30.03.2008

• India to develop 6 multi-modal airport hubs
• India will soon have multi-modal airport hubs across its landscape, similar to the one proposed at Nagpur.
• They will be developed in six metros to cater to not only commercial airlines but also to cargo airlines. They will have MRO (Maintenance, Repair and Overhaul) facilities.
• The proposed places where these will be established are: Amritsar, Ahmedabad, Hyderabad, Thiruvananthapuram, Kokata and Guwahati.
• Regional stock exchanges in limelight again. Why?
• There is a rising interest in regional stock exchanges because of new FDI norms that allow foreign investments up to 49% in stock exchanges, depositories and clearing corporations, with a cap on single investment, direct or indirect at 5%.
• One more reason is the ‘corporatisation of exchanges.’ This allows them to be run like any other company. They exist and operate to earn profit.
• The interest evinced by Nasdaq (the largest electronic equity securities trading market in the US) to partner with Ahmedabad Stock Exchange and the German multinational bank Deutsche Bank’s attempt at owning about 5% stake in the Delhi Stock Exchange are examples of this trend.
• Language lessons:
• What is meant by ‘epiphany’ in this following sentence?
• “While observing exotic animals and trainers in her acclaimed book, journalist Amy Sutherland had an epiphany: what is she uses these training techniques with the human animals in her own life – specifically dear husband, Scott?”
• Christians would, I suspect easily know it. But for others it may not be so easy. Here is what Merriam Webster’s says about it.
• An intuitive grasp of reality through something (as an event) usually simple and striking.
• On self healing materials
• It is quite sometime since we had Shelly Singh write about some new technology stuff. Today it is about self healing materials. Some excerpts:
• Materials’ properties degrade over time due to cracks on a microscopic scale that ultimately lead to failure of the material. In the biological world there are built-in mechanisms that continuously sense damage and repair it. In the field of materials science researchers are now trying to engineer this type of behaviour into man-made materials, hence called self healing materials. There are already a few such materials but new research and development has focussed on materials that repair within minutes of damage.
• Two research groups — one in the US and one in the UK — have independently tried to create composite materials that mend themselves if damaged. In a manner akin to the self healing process of an animal’s broken bone or a skin rash. The effort by the two research groups differs from other such efforts as they seek to make materials which will heal in minutes rather than days, weeks or months.
• The American initiative focuses on the problem by adding extra components to composites. Like most such materials, these composites comprise fibers, carbon fibers in this case, embedded in a plastic matrix (an epoxy resin). The main extra component added are tiny capsules containing a chemical called dicyclopentadiene. If the composite cracks, the capsules near the crack break open and release the dicyclopentadiene molecules, which link together to form another type of plastic that binds the crack together and thus heals the material.
• And in the UK, scientists have taken a different approach to achieve the goal. They used glass fibers rather than carbon fibers in their composite and, instead of adding capsules, they have put the healing molecules into the fibers themselves. A crack in the material breaks the fibers, releasing the ingredients which react, form more epoxy, and thus mend the crack. If such research succeeds commercially, we can look forward to healthier, longer lasting products.
• Tatas clinch the Jaguar deal – Jaguar Land Rover deal
• It is a $2.3 bn all-cash deal. Under the deal Ford would pay about $600 mn towards the pension liabilities of Jaguar-Land Rover employees and Tata Motors would continue to source motors from Ford.
• However, the cost of the final deal is expected to be about $3 bn because this price of $2.3 bn just covers the price of brands, assets and technology know-how. A big part of the additional cost would go for engine and component supply.
• Any amount of coverage on the US attempts at coming out of the morass that the sub prime mess landed it seems to be not enough. Let’s look at some coverage relating to it that appeared in today’s ET:
• The first one is about helping the defaulting borrowers of home loans.
