GoM okays selling majority stake in Cairn India to Vedanta

A ministerial panel on Friday agreed to government granting approval to UK's Cairn Energy selling majority stake in its Indian unit to Vedanta Resources apparently without any pre-condition.

Cairn-Vedanta deal referred to CCEA, decision in two weeks

The recommendation of the Group of Ministers headed by Finance Minister Pranab Mukherjee will go to the Cabinet Committee on Economic Affairs (CCEA) in two weeks time, Oil Minister S Jaipal Reddy told reporters after the 75-minute long meeting.

Initial indications available suggest the GoM may have ignored the tougher option of asking Cairn or its successor to consent to paying cess on the all important Rajasthan block as well as agreeing to cost-recovery of Rs 18,000 crore in royalty that ONGC pays in the fields, as a pre-condition for the nod.

"It (GoM) has looked at various aspects of the (USD 9.6 billion) deal. It has taken a view on the matter. This view will be presented to the CCEA. GoM is not going to meet again," Reddy said.

Refusing to divulge what the GoM recommendation will be, the minister however stated that his ministry's previous stand of supporting ONGC's demand for royalty being made cost recoverable from revenues of Rajasthan block "may not be GoM's recommendation".

Oil Ministry had till January supported the view that consent to Cairn-Vedanta deal should be pre-conditioned to agreement on demand made by ONGC in July 2010, a month before the USD 9.6 billion deal was announced. However, after Reddy took over in late January, the ministry diluted the stand and suggested an alternative that consent may be given without any condition and the government "shall take appropriate decision to enforce cost recovery of royalty".

The GoM appears to have gone with the second option, which was strongly supported by finance ministry. In both the cases, Cairn will have to seek consent of state-owned Oil and Natural Gas Corp's (ONGC), which holds stake in 8 out of the 10 properties held by Cairn India in the country.

Also, Vedanta will need a security clearance from the Ministry of Home Affairs. Cairn has refused to accept the requirement of partner consent even though five oil blocks it won under New Exploration Licensing Policy (NELP) explicitly provides for obtaining no objection from partners in case of change of ownership.

It holds 70% interest in the Rajasthan block but does not pay any royalty. It is opposed to cost recovery of the Rs 18,000 crore royalty payments that ONGC has to make on its 30% and Cairn's share of production.

The CCEA had on April 6 constituted a GoM to look into the issue of conditional or unconditional consent to the Cairn-Vedanta deal. Today was the first meeting of the GoM which also comprised of Law Minister M Veerapa Moily, Telecom Minister Kapil Sibal, Commerce Minister Anand Sharma and Planning Commission Deputy Chairman Montek Singh Ahluwalia. Sharma did not attend the meeting.

"We have taken up the matter in right earnest. We have taken a view at our level. The decision has to be taken by CCEA," Reddy said. Solicitor General Gopal Subramaniam had in March opined that the government should not give unconditional nod to the deal but in April 6 slightly diluted it but reaffirmed the cost recoverability of royalty.

He however refrained from saying if this along with Cairn being made to pay cess should be made a pre-condition for approval. ONGC owns a 30% stake in Cairn India's mainstay Rajasthan block, but is liable to pay 20% of crude oil price as royalty on the entire output from the field. This
liability has made the project economically unviable for ONGC.

Cairn is also contesting its liability to pay a Rs 2,500 per tonne cess on its 70% share. But unlike royalty, it is treating cess as a cost-recoverable item. All cost-recoverable items like capital and operating expenditure are first deducted from revenues earned from the sale of oil before profits are shared between stakeholders, including the government.

Cairn Energy, which wants to sell at least a 40% stake in its Indian unit to Vedanta, and the London-listed mining group are opposed to making royalty cost-recoverable as it will lower the profitability of Cairn India

March quarter growth seen at 8.2% year-on-year

Median forecast from a poll of 28 economists is for an annual growth of 8.2% in the quarter through March, unchanged from the previous quarter.

Forecasts ranged from 6.3% to 8.9%.

The economy is expected to have grown 8.5% in fiscal year 2010/11 that ended in March, just below the 8.6% estimated by the government, and up from 8% a year earlier, the poll showed.

Forecasts for the full fiscal year growth ranged between 8.0% and 8.7%.

Factors to watch

* India's industrial output grew an annual 7.3% in March, smashing forecasts on the back of a revival in capital goods production.

* Services sector gained momentum in April, with strong growth in new business orders, a HSBC survey showed early this month.

* Manufacturing sector maintained its strong rate of expansion in April, helped by higher output and employment, the latest purchasing managers' index (PMI) data showed.

* While both input and output price indexes fell from the highs seen in March, they remained way above the 50 mark as soaring fuel and raw material prices drove up costs and fed into output prices, a clear indication that high inflation was here to stay.

