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GlobalLogic Appoints New Chief of Asia Pacific / Managing Director for India

September 16, 2010

MCLEAN, VA–(Marketwire – September 16, 2010) – GlobalLogic, the leader in software R&D services, has appointed Sunil Singh as Chief of Asia Pacific and Managing Director of India. A current resident of Silicon Valley, Singh will relocate to New Delhi to manage GlobalLogic’s Indian operations and market development, as well as guide the company’s overall business strategy in the Asia Pacific region.

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MJP Waterjets wins record EUR2m for the Indian Coast Guard

September 6, 2010

MJP Waterjets wins record EUR2m for the Indian Coast Guard

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Video: Lombard’s Bhandari Says Indian Inflation `Major Threat’

August 31, 2010

Aug. 31 (Bloomberg) — Maya Bhandari, a senior economist at Lombard Street Research, talks about the expansion of the Indian economy and the threat of inflation. India’s economy grew at the fastest pace in 2 1/2 years, increasing pressure on the central bank to extend the most aggressive round of monetary-policy tightening in Asia. Bhandari speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

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Mark H. Ayers: It’s the Height of Audacity to Claim a Skilled Worker "Shortage" When 20% Percent of American Skilled Craft Workers Are Unemployed

August 27, 2010

As a labor leader, I have learned over the years to never underestimate the lengths to which some unscrupulous employers, and some associations and consultants who serve them in the business community at large, will go to squeeze American workers and fatten their profit margins, regardless of the social impact their actions may have. The most recent example comes in the form of a newly issued report by a company called Manpower, Inc., which bills itself as “…a world leader in innovative workforce solutions; creating and delivering services that enable its clients to win in the changing world of work.” And those services happen to include “permanent, temporary, and contract recruitment.” I always find it interesting when companies that have a product to sell – in this case worker recruitment – somehow magically produce a report that suggests some sort of emergency or crisis that can be solved by, you guessed it, the services that they provide. And it’s even more incredible to me when some “respected” media outlets report it as fact without once ever considering that the source of the report is inherently biased. In this case, the Manpower, Inc. report to which I refer is titled, “Strategic Migration – A Short-Term Solution to the Skilled Trades Shortage.” The report essentially concludes that “Strategic migration is a practical answer to talent mismatches today. Without it, there would simply be no near-term way to alleviate shortages of skilled blue-collar workers.” Now, let me just say three things about this report. First, it is suspect from the start due to its source. Secondly, the brain trust at Manpower, Inc. is apparently unaware that there is 20% unemployment right now among the skilled trades in the United States (and in many areas of the nation, the rate is above 30% and sometimes 40%). Third, the term “strategic migration” is simply a more elegant way to say that American employers – not all American employers, mind you, but a significant number of them – are chomping at the bit to ease immigration restrictions for guest workers so that they can pay less for skilled craft labor. The news of the release of this report undoubtedly foreshadows the ratcheting up of pressure on American lawmakers to expand the guest worker programs under the federal H-1B and H-2B visa programs, as well as further expand the L1 Intra-Company transfer visas. This increased pressure stems from the disappointment of the U.S. Chamber of Commerce and other business organizations over the fact that the issue of comprehensive immigration reform was placed on the back burner this year by the U.S. Congress. The next logical step for the business community would be to manufacture a “crisis” in order to get Congress to pass a massive expansion of flawed guest worker programs. The stated view of the Chamber and the business community at large on the issue of guest workers is that the “market” should determine the number of visas and, of course, the market is defined by employer demand. The abuse of the H-2B visa program gets very little attention, yet it is an issue that has wide-ranging effects on the wages and working conditions for skilled craft workers all across the United States; in similar fashion to the escalation of “employee misclassification” in the construction industry which is now reaching epidemic proportions and wreaking havoc on workers, communities and many state’s already-dire fiscal troubles (due to the significant drop-off in tax revenues caused by this shameful practice). Until recently, employers and unscrupulous labor brokers who used the H-2B visa program to exploit foreign workers and drive down community wage standards have operated in the shadows. But today, thanks to watered down application and enforcement provisions, these parasitic “visa vultures” are free to ply their unscrupulous trade out in the open. Hence, the Manpower, Inc. “report.” Hundreds of billions of dollars have been appropriated by the federal government over the course of the last two years for the purpose of jump-starting our national economy. Many of the jobs that are being created by the stimulus bill are in the construction trades. And with an industry unemployment rate that continues to hover at 20% nationally, the last thing we would think possible is for U.S. employers to claim that there are not enough American welders, electricians, boilermakers and other skilled craft workers available to fill these jobs. Rather, these employers believe that there are not enough skilled craft professionals who are willing to work for the starvation wages they would like to pay, and for which they can find willing foreign workers. Just like the scourge of abuse occurring in the Gulf Coast region, where some employers continue to engage in the abuse of the H-2B visa program. Their modus operandi typically involves mis-advertising for lower-skill workers at the lowest level of wages (Levels 1 and 2 as defined by the H-2B program) when in actuality the jobs require much higher skill levels. By advertising for a lower class of skill, these employers are virtually guaranteeing that they won’t get a pool of “qualified” American workers. For example, they will advertise for a lower-skill “production welder” rather than a “construction welder” for a job in shipyard, knowing full well that any welder that works in a U.S. shipyard must pass a certification test. The United Association of Plumbers and Pipefitters (UA) has done a remarkable job of exposing this travesty. They have had qualified union members apply for these lower wage jobs, and when the employer finds out who they are and examines their stellar qualifications, these applicants are simply never contacted. Over the last couple of years throughout the Gulf Coast, the UA has successfully stopped over 12,000 individual job placements from going forward because of such fraudulent advertising practices. And this comes on the heels of another employer in the Gulf Coast who, in 2007, fraudulently submitted applications for 6,000 foreign H-2B visa workers to work on re-building the petrochemical industry in that region after the devastation of Hurricanes Katrina and Rita, when many American workers in that region were desperate for work. Of the 6,000 applications for welders, 3,000 were targeted for the Motiva Refinery, 1,500 for Valero, 1,000 for Total Petrochemical & 500 for ExxonMobil. The State Workforce Agency killed this application after complaints from local building trades unions in that area, along with newspaper stories and investigations. With so much fraud involved it is unfathomable that not one single person went to jail or was even charged for filing forged documents and falsified applications! If that’s not enough, you could point to the example of late 2006, again along the Gulf Coast, where U.S. and Indian recruiters defrauded more than 500 Indian workers of $20,000 each for an American dream–promises of good work and green cards–but delivered to them instead temporary visas binding them to one employer, along with deplorable conditions at Signal International shipyards, and constant threats of deportation from the company. Or, the example in Los Angeles, CA where it was discovered that Jacobs Engineering was seeking H-2B visas to import several hundred workers to fill skilled craft positions at a Los Angeles refinery. And in Florida, where the quick action on the part of our State Building and Construction Trades Council thwarted attempts by Blackhawk Marine to obtain H-2B visas for 400 foreign national workers in the Tampa area. The list of these types of abuses goes on and on. It is time that American lawmakers were reminded that their job is to protect the sanctity of American community standards and the interests of American workers. It is long past time for the federal government to initiate rapid regulatory reform of the H-2B process in order to require State Workforce agencies to review employer applications for H-2B temporary labor certifications and to revoke regulations that authorize employer “attestation;” to put an end to three-year “temporary” labor certifications for the construction industry; and to debar from the H-2B program for up to three years any employers, attorneys, or agents who commit willful violations of its requirements. We are on the verge of experiencing tremendous investment in America’s domestic energy sources – including oil, gas, nuclear, solar, wind, and geothermal. And we are hopeful that the Congress will soon devote some attention to the state of our crumbling infrastructure. In each instance, there is the potential for substantial job growth for American skilled craft workers. And the joint labor-management skilled craft apprenticeship training infrastructure that our unions operate, and which is funded by approximately $1 billion annually in private monies, is fully prepared to meet the challenge of developing this workforce. As stated in the Labor Movement’s Framework for Comprehensive Immigration Reform, one of the great failures of our current employment-based immigration system is that the level of legal work-based immigration is set arbitrarily by Congress as a product of political compromise – without regard to real labor market needs – and it is rarely updated to reflect changing circumstances or conditions. This failure has allowed unscrupulous employers to manipulate the system to the detriment of workers and respectable employers alike. The system for allocating employment visas – both temporary and permanent – should be de-politicized and placed in the hands of an independent commission that can assess labor market needs on an on-going basis and – based on methodology approved by Congress – determine the number of foreign workers to be admitted for employment purposes, based on labor market needs.

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Robert Reich: America’s Biggest Jobs Program — the U.S. Military

August 11, 2010

America’s biggest — and only major — jobs program is the U.S. military. Over 1,400,000 Americans are now on active duty; another 833,000 are in the reserves, many full time. Another 1,600,000 Americans work in companies that supply the military with everything from weapons to utensils. (I’m not even including all the foreign contractors employing non-US citizens.) If we didn’t have this giant military jobs program, the U.S. unemployment rate would be over 11.5 percent today instead of 9.5 percent. And without our military jobs program personal incomes would be dropping faster. The Commerce Department reported Monday the only major metro areas where both net earnings and personal incomes rose last year were San Antonio, Texas, Virginia Beach, Virginia, and Washington, D.C. — because all three have high concentrations of military and federal jobs. This isn’t an argument for more military spending. Just the opposite. Having a giant undercover military jobs program is an insane way to keep Americans employed. It creates jobs we don’t need but we keep anyway because there’s no honest alternative. We don’t have an overt jobs program based on what’s really needed. For example, when Defense Secretary Robert Gates announced Monday his plan to cut spending on military contractors by more than a quarter over three years, congressional leaders balked. Military contractors are major sources of jobs back in members’ states and districts. California’s Howard P. “Buck” McKeon, the top Republican on the House Armed Services Committee, demanded that the move “not weaken the nation’s defense.” That’s congress-speak for “over my dead body.” Gates simultaneously announced closing the Joint Force Command in Norfolk, Virginia, that employees 6,324 people and relies on 3,300 private contractors. This prompted Virginia Democratic Senator Jim Webb, a member of the Senate Armed Services Committee, to warn that the closure “would be a step backward.” Translated: “No chance in hell.” Gates can’t even end useless weapons programs. That’s because they’re covert jobs programs that employ thousands. He wants to stop production of the C-17 cargo jet he says is no longer needed. But it keeps 4,000 people working at Boeing’s Long Beach assembly plant and 30,000 others at Boeing suppliers strategically located in 40 states. So despite Gates’s protests the Senate has approved ten new orders. That’s still not enough to keep all those C-17 workers employed, so the Pentagon and Boeing have been hunting for foreign purchasers. The Indian Air Force is now negotiating to buy ten, and talks are underway with several other nations, including Oman and Saudi Arabia. Ever wonder why military equipment is one of America’s biggest exports? It’s our giant military jobs program in action. Gates has also been trying to stop production of a duplicate engine for the F-25 joint Strike Fighter jet. He says it isn’t needed and doesn’t justify the $2.9 billion slated merely to develop it. But the unnecessary duplicate engine would bring thousands of jobs to Indiana and Ohio. Cunningly, its potential manufacturers Rolls-Royce and General Electric created a media blitz (mostly aimed at Washington, D.C. where lawmakers wold see it) featuring an engine worker wearing a “Support Our Troops” T-shirt and arguing the duplicate engine will create 4,000 American jobs. Presto. Despite a veto threat from the White House, a House panel has just approved funding the duplicate. By the way, Gates isn’t trying to cut the overall Pentagon budget. He just wants to trim certain programs to make room for more military spending with a higher priority. The Pentagon’s budget — and its giant undercover jobs program — keeps expanding. The President has asked Congress to hike total defense spending next year 2.2 percent, to $708 billion. That’s 6.1 percent higher than peak defense spending during the Bush administration. This sum doesn’t even include Homeland Security, Veterans Affairs, nuclear weapons management, and intelligence. Add these, and next year’s national security budget totals about $950 billion. That’s a major chunk of the entire federal budget. But most deficit hawks don’t dare cut it. National security is sacrosanct. Yet what’s really sacrosanct is the giant jobs program that’s justified by national security. National security is a cover for job security. This is nuts. Wouldn’t it be better to have a jobs program that created things we really need — like light-rail trains, better school facilities, public parks, water and sewer systems, and non-carbon energy sources — than things we don’t, like obsolete weapons systems? Historically some of America’s biggest jobs programs that were critical to the nation’s future have been justified by national defense, although they’ve borne almost no relation to it. The National Defense Education Act of the late 1950s trained a generation of math and science teachers. The National Defense Highway Act created millions of construction jobs turning the nation’s two-lane highways into four- and six-lane Interstates. Maybe this is the way to convince Republicans and blue-dog Democrats to spend more federal dollars putting Americans back, and working on things we genuinely need: Call it the National Defense Full Employment Act. This post originally appeared at RobertReich.org .

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Inder Sidhu: Profiles in Doing Both: The Missing Link in Electric Vehicle Technology

August 11, 2010

Would you pay $41,000 for an electric car that has a range of just 40 miles per charge? That’s what a lot of car pundits are wondering, now that GM has put a price on its much anticipated Chevrolet Volt . But instead of focusing on the hefty price, critics are wondering if ” range anxiety ” will prompt consumers to buy something more traditional. If only there was a solution to this 21st century condition. Actually, there is: recharging stations where electric car owners can plug in their cars or swap out their batteries for replacements. The company behind these stations is Better Place, the brainchild of multimillionaire software entrepreneur Shai Aggasi. Unlike most companies working to provide environmentally friendly transportation, Better Place has focused its energies not on the electric vehicles themselves but on the oft-overlooked infrastructure they require. By addressing this part of the market, Agassi may wind up a hero to environmentalists and investors alike. Business leaders, too, may one day sing his praises, albeit for a different reason. In addition to that what he is doing, Agassi is worth studying for how he does things. Take the way his company leverages global resources to fast-forward its agenda. It’s a very different approach than the norm. Most technology startups set out to build advanced products for sophisticated customers in established countries. More often than not, these companies rely on a tightly knit team of engineers who focus on building the most refined solutions they can. Afterwards, they typically water down their innovations for sale to customers in emerging countries. Agassi has dispensed with this model and is instead focused on building simple solutions that can be deployed anywhere around the world simultaneously. That’s a daunting challenge that requires a high level of engineering horsepower and significant amount of local market knowledge. To achieve its goals, thus, Better Place is leveraging multiple inputs from around the world. That includes ideas from both established and emerging economies. Though just three years old, Better Place has already developed partnerships in places as diverse as the U.S., Japan, Denmark and China. That’s right: China. While some view China primarily as a market in which to seek out new customers or source cheap labor, Better Place believes it is an ideal source of new inspiration. In April, Better Place signed an agreement with the Chery Automobile Co. of China to co-develop prototype vehicles and charging stations that could advance the work the company is doing in established nations. To collect even more ideas on markets and innovations, Better Place has helped spur the creation of electric car enthusiasts groups in Eastern Europe, South America, India and Africa, too. As interest and momentum for electric vehicles builds in one part of the world, Better Place believes it will multiply in another–many times over. By leveraging the best ideas from both the established and the emerging world, Agassi hopes to move quickly–before the next wave of first-time car buyers choose gas- or diesel- powered vehicles. This is especially true in emerging countries such as China and India, where car ownership is below 5 percent but growing quickly. Over the next five years, Chinese and Indian consumers are projected to buy as many as 70 million vehicles–more than all of the cars that exist in the UK and Germany today. If Better Place and electric car makers can persuade just 25 percent of these consumers to choose an emission-free vehicle, they would effectively reduce carbon emissions by an amount equal to what all the cars in Canada produce annually. This explains why Agassi and others are so passionate about overcoming “range anxiety.” To truly make the world a better place, they believe you can’t waste time debating about pursing ideas from this established market or engaging customers in that emerging one–you have to commit to doing both. Nothing less than the fate of the environment depends on it. Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco , and the author of Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth . Follow Inder on Twitter at @indersidhu .

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Bianca Jagger: Let’s Save the Real Avatar

