Slowdown? Sure, but ‘temporary'

For the first time, the government also officially signalled that the Indian economy is poised to slow even as it dubbed such a pull back as “temporary”

Hours after the Reserve Bank of India (RBI) signalled softer interest rates, the Indian government asked Parliament to approve an additional cash expenditure for the current financial year of Rs1.05 trillion, some 80% of the budgeted annual fiscal deficit, or gross borrowings.

For the first time, the government also officially signalled that the Indian economy is poised to slow even as it dubbed such a pull back as “temporary”.

Meanwhile, the additional cash expenditure, which will most likely be met through new loans, is expected to be the last “supplementary” demand for extra expenditure, said a finance ministry official who didn’t want to be identified, implying that the Congress-led United Progressive Alliance may be factoring in a general election earlier than May when they needed to be held.

The supplementary demand for grants, a post-budget approach by the government to Parliament asking it to approve expenditure not foreseen or difficult to pin down during the budget exercise, stood at Rs2.37 trillion. Of this, the government said only Rs1.05 trillion would involve “net cash outgo” and the balance would be met through enhanced revenue and savings.

Though, for most part, the additional expenditure was incurred in bits and pieces over the last seven months, some economists said it would still push up aggregate demand in the economy. Along with RBI’s surprise cut in interest rates, the move is expected to mitigate the risks of the economy slowing too sharply.

Though counter-intuitive, most economists were of the view that the step-up in government spending, largely financed through additional borrowings, will not result in draining liquidity from the system and thereby reverse the efforts of the central bank to progressively inject liquidity into the system over the last two weeks.

Speaking in Parliament, Prime Minister Manmohan Singh said: “We must be prepared for a temporary slowdown in the Indian economy. The precise impact is difficult to estimate at this point since the depth and duration of the global slowdown remain uncertain. Some estimates project GDP (gross domestic product) growth to decelerate to 7.5% in the current year. The most pessimistic estimates place it at no less than 7%. Our effort will be to minimize the negative effect of the financial crisis and, once the global situation stabilizes, to return to the growth trajectory of 9%.”

In early October, Arvind Virmani, the finance ministry’s chief economic adviser, had marked down economic growth in 2008-09 by 25 basis points to 8%.

The major items of the cash outgo on supplementary demand came from fertilizer subsidy (Rs38,863 crore), farm loan waiver (Rs15,000 crore), enhanced pay to government staff on account of the pay commission recommendations (exceeding Rs20,000 crore) and rural employment guarantee scheme (Rs10,500 crore). Among the big ticket expenditures where there is no additional cash outgo was issue of oil bonds worth Rs65,942 crore to public sector oil marketing companies to subsidize retail prices of petrol and diesel.

“It is a good counter-cyclical measure at this point in time, given the fact we have a serious financial crisis. You need to spend more, holding back does not arise,” M. Govinda Rao, member of the Prime Minister’s Economic Advisory Council, said.

The size of additional cash expenditure the government asked Parliament to approve was in sync with expenses incurred over the last few months, N.R. Bhanumurthy, associate professor at New Delhi-based Institute of Economic Growth, said. “I don’t see any surprises. It is in line with our expectations,” he added.

Most economists had forecast the Union government’s fiscal deficit for the year to be higher than the government’s budget forecast of 2%, or Rs1.33 trillion, of GDP.

Fiscal deficit is a measure of the government expenditure in excess of revenue that is met through market borrowings.

Economists who spoke to Mint did not expect the likelihood of the additional spending and consequent increase in borrowing by the government to impact liquidity and thereby interest rates in the economy.

According to one of the them, as long as the banking system was compelled to hold government securities (through statutory liquidity ratio), there is unlikely to be an immediate impact of enhanced government borrowing on interest rates.

India says growth may slow due to global turmoil

Prime Minister Manmohan Singh said on Monday India must brace for slower economic growth because of the global market turmoil, but the country's banks were safe and there was no need to fear any collapse.

Singh told parliament the government and the Reserve Bank of India (RBI) were monitoring the situation and would ensure that additional liquidity infused into the system translated into actual credit and would take more steps if needed.

He said some estimates projected GDP growth to decelerate to 7.5 percent in the current fiscal year to March, with the most pessimistic estimate at 7 percent -- lower than government projections of 8 percent versus 9 percent rise in 2007/08.

"We must be prepared for a temporary slowdown in the Indian economy," Singh said, adding that the global market turmoil would have an indirect impact on the economy.

"The precise impact is difficult to estimate at this point since the depth and duration of the global slowdown remains uncertain."

Pressure on Singh to address the nation had mounted after investor confidence was rattled in recent weeks, with the stock market losing more than half its value this year, the rupee plumbing record lows and as banks grappled with a cash crunch.

"Our first concern was to ensure stability of our banking system. Our banks, both in the public sector and in private sector, are financially sound, well capitalised and well regulated," Singh said.