* India's headline inflation eased to 8.66% in April, but upward revisions to past readings and the prospect of higher energy prices will keep pressure on the central bank to raise interest rates in June and maintain its hawkish stance.

* The Reserve Bank of India (RBI), which has been one of the most aggressive of major central banks in tightening policy, early this month raised rates by a higher-than-forecast 50 basis points and said it was willing to sacrifice a bit of growth to tame inflation.

* The RBI has raised its policy rate nine times by a total of 250 basis points since March 2010.

* Most economists in a recent Reuters poll expect the central bank to raise rates by at least another 75 basis points in 2011.

* Monsoon rains, which are vital for boosting farm production and rural incomes in the nation of more than 1.2 billion people, have been forecast to be normal in 2011.

Market impact

* Bond dealers said a March-quarter GDP growth number of around 8.1-8.3% will have little market impact.

* However, they said a number below 8% could push yields down by 4 to 5 basis points as the market has been heavily sold in recent sessions, while a number above 8.5% could push up yields by 2 to 3 basis points.

Market blooms: Is it time to bid a frosty farewell?

Indian equities continued their winning streak on Friday as investors enlarged their positions in realty, banking and metal counters. TheNifty June F&O series, too, kick started on an upbeat note as buyers shrugged off rising food inflation concerns and bought blue chips across the board.

The Sensex closed shop at 18266.10, higher by 221.46 points or 1.23% and the Nifty ended up 63.30 points or 1.17% at 5475.65.

Will it be a sweet start for the Nifty June F&O series? Perhaps, yes, as investor confidence pours in at lower levels, Deven Choksey, managing director of KR Choksey Securities said. “A lot of put writing options around 5,200-5,300 has also been witnessed, suggesting that 5,300 levels could serve as a floor for the new series,” he added.

“Going ahead, it's likely to rise up to 5.600-5,650 levels in the month of June,” he further stated.

Here's how market performed on Friday

In the similar manner, Mithil Pradhan, technical and derivatives analyst, Vikhroli Polycom pointed out that the market may bottom out around 5,300-5,400 levels.

“On the upside, the 50-scrip barometer may face stiff resistance around 5,498 and 5,545 levels; however, once it breaches 5,550-5,549 on the top, it has a target of 5,800-5,900 levels,” Pradhan added.

“In the curent scenario, one need to believe in the proverb: 'never short a dull market’. One can be cautiously long as the runaway to heights won't be quick,” Pradhan further endorsed, adding that June, by default, kicks off on a subtle note. “As per the historical charts of past 20 years, no major downturn during this month has been encountered,” Pradhan said.

So, what are the defensive bets in the unsettled economic scenario? “One can park their money in Ranbaxy, Wockhardt, TCS, or ITC in the current choppy market,” Pradhan concludes.

Nervous investors to demand bigger returns

The world looks a lot more dangerous then it did only a few months ago and signs are that US stock investors are starting to demand more for the added risk. With important manufacturing and jobs data due next week, it could start to get even riskier.

That means nervous investors are likely to keep a lid on equity prices this year as they grapple with slowing global growth and a host of geopolitical risks from the Arab Spring to debt defaults in the euro zone.

The actions of some big Wall Street banks best show the shift in the risk-reward nexus. Over the last two weeks, UBS, Citigroup and Goldman Sachs have effectively lowered their view of what investors will be willing to pay for a dollar of corporate earnings this year.

Jonathan Golub, chief U.S. equity strategist at UBS in New York, made the decision to keep his S&P 500 Index target on hold, even though he increased his expectations of what S&P 500 companies would likely earn this year and next.

"Earnings are going to continue to surprise to the upside, but investors will continue to be reluctant to believe in the sustainability of earnings and, therefore, not give full credit to that," Golub said.

Golub raised his average S&P 500 earnings estimate to $101 from $96 for this year, but left his year-end S&P 500target at 1,425. By doing that, Golub has effectively lowered his price-to-earnings (P/E) ratio -- the amount investors are willing to pay for a dollar of earnings -- to 14.1 from 14.8.

That amounts to an increase in the expected equity yield -- a measure of the return investors want -- to 7.1% from 6.8%.

That is significant because the expected price-to-earnings ratio was already below what investors have historically been willing to pay for S&P 500 earnings. The average trailing P/E ratio is 15.6 over the last five years and 19.2 since 1988, according to Standard & Poor's.

Golub argues that a batch of weak economic data pointing to slowing manufacturing, a weak housing market and stubbornly high unemployment is weighing on investor sentiment. Weakness in commodity markets and rotation into defensive sectors of the stock market testify to that shift.