August 10, 2010

The Survival of the Kondh Tribe is Hanging in the Balance For centuries, tribal and indigenous people have been victims of exploitation, first at the hands of colonial powers and now, at the hands of powerful businessmen representing mining, oil, gas and logging companies. Their policies are implemented “in the name of progress and development” and their mantra is “maximum production” and “minimum cost.” The struggle of indigenous and tribal people versus corporations and states, over land rich in natural resources, is a global issue. The Kondh tribe’s battle to save their livelihood against British based mining company, Vedanta Resources plc, illustrates the struggle for survival that indigenous and tribal people are facing throughout the world. On July 28, I attended Vedanta’s shareholders’ meeting in London. At this year’s AGM the company’s human rights and environmental record was brought under public scrutiny by British Member of Parliament, Martin Horwood, and NGOs including Amnesty International, ActionAid, the London Mining Network, Banktrack and Survival International. During the meeting I read an impassioned plea on behalf of the Niyamgiri community to the Vedanta board, and to shareholders. I also delivered an Amnesty International petition signed by 31, 428 people urging Vedanta to halt a planned mine and refinery expansion in Orissa, India until the Dongria Kondh are fully informed and consulted. Vedanta plans to mine for bauxite – the base raw material in the production of aluminium – in the Niyamgiri Mountain, which is considered sacred by the Dongria Kondh, an endangered tribal group recognised by the Indian government as “a people requiring particular protection.” The lush forests of Niyamgiri Mountain are a pristine ecosystem of great conservation significance. The Kondh have lived in Niyamgiri long before there was a country called India or a state called Orissa. They consider the mountain to be a living God and claim that their spiritual, cultural and economic wellbeing are embedded deep within it. The proposed mine will violate the community’s rights to water, food, and health; it will displace and endanger the survival of 15,000 Kondh. For the past two years, the Bianca Jagger Human Rights Foundation (BJHRF) has spearheaded a campaign in support of the Kondh, denouncing the activities of Vedanta. In April this year I travelled to Orissa representing the BJHRF with ActionAid to meet with the Kondh communities. At every stage of my trip, at every village I visited, the communities and their leaders were eager to tell me their tragic side of the story. (Read the full story about my trip to Orissa in the Huffington Post) The messages the Dongria Kondh villagers asked me to carry back could not have been clearer: “No amount of financial reward or relocation packages can compensate for the loss of our livelihood and our sacred land”. “Please tell Vedanta that the Kondh do not want the mine to be built.” At the AGM I asked Executive Chair of Vedanta, Anil Agarwal and the Vedanta board four questions on behalf of the Kondh: 1. The conveyer belt construction has resulted in two perennial streams that we used to cultivate vegetable, cereals, pulses round the year, drying up. Tell us what will happen to the rivers and streams when Niyamgiri is mined? 2. Why are people not being compensated for the land that Vedanta has acquired forcefully? (example: Jagannathpur, Tudra Majhi, Sambru Majhi and Mala Dei villages) 3. We are suffering from TB and skin diseases because of pollution caused by your refinery. Vedanta claims to provide health care that we have not seen. Where is the healthcare that you talk about and that our people now need so desperately? 4. For generations we depended on sustainable livelihoods drawn from Niyamgiri. You are trying to destroying that. Your income generating initiatives like strawberry cultivation, leaf plate stitching using machine and phenol product have failed. You have failed to keep your promise and provide job to local tribal youths. What development do you mean – Your Profit at Our Cost? Mr Agarwal, and Non-Executive Director, Naresh Chandra, failed to address the Kondh’s questions, and responded instead with a deceptive argument. Mr Agarwal declared, Vedanta is “more concerned than anyone” about the welfare of the Kondh. He argued that malnutrition rates have fallen, and poverty has decreased since Vedanta opened its aluminium refinery in Lanjigarh, in 2006, calling it Vedanta’s “biggest achievement.” In fact, the Lanjigarh refinery has brought nothing but poverty, disease and suffering to the Kondh. The refinery has created two red mud ponds the size of several football pitches near Rengopali into which bauxite ore is washed, along with chemicals, causing toxic fumes and polluted dust. As a result, diseases affecting peoples’ lungs and eyes have become widespread: 13 people have died from TB in the last two years and 200 to 250 cattle and goats have perished. Vedanta claims that they have adequately compensated the Kondh for all land acquired and that they cannot be held responsible for the displacement of the Kondh communities. Mr Chandra argued that people were being forced out of their villages due to poverty and unemployment before Vedanta began its operations. This is in stark contrast to the testimonies given to me by the Kondh. They told me that in 2003, Vedanta had forced the community of Kinari to vacate their village, coercing farmers into selling their land for far below its market value. The few people who had titles to their land or records given by the revenue department (TATA) were promised 100,000 rupees (US $2,000) per acre. Those without titles were promised a one off settlement of 50,000 rupees (US $1,000) to give all their rights away. Worse still, those willing to give up their homes were promised up to 1,000 rupees (US $ 21). In contravention of the 5th and 6th Schedules of the Constitution of India, hundreds of people have been displaced. The top of Niyamgiri mountain, where Vedanta proposes to mine bauxite to feed the refinery that is currently poisoning the communities around Bandhaguda and Rengopali, is the source of two rivers and thirty six springs. The streams that run through the hills are the only source of water for the Kondh. The Central Empowered Committee to the Supreme Court anticipates “adverse effects of mining will affect not only bio-diversity but availability of water for the local people.” The mine will also cause increased erosion and pollution of the water systems, resulting in deteriorated water quality. In an attempt to justify Vedanta’s policies, Mr Agarwal claimed “We are bringing development to the most backward part of India…Vedanta has a long standing commitment to sustainability… an integral part of managing our operation is a commitment to health, safety, the environment and our communities.” I cannot fathom how a company that refuses to acknowledge the harmful impacts of its activities on tribal people, communities and the environment, can have the audacity to claim a commitment to sustainable development. Vedanta continues to deny all allegations of human rights violations and environmental degradation. The day before the AGM, Mr Mehta, Vedanta’s Chief Executive, refuted all claims made by human rights groups, arguing in the Financial Times, “There is no shred of truth here.” At the AGM, Mr Chandra suggested that “NGO’s, human rights and environmental organisations have based their allegations against Vedanta on misguided reports.” I asked him how twelve independent investigations, including those conducted by the UK National Contact Point for the OECD Guidelines for Multinational Enterprises, the Wildlife Institute of India, the Central Empowerment Committee to the Supreme Court, the State Pollution Control Board of Orissa, the Norwegian Council of Ethics, the Public Interest Research Centre (PIRC), the Experts in Responsible Investment Solutions (EIRIS), India’s Ministry of Environment and Forests, the India Resource Centre, Social Watch, Mines and Communities and Amnesty International, could all have found Vedanta to be violating human rights and labour rights, causing environmental damage and contravening OECD guidelines. According to the Norwegian Council of Ethics report, the company has also been accused of “repeated breaches of national environmental legislation, illegal production expansions, irresponsible handling of hazardous waste, violations against tribal peoples, deplorable wages, and dangerous working conditions in the mines and factories.” My question, like so many others at the AGM, went unanswered. Vedanta’s public relations efforts are a relentless attempt to mislead the public, with endless promises of new jobs, new roads and new facilities for local people. A glaring example is the billboard I saw on arrival at Biju Patnaik Airport, Bhubaneswar, Orissa: “Mining happiness for the people of Orissa – Vedanta.” What cruel irony. It should read, “Undermining human rights for the people of Orissa.” According to the Times of India, India is the second largest growing economy, it is the second most populated country in the world. During the last decade, India’s GDP has remained at above six percent, however, during that period the country’s Human Development Index has not improved. If India is going to assume its status with the other BRIC countries as an economic power-house, its model of ‘development’ needs to be reassessed. Development must be sustainable; it must take into account the rights and needs of local communities, indigenous and tribal people, and should benefit all sectors of society, without endangering human life or the environment. The pertinent questions of development, displacement, and livelihood, have not been at the heart of the policies implemented by the Indian states The Kondh are just one of the many tribes that have fallen victim to the so-called ‘development’ promoted by multinational companies in India. As Arundhati Roy writes, “structural adjustment, privatization and huge infrastructural projects like dams, power plants and mines have resulted in the displacement of hundreds of thousands of people.” India has one of the largest populations of internally displaced people in the world, the majority of which are Adivasis. On World Indigenous People’s Day, August 9, Adivasis from eight states protested in Delhi against the hunger, displacement and violations of rights, which have left them marginalized and disempowered. It is up to shareholders, to hold companies to account. Some prominent members of the investment community have shown their condemnation of Vedanta’s human rights and environmental record by disinvesting. Dutch pension manager PGGM sold their £11m stake in the FTSE 100 company in July, stating that its “intensive effort” to urge the company to devote greater attention to human rights and the environment had failed to have the desired effect.” This follows pull-outs on ethical grounds earlier this year by the Joseph Rowntree Charitable Trust (£1.9 million) and the Church of England (£3.8 million). Edinburgh-based investment management company Martin Currie sold its £2.3million stake in Vedanta in 2008 on ethical grounds. In 2007 the Norway pension fund withdrew its investment of $15.6 mi based on the findings of its ethics committee, which stated: “Allegations levelled at Vedanta regarding environmental damage and complicity in human rights violations, including abuse and forced eviction of tribal people, are well founded.” At the AGM, a representative from the Railways Pension Fund, said, “Vedanta could make major improvements in terms of its investor briefing sessions.” Steve Waygood, representing blue-chip City investor, Aviva voiced concern regarding Vedanta’s lack of respect for OECD guidelines, stating, Vedanta has “not engaged in the process [beside] the most cursory reply.” The Vedanta board’s response was that they were not “answerable to the British government”. Aviva voted against three resolutions at Vedanta’s meeting, regarding the annual report and accounts, the remuneration report and the reappointment of the board member who chairs the health, safety and environment committee. In an interview with Amnesty International after the meeting, Mr Waygood called the AGM “a symptom of a much deeper problem, which is that for a number of years the company hasn’t engaged with stakeholders, including minority shareholders.” He said it was “unacceptable” for Vedanta to treat the OECD guidelines with the disdain they have demonstrated. I am surprised that share-tipsters continue to recommend the company as an investment. Regrettably, many shareholders, content to read about the share price, remain silent about Vedanta’s impact on local communities. I will continue to campaign in support of the Dongria Kondh until their voices are heard. I appeal to Vedanta shareholders to take into account the plight of the Dongria Kondh, and the human rights and environmental consequences of the proposed bauxite mine, and to reconsider their investments .I urge investors to follow the example of those who have divested from Vedanta, making this year a landmark year for justice, human rights and the environment. Please sign my letter to the Chief Minister of Orissa, Naveen Patnaik, urging him to refuse permission for the mine at Bianca Jagger Kondh Campaign on Facebook For more information you can read my other articles about the Kondh: Undermining human rights The Battle with Vedanta is not over yet The Battle for Niyamgiri

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In The Pipeline: CoStar Development and Construction News for July 25-31

July 26, 2010

In this week’s Pipeline, the Ak-Chin Indian Community and general contractor PENTA Building Group break ground on $20 million expansion of a Harrah’s Casino south of Phoenix; a Denver-based electrical contractor completes a new design-build $64 million…

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Video: Chadha Likes Indian Financials, Industrials, Health Care: Video

July 19, 2010

July 20 (Bloomberg) — Rahul Chadha, head of India equities at Mirae Asset Global Investment, talks with Bloomberg’s Linzie Janis about Indian stocks and the economy. Chadha, speaking in Hong Kong, says Indian companies may increase earnings by as much as 25 percent this year, with first-quarter results suggesting that profit growth is “on track”. (Source: Bloomberg)

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Who’s afraid of FDI in Indian retail sector?

July 19, 2010

Who’s afraid of FDI in Indian retail sector?

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Video: Veda’s Pershad Says He’s a `Skeptic’ of Chinese Banks: Video

July 14, 2010

July 15 (Bloomberg) — Vikas Pershad, chief executive officer at Chicago-based hedge fund Veda Investments LLC, talks with Bloomberg’s Susan Li about his investment strategy for Chinese and Indian stocks. Agricultural Bank of China Ltd. may overtake local rival Bank of China Ltd. on its trading debut today to become the world’s seventh-largest lender by market value, according to analysts and investors. Pershad also discusses the outlook for U.S. and European stocks. (Source: Bloomberg)

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DK Matai: G20 Toronto Digest – Key Tweets, Achievement & Result?

June 28, 2010

The highlights of The Fourth G20 leaders summit in Toronto are presented as a series of tweets. Canada’s PM Stephen Harper concludes G20 Toronto Summit Bank Capitalisation . In future banks should keep enough capital on their balance sheet to withstand aftermath of Lehman Brothers’ in 2008 http://ow.ly/23YYD Bank Levy . Market reform efforts to introduce a common tax on banks to shield taxpayers from bailouts in future splinter http://ow.ly/23YHM BP . Obama and Cameron agree BP must not collapse post Gulf oil gusher as company starts week with shares at 14yr low http://ow.ly/23Y1h China Revaluation . China gave in, set strongest yuan exchange rate in years on Monday after Beijing came under renewed pressure on w/e http://ow.ly/23Yvq Consequences . Europeans score win — Leaders agree to halve public debt by 2013 — What are the consequences for world recovery…? http://ow.ly/23Ye3 Deficit Reduction . Leaders Pledge To Halve Deficits By 2013: Wary of slamming on stimulus brakes too quickly; shaken by euro debt crisis http://ow.ly/23Ynx Differences Emerge . Differences on 1. exit strategy for global economic stimulus – US and India caution – and 2. universal tax to bail out banks http://ow.ly/23Yzp Economic Clash . An economic clash of civilisations — pits Obama’s stimulus efforts against European calls for austerity budgets http://ow.ly/23YCi Friendly Talks . British PM Cameron and US President Obama agree to differ in ‘friendly’ talks on economic policy, ie, spending cuts http://ow.ly/23RaI Nuclear Deal . Canada signs nuclear deal with India that’ll see uranium exported to India and wide-ranging pledge to increase trade http://ow.ly/23YU9 Oil Gusher . Toronto summit discusses BP oil gusher – recent accident shows the need for better marine environment protection http://ow.ly/23YKv Private Sector . S Korea wants to be bridge between G20 and non-G20 Govs and Orgs: Post Gov lead comes private sector lead in future http://ow.ly/23YF1 Quiet Diplomacy . UK PM Cameron, preaching austerity, brings new G20 style – Cameron prefers what he calls ‘quiet diplomacy’ http://ow.ly/23Yaa US-India . President Obama, ‘…when the Indian PM speaks people listen particularly because of his deep knowledge of economic issues…’ http://ow.ly/23YXj Vandalism . Torontonians try to make sense of vandalism: ‘To see this destruction is beyond unfortunate,’ Queen St businesswoman http://ow.ly/23Ytp Winners and Losers . Winners and losers at summit: Top priority to strengthen shaky economic recovery and clean up debt burdened finances http://ow.ly/240gG Background Established in 1999, following the Asian financial crisis in 1997, the G20 has convened annual meetings of finance ministers and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union. In 2008, G20 leaders met for the first time in Washington, DC, to develop a coordinated response to the global economic crisis or The Great Unwind manifest as the collapse of Lehman Brothers. The Washington Summit was followed by summits in London in April 2009, Pittsburgh in September 2009 and Toronto in June 2010, where leaders have designated the G20 as the premier forum for international economic cooperation. Achievement Over the course of the four G20 summits — Washington, London, Pittsburgh and Toronto — world leaders have crafted a co-ordinated global response to the financial and trade crisis, including The Great Unwind (2007-?) and The Great Reset (2008-?). They: 1. Implemented stimulus measures to restore confidence; 2. Agreed on actions to strengthen financial regulation; 3. Committed to reform international financial institutions; and 4. Agreed to promote trade and resist protectionism. Result? The G20 interventions are widely regarded as having been effective in mitigating the impact of the global economic crisis, while encouraging a quicker transition to recovery than could otherwise have been expected. The key question ringing in our ears is, “What are the consequences of synchronised world wide measures to cut sovereign budget deficits and debt going to be for the world economic recovery?” It remains to be seen how effective the Toronto G20 summit’s simultaneous embrace of austerity will prove to be in sustaining the green shoots of global growth. It is entirely plausible that draconian deleveraging measures implemented worldwide could stunt economic growth. As the Republic of Korea, G20 Chair for 2010, hosts the fifth summit in November in Seoul, the financial markets may have delivered a verdict!

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Marc Gunther: Modern-day slavery: Alive and Well

June 27, 2010

Modern-day slavery is not just about sex workers or poor people in faraway places. Some farmworkers in the U.S., for all practical purposes, work as slaves. Laborers with few or no rights, working under inhumane conditions, typically far home, have produced such products as blueberries, organic milk, personal computers or cell phones and garments imported from India, a new report says. Consider: An estimated 12 to 27 million people are victims of slavery, and other forms of forced labor around the world. In the United States alone, 10,000 or more people are being forced to work at any given time. The report, called Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy (PDF for download, here ), was published by Verite, a non-profit based in Amherst, Mass., that monitors and reports on labor rights abuses around the world. (It was funded by Humanity United , a nonprofit focused on peace and human rights started and chaired by Pam Omidyar.) Over the years, Verite has helped identify and clean up the supply chains of such global brands as Timberland, Gap, Levi Strauss, Apple, Disney and HP. I met with Verite’s executive director, Dan Viederman, last week in Washington to talk about the report, and what can be done to deal with slavery. Dan, who is 46, explained to me that Verite has begun a initiative called Well Made to help companies, governments, investors and advocates deal with modern-day slavery. Companies, for examples, are given sets of questions to put to their suppliers. Shareholders are advised to bring pressure on companies they own. Here it must be said that today’s slaves are not the equivalent of those in 19th century America; in theory, at least, they have legal rights, at least in theory. In fact, many of the stories in the report come from workers who managed to escape dire conditions, on their own or with help. But these modern-day slaves, who can be found in such places as Taiwan, the Persian Gulf, India, Malaysia and, yes, here in the U.S. of A., do have some experiences in in common with the American slaves who picked cotton in the antebellum South: They typically work far from where they grew up, they were trafficked from their homes to their workplaces by labor brokers (slave ships in the old days), and they don’t have the freedom or organize or look for work elsewhere. This makes it relatively easy to uncover forced labor. “The presence of foreign migrant workers is a significant indicator of exploitative labor conditions,” Dan told me. Many employers like to bring in workers from abroad. “You get a cheaper and more compliant workforce if you bring in people who don’t understand their legal rights and can’t turn to social support systems,” he said. Because the migrant workers frequently pay recruitment and transportation fees to get jobs in faroff places, they can find themselves in what’s called “debt bondage.” They are bound to their new employer, sometimes because they need the money to pay debt, other times because they have traveled on a work visa that ties the migrant to a single employer. Some labor brokers endeavor to act responsibly–the global company Manpower Inc . is an industry leader–but many are unscrupulous. “It’s by an large and unregulated industry,” Dan said. The Verite report, which is extensive, looks at four sectors and locales: the migration of adults from India to the Gulf Cooperation Council (GCC) States of the Middle East for work in construction, infrastructure and the service sector; the migration of children and juveniles from the Indian interior to domestic apparel production hubs; the migration of adults from Guatemala, Mexico and Thailand to work in U.S. agriculture; and the migration of adults from the Philippines, Indonesia and Nepal to the Information Technology sector in Malaysia and Taiwan. Verite’s Well Made website puts a human face on the problem. Here’s an example of a worker who was trafficked from Guatemala to Georgia to Connecticut: Fortunately, some governments and companies are paying attention. The U.S. State Department this month published its own report finding that more than 12 million people worldwide are victims of “trafficking in persons” — trapped in forced labor, bonded labor or prostitution. If you read deep into Apple’s corporate responsibility report, you find this dense but revealing passage: Some of our suppliers work with third-party labor agencies to source workers from other countries. These agencies, in turn, may work through multiple subagencies: in the hiring country, the workers’ home country, and, in some cases, all the way back in the worker’s home village. By the time the worker has paid all fees across these agencies, the total cost may equal many months’ wages and exceed legal limits–and many workers need to incur significant debt to pay these fees. Apple’s Code has always strictly prohibited all forms of involuntary labor . As such, we classify recruitment fee overcharges as a core violation of voluntary labor rights, and we require each supplier to reimburse overpaid fees. As a result of our audits and corrective actions, foreign workers have been reimbursed more than $2.2 million in recruitment fee overcharges over the past two years. To Apple’s credit, it has not only required its suppliers to reimburse workers but issued a “standard for Prevention of Involuntary Labor, which limits recruitment fees to the equivalent of one month’s net wages.” But Dan tells me: “Only a handful of companies are now paying attention to the problems of migrant workers.” Sad to say, modern-day slavery can be very profitable. Labor brokers make a good living. The employers get a docile workforce and essentially outsource the job of recruiting and hiring people. Workers also can benefit, to a degree. Today’s New York Times has an excellent story about the impact of global migration which says, among other things, that Migrants sent home $317 billion last year — three times the world’s total foreign aid. In at least seven countries, remittances account for more than a quarter of the gross domestic product. Of course, if the workers had the freedom to move from one employer to another, or to organize themselves, they could obtain or negotiate higher wages and send even more money home. The bottom line is that lots of the things we consume and enjoy at low prices exact a high cost on others who are out of sight and out of mind. Disclosure : My wife Karen Schneider recently joined the board of Verite, but since I’ve written about the organization’s work before (see this from 2006 and this from 2008), I see no reason to stop now. Photo credit: Sandy Huffaker/Getty Images

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Worrying trends in Indian pharmaceutical industry

June 21, 2010

Worrying trends in Indian pharmaceutical industry

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SK Energy Will Focus on Oil Drilling, Electric-Car Batteries for Growth

June 19, 2010

By Shinhye Kang June 20 (Bloomberg) — SK Energy Co. , South Korea’s biggest refiner, said it will focus on producing oil and gas overseas, developing electric-car batteries and making petrochemicals with emissions-reduction technology to drive future earnings. “The current business model may not be able to boost the company’s operating profit a lot from now,” Chief Executive Officer Koo Ja Young told reporters on June 18. “Innovations in the business model, and in technology, are needed.” Refiners in South Korea, Asia’s largest fuel exporter, are seeking new growth engines as expanding Chinese and Indian suppliers cut profitability. SK Energy took the first step toward reorganizing in October by turning its lubricants division into a wholly owned unit . “This is very positive in the long term,” said Cho Seung Yeon , an analyst at HMC Securities Co. “The reorganization will let each division focus resources on its own business while the parent boosts investment in new sectors.” Starting next year, SK Energy will spin off petroleum and chemicals divisions that accounted for 98 percent of overall revenue in the first quarter. Ahead of the change, the refiner has completed its first electric-car battery production line to supply Daimler AG’s Japanese unit. SK Energy has also signed up for 38 oil and natural-gas projects in 17 countries. The petroleum and chemicals divisions, as they start off as wholly owned units, may sell assets or form partnerships with overseas companies to raise funds, Koo said. The petroleum division posted an operating loss for three consecutive quarters last year as the global financial crisis cut demand and China and India increased shipments. New Growth Engines SK Energy has fallen 11 percent in Seoul trading this year, compared with the 1.7 percent gain by the benchmark Kospi index. The stock closed unchanged at 104,500 won on June 18. The company’s smaller rival GS Caltex Corp. bought an unlisted waste-treatment company in April, while S-Oil Corp. may seek opportunities in alternative energy. SK Energy plans to start up a 30 billion won ($25 million) trial plant in October that can produce more olefins while emitting less carbon dioxide than current facilities, Koo said. The refiner is also developing technology to use carbon dioxide as a raw material for producing plastics, he said. “The technologies will help SK Energy reach its target of 100 trillion won in revenue before 2020, up from 35 trillion won currently,” Koo said. In energy exploration, the company is seeking rights to overseas projects and may acquire exploration companies, the chief executive said. SK Energy is producing 71,000 barrels of oil equivalent a day currently. The chemicals division may build ethane-based ethylene plants in Latin America, including Peru and Colombia, Koo said at the company’s Daejeon research & development center. SK Energy has a stake in a gas project in Peru. The company’s lubricants unit is in talks with a European company and an Asian company to form joint ventures, he said. To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net

