towards 9th issue

8/14/2019 Towards 9th Issue

1/26

21st

August 2008


2/26

Happy Independence day!

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

themselves.

Freedom is indeed the most beautiful thing that could happen to you in

life.Yesthat could happenbut has it happened yet to you?...only you can

answerOr may be question to your conscience

So questiondo question yourself.

Dear! Are you free?

Yes ! I am free

Born and learnt believing somethingenchanting mantras oftraditioncultureethosand

all that my forefathers have left for me as legacy

discovering that my soilmy Ganges,Yamunas..Godawarieswould quench my thirsty

soulHimalayas would guardian me..

.I was toldwhen I could sense and conceive.I am born

free

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

losing my freedom

When I had to doWhat my conscience wouldnt allow..

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

While I see myself enjoying every fun of lifewhile my nation.is actually in pain.

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When I should have shouted at the top of my voiceI wont let this bullshit to be done in

my soilto my nationto my people..But ..i couldnt shout.couldnt even murmur.

I wasnt perhaps free, when they decided overnight.policies,lobbies,quotas..

when they sold my part of nationjust overnight..

I discovered may be I am not free

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

just todayfew Free people died in Ahmedabad,Bangalore,Ajmer,Jammu..free..YeahI

mean itfree like me..Innocent..

Just today..18 crore Kidsageless than 12 years.are breaking their bones to earn day-

time bread

and just todaymy Government.my elected leaders.sold this great free nation in

nation..and still selling it in installmentsto whoever pays the dirty price.

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

Kashmirthose Azaadi..Azaadi..screaminghave not torn my ears apart yet

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

I am still free.for I still spend my evening in Firangi-Paani or Baristashopping in

malls.enjoying PVRs

I am still free.coz..i dont botherthat half of my nation has still not seen Thomas Alva

Edisions Electric Bulb..

Coz I dont bother.that just few Kilometers away from my posh City-Metro..Naxalites are

eating away my territory of freedom.

I dont bother.becauseI am the proud citizen of Worlds most corrupt free nation.

I dont botherif my Government could not give my fellow-countrymen basic amenities of

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

----------I dont botherI dont botherI dont bother.just ..dont

My days are passing byso smoothlywhy should I bother..I am

free..free till Sun setsCome the dark night..I ask my selfAm I

free..Yeas.may be.may be not.Or I am NOT

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Democracy is the most beautiful thing that has happened to human civilization.It has

established the fact that all human beings are equal to all opportunitiesto manifest

themselves to their fuller potentials..

Democracy however is also equally dangerous if come without sense of responsibility and

discipline. It could fatally destroy the nation, society and generation..

It is the same democracywhere everyone does not enjoy similar rights..where opportunities

are not equal.where you start doing something goodand you will find many many hands to

stop you doing good.where people just do not wish something good, better that happen to

them.they are just happy being what they arewherever they are.

People are ready to dieready to be crushed.but till we breathe..we do not have time to

think.just no time to think.what is happening with ustous to our childrenwe just dontthinkwhat kind of nation ,we are makingbecause we just dont make this nationwe only

live in itunfortunately for manyand fortunately to few.

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

as well.

Day-by-day, minute-by-minutewe are destroying every good thing that was so far with

uspolluting our riverssucking our groundwater, poisoning our air.chopping our

Jungles..Killing our wildlife

.forgetting our traditions..fighting with each

other.casteRacestatelanguagereligion.killing each other..corrupting ourselvesour

systembribing institutions..vulgarizing our schools..

I would not say you Happy Independence Day.

Just that..this independence is attained after much sacrificesit is

still being protected by bloodstained soldiers at our borders.

Please.respect itOur nation is very great.10, 000 years of

burning mid-night candles

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Come togetherfor no time is leftjust come close to each

othereven air could not pass by..

Hold hands.together.

Lets join the caravanlets make our nation stronger..bring all those

who are left behindthose dirty.half-naked.empty-

stomachilliterate...stupidbeggars, laborers.left-behind ones.put

all you intellect, strength..appetitetogether

Feel ProudYou are an Indian.

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

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Heroes and Hooliga

Bihar: On a fast track of growth machine: Clears 135 proposals worth Rs 71,2

crore

The Bihar government has cleared 135 proposals worth Rs 71,290 crore submitted by big

entrepreneurs for setting up medium and large industries.

All these proposals have been approved by the State Investment Promotion Board.

proposals approved include opening of 23 new sugar mills and the expansion of the 7 exis

ones, apart from the production of ethanol in 2 sugar mills and 5 sugar cane juice produc

plants. The projects regarding 5 power plants, 12 food processing units and 15 steel proces

and cement plants have also been cleared.

As per the report, a sum of INR 603 crore had already been spent on various activities pertai

to the cleared projects, which are likely to create job opportunities for over 0.114 million peo

Amarnath Shrine issue: Its more than just a few acres

Kashmir is burning and so is Jammu.The issue is odd 180 Hectare of land that was a bout to

transferred to Amarnath Shrine board. The decision was initially taken by the then

Government in J&K. The issue was then taken up by fundamentalist and separatist, pro-Pakis

pro-Taliban forces who purposefully wanted to vitiate the peaceful environment of valley.