Soft jobs data may hit S&P

With next week's ISM national manufacturing survey for May expected to show more weakness and payroll data tipped to show under 200,000 jobs added during the month, risk aversion -- driven by fear about the economy -- could get worse before it gets better.

Goldman Sachs economist Zach Pandl said his firm is predicting 150,000 jobs were added in May, compared with a Reuters consenus of 185,000.

An ISM reading below 60 next Wednesday would show "the strongest period of growth has passed and investors may need to adjust their expectations going forward," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

Economists in a Reuters poll expect the ISM reading to fall to 58 in May from 60.4 in April.

Goldman Sachs has also been tweaking its stocks outlook. It cut its year-end S&P 500 target, one of the highest on the Street, to 1,450 from 1,500, and lowered its 2012 earnings outlook to USD 104 to USD 106, citing lower global growth, higher commodity prices and slightly higher inflation.

Goldman analyst David Kostin, who is responsible for the S&P 500 target, was unavailable for an interview.

However Goldman's analysts wrote: "As we transition into the late expansion phase of the cycle later this year, the risk-reward balance for the S&P 500 is likely to become slightly less attractive."

Citigroup also slightly increased its earnings estimates for S&P 500 companies, lifting its 2011 forecast to USD 98 from USD 96.50. Although admittedly only a small increase, it chose to leave its S&P 500 target at 1,400.

Tobias Levkovich, Citigroup's chief U.S. equity strategist, could not be reached for comment.

The targets for all three banks are still at the upper end of analysts' estimates and are 5 percent to 8% above current levels.

Even if the index does get up to those levels later this year, those gains are slight compared to the near 80% run the S&P 500 has experienced since hitting a bear market low in March 2009.

For people like Bill Strazzullo, partner and chief investment strategist at Bell Curve Trading in Boston, that means the risks are firmly on the downside.

"The good news is there's some upside. The bad news is that you've probably made about 80 (%) to 90% of this rally," Strazullo said. "From a 'bigger picture' standpoint, the risk-reward really doesn't make sense."

Strazullo believes the S&P 500 will revert toward fair value, which he places at 1,100, based on where most of the money in the S&P 500 is invested. He is looking at some longer-term bearish options trades to capitalize on the end of the March 2009 rally.

"I'm not saying we'll go all the way back there, but the point is, you could drop a lot further than most people anticipate."

'Reforms crucial for getting Bharat closer to India'

After serving as secretary-general at the Federation of Indian Chambers of Commerce and Industry (FICCI) for 17 years, Amit Mitra passed on the baton to Rajiv Kumar. Kumar, who was earlier director and chief executive of the Indian Council for Research on International Relations, told HT that it woul d be a tall task to fit into Mitra’s shoes. Excerpts.

In the wake of high inflation, the finance ministry and the RBI have said that India’s growth rate would be lower than the 9% Budget projection. What is your opinion?
TheRBI in its annual monetary policy has already stated that the GDP growth rate would be much lower than 9%. I would say it is likely to be a little below 8% for the current fiscal year. But even that is not bad. Inflationary pressures do exist and interest rates are now going up in a bid to tackle high prices. Why do we allow the inflationary situation to build up in the first place? Why can’t we emulate China in this sphere and ease supply side much before it hits the economy? Before problem comes up, it should be addressed.

Now that you would be at the helm of affairs at FICCI, what would be your focus?
My focus would be to continue with all our policies and facilitate a conducive environment for investment. Investment procedures should be simplified to attract more foreign investment. We would like to work with state governments to create a uniform integrated investment climate within the country.

Reforms are yet to be carried out in various sectors. What would be your role?
Reforms are crucial to getting India and Bharat closer to each other and generating employment. We need to create 1.2 crore jobs annually. Sectors such as tourism, media and entertainment, manufacturing and agriculture would be critical in generating employment. 

What would be your role in sorting out land acquisition issues? 
Urbanisation and manufacturing both would need fresh patches of land. The archaic law needs to be changed at the earliest. FICCI has suggested adoption of the Haryana model for land acquisition. Around 70% of the land must be acquired at the existing market rate. Employment for local people, who may be displaced, must also be looked into. 

Food inflation rises to 8.55% for week ended May 14

Food inflation shot up to 8.55% for the week ended May 14, the highest level in four weeks, as prices of fruits, cereals and protein-based items escalated.
Food inflation, as measured by the Wholesale Price Index (WPI), was on a declining trajectory for the previous three weeks. The figu re for the seven-day period under review was 1.08 percentage points higher than the 7.47% inflation rate recorded in the previous week.

During the week ended May 14, cereals became costlier by 5.03% year-on-year and prices of onions were up by 8.32%, official data released here showed.

