Thursday, July 31, 2008

'Disputes relating to facts are settled upon establishment of facts'

Delay and dispute in M&A deals

Mergers and acquisitions (M&As) are slowly turning out to be painfully long, and most of the times burdened with disputes in one form or the other. Let's first take a local example: After negotiations stretching over 50 days, Reliance Communications and South Africa's MTN Group ended talks that could have seen a potential telecom powerhouse emerge. Even as the media and analysts try and discover the corporate `whodunit' behind it all, many are left to wonder what happened to the times of deals such as Ranbaxy-Daiichi or even Hindalco-Novelis, which sailed through in comparison....
What seems to be the problem in these potential deals? "Recent experiences in more mature M&A markets (mainly continental Europe and the US) show that transactions concluded in these geographies either go through a lengthy negotiation process or a formal dispute resolution process with respect to purchase price after the deal has been signed," says Mr Srikant Krishnan, Partner, Ernst & Young.

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Monday, July 28, 2008

'Outsourcing product engineering is no longer a tactical initiative'

Firing from the GPE engine

Any slowdown in the US market is a challenge and an opportunity for us, avers Amitava Roy, President, Symphony Services Corporation India P Ltd, Bangalore. “Like in 2001-2002, when a number of Indian IT (information technology) companies, especially the large ones, benefited from the slowdown, we believe that our innovative business models will help our customers to address such a situation and thereby provide an opportunity to strengthen our leadership position.R 21.

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'The Indian Government has also learnt a lot of lessons in implementing PPP programmes'

PPP in infrastructure: Is India Inc. deriving value?

India will need investment of over $500 billion up to fiscal 2011-12 to upgrade its infrastructure if it wants to maintain close to 9 per cent growth, the Finance Ministry’s annual Economic Survey 2007-08 had noted. Numbers aside, India’s constraints in infrastructure are obvious in our daily lives — evidenced by clogged airports, poor roads, inadequate power and delays at ports, feels Ms Ameeta Chatterjee, Director, Corporate Finance, KPMG in India.

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'A cell type is a specialised functional form of cell'

‘We plan to bring out innovative tailor-made cells for diseases’

Can you gain anything from someone whose job has not been determined? In sports, the guy who sits on the bench can only sit and watch the game, till he is called for.
But we are in the 21st century and medical science can do wonders, breaking barriers and age-old thinking. So even though a stem cell is a cell whose job is yet not determined, new-age companies are opening new vistas of treatment with them.

Stem cell company Stempeutics Research (backed by Manipal Education & Medical Group) is in the forefront of such innovation. Its sprightly President, Mr B. N. Manohar, in a luncheon interaction with Business Line, opened up a new world of therapy and possible cure for diseases, which conventional medicine cannot cure.

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Thursday, July 24, 2008

Does India figure in the FCPA often?

Skeletons in M&A cupboards

The Foreign Corrupt Practices Act (FCPA) is a US federal law mostly known for clamping down on bribery of foreign officials. If one would review FCPA enforcements over the last five 5 years, India finds a name mention in over 70 enforcements; and of the enforcements in 2007, more than half of them arose in the context of M&A (merger and acquisition) activity. "These are figures that India Inc. cannot ignore," says Ms Navita Srikant, Partner, Fraud Investigation & Dispute Services, Ernst & Young.

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'A HDD is the difference between a baseline temperature and the average temperature for a day in winters.'

Use `weather derivatives' to weather droughts

With drought looming large over 14 meteorological sub-divisions, spare a thought for the planted crops that are in grave danger. For the farmers in Maharashtra, Andhra Pradesh, Karnataka and Kerala this monsoon has brought everything except the much-needed moisture. "Come rainy season and nearly 59 per cent of the Indian population, the people dependent on agriculture, keep their fingers crossed. Some pray to the rain God to ensure that it does not pour so hard that their crops get destroyed. On the other hand, in some villages, the farmers tie two frogs to a pole and get them married, a superstition which is supposed to bring good rainfall," quips Dr Nupur Pavan Bang, Faculty Member at ICFAI Business School (Hyderabad).

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Monday, July 21, 2008

Is environment a priority in the hospitality industry?

Desi hospitality industry needs to get its act together

The Indian hospitality industry is getting global attention. As major hotel groups and real-estate players join hands to accommodate business as well as pleasure travellers from across the world, what separates the desi hospitality industry from its counterparts in Malaysia or Thailand?
There is many a slip between the cup and lip, as they say. "What we need are quick licensing, less red tapism, enhanced infrastructure, and less interference from local Government bodies, except in the main areas, preferably from one window. Also a more co-ordinated and planned approach to the development of the industry, by all the local bodies involved," evaluates Mr Geoff Magee, Chief Executive Officer, The Accord Metropolitan, Chennai (www.theaccordmetropolitan.in).

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'Indian call centres, since their boom 10 years ago, have truly come of age'

Call centres: One size doesn’t fit all!

