TIMES BUSINESS THE TIMES OF INDIA, CHENNAI | THURSDAY, DECEMBER 9, 2010*

EU PHONE OPERATORS ASK STEVE JOBS-LED APPLE YAHOO CEO CAROL BARTZ SAYS FACEBOOK IS
TO SHELL OUT FOR NETWORK IMPROVEMENT A BIGGER RIVAL THAN GOOGLE

Oppenheimer Co To Buy 26% For $2Bn In JV

Govt spending can ease liquidity Stemcor in talks for
Centre Has Rs 90,000 Crore Cash Lying Idle With RBI; Q4 May Be Better
Surojit Gupta & Sidhartha | TNN

New Delhi: The prolonged

cash crunch in the banking
system could ease consider-
ably if the government starts
loosening its purse-strings.
According to latest data,
the government has around
Rs 90,000 crore cash balances,
which is lying idle with the
RBI. This is more than twice
the level of Rs 43,525 crore re-
ported in RBI’s latest data on
November 26. The government
receives resources by way of
revenue, which, when not
spent, leaves it with a positive
cash balance just as individ-
uals have bank balances.
While economists estimat-
ed the amount to be around Rs
93,000 crore, government offi-
cials said it was in the range
of Rs 85,000 crore to Rs 90,000
crore. Although holding large
cash balances are not a new
phenomenon, some analysts
said this could be near record
highs. This surplus could rise
steel plant in K’taka
PUT IT TO WORK
further after advance tax is
paid next week.
Even the amount borrowed
by banks from the RBI,
through the repo window, is
continuously hovering near
record levels of over Rs 1 lakh
crore a day. Repo allows banks
to raise overnight funds from
the central bank to meet their
cash requirements. Alterna-
tively, banks park surplus
funds with the RBI through
what is called reverse repo.
On Wednesday, banks ac-
cessed nearly Rs 1.26 lakh crore,
which shows the fund crunch
in the system. And, with ad-
vance tax payment by compa-
nies and high networth indi-
viduals expected to suck out an-
other Rs 40,000 crore, or more,
the pressure is only going to in-
tensify after the December 15
deadline for tax payment.
Shubhada Rao, chief econ-
omist with Yes Bank, expects
the liquidity tightness to re-
main for a substantial part in
December but says it may be-
gin to ease once government
spending picks up in the last
quarter of the financial year.
A senior finance ministry
official said government de-
partments are being pushed to
step up spending. “In any case
if they do not do it now, they
stand to lose out since depart-
ments are allowed to spend
only 33% of their annual allo-
cation in the fourth quarter.
So, spending will increase this
month,” the official said.
So far, the steps initiated
by the government and the
RBI have served limited pur-
pose. The RBI has permitted
banks to lower their holding
of government bonds till Jan-
uary-end to help them tide
over the crunch. But bankers
said that the move is unlikely
to prompt most lenders to sell
their bond holdings.
Even the government had
cut its scheduled market bor-
rowing for this week to help
cash stay in the system. But
market players said that this
too has failed to prop up sen-
timents, prompting bankers
to seek lower CRR.
“RBI has been categorical
that the CRR is a tool for its
monetary policy which re-
mains anti-inflationary now.
RBI has raised six times this
year to cool soaring inflation
which still remains above its
comfort level of 5-6%,” said
Indranil Pan, chief economist
at Kotak Mahindra Bank.
RBI deputy governor Subir
Gokarn has said the central
bank views the CRR as mone-
tary instrument and is using
other tools in its armoury to
gain short-term control over
the liquidity situation with-
out compromising its mone-
tary stance.
Boby Kurian &
Reeba Zachariah | TNN
Mumbai: The Oppenheimer
family-controlled Stemcor, the
world’s largest steel trading
company, is stepping up the
India play. The London-based
and privately-held company is
discussing a joint venture with
two local partners for a $2-bil-
lion steel plant in Karnataka,
in a move that promises to be
its biggest bet on manufac-
turing. Stemcor has been hold-
ing talks with the Bangalore-
based diversified business
group United Telecoms and an
unidentified mining partner
from the iron ore-rich Bellary
in Karnataka to set up the
plant, said sources privy to the
development.
The discussions under way
suggest that Stemcor may pick
up a 26% stake, leaving the rest
with the two local partners –
UTL holding with around 40%
India Play
Stemcor has been holding
talks with diversified group
United Telecoms and an
unidentified mining partner from
the iron ore-rich Bellary
This move comes at a time
when Stemcor’s plans to buy a
10% stake in Ispat Industries has
been on the slow track
Bigger global peers such as ArcelorMittal, Posco and Bhushan
Steel have unveiled steel projects in Karnataka
various potential JV partners United Telecoms has in-
on a number of different proj- terests spread across telecom-
ects in the Indian steel indus- munications, power and in-
try,” he added. frastructure, with one of its
Industry estimates suggest group entities holding a large
that a one million-tonne per stake in Karbonn Mobile, the
annum steel plant would re- handset maker. The promoters
quire investments of $1 billion also owned JT Mobile, a mo-
approximately. Hence, the pro- bile telephone service provider
posed JV could be looking at a in Karnataka and Andhra