So far, it is not strange, Mr.Mirwaiz Umer Farooq,Mr Gilani,Hurriyat Conference,JKLF and t

rank and file were always Pakistani interest on Indian soil, They were eagerly waiting for

opportunity to poison the environment and fuel separatist sentiments among comm

KashmiriesAnd eventually they got chance.

But there is a catch in the drama here. And there are people to be exposedthese are the

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

And these are the people who swear by being Indian. The role of Ms. Mehbooba Mufti,

Farooq Abdullah and their political cousins need to be scruitinised. They are the real vill

backstabbing Indian interest and fuelling common Kashmiries sentiments against In

mainstream.

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An era ends/begins in our neighborhood: Musharraf

dethroned

General Pervez Musharraf, President of Islamic Republic of Pakistan has finally resigned from

his premiership after a month old political tussle with the democratically elected government

and its core forces.

Departure of Mr. Musharraf from the political landscape of Pakistan has closed a great chapter,

not just in the Pakistani History but in Global power circles, especially in the Indian context and

much hyped US-Global war on terror.

Mr. Musharraf has played a very crucial role in Terror-corridor, from Saudi-to Iran to

Afghanistan-Libya-Egypt and most of the Muslim dominated world. Here is the man who has

sailed his country prudently in its most difficult time and transformed (or tried to transform,

but failed) a fast-getting-Talibanised country to a country, which has visibly shown its

determination in global war against terrorism.

If you follow the statistics in last 10 years, you can easily understand that his was the time,

when terrorism and infiltration dropped substantially and acrimonious gesture of Pakistan

towards India moderated a bit.

While looking little deeper in Pakistan, for recent years, one also can observe the positive

changes, Mr. Musharraf had tried to bring in the mindset of Pakistan.

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

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

What failed Mr. Musharraf?

Musharraf seems to be more secular, pro-developmental and more modern than any other

ruler, Pakistan ever had in its history. He was a great opportunity for Pakistan to come out of all

those stupid medieval aged mindset and become a modern developed state of respect, repute

and prosperity.

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

He could not change the psyche of Pakistani intelligentsia. He lost it to Taliban. Pakistan of

today is , sadly much more talibanised than ever before. It is well saidYou can kill an

institution, millions of people, but you can never kill an idea, a thought. Taliban has resurrected

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itself in common People of Middle East, London, USA and Islamic world. Taliban now is much

much stronger that it ever was.

Recent bomb blasts and terrorist activities in India are evidence that the so called democratic

regime and forces in Pakistan are actually people and philosophy of Taliban and Al-Qaeda

resurfacing with a legal face. Its as soon world realizes the fact that political power of Pakistan

has actually in hands of Taliban and faces like Mr. Gilani, Asif Zardari and Nawaz Sharif are just

puppets being played by very strong invisible hands who are very soon going to be surfaced.

What are the takes from the saga of Pervez Musharraf?

Number one is that it zeroes in to the Leadership ultimately. Mr. Musharraf failed to deliver

what he promised for. Leaders, who do not hold on the promises they make are bound to be

thrown into dust, no matter how strong legacy they assume.The second lesson is for the world and people in so called democratic society about thepotential weaknesses of democracy as an institution.Democracy, per se, does not guarantee

freedom and prosperity. Democracy must have elements of Discipline, Responsibility and

sociological character, for, without them it is bound to fail and succumb to fundamentalist and

destructive forces.

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

We need to be over cautious and prepared about coming forces in Pakistan. People in power

de-fecto represent Taliban and Al-Qaeda and their very survival depends on their acrimonious

attitude towards us..

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

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MAKETS FORTNIGHTL

Amar Sab

20th Aug:

Firming trend in Asian region boosted

the trading sentiment. Hong Kong stocks rose,

with the benchmark index rebounding from a

one-year low on speculation that China will

introduce measures to support the economy.

19th Aug:

The domestic market had shown smart

recovery during final trading hours to came off

from the days low but closed with marginal

losses.Weak European markets also added tothe negative sentiments. Along with this, fears of

more losses from the US mortgage crisis globally

mulled over the sentiment.

14th Aug:

Domestic market ended the day w

heavy losses as witnessed a sharp fall during

trading session on the back of sustained sel

activity over the counters.The market extenlosses for the third session in a row as a bou

back in crude oil prices stroked fears of incre

in inflationary pressures.

13th Aug:

on a subdued note as investors

waiting for the outcome of SEBI`s board m

regarding participatory notes. Weak global cu

13000

13500

14000

14500

15000

15500

25-Jul

27-Jul

29-Jul

31-Jul

2-Aug

4-Aug

6-Aug

8-Aug

10-Aug

12-Aug

14-Aug

16-Aug

18-Aug

20-Aug

Sensex.too sensitive to cues

Sensex.too

sensitive to cue

date sensex

25-Jul 14274.94

26-Jul 14274.94

27-Jul 14274.94

28-Jul 14349.11

29-Jul 13791.54

30-Jul 14287.21

31-Jul 14355.75

1-Aug 14656.69

2-Aug 14656.69

3-Aug 14656.69

4-Aug 14577.87

5-Aug 14961.07

6-Aug 15073.547-Aug 15117.25

8-Aug 15167.82

11-Aug 15,223

12-Aug 15,212.13

13-Aug 15,093.12

14-Aug 14,724.18

18-Aug 14,645.66

19-Aug 14,543.73

20-Aug 14,678.23

21-Aug 14244

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12th Aug:

broke its winning trend to close the

session with heavy losses on sustained selling

pressures due to disappointing IIP numbers that

were down at 5.4% YoY and negative cues from

European and Asian markets.