Small size matters, especially in call centres. With mid-sized companies increasingly outsourcing part of their work to India, they are not necessarily looking at 1,000 associates working for them. A 50-100 seat centre is not only easy to manage but also more receptive to the smallest of processes.
“Size always creates an element of macro management and that we believe is not desired by small and medium companies outsourcing from the UK. We have witnessed over the last few years that the smaller the centre is, the greater is the attention and devotion given to small processes and it is this that we seek in our efforts to secure 50 more call centres to partner with us,” says Paul Kopec, Chairman of Scotland-based VoiceStream Group.

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'The AAR ruling is binding only on the taxpayer and the Revenue authorities'

A favourable ruling on referral fee

Sometimes having something permanent can be a drawback. The Authority for Advance Rulings (AAR) in a recent ruling held that where a non-resident company had referred a potential customer to its Indian group company and received referral fees, the fees received being business income, would be liable to tax in India - only if it has a permanent establishment (PE) in India.
This means the absence of a PE may work out in an entity's (in this case Cushman & Wakefield Pte - CWS) favour as it doesn't have a permanent shop in the country. Says Mr Girish Mistry, Executive Director, PricewaterhouseCoopers Pvt Ltd, "The AAR ruled that referral fee was not royalty or fees for technical services and was not taxable in India as business income since CWS did not have a PE in India. Under the tax treaty provisions a non-resident's business income would be taxable in India only when it has PE in India."

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Thursday, July 17, 2008

'To keep pace with the demand, we need public-private partnerships.'

Why PE has taken little interest in the Indian mining sector

The mining sector is experiencing tremendous demand, and prices of raw material are at an all-time high. Naturally, mining projects, both domestic and abroad, have become more viable than ever before, according to experts.
While new business models have evolved due to higher levels of liquidity and greater degree of participation from project financing companies, private equities and financial institutions, is financing easy? “Bringing new assets to stream remains replete with challenges and risks,” says Mr Kameswara Rao, PricewaterhouseCoopers’ India Energy, Utilities and Mining leader.

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Monday, July 14, 2008

'The total market size for financial year 2007 is expected to cross $40 million'

Bring threads of security together

As an entrepreneur or technology head, when you sit down with your technical team to pinpoint how the intruder got in, it could be that one of your employees unintentionally `left one door' open just enough just enough open for someone to swoop in. The problem occurs when there are many doors and hence each doorkeeper has to be alert. This is where convergence to a single solution comes handy. "
A unified threat management (UTM) is the single answer to all these and many more such worries," says Mr Sunil Sapra, Country Manager (India & SAARC) of Watchguard Technologies, New Delhi.

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'Ninety per cent of our revenues come from manned guarding'

‘Treat security as an investment, not as a cost’

While politicians and administrators grapple with the increase in terrorism and heightened local crime levels, the security industry is cashing in on the opportunity. As Mr Ramesh Iyer, Executive Director, Topsgrup, ( http://www.topsgrup.com/) puts it: “Globally, the security industry is estimated at $140 billion and it is growing at around 10-12 per cent CAGR (compound annual growth rate). Among the high-growth markets are India, China, South America, South Africa, West Asia and some of the South Asian countries.”

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'Relative allocation of spectrum between GSM and CDMA has always been an issue.'

Issues in the spectrum debate

Telecom spectrum as a topic has received widespread attention and coverage from analysts and policymakers. GSM operators, CDMA operators, new licence awardees, equipment providers, DoT, TRAI and industry bodies such as the Cellular Operator's Association of India and the Association of Unified Service Providers of India are all stakeholders in these debates around spectrum.
"How the Government manages to keep all these stakeholders involved in future regulation and direction and how it is going to formulate a holistic policy and refrain from patchwork is going to determine the course of these spectrum issues," says Mr Nitin Gupta, Associate Director, Ernst & Young, in a Q&A with Business Line. For more insight, read on.

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Friday, July 11, 2008

'Feasibility criteria are important factors which determine whether an MBO is successful or not'

MBO: Management or `managed' buyouts?

"MBOs were traditionally considered high-risk transactions, but in India they have proven to be good for companies and are considered an attractive option by managements. Significant increases in revenues and profits have been witnessed in victims of MBOs - Phoenix Lamps, Nitrix, Intelenet to name a few in India," says Mr Rohit Kapur, Head-Corporate Finance, KPMG, India. Explaining to Business Line over the course of an email interaction, Mr Kapur feels MBOs are also becoming the preferred option for company managements.

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Monday, July 7, 2008

'The Net has changed the way information sequence takes place.'

Using the Web to find talent

Aadith D. Vikram, the 22-year-old Managing Director and Vice-Chairman of PGC Industries and Group, Tirupur ( http://www.pgcindustries.org/), with a finance and management science degree from the University of Strathclyde, is effectively the new-generation boss of his company. But he keeps asking, “Where is my boss?”

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'Incorporation of RFID will necessitate a new look at existing business processes.'


The world is changing with RFID

“RFID today is a lot affordable. Prices are way below what the market has seen a year before and we see clear signs of RFID adoption happening in a big way in the near future,” says Mr Pradhyumna Venkat, CEO, Gemini Traze, Chennai. His company deals with RFID and the tags. RFID is about speed and ease of use and merchants have been successfully deploying RFID-based payment transactions for loyalty applications.

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Thursday, July 3, 2008

Portrait - July 3, 2008


Pankaj_Chadha - Illustration by Rajesh