Exports rise 27% in Nov Banking, teleco and the Bellary mining group
with 33%. Stemcor’s plans
comes at a time when its bigger
global peers such as Arcelor-
two million-tonne plant going
by its investment plans. How-
ever, details about the plant
and the investments were cur-
Pradesh circles, which was
merged with Bharti Airtel
about 10 years ago.
Stemcor, with over $5 bil-
TIMES NEWS NETWORK

stocks sink mkt

New Delhi: The country’s ex-
ports rose 26.8% to $18.9 bil-
lion in November, helped by
robust shipments across most
sectors, and trade deficit nar-
rowed to $8.9 billion on account
of a lower rise in imports.
With export momentum
continuing, commerce secre-
tary Rahul Khullar said the
export target of $200 billion
for the current financial year
could be breached. “Exports
are doing pretty damn well...
It’s not a question of whether
we will cross the $200 billion
market, the question is by how
much will we exceed it. It
could be $210-215 billion,” he
told reporters.
According to provisional
data compiled by the commerce
department, exports went up
by 26.7% to $140.3 billion dur-
ing April-November, led by
strong performances from en-
gineering goods (50% increase
to $31.6 billion), gems & jew-
ellery (16% to over $20 billion)
and petroleum products (41%).
Though some of the sector
such as ready made garments
(3% drop to $700 million),
gems and jewellery (24% de-
cline), leather (13% fall) and
crude oil (8% decrease) had
seen a fall in exports during
November, Khullar sought to
play down any concerns, say-
ing that the numbers for the
TRADE DEFICIT DOWN
month might be revised up-
wards. Besides, he said that
in case of petroleum imports,
the decline was largely on ac-
count of global prices.
Imports during the first
eight months of the financial
year, are estimated to have in-
creased 24% to $222 billion, re-
sulting in a trade deficit of
$81.7 billion. The trend of ex-
ports rising faster than im-
ports for the past couple of
months has also prompted the
government to lower the trade
deficit projection to around
$120 billion, from $135 billion
estimated earlier. Khullar, how-
ever, warned that an increase
in global crude oil prices could
upset the calculations.
The commerce secretary
also acknowledged the possi-
bility of problems in Europe
affecting India’s exports. “It
will affect and it has started
affecting us but we can hope
to stay a little insulated due to
our diversification strategy,”
he said. Khullar, however, said
the impact of the rupee ap-
preciation was limited.
Mumbai: Sellers pulled down
sensex by 238 point on fears
that banks’ profitability will
be eroded due to their decision
to hike deposit rates, while tel-
com scrips came under pres-
sure with the CBI intensify-
ing investigation into the 2G
spectrum allocation scam.
The BSE index saw a weak
opening and ended in the neg-
ative terrain, losing 1.91% or
238.16 points at 19,696.48.
Besides the banking sec-
tor concerns, the sentiment
was also impacted by the fall
in telecom stocks, as the CBI
searched homes of former
communications minister A
Raja and other officials in the
2G spectrum allocation scam.
Sensex saw a weak open-
ing and ended in the negative
terrain, losing 1.91% or 238.16
points at 19,696.48.
A similar movement was
witnessed in Nifty which de-
clined by 1.22% or 72.85 points
to settle the day at 5,903.70.
Analysts said that talks of
an imminent rate hike in Chi-
na, liquidity crunch in the lo-
cal banking system, and con-
cerns over banks’ margins
have hit the market.
“Dearth of positive news in
the market and strengthening
dollar are leading the fall. It
Re’s biggest 1-day
fall in a month
The rupee snapped a six-
session rally and posted its
biggest single-day fall in
almost a month on Wednesday,
weighed by broad losses in the
dollar versus major currencies
and weak domestic shares.
The partially convertible
rupee closed at 45.09/10 per
dollar, off the day’s low of
45.1675 but still 1% weaker
than its 44.64/65 close on
Tuesday. This is the rupee’s
worst one-day fall since its
1.1% decline on Nov. 12. REUTERS
seems that FIIs are pulling
their money from India to in-
vest in the US markets,” Reli-
gare Securities executive vice-
president Rajesh Jain said.
HDFC Bank and HDFC be-
came the major contributors
to the overall sensex fall with
the former plunging 3.07%
and the latter declining 2.42%.
State Bank of India and
ICICI Bank also saw a sub-
dued trade, shedding 2.01%
and 0.39% respectively.
The index has shed 7.91%
or over 1,100 points in the four
trading sessions. PTI
Mittal, Posco and Bhushan
Steel have unveiled multi-bil-
lion dollar steel projects in Kar-
nataka, where JSW Steel al-
rently not available.
This move comes at a time
when Stemcor’s plans to buy a
10% stake in Pramod Mittal and
lion in revenue from trading
of steel and steel-making raw
materials, has been diversify-
ing into manufacturing with
ready has a sizeable presence. Vinod Mittal-owned Ispat In- India being the learning
“I can confirm we are ex- dustries has been on the slow ground. The British giant has
ploring an exciting opportu- track. In September, Stemcor preferred greenfield projects
nity with United Telecoms but and Ispat also entered into an with low-profile partners and
we have not finalized anything agreement to jointly set up a one would like to cap its exposure
as yet,” Matthew Stock, man- million-tonne coke oven plant in manufacturing projects
aging director, Stemcor India, at Ispat’s existing steel complex with inherent risks normally
told TOI. “We are in ex- at Dolvi in Maharashtra. But associated with metals and
ploratory discussions with the transaction is yet to take-off. minerals industry.
Fare data not flier-friendly
Continued from P 1
“Could one ever imagine airlines will make
For instance, an airline’s Delhi-Lucknow their fare range public? This is raw data and
basic fare goes up from zero to Rs 14,400 for now it will go to the logical next step of being
Delhi-Lucknow in 18 levels. made available in a useful and purposeful man-
Even after taking the trouble of decipher- ner. Just give some time,” said a senior official.
ing the fare charts, there is no way for pas- Ankur Bhatia, head of a company providing
sengers to check if the fares being offered for airline reservation technology service, said,
travel are after all the lower level fare buckets “Fares shot up last month due to factors like
have been exhausted. The only solace is that pent-up demand as people postpone their trav-
if the figure being asked seems too high, one el to after Diwali from a week or so before the
can do some algebra to find if that is more than festival. There was massive demand while the
the highest the airline is supposed to charge supply is low with many planes grounded. Fares
as per its fare chart! have not been lowered but will be charged as per
Stumped by this fare ranges — well within demand and supply. We see the next peak in trav-
the deadline set by it — the aviation ministry el around Christmas.” Airlines keep a certain
said it was studying the charts. “There seem to number of seats in each price bucket and fares
be some serious jumps in fares of certain sec- move to the next level as soon as that number is
tors. The information is not consumer-friend- sold out. But the number of seats in each bas-
ly and we will ask for changes within 24-48 hours. ket is also dynamic, with more seats in low range
Our idea is not to interfere in setting highs/lows during off-season and reverse in travel period.
or the ranges, but we just want transparency “An airline seat is a perishable commodity. The
for consumers,” said a senior Directorate Gen- moment a plane’s gate is closed, an unsold seat
eral of Civil Aviation (DGCA) official. is a dead loss,” said an official. TNN