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SK Energy Will Focus on Oil Drilling, Electric-Car Batteries for Growth

June 19, 2010

By Shinhye Kang June 20 (Bloomberg) — SK Energy Co. , South Korea’s biggest refiner, said it will focus on producing oil and gas overseas, developing electric-car batteries and making petrochemicals with emissions-reduction technology to drive future earnings. “The current business model may not be able to boost the company’s operating profit a lot from now,” Chief Executive Officer Koo Ja Young told reporters on June 18. “Innovations in the business model, and in technology, are needed.” Refiners in South Korea, Asia’s largest fuel exporter, are seeking new growth engines as expanding Chinese and Indian suppliers cut profitability. SK Energy took the first step toward reorganizing in October by turning its lubricants division into a wholly owned unit . “This is very positive in the long term,” said Cho Seung Yeon , an analyst at HMC Securities Co. “The reorganization will let each division focus resources on its own business while the parent boosts investment in new sectors.” Starting next year, SK Energy will spin off petroleum and chemicals divisions that accounted for 98 percent of overall revenue in the first quarter. Ahead of the change, the refiner has completed its first electric-car battery production line to supply Daimler AG’s Japanese unit. SK Energy has also signed up for 38 oil and natural-gas projects in 17 countries. The petroleum and chemicals divisions, as they start off as wholly owned units, may sell assets or form partnerships with overseas companies to raise funds, Koo said. The petroleum division posted an operating loss for three consecutive quarters last year as the global financial crisis cut demand and China and India increased shipments. New Growth Engines SK Energy has fallen 11 percent in Seoul trading this year, compared with the 1.7 percent gain by the benchmark Kospi index. The stock closed unchanged at 104,500 won on June 18. The company’s smaller rival GS Caltex Corp. bought an unlisted waste-treatment company in April, while S-Oil Corp. may seek opportunities in alternative energy. SK Energy plans to start up a 30 billion won ($25 million) trial plant in October that can produce more olefins while emitting less carbon dioxide than current facilities, Koo said. The refiner is also developing technology to use carbon dioxide as a raw material for producing plastics, he said. “The technologies will help SK Energy reach its target of 100 trillion won in revenue before 2020, up from 35 trillion won currently,” Koo said. In energy exploration, the company is seeking rights to overseas projects and may acquire exploration companies, the chief executive said. SK Energy is producing 71,000 barrels of oil equivalent a day currently. The chemicals division may build ethane-based ethylene plants in Latin America, including Peru and Colombia, Koo said at the company’s Daejeon research & development center. SK Energy has a stake in a gas project in Peru. The company’s lubricants unit is in talks with a European company and an Asian company to form joint ventures, he said. To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net

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Cipla Chairman Hamied Targets $19 Billion-a-Year Roche, Amgen Treatments

June 16, 2010

By Adi Narayan June 16 (Bloomberg) — Cipla Ltd. , the Indian drugmaker that built a $1 billion business making generic HIV treatments, aims to sell copies of Roche Holding AG ’s and Amgen Inc. ’s best- selling biotechnology medicines with a partner in China. Cipla Chairman Yusuf Hamied plans to invest in companies in India and Hong Kong that make so-called monoclonal antibodies. The technology will enable Mumbai-based Cipla to gain access to products modeled on Roche’s Avastin and Herceptin cancer drugs and Amgen’s rheumatoid arthritis treatment Enbrel, Hamied said. The three medications generated $19 billion in sales last year. Cipla, India’s third-largest drugmaker by revenue, intends to sell its versions cheaper, making them more affordable. The same strategy of copying medicines developed by others helped the 75-year-old company become one of the largest suppliers of AIDS pills for developing nations. “Avastin, Enbrel, Herceptin — these are all being marketed today, but the prices are very high,” said Hamied, whose father founded the company in 1935, in a telephone interview yesterday. “We will have biosimilars for them.” Cipla advanced 1.5 percent to 343 rupees at 9:10 a.m. Mumbai time, while the benchmark Sensitive index added 0.5 percent. Hamster Ovaries Biotechnology drugs are made from proteins synthesized in living cells such as yeast and Chinese hamster ovaries. They are more complex, difficult to make and pricier than traditional pharmaceuticals, which consist of comparatively simple chemical compounds. Other Indian companies are expanding into this area. Biocon Ltd., India’s biggest biotechnology company, signed an agreement a year ago with Mylan Inc. to develop, make and market generic biologic drugs. Dr. Reddy’s Laboratories Ltd. , India’s second-biggest drugmaker, said in 2007 it began selling a version of the cancer medicine rituximab at about half the price of Roche’s original, called Rituxan. Under an agreement with Shanghai-based partner Desano Pharma , Cipla will have rights to market the biosimilars in India and overseas, Hamied said. Cipla will invest $65 million over three years buying 40 percent of a company based in the west Indian city of Goa and a 25 percent stake in a Hong Kong- based biotechnology company, Cipla said in a statement yesterday. Cipla is targeting 8 to 10 treatments for rheumatoid arthritis, colorectal cancer, allergic asthma, and head and neck cancer that aren’t covered by patents in India and China, according to a statement on the company’s website. The brand- name drugs generate about $30 billion a year in sales, Cipla said. Patent Protection Biotechnology drugs account for about 10 percent to 15 percent of the global pharmaceutical market and many of them are off-patent or will lose patent protection soon, Cipla said. “This investment will, therefore, enable Cipla to expand its business in this high technology and high growth segment,” the company said. Hamied said he may consider other sales and marketing ventures. “I am not hunting for partners, but if something comes up, we have an open mind with regard to partnerships,” he said. To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net .

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Hamied Seeks Partner for Cipla to Sell Roche, Amgen Generic Drugs in China

June 15, 2010

By Adi Narayan June 16 (Bloomberg) — Cipla Ltd. , the Indian drugmaker that built a $1 billion business making generic HIV treatments, aims to sell copies of Roche Holding AG ’s and Amgen Inc. ’s best- selling biotechnology medicines with a partner in China. Cipla Chairman Yusuf Hamied plans to invest in companies in India and Hong Kong that make so-called monoclonal antibodies. The technology will enable Mumbai-based Cipla to gain access to products modeled on Roche’s Avastin and Herceptin cancer drugs and Amgen’s rheumatoid arthritis treatment Enbrel, Hamied said. The three medications generated $19 billion in sales last year. Cipla, India’s third-largest drugmaker by revenue, intends to sell its versions cheaper, making them more affordable. The same strategy of copying medicines developed by others helped the 75-year-old company become one of the largest suppliers of AIDS pills for developing nations. “Avastin, Enbrel, Herceptin — these are all being marketed today, but the prices are very high,” said Hamied, whose father founded the company in 1935, in a telephone interview yesterday. “We will have biosimilars for them.” Cipla advanced 1.5 percent to 343 rupees at 9:10 a.m. Mumbai time, while the benchmark Sensitive index added 0.5 percent. Hamster Ovaries Biotechnology drugs are made from proteins synthesized in living cells such as yeast and Chinese hamster ovaries. They are more complex, difficult to make and pricier than traditional pharmaceuticals, which consist of comparatively simple chemical compounds. Other Indian companies are expanding into this area. Biocon Ltd., India’s biggest biotechnology company, signed an agreement a year ago with Mylan Inc. to develop, make and market generic biologic drugs. Dr. Reddy’s Laboratories Ltd. , India’s second-biggest drugmaker, said in 2007 it began selling a version of the cancer medicine rituximab at about half the price of Roche’s original, called Rituxan. Under an agreement with Shanghai-based partner Desano Pharma , Cipla will have rights to market the biosimilars in India and overseas, Hamied said. Cipla will invest $65 million over three years buying 40 percent of a company based in the west Indian city of Goa and a 25 percent stake in a Hong Kong- based biotechnology company, Cipla said in a statement yesterday. Cipla is targeting 8 to 10 treatments for rheumatoid arthritis, colorectal cancer, allergic asthma, and head and neck cancer that aren’t covered by patents in India and China, according to a statement on the company’s website. The brand- name drugs generate about $30 billion a year in sales, Cipla said. Patent Protection Biotechnology drugs account for about 10 percent to 15 percent of the global pharmaceutical market and many of them are off-patent or will lose patent protection soon, Cipla said. “This investment will, therefore, enable Cipla to expand its business in this high technology and high growth segment,” the company said. Hamied said he may consider other sales and marketing ventures. “I am not hunting for partners, but if something comes up, we have an open mind with regard to partnerships,” he said. To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net .

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Standard Chartered Gains on Debut in India, Second-Most Profitable Market

June 10, 2010

By Ruth David and Paresh Jatakia June 11 (Bloomberg) — Standard Chartered Plc rose 0.9 percent in its Mumbai trading debut after the U.K. lender that makes at least three quarters of its profit in Asia raised $540 million in what may be its most profitable market this year. The stock traded at 104.9 rupees as of 9:09 a.m. local time, after earlier climbing as much as 3.9 percent. The London-based lender last month sold the shares at 104 rupees apiece. Standard Chartered, the first company to issue Indian depository receipts, aims to use the public listing to reach more corporate clients in the world’s second-fastest growing economy. The lender, already India’s largest overseas bank by branches, plans to step up advising companies on share sales while expanding its wholesale banking operations. India, which last year generated operating profits of more than $1 billion for the first time, is “just a whisker behind Hong Kong,” putting the two markets in a race to be the biggest by profits this year, Standard Chartered said in March. It has been operating in the South Asian nation for more than 150 years. Standard Chartered, which is listed in Hong Kong and London, climbed 1.7 percent to 1,649 pence yesterday in the U.K. In Hong Kong, the stock rose 2.2 percent to HK$185.60 as of 11:47 a.m. local time today. Ten IDRs will represent one share. The lender last month received orders for 2.2 times the 204 million shares on offer after it agreed to sell 36 million IDRs to so-called anchor investors including ICICI Prudential Asset Management Co. and Reliance Capital Ltd. UBS AG, Goldman Sachs Group Inc. , JM Financial Services Ltd., Bank of America Corp.’s Merrill Lynch & Co., Kotak Mahindra Capital Co. , SBI Capital Markets Ltd. and Standard Chartered-STCI Capital Markets Ltd. managed the sale. Standard Chartered had initially sought to raise as much as $750 million, according to comments by Finance Director Richard Meddings on May 13. To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net ; Paresh Jatakia in Mumbai at pareshj@bloomberg.net

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Sunil Chacko: US-India Business Council Celebrates Its 35th Anniversary

June 10, 2010

Hundreds of US and Indian participants celebrated the 35th anniversary of the US-India Business Council (USIBC) in Washington, DC on June 1 and 2. The sessions this year were focused on the themes of “Education, Infrastructure & Inclusive Growth.” The word infrastructure, as defined, includes “hard” power plants, roads, bridges, and “soft” health, as examples. In a nutshell, these three themes encompass the hopes and challenges facing millions in India and are central to US-India relations, and USIBC is wise to work on them. Further, in this information era, the USIBC event has become, in effect, a virtual component of the US-India strategic dialog, perhaps a more pertinent part than mere bilateral government to government talks, because it involves government and corporate leaders, think tankers, policy experts, academics and NGOs. Inaugural Session Opening the annual conference, USIBC President Ron Somers called attention to the rapidly growing membership of the organization, now at over 350 Fortune-500 and global Indian companies. He stressed how industry was ahead of the curve and plays a vital role in enhancing the relationship between US and India. To sustain growth at the current 8.5%, massive mobilization of capital will be required, including $1.5 trillion for infrastructure over the next decade. Further, creation of jobs and protection of the environment in both countries is a basis for the economic partnership. He urged industry to continue to provide leadership. Outgoing USIBC Chair Indra Nooyi of Pepsico described how much the USIBC has grown since its founding in 1975 and its key role in facilitating understanding on the US-India nuclear deal. India has since joined the nuclear suppliers’ group and has accepted International Atomic Energy Agency safeguards, but has refused to sign the Nuclear Non-Proliferation Treaty while presenting a pristine track-record on nuclear non-proliferation. She also recalled the horrific Mumbai attacks of 2008 when over 300 lives were lost, and how both the US and India came together to deal with the aftermath with the USIBC playing a key facilitating role. Incoming USIBC Chair Terry McGraw of McGraw-Hill recalled his company’s 40 year publishing joint-venture with Tata. He urged the government to lower tariffs, to lift the cap on foreign direct investment in the insurance sector, build a strong long-term debt market, and have a US-India bilateral investment treaty. He promised the support of the USIBC and its member companies in increased trade and investment, recalling US President Obama’s goal to double exports in the next five years, and noted that President Obama will be the sixth US President to visit India. India’s middle-class is larger than the entire US population. Several speakers spoke about how 770 million people in India are below the age of 35, with 385 million people being under age 15, making India one of the few large non-aging countries in the world. Incidentally, China with its one-child policy has become the largest aging country of Asia, even outpacing Japan in that respect. Nevertheless, India has an enormous “inclusive education” challenge to ensure access to education and training. Projections include having to recruit 2 million teachers and build 6,500 “model” schools in less-developed areas. And generating employment through the private sector is another great challenge. This is why India’s External Affairs Minister Mr. S.M. Krishna stressed the revolution of entrepreneurship, creativity and innovation and said that India has become a global hub for innovation, design & development and manufacturing. His credibility stems from having helped expedite the IT revolution while he was chief minister of Karnataka and for making Bangalore a world IT capital. Mr. Krishna cited the example of State Bank of India’s low cost “tiny branch” for banking in remote areas, costing a little over $300 per branch. The branch is comprised of a mobile phone and a finger-print scanner. The branch can hold data of up to 50,000 customers, record details in 11 languages and is operated by women recruited at the village level. Furthermore, the devices work on battery that is rechargeable using solar energy. State Bank of India hopes to install 250,000 of these tiny branches across Indian villages. Another example he discussed was a non-profit rice husk based water purifier invented by a major Indian company. At a onetime cost of $20 and a recurring expense of $6 for every 3,000 litres, he said this is an example of an affordable innovation for safe drinking water across villages and middle class urban homes. Mr. Krishna said that products like the small car or a portable low cost ECG machine are other powerful examples of global capabilities applied to local needs, and have great potential in other markets. He added that around 200 Fortune-500 companies have set up research and development structures in India, and he opined that India looks to USA for its scientific output and the ability of converting this strength into wealth-generating innovations. India-US partnerships are now looking at providing low cost, efficient healthcare services to remote areas through mobile clinics, tele-medicine etc. Both countries can work together in streamlining health based IT solutions such as digitizing health records, joint research and collaboration in drug discovery, medical research and clinical trials. Commentary on the US-India Strategic Partnership Former Defense Secretary Bill Cohen explained that India has been recognized as one of the key centers of influence in the US National Security Strategy, commended the Singh-Obama 21st century Knowledge Initiative, and emphasized that it was not just national security but also food security and other components of human security that are at the core of the US-India relationship. The Federation of Indian Chambers of Commerce and Industry’s Dr. Amit Mitra spoke about how logistics and supply chain management had enhanced efficiency in Indian manufacturing, citing an example from the textile industry. With an estimated 40% of India’s fruits and vegetables being lost due to the absence of appropriate storage and cold chain, Dr. Mitra called for enhanced foreign collaboration on this area, and also on finding sustainable health care models to ensure access for some 600 million people who lack it. Dr. Vasant Narasimhan, Novartis Vaccines North America, said that his company was working to strengthen health care in rural India through private sector collaboration with the public system. John Wood of Room to Read spoke about his hope of creating 10,000 libraries in India. Brooks Entwistle, India country head of Goldman Sachs, discussed his company’s efforts to support women entrepreneurs, and emphasized that access to capital was as important as business education. Some lending institutions are charging an exorbitant 27% interest rate to entrepreneurs. David Good, chief representative of Tata in North America, introduced US Education Secretary Arne Duncan who said that education is the only sure path out of poverty. Secretary Duncan mentioned the $300,000 initial grant to build US-India education cooperation modeled on the USIBC that he has made to the Institute of International Education, a non-profit entity with offices in the US and India. India’s Minister for Human Resource Development Mr. Kapil Sibal, a Supreme Court lawyer, spoke about education empowering people and disadvantaged communities to move forward. Humanism, collaboration and respect for the individual should be built on the shoulders of knowledge, he said. Globalization and innovation are concurrent themes. So too is the culture of tolerance. He called attention to the Right to Education Act, the first time in 62 years that it has been passed by the Indian parliament, granting children the right to go to court in the event of local bodies using any reason, such as lack of resources, to deny them education. The right is drawn from a Constitutional section. Intangible assets, he said, comprise the primary wealth of a nation, and creativity sows the seeds of future wealth. He presented the daunting challenge of the Indian education sector of having to set up 700 universities in about 12 years, and 35,000 colleges. 22% of people in the US are above 65 years of age and in 2015 that group will be 39%. The corresponding percentages for Europe will be 53% and for Japan, 67%. Thus, it is India that has the vibrant young population, and of course they must be educated. David Rubenstein, co-founder of The Carlyle Group, a major private equity firm, predicted that India would become the third largest economy during this century, after China and the US, and described the US-India relationship as the second most important in the world, after the US-China one. Some others, on the sidelines, wondered if indeed because of the favorable age-pyramid that India has, whether in fact it might be the most important. Admiral Walter Doran, President of Raytheon Asia, discussed defense technologies that have spinoff benefits, including for maintaining internal security, and the value of investing in education, health infrastructure as well as the hard infrastructure of power plants, ports, airports, roads and bridges. Prof. Raj Kumar, President of Jindal University, called for endowments to be created in the process of university development, describing it as a big difference with the US pattern of private universities having large endowments to support students and faculty. Ambassador Nick Burns of the Cohen Group described the Indian Ocean region as being the most important from a strategic sense, with the US, China, India, Japan, and South East Asian countries having core interests. Yogi Deveshwar, Chairman of ITC, described the pioneering rural markets creation work that his company has undertaken to serve the “bottom of the pyramid” as enunciated by the late Prof. Prahalad. He discussed the triple financial, social and environmental bottom line of the modern corporation. In a press conference, new USIBC Chair Terry McGraw called for focus on corporate social responsibility, digital online learning tools, and the USIBC education initiative. Larry Summers, Director of the National Economic Council, described high quality Indian medical facilities that would increasingly attract patients from abroad in medical tourism. He recognized the Indian expatriate community’s role in catalyzing change in perceptions in the US. He spoke about the momentous transformations in the global economy, with the G-8 losing relevance and being replaced, in effect, by the G-20 of which India and the US are leading members. Prime Minister Dr. Manmohan Singh had asserted that he would not attend any more G-8 summits as a supplicant, and sure enough, the G-20 has become the major venue for global consultation. The Supreme Court Decision in June 2010 on the Bhopal Industrial Disaster of 1984 Amidst the euphoria of the follow-up of the USIBC event, the long-delayed Indian Supreme Court ruling on June 7, 2010 concerning the Bhopal industrial disaster of 1984 has had a sobering effect. In December 1984, an explosion at Union Carbide’s pesticide plant caused an estimated 40 tons of lethal methyl isocyanate gas to escape into the city of Bhopal exposing some 500,000 people and causing an estimated 15,000 deaths. Six safety measures designed to prevent a gas leak had either malfunctioned, were turned off or were otherwise inadequate. Further, the safety siren, intended to alert the community should a catastrophe occur at the plant, was turned off. The failure to compensate most of the thousands of victims and their families even after 26 years is undoubtedly a disgrace. The disaster is etched into the minds of corporate chieftains in India and their foreign partners, and safety and quality control have since 1984 become foremost on their minds. Further, the media has become far more watchful. Corollary — New Japanese Government Installed, India and USIBC can be Examples On June 8, 2010 yet another Japanese government was installed, that of new Prime Minister Mr. Naoto Kan, nine months after the previous Hatoyama government was elected in a landslide amidst ecstatic scenes, making Mr. Kan the fifth Japanese Prime Minister in the past four years. The ostensible reason was Dr. Hatoyama’s inability to convince the US on the Futenma military base matter , that had been a campaign pledge. It was handled so very differently from how India approached the US on the nuclear power issue, where India did not budge and it was the US that gradually came to understand India’s position and altered its own laws. Further, Indian Prime Ministers generally resign only when the ruling coalition loses its majority in the lower house of Parliament as is specified in the Constitution. Since India is the world’s largest parliamentary democracy, Japan would do well to learn from both the ruling Indian National Congress and its coalition partners, and indeed the opposition Bharatiya Janata Party and its coalition partners, on how parliamentary democracy can work without endless, damaging political instability as is happening in the world’s second largest economy of Japan. In all of the confabulations on the US-India nuclear deal, the USIBC did a fabulous job of building understanding on both sides of the other country’s positions and concerns. There is no equivalent organization for US-Japan, and it is worth having one for India-Japan. Needless to say, much of the USIBC’s success has been built on the passion and dedication of its inspiring President Ron Somers and successive high-profile Chairs such as Pepsico’s Indra Nooyi and now McGraw-Hill’s, Terry McGraw, and it is not easy to replicate that sort of leadership skill and commitment.