Prices of fruit rose by 32.37%, milk by 5.53% and eggs, meat and fish by 8.26%.

Rice also became 2.63% more expensive and potatoes 0.17% costlier on an annual basis.

Food inflation remained in double digits for most of 2010, before showing signs of moderation from March, 2011.

Prices of vegetables and pulses declined by 1.46% and 9.49%, respectively. Also, wheat became cheaper by 0.30% on an annual basis.

On an annual basis, the primary articles category saw an inflation rate of 11.60%.

On the other hand, prices of non-food primary articles were up 23.22% during the week under review. Fibres became dearer by almost 61%, while minerals were up 11.78%.

The government and Reserve Bank had said that in the months to come, inflationary pressure would be more from core (non-food) items on account of high global prices of commodities, particularly crude.

Online Ponzis: there’s no free lunch, not even low-priced ones

Over the last few days, there have been a spate of stories in the media about multi-level-marketing schemes that were, apparently, little more than Ponzi schemes. Like all such schemes, these too relied on the perpetrators’ keen appreciation of the general lack of knowledge about how this thing calle d money works.

It’s interesting to note that such schemes can be completely online. All interactions, as well as the product (or investment) being sold had only a digital existence. To use the latest buzzword, this fraud was deployed completely in the cloud.

But that doesn’t change the fact it exploited an instinct that is probably as old as civilisation itself. There are a lot of people whose idea of investing is that there’s someone out there who knows a secret of making money effortlessly and they too could do the same if only the secret was theirs too.

Now, I won’t argue that such a holy grail don’t exist. To pick some names at random, Mukesh Ambani, Warren Buffet and Goldman Sachs surely have some combination of abilities and knowledge that you and I don’t have.

However, no one is going to make you part of this inner circle for R11,000 paid online. There’s a normal range of how much return an investment can get.

This depends on whether it’s equity or debt, or even employment or entrepreneurship, something that isn’t clear in these survey companies. There are no free lunches, and in fact there may not even be any low-price lunches.

Much of the coverage of Ponzi schemes have focussed on the details of their businesses and how they could/should be detected and cracked down upon. I don’t think this is a useful approach.

As long as a large number of people are willing to believe in such schemes, they’ll keep happening. Among the first few referrals a scheme gets, someone should be able to stand up and say that this must be a fraud because it’s too good to be true.

Apollo Hospitals designates Suneeta Reddy as JMD

Apollo Hospitals on Thursday said it has re-designated Suneeta Reddy as Joint Managing Director (JMD) of the company with effect from June 1, 2011. The company's board, on recommendations of remuneration and nomination committee, has approved the re-designation of Suneeta Reddy as JMD of the firm, A pollo Hospitals Enterprise said in a filing to the Bombay Stock Exchange (BSE).

The board, which met on Thursday, has also approved a remuneration of 1.50% of the net profits of the company for Reddy, it added.

Prior to this, Reddy was designated as Executive Director (Finance) in the healthcare major. Her tenure as JMD is till February 2, 2016, it said.

The Chennai-headquartered group's consolidated net profit for the year ended March 31, 2011, stood at Rs 183.92 crore.

Shares of Apollo Hospitals on Thursday closed at Rs 475.70 on BSE, down 0.91% from the previous close.

India trying to build consensus on next IMF chief: Pranab

After France's Finance Minister Christine Lagarde announced her candidacy for the post of Managing Director of the International Monetary Fund (IMF), India on Thursday said developing nations are trying to "consolidate" their position to take a view on the issue. While most European countr ies are backing Lagarde, the developing countries are trying to build a consensus on nominating a person from the emerging nations as the next IMF chief.

"I am in touch with some of the finance ministers of developing countries and emerging economies... We are trying to consolidate our position where we can take a view," Finance Minister Pranab Mukherjee told reporters in New Delhi.

The post of IMF managing director fell vacant following the exit of Dominique Strauss-Kahn, who is being tried for charges of sexual assault in the US.

Even Prime Minister Manmohan Singh has asked developing countries to be united in the attempt to reform global financial institutions.

"I had a discussion with the Finance Minister of South Africa over the phone yesterday," Mukherjee said.

On Wednesday, the BRICS (Brazil, Russia, India, China and South Africa) grouping came out in the open to oppose the notion that the next IMF chief should be from Europe and argued that such a selection criteria undermines the legitimacy of the fund.

Tech Mahindra Q4 net falls 59% on Satyam losses

Tech Mahindra Ltd, India's No 5 software firm, on Thursday said quarterly profit fell 59%, missing market estimates as it was hurt mainly by losses related to Mahindra Satyam. Tech Mahindra, a unit of tractor and utility vehicle maker Mahindra & Mahindra, reported net profit of 922 million rupee s, compared with 2.27 billion rupees a year ago.

