Let zero schemes finance growth, RBI

The RBI has done immense disservice to industrial growth in the short term by asking banks not to offer popular financing schemes for consumer durables dressed up as zero-interest equated monthly instalment (EMI) schemes. Industrial growth has been extremely weak for an extended period and the forthcoming festival season is an opportunity for assorted consumer durable companies to step up their sales.

The zero-down-payment, zero-processing-fee, zero-interest EMI schemes an increasing number of companies offer on a variety of products are good for both consumers and for companies. The RBI's move scuppers this opportunity to a large extent.

It is not the case that consumers are unaware that these financing schemes entail real costs on account of interest and documentation. They are aware that credit card-issuing banks charge a financing cost that product companies bear, to tempt consumers with "zero" offers. But this is not their concern. Nor should it be the RBI's. If the RBI is worried about the rates banks offer, it is welcome to examine the banks' books and ascertain if any rule is being violated.

Why should the bank regulator interfere with the behavioural economics at work when consumers prefer "zero" finance options on a higher price that bundles financing cost with the product price to the transparencyof a lower product price and an explicit overlay of financing cost? Nor are consumers irrational. The cost would be lower, when borne by the company for multiple transactions all together, than when financing is offered to individual consumers.

The only beneficiary from the RBI's move is the buyer with sufficient purchasing power to not need a financing scheme, now that the product would be priced lower, taking out the financing cost by which price had been marked up earlier. Product sales and industrial growth would suffer, for the benefit of a tiny elite. This is a fetish for transparency that benefits no one except bean counters at the RBI. The RBI should withdraw these strictures gracefully and wish the economy a Happy Diwali.

source:Economic Times

Google's Motorola eyes BlackBerry employees

With Blackberry shedding staff in its hometown of Waterloo, Ontario, other tech companies, including Google's Motorola Mobility unit, are moving to take advantage of a growing pool of local talent. 

Motorola Mobility said it plans to set up a new hub in Waterloo, located about an hour's drive west of Toronto. 

"We have a small space right now and we're looking to grow considerably," said Derek Phillips, engineering director for Motorola Canada. 

He declined to specify the number of new hires expected, but said the company was seeking computer science and engineering talent. 

Google acquired Motorola Mobility last year in a $12.5 billion deal that gave it ownership of a large portfolio of communications patents. It has since moved to revamp the company's money-losing mobile phone business. 

Google separately has its existing Canadian development headquarters in Waterloo, which boasts an in-office slide. 

The company is one of hundreds of tech players with a presence the city, attracted in part by graduates of the University of Waterloo's highly ranked computer science, engineering and technology programs. 

The vast majority of local technology companies are small startups looking to make a splash such as the one BlackBerry, then called Research in Motion, made after it pioneered pocket email in the 1990s. 

But times have changed for BlackBerry, which said on Friday that it would cut about 4,500 workers, more than a third of its global workforce, and post a quarterly loss of nearly $1 billion. 

The job cuts are expected to strike a blow to the city and regional economy, given the knock-on-effect on retailers, the property market and local service providers. 

The latest layoffs follow other cuts over the past three years as Blackberry bled market share to competitors such as Apple Inc and phones that use Google's Android operating system. 

On Monday, BlackBerry said it agreed to sell itself for $4.7 billion to a consortium led by its biggest shareholder, Fairfax Financial Holdings Ltd. 

It is unclear if the sale, if it goes through, will result in further job cuts. 

Start-ups hiring

Phillips did not link Motorola's expansion to BlackBerry's troubles, but said the local talent pool was key to the area's appeal. 

"The goal is to try to get just as many people who are interested to come out and hire as many people as we can. I think as long as we can find really good people, we will find a way to hire them," he said. 

The hiring is not expected to come close to replacing the hole left by the BlackBerry cuts. But members of the local technology community noted that Motorola is not the only one looking to expand in the region. 

Mobile payments company Square Inc plans to establish a permanent office in the area in 2014, spokeswoman Lindsay Wiese told Reuters. 