ONGC offer
now in Feb
New Delhi: The government
has advanved the public of-
fering of ONGC to February
2011, while pushing back the
share sale of Indian Oil Corp
(IOC) following the rise in glob-
al oil prices.
The Cabinet, on December
1, approved sale of govern-
ment’s 5% stake in ONGC, the
nation’s highest profit earn-
ing firm, to raise up to Rs
13,000 crore, sources privy to
the decision said.
The follow-on offer is
planned for mid-February or
early March, a month earlier
than previously planned. IOC’s
public offering was to have
come up in the 3rd or 4th week
of January, but would now fol-
low ONGC.
The Cabinet has not yet ap-
proved sale of its 10% share-
holding in IOC. PTI
LCC, Big Boys birds of same fare
Saurabh Sinha | TNN
New Delhi: Till about three
years ago, the two big boys of
Indian aviation – Jet’s Naresh
Goyal and Kingfisher’s Vijay
Mallya – used to say that
there’s nothing like low cost
carrier (LCC) in India as every
airline has to operate under
the same cost structure of air-
port and fuel charges. The
only differentiating factor, ac-
cording to them, was low fares
offered by LCCs.
But now with airlines for
the first time ever making
public their entire fare range,
one thing is clear that even
this distinction is fast blur-
ring. For there is not much dif-
ference in the fare ranges of
these two.
For example, an LCC offers
basic fare range of Rs 490 to
Rs 22,800 to fly the 1,150 km
NOT FAIR
separating Delhi and Mum-
bai. To this will be added a fuel
surcharge of Rs 2,200-2,600
(which also goes to the airline)
and airport charges and tax
of about Rs 550.
People will also need to
spend on sandwiches and cold
drinks on this flight. On the
other hand, a full service car-
rier (FSC) offered an all-in-
clusive range of Rs 4,181 to Rs
24,871 on the Delhi-Mumbai
sector. A small LCC, in fact,
had among the highest highs
in its fare ranges for many
routes.
A top government official
said: “The maximum opposi-
tion to our move of making
fare ranges public came from
LCCs. Full service carriers
have been filing their range
with the global distribution
system providers, while it re-
mained out of public domain.
Very often we found LCC fares
to be higher than the ones on
FSCs offered.”
On their part, LCCs said
every airline has fare range
and they sell more of their
seats in lower priced buckets
than the higher ones. “Our
cost of operation are lower
structurally than the biggies
like Air India, Jet or King-
fisher. If the government is
able to ask airports to offer
lower fares to us and sales tax
on jet fuel is rationalised, we
can show the difference be-
tween us and FSCs,” said a
senior official of an LCC.
In fact, one of the objec-
tives of the aviation ministry
drive to make fare ranges pub-
lic was to ensure that LCCs
come under pressure to either
live up to their name or be-
come FSCs themselves. If the
government is able to find
some consumer-friendly way
of publicising the fare ranges
and it becomes popular among
travellers, LCCs could come
under intense pressure from
fliers to remain low fare air-
lines.