According to Thomson Reuters I/B/E/S, analysts, on average, expected net profit of 1.9 billion rupees for the company, which counts BT Group and US telecom giant AT&T as clients.

Earlier this week, Mahindra Satyam, which Tech Mahindra bought in 2009, reported a quarterly net loss. It was hurt by a one-time expense due to settlement of a US shareholder lawsuit. The results sent its shares down as much as 6%.

Mahindra Satyam, earlier called Satyam Computer, was bought by Tech Mahindra after being hit by what became India's biggest corporate fraud.

EGoM likely to take a call on Cairn-Vedanta deal today

The fate of the $9.6-billion Cairn-Vedanta deal may be decided soon as the empowered group of ministers (EGoM) under finance minister Pranab Mukherjee is meeting on Friday to take a decision on the issue of the Rs 18,000-crore royalty tab on the crude oil produced from Cairn India’s Rajasthan block.</P>

ONGC, which holds 30% in the Rajasthan project, is currently bearing the entire royalty burden and wants Cairn India to share the burden.

The EGoM will look into all aspects relating to royalty sharing by the stakeholders. The multi-billion dollar deal involves the sale of majority stake by Cairn Energy Plc in Indian unit  Cairn India Ltd to Anil Agarwal-promoted and London-listed Vedanta Resources.

The Cabinet Committee on Economic Affairs had on April 6 asked the EGoM to vet the deal, but the panel has not held a single meeting till then.

Income-tax department initiates action

The income tax (I-T) department has begun a probe against the alleged ‘Ponzi scheme’ of Speak Asia. The department is likely to send a request to the Singapore government to sought information regarding the company and its financial transactions. India has signed a double taxation avoidance agreeme nt (DTAA) with Singapore, which will help in procuring information.

According to the sources, the director general (Intelligence) of I-T has been asked to look into the Indian operation of Speak Asia. “First the I-T department needs to have some concrete evidence to act upon and we’re into it,” a senior I-T official told Hindustan Times.

Sensex holds on to morning gains

A benchmark index of Indian equities markets, which rose after a quiet start on Friday, continued to hold on to its morning gains. Broader markets too were ruling in the green.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,199.96 points, was ruling at 18,326.15 points, up 184.75 points or 1.02 percent soon after start of trade, compared to its previous close at 18,141.4 points. The 50-scrip S&P CNX Nifty of the National Stock Exchange was ruling at 5,483.15 points, up 1.01 percent. Broader markets were ruling in the positive with the BSE midcap index ruling 0.81 per cent up and the BSE smallcap index up 0.88 per cent.
Capital goods, realty and power stocks were among major gainers at this time. All 13 sectoral indices on the BSE were in the green. The market breadth was positive with 1,538 stocks advancing, 834 on the decline and 111 unchanged. Among gainers on the Sensex were L&T, ONGC, Bharti Airtel and Cipla, while the sole loser on the barometer index at this time was Infosys. Asian markets were mostly flat. The Nikkei of the Japanese stock exchange was ruling flat at 9,625.35 points, while Hong Kong's Hang Seng was trading 0.07 per cent up at 23,179.86 points. The Shanghai Composite index of the Chinese markets was also trading lacklustre at 2,858.22 points, 0.05 per cent down.

Fuel subsidy hiked for upstream PSU oil cost

May 20: After days of rumours, the government on Friday finally raised the subsidy burden of the upstream PSU oil companies ONGC, Oil India and GAIL from 33 per cent of the total loss suffered on sale of fuel to 38.8 per cent for 2010-11.This would mean a burden of a little over Rs 30,000 crore. With government unable to pass the full increase in the international crude oil prices to the consumers, upstream companies have to bear a higher burden sources said.
The three-state run oil marketing companies — IOC, HPCL and BPCL, incurred Rs 78,000 crore loss for selling diesel, LPG and domestic cooking gas at subsidised rates in 2010-11. ONGC, Oil India and GAIL have been asked to pay Rs 30,295.75 crore towards compensation to the oil marketing companies.
Government on its part will pay Rs 41,000 crore cash to the oil marketing companies. Since Pranab Mukherjee has become the finance minister he has done away with the practice of giving bonds to oil marketing companies for their losses. Mr Mukherjee believes that paying cash give the true picture of the government's fiscal position than oil bonds which were kept off the books. ONGC has been hit the hardest as it will be paying 80.5 per cent of the total upstream share of the oil subsidy. ONGC will pay Rs 24,892 crore, OIL Rs 3,293 crore and GAIL Rs 2,111 crore.
“We are giving Rs 3,832 crore more in subsidy that we had projected earlier. Our profits will be adversely impacted by Rs 2,000 crore due to this additional subsidy outgo,” said ONGC chairman and managing director, Mr A. K. Hazarika. He said that company’s capex will not be impacted by the higher subsidy outgo and that it would invest the planned `30,000 crore this fiscal. ONGC’s share was down by 1.17 per cent on the Bombay Stock Exchange on Friday. However on Tuesday it had lost 6.6 per cent when the news was unofficially first aired by the news channels.