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MTN’s Nhleko Ends Orascom Talks in Fourth Failed Transaction in Two Years

June 9, 2010

By Nicky Smith June 10 (Bloomberg) — MTN Group Ltd. Chief Executive Officer Phuthuma Nhleko failed to close his fourth deal in two years, frustrating the South African company’s ambitions of entering new markets to secure sales growth. MTN, Africa’s largest mobile-phone company, yesterday said it ended talks with Weather Investments S.p.A to buy $10 billion of assets of Orascom Telecom Holding SAE. The inability to complete the transaction caps more than 24 months during which Johannesburg-based MTN sought purchases to offset increasing competition and price-regulation pressures at home. “Management must now focus their attention on the assets that they have,” said Bruce Main , a fund manager at Ivy Asset Management which holds MTN shares. Nhleko, 50, who has said he will leave the company in March after eight years in the post, has tried to expand the company’s business in emerging markets through mergers or acquisitions. He has sought to add new markets to its 21 businesses across the Middle East and Africa as some of the world’s largest operators, including Vodafone Group Plc , seek expansion in Africa to counter slowing revenue growth in Europe. MTN said April 28 that it was negotiating to buy all or part of Orascom Telecom, the biggest mobile-phone company by subscribers in the Middle East. A purchase would have broadened MTN’s presence in Africa and the Middle East and extended its reach to markets such as Bangladesh, Pakistan and North Korea. Failed Deals That came after MTN and India’s Bharti Airtel Ltd. failed for the second time last year to conclude a $23 billion merger that would have created the world’s third-largest mobile phone company by subscribers. Talks about a tie-up with Indian mobile operator Reliance Communications Ltd. ended without an agreement in July 2008. Bharti said this week that it had completed a $9 billion deal to acquire African assets from Kuwait’s Mobile Telecommunications Co., also known as Zain. MTN’s discussions with Orascom were “terminated,” MTN said in a statement yesterday, without giving a reason. MTN spokeswoman Nozipho January-Bardill and Orascom spokeswoman Manal Abdel-Hamid didn’t respond to messages left on their mobile phones. Orascom Telecom operates in Algeria, North Korea, Bangladesh, Pakistan, Egypt, Tunisia, the Central African Republic, Burundi, Namibia and Zimbabwe. The talks failed after Algeria’s government blocked a possible sale to MTN of Orascom’s largest and most profitable unit, Djezzy. “It was clear that after Djezzy was out, there couldn’t be a deal,” Ivy Asset’s Main said. Algerian Obstacle The Algerian government has said it would make an offer to Orascom for the local unit, exercising its rights of pre- emption. Orascom Telecom this month said it received a letter from the Algerian government saying that it was preparing for talks on the possible purchase of the company’s unit there. MTN rose 3.2 percent to 101.40 rand in Johannesburg yesterday, while Orascom Telecom shares rose 1.9 percent to 5.88 Egyptian pounds in Cairo. Nhelko needs new growth drivers. In March, the company said full-year profit fell, as South African customer numbers declined 6.4 percent to 16.1 million, the first time subscribers in MTN’s home market have dropped. Subscriptions were hurt by a new law requiring customers to supply personal details to mobile-phone companies. The company’s regional market is also getting crowded. Mobile-phone operators, including the U.K.’s Vodafone Group, are seeking growth in Africa as revenue gains slow in their home markets. India’s Bharti Airtel bought Zain assets in 15 African countries. In April, France Telecom SA CEO Stephane Richard said the Paris-based company may invest as much as 7 billion euros ($8.4 billion) in deals focused on Africa and the Middle East in the next five years. To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

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ABB’s Hogan Says Chloride-Size Takeovers Are `Digestible’ Use of Cash Pile

June 8, 2010

By Antonio Ligi June 9 (Bloomberg) — ABB Ltd. Chief Executive Officer Joe Hogan has opted to take nibbles rather than bites out of the company’s $9.4 billion in cash reserves as the Swiss company seeks to add to its range of power-supply equipment. ABB announced an agreed bid for Chloride Group Plc of 864 million pounds ($1.3 billion) in cash yesterday, one month after a similar-size takeover for software maker Ventyx. Takeovers of this size are more “digestible” and easier to integrate, Hogan said in an interview. Hogan took over ABB in 2008 with a track record of deal making at General Electric Co., where as an executive he made its then-biggest purchase by buying Amersham Plc for about $10 billion in 2004. Before contemplating acquisitions at ABB, Hogan fought the financial crisis by accelerating an overhaul of the Zurich-based power-grid maker to save $3 billion in 2010. “You have the execution done at division level so there’s not too much to absorb,” Hogan said. “I’ve been in this job now for about two years and a lot of people have asked what we plan to do with our cash. It takes a lot of work to figure out what companies make the most sense.” ABB’s cash reserves swelled to $9.4 billion in March. Even with the purchases of Ventyx and Chloride done, and a potential $1 billion spent on increasing its stake in an Indian subsidiary, cash reserves would stand at $6.2 billion, Moody’s Investors Service analyst Sabine Renner and colleagues said in a note yesterday. With a customer base spanning data centers and hospitals, the London-based manufacturer of back-up power equipment will complement ABB’s factory robots and automation equipment, according to Hogan. Annual revenue rose 2.8 percent to 336 million pounds and the British company said May 24 that an overhaul will save 3.8 million pounds a year in costs. ‘White Spaces’ Chloride’s services division has proved resilient to the financial crisis and that area will be expanded under ABB’s parentage, Hogan said. The British manufacturer already attracted the interest of Emerson Electric Co ., which had an indicative bid of 723 million pounds turned down. The St. Louis-based company is considering its options following ABB’s move, it said in a statement yesterday. Hogan’s strategy centers on filling the “white spaces” in ABB’s offering rather than looking for new markets, the executive said after announcing the agreement. “It’s always been clear they weren’t looking at a major acquisition, more small to mid-size acquisitions in niche segments complementing their smart-grid offering,” said Standard & Poor’s equity analyst Virginie Vacca . “Perhaps also for cultural reasons it’s much easier for them to integrate smaller companies.” Better Than Cash Adding so-called uninterruptible power supply gear leaves ABB encroaching on the market shares of Emerson, Eaton Corp. and Schneider Electric SA , while its foray into industrial software impinges on companies like SAP AG. Hogan said he was pushed to act on Chloride sooner than expected after Emerson began its pursuit of Chloride. Spurned by management, Emerson’s proposal failed to spark negotiations, forcing the U.S. company to appeal directly to investors. By contrast, Hogan said it was easy for him to pick up the phone to Chloride CEO Tim Cobbold after having discussed collaboration over an 18-month period. “He has certainly taken his time to look at it,” said Vontobel analyst Panagiotis Spiliopoulos . “You don’t have to buy something huge. These are all growth options. These are not restructuring cases. If it’s accretive, it’s better than cash.” Austere The Swiss company, itself the result of a merger of BBC Brown Boveri of Switzerland and ASEA AB of Sweden in 1988, still has the appetite for more purchases, though it’s committed to an investment grade credit rating, Chief Financial Officer Michel Demare said on a call. Moody’s yesterday reiterated its A3 rating on ABB debt. “We obviously have the balance sheet to do a transformational deal,” said Hogan. “If there is access available and it would make strategic sense for ABB going forward to make much larger acquisitions, I would certainly consider it.” The sudden flurry of deals contrasts with a decade of austerity after asbestos litigation threatened ABB with near bankruptcy in 2002. Prior to Ventyx and Chloride, it last spent more than $1 billion on a purchase in 1998, with the takeover of Elsag Bailey Process Automation NV for $2.1 billion from Finmeccanica SpA. The thriftiness chimes with events at Siemens AG , Europe’s largest engineering company. The German maker of trains, turbines and factory automation gear has limited itself to minor deals, including the purchase of an Israeli solar thermal power company for about $418 million. “I was really surprised when I came in that anyone could characterize me as an M&A guy,” said Hogan. “I have been an organic growth and operations guy.” To contact the reporter on this story: Antonio Ligi in Zurich at aligi@bloomberg.net .

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Qantas, Virgin Say They’re Open to Bids as Airline Industry Consolidates

June 7, 2010

By Steven Rothwell and Cornelius Rahn June 8 (Bloomberg) — Qantas Airways Ltd. and Virgin Atlantic Airways Ltd. said they’re open to merger proposals as efforts to cut costs and boost traffic push carriers to combine. Qantas, Australia’s biggest airline, favors an inter- continental deal and would be “a great asset for anyone,” Chief Executive Officer Alan Joyce said in an interview. Virgin is exploring options as U.S. and European mergers squeeze its position in the North Atlantic market, CEO Steve Ridgway said. “Consolidation isn’t easy to do and cross-border inter- continental mergers have not occurred yet, but I think they will and Qantas will be at the forefront of that,” Joyce said in Berlin, adding that the process “will take some time.” Joyce didn’t say if he favored a combination with British Airways Plc , which held merger talks with Qantas in 2008 before agreeing to a deal with Iberia Lineas Aereas de Espana SA. Virgin, British Airways’s biggest competitor at London’s Heathrow airport, is reviewing its standalone stance after regulators said they’d approve an expanded alliance between British Airways and AMR Corp.’s American Airlines and after United Airlines agreed to combine with Continental Airlines Inc. “We’re a small company still,” Ridgway said in an interview in Berlin where, like Joyce, he was attending the annual meeting of the International Air Transport Association. “We would be looking potentially just to grow ourselves, to become part of a bigger group. We just need to look at what happens in the industry over the next 18 months.” LOT, SAS Polish national carrier LOT said its forecasts of a return to profit this year are attracting interest from other carriers and private-equity firms, while SAS Group AB CEO Mats Jansson said a new wave of consolidation in Europe is likely to begin in earnest next year as prospects improve. Sydney-based Qantas’s previous negotiations with British Airways were called off after the pair failed to agree on how to split ownership, the U.K. carrier has said. A combination would have created a carrier with $24 billion in sales and 500 planes. Talks were complex because the London-based company had more revenue and Qantas a higher market value. That’s still the case. “I don’t think you can ever look back and have any regrets,” Joyce said. “I think you have to look forward, and we do look forward at what other opportunities do exist.” Qantas is already partnered with British Airways in the Oneworld alliance, as are American Airlines and Spain’s Iberia, with which the U.K. company aims to complete a merger this year British billionaire Richard Branson ’s Virgin Atlantic isn’t in a global grouping and specializes in point-to-point travel to business destinations and high-end tourist resorts. Singapore Stake Singapore Airlines Ltd. owns a 49 percent stake in the Crawley, England-based company, though CEO Ridgway said it’s possible that the holding could be offered for sale as the Asian carrier modifies its strategy to reflect the expansion of the Indian and Chinese markets in the past 10 years. “Singapore Airlines is a great shareholder, and I don’t think they’re in any hurry to do that,” he said. “At the end of the day it’s down to them, but it could be an opportunity.” Malaysian Airline System Bhd. , which like Virgin stands apart from the Oneworld, Star and SkyTeam alliances, also favors consolidation to boost earnings and cut costs, CEO Tengku Azmil Zahruddin said yesterday at the IATA event. “As an industry we are far too fragmented and that is one of the reasons that we don’t make reasonable returns for shareholders,” the CEO said during a roundtable discussion. ‘Too Early’ SAS, the unprofitable owner of Scandinavian Airlines rescued by share sales that saw the Swedish, Danish and Norwegian governments increase their stakes, has said it’s unlikely to remain independent once earnings are restored. CEO Jansson said yesterday that the level of losses suffered by European carriers during the recession means it’s “too early” to contemplate consolidation this year. “2011 is the time for new steps in the consolidation process,” Jansson said in an interview. “When companies feel they’ve done their homework, they’re in good shape and the market is stable, then boards will start to look at the acquisition list, but not now.” Poland’s LOT, or Polskie Linie Lotnicze LOT SA, said right now is “a very good moment” to seek a buyer. The company, which aims to post a profit in 2010 after losing money for the past two years, has sent “teasers” that attracted interest from “a few” airlines and investment funds and a transaction could in theory be agreed “very quickly,” CEO Sebastian Mikosz said in an interview. At Qantas, Joyce said an investment-grade debt rating will be a major attraction for a merger partner. The Asia-Pacific market is also now “very healthy,” though demand on routes to Europe is weak and of most strategic concern, he said. Air France’s purchase of KLM Royal Dutch Airlines in 2004 is the airline industry’s biggest deal to date. It would be surpassed by merger of United Airlines parent UAL Corp. and Continental in a $3 billion stock swap announced on May 3. To contact the reporters on this story: Steven Rothwell in Berlin via srothwell@bloomberg.net ; Cornelius Rahn in Berlin via crahn2@bloomberg.net

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India Ruling on Minimum Ownership May Generate $53 Billion of Share Sales

June 5, 2010

By Rajhkumar K Shaaw and Manish Modi June 5 (Bloomberg) — Oil & Natural Gas Corp. and Reliance Power Ltd. are among a sixth of the top 3,000 listed Indian companies that may need to sell $53 billion of shares after a new government rule raised the minimum public holding. Companies must increase shares held by the public to a minimum 25 percent by selling at least 5 percent annually, according to an e-mailed statement from the government’s Press Information Bureau yesterday. The rule may prompt equity sales of about 2.5 trillion rupees among companies including state-owned ONGC, India’s biggest energy explorer, and Reliance Power, owned by billionaire Anil Ambani , according to data compiled by Bloomberg. The step will also boost government efforts to reduce stakes in its companies and cut the budget deficit. “The aim of the government is to have a market that is efficient and liquid, and not susceptible to volatile movements due to thin volumes,” said Jitendra Sriram , who helps manage $800 million as head of equities at HSBC Asset Management (India) Pvt. in Mumbai. “A limited float is susceptible to manipulation. The government wants to encourage a wider minority participation to increase the depth of the market.” Budget Speech Finance Minister Pranab Mukherjee had proposed in his July 6, 2009, budget speech that a rule requiring a public float of at least 25 percent for listed companies should be enforced uniformly, including on state-run companies. “The move is good for the markets as it will lead to better price discovery and transparency,” said Tarun Bhatia , director of capital markets at Crisil Research in Mumbai. “I think the government has given companies a fair timeframe to increase public shareholding and the market should be able to absorb it.” Prime Minister Manmohan Singh ’s government is seeking to complete share sales in state companies such as Engineers India Ltd. and Steel Authority of India Ltd. to raise a record 400 billion rupees this year. Mukherjee has pledged to shrink the deficit to 5.5 percent of gross domestic product in the year that began April 1, from a 16-year high of 6.9 percent in the previous 12 months. Government Companies The top ten among the 526 companies that will need to sell shares are government owned. The shares, if sold at yesterday’s prices, will be worth 1.7 trillion rupees, according to data compiled by Bloomberg. “The government has put itself in a situation where follow-on public offers become the rule and norm,” said Jagannadham Thunuguntla , chief strategist at SMC Capitals Ltd. in New Delhi. “Until now, disinvestment plans have remained a choice for the government.” State-owned Coal India Ltd., the world’s biggest producer, plans to raise as much as 130 billion rupees in a share sale in July, two government officials said in April. The sale may now take place by September when market conditions improve, Coal Minister Sriprakash Jaiswal said June 2. “All I can say right now is that the Coal India offer won’t be affected,” Disinvestment Secretary Sumit Bose said yesterday after the announcement. For new share sales, if the post-issue capital calculated at offer price is more than 40 billion rupees, the company may be allowed to sell 10 percent of its equity and comply with the 25 percent public shareholding requirement by increasing the float by at least 5 percent a year, the government said in the statement. Delayed Sales At least 29 companies delayed or canceled equity sales worldwide in May as Europe’s debt crisis triggered the biggest decline in emerging-market stocks since October 2008. “It may be difficult for all share sales to go through as there will be tightening in liquidity,” said S. Thiagarajan , director finance at NMDC Ltd., India’s largest iron-ore producer. “With so many offers there may be erosion in share value.” NMDC, in which the government sold an 8.38 percent stake in March, has a 10 percent public holding. India’s Sensitive Index declined 3.5 percent last month, the first drop since January, as overseas investors sold a net 94.4 billion rupees of equities, the most since October 2008, following the collapse of Lehman Brothers Holdings Inc. To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net ; Manish Modi in New Delhi at mmodi6@bloomberg.net

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Gold Sales to Europe Jump on Greek Sovereign-Debt Crisis, Perth Mint Says