Publicis on expansion drive to take on WPP

Samidha Sharma | TNN plans to get international tal-
ent to India to widen its talent
Mumbai: Publicis Groupe, the pool in the country.
world’s third-largest commu- Publicis will also step up ef-
nications group, is reviewing forts on the digital front. The
its India strategy with the aim idea is to strengthen our digi-
of tripling the size of its busi- tal presence and ramp up Dig-
ness here. itas along with introducing
The group is looking to ex- new ventures from within the
pand its operations, invest- group, Levy said. Last year,
ments and business here in an Publicis acquired Microsoft’s
effort to narrow the huge gap digital ad firm, Razorfish, for
between Publicis and Martin around $530 million, which is
on the overall Asia-Pacific ad
market. The 9.2% organic
growth achieved in the third
quarter is partly due to an up-
turn in the global ad market but
more importantly, it is the out-
come of our investment strat-
egy in two high-growth areas,
digital and emerging markets.
The BRIC countries to-
gether registered a 15% jump
in revenue for Publicis. Cur-
rently, emerging markets con-

(
Sorrell’s WPP Group, which
currently dominates the Indi-
Price: . 295/ - an market.
J Talking to TOI, Publicis
Groupe CEO Maurice Levy
said the agency’s board will
likely to enter India consider-
ing the group’s seriousness in
BATTLEGROUND INDIA: The French ad group wants to accelerate its expanding its digital offerings
growth here organically and through acquisitions here. In fact, the French ad-
vertising group expects digi-
Coming close on the heels countries.” Elaborating on its tal and emerging markets to
tribute about 22% of the
group’s revenues.
When asked about the
group’s interest in the much
talked-about acquisition of
American advertising group,

________
________
BAI’JGALORE: Book Mark—824427a0a0, Grosswonis 25bB241 1, Oangarams 25581 BiT , In-Toucr 25B37744,
Landmark—42404340 , Nagashree—26630993, Sapna—401 I4455, Sri Book World—26624904, Strands—25580000,
meet on Thursday to firm up
its expansion plans. The euro
4.5-billion French group is am-
of French President Nicolas
Sarkozy’s India visit, Levy
said, “the president has helped
India plans, Levy said, “We
want to invest heavily in hir-
ing talent across the group
contribute 60% to its overall
revenue in the next few years.
Besides India, Publicis is
Interpublic Group (IPG), Levy
denied any such interest.
“There are some conflicts and
Reliance lime Out 22667125 , Reliance Time Out-41286025; HYDERABAD: Crosswords 9848072884, A A AA bitious about India and wants create a Franco-Indian body, companies here in India – be betting big on China where it some similarities as far as IPG
Hussain—23203724 , Akshara—23554096, Book Selection—278432 11 Book Point—27665094 , Walden—23551613,
Himaleya—23355598, Landmark 40.4 4OOO , 64631583, Ody8sey 4027892125; CHENNAI: Landmark- 42139397, to accelerate its growth here which brings together Indian it Leo Burnett, Saatchi & is looking to double its rev- goes. But at the moment, there
Odyssey—24402264 , Book Point—2852301 9, Connoxions—26260429, Higginbothams Ltd—285 1 35191. organically and through ac- and French CEOs to acceler- Saatchi or the media and dig- enues. Levy, who was in China is no logic to making such a
quisitions. ate the growth of both the ital agencies. The group also last week, is extremely bullish big acquisition,” he said.