Savings trigger bubble worries

The head of China’s Central Bank said on Friday too many people were saving too much money, which could lead to asset bubbles, adding Beijing had to find a way to promote growth and curb inflation.
China’s national savings rate is one of the highest in the world, standing at about 50 per cent of the GDP in 2010 — much higher than developed economies. “China is an economy with a high savings rate, which may lead to high investments and may cause overheating and overcapacity in some sectors and fuel bubbles,” Mr Zhou Xiaochuan, governor of the People’s Bank of China, said.
“A high savings rate has good aspects, but at the same time there are other aspects we must be vigilant about,” he said. Chinese households typically keep more than one-fifth of their disposable income in deposits, as they maintain frugal habits and worry over housing, health and education costs in a nation that has poor social welfare. Mr Zhou said the outlook for the economic recovery was clearer now than the last year, but many uncertainties remained. He added that China needed to take “counter-cycle” policies as its economic cycle was different from that of developed nations.

Apple probes blast at Chinese plant linked to iPad

Apple Inc is investigating an explosion that killed two people, injured 16 and forced a production halt at a Foxconn International Holdings Ltd factory in China said to produce the popular iPad 2.

Foxconn, part of Taiwan's Hon Hai Precision Industries group and Apple's main manufacturing partner, said in a statement the explosion happened at about 7 pm local time (1100 GMT) on May 20.

"Production has been suspended at the site of the explosion until the completion of the investigation," Foxconn said in a statement.

"The safety of our employees is our highest priority and we will do whatever is required to determine and address the cause of this tragic accident."

It did not name the affected plant or say what it made, but China's official Xinhua News Agency said it was the Hongfujin Precision Electronics plant in a high-tech industrial zone west of Chengdu, the capital of Sichuan province.

Hon Hai spokesman Edmund Ding said the company is still evaluating losses. He could not say whether group founder and chairman Terry Gou had gone to the site.

IPAD AFFECTED

Apple shares closed down 1.56 percent at $335.22 on the Nasdaq, which saw a broad sell-off on euro-zone debt worries.

The explosion could affect the supply of iPads and investors were watching closely. Apple spokesman Steve Dowling said the company was assessing the situation.

"We are deeply saddened by the tragedy at the Foxconn plant in Chengdu and our hearts go out to the victims and their families," he said. "We are working closely with Foxconn to understand what caused this terrible event."

Ticonderoga Securities analyst Brian White said the factory makes a lot of iPads because some production had been shifted to the facility from factories in the southern Chinese city of Shenzhen.

Apple's iPad 2 commands 80 percent of the burgeoning tablet market in which Motorola Inc and Samsung Electronics Co Ltd also compete.

Apple sold 4.69 million iPads last quarter and is scrambling to meet staggering demand for the mobile device, but is heavily backlogged. Executives had expected production to ramp up during the present quarter to meet demand.

The plant explosion is the latest setback for Foxconn, the world's largest contract manufacturer.

The company made headlines last year after reports emerged about poor working conditions at factories in southern China, which critics say may have helped drive several employees to suicide.

The company pledged to improve employee welfare.

Facing higher wages in the southern China manufacturing belt, the scene of labour disputes last year, some Taiwanese manufacturers have opted to shift some operations to the country's interior, where costs are lower.

Foxconn also has plants in North America and Mexico, as well as in European countries, including Slovakia and Poland.

India’s forex reserves fall by $2.04 billion

India's foreign exchange (forex) reserves dipped by $2.04 billion to $307.49 billion for the week ended May 13 partly due to revaluation of non-dollar assets and foreign investors withdrawing money from the local markets.

The foreign currency assets, the biggest component of the forex reserves kitty, slipped by $1.98 billion to $276.14 billion during the week under review, according to the weekly statistical supplement of the Reserve Bank of India. The foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as British pound sterling, euro and Japanese yen held in reserves.

The value of special drawing rights (SDRs) declined by $38 million to $4.59 billion and reserves with the International Monetary Fund fell by $25 million to $2.96 billion. The value of gold reserves remained unchanged at $23.79 billion.

Salary negotiation skills

Irrespective of whether you are a novice or a seasoned pro, whether you love the art of salary negotiation or dread it, the truth is - you need to know salary negotiation tactics and how to avoid disaster to obtain the offer you deserve and that coveted job.