June 3, 2010

By Jason Scott June 4 (Bloomberg) — Gold sales to Europe from the Perth Mint surged in May as the Greek sovereign-debt crisis triggered a flight to haven investments, draining stockpiles at the producer of 6 percent of the world’s bullion. Buyers from the continent accounted for 69 percent of gold- coin purchases last month compared with 51 percent a year ago, said Ron Currie, sales and marketing director. Individual German investors also bought silver, seeking to protect their wealth with “poor man’s gold,” Currie said from Western Australia. Greece’s fiscal crisis roiled financial markets worldwide, driving the euro lower. Gold reached a record in May as sovereign-debt risks escalated. The mint is working at full capacity with 20 percent more staff than a year ago, Currie said. “As soon as it was announced the European Commission was bailing out Greece, the German population decided they’d better hedge their euros by buying precious metals,” Currie said in an interview yesterday. “We had stock before this blip in the market, then it all went.” Spot gold traded at $1,207.80 an ounce at 7:44 a.m. in Singapore today compared with last month’s record of $1,249.40 and $1,096.95 at the end of last year. The precious metal has gained for nine straight years. Silver, which peaked this year at $19.8275 an ounce on May 13, traded today at $17.9925. ‘Safety of Gold’ “Anyone throughout Europe who understands how the euro is being debased is seeking the safety of gold,” said James Turk , founder of GoldMoney.com, an online gold-buying and storage service that has passed $1 billion of customer assets. The metal may advance further next week, a Bloomberg survey showed. “The gold market in Europe, and particularly in Germany, has just taken off,” Currie said from the 111-year-old mint, which was founded on the back of a gold rush in the state that accounts for 62 percent of the nation’s mineral production. “People in Germany are buying silver, which leads me to believe it’s the moms and pops stocking up on ‘poor man’s gold’,” said Currie. “They could be storing it in their homes or burying it in their gardens.” The mint , controlled by the Western Australian government, has 300 staff and doubled capacity in the past 18 months, Currie said, declining to give a total output figure for coins and bars, or the value of the bullion stored on behalf of buyers. Investors can opt to buy and store gold at the mint, or buy coins to hold themselves. ‘Greeks Changed Everything’ “We came off the highs of the global crisis, we were rolling along at a steady pace for a while and the Greeks changed everything,” said Currie. Standard & Poor’s cut Greece’s rating to junk status on April 27. The rush for bullion in May at the Perth Mint was matched overseas. The U.S. Mint sold 190,000 ounces of American Eagle gold coins last month, the most since December. CME Group Inc. , the world’s largest futures market, said gold-futures trading rose to a record in May. Gold trading on the Comex unit was 4.82 million contracts, exceeding the 4.57 million record set in January, the Chicago-based CME said June 2. “Sales have come off the highs of the global financial crisis, but they haven’t fallen anywhere near to where they were before the crisis,” Currie said. In the 12 months to June 30, sales of the mint’s 1-ounce Kangaroo and other gold coins may fall by about 16 percent to about 350,000 ounces from the year before, Currie said. Silver will match that drop even as sales of that metal spiked in the past two months, he said. ‘Volatile Market’ “It’s a volatile market and you can’t pick what’s going to happen from day to day,” Currie said. “The Indian market isn’t what it was, jewelry sales are down, but the ETFS are up and the overall gold price is still high. Our assumption is that volatility will continue.” Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose to a record 1,268.23 tons on June 2. India’s gold imports may reach a 12-month low of 15 tons to 17 tons in May as rising prices slowed imports, the Business Standard reported yesterday, citing Suresh Hundia, president of the Bombay Bullion Association. Western Australia produces 6 percent of the world’s gold, valued at A$5 billion in the year to June 30, 2009, according to state government figures. The mint processes all the gold mined in Australia as well as imports of scrap from overseas, Currie said. To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net

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Brazil, India, China May Be Overheating, Roubini Says

May 31, 2010

By Andre Soliani and Matthew Bristow May 31 (Bloomberg) — Nouriel Roubini, the New York University professor who predicted the global financial crisis before markets peaked, said the Brazilian, Chinese and Indian economies may be overheating and developing asset bubbles. The outlook for Brazil’s economy is “very positive,” though the debt crisis in the euro zone countries and a slow “u-shaped” recovery globally could dent the country’s growth, Roubini said today at an event in Sao Paulo. “In Brazil, like in many other emerging market economies, there is now evidence of overheating of the economy,” Roubini said. “Expected and actual inflation is starting to rise, and that implies that over the next few quarters there has to be a tightening of monetary policy, gradually but progressively, in order to make sure that inflation expectations remain anchored.” Roubini, 52, recommended that Brazilian policy makers take steps to limit the appreciation of the real, including the “judicious” use of capital controls. The currency has gained 8.2 percent against the dollar over the past 12 months, the best performer among 16 major currencies tracked by Bloomberg. The stronger real has made the country’s exports more expensive in dollar terms, and the economy could also be hit by a fall in commodity prices, which are likely to decline over the next 6 months to 12 months because of a possible double-dip recession in Europe and a U.S. slowdown, Roubini said. Housing Bubble Roubini predicted a bubble in U.S. housing prices during an interview with Bloomberg News in October 2005, months before the market peaked, and said in August 2006 that he expected a “painful” recession. In October 2008, he said he still saw “significant downside risks to equity markets.” The Standard & Poor’s 500 Index fell by almost half over the next five months. The euro zone economies are likely to stagnate this year, and Greece is growing closer to insolvency and may be forced to restructure its debt, Roubini added. Euro-area ministers agreed on May 2 to provide 110 billion euros ($135 billion) of aid to Greece as the country struggled to control a deficit that reached 13.6 percent of GDP last year, more than four times the EU limit. When that failed to stop the euro’s slide, the EU and International Monetary Fund offered a financial lifeline of almost $1 trillion to member states. Europe’s currency has dropped 14 percent against the dollar this year, the biggest loss among its 16 most-active counterparts, according to data compiled by Bloomberg. It traded at $1.2308 as of 5:58 p.m. in New York. Chinese Growth Chinese economic growth may slow to an annual rate of 7 percent to 8 percent by the end of the year or early 2011, Roubini said today in Sao Paulo. U.S. economic growth may slow to less than 2 percent in the second half of the year, Roubini said. China’s challenge is to boost domestic demand to sustain an economic expansion that has been based so far on investments and exports, he said. Brazil and India are in a “better shape” than China regarding the strength of domestic demand, Roubini said. Emerging markets can grow between 5 percent and 8 percent during the global economic recovery compared to between 2 percent and 3 percent for rich nations, he said. He didn’t provide further details about his growth outlook for India or China. China’s economic growth accelerated to the fastest pace in almost three years in the first quarter, rising 11.9 percent from a year earlier. India’s GDP rose 8.6 percent in the three months ending March 31 from a year earlier, following a revised 6.5 percent gain in the previous quarter, the statistics office in New Dehli said today. Brazil’s GDP may have expanded 8.5 percent on an annual basis in the first quarter, according the median estimate in a Bloomberg survey of five analysts. If maintained throughout the year, that would be the fastest growth rate in two decades. Brazil reports first quarter GDP on June 8. The professor, who is also chairman and co-founder of Roubini Global Economics LLC in New York, failed to predict the market rebound that sent shares across the globe soaring last year. The S&P 500 Index surged 80 percent from a March 2009 low to a peak in April this year. To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net ; Matthew Bristow in Bogota at mbristow5@bloomberg.net

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Roubini Says Brazil, India, China May Be Overheating, Sees Asset Bubbles

May 31, 2010

By Andre Soliani and Matthew Bristow May 31 (Bloomberg) — Nouriel Roubini, the New York University professor who predicted the global financial crisis, said the Brazilian, Chinese and Indian economies may be overheating and developing asset bubbles. The outlook for Brazil’s economy is “very positive,” though the crisis in the Eurozone countries and a slow “u- shaped” recovery globally could dent the country’s growth, Roubini said today at an event in Sao Paulo. “In Brazil, like in many other emerging market economies, there is now evidence of overheating of the economy,” Roubini said. “Expected and actual inflation is starting to rise, and that implies that over the next few quarters there has to be a tightening of monetary policy, gradually but progressively, in order to make sure that inflation expectations remain anchored.” Roubini recommended that Brazilian policy makers take steps to limit the appreciation of the real, including the “judicious” use of capital controls. The currency has gained 8.5 percent against the dollar over the past 12 months, the best performer among 16 major currencies tracked by Bloomberg. That’s made the country’s exports more expensive in dollar terms. Brazil’s economy could also be hit by a fall in commodity prices, which are likely to decline over the next 6 months to 12 months because of a possible double-dip recession in Europe and a slowdown in the U.S., Roubini said. The Eurozone economies are likely to stagnate this year, and Greece is growing closer to insolvency and may be forced to restructure its debt, Roubini added. Chinese economic growth may slow to an annual rate of 7 percent to 8 percent by the end of the year or early 2011, from 11.9 percent in the first quarter of 2010, Roubini said. U.S. economic growth may slow to less than 2 percent in the second half of the year, Roubini said. To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net ;

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Indian Economic Growth Accelerates, Increasing Pressure on Interest Rates

May 30, 2010

By Kartik Goyal May 31 (Bloomberg) — India’s economic growth accelerated, adding pressure on the central bank to raise interest rates even as Europe’s sovereign-debt crunch threatens the global recovery. Gross domestic product rose 8.6 percent in the three months ended March 31 from a year earlier after a revised 6.5 percent gain in the previous quarter, the statistics office said in a statement in New Delhi today. That matched the median estimate in a Bloomberg News survey of 22 economists. India and China, the world’s fastest-growing major economies, are weighing the risk of Europe’s debt crisis reducing demand in the market that accounts for a fifth of their exports. For India, the room to pause on monetary tightening is limited because its benchmark inflation rate is more than three times that in China. “The biggest threat in India is from inflation and the risk that the economy overheats,” Kevin Grice , an economist at Capital Economics Ltd. in London, said before the report. “This, in the end, would force the Reserve Bank of India to aggressively hike policy rates, which would inevitably bring far lower growth later on.” India’s central bank said May 19 that it will raise rates only cautiously even though they are “out of line” with the key wholesale-price inflation rate, running at 9.59 percent. In comparison, China’s $4.3 trillion economy expanded 11.9 percent in the first quarter and consumer prices rose 2.8 percent in April from a year earlier. Stocks Gain India’s Sensitive Index extended gains after the GDP report, increasing 0.4 percent to 16,935.70 at 11:10 a.m. on the Bombay Stock Exchange. The yield on the 10-year government bond rose 3 basis points to 7.51 percent from before the report. The rupee was little changed, maintaining the 4.5 percent drop against the U.S. dollar this month, making imports costlier and impeding central bank Governor Duvvuri Subbarao’s efforts to cool inflation. The Reserve Bank’s benchmark reverse repurchase rate is at 3.75 percent after two quarter percentage point increases since mid-March. Manufacturing rose 16.3 percent in the three months through March from a year earlier, compared with a 13.8 percent gain in the previous quarter, today’s report showed. Farm output rose 0.7 percent from a contraction of 1.8 percent and mining grew 14 percent. ‘Source of Strength’ European Central Bank President Jean-Claude Trichet said today that emerging nations have weathered the global recession better and are a “source of strength” for the world economy. GDP in the euro region rose 0.5 percent in the first quarter from a year earlier, according to the European Union’s statistics office. Growth in India’s $1.2 trillion economy, Asia’s largest after Japan and China, is accelerating as rising incomes boost demand for cars, mobile phones and air travel. Salaries in India may increase at the fastest pace in the Asia Pacific in 2010, according to Hewitt Associates Inc., the Lincolnshire, Illinois- based human resources adviser. Car sales by companies including Maruti Suzuki India Ltd. and Tata Motors Ltd. rose 39.5 percent in April from a year earlier, the biggest jump for the month since 1999, according to the Society of Indian Automobile Manufacturers. 3G Auction The government’s auction of high-speed wireless licenses this month highlights corporate enthusiasm for the nation’s prospects. Companies including Newbury, England-based Vodafone Group Plc, the world’s biggest mobile-phone operator by sales, took part and the sale raised 677.2 billion rupees ($14.3 billion), almost double the amount budgeted by Finance Minister Pranab Mukherjee . Services including air travel, which account for about 55 percent of India’s economy, expanded the most in 21 months in April, according to the Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics. The Organization for Economic Cooperation and Development said May 26 that China and India need “a much stronger tightening of monetary policy” to counter inflation and reduce the risk of asset bubbles. Some economists say Indian Prime Minister Manmohan Singh’s government has made slow progress in creating new capacity in infrastructure such as power, roads and ports, which is adding to inflation pressures and limiting economic expansion. Infrastructure Woes “The shortage of infrastructure has an adverse impact on growth and it increases the cost of operations for companies,” said Shashanka Bhide , chief economist at the New Delhi-based National Council of Applied Economic Research. The finance ministry estimates that India produces about 10 percent less electricity than it needs, and roads, which account for 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces. India, ranked below war-ravaged Ivory Coast and Sri Lanka for the quality of infrastructure, in March lowered its target for spending on roads and ports, after failing to complete planned projects. Projected investment in electricity, roads and wharves may reach 407 billion rupees in the five years to March 2012, half the original goal, according to the Planning Commission, a government office that sets investment targets. Singh wants to boost growth to a 10 percent pace, which he says is needed to pull the 828 million people living on less than $2 a day out of poverty. To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net

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Samberg Traded Perch Atop $15 Billion Fund for $15 Million Illicit Profit

May 28, 2010

By Katherine Burton and Saijel Kishan (Corrects spelling of Columbia Business School in 15th paragraph.) May 28 (Bloomberg) — Art Samberg traded hundreds of stocks as he built Pequot Capital Management Inc. into the world’s largest hedge-fund firm a decade ago. One of them, Microsoft Corp., led to his downfall. Samberg and Pequot agreed yesterday to pay almost $28 million to end a six-year probe into claims that they profited in 2001 on inside information obtained from a Microsoft employee he had agreed to hire. Samberg, 69, will be barred from the investment-advisory business except for closing Pequot. Samberg said a year ago he would shut the Wilton, Connecticut-based hedge-fund manager because “public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction.” Hedge-fund investors say the settlement hasn’t tarnished Samberg’s legacy in the industry. His main fund, Pequot Partners, returned an average of 16.8 percent annually between its start in 1986 and last year, compared with the 9 percent gain by the Standard & Poor’s 500 Index, according to a May 2009 investor letter. “He has an outstanding record as an investor and he built a terrific business,” Leon Cooperman , who runs New York-based hedge fund Omega Advisors Inc. and has known Samberg since the two were in business school at Columbia University in the mid- 1960s, said in a telephone interview. SEC Allegations The SEC claimed in a civil action that Samberg and Pequot had illegally tapped information from a former Microsoft employee to bet on the Redmond, Washington-based software maker’s stock. The funds gained $14.8 million on the trades, according to the SEC. The agency also brought a claim against the former Microsoft worker, David Zilkha , saying he concealed his actions during an earlier probe. “The cases have two particularly troubling aspects — a hedge-fund manager trading on illegal insider information, and his tipper source who withheld crucial information about the scheme during an SEC investigation,” Robert Khuzami , the Washington-based agency’s enforcement director, said in a statement. “Both are high-priority targets.” Zilkha’s attorney, Henry Putzel, didn’t return a phone call seeking comment. Jonathan Gasthalter , a spokesman for Samberg and Pequot, declined to comment. Regulators’ interest in Pequot’s trading stretches back to at least 2004, according to documents an SEC official provided to lawmakers during testimony in 2006. Senators including Iowa Republican Charles Grassley have criticized the SEC’s decision in 2006 to close an examination of Pequot’s trades that included scrutiny of Morgan Stanley Chairman John Mack , who had worked at the hedge-fund firm. Interest was rekindled last year after investigators got copies of e-mails between Zilkha and a Microsoft colleague from a hard drive in possession of Zilkha’s ex-wife. ‘Sad Outcome’ “I don’t believe he had any intent to pursue any insider- trading, and this incident must have been a miscommunication with staff or an error in judgment that resulted in this sad outcome,” said John Trammell , chief executive officer of New York-based Cadogan Management LLC, which invests about $2.7 billion of client money in hedge funds. Trammell met Samberg in 2000. The 6-foot, 3-inch tall (1.9 meters) Samberg was born in the South Bronx, New York. His father was an electrician and his mother a secretary. Samberg graduated with a degree in aeronautics from Massachusetts Institute of Technology in Cambridge, Massachusetts, in 1962. He then went to work for Lockheed Missiles & Space Co. in Sunnyvale, California, and at the same time attended nearby Stanford University part time, where he got a master’s degree in aeronautics. Starting Pequot Samberg left Lockheed in 1965 and went to Columbia Business School in New York, where he graduated with an MBA two years later. He then joined Kidder Peabody & Co. as an electronics analyst before working for investment firm Weiss, Peck & Greer in 1970. After 15 years he joined his friend John Dawson, forming Southport, Connecticut-based Dawson-Samberg Capital Management Inc. Samberg started his Pequot Partners fund while he was at Dawson-Samberg. He added other hedge funds over the next dozen years and spun off Pequot Capital, named for the American Indian tribe that populated the area, in January 1999 with about $4 billion in assets. Pequot’s assets more than tripled over the next three years, and by 2001, the firm was managing $15 billion, making it the largest hedge-fund manager in the world. Pequot’s rapid growth came in part because the firm’s traders caught the rise in technology stocks and later anticipated their decline. Business Split The success of the business caused tension between Samberg, then 60, and his 42-year-old lieutenant, Dan Benton , who managed the tech-stock portfolios. Samberg wanted to slow the growth of assets. Benton disagreed. Benton left to start his own firm, Andor Capital Management LLC, in October 2001, taking $7.5 billion in assets with him. The firm closed in 2008. Samberg, who climbed Mount Kilimanjaro, the highest peak in Africa, in 2000, has been involved in numerous charities, giving $25 million to Columbia Business School in 2006. “He is a very generous man,” said Russell Carson , a founding partner of New York-based private-equity firm Welsh, Carson, Anderson & Stowe who has known Samberg for two decades. “He had the benefit of a good education and realized that lots of kids don’t, and he wanted to help make that available.” It made sense for Samberg to settle with the SEC, Carson said. “It was something hanging over him,” he said. “He was hurt that someone would question his integrity, because he values his integrity the most.” To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net ; Saijel Kishan in New York at skishan@bloomberg.net .

