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Upfront

Print Edition: Oct 14, 2012

Investing in God's Own Country: The recent Emerging Kerala 2012 Global Connect conference attracted 45 investment proposals worth over Rs 40,000 crore. The list of projects includes Bharat Petroleum Corporation's Kochi refinery expansion, a joint venture project worth Rs 18,000 crore, and Volkswagen's engine assembly unit.

CORPORATE
Britain's Vodafone, locked in a $2.2 billion tax dispute in India, may be preparing for a settlement if interest and penalty are waived. In January, the company won a four-year legal battle against the government after the Supreme Court ruled that it did not owe tax on its 2007 acquisition of Hutchison's Indian operations. The government decided to retrospectively amend the tax law to recover the money. Thus far, Vodafone has resisted setting aside any provision to meet any liability.

  • Reliance Communications has raised calling rates by 25 per cent, setting the stage for all leading mobile companies to go in for a second round of tariff hikes in 12 months.
  • India's GSM subscriber base now stands at 671.95 million, registering a decline of 7.1 million subscribers in August. Bharti Airtel, which currently holds a 27.82 per cent market share, lost 1.90 million subscribers in August, bringing its subscriber base down to 186.9 million. Idea Cellular lost 1.64 million subscribers, to end up with 115.97 million subscribers. Vodafone lost 1.55 million subscribers, and had 153.35 million subscribers.
Tech Mahindra, India's sixthlargest software services company, has acquired a 51 per cent stake in the Bharti Group-owned mobile value-added services (VAS) provider, Comviva Technologies, for Rs 260 crore. In another deal, US-based LeapFrog, the world's largest insurance investor for low-income customers, has purchased a 15 per cent stake in Mahindra Insurance Brokers for Rs 80.41 crore.

  • Younger Indian CEOs beat their American and European peers as the highest paid executives globally. The average annual salary for an Indian CEO below the age of 50 years now stands at Rs 7.9 crore, compared with Rs 7.3 crore and Rs 7.8 crore earned by their American and European counterparts, according to global recruitment firm Randstad.
  • The Asia-Pacific region is now home to 3.37 million high-net-worth individuals - people with $1 million or more to invest - compared with 3.35 million in North America and 3.17 million in Europe, according to Capgemini and RBC Wealth Management. Wealth fell significantly last year in Hong Kong (20.1 per cent) and India (18 per cent) and grew strongly in Thailand (9.3 per cent).
ECONOMY
Pie in the Sky

Advance tax realisations from the top 100 companies during the second quarter saw a healthy 10 per cent increase. Handsome payouts by State Bank of India, which paid Rs 1,820 crore as compared to Rs 1,650 crore a year ago, LIC and HDFC Bank, helped negate a 15 per cent drop in payments from Reliance Industries, the largest corporate house.

The government, which is aiming to mobilise Rs 30,000 crore through disinvestment this financial year, has initiated the process of setting up a Central Pubic Sector Enterprises Exchange Traded Fund. This fund will help investors to reduce investment risk.

India's annual consumer price inflation increased to 10.03 per cent in August, on rising food prices. The country's retail inflation is the highest among the BRICS group - Brazil, Russia, India, China, and South Africa - and is way above what the RBI calls its comfort level.

$180 billion Estimated global annual investment volumes in retail real estate by 2020. This is a growth of around 50 per cent on the projected volumes for 2012 ($110-125 billion). Growth markets, including India and China, are projected to account for around one-quarter of retail investment by 2020, compared to less than 10 per cent today.

Rs 2 trillion Fuel subsidy facing the nation had the government not acted fast and hiked diesel, kerosene and cooking gas (LPG) prices, said Prime Minister Manmohan Singh in his address to the nation.


MARKETS
There is good news for home owners, car buyers and other borrowers. A day after the RBI reduced the cash reserve ratio by 25 basis points, State Bank of India, the country's biggest lender, cut its base rate by an equal amount. SBI's base rate will be 9.75 per cent per annum, from 10 per cent earlier. The RBI has asked banks to provide a one per cent interest subsidy on home loans of up to Rs 15 lakh.

Bharti Infratel, India's secondlargest telecom tower company and a subsidiary of Bharti Airtel, has filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering. The IPO aims to raise $1 billion.

Coming Up
  • The much-hyped iPhone5 may be launched in India by Diwali and is expected to be priced at around Rs 45,000. According to research firm IDC, the iPhone accounts for 2.6 per cent of smartphone sales in India. Samsung is in the top slot with a 21 per cent share while Research In Motion Ltd's BlackBerry accounts for 15 per cent.
  • The government's annual budget making exercise has begun. The finance ministry has asked financial advisers of ministries to submit initial budget estimates for the next financial year by October 10.
  • A panel of ministers will suggest a mechanism to set retail prices for essential medicines soon.

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