Some of the 'must-know' salary negotiation tactics are:

• Never assume salaries to be predetermined by employers and that qualifications, experience and performance are determining factors.Negotiation is a vital aspect of getting the right salary, but try avoiding premature salary discussion until the employer questions your requirements - otherwise, you can get screened out by talking about money too soon. 
• Information is the key to any negotiation and a common mistake is to tell your employer what you would accept. Sometimes, it is hard not to disclose this, especially when asked about your salary history, requirement or expectations. But the earlier you give out the details; there is less room for negotiation when the time comes. Try to be noncommittal when asked about the salary requirements too early in the interview process. 
• Do not underestimate your worth and accept what is offered even if it is an urgent requirement. Avoid such desperate acts as even the best offers need review. Most employers give you time to contemplate and consider negotiating for a better offer if you feel it would be better. Remember, the amount of time asked for is the time in which you take your decision. 
• Do a thorough research on salary comparables and be aware of your worth. With unlimited online resources, you need to assess your market value and conduct adequate research on the prospective employer, the salary levels, negotiation policies and performance appraisals. 
• Avoid declining offers immediately when the salary is much lower than expected. It is best to ask for time before an outright rejection. If the money is below average, you may be left with no choice, however if it is good but not as per your expectation, other benefits should also be taken into account. 
• Always try and project an image commensurate with the negotiated salary and do not attach a high price tag without providing support to justify the salary figure, like previous salary history and performance indicators. 
• Calculate benefits as part of the entire compensation package, and not just benefits or just salary. Never  accept whatever severance the company offers without negotiation and simply play "hard to get" when there is little or nothing to leverage. 
• Never negotiate salary over the telephone and use timing as part of establishing your value to the employers. Neither, lying about salary history or alternative salary offers would ever help. 
• Everything said and done and with acceptable terms and conditions,always ask for the final offer in writing. No employer will have issues with that.
  

Finally, the bottom line is that salary negotiations need to be done in a dignified manner and in the right perspective. 

Anti-trust probe on NSE: HC asks CCI for order copy

The Delhi high court on Wednesday asked the Competition Commission of India (CCI), India's anti-trust body, to give a copy of its order to National Stock Exchange (NSE) within a week explaining the basis of serving a show cause notice to NSE on abuse of dominant position. "CCI has to furnish the pet itioner any order forming the basis of penalty show cause notice. On principle of natural justice CCI is directed to furnish a copy of order dated April 29 within one week," Justice S Muralidhar said.

NSE had approached the Delhi High Court after the CCI imposed a show-cause notice on the bourse asking why penalty should not be imposed on it for allegedly abusing its dominant position in currency futures trading.

MCX Stock Exchange Limited (MCX-SX), the currency futures trading arm of Multicommodity Exchange,

had charged NSE of adopting predatory pricing techniques and abuse of dominant position that goes against market fair play.

MCX-SX had sought CCI's intervention to prevent NSE from offering several services at sharply lower charges and "discriminatory fee waivers" in the currency derivatives segment.

It alleged that in an unfair practice, NSE has waived off the transaction fee in its currency derivative segment, even though it charges a transaction fee of Rs 2 per lakh on the turnover in equity derivatives

Trading in currency futures was allowed in India in 2008 to allow exporters and importers to hedge against sharp fluctuations in value of international currencies.

These futures are traded on MCX-SX, NSE and the Bombay Stock Exchange.

Ashok Leyland Q4 net up 33.93 pc to Rs 298.22 cr

Ashok Leyland today reported a 33.93 % increase in net profit to Rs 298.22 crore for the quarter ended March 31, 2011. The company had reported a net profit of Rs 222.66 crore for the fourth quarter last fiscal, Ashok Leyland said in a filing to the Bombay Stock Exchange (BSE). The company's net sa les rose to Rs 3,828.53 crore in the quarter ended March 31, 2011, from Rs 2,939.04 crore in the same period last fiscal. The company's board, which met today, has recommended a dividend of Rs 2 per share (200 %) of Re 1 face value for the full fiscal.

For the year ended March 31, 2011, the company has posted a net profit of Rs 631.29 crore, up 49 % from Rs 423.67 crore in the previous fiscal. The company's net sales rose to Rs 11,117.70 crore during the year from Rs 7,244.71 crore in the previous fiscal. Shares of Ashok Leyland were being quoted at Rs 49.50 apiece on the BSE in late afternoon trade today, up 6.11 % from their previous close.

