Money Blog

The new Wal Mart and Bharti retail chain is expected to start opening its stores from August next year onwards. The recruitment process is expected to start soon and it is likely that the top slots will be kept by Wal Mart itself. Wal Mart has huge experience in the industry and they do not want to put the new venture solely in the hands of indian managers. However the CFO of the new venture is likely to be an Indian. Wal Mart is expected to bring Randy Guttery and Lance Retigg to spearhead the operations of the new venture. The crucial areas of operations like sourcing, merchandising and logistics will be managed by the Wal Mart team.

US based hedge fund Farallon Capital and Lakshmi Niwas Mittal have bought stake in Indiabulls Infrastructure development, a wholely owned subsidiary of Indiabulls Financial Services Ltd. Mittal has taken 3.33 percent for Rs. 111.75 Crore and Farallon has taken 10 percent for Rs. 335.25 crores. This has reduced the stake of Indiabulls Financial Services Ltd. to 86.7 percent in the company. The transaction has valued Indiabulls Infrastructure at Rs. 3350 crore, the company is setting up a 6000 acre SEZ in Maharashtra. The transaction has given a boost to indian real estate and infrastructure development companies. India is a growing economy and there is a huge opportunity for infrastructure development companies to grow with the growing economy of the country. With Mittal and Farallon taking stake in a infrastructure development company, the investor confidence in real estate and infrastructure development companies has increased. Real estate companies like Unitech, Ansal Properties, Mahendra Gesco have witnessed a sharp rise in their stock prices recently and overwhelming response to the IPO of Parsvnath developers has confirmed the investor confidence in real estate sector. Stocks of infrastructure development companies like GVK infrastructure and GMR infrastructure have also surged recently in wake of the upcoming oppertunity of infrastructure building announced by the Government. It is likely that construction, infrastructure and realty space will continue to grow at a rapid pace in the coming years.

Sugar Mills, mostly in Maharashtra and south, have not been able to sell their sugar stocks of their last year produce. This has pushed the sugar prices downwards. As per the data of Central Excise department as on 30th September 2006 Maharashtra was holding 18 lakh tonnes, Karnataka 5.17 lakh tonnes, Tamil Nadu 6 lakh tonnes and Gujrat was holding 1.7 Lakh tonnes. The total sugar production in India was 192.62 lakh tonnes last year and as on 30th September 2006 it was holding 39.65 lakh tonnes of sugar. North Indian states like Uttar Pradesh, Haryana, Punjab and Bihar are holding relatively lesser stocks. Further more, the Government has imposed a ban on export of sugar, leading to the surging of stocks. The ban is likely to be lifted in wake of the demand from sugar companies and increasing stocks of sugar. The sugar companies are witnessing high margin pressures as the prices of sugar are coming down. Almost all sugar company stocks like Balrampur Chini, Dhampur Sugar, Bajaj Hindustan, Mawana Sugar, Uttam sugar, etc. are under performing. They are hovering around their yearly lows. Lifting of ban on Indian sugar export will impact Thailand, a major sugar exporter of Asia as Indian sugar prices pose stiff competition to Thai exporters and the major buyer Indonesia is expected to unveil its year 2007 import quotas till the end of December 2006.

The Government has given in to the demands of Left to keep the pension funds from the uncertainties of Stock Markets. The pension funds are likely to be kept invested in fixed interest instruments. It is also proposed that only LIC, SBI and UTI should be allowed to handle the hard earned money of the public. The left is also demanding that the pension payable should not be less than the 50 percent of the last salary drawn by the pensioner and in case it is less than the said 50 percent, Government should contribute to the deficiency. The second demand of the left is still under consideration and therefore the pension bill is still pending before the cabinet. Earlier there were expectations that the pension funds will be invested in the stock markets aggressively like most international pension funds and some private pension funds will also be allowed to play in the market. This would have provided a lot of liquidity into the stock market and perhaps the returns of pension funds would have surged, but it seems that it is unlikely in the present situation. Also, the UTIs and the LICs do not have a very sound track record of doing justice to the investors’ money, the Government has its own compulsions and it remains to be seen as to what shapes out in the end.

Nokia and Doordarshan have agreed to launch a pilot project of mobile TV in India. Nokia will provide the technology and DD will provide the content. The technology used will be based on Nokia’s open standard based DVB-H solution. The technology allows the mobile users to watch their desired TV programmes on their mobile sets. The technology will provide high picture quality with low battery consumption. Nokia is already providing mobile TV technology on the DVBH platform in Vietnam, Italy and Finland is running pilot projects in many other countries. Initially Nokia N92 model will support the proposed service and later on the service will be extended to other Nokia models. The technology, if successful, will bring a revolution in the telecom industry. The technology will bring TVs in the pockets of consumers and industries like media and entertainment and telecom are expected to be the major beneficiaries. Nokia is already market leader in selling mobile phones in India and this technology will give it a major lead over its competitors. Doordarshan, with a large viewers base in India is also expected to benefit for being the first mover. Once the pilot project is successful, other TV channels will also be available on the mobile.