09.06.2010

Finance & Economy

• The Munjal family settlement
• The Munjals of Hero Honda have partitioned their businesses in an amicable manner -- a rarity seen in India Inc.
• Take a look at this lead story in today's paper. Makes an interesting reading.
• Bharti wraps up Zain deal
• Bharti has reportedly closed the $9 bn purchase of the African operations of Kuwait's Zain Telecom.
• This is India's second biggest overseas deal after Tata Steel's $13 bn purchase of Corus in 2007.
• The completion of the deal gives Bharti Airtel a firm foothold in a market that it has long coveted: two previous attempts to enter Africa with MTN, the continent’s largest phone firm, came to nought.
• Cash from the African operations will pay for the about $9-billion loan that Bharti has taken to fund the deal and will reportedly cost the company less than $200 million a year in interest payments.
• The combined entity will be the world’s fifth largest, with 180 million customers, 42 million of them in Africa.
• On the importance of tackling inflation
• Inflation will be a nagging issue for India because: (a) We are a nation with a large population, which is underserved in terms of food, clothing, housing, etc, (b) Indian GDP is on the trajectory of high trend growth rate of over 8% and GDP per capita is growing at the rate of 7.5%. There is significantly high unsatiated demand at current level of economy, which is bound to rise significantly further as the GDP per capita increases. Hence, the managers of Indian economy have to address the issue of inflation with short-, medium- and long-term perspective.
• On financial exclusion through KYC norms
• This is an excellent piece written by Sandeep Parekh explaining how we are all getting financially excluded because of the KYC norms. An interesting read.
• What needs to be done to fix our power sector?
• Take a look at the prescription from a former Power Secretary:
• One, bring back distribution to the centre of power sector reform. MoA signed with each state should be implemented.
• Two, states refusing to reorganise electricity boards may be made ineligible to a number of benefits under various central schemes.
• Three, theft control measures must be implemented by states with commitment.
• Four, distribution business in such towns, where the loss is more than 25%, should be franchised. A similar initiative in villages is a condition for the rural electrification grant from the Centre. It should, therefore, be insisted upon.
• Five, cross subsidy, as per tariff policy, must be brought within plus minus 20% of average tariff progressively, by January 2011.
• Six, open access on distribution is key to competition in distribution. States which do not facilitate this should be denied various central benefits.
• Seven, free power, as an approach, must be abandoned.
• Tribunals for economic disputes, offences likely
• The government plans to set up special dispute resolutions panels and courts to resolve economic offences and disputes, as it looks to make a clear distinction between cases of general and specialised nature.
• The proposal will now be discussed and finalised by the law ministry. It may require changes in existing legal framework.
• This initiative follows a suggestion made by the Prime Minister’s Council on Trade and Industry, which called for a special dispute resolution mechanism to administer all existing and future economic legislations.
• Private funds flowing swiftly to infrastructure projects
• Private investments in India’s infrastructure projects crossed $25-billion mark in the first three quarters of 2009, as conducive government policies and liquidity in capital market opened the floodgates of corporate funds into the booming energy and transport sectors.
• An improved show by infrastructure industries helped India lead its South Asian neighbours in terms of economic performance, according to a World Bank report. India’s energy and transport sectors attracted 40% of total investment commitments worth a record $26 billion.
• Investment commitments to new infrastructure projects with private participation grew by 15% in 2009.
• This could be because of the country’s globally competitive manufacturing sector.
• Basic about Pass through certificates
• A pass through certificate (PTC) is created on conversion of a loan to an investible debt instruments such as bonds and debentures. The PTC has features of any other debt instrument and earn a return to the investor. Such certificates are sold against an underlying security which is generally the loan that a bank converts into securities or bonds.
• In India, servicing of such PTCs is done by a special purpose vehicle (SPV) which is created by the issuer of such PTCs. The issuer is essentially a bank or an NBFC which benefits by converting loans to PTCs through what is known as securitisation as it generates further resources for the entity for further lending. The investor earns a fixed return like any other fixed income instrument.
• On liquidity
• This is a very good ET in the Classroom column that explains all about the concept of liquidity. Worth a read.

Sport

• FIFA World Cup history
• From its humble beginnings in Uruguay in 1930 to a global phenomenon, the FIFA World Cup (WC) has grown as a passion for both foot-ballers and fans. With Uruguay, the football champion in the 1924 and 1928 Olympics, along with celebrating 100 years of Independence in 1930, FIFA decided to give the country the hosting rights for the first World Cup.
• Only 13 nations participated in the first World Cup and Uruguay won. FIFA then asked teams to qualify for the following World Cup, held in Italy. Uruguay did not defend its title, miffed with the non-appearance of European nations on its soil. Italy went on to win in 1934.
• The succeeding edition saw the host nation and defending champion given direct entries into the finals. Italy retained the title while many South American nations boycotted the event because of the finals staying in Europe. The next two tournaments were cancelled because of World War II.
• The 1950 World Cup in Brazil saw England participating for the first time. The competition did away with knockouts and had two group phases.
• A 17-year old Pele, displaying skills beyond his age, became the youngest player to win the WC. With the likes of Garrincha by his side, Pele and Selecao again won the World Cup in 1962.
• England hosted the 1966 event and won, and it would be remembered for many things. The Jules Rimet trophy was lost and found, South Africa was banned for apartheid, the first WC mascot was unveiled, and North Korea became the first Asian nation to enter the last eight.
• In 1970, Brazil coasted to a dominating triumph, with Pele becoming the first and till now only player to win three WCs. The team, which also had the likes of Gerson and Tostao, is widely recognised as the best ever football team.
• Now in its 80th year, the World Cup touches down in Africa. The African nation, riddled with economic strife and racial tensions, has done all the spadework for the quadrennial event.