• The Bush administration is finalising a plan to rescue thousands of homeowners facing foreclosure by helping them re-finance into more affordable loans, according to media reports on Saturday. The proposal is aimed at assisting borrowers who owe their banks more than their homes are worth due to declining home prices. If enacted, it would mark the first time the White House has committed federal dollars to help the most hard-pressed borrowers. Under the plan, the Federal Housing Administration would encourage lenders to forgive a portion of these loans and issue new, smaller loans in exchange for the backing of the US government. Is this any different from the farm loan waiver that we are seeing in India?
• The second is the Fed’s helping hand given to JP Morgan Chase for buying out the beleaguered Bear Stearns. I would recommend a read, for those of you with time and interest in knowing the details. It is here. But for others, the following excerpt may be enough:
• What the Fed is calling a $29 billion “loan” to help finance JPMorgan Chase’s purchase of Bear Stearns looks much more like a $29 billion investment in securities owned by Bear. Although the Fed insists that it isn’t technically buying any assets, in practical terms it’s doing exactly that.
• So far, few people have focused on what exactly the Fed is getting in exchange for supplying $29 billion to JPMorgan Chase. That’s a bit surprising because whatever the deal is, it’s far from a standard loan. The strangest twist is that even though the money goes to JPMorgan, that firm isn’t the borrower. So the Fed can’t demand repayment from JPMorgan if the Bear assets turn out to be worth less than promised.
• Here’s how it works: A Delaware-based limited liability company will be set up to receive, upon completion of the merger, $30 billion in various Bear holdings, such as mortgage-backed securities. The Fed will lend $29 billion to that company, which will pass all the money along to JPMorgan, Bear’s new owner. JPMorgan itself will lend $1 billion to the Delaware company. The company, managed by BlackRock-Financial Management, will pay back the loans by gradually liquidating the assets. As a protection for the Fed, it gets paid back fully before JPMorgan gets back anything on its loan. The other sweetener for the Fed is that if there’s money left over even after JPMorgan gets repaid, the Fed gets it all.
• From an economic perspective, this complex arrangement is functionally identical to a purchase of the Bear portfolio by the Fed—one that’s financed in small part by the subordinated $1 billion loan from JPMorgan. But the Federal Reserve Act doesn’t seem to provide for the Fed to make such equity investments. That doesn’t trouble the Fed because it argues that the $29 billion is indeed a loan—or, to use the antiquated language of the Fed’s founding legislation, a “discount” of a “note.”
• Remembering as we are about our farm loan waiver in the above discussion, is it really bad? Look at what our celebrated and noted Management Guru CK Prahlad says about the farm loan waiver package.
• The waiver will only allow the farmers to become credit worthy again. What is far more important for them is better access to markets, skills upgrade and a host of other measures. The loan waiver has not really solved the structural problem for farmers in India. He further feels that agricultural policies in India need to be sensitive to the fact that the problems in different parts of the country are very different. For instance, the farmers in Vidarbha face a completely different set of issues from those in Telangana.
• BTW, do you know what is he famous for? His “fortune at the bottom of the pyramid” concept has won him laurels and international recognition. This concept highlights that businesses, governments, and donor agencies need to stop thinking of the poor as victims and instead start seeing them as resilient and creative entrepreneurs as well as value-demanding consumers.
• Good news on the cricket front
• Now it is the turn of Dravid to join some all time greats by reaching the 10,000 run mark in test cricket. He joins as the sixth member of that elite club which reached this mark. The others before him include: Sunil Gavaskar (10122), Alan Border (11174), Brian Lara (11953), Steve Waugh (10927) and Sachin Tendulkar (11782).
• Dravid, Lara and Tendulkar are the only ones who have scored more than 10000 runs in both Test and one-day cricket.
• Who is Jayakrishna Ambati and why is he in the news?
• This Indian American questioned the Nobel price winning work of prototype gene treatment. His team discovered that the gene silencing method, rooted in a 1998 breakthrough that earned the Nobel for medicine in 2006, works not by targeting the specific culprit gene, but by having a generalised effect of blocking blood-vessel growth that could harm tissues.