Saturday, February 20, 2010

'We have crossed $1 billion in India'

After seven years, the world’s third-largest PC manufacturer Dell managed to break HP’s stranglehold in the Indian notebook market. Dell India Country General Manager Sameer Garde and Executive Director & General Manager (Consumer Division) Mahesh Bhalla tell Shivani Shinde the reasons behind the success, and the way forward. Edited excerpts:

Asia has performed well for Dell during the fourth quarter (October-December). How did India perform?
Garde: India’s contribution to Dell revenue is 2 per cent. We have crossed the $1-billion revenue mark in India. On a year-on-year basis, India revenue grew 52 per cent. In terms of units, we grew 82 per cent in India. Sequentially, revenue grew 8 per cent. For us, both SMEs and consumer segment grew over 100 per cent.

What do you attribute this growth to?
Garde: We have done a lot of things in the past five to six quarters that have led to this growth. These include building the brand and doing phenomenal amount of advertisement. We will also increase our product lines despite contraction of the market.

Do you think you will be able to hold on to this position?
Garde: We will continue to add new products, focus on customers, and continue to be competitive. We will also focus on our channel (distribution) strategy. We will continue to expand our desktop and notebooks range, drive more solutions for our clients in the large and the public sector domain.

In a way, Dell’s strategy to move to the indirect marketing has worked?
Bhalla: Going into retail and increasing the number of points of sale is one of the reasons for the success. But the essence has been listening to the customer. We have had a multi-channel strategy that has allowed us to reach newer markets and customers. Earlier, Dell was available online and through telephone only. But today, Dell is available across thousands of retail outlets as well as in large retail formats like Croma. Within these outlets, we also have Dell shop-in-shops managed by the company. With 35 Dell exclusive shops, we plan to expand this in future. We have also powered our sales persons as experts and help people buying online.

Do you think desktop market growth will be slower compared to the portable products?
Bhalla: There is variation across segments. In the consumer segment, the majority of growth is coming from the portable section (notebook and netbooks). But that does not mean that the desktop is not growing. We have see the all-in-one-category becoming interesting. Customers are choosing it as it gives simplicity — you need one power cord to connect. You get a much smaller form factor. Besides, PC penetration is still low in India. There is a lot of headroom to grow, as well as the various form factors to grow.
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Castrol net jumps 45% to Rs 381cr

MUMBAI: Castrol India has reported a 45% jump in profit after tax for the year ended December 31, 2009 at Rs 381.1 crore against Rs 262.3 crore in
the previous year. Net sales for the fiscal rose 5.1% to Rs 2,318.2 crore from Rs 2,205.7 crore, a company release said.

In the fourth quarter, the company clocked a PAT of Rs 80.8 crore, up 72% over the year-ago figure of Rs 47 crore. Net sales for the quarter was up 14% at Rs 609.5 crore.

Naveen Kshatriya, regional V-P, Asia & Pacific, BP Castrol Lubricants, told ET NOW, this newspaper’s business news channel, the company has done well in the last quarter of the fiscal due to the combination of a couple of things. “First, there is an uptrend in the economy and that’s reflecting in our volumes. Second, we have been very diligent in terms of execution of our strategy, focusing on specific areas and investing heavily in brands... I mean in terms of introducing new products or uplifting the quality of our products,” Mr Kshatriya said.

Ravi Kriplani, COO & automotive director, Castrol India, told ET NOW that the company has seen its volumes bounce back in the fourth quarter. “It’s a combination of better volumes, better margin management and better cost,” he said.

The board of directors of the company has announced a bonus issue in the ratio of 1:1 and recommended a final dividend of Rs 5 per share and a special dividend of Rs 10 per share for FY09. This dividend is in addition to an interim dividend of Rs 10 per share for the full-year 2009.

Mr Kshatriya said the bonus issue was in recognition of the company’s centenary year. “This will improve the liquidity in the market and will enable investors to participate in our business a bit more,” he said.

Mr Kshatriya said the company commands around 21% share of the Indian automotive lubricant market. “But if you look at the areas where we focus on... in the new generation truck oils, in motor cycle oils, in the premium passenger car oils, we have actually shown a growth in market share,” he added. “We will continue to improve our shares in the strategically important areas, Mr Kshatriya said. link...

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Sensex static as traders wait for budget

MUMBAI: Indian stock markets were caught up in volatile trading this week with a key index see-sawing between red and green terrains but managing to
end Friday with meagre gains.

Global cues were depressing too. Bourses across the world traded on an uncertain note after the US Federal Reserve's decision to increase lending rates to banks was sensed as a possible move to initiate tightening of the easy credit policy.

Investors at Indian markets also speculated on the stance the government is going to take on removal of stimulus measures, given the fact that most of the economic recovery was fuelled by government spending and subsidies to various sectors.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) moved up only 39.04 points or 0.24 per cent to end Friday at 16,191.63 points, from its previous weekly close at 16,152.59 points.

The broader S&P CNX Nifty of the National Stock Exchange (NSE) too followed a similar trajectory and closed the week at 4,844.9 points, gaining 18.15 points or 0.37 percent.

Broader market indices ended the week in the red with the BSE midcap index closing 1.19 per cent down and the BSE smallcap index a similar 1.19 per cent lower. link...

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Rangarajan pitches for partial roll-back of stimulus

NEW DELHI: In what may be a broad prescription for the government's economic policy road map ahead of the Budget for 2010-11, the Prime Minister's Economic Advisory Council (PMEAC) on Friday pitched for a partial roll-back of stimulus measures to usher in fiscal correction by scaling up excise duties and service tax and “adjusting” Central expenditure without hurting capital spending on infrastructure.