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Flotilla Starts Cleaning Up Oil Spill From Tanker Collision Off Singapore

May 25, 2010

By Yee Kai Pin May 26 (Bloomberg) — An oil tanker that spilled 2,500 metric tons of crude into the Singapore Strait yesterday is being unloaded as efforts to clean up a slick near the world’s busiest container port resumed. AET Tanker Holdings Sdn., the owner of the MT Bunga Kelana 3 that collided with the bulk carrier MV Waily, is undertaking an “internal transfer” of Bintulu grade oil, the company said today in an e-mailed statement. The vessel, struck on its port side as it sailed east to west, will be moved after the underwater damage is assessed. The spill, equivalent to 18,325 barrels, is enough to fill an Olympic-sized swimming pool and is about three days of leakage from BP Plc’s damaged well in the Gulf of Mexico. More than 100 people have been deployed along the coastline in case the spill reaches shore, according to AET, a unit of MISC Bhd. , the world’s biggest owner of liquefied natural gas tankers. The spill hasn’t increased in size or reached shore, Serene Tan, a spokeswoman at the Maritime and Port Authority of Singapore, said today. Yesterday’s collision occurred 13 kilometers (8 miles) southeast of Changi East. MISC shares fell for a fifth day, the longest losing streak in five years. They declined 2 percent to 8.25 ringgit at 10.56 a.m. in Kuala Lumpur, against a 0.3 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index. “The incident caused significant damage to the vessel’s hull,” AET said. “AET is also cooperating fully with Malaysian authorities in readiness of possible clean-up operations along the southeastern coast of Peninsular Malaysia.” Worst Oil Spill Singapore’s worst oil spill was in October 1997 when the Cyprus-flagged Evoikos collided with the Thai-registered Orapin Global, a Very Large Crude Carrier. More than 25,000 tons of oil were spilled. Efforts to contain and clean up the spill resumed today, according to AET. Yesterday’s operations involved 15 emergency response craft, 50 tons of dispersant and 4 kilometers of boom. “If you have an oil spill in a harbor, a populated area, it’s going to cause some concern,” Stuart Traver, a downstream adviser at energy consultants Gaffney, Cline & Associates Ltd. in Singapore, said yesterday. The spill “is not small — most environmental organizations get upset about even smaller slicks.” BP estimated its Gulf of Mexico oil well has been leaking 5,000 barrels a day since an April 20 explosion aboard the Deepwater Horizon drilling rig, which killed 11. Independent scientists have told the U.S. Congress crude was coming out at more than 10 times that rate. Double Hull The Malaysia-flagged Bunga Kelana 3, classed as an Aframax tanker, was built in 1998 with 12 cargo tanks, according to data compiled by Bloomberg. It has a double hull, a design meant to prevent oil leaks or flooding beyond the outer compartment. “Double hull does not guarantee there will never be a spill,” said John Vautrain, senior vice-president at consultants Purvin & Gertz Inc. in Singapore. “Double hull means it takes a bigger collision to create a spill. I shouldn’t think it’ll take too long to clean this up.” The vessel had a loaded draft of 11.4 meters (37.4 feet) yesterday, compared with its maximum of 14.9 meters, based on transmissions captured by AISLive on Bloomberg. This indicates it was almost fully laden when it departed Bintulu, off Malaysia’s Sarawak state, on May 23. Treasure Marine Ltd. is the beneficial owner of the Waily, Bloomberg data showed. The 25,449-deadweight-ton vessel, flying a St. Vincent & The Grenadines flag, was built in 1983. It sailed from the east Indian port of Paradip about two weeks ago. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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Voice Recorder Found After Fatal Air India Accident

May 23, 2010

By Vipin Nair and Rakteem Katakey May 23 (Bloomberg) — Accident investigators found the cockpit voice recorder from the wreckage of an Air India Express Boeing Co. aircraft that crashed yesterday, killing 158 passengers and crew. Analysis of the fire-damaged recorder may take about two weeks and is expected to provide the necessary details about the accident, the government said in a statement. Search teams were still looking for the main flight data recorder. “Officials from the Directorate General of Civil Aviation are searching for the black box,” Harpreet Singh, Air India’s emergency response coordinator for the disaster in southern Karnataka state, told reporters today, referring to India’s aviation regulator. Until it’s “found and formal studies are done, we can’t conclude anything,” Singh said in Mumbai. Flight IX-812 from Dubai to Mangalore slammed through a boundary wall and slid down a hill before bursting into flames at about 6:05 a.m. yesterday in India’s first fatal crash of a passenger aircraft in a decade. Flames and thick smoke billowed from the forested area. All the bodies of the dead have been removed from the wreckage of the Boeing 737-800, Singh said. Of those, 87 have been identified. There were eight survivors. The accident was the worst in India in 14 years, according to the Aviation Safety Network website. Houston, Texas-based disaster management company Kenyon International Emergency Services has been asked to assist in the rescue operation, Air India’s Singh said. The airline will also conduct an internal inquiry. Busy Skies Since India’s last major air disaster in 2000, its skies have seen the arrival of Kingfisher Airlines Ltd ., SpiceJet Ltd ., IndiGo, GoAirlines (India) Pvt. and Paramount Airways Ltd., as the world’s second fastest expanding major economy after China saw demand surge. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. The country’s carriers will add $138 billion of new aircraft over two decades, the company forecasts. National Aviation Co. of India Ltd, Air India’s owner, is seeking to raise as much as $1.15 billion to refinance loans that funded the purchase of 21 Airbus planes. Civil Aviation Minister Praful Patel said in March that India needs to more than quadruple the number of airports from the current 90 to meet the increased traffic. “India’s safety record has been as good as it gets,” said Kapil Kaul , chief executive officer of the Indian unit of the Centre for Asia Pacific Aviation . Mangalore’s “tabletop” runway “has challenges and the experience of the pilot is critical,” he said. Boeing Team Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based manufacturer said in a statement yesterday. Air India said the crashed 737 was about 2 1/2 years old. Firefighters had to cross a railway and battle through trees to reach the wreckage, the CNN-IBN television channel reported yesterday. It showed a rescue worker carrying the foam- covered body of young child up a mud bank away from the crash. At least 50 victims were from the state of Kerala, Press Trust of India reported. Kerala relies on remittances from people working in the Middle East for a quarter of its economy. Both pilots were experienced and had flown into Mangalore together on May 17, Air India’s director for personnel, Anup Srivastava , told reporters in Mumbai yesterday. The civil aviation ministry said in a statement the plane had landed “slightly beyond” the runway’s “touchdown” zone at a time when visibility was about six kilometers (four miles). 1996 Crash Yesterday’s crash was the worst in India since a Saudi Arabian Airlines flight collided with a Kazakhstan Airlines jet in November, 1996, killing all 349 on board. In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern Bihar in July 2000. For loss-making national carrier Air India the accident “comes at a time when it is struggling,” analyst Kaul said. “This is going to be demotivating. While the incident may not affect their plans to raise capital, “they are going to be much more in focus for the wrong reasons,” he said. International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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Abbot invests $3.7b in Indian pharma firm

May 23, 2010

Abbot invests $3.7b in Indian pharma firm

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Air India Crash That Killed 158 Investigated, Flight Data Recorders Sought

May 23, 2010

By Vipin Nair and Rakteem Katakey May 23 (Bloomberg) — Accident investigators continue to search for flight data and voice recorders from the wreckage of an Air India Express Boeing Co. aircraft that crashed yesterday, killing 158 passengers and crew. “Officials from the Directorate General of Civil Aviation are searching for the black box,” Harpreet Singh, Air India’s emergency response coordinator for the disaster in southern Karnataka state, told reporters today, referring to India’s aviation regulator. Until it’s “found and formal studies are done, we can’t conclude anything,” Singh said in Mumbai. Flight IX-812 from Dubai to Mangalore slammed through a boundary wall and slid down a hill before bursting into flames at about 6:05 a.m. yesterday in India’s first fatal crash of a passenger aircraft in a decade. Flames and thick smoke billowed from the forested area. All the bodies of the dead have been removed from the wreckage of the Boeing 737-800, Singh said. Of those, 87 have been identified. There were eight survivors. The accident was the worst in India in 14 years, according to the Aviation Safety Network website. Houston, Texas-based disaster management company Kenyon International Emergency Services has been asked to assist in the rescue operation, Air India’s Singh said. The airline will also conduct an internal inquiry. Busy Skies Since India’s last major air disaster in 2000, its skies have seen the arrival of Kingfisher Airlines Ltd ., SpiceJet Ltd ., IndiGo, GoAirlines (India) Pvt. and Paramount Airways Ltd., as the world’s second fastest expanding major economy after China saw demand surge. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. The country’s carriers will add $138 billion of new aircraft over two decades, the company forecasts. National Aviation Co. of India Ltd, Air India’s owner, is seeking to raise as much as $1.15 billion to refinance loans that funded the purchase of 21 Airbus planes. Civil Aviation Minister Praful Patel said in March that India needs to more than quadruple the number of airports from the current 90 to meet the increased traffic. “India’s safety record has been as good as it gets,” said Kapil Kaul , chief executive officer of the Indian unit of the Centre for Asia Pacific Aviation . Mangalore’s “tabletop” runway “has challenges and the experience of the pilot is critical,” he said. Boeing Team Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based manufacturer said in a statement yesterday. Air India said the crashed 737 was about 2 1/2 years old. Firefighters had to cross a railway and battle through trees to reach the wreckage, the CNN-IBN television channel reported yesterday. It showed a rescue worker carrying the foam-covered body of young child up a mud bank away from the crash. At least 50 victims were from the state of Kerala, Press Trust of India reported. Kerala relies on remittances from people working in the Middle East for a quarter of its economy. Both pilots were experienced and had flown into Mangalore together on May 17, Air India’s director for personnel, Anup Srivastava , told reporters in Mumbai yesterday. The civil aviation ministry said in a statement the plane had landed “slightly beyond” the runway’s “touchdown” zone at a time when visibility was about six kilometers (four miles). 1996 Crash Yesterday’s crash was the worst in India since a Saudi Arabian Airlines flight collided with a Kazakhstan Airlines jet in November, 1996, killing all 349 on board. In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern Bihar in July 2000. For loss-making national carrier Air India the accident “comes at a time when it is struggling,” analyst Kaul said. “This is going to be demotivating. While the incident may not affect their plans to raise capital, “they are going to be much more in focus for the wrong reasons,” he said. International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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Air India Boeing Crashes Carrying 166 in First Fatal Accident in a Decade

May 22, 2010

By Vipin Nair and Rakteem Katakey May 22 (Bloomberg) — An Air India Express plane overshot the runway and burst into flames while landing in heavy rain in southern India, killing all but three of the at least 166 people aboard in the country’s first fatal commercial air crash in a decade. “We have been able to confirm three survivors,” said Prabhakar Sharma, additional deputy commissioner of Mangalore district in southern Karnataka state. The plane “is almost completely burnt,” he said. There was little chance of more people being found alive, state home minister V.S. Acharya said by phone. Television channels including CNN-IBN and NDTV 24×7 showed flames and thick smoke billowing from a forested area at the end of the runway. Broadcasters said the plane crashed through a boundary wall and fell into a ravine. Firefighters had to cross a railway line and battle through trees to reach the wreckage, according to the reports. There were 137 adults, 23 children and six crew aboard the low-cost flight IX-812 when it crashed this morning, Sharma said. The survivors have been taken to a hospital 20 kilometers (12 miles) from the crash site, he said. Acharya put the total number of passengers and crew at 169. CNN-IBN showed a rescue worker carrying the foam-covered body of young girl up a mud bank away from the crash. It was not immediately clear if she was one of the survivors. ‘Grievous Loss’ Prime Minister Manmohan Singh expressed condolences over the “grievous loss of life” in a statement, announcing compensation for those killed. Singh postponed celebrations to mark the first anniversary of his re-election. The Boeing Co. 737-800 plane flying from Dubai to Mangalore crashed at 6:30 a.m. local time, Air India spokesman Swaminathan said by telephone. The crash may be the worst in India in 14 years, according to the Aviation Safety Network website. There was heavy rain and fog at the time of the crash, Sharma said. Civil aviation officials are on their way to Mangalore from the Karnataka capital city of Bangalore, he said. Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based aircraft manufacturer said in a statement. Air India said in statement it was deploying “all its resources” to assist the families of passengers. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. Over the next 20 years, Indian carriers will need 1,030 new aircraft worth $138 billion, it forecasts. Bihar Crash In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern state of Bihar in July 2000. The Alliance Air aircraft, which carried 52 passengers and six crew, nose-dived into a house one kilometer short of the airport, killing 45 passengers, all crew members and two people on the ground. Air India had debt of 152 billion rupees ($3.3 billion) as of June, according to the government. It may post a loss of 54 billion rupees for the fiscal year ended March 31, compared with a loss of 55.5 billion rupees a year earlier, according to Civil Aviation Minister Praful Patel . International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. Like state-controlled Chinese carriers and Japan Airlines Ltd., Air India has sought government aid as it flies unprofitable routes and faces growing competition from carriers including Singapore Airlines Ltd. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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Air India Plane Crashes on Landing in Mangalore; 166 People Feared Dead

May 21, 2010

By Vipin Nair and Rakteem Katakey May 22 (Bloomberg) — An Air India plane overshot the runway while landing in the southern Indian city of Mangalore and burst into flames, killing as many as 166 people in India’s first fatal commercial aircraft crash in a decade. “Our present information is that all 166 people on board the plane are feared dead,” said Prabhat Sharma, the deputy commissioner of Mangalore district in southern Karnataka state. The plane “is almost completely burnt,” he said. There were 137 adults, 23 children and six crew on board, he said by telephone. The Boeing Co . 737-800 plane flying from Dubai to Mangalore crashed at 6:30 a.m. local time, Air India spokesman Swaminathan said by telephone. If all 166 people on board died, the crash would be the worst in India in 14 years, according to the Aviation Safety Network website. The Home Minister of Karnataka state, V.S. Acharya, said six or seven people may have survived. CNN-IBN television showed flames and thick smoke billowing from a forested area at the end of the runway. The channel said the plane crashed through a boundary wall and fell into a ravine. Firefighters had to cross a railway line and battle through trees to reach the wreckage, the channel said. Air India had debt of 152 billion rupees ($3.3 billion) as of June, according to the government. It may post a loss of 54 billion rupees in the fiscal year ended in March compared with a loss of 55.5 billion rupees last year, according to Civil Aviation Minister Praful Patel . Travel Rebounds Indian and international air travel has rebounded from last year’s slump because of an economic pick-up. Domestic Indian travel jumped 23 percent in January to 4.1 million passengers, according to the Civil Aviation Ministry. Worldwide international airline passenger traffic rose 6.4 percent that month, to the International Air Transport Association. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, said in a statement today. Over the next 20 years, Indian carriers will need 1,030 new aircraft worth $138 billion, it said. To contact the reporter on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net

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Abbott Laboratories to Buy Piramal Healthcare Solutions for $2.12 Billion

May 20, 2010

By Colin Keatinge (Corrects $400 to $400 million in second paragraph.) May 21 (Bloomberg) — Abbott Laboratories said it will buy Piramal Healthcare Ltd.’s Healthcare Solutions unit for $3.72 billion to become the biggest drug company in India. Shares of the Indian company fell after the announcement. Abbott will pay $2.12 billion initially and $400 million annually over the next four years, the Abbott Park, Illinois- based drugmaker said in a statement today. The Piramal purchase builds on Abbott’s acquisitions in emerging countries to tap demand as growth slows in the U.S., the world’s largest pharmaceutical market. Piramal dropped 4.8 percent to 543 rupees as of 11:34 a.m. in Mumbai trading, and India’s benchmark Sensitive Index lost 1.2 percent. To contact the reporter on this story: Colin Keatinge at ckeatinge@bloomberg.net

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India’s Central Bank Signals `Cautious’ Policy Amid Europe’s Debt Crisis

May 19, 2010

By Anoop Agrawal and Kartik Goyal May 20 (Bloomberg) — India’s central bank signaled it may raise interest rates in a measured manner as Europe’s debt crisis outweighs inflation concerns. Global economic conditions have changed in the past six weeks and a “cautious pace is the best way to go and that is the stance,” Subir Gokarn , the deputy governor in charge of monetary policy at the Reserve Bank of India, told reporters in Thiruvananthapuram, India, yesterday. “I am aware rates are quite out of line with inflation and the growth scenario.” India and China, the world’s fastest-growing major economies, are struggling to control inflation amid risks to growth emanating from debt woes of Greece, Portugal and Spain. Gokarn’s comments indicate the central bank may slow the pace of interest-rate increases even though Governor Duvvuri Subbarao described rising prices as a “big worry.” “Interest rates will go up, but in a gradual way,” said Dharmakirti Joshi , chief economist at Crisil Ltd., the Indian unit of Standard & Poor’s. Subbarao may raise borrowing costs by a quarter percentage point in the next monetary policy announcement on July 27, Joshi said, adding a move before that is unlikely. The Reserve Bank on April 20 raised its benchmark interest rates by a quarter point for the second time in a month, increasing the reverse repurchase rate to 3.75 percent and the repurchase rate to 5.25 percent. Protect Economy The government will protect the Indian economy from the crisis in Europe, Finance Minister Pranab Mukherjee said in an interview with the NDTV Profit television channel yesterday. India’s central bank unveiled its stance after the European Union and International Monetary Fund cobbled together a 110 billion-euro ($136.4 billion) rescue package for Greece on May 2 to prevent contagion. European leaders followed it up with an unprecedented emergency fund of as much as 750 billion euros to back countries facing instability and a program of bond purchases by the European Central Bank. Europe’s problems coincide with rising prices in India, with the benchmark wholesale-price inflation rate climbing 9.59 percent in April as demand for cars and houses increase. India’s industrial production grew 13.5 percent in March, rising more than 10 percent for a sixth straight month. In China, where industrial production rose 17.8 percent in April, consumer prices climbed at the fastest pace in 18 months, adding pressure on policy makers to raise interest rates and allow yuan gains. China has raised banks’ reserve requirements three times this year. Factory Output Factory output is gaining strength in India as wages rise. Salaries in India may grow at the fastest pace in the Asia Pacific this year, according to Hewitt Associates Inc., the Lincolnshire, Illinois-based human resources adviser. Cement production by companies including ACC Ltd. , India’s biggest cement maker, gained 10.1 percent in March, the government said on April 27. Concerns about Europe caused the Sensitive Index to fall the most in about four months yesterday, declining 2.8 percent on the Bombay Stock Exchange. The rupee weakened the most in 15 months, closing at 46.3550 per dollar in Mumbai, while the yield on the 10-year government bond fell five basis points to 7.44 percent, the lowest in more than five months. Subbarao and Gokarn are in Thiruvananthapuram for a meeting of the central bank’s board of directors today. The board includes Azim Premji , chairman of Wipro Ltd., India’s third- largest software provider, and Kumar Mangalam Birla , chairman of Hindalco Industries Ltd., the nation’s largest aluminum producer. To contact the reporter on this story: Anoop Agrawal in Thiruvananthapuram at Aagrawal8@bloomberg.net . Kartik Goyal in New Delhi at kgoyal@bloomberg.net

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Vodafone’s Colao Tackles Indian `Fiasco’ as Call Rates Plummet, Costs Rise

May 18, 2010

By Jonathan Browning May 19 (Bloomberg) — For Vodafone Group Plc Chief Executive Officer Vittorio Colao , India is failing to become the emerging-market powerhouse the company had hoped for. When the world’s biggest mobile-phone operator agreed to buy a 67 percent stake in Hutchison Essar Ltd. for $10.7 billion in 2007, it predicted “major contributions.” Instead, Vodafone yesterday booked a $3.3 billion charge for the unit, citing “intense price competition.” “India continues to look a fiasco,” said Mark James , an analyst at Liberum Capital in London. “There’s no doubt that regulation and competition have moved against them since they went into the country.” Vodafone’s difficulties in India, like those of Norway’s Telenor ASA, show the pitfalls of expanding in emerging markets as European phone companies counter slower growth at home. Vodafone’s outlook for India soured a year after its entry, when six new national licences were awarded. Price competition has pushed call rates to among the cheapest in the world. India’s seven largest operators face rates of less than 1 cent a minute. New operators “triggered very strong price declines,” Colao told reporters yesterday. “We are recognizing the pricing environment is different from what we had put in the acquisition business case.” Seeking Partners Vodafone may have to adjust its spending and seek partnerships with other operators to battle increased competition and rising spectrum auction costs, he said. “They’ve had network-sharing agreements in many other markets, and this is a potential way of avoiding auction prices getting out of control in India,” said Paul Marsch , an analyst at Berenberg Bank in London. Colao, the 48-year-old former McKinsey & Co. partner who took over in July 2008, is tweaking his predecessor Arun Sarin ’s strategy. Under Sarin, Vodafone entered markets such as India and Turkey to counter a slowdown in Europe. Colao is pushing managers to eke out more profit from existing operations. Newbury, England-based Vodafone and rivals are struggling to live up to investors’ expectations in India after growth in the world’s second-largest wireless market attracted a flurry of global companies, eroding prices and pushing up license fees. Telenor, the Nordic phone company that also made an Indian foray with the purchase of a majority stake in Unitech Wireless, on May 5 reported first-quarter income that missed analyst estimates as it extended spending on India. Spending on capital expenditure and investment will be “compatible with the new environment,” Colao said at a meeting with analysts yesterday. Indian Auction After the Essar acquisition in 2007, Vodafone had started a joint venture with Bharti Airtel Ltd., India’s largest mobile- phone operator, to share phone towers to help cut costs. “Having a tower company, sharing and collaborating on the infrastructure front is a mitigation, but for sure there is a limit,” the CEO said. The overcrowded India market also includes Reliance Communications Ltd. and Japan’s NTT DoCoMo Inc. India’s mobile market is still growing. About 19.9 million new mobile-phone connections were added in January, a record, according to an estimate by Shubham Majumder , regional head of telecommunications research at Macquarie Group Ltd. in Mumbai. License Bids Bids for an all-India license to offer faster wireless services reached 165 billion rupees ($3.6 billion) on the 33st day of an auction, the Indian department of telecommunication said yesterday. Nine mobile-phone carriers including Vodafone and Bharti are vying for the spectrum. Vodafone considered “where the auction will end up” when it took the impairment charge and included possible costs, Colao said yesterday. The charges in India may threaten Vodafone’s financial targets, says Morten Singleton , an analyst at Collins Stewart in London. The impairment on India “suggests costs are being squirreled away as exceptional items,” he said. The company yesterday said it targets an annual dividend per share growth of no less than 7 percent for the next three financial years after a 1.7 percent increase in full-year operating profit on job cuts and higher emerging markets sales. The dividend target “will prove much harder to achieve,” Singleton said. With spectrum costs increasing, there may be a time this year “we might be uncovered for the dividend,” Chief Financial Officer Andy Halford said yesterday. Colao remains confident that the Indian investment was the right decision. “We are very glad we have established the joint venture, I think it is a very good thing,” he said yesterday. Essar Option In the 12 months ended March, Vodafone’s Indian unit kept its No. 2 position in the market as it won 32 million customers and in March exceeded the 100 millionth customer mark. Since its entry into India in 2007, the division gained about 1 percentage point annually in revenue market share and moved the business into operating free cash flow generation. The expansion has come at a price. Vodafone said yesterday profitability in the Asia Pacific and Middle East region, based on earnings before interest, taxes, depreciation and amortization, fell in the year ended March by 2.2 percentage points, “primarily reflecting lower margins in India.” Colao’s pledge to cut spending in India may be tested, with another $5 billion investment around the corner. Essar Group’s option to sell its remaining 33 percent stake in the mobile- operator to Vodafone for $5 billion opened in May for 12 months. An Essar spokesman said this month that the company “is happy with its investment in Vodafone Essar” and that “a decision on exercise of the put, if at all it is exercised, will only be taken at the appropriate time.” “You’ve had severe competition, you’ve got a lot of players, you are about to get a spectrum differential between operators,” said Guy Peddy , an analyst at Macquarie Securities in London. “The status quo is probably the one thing that is unsustainable.” To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net .