11th Aug:

The Sensex witnessed the awaited

correction today, as meltdown in major global

indices turned the domestic market upside

down. After rallying for the past few sessions,

the Sensex lost 292 points on sustained selling in

heavyweights, metal and banking stocks.

8th Aug25th July

This fortnight the markets opened dull

on 28th July-08, Monday aftermath Bangalore

and Ahmedabad bomb blast which had already

knocked 500 points off the sensex on 25thjuly,

Friday. Major focus was on RBIs monetary po

on short term rates scheduled for release

29thjuly, Tuesday. On Tuesday RBI hiked not o

hiked CRR by 25 basis points as expected bu

also hiked repo rate by 50 basis points aga

the investor expectation. This again l

weakening of sensex by over 500 points clos

at 13791.54. The market sentiments for

whole period was negative due to high inflatrate hike by RBI, monsoon forecast etc. But

these news were out weighted by cues form

markets and falling crude prices. Thats why

30th July, Wednesday, market gained 495 po

due to fall in crude prices by $3/barrel amid h

in rates by RBI just the previous day. US inde

were up DJIA by 2.4% and NASDAQ by 2.5%.

The crude oil prices dropped by $10

fortnight. This has led to a rally in US markThe Dow Jones which was at 11370.69 on 2

July climbed to 11734.32 up by 3.19%.

The reactions of sensex to cues from US

markets were notable. In fact sensex almost

followed the same trends as the US markets.

This trend is visible only in short run, in

absence of any positive news and

uncertainty. For most part sensex was similar

to US markets except few days when local

news was strong. Like on 1 st Aug, Friday the

markets went up irrespective of weak global

cues because of expectation that IAEA

give green signal to Indo-US nuclear de

Stocks of infrastructure companies- L&T,

Associates; power companies-NTPC; pow

equipment supplier-BHEL, ABB, Siem

were up because of the positive news

nuclear deal. Rcom on the same day w

badly hit trading 13% below at Rs.436.8 d

to lower that expected Q1 results.

108110112114116

118120122124126128

crude

crud

Date crude

25-Jul 125.93

26-Jul 125.93

27-Jul 125.93

28-Jul 125.05

29-Jul 124.71

30-Jul 125.19

31-Jul 122.03

1-Aug 125.19

2-Aug 125.19

3-Aug 125.19

4-Aug 122.07

5-Aug 117.42

6-Aug 117

7-Aug 118.2

8-Aug 115.11

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Table 1: comparison of sensex and DJIA

Table 1 shows the movement of sensex in

comparison to DJIA (Dow jones industrial

average). X-axis is dates and Y axis is %

change in indexes. Due to time difference

the US markets lag behind our markets i.e.US markets on 1

stAug will act as cue for

Indian markets on 2nd

Aug(US markets open

at 7.30pm IST).

Now to sum up the overall story sensex this

fortnight was a big gainer. On 25th July it was

at 14274.94 but on 8th ague it was at

15167.82 up 892.88 points (6.25%)

compared to 25th

July. The positive si

were only in the form of falling crude pric

Due to slowing down of US economy

evident from low GDP growth of 1.9% l

demand for crude is expected. For Indiamay act as a signal of lowering of inflat

and thus, no further hike in RBI rates.

The most active sectors in this period w

Banks (because of RBI policies, inflation a

crude), Capital goods (because of Indo-

deal), Sugar (because of monsoon), oil a

gas (because of falling crude).

-6

-4

-2

0

2

4

%change in sensex and djia

%senxex %djia

date DJIA

25-Jul 11370.6928-Jul 11131.08

29-Jul 11379.56

30-Jul 11583.69

31-Jul 11378.02

1-Aug 11326.32

4-Aug 11284.15

5-Aug 11615.77

6-Aug 11656.07

7-Aug 11431.43

8-Aug 11734.32

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Sector Watc

Real Estate: CB Richards Ellis views

Investment in country's real estate sector remained subdued in the second quarter this ye

amid global economic slowdown, which has also cast its shadow on the property mark

across the world.

Like most property markets around the world, Asian markets have been affected by slow

economic growth and unsettled capital markets. The cautious attitude was largely becau

many investors expect the ripple effect of the global credit crunch to continue unfolding

Asia. Investors have been exercising restraint in launching new developments and proje

intended to support new emerging commercial hubs. Developers profitability was a

impacted by rising construction costs, escalating interest rates and tighter lending measure

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

funds, remained active across major cities in Asia. Direct commercial property transactions

Asia were up moderately in the first half of 2008, as compared to the corresponding perlast year.