Briefing the media here after releasing the ‘Review of the Economy 2009-10' which projected a GDP (gross domestic product) growth of over 7.2 per cent this fiscal, 8.2 per cent in 2010-11 and 9 per cent in 2011-12, PMEAC Chairman C. Rangarajan said that since the expenditure stimulus was directed at augmenting consumption and not investment, the corrective measures must also focus on adjusting expenditure. “There is a case for adjustment of duties...adjustments are possible both on the revenue side and the expenditure side in order to bring down fiscal deficit,” he said.

Noting that government finances have come under severe strain and the fiscal imbalance “is now a matter of concern”, the PMEAC said: [The] Government cannot continue with the kind of large revenue and fiscal deficits recorded in the last two years and will have to initiate fiscal consolidation in the coming fiscal year (2010-11) itself …in the forthcoming budget to ensure fiscal sustainability, enable greater flexibility in monetary policy calibration, contain interest payments and to avoid upward pressure on interest rates.” link.....

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Lending rates not to move up till May-June: SBI chief

MUMBAI: State Bank Chairman O P Bhatt on Saturday said that lending rates in the banking system are unlikely to rise at least in the next 3-4 months as hiking rates in a low-demand scenario could hurt banks' margins.

"That (increasing lending rates) may not happen till May-June till the liquidity surplus goes away from the system," O P Bhatt told reporters on the sidelines of an event here.

Bhatt hinted that the State Bank is also unlikely to increase the interest rates for its depositors in the near future.

After the RBI hiked the portion of deposits banks need to park with it for zero interest last month, at least two banks--HDFC Bank and IDBI Bank--had upped their deposit rates-- a trend that could be followed by other banks in the coming days.

SBI has a liquidity surplus of around Rs 75,000-crore and its maintenance cost had adversely impacted the third quarter numbers the bank.

On base rates, Bhatt said banks have sent a "collective feed back" to RBI, where they have cited some implementation issues, particularly in the priority sector and staff loan segments. link.....

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Monday, February 15, 2010

Europe cannot afford to rescue Greece

To bail out Greece or not? The question is grabbing headlines daily. Supporters of a bail-out argue that if Greece collapses, others would follow. Financial markets have already identified the next candidates. As such, European economic and monetary union is at risk. Only financial aid and “solidarity” with highly indebted members can rescue the euro.

It is certainly true that this is a decisive moment for Emu – but for the opposite reason. Greece will continue to receive support from several European Union funds. But financial aid from other EU countries or institutions that amounted, directly or indirectly, to a bail-out would violate EU treaties and undermine the foundations of Emu. Such principles do not allow for compromise. Once Greece was helped, the dam would be broken. A bail-out for the country that broke the rules would make it impossible to deny aid to others.

It seems that quite a number of observers have forgotten what Emu is, and what it is not. The monetary union is based on two pillars. One is the stability of the euro, guaranteed by an independent central bank with a clear mandate to maintain price stability. The other is fiscal solidity, which has to be delivered by individual member states. Member countries are still sovereign. Emu does not represent a state; it is an institutional arrangement unique in history.

In the 1990s, many economists – I was among them – warned that starting monetary union without having established a political union was putting the cart before the horse. Now the question is whether monetary union can survive without such a political union. The current crisis must be handled in such a way as to produce a positive answer. The viability of the whole framework – nothing less – is at stake.

By joining Emu, a country accepts its rules. Greece, moreover, also knew that adopting a stable currency that was not controlled by its own central bank implied a total break with the past. Devaluation of the national currency and an inflationary monetary policy were no longer options. A single monetary policy is implemented by the European Central Bank and it is the responsibility of each country to adjust its economic policies so that this one size fits all.

Participation in Emu brings huge advantages. The benefits of joining a stable economic area are greatest for countries that were unable to deliver such conditions before. Thanks to the euro, Greece has enjoyed long-term interest rates at a record low. But instead of delivering on its commitment at the time of entry to reduce public debt levels, the country has wasted potential savings in a spending frenzy. The crisis with which it is now confronted is not the result of an “external shock” such as an earthquake, but the result of bad policies pursued over many years. Bailing out Greece would reward such behaviour and create moral hazard of a dimension hardly seen before.
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Bharti Faces Hurdle on Zain Nigeria in $10.7 Billion Purchase

Bharti Airtel Ltd.’s plan to buy most of the African assets of Kuwait’s Zain for $10.7 billion may face challenges even before it begins its due diligence.

India’s largest wireless company’s plan can’t include Zain’s Celtel Nigeria B.V. unit until an ownership dispute with Econet Wireless Holdings Ltd. on that business is resolved, Econet Chief Executive Officer Strive Masiyiwa said.

“Zain Nigeria is not for sale,” Masiyiwa said in an interview in Johannesburg today.

For Bharti, troubles in Nigeria, Africa’s most-populous nation and the continent’s fastest-growing telecommunications market, may be an indication of what it might be up against in the 15 countries where it’s seeking to take over Zain’s operations. Kuwait’s Mobile Telecommunications Co., or Zain, and Bharti said in statements today that they will hold exclusive talks until March 25 on the assets.

“If there are 15 companies in which you are taking a stake, then there are going to be 15 different complexities,” said Jigar Shah, senior vice president of Kim Eng Securities Pvt. in Mumbai. “It’s doubtful that a company like Bharti hasn’t foreseen this.”

Bharti fell as much as 9.6 percent in Mumbai trading, the most since Oct. 6. Zain shares were suspended from trading in Kuwait. They last traded on Feb. 11 when they advanced 3.9 percent to 1,080 Kuwaiti dinars. The stock has soared 23 percent in the last week, giving the company a market value of 4.64 billion Kuwaiti dinars ($16 billion). link....

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