'We’re transparent in selecting the most competent people'

Software major Infosys, which is strengthening strategic partnerships with its clients, does not see any threat from cloud computing that could change the way software is used. SD Shibulal, CEO-designate, who takes charge in August this year, in a candid chat with Hindustan Times, shared the company’s growth initiatives and acquisition plans. Excerpts:

A couple of months later you would take charge of Infosys. What will be your priorities?Well, our priority is to roll out the Infosys 3.0 vision, which essentially is about strengthening our strategic partnership with our clients and become more global.

Tell us about your plans for cloud computing (renting software services over Internet). How will a service company like yours address the issue?You need to look cloud from a client’s perspective. Our addressable market of 2,000 clients wants to be unique in the market they operate. They do not want to be a ‘Me too’ player. There can be a (cloud) platform in a company for standardised processes such as creating pay slips, or tax deduction of an employee. But a company can attain differentiation only through technology, which means there will always be space for players like us who have the ability to create this differentiation. In fact, there will be a hybrid environment of public cloud, private cloud or no cloud.

What will be your growth plans?We continue to increase our addressable market space, where we would like to add more clients in our kitty from the present tally of 620 clients. Second, we are ramping up operations in industry verticals where we do not have a major presence, for instance, life sciences, energy & utilities, healthcare.

You will be the last founder to lead Infosys. How easy will it be for the middle management to aspire for leadership positions?We are transparent and process-oriented in selecting the most competent people across all levels. These people are selected based on the recommendations made by a nomination committee that is independent. In the last ten years we have grown from a $100 million to a $6 billion company today. This effectively means we have created leadership position sixty times over.

15 Ways to win at job interviews

The interview process begins when you accept the interview, and ends when the employer decides to either hire you or look for someone more suitable. The more you are able to communicate professionalism with personality, distinction and skill, the better your chance of getting the job.

Before the Interview:

Use the 3 P’s - Plan, Prepare, and Practice

• Prepare for the interview; research the company and prepare questions based on your research. 
• Do mock interviews in order to prepare for all questions, especially uncomfortable ones. (Also read: Tips to answer some typical interview questions)
• Dress professionally even if the company dress code is business casual. 
• Arrive early! (12-15 minutes before the interview) 
• Give your interviewer a firm handshake. A powerful handshake and a genuine smile will get you off to a good start. 
• Beware of your Body Language; sit erect, stand and walk with confidence, lean forward toward the interviewer. (Also read: Managing your body language)
• Build rapport - use powerful, effective communication techniques. 
• Be a good listener. Answer only what’s asked, in a brief but effective manor.
• Show enthusiasm and sincere interest. Don’t act desperate. 
• Take notes. You may need to refer to them later in the interview. 
• Communicate your skills, qualifications, credentials and the benefits you offer. 
• Demonstrate your accomplishments; how you improve sales, reduce costs, improve productivity, solve organizational problems, etc. 
• Make eye contact. It demonstrates confidence, trust, and power. 
• If you want the position, ask for it - directly. (Also read: Want the job? Then ask for It!)

After the Interview:

• Send a follow-up thank you letter. The letter should state what interests you about the position, why you are suitable for the job, and your appreciation for the interviewer’s time.

Mass telephony will spawn new services

More than two years ago, I had started this column by describing as the "Law of diminishing digital returns" the phenomenon under which your digital device will seem dumber as they days progress while smarter ones costing less hit the market. A recent study shows how far this is going to change the world. Gurgaon-based knowledge process outsourcing (KPO) firm Evalueserve says that by 2015, about 70% of the world's handsets, accounting for some 4.8 billion handsets, will have an average price of less than $100 (Rs 4,400), and the annual demand for handsets that year will be about 2.58 billion, with replacements driving 94% of the demand.

By 2015, the share of smartphones will more than double to 30% from 14% in 2010, and replacement markets will account for 94% of the demand, says the study.

But the study notes that basic handsets costing under $30 will also grow sharply, and between the smartphones and the basic handsets, feature phones, which essentially involve Qwerty keyboards, cameras and other frills, will get squeezed.

It is difficult to imagine such a future, but is clear to me that even feature phones will get smarter before they get squeezed. Elsewhere in Hindustan Times, we have a story about how Facebook is adapting itself to appeal to feature phones through software changes.

Whatever the detail, the trend is clearly towards the "massification" of telephony, and by extension, the Internet, because dumber phones are getting Net-savvy, with handset makers, software firms and telecom operators working with each other to make that happen.

Evalueserve estimates that more than 50% of mobile subscribers will be from low and middle income countries while 84% of the new subscribers will be from these economies between 2010 and 2015.

And so, within a decade, pervasive computing and its fallouts would have reached out to the poorer sections of the planet. What fascinates one is a key takeaway: while voice calls will get cheaper, Internet or other data-based services will drive revenues. Expect a profusion of data-based ideas and services. The game, which began with ringtones and SMS votes, has just begun.