Cement: prices to fall on surplus output

Cement makers feel their margins will remain under pressure for the next several quarters

excess capacity build up in the country is expected to keep prices from moving up. This

despite various infrastructure development projects which is keeping demand alive even

real estate development has witnessed a slowdown. The bullishness surrounding the cem

sector has ended due to overcapacity. The economys performance is below expectation a

will result in lower demand for cement. Overcapacity alone will not result in decline in pricIf input costs keep rising and cement makers still reduce prices, many of them will just go o

of business. Therefore, itd be difficult to say if prices will surely decline in a year.

The cement industry has added around 20 million tonnes of capacity in the Q1 of calen

year 2008 taking the existing installed capacity to 203 million tonnes per annum. The indus

is expected to increase its capacity to 254 million tonnes by the end of next calendar ye

which may create a huge supply demand mismatch. Last year, the capacity utilization of t

industry was over 90% with several plants working at over 100% capacity.

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

The new rules would promote joint ventures abroad, which in turn will help meet Ind

domestic demand through imports at competitive prices.

According to the new investment policy, additional urea from the revamp of existing units w

be recognized at 85 per cent import parity price with the floor and ceiling price of $250 a

$425 per tonnes respectively. The urea from the expansion of existing units would

recognized at 90 per cent of import parity price with a floor price of $250 per tonnes. T

new policy also provides that coal gasification-based urea projects will be treated at par w

other new and existing plants, which will encourage use of local coal.

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Iron ore prices likely to rise in near term

The domestic price of iron ore is once again rising, after experiencing a marginal slip l

month. Prices are likely to shoot up even further, with steelmakers indicating a 5 perc

hike in prices which they had kept in check till now.

On the global front, iron ore prices have been declining, which has affected Indian iron o

exports adversely. In fact, miners in India are on the back-foot and have said that exportiron ore has slipped by as much as 20 percent in just the past month. Steel production in t

country has been slow and is expected to pick up once the Olympics are over. Therefore, t

current lower freight rate is nothing but a temporary phenomenon and stands to

corrected soon. According to a source, f.o.b price of 63.5 grade iron ore is currently rang

between $128 and $130. Change in prices is unlikely to occur before the first week

October.

Core Sector Research:

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

India's production at six key industries, which account for a quarter of the nation's indust

production, rose by 3.4% in June 2008. The Ministry of Commerce and Industry said i

release that the index for the six key industries rose to 232.5 in June from 224.8 a year earl

Production in the three months ended June 30 rose by 3.5% as compared with a 6.4% a ye

earlier.

The following is the percentage change in production

Sector Jun'08

Electricity 2.6Coal 6.2

Steel 4.4

Crude oil -4.7

Refined petroleum 5.6

Cement 3.8

Overall 3.4

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1st

Quarter result Analysis: Devil lies in details:

Sales grew at a record pace (37%); profit growth was the slowest in the past

quarters.

Fertilizer companies showed an unexpected 60 per cent jump in sales as t

government increased the subsidy to compensate for the higher raw material prices

Food processing, pesticides, agrochemicals, industrial gas and explosives, compu

education and cement firms, recorded a healthy 40 per cent growth due to high

income and increased industrial activity.

The software sector, after growing at a scorching pace of more than 35 per cent

the past five years, grew at a moderated pace of 25 per cent in the period afte

slowdown in the US.

Power cables grew at a higher rate of 25 per cent helped by demand fro

telecommunication and power companies.

Passenger cars, diversified companies, paints, pharmaceuticals and t

manufacturers posted 20 per cent-plus revenue growth.

Commercial vehicle sales grew by 18 per cent driven by tractors and LCVs. Motorcy

producers saw sales rising 12 per cent even after hardening of interest rate. A

ancillary makers, which derive demand from automobile sector and origi

equipment manufacturer, posted a modest revenue growth of 15 per cent.

Foods products (manufacturers of biscuit and dairy products), tea, personal c

products, sugar, consumer durables, cigarettes, textiles and retailers, which fac

price competition, expanded revenue by 10-15 per cent.

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Economy: Would the Elephant still be dancing?

CAPEX increased to Rs 1,050,950 crore in 6 months

Despite global slowdown, the capacity expansion plans announced by Indian corporate

surged to INR 10, 50,950 crore in the first 6th months of the current calendar year as again

INR 5, 67,851 crore between August to December 2007.

Current Account deficit widening

India's current-account deficit, which includes trade and investment flows, widened to a

record $17.4 billion in the financial year ended March 31, from $9.8 billion in the previous 1

months, partly because of increased spending to keep fuel prices below international levels

The deficit is the amount the government needs to borrow to bridge the difference betwee

spending and receipts. A narrower budget gap may lead to lower government borrowing in

Asia's third-largest economy, allowing reductions in interest rates.

Finance Minister undeterred.Inflation crosses 12%

India's Finance Minister P. Chidambaram believes that the central bank's tight monetary

policy stance would help tame inflation in 3-6 months.

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

The wholesale price index, India's most widely watched price measure, rose 12.01 pct in th

12 months to July 26, above the previous week's 11.98 % and the highest since the current

series became available in 1995.

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

Bradstreet

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

Given the supply driven nature of the current inflation, the RBI's measures are likely to have

limited impact towards controlling inflation in the short run."