Avvey Peters, head of external relations at Communitech, a non-profit that bills itself as a regional hub for the tech sector, said she knew of about 1,000 job vacancies in the industry. She estimates the sector employs about 30,000 people. 

"Certainly everybody's watching. Everybody's feeling for individuals who either have been laid off or are going to be," she added. "The local ecosystem created BlackBerry, not the other way around."

source:Times of India

Ford CEO leading race to head Microsoft: Report

 Ford CEO Alan Mulally has reportedly emerged as the lead candidate for the top seat at Microsoft.

Technology website AllThingsD said that Mulally has vaulted to the forefront of the candidates being considered to replace retiring Microsoft chief Steve Ballmer.

Earlier, there were reports that at least three of the top 20 investors in Microsoft want a turnaround expert to succeed Ballmer and have urged the technology giant's board to consider Ford Motor CEO Alan Mulally and Computer Sciences Corp CEO Mike Lawrie for the job.

Investors are keen on Mulally and Lawrie as both have histories of successfully turning around companies.

Under a succession plan at Ford outlined last November, Mulally, 68, is expected to stay on as CEO until at least the end of 2014. However, according to reports, Mulally may step down sooner than planned if he gets an interesting offer.

Microsoft recently inked a deal to buy Nokia's phone business. The deal also brings Stephen Elop, who ran Microsoft's business software division before jumping the ship in 2010, back to the company. Elop too is said to be among the list of contenders to succeed Ballmer.

source:Times of India

Tata Teleservices, Sistema and Aircel in merger talks

Tata Teleservices, Russia's Sistema JSFC and Aircel, controlled by Malaysia's Maxis, are in exploratory talks for a three-way merger to create India's third-largest telecom company by subscribers, said three persons familiar with the development. 

If the transaction materialises, it will allow the companies to cut costs, share infrastructure and pool capital. 

Deal could be complicated

It will create a combined entity with 13.5 crore subscribers. 

A person with direct knowledge of the development said a three-way merger would be complicated and will take some time to fructify. "There was a fair amount of discussion between Tata Teleservices and Sistema. The discussion between Tata Teleservices and Aircel is very new. These are early days," he said. 

Tata Tele, Sistema, Aircel in initial merger talks Another person familiar with the development said, "I know that a few weeks ago, the three companies were trying to put together this idea of a merger." Both these people declined to be named as the talks are confidential and still developing. 

Both Tata Teleservices, which is 26% owned by Japan's largest mobile company NTT DoCoMo, and Aircel have been struggling to pare their debt - around Rs 23,000 crore and Rs 22,000 crore, respectively. Standard Chartered Bank is advising Aircel on its debt-restructuring exercise. 

Sistema, on the other hand, is cash rich and would be the dominant shareholder if the three companies agree to merge. The company, which is partly owned by the Russian government and operates in India through a joint venture with Shyam Telecom, has identified consolidation as the route to growth in the Indian market. 

"The Indian telecom market was ready for consolidation and one shouldn't be surprised to see more than two operators come together," Sistema Global Chief Financial Officer Vsevolod Rozanov told ET recently. "One could expect the top seven players to shrink to just four and that foreign investors will lead the consolidation of this market." 

Rozanov, however, declined to comment on a specific query on the merger talks involving Sistema Shyam Teleservices (SSTL) with Tata Teleservices and Aircel. 

Spokespersons for both Aircel and Tata Teleservices said they would not comment on market speculation. 

Sistema Shyam's pan-India licence to offer CDMA services in 22 circles was cancelled by the Supreme Court last year. But the company won back airwaves for eight states earlier this year and now has more than 9 million customers. 

The government will shortly announce revised M&A guidelines for the sector, a move that is expected to trigger a shakeout in the industry. But foreign operators such as Sistema are concerned that the new policy might make it compulsory for the buyer to pay an additional amount to the government for the acquired airwaves, thereby increasing the total acquisition cost. Industry experts said consolidation was the way forward and any deal would be a win-win for the three companies. 

