn their inventory only
half as fast as retail chains in US or
Western Europe, and stock out levels are
towards
also twice or thrice as much. On the other
hand, shrinkage levels are in tandem with
international benchmarks. However, since
many retailers have still not invested in the
back end and the average length of the
retail supply chains in India is
comparatively smaller than their
counterparts in other mature markets, this
might not have been captured.
IMPROVEMENT PROJECTS FOR
RETAILERS
The retail firm boundaries may extend
anywhere from the sales point (stores,
typically for Indian retailers today) and
backwards up-to the source, encompassing the
distribution network, intermediaries and the
final supplier. The linkages in between these
entities (transportation network) may be
owned by either of the parties. In addition,
parts of the value chain may be outsourced to
a 3PL. Finally, to ensure proper planning and
visibility, IT systems may need to be deployed
at various points of the value chain, often
connecting one entity to the other.
A number of opportunities exist for Indian
retailers today in terms of reducing cost and
improving service levels in the existing supply
chains. For most retail chains today, simply
setting up the entire network is a big challenge
at the moment, since decisions today will
affect the performance of their stores (or any
other mode of sales) in the coming years.
Investment required will be huge and a
number of challenges will have to be
overcome, as described in the previous
sections. Network design, DC design &
engineering, Supply chain IT systems
implementation, decisions to outsource part of
the network are some of the typical projects
Indian retailers are taking up at the moment,
and would be taking up in the near future.
However, going forward, there will be
tremendous scope to further improve upon
the supply chains and even more important, to
use supply chain innovation for gaining
competitive advantage. As mentioned before,
Supply chain best practices in global retail have
created giants like Walmart, Amazon, Target,
Tesco, Metro, to name a few. Hence, a number
of projects, including process improvement at
the DC level or the store level, improving
forecasting accuracy, reducing out of stock,
increasing sourcing efficiency, increasing
product movement visibility, reducing lead
time (sourcing, distribution), optimizing
transportation etc. should be on the radar of
the Indian retailers for the short to medium
term time horizon.
On a long term basis, supply chains would
need to be built flexible, in order to respond to
changes, drastic or slow, in demand, supply
and technology. Further, flexible supply chains
would allow retailers to tackle any dramatic
events like natural calamities, terrorism, etc.
 Aligning the supply chain strategy to the
business strategy would be of paramount
importance in order to make strategic
decisions more effectively, like entering new
markets, new product introductions, new
mode of sales, etc. Anticipating the future, and
building a supply chain around it, is another
way of looking at what the customer behavior
would be in the long term.

Prospects
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No doubt the retail sector is still going to be a
major contributor to GDP of India.

Now that the influence of the left parties have

been reduced to a great extent from the UPA,
hopefully we expect government to come up
towards

with more vibrant policies to boost the retail

boom which would bring about changes in
other sectors like realty, processed food
industry, garments, gems and jewellery,
education,etc and also lead the improvement
in supply chain management services by more
tie-ups with foreign players or hiring more of
experienced executives predominant in this
sector.

CONCLUSION
“Past is experience, Present is experiment and
Future is expectation.

Use your experience in your experiments for

better expectations”

In the same way the retailers keeping in their

mind their past experiences, using them in
their present experiments will surely come out
with better expectations in future.

-------------------------------
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Disclaimer: This magazine is To reach the editors….
being published and circulated on
behalf of Stockyard by Mr.Prem
Prem_propulsion@yahoo.co.in
Kumar and Mr Chandra Prakash .All chandra5911@gmail.com
the liabilities and issues concern to
named individuals.