The fiscal measures initiated by the government to augment supply are expected to begin

yielding results from December. As such, we expect inflation to continue to remain elevated

and in double digits till December 2008."

The report stated high input costs and rising interest rates have impacted industrial growth

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with IIP growth slowing down to 5.23% in Q1 of FY 2009 against a growth of 10.28% in the

same period last year. However, with inflation continuing to be in double digits and the

money supply growing well above target, RBI further tightened its monetary stance,

increasing the CRR and repo rates.

Recent increase in policy rates could lead to upward movement in banks' lending rates,

thereby increasing pressure on corporate margins. Also, high interest rates would further

dampen the demand in interest sensitive sectors. We may witness deferment in investmen

decisions by companies. Industrial growth is therefore, expected to be subdued in the mon

to come and average at around 6.8% during FY 2009.

OPEC oil production up in July

OPEC pumped an average of 32.77 million barrels per day of crude oil in July an increase of

300,000 barrels per day on collective production.

OPEC 12, excluding Iraq exceeded their 29.673 million barrels per day target by 637,000barrels per day. An increase in the daily production of 390,000 barrels per day by Saudi

Arabia, Iran, Nigeria and Kuwait was said to be offset by shortfalls in Libyan and Iraqi outpu

The biggest increase in OPEC production came from Saudi Arabia which increased outputfrom 9.45 million barrels per day to 9.7 million barrels per day as it had pledged to do. Niger

increased its crude oil output by 100,000 barrels per day in July to an average of 1.9 millionbarrels per day. Libyan output volume, which had declined in May and June because of repa

work on Totals al-Jurf field decreased further in July after maintenance work commenced othe Waha-Defa oil pipeline. Iraqi crude production was down by 30,000 barrels per day in Ju

to 2.46 million barrels per day.

and the crude tumbled..

Crude oil is on a falling streak for this fortnight mainly on signs that a U.S. economic slump w

extend into 2009, paring fuel demand in the world's biggest oil consumer. Hedge funds and

other speculators are increasing their net-short positions in futures contracts.

Speculative short positions, or bets that prices will fall, have actually outnumbered long

positions by 5,550 contracts on the New York Mercantile Exchange in the week ended Aug.

the Commodity Futures Trading Commission said in its Commitments of Traders report on

Aug. 8. Net-short positions rose by 4,890 contracts, or 741 percent, from a week earlier.

China's July crude-oil imports fell 7 % from a year earlier after global prices increased to arecord, discouraging refiners from purchasing raw material to process into fuels. The

country's 15 biggest oil refineries increased their operating rates to boost fuel supplies for t

Beijing Summer Olympic Games that started on Aug. 8.

Clashes between Russia and Georgia threatened alternative export routes from Azerbaijan,

needed because of a pipeline fire. A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan

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pipeline was extinguished following an explosion last week. Georgia is a key link in a U.S.-

backed southern energy corridor that connects the Caspian Sea region with world markets,

bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.

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

The shock of credit crunch should moderate by early next year, with the crisis mainly affect

the financial and consumer sectors. I am sure that there will be some calmness in the whturmoil in the next six to nine months. Large parts of manufacturing industry would not suf

the same problems as those parts of the world economy more closely linked to banking a

finance such as housing and consumer goods. The world has to differentiate between t

industrial and consumer parts of the global economy and recognize that they would beha

differently as a result of today's difficult conditions, including tightness in credit markets a

commodity and food inflation.

The substantial parts of the broad industrial sector across the world would perform in

satisfactory way in the next one to two years. Much of this related to the demand

manufactured products in emerging economies such as China and India. They are continu

to grow and they need to grow. They are not stopping even if they have slowed down th

progress.

NYSE Euronext 2009 CEO Report: Managing During Economic Turbulence,

The current US and global economic conditions will separate the best companies from gre

ones.[NYSE Euronext operates the world's leading exchange group with 4,000 lis

companies representing a combined USD 28.5 trillion in total global market capitalizat

more than 4 times that of any other exchange group.]

For the fourth consecutive year, the US is the most important region with 66%, followed China with 9% and Western Europe with 9%. In fact, most CEOs view the US as crucial

important to their businesses. Nearly two thirds of CEOs view BRIC countries as opportunit

This is particularly true of CEOs from non US companies, of which nearly 8 in 10 see BR

countries as an opportunity. Sensible acquisitions and expansions are targeted in BR

countries with the majority saying they would maximize their opportunity by establishing

expanding local marketing and sales activity. Half of CEOs from NYSE Euronext list

companies plan to establish or expand local marketing and sales activities in BRIC countr

through 2009. One quarter will seek or expand local partnerships.

Also, a vast majority of CEOs believe that changes to the US legal and regulatory systewould have a positive impact in the competitive position of the US capital markets. US bas

CEOs are more optimistic about the impact these will have, compared to non US based CE

US based CEOs are less likely to believe a convergence of international accounting standa

would have the same positive impact.

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Global Stage: Shiva Tankha

Russia Georgia spat

Georgia declared a "state of war" as Russia bombed the country and their armies battled fo

control of the separatist region of South Ossetia.

Georgia is under a state of total military aggression by the Russian navy, air force, large-sca

ground operations.

The Georgian parliament approved the emergency decree, which will last for 15 days and is

equivalent to declaring martial law.