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StanChart launches first Indian Depository Receipt

May 16, 2010

StanChart launches first Indian Depository Receipt

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World’s Largest Tea Company Amasses $250 Million Fund to Grow Even Bigger

May 14, 2010

By Arijit Ghosh and Thomas Kutty Abraham May 14 (Bloomberg) — McLeod Russel India Ltd. , the world’s biggest tea grower, plans to use rising prices to build a “war chest” of as much as $250 million to acquire companies. The plantation company, based in Kolkata, may buy tea companies in India and Africa as it targets a 50 percent increase in production to 150 million kilograms in three to four years, said Aditya Khaitan , managing director of McLeod Russel. McLeod plans to “wait for the tea cycle to turn and wait for people to exit plantations,” Khaitan said in an interview at his office today. “There is no way for us to grow organically.” Rising prices helped the 141-year-old company report record quarterly profit in the three months ended Sept. 30 and prompted it to acquire plantations in Uganda and Vietnam. Prices in North India, which accounts for 70 percent of the nation’s output, may rise as much as 15 percent as demand for the beverage rises and costs increase for companies including Tata Tea Ltd. , the owner of the Tetley brand, and Unilever Plc. McLeod’s shares , which have more than doubled in the past year, declined 3.6 percent to 208.60 rupees in Mumbai. The benchmark Sensitive Index slipped 1.6 percent, paring its gains in the past 12 months to 43 percent. The average prices of tea sold in auctions in north India rose 14 percent to 97.4 rupees ($2.2) a kilogram in February from a year ago, according to data from the state-run Tea Board of India . Overseas Plantations The company completed the acquisition of James Finlay Uganda Ltd., which makes and markets 15 million kilograms of tea annually, McLeod said on Jan. 18. It bought U.S.-based Olyana Holdings LLC for $2.75 million in August last year to gain control of Gisovu Tea Co., a Rwandan plantation company. “It makes sense for Indian tea companies to look for plantations overseas as asset prices in India are high at the moment,” said Anup Ranadive , an analyst at Tower Capital & Securities Ltd. in Mumbai. “McLeod, with most of its gardens in Assam, will continue to command a premium and that should help them generate enough cash.” Khaitan expects India’s demand for the beverage to rise 3.5 percent annually, outpacing the estimated 1.5 percent increase in production this year. India’s output last year dropped 0.18 percent to 978.9 million kilograms, according to the Tea Board. Exports declined 5.7 percent to 191.4 million kilograms. “India is becoming a story in itself,” Khaitan said. “Money is flowing into rural India and they are spending it on basic necessities.” To contact the reporters on this story: Arijit Ghosh in Kolkata at aghosh@bloomberg.net ; Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

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DP Bets $1 Billion Kochi Port Will Challenge Colombo Grip on India Trade

May 12, 2010

By Vipin V. Nair May 12 (Bloomberg) — DP World Ltd. said as much as $1 billion may be invested in the first Indian port able to handle the largest container ships as the company tries to challenge Colombo’s grip on India’s maritime trade with Europe and China. “What we are trying to do is compete in the regional and international market,” Anil Singh , the company’s India head, said in an interview in Mumbai yesterday. “It will change the logistic pattern of the country.” The new terminal in Kochi, south India, which is due to open in August, will be able to handle the 13,000-container capacity ships commonly used on Asia-to-Europe routes. Presently, these long-haul vessels are unable to stop in India, which forces the nation’s importers and exporters to spend an extra $150 million a year ferrying goods to and from Colombo, Singapore or Dubai, Singh said. DP World, controlled by Dubai World, spent about 13 billion rupees ($288 million) on the first phase of the new Kochi facility, which will have an initial capacity of 1 million twenty-foot equivalent containers a year, Singh said. The remainder of the investment will cover a second phase, which will add another 3 million boxes of capacity within five years, he said. Container Corp . of India Ltd. is among three other partners in the terminal venture. London Listing DP World will pay for its share of the investment using its own funds, Singh said. Financial difficulties at Dubai World have had no impact on expansion plans, he said. DP World, which is preparing to sell shares in London, has risen 12 percent this year in Dubai trading. The Indian government is also dredging Kochi port and building rail links to help boost traffic, Singh said. The government has also agreed to reduce port fees that are presently more than eight times higher than Colombo’s for larger ships to help boost traffic, he said. These fees are separate from terminal charges. Kochi aims to lure large container vessels from Colombo, which presently handle as much as 40 percent of India’s transshipment trade , according to Singh. Indian shippers use the Sri Lankan port because of lower costs, deepwater facilities and looser regulations. Sri Lanka, some 31 kilometers (19 miles) southeast of India, is also boosting its port facilities to tap growing Asia- Europe trade and rising intra-Asia traffic. Colombo is set to build a fourth container terminal, while Hambantota port is also planning to add facilities. 8 Million Containers DP World already handles almost half of India’s 8 million annual container volume at five ports across the country, Singh said. The company, which has spent about 80 billion rupees in India, is pursuing further projects and expansion plans in the country, he said. Worldwide, the port operator runs terminals in 31 countries from the U.K. to China. It handled 43.3 million containers at 50 ports last year. The company, now the world’s fourth-largest container terminal operator, began services about 35 years ago with one port. In 2006, it bought Peninsular & Oriental Steam Navigation Co. for $6.8 billion. Dubai World, the state-owned holding company that owns 80 percent of DP World, is seeking to restructure as much as $22 billion of debt. The company has said that DP World isn’t a part of its debt restructuring. To contact the reporter on this story: Vipin V. Nair in Mumbai at Vnair12@bloomberg.net .

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Video: Infosys, Wipro Say European Customers Limit Spending: Video

May 10, 2010

May 10 (Bloomberg) — Bloomberg-UTV’s Balakrishnan reports on how concerns about euro-region’s economic outlook are affecting sales of Indian information-technology companies. European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. (Source: Bloomberg)

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Goldman Sachs’s Gupta Did Business For Years With Galleon’s Raj Rajaratnam

May 5, 2010

By Mehul Srivastava, John Helyar and Miles Weiss      May 6 (Bloomberg) — Rajat Gupta, the Goldman Sachs Group Inc. director who is being investigated by U.S. authorities over his links to Galleon Group LLC founder Raj Rajaratnam , had a long-standing business relationship with the billionaire hedge fund manager. Interviews, public records, lawsuits and regulatory filings show a 13-year history of co-investing and other business collaborations between Gupta, 61, the former worldwide head of consulting firm McKinsey & Co. , and Rajaratnam, 52, the central figure in the Galleon insider trading probe. Rajaratnam has a stake in a fund managed by New Silk Route NSR Partners LLC, founded by Gupta and three others in 2006 to invest in South Asian companies, according to a New Silk Route spokeswoman. The fund owns stakes in at least 11 Indian companies, including cell phone tower operator Reliance Infratel Ltd. and the Cafe Coffee Day chain.      “Mr. Rajaratnam has had a well-known relationship with Mr. Gupta for many years, and it is one that he is both proud and fond of,” Rajaratnam’s spokesman, Jim McCarthy, said yesterday in a statement. “Their association as investors has led to many successful ventures around the world and made a large and positive impact for a long list of worthy businesses and charities. But just as important, they have always conducted those efforts with integrity and diligent attention to sound, ethical practices.” Criminal Charges Rajaratnam, who was arrested Oct. 16, is fighting criminal charges and U.S. Securities and Exchange Commission civil claims that he used inside information to trade shares of companies including Advanced Micro Devices Inc. He denies any wrongdoing. U.S. investigators are examining whether Gupta tipped off Rajaratnam to a $5 billion investment in Goldman Sachs by Warren Buffett ’s Berkshire Hathaway Inc. , a person with direct knowledge of the inquiry said April 23. “In any insider trading investigation, prosecutors will be looking at relationships to try to determine if any improper information was passed between them,” said Robert Mintz , a former federal prosecutor in New Jersey who is a partner with McCarter & English. “The nature of the relationship, the length of the relationship, the frequency of contact and the subsequent investing strategy are all areas that are likely to be scrutinized.” Gupta, who earned an MBA at Harvard Business School, serves on the boards of American Airlines parent AMR Corp., Procter & Gamble Co., Harman International Industries Inc., Genpact Ltd., the business outsourcing company, and Russia’s Sberbank. Gupta announced earlier this year he would not seek re-election to the Goldman Sachs board. Gupta’s attorney, Gary Naftalis of Kramer, Levin, Naftalis & Frankel LLP, denied that his client had done anything wrong. ‘Business Dealings’ “During the course of his long career, Rajat Gupta has been involved with many business dealings and philanthropic activities,” he said in a May 4 statement. “In all his activities, he has always conducted himself with unquestioned integrity.” Gupta and Rajaratnam have ties through Indian business organizations. In 2005, they were speakers at an Indian Institute of Technology conference. The two men and their wives, Anita and Asha, attended galas staged by the American India Foundation, on whose council of trustees both served. In May 2009, they were among the “creme de la creme crowd” that dined on Tandoori lamb chops, raising $1.5 million for charity in an auction while honoring KKR & Co. co-founder Henry Kravis , according to Indian-American society website Lassi With Lavina. Personal Investments In 1997, Gupta and Rajaratnam were both looking for personal investments, and when the venture-capital firm TeleSoft Partners LP of Foster City, California, sought limited partners, both men seized the opportunity. By the end of 1998, Gupta’s position was worth $213,570 and Rajaratnam’s $86,451, according to documents filed as part of a lawsuit. In early 2006, Gupta and Rajaratnam joined Mark Schwartz , the former chairman of Goldman Sachs, and Parag Saxena , the former chief executive officer of Invesco Private Capital, to start a blended hedge fund and private equity company called Taj Capital Partners Asia Fund LP. They planned to hire a 50-person team to invest about $2 billion in India and neighboring countries, according to an investor prospectus. Change Plans By December 2006, plans had changed: The fund was renamed New Silk Route, the hedge fund was dropped and the fund size reduced to $1.34 billion, according to documents filed with the SEC in October 2008. While Rajaratnam was not a principal in New Silk Route, he took a stake that by Oct. 30, 2009, was “much less than 5 percent,” said the New Silk Route spokeswoman. Rajaratnam also created a fund merging the Galleon and New Silk names, called the Galleon International Master Fund SPC Ltd.-New Silk Route Pipe Segregated Portfolio. The SEC filings don’t reveal whether Gupta or New Silk Route were involved in the fund. A Gupta spokesman declined to comment. Still, in one case, the principals at Gupta’s New Silk Route brought an investment opportunity to Rajaratnam’s fund after passing on it themselves, according to a person familiar with the transaction. The opportunity was a stake in Firstsource Solutions Ltd. , a Mumbai-based outsourcing firm that was about to go public. Rajaratnam’s fund went on to accumulate a 4.86 percent stake, according to FirstSource’s 2009 annual report. In early 2007, New Silk Route and Galleon International Master Fund SPC Ltd. bought stakes of less than 1 percent in Reliance Infratel in a single share agreement executed July 30, 2007, according to a prospectus the company filed with Deutsche Bank AG. Reliance Infratel, a cell phone tower operator, is part of Reliance Communications Ltd., one of India’s largest mobile phone companies. $1.2 Billion to Invest When Gupta and his partners launched New Silk Route in 2006, they had $1.2 billion to invest after paying salaries to themselves and staff, according to SEC filings. In 2007, Gupta and his partners found five companies in India to invest in — with investments ranging from the $21 million investment in Reliance Infratel to $68 million in INX Media Pvt Ltd., a media and television company with headquarters in Mumbai, according to data collected by Venture Intelligence, a Chennai-based research firm that tracks private equity in India. In 2008, it made two deals, for a total of $64 million. In February 2009, New Silk Route said “with a substantial portion of capital still uncommitted, the fund will be an active investor in the region over the next 12-18 months,” according to a press release. It made two more deals in 2009, for $76 million. So far this year, New Silk Route has backed two companies to the tune of $135 million, according to Venture Intelligence. New Silk Route has invested less than half of its fund, or about $468 million in publicly disclosed transactions, according to Venture Intelligence. To contact the reporters on this story: Mehul Srivastava in New Delhi at msrivastava6@bloomberg.net ; John Helyar in Atlanta at jhelyar@bloomberg.net ; Miles Weiss in Washington at mweiss@bloomberg.net

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Australia Will Impose 40% Tax on Resource Company Profits in Overhaul Plan

May 2, 2010

By Gemma Daley and Marion Rae May 2 (Bloomberg) — Australia will impose a 40 percent tax on the profits of resource companies like BHP Billiton Ltd. and Rio Tinto Group to pay for infrastructure, retirement and company levy reforms as part of the nation’s broadest overhaul of its tax system since the Second World War. The resources tax, scheduled to start in 2012 after talks with state governments, will yield A$12 billion ($11.1 billion) in its first two years, according to the government’s response to Treasury Secretary Ken Henry ’s 10-year tax plan released today. The government will use the revenue to create a A$5.6 billion infrastructure fund, cut company taxes to 28 percent in mid-2014 from the current 30 percent and boost retirement funds, now worth A$1.3 trillion. “This will use super profits on resources owned by all Australians,” Prime Minister Kevin Rudd told reporters in Canberra, saying he’s prepared for a backlash to the measures. “This will help convert Australia’s strong economic position today into enduring prosperity.” The government, which has led opinion polls before an election later this year, commissioned the tax review two years ago to create a simpler and fairer system to meet the needs of an ageing population. One quarter of a projected population of 36 million Australians will be aged 65 and over by 2050, increasing pressure on hospitals in a country where six out of 10 people live in areas with too few doctors. Clash With Companies The changes promise to set up a clash between Rudd and the resources companies that make up 9 percent of the economy. The moves also help more directly tap into the booming demand for the nation’s commodities from China and India. Chinese and Indian demand for resources from Australia, the world’s biggest exporter of coal, iron ore and alumina, helped the A$1.2 trillion economy skirt recession during the global financial crisis. China is the nation’s largest resource customer. The introduction of a 40 percent resource rent tax would make Australia the most highly-taxing mining nation, cutting its competitiveness, Citigroup Inc. said on April 28 before the release of the Henry tax review. BHP, the world’s biggest mining company with 51 percent of its assets in Australia, may have its earnings cut by 19 percent under the tax, Merrill Lynch & Co. said on April 27. Rio, the world’s second-largest iron ore exporter, which has about a third of its assets in Australia, may have its earnings cut by as much as 30 percent. Resource Deposits The resources tax, scheduled to begin on July 1, 2012, will be paid on the realized value of resource deposits, the government documents show. That is the difference between the revenue generated from resource extraction and associated costs. The Australian government will also credit companies for resource taxes paid to the states. The government will also give a tax concession for resource exploration, including geothermal, affecting 4,300 companies, Treasurer Wayne Swan said. “A fair share of the proceeds of the boom should be dedicated to a stronger and broader economy,” Swan told reporters in Canberra. “Australians have missed out on billions of dollars from the last boom and we can’t make the same mistake again.” The resource tax will fund the government’s response to Henry’s 1,500-page review Swan said. Ten of the nation’s 125 local, state and federal taxes reap 90 percent of revenue — including income and company taxes, mining royalties, property taxes and the goods and services tax. The plan drawn up by Henry cuts the number of taxes and builds so-called social equity. Company Tax The company tax rate, reduced to 30 percent from 36 percent by the previous Liberal-National government, will be cut to 28 percent by mid-2014, with 720,000 small businesses getting a one-year head-start. The government may decrease the rate further. The government will also increase the amount companies have to pay into people’s retirement fund to 12 percent of their gross salary in mid-2019. Australia will also make it more attractive for some 8.4 million Australian workers to increase their own contributions to the pool, which is currently A$1.34 trillion. “That will add some A$85 billion in the next decade to Australian superannuation funds,” Swan said. “It will build up the private savings of Australians.” In total, the government’s tax policy changes will add 0.7 percent a year to the nation’s economy. Economic growth in Australia will accelerate to 3.5 percent in 2011 from 3 percent this year, and the country will continue to be among nations leading the world on raising borrowing costs, the International Monetary Fund said on April 21. Glenn Stevens , the first Group of 20 central bank governor to raise rates after the global recession, also expects Australia’s economic growth to strengthen this year. To contact the reporters on this story: Gemma Daley in Canberra at gdaley@bloomberg.net Marion Rae in Canberra at mrae3@bloomberg.net ;

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Karzai, Singh to Discuss Efforts to Halt Taliban Attacks on Indian Workers

April 25, 2010

By Eltaf Najafizada and James Rupert April 26 (Bloomberg) — Afghan President Hamid Karzai arrived in New Delhi today for talks likely to focus on security for 3,500 Indian workers in Afghanistan who have become targets for attacks by Taliban guerrillas. Karzai will meet Prime Minister Manmohan Singh in an overnight stop before both leaders travel to Bhutan tomorrow for a South Asian summit. The talks come two months after suicide bombers killed at least 17 people in Kabul, including Indian government officials. “President Karzai will talk with Prime Minister Singh about counter-terrorism matters,” including the Feb. 26 attack, presidential spokesman Waheed Omar told reporters yesterday. Seventeen Indians have been killed in Afghanistan since 2008, Foreign Minister S.M. Krishna told parliament in New Delhi last week. The Indian and Afghan governments have accused Pakistan’s military intelligence of backing at least some of those attacks, which come as Pakistan opposes the breadth of India’s role in aiding its western neighbor. India has “no plan to scale down” its presence in Afghanistan, Krishna said, according to a statement on a Ministry of Overseas Indian Affairs Web site. India has been a main backer of Karzai’s government, providing $1.2 billion in aid since 2002 that has included the construction of highways, power lines and Afghanistan’s new parliament building. India provides 1,000 scholarships each year for Afghan students to study in India, the biggest such education contribution, Omar said. Karzai has maintained close ties with India since his own university studies there in the early 1980s. Neighboring Pakistan supported his foe, the Taliban movement, until the U.S. forced it to break relations after the September 2001 attacks. Pakistani politicians complain that India’s four consulates in Afghanistan are used to covertly destabilize Pakistan, which India denies. Pakistan in turn rejects Indian and Afghan assertions that intercepted communications showed Pakistan’s military intelligence network helped its longtime ally, Taliban commander Jalaluddin Haqqani , launch attacks on Indians in Kabul. Haqqani’s faction claimed responsibility for the October 2009 suicide bombing of India’s embassy in Kabul, which killed the mission’s defense and press attachés. That strike, and a July 2008 bombing killed a total of 75 people. Indians in Afghanistan, many of whom work on road-building or other technical assistance projects, now live under tightened security, advised by their embassy to vary routes and schedules. To contact the reporter on this story: James Rupert in New Delhi at jrupert3@bloomberg.net ; Eltaf Najafizada in Kabul at enajafizada1@bloomberg.net .