"Sistema will receive CDMA footprint of Tata and can strengthen its voice subscribers while Aircel and Tatas can cut their expenditure by pooling their capital and share infrastructure," said BK Syngal, senior principal at Dua Consulting. 

The country's leading telcos are also preparing for a wave of consolidation. Last week, SingTel chief Simon Israel urged Bharti Airtel, in which it holds a 32.34% stake, to lead such moves in the Indian telecom market while a few days before him, Vodafone India CEO Martin Pieters said he saw his company as the natural consolidator.

source:Times of India

India to build its first strategic oil storage by January 2014

 India will build its first strategic oil storage by January in an effort to insulate itself from supply disruptions, Oil Minister MVeerappa Moily said today.

India, which is 79 per cent dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil. This is enough to meet nation's oil requirement for 13-14 days.

"The storage at Visakhapatnam is expected to be commissioned in January 2014," Moily said here.

Visakhapatnam facility would have the capacity to store 1.33 million tonnes of crude oil in underground rock caverns. Huge underground cavities, almost ten storey tall and approximately 3.3 km long are being built.

A similar facility in Mangalore will have a capacity of 1.55 million tonnes and would be mechanically completed by March 2014. A 2.5-million tonnes storage at Padur, near Mangalore, would be completed by end of current fiscal, he said.

With the commissioning of Visakhapatnam storage, India will join nations like the US, Japan and China that have strategic reserves. These nations use the stockpiles not only as insurance against supply disruptions but also to buy and store oil when prices are low and release them to refiners when there is a spike in global rates.

Originally, India Strategic Petroleum Reserves Ltd (ISPRL), the state-owned firm building the strategic stockpile, was to build the Visakhapatnam facility by October 2011 while the Mangalore storages were to be mechanically completed by November 2012. The storage at Padur was scheduled for completion in December, 2012.

"Visakhapatnam storage is 94.6 per cent complete, Mangalore is 89.2 per cent and Padur is 86 per cent complete," Moily said.

The Cabinet had in January 2006 approved building of the strategic crude oil storages at a cost of Rs 2,397 crore but due to cost and time overrun the capital required is now estimated at Rs 3,958 crore.

The Visakhapatnam facility will cost Rs 1,038 crore, Mangalore Rs 1,227 crore and Padur Rs 1,693 crore.

ISPRL has till date received Rs 2,529 crore from Oil Industry Development Board (OIDB) and Rs 100 crore from Hindustan PetroleumBSE 1.93 % Corp Ltd ( HPCLBSE 1.93 %), officials said adding that the firm requires Rs 1,195 crore either from OIDB or the Government to complete the projects.

ISPRIL would need Rs 490 crore in current fiscal and Rs 705 crore in the next, they said.

The Economic Times

India clinches bronze in Asia Cup hockey

Indian women defeated China via the penalty shootout to clinch the bronze medal in the eighth women’s Asia Cup hockey tournament here today.

India, which needed to win the tournament to qualify for next year’s World Cup to be held at The Hague, Netherlands, edged past China 3-2 in the shootout after both the teams were locked 2-2 at the regulation time.

By virtue of this win, the Indians managed to avenge their 0-1 defeat to the Chinese in the pool stages of the tournament.

India dominated proceedings in the first half and scored two field goals through Anuradha Devi Thokchom (16th minute) and Vandana Katariya (31st) to go into the breather with a comfortable 2-0 lead.

China pulled one back in the 51st minute through Yan Yan’s field goal to liven up the match.

The Indians had themselves to blame as some sloppy defending towards the end allowed China to draw parity when Wu Mengrong scored the equaliser in the 64th minute.

Thereafter, both the teams played cautiously in the last six minutes to take the encounter into the shootout.

In the shootout, the Indians came out on top, converting three of their chances as against the two by the Chinese girls.

Meanwhile, Japan stunned defending champion Korea 2-1 in the final to win the Asia Cup and secure a place in next year’s World Cup.
The Hindu