Within hours of the Russian bombing of the second separatist region, the Abkhazians

announced they had begun a military operation against Georgian troops in their territory.

THE BROADER IMPLICATIONS-------

Russian President Dmitry Medvedev ordered a halt to military operations in Georgia on

Tuesday, saying Moscow had achieved its objectives by punishing Tbilisi , after five days of a

and land attacks that sent Georgia's army into headlong retreat and left towns, military bas

and homes in the U.S. ally smoldering. Georgia insisted that Russian forces were still bomb

and shelling.

Senators McCain and Obama are both trying to demonstrate their leadership capacities in

their strong statements on the conflict between Russia and Georgia. Senators McCain and

Obama are both trying to demonstrate their leadership capacities in their strong statement

on the conflict between Russia and Georgia

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

Oil fell to a three-month low today, dropping for the third day in a row, after the Internatio

Energy Agency (IEA) predicted supplies would be more adequate and Russia called a halt to

the conflict in Georgia.US crude fell to a session low of $112.48.

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Energy Outlook: EIA perspectiveWorld energy demand and carbon dioxide emissions will grow by about 50 percent over the

next two decades despite soaring oil prices as developing countries outpace rich ones in

consumption, the U.S. government predicts.

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

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

report..

During the same period, total energy demand in the non-OECD countries increases by 95 %

compared with an increase of 24 % in the OECD countries."

The non-OECD countries' share of world energy consumption is seen rising from 47.9 % in

2005 to 58.8 % in 2030.

Oil and coal -- both regarded as major culprits in global warming because of the carbon

dioxide they spew into the atmosphere when burned -- will continue to dominate global

energy supply, says the U.S. Energy Department's statistical wing.

As a consequence, and assuming no new measures are enacted to curb climate change, the

annual amount of heat-trapping carbon dioxide flowing from energy use will have balloone

by 51 % between 2005 and 2030.

It sees demand for oil and other liquid fuels growing to nearly one-third more than today's

consumption, topping 113 million barrels a day by 2030. Crude oil will retain its 40 percent

market share throughout thanks to stepped up production by members of the Organisation

Petroleum Exporting Countries (OPEC) cartel.

The EIA also expects alternative liquid fuels -- including environmentally controversial oil

shale and biofuels such as ethanol, which has been assailed as contributing to runaway foo

prices -- to grow to supply nearly 10 percent of total liquid fuel consumption by 2030.

The United States is expected to account for nearly half the growth in global biofuels

production. This is expected to rise from 1.3 million barrels a day in 2010 to 2.7 million barr

a day in 2030, with U.S. production increasing from 500,000 barrels a day to 1.2 million

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barrels a day in the same period.

The EIA sees nuclear power leading growth in alternatives to fossil fuels. It anticipates that

nuclear-generated electricity will grow by about one-third and that 124 new nuclear power

plants will be built by 2030. Around 45 would be erected in China, with another 18 in Russia

17 in India, and 15 in the United States, the agency predicts.

"Electricity generation from nuclear power is projected to increase from about 2.6 trillion

kilowatt-hours in 2005 to 3.8 trillion kilowatt-hours in 2030, as concerns about rising fossil

fuel prices, energy security, and greenhouse gas emissions support the development of new

nuclear generation," the report says.

"Issues that could slow the expansion of nuclear power in the future include plant safety,

radioactive waste disposal, and the proliferation of nuclear weapons, which continue to rai

public concerns in many countries and may hinder the development of new nuclear power

reactors," it says. "Moreover, high capital and maintenance costs may keep some nations

from expanding their nuclear power programmes."

Electricity generated by renewable energy sources will rise by about 2.1 percent a year. Mo

of this growth will stem not from sources favoured by conservationists -- the sun, wind, or

heat trapped under Earth's surface -- but from new mid- to large-sized dams in Asia and Lat

America.

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Our Debutants: Young Blood

Mukesh Kr. Man

SHOULD INDIA GO FOR FULLER CAPITAL ACCOUNT CONVERTIBILITY ?

When the Prime Minister asking the Finance

ministry and the RBI to sketch the road map for

Capital Account Convertibility (CAC), once again

the expectation that the rupee is close to full

convertibility has become a reality. Presently,

current account convertibility is allowed to make

and receive payments in foreign currency for

exports, imports, education, travelling and trade

in services. Capital account convertibi

restricted and full capital account conver

would allow free conversion of Indian asse

foreign currency assets and vice versa.

asking the RBI to prepare the roadmap, the

Minister said that India is more comfortabl

externally and internally and that the time

now for full capital account convert

S.S.Tarapore

In 1997, a committee on

CAC, headed by former RBI

deputy governor S.S.

Tarapore, had spelt out the

conditions under which full

convertibility could be ushered in. These are

manageable fiscal deficit, moderate rate of

inflation, strong financial sector and ample forex

reserves.