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India, Brazil Central Bankers Back U.S. Stance on Yuan Before G-20 Meeting

April 20, 2010

By V. Ramakrishnan and Anoop Agrawal April 21 (Bloomberg) — Central bank governors in India and Brazil backed a stronger Chinese yuan, siding with U.S. President Barack Obama before a meeting of the Group of 20 nations this week. Exports from China to India have grown faster than Indian shipments to its northern neighbor “and that obviously is a reflection of differences in the exchange-rate management,” Reserve Bank of India’s Duvvuri Subbarao told reporters in Mumbai yesterday. Brazil’s Henrique Meirelles told a senate hearing yesterday in Brasilia it was “absolutely critical” that China should let its currency appreciate. Obama, who considers the yuan “undervalued,” is seeking to gain broader support from finance officials of the G20, who will discuss outlook for the global economy in Washington for three days starting April 22. Speculation that China may scrap the yuan’s peg to the dollar intensified this month after Treasury Secretary Timothy F. Geithner delayed a report that could brand the nation a currency manipulator. “This meeting will be the first test by the U.S. to use a multilateral forum to press China into action on its currency,” Philip Wee , a Singapore-based senior currency economist at DBS Group Holdings Ltd. wrote in a research note yesterday. The discussions will include a range of topics including currencies and a communiqué will be released on April 23, a U.S. Treasury Department official, who declined to be identified, said yesterday. Bank Indonesia Deputy Governor Hartadi Sarwono declined to discuss his position before the meeting and the Bank of Korea also preferred not to comment when contacted yesterday. Giving Opinions India will give its opinion if the issue is raised in the G20 meeting, Subbarao said. “When it is discussed we will certainly give our opinion or view on the subject,” he said. “If China revalues the yuan, it will have a positive impact on our external sector,” Subbarao said. “If some countries manage their exchange rate and keep them artificially low, the burden of adjustment falls on some countries that do not manage their exchange rate so actively.” China has pegged its currency at about 6.83 against the dollar since July 2008, after allowing it to rise 21 percent in the previous three years. China won’t revalue until the middle of the year when it can see evidence of sustainable growth and inflation, Win Thin , a New York-based strategist at Brown Brothers Harriman & Co. said this week. Calls for revaluation will delay the process, he said. Twelve-month non-deliverable yuan forwards traded at 6.622, reflecting bets the currency will strengthen 3.1 percent from the spot rate. The Brazilian real has gained 28 percent against the yuan in the past year, while the rupee climbed 13 percent. India’s Imports India imported $14.9 billion of goods in the six months to September 2009 from China, more than double the exports from the second-ranked U.S. India shipped $3.9 billion of goods to China in the same period. U.S. lawmakers have urged Obama to step up pressure on China, accusing officials in Beijing of keeping the currency artificially weak to gain export advantage. Chinese President Hu Jintao told Obama on April 13 in Washington that the country wouldn’t yield to “external pressure” in deciding when to adjust the yuan. The Chinese government will decide on the valuation of its currency and is seeking a stable yuan to control speculative capital inflows, Yao Jian , spokesman for the Ministry of Commerce, told reporters April 15. Brazil Versus China China boosted exports to Argentina, Uruguay and Paraguay, members of the Brazil-led Mercosur trade bloc, by 7.3 percent to $4.8 billion in the first eight months of 2009 from two years earlier, while Brazilian sales to its neighbors fell 18 percent to $9.6 billion during the same period. Chinese-made products such as tires and stereo speakers are the target of 26 Brazilian anti-dumping measures, more than any other country and nearly half of all 68 in place, according to Brazil’s Trade Ministry. Soy and iron ore accounted for 66 percent of $20 billion in Brazilian sales to China last year. “It’s absolutely critical that China appreciate its currency to ensure equilibrium in the global economy,” said Brazil’s Meirelles. To contact the reporter on this story: V. Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net ; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net ; Andre Soliani Costa in Brasilia at asoliani@bloomberg.net .

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Singapore Revalues Currency After Raising Estimates for Growth, Inflation

April 13, 2010

By Patricia Lui April 14 (Bloomberg) — Singapore unexpectedly revalued its currency, triggering the biggest gain in a year, after the government raised forecasts for economic growth and inflation. The Monetary Authority of Singapore said it will seek a “modest and gradual appreciation” in the local dollar and shift to a stronger range for currency fluctuations, the first such combined move in its 39-year history. The trade ministry said the economy will expand as much as 9 percent in 2010, compared with a previous outlook of 6.5 percent, after the fastest growth since at least 1975 in the first quarter. Currencies across Asia rallied as investors bet governments will switch to fighting inflation from stimulating growth, after oil, copper and aluminum prices jumped more than 60 percent in the past year. The decision adds to signs that China, which will probably report its fastest growth in three years tomorrow, will end the yuan’s 21-month-old peg to the dollar. “Singapore’s move might reflect policymakers’ belief that China is possibly close to moving on the yuan,” said Brian Jackson , an emerging-markets strategist at Royal Bank of Canada in Hong Kong. “It’s part of the broader trend across Asia that policymakers are moving toward a tighter stance as inflation is driven by stronger commodities prices.” Withdraw Stimulus Singapore’s dollar rose to the strongest level since August 2008, Malaysia’s ringgit advanced toward its highest in 23 months and the South Korean won approached an 18-month high. The Monetary Authority of Singapore, which uses the exchange rate rather than interest rates to conduct monetary policy, joins policy makers from India to China who have begun withdrawing monetary stimulus this year, seeking to check asset- price bubbles. China has twice ordered banks to raise the share of their assets held in reserve. India increased interest rates last month for the first time in almost two years. Australia’s central bank has boosted borrowing costs in five out of the past six meetings. “This opens up the rest of Asia to allow further appreciation of their currencies, with the Korean won, Malaysian ringgit, Indian rupee and Taiwan dollar to lead the charge,” said Bernard Yeung , Hong Kong-based head of currency trading for Asia at National Australia Bank Ltd. MAS Statement The MAS will “re-center the exchange-rate policy band at the prevailing level of the Singapore nominal effective exchange rate” and “shift the policy band from that of zero appreciation to one of modest and gradual appreciation,” according to a statement issued today following a semi-annual currency review. There will be no change to the width of the band. Singapore’s dollar rose as much as 1.1 percent to S$1.3777 against the greenback, according to data compiled by Bloomberg. It last traded at S$1.3785 as of 11:41 a.m. local time from S$1.3923 in New York yesterday. Penn Nee Chow , an economist at United Overseas Bank Ltd., Singapore’s second-largest lender by market value, was the only one of 13 economists who predicted today’s central bank move in a Bloomberg survey “It was a quite hawkish stance from the MAS,” said Chow . “According to our model, it looks to be a 0.6 percent appreciation of the Singapore dollar’s trade-weighted index.” Growth Accelerates Singapore’s gross domestic product rose an annualized 32.1 percent in the first quarter from the previous three months, after shrinking 2.8 percent in the October-to-December period, the trade ministry said today in its preliminary estimate. That was faster than the 18.4 percent median estimate of economists in a separate Bloomberg survey. “We’ve just seen the realization that Singapore is a great place to do business,” said Donald Gimbel , senior managing director at New York-based Carret Asset Management LLC, in an interview with Bloomberg Television. “We will gradually be adding to our position” in Singapore stocks. “Companies that are doing a lot of business in the People’s Republic of China, like Midas is a good example.” The benchmark Straits Times Index advanced to a 22-month high, rising as much 1 percent to 3,001.16. DBS Group Holdings Ltd., Southeast Asia’s biggest lender, climbed as much as 3.6 percent. Neptune Orient Lines Ltd., owner of Southeast Asia’s largest container line, surged as much as 7 percent. Midas Holdings Ltd., which designs and makes polyethylene pipes, was little changed, with shares up 25 percent this year. ‘Behind the Curve’ The government revised its inflation target for this year to between 2.5 percent and 3.5 percent, compared with an earlier projection of 2 percent to 3 percent. Consumer prices rose 1 percent in February from a year earlier, the fastest pace since March 2009, official data show. “Singapore’s GDP release represents the start of a series of strong Asian first-quarter numbers which will emphasize that central banks across the region have fallen significantly behind the curve,” said Robert Prior-Wandesforde , an economist at HSBC Holdings Plc in Singapore. With assistance by Lilian Karunungan , Haslinda Amin and Anna Kitanaka in Singapore, and Frances Yoon in Hong Kong. Editor: Simon Harvey , Sandy Hendry To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net

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Singapore Dollar Jumps on One-Time Revaluation as Growth Estimates Raised

April 13, 2010

By Patricia Lui April 14 (Bloomberg) — Singapore unexpectedly revalued its currency after the government raised its estimate for economic growth and said inflation will accelerate faster than expected. The Monetary Authority of Singapore , which uses the exchange rate rather than interest rates to conduct monetary policy, said it will seek a “modest and gradual appreciation” in the local dollar after shifting to a stronger range for currency fluctuations. The trade ministry said the economy will expand as much as 9 percent in 2010, compared with a previous outlook of 6.5 percent. The Singapore dollar jumped the most in 10 months and currencies across Asia rallied as the decision showed regional governments are shifting to fighting inflation from stimulating growth as China drives a global economic recovery. Singapore property and car prices have climbed as the recovery boosts demand for Capitaland Ltd. apartments and Toyota Motor Corp. automobiles. “This opens up the rest of Asia to allow further appreciation of their currencies, with the Korean won, Malaysian ringgit, Indian rupee and Taiwan dollar to lead the charge,” said Bernard Yeung , Hong Kong-based head of currency trading for Asia at National Australia Bank Ltd. Singapore Dollar Rallies Singapore’s dollar rose as much as 1 percent to S$1.3791 against the greenback, its biggest gain since June 2009 and the strongest level this year, according to data compiled by Bloomberg. It last traded at S$1.3799 as of 9 a.m. local time from S$1.3923 in New York yesterday. The Monetary Authority of Singapore will “re-center the exchange-rate policy band at the prevailing level of the Singapore nominal effective exchange rate” and “shift the policy band from that of zero appreciation to one of modest and gradual appreciation,” according to a statement issued today following a semi-annual currency review. There will be no change to the width of the band. The revaluation was forecast by only one of the 13 economists surveyed by Bloomberg News, while just six predicted favoring appreciation. The remainder saw no change in policy. Gross domestic product rose an annualized 32.1 percent in the first quarter from the previous three months, after shrinking 2.8 percent in the October-to-December period, the trade ministry said today in its preliminary estimate. That was faster than the 18.4 percent median estimate of economists in a separate Bloomberg survey. Inflation Target Singapore revised its inflation target for this year to 2.5 percent to 3.5 percent, compared with an earlier projection of 2 percent to 3 percent. Consumer prices rose 1 percent in February from a year earlier, the fastest pace since March 2009, official data show. “It was a quite hawkish stance from the MAS,” said Penn Nee Chow , an economist at United Overseas Bank Ltd., Singapore’s second-largest lender by market value. “According to our model, it looks to be a 0.6 percent appreciation of the Singapore dollar’s trade-weighted index.”

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Pakistan’s Gilani Says He Opposes Afghan Government’s Talks With Taliban

April 12, 2010

By Indira A.R. Lakshmanan April 13 (Bloomberg) — Pakistani Prime Minister Yousuf Raza Gilani said he opposes the Afghan government’s efforts to engage Taliban leaders in talks to promote national reconciliation. “Militants just want to destabilize the system,” Gilani told reporters at a lunch in Washington yesterday. Afghan President Hamid Karzai has campaigned for inviting Taliban leaders to negotiations to broker an end to an almost nine-year conflict that has 89,000 U.S. troops and 44,000 allied forces stationed in Afghanistan. The U.S. hasn’t endorsed such talks, advocating instead for job creation for low-level fighters rather than reconciliation with top militants. Gilani’s government itself negotiated cease-fires or peace deals with the Pakistani branch of the Taliban in 2008 and 2009, pacts that later fell apart. Starting in May of last year, Pakistan launched sustained military offensives in Swat and Waziristan, territories in its northwestern region that border Afghanistan. The campaigns won praise from U.S. officials. Still, Gilani said, socio-economic investments to address the root causes of the insurgency are as essential as military action. Militant violence and suicide bombings have spurred the “flight of capital and there is no investment in Pakistan,” he said, calling for international capital to return. Gilani is attending President Barack Obama ’s two-day nuclear security summit that brought leaders and senior representatives from 47 nations to Washington. Access to Technology The prime minister said he told Obama April 11 that Pakistan wants access to U.S. technology for nuclear power generation, in a deal similar to the 2008 agreement that allowed for U.S.-India civil-nuclear cooperation. Both India and Pakistan conducted nuclear tests in 1998, making them subject to U.S. sanctions that were lifted by President George W. Bush ’s administration in 2001. Gilani said he is confident his country has adequate safeguards to prevent atomic material from being trafficked or falling into the hands of terrorists. He said Pakistan is following all United Nations regulations and that its continued enrichment of uranium to weapons grade is necessary to maintain “minimum deterrence” against India. Pakistan is a “responsible nuclear state” that is suffering its “worst-ever energy crisis with serious implications for our national economy,” he said. “Civil nuclear power generation, hence, is an essential requirement of our national energy strategy.” Interest in India In India, Asia’s third-biggest economy, GE Hitachi Nuclear Energy, a subsidiary of Fairfield, Connecticut-based General Electric Co. , and Monroeville, Pennsylvania-based Westinghouse Electric Co. , a subsidiary of Tokyo’s Toshiba Corp. , would be among the companies bidding for nuclear energy contracts worth at least $10 billion. More than 30 U.S. nuclear-industry suppliers have expressed interest. Gilani said Obama expressed his interest in improved relations between India and Pakistan, neighbors and rivals who have fought three wars since their partition and independence in 1947. He didn’t say how the two countries might resolve the conflict over the disputed territory of Kashmir. India blames Pakistan for aiding and sheltering domestic terror groups that Indian and U.S. intelligence agencies have linked to attacks on India, including the November 2008 attack in Mumbai that claimed 166 lives. Indian Prime Minister Manmohan Singh , also in town for the nuclear summit, urged Obama in their meeting April 11 to pressure Gilani to rein in the banned Pakistani terror group Lashkar-e-Taiba, whose name means “Army of the Pure,” according to Indian Foreign Secretary Nirupama Rao . ‘Brought to Justice’ If there’s more evidence provided by India of the involvement of the group, “they’ll be brought to justice,” Gilani said. The Indian and Pakistani leaders, who two months ago reopened stalled dialogue for the first time since the Mumbai attacks, have no plans to meet in Washington, Gilani said. Asked whether Obama had sought Pakistan’s help in pressuring Iran to halt its suspected pursuit of nuclear weapons, Gilani said the issue hadn’t come up. There should be no fear in the U.S. that Pakistani nuclear technology or materials might be diverted to Iran, he said. Pakistan is a “very responsible nuclear state; how can they even think that?” he said. Khan Network The U.S. State Department blames an illicit nuclear technology network run by Abdul Qadeer Khan , a Pakistani nuclear scientist who takes credit for building his country’s nuclear program, for having “lasting implications for international security.” Khan admitted responsibility for selling nuclear bomb technology to Iran, North Korea and Libya, among other countries, after the International Atomic Energy Agency presented evidence of the sales in 2004. Then-President Pervez Musharraf of Pakistan pardoned Khan and placed him under house arrest. His house arrest was lifted by a Pakistani court last year. U.S. investigators have long sought access to Khan, a former head of Pakistan’s nuclear and missile programs. Asked why his government wasn’t making Khan available, Gilani said “that chapter is closed,” and insisted Khan “is being regulated.” The Pakistani leader said he told Obama that the “biggest mistake of the U.S.” after its military campaign that ousted the Taliban from power in Afghanistan in 2001 was to leave “a vacuum” that allowed militants to return. To contact the reporter on this story: Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net

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MasterCard Appoints Ajay Banga Chief Executive Officer to Replace Selander

April 12, 2010

By Nikolaj Gammeltoft April 12 (Bloomberg) — MasterCard Inc. , the second-biggest electronic-payments network after Visa Inc., named Ajay Banga chief executive officer, 10 months after hiring him as a potential successor to Robert W. Selander . Banga, 50, will take the top position on July 1, the Purchase, New York-based company said today in a statement. Selander, 59, will continue as executive vice chairman and a member of the board of directors until he retires on Dec. 31. Banga joined MasterCard as president and chief operating officer from Citigroup Inc. last August, and was given a $4.2 million signing bonus he could keep if he wasn’t named CEO by June 30, 2010, according to a regulatory filing . Banga will retain his title as president when he becomes CEO. “Ajay has demonstrated extraordinary leadership and insight, and I know he is the ideal candidate to lead MasterCard moving forward,” Selander, who was named CEO in 1997, said in the statement. MasterCard’s fourth-quarter earnings fell short of most Wall Street estimates as rebates and incentives climbed 35 percent from a year earlier. Visa reported earnings that exceeded forecasts. Both networks are benefiting from consumers’ increased shift to plastic. Card-based transactions were projected to exceed cash and checks for the first time in 2009, according to the Nilson Report, an industry newsletter based in Carpinteria, California. By 2013, card- and electronic-based payments will account for 63 percent of an estimated $9 trillion in U.S. consumer transactions, Nilson said. Kraft, Citigroup Banga, who is a board member of Kraft Foods Inc., started his career at Nestle SA and spent 13 years at Citigroup. He joined the New York-based bank in 1996 as head of marketing in India for the consumer business. In 2000 he was promoted to head CitiFinancial and the U.S. consumer assets division. In 2002 he took over the retail bank in North America, and in 2005 he was named to head Citigroup’s international consumer-banking and finance businesses. He moved to Hong Kong in early 2008 after being named to oversee all of the bank’s businesses in Asia. Banga holds degrees from Delhi University and the Indian Institute of Management in Ahmedabad. To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

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