Government aimed at reducing the Gross Fiscal

Deficit to GDP ratio from 4.5% in 1997 to 2.5% by

2009 and estimated revenue deficit at 1% by

2009. In 2007-08, Gross Fiscal Deficit to G

ratio was 3.1% and revenue deficit was 1.4%.

average inflation for the period 1997-2000 w

maintained between 3 to 5%. But presently,

inflation is hovering around 12% and also

Cash Reserve Ratio (CRR) is 9%, so these m

hamper progress towards full capital acco

convertibility. The banking system has done w

to bring NPAs down and now the Gross NPAall banks in India averaging close to 2% ma

Indias foreign exchange reserves are over $

bn. So situations are favorable for India

introduce full CAC.

PROBLEMS WITH CAC

Several economists are of the view that the full Capital Account Convertibility has serio

consequences on the wellbeing of the country, and this may even lead to extreme sufferi

of the common masses. Some of the reasons are highlighted below.

During the good years of the economy, it might experience huge inflows of foreign cap

but during the bad times there will be an enormous outflow of capital. This has seri

impact on the economy and can even lead to an economic crisis as in South-East Asia in 19

There arises the possibility of misallocation of capital inflows. Such capital inflows may f

low-quality domestic investments, like investments in the stock markets or real estates, a

desist from investing in building up industries and factories, which leads to more capa

creation and utilisation, and increased level of employment. This also reduces the potentia

the country to increase exports and thus creates external imbalances.

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International finance capital today is highly volatile, i.e. it shifts from countrycountry in search of higher speculative returns. In this process, it has led to econom

crisis in numerous developing countries.

Entry of foreign banks can create an unequal playing field, whereby foreign ba

pick the most creditworthy borrowers and depositors. This aggravates the problem

the farmers and the small-scale industrialists, who are not considered to be cre

worthy by these banks. In order to remain competitive, the domestic banks too ref

to lend to these sectors, or demand to raise interest rates to more competitiv

levels from the subsidised rates usually followed.

Under flexible exchange rates, capital inflows lead to an appreciation of the domes

currency directly. On the other hand, in a fixed exchange rate regime, increas

capital inflows lead to monetary expansion and price inflation, which also cause

real appreciation. In both cases, capital inflows tend to cause a real appreciation a

the possibility of current account deficits because of cheaper imports a

uncompetitive exports which, if not controlled in time, will lead to loss of confiden

and capital flight.

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

significant impact of capital account convertibility on the growth rate of a countA 1999 World Bank survey of 27 capital inflow surges between 1976 and 1996 in

emerging market economies found that in about two-thirds of the cases, there wa

banking crisis, currency crisis or twin crises in the wake of the surge.

BACKGROUND OF CAC IN INDIA

By August 1994, India was forced to adopt full capital account convertibility under t

obligations of IMF. The committee on Capital Account Convertibility, under Dr S S Tarapor

chairmanship, submitted its report in May 1997 and observed that international experien

showed that a more open capital account could impose tremendous pressures on financial system. Hence, the committee recommended certain signposts or preconditions

Capital Account Convertibility in India. The RBI over a period of time has accepted the po

that the South East Asian crisis was a bad example for Capital Account Convertibility and t

India had been insulated from the crisis because it had not allowed Capital Accou

Convertibility.

There are four benefits to India from CAC:

(1) Rates of return on debt and equity in India are high by world standards. Wconvertibility, foreign money will come into India to reduce these rates of retu

i.e., the cost of capital faced by the companies of India in equity and debt financ

will drop. At a lower cost of capital, more investment projects would be viab

which would generate a faster pace of investment and growth in the economy.

(2)With convertibility, Indians would be able to diversify their portfointernationally. Instead of being constrained to only hold Indian real estate, equ

and debt, we will reduce our risk by diversifying internationally. This means that

a bad year in India, when Indian financial assets generate a poor return, fore

assets owned by Indians would continue to generate good returns.

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RETAIL INDUSTRY IN

INDIA

ALL THE POWER IS WITHIN YOU, YOU

CAN DO ANYTHING AND EVERTHING

This positive atmosphere has been prevailing

in India from quite a few time with all the big

players like Reliance, Aditya Birla group, the

Pantaloon retail of Future group, subhikha

group, The Tata and shoppers stop, RPG, Vishal

mega mart, Godrej etc entering and foraying

into retail sector.

The growing Indias GDP at 8%, increase in the

disposable income of middle class in India,

shift in consumer demand to foreign brands,

flexible government policies, the spread of

visual media making consumer more aware of

advancements in the industry are a few factors

driving these players towards the retail sector.

The Indian retail market, which is the fifth

largest retail destination globally, according to

industry estimates is estimated to grow from

the US$ 330 billion in 2007 to US$ 427 billionby 2010 and US$ 637 billion by 2015.

Simultaneously, modern retail is likely to

increase its share in the total retail market to

22 per cent by 2010.

Apart from the domestic players the

announcement of tie ups with the foreign

giants like Wal-mart, Woolworth , etc has also

brought out sea change in this sector.

The Government allows 100 per cent foreign

direct investment (FDI) in cash and carry

through the automatic route and 51 per cent in

single brand. Besides, the franchise route is

available for big operators. To further attract

global retailers, the economic survey 2007-08

has suggested a share for foreign equity in all

retail trade and 100 per cent in respect of

Our Debutant: Young Bloo

--Leena Agarw

Industry Watch

luxury brands and other specialized re

chains.

Retail today has changed from selling

product or a service to selling a hope,

aspiration and above all an experience tha

consumer would like to repeat again

again.

The industry has seen such a transformat

over the past decade that its very definit

has undergone a sea change. No longer camanufacturer rely on sales to take place

ensuring mere availability of his product.

The major investment areas in retail sup

chains lie in the area of sourcing, distribut

centers (warehouse, c

storage),transportation netwo

inventory(both store level and warehou

supply chain information systems such

warehouse management systems, plann

forecasting,inventory management, etc.

Strategies in retailing

Retail chains can choose to own or outsou

one or more areas in the back end start

from inbound transportation, distribut

centers, or even further upstream, va

adding operations. Currently, some of

retail chains like Subhiksha have outsour

most of their back end, while some, such

Reliance, are investing heavily in the sup

chain network. Others are positioned

between owning part of the activities in

back end. Outsourcing is done mostly

inbound transportation to independ

trucking companies, or to 3PLs, who may a

provide other services as warehousing.

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Retailing inherently is a difficult business.

Forecasting is merely 65% accurate, up to

20% of the orders are filled imperfectly,

30% of the merchandise is sold on

markdowns, 75% of the new products fail

to meet expectations, net margins are low

(2-3%) and inventory is high. However,

even beyond that, the Indian retail

scenario has a number of deficiencies.Supply chain and logistics costs currently in

some cases go up to 10% of the organized

retail sales, to the tune of INR 50 bn, while

it is less than 5% in mature retail markets

such as US.

Thus, there is a current improvement

opportunity of up to INR 25 bn. In the next

10 years, this gap of INR 25 bn could go up

to INR 300 bn., and hence a lot more

investment and effort would have to beput in to reduce this.

On other measures of supply chain

effectiveness also, Indian retailers lag

behind that of mature markets. Indian

retail chains turn their inventory much

slower, and stock out levels are also

higher. Even the more established retail

chains are able to turn their inventory only

half as fast as retail chains in US orWestern Europe, and stock out levels are

also twice or thrice as much. On the other

hand, shrinkage levels are in tandem with

international benchmarks. However, since

many retailers have still not invested in the

back end and the average length of the

retail supply chains in India is

comparatively smaller than their

counterparts in other mature markets, this

might not have been captured.

IMPROVEMENT PROJECTS FOR

RETAILERS

The retail firm boundaries may extend

anywhere from the sales point (stores,

typically for Indian retailers today) and

backwards up-to the source, encompassing the

distribution network, intermediaries and the

final supplier. The linkages in between these

entities (transportation network) may be

owned by either of the parties. In addit

parts of the value chain may be outsourced

a 3PL. Finally, to ensure proper planning

visibility, IT systems may need to be deplo

at various points of the value chain, of

connecting one entity to the other.

A number of opportunities exist for Ind

retailers today in terms of reducing cost improving service levels in the existing sup

chains. For most retail chains today, sim

setting up the entire network is a big challe

at the moment, since decisions today

affect the performance of their stores (or

other mode of sales) in the coming ye

Investment required will be huge and

number of challenges will have to

overcome, as described in the previ

sections. Network design, DC design engineering, Supply chain IT syste

implementation, decisions to outsource par

the network are some of the typical proje

Indian retailers are taking up at the mome

and would be taking up in the near future.

However, going forward, there will

tremendous scope to further improve u

the supply chains and even more important

use supply chain innovation for gain

competitive advantage. As mentioned befo

Supply chain best practices in global retail h

created giants like Walmart, Amazon, Targ

Tesco, Metro, to name a few. Hence, a num

of projects, including process improvement

the DC level or the store level, improv

forecasting accuracy, reducing out of sto

increasing sourcing efficiency, increas

product movement visibility, reducing l

time (sourcing, distribution), optimiz

transportation etc. should be on the radar

the Indian retailers for the short to medi

term time horizon.

On a long term basis, supply chains wo

need to be built flexible, in order to respond

changes, drastic or slow, in demand, sup

and technology. Further, flexible supply cha

would allow retailers to tackle any dram

events like natural calamities, terrorism,

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Aligning the supply chain strategy to the

business strategy would be of paramount

importance in order to make strategic

decisions more effectively, like entering new

markets, new product introductions, new

mode of sales, etc. Anticipating the future, and

building a supply chain around it, is another

way of looking at what the customer behavior

would be in the long term.

Prospects

No doubt the retail sector is still going to be a

major contributor to GDP of India.

Now that the influence of the left parties have

been reduced to a great extent from the UPA,

hopefully we expect government to come up

with more vibrant policies to boost the retailboom which would bring about changes in

other sectors like realty, processed food

industry, garments, gems and jewellery,

education,etc and also lead the improvement

in supply chain management services by more

tie-ups with foreign players or hiring more of

experienced executives predominant in this

sector.

CONCLUSION

Past is experience, Present is experiment and

Future is expectation.

Use your experience in your experiments for

better expectations

In the same way the retailers keeping in their

mind their past experiences, using them in

their present experiments will surely come out

with better expectations in future.

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Disclaimer:This magazine isbeing published and circulated onbehalf of Stockyard by Mr.Prem

-------------------------------------

To reach the editors.

[email protected]

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