"There should be no fear of a failure of any bank."

Policy makers have taken a slew of measures in recent weeks as foreign capital was pulled out of the stock market and as credit markets seized up as onshore liquidity evaporated in part because banks were wary of lending.

On Monday, the central bank unexpectedly slashed its main short-term lending rate for the first time in more than four years, lowering the repo rate 1 percentage point to 8 percent, to shield the economy from the global crisis.

"It will have a beneficial effect on the interest rate structure and, in combination with other steps to increase liquidity, will help support economic activity and investment," Singh said.

The RBI has released liquidity of 1 trillion rupees ($20.4 billion) in recent weeks, by slashing the amount of money that banks much keep in reserve with the central bank, to enable more funds for loans.

Singh said the government had also stepped up public spending in anticipation of the slowdown despite criticism when they were announced.

"I am happy to note that it is now widely acknowledged that increased public expenditure is an important part of the solution.

($1 = 49 rupees)

The decline of America?

Something shocking has happened these last few days -- Americans are talking about their own decline

One block from New York City’s Times Square, among America’s greatest symbols of consumption gone wild, neon and flashy, is a place that few tourists ever visit. It is a comparatively simpler and straightforward sign, but one that perhaps has come to define the US even more in recent days—a series of numbers so quickly on the move that by the time you scribble the 13th digit into a notebook, all the numbers have changed and it’s time to start over.

The national debt.

Earlier this week, on the Manic Monday that the Dow Jones Industrial Average dropped a record 777 points and the US Congress failed to approve a $700 billion bailout that would keep an economy built on debt from collapse, I headed to a spot under the sign to begin my quest. I wanted to know if the American dream was dead.

For as long as I can remember, the hypocrisy of America has been the subject of debate, especially in developing nations frustrated by its exertion of muscle (Iraq), its inexertion of muscle (Darfur), its willingness to open trade to some (China) and not others (Iran, Cuba).

Then, the rise of China and India created a new discussion about new superpowers and lands of opportunity being created. For the last few years, many have alluded to the influx of foreigners and returned emigres to India as a sign that the US is losing its pull; a visit to a line outside a US embassy in any developing country pretty much quells that thought.

But in these last few days in the US, something shocking has happened— Americans themselves are talking about their decline. CNN, the cable news channel, ran a feature this week asking if the American century was over. An article in The Wall Street Journal referred to the “humbling” of America. My brother and his friendsin their twenties ask, “Just what is America working towards now?”

And so under that ever changing sign, I sought some answers.

“Hi,” I said to a woman on a cigarette break. “I’m a columnist in New Delhi and was just wondering, ‘Do you think America is on the decline?’”

She didn’t even blink. (Although the sign did. When we started talking, it was at $9,536,664,911,884.)

“It’s definitely shifting towards the East,” she said in a British accent. “One day, it won’t have as much power as China or India.”

I asked where she was from. She said she was Bhavna Sadarangani, the daughter of Indian immigrants in Africa, was educated in Mumbai and now lived in London but was in New York on business. But once I probed for an estimate of when that world dominance will shift, she grew silent.

“Asia’s not fully equipped yet,” she concluded. “Like take education. I can’t tell you what I learned in India. You take it in, you take it out. There’s no room for debate. But I had a British education in high school and I remember so much.”

I moved on. A woman nursing her baby gave me a blank stare when I asked the question. Getting a better look at her face, I switched to Spanish and she immediately grew warm. “Oh but I am not American,” Claudia Suru said. “And I think I will go home.”

Suru cleans houses for a living, one of those professions that became a necessity versus a luxury in boom times as families grew busier yet more comfortable against a surge of immigration and cheaper labour options. She says work has definitely slowed but she wanted to stay until she gave birth to her son on US soil so he could be a citizen. She plans to go back to Guatemala in the next few months.

“He,” she said, gesturing at three-month-old Miguel, “can come back. I still have a dream for him in this country.”

I approached a blonde woman, thinking she would be my “American” respondent. “I’m an Australian,” she laughed. But then, Nicole Brittain, a travel agent, answered my question. “I love New York. I want to move here.”

Finally, on another end of the marble slab that served as a bench, I found a white-haired, bearded man who only identified himself as Bill. Of course, he said, he was an American. A proud one. And 85 years old.

It’s not, he corrected, about a decline. It’s that the idea of America has been replaced by a new commitment.

“Money,” he pronounced. “This whole country is all about money. Even baseball used to just be a sport. Now it’s all about money.”

Bill’s really worried about food inflation and about losing senior citizen discounts at restaurants that just want more of his money. He retired as a machinist and is appalled that new guys in the job make about what he used to make—$10 an hour to start.

“Wages haven’t gone up at all for most people,” he said. “We have become a country of the haves and the have-nots.”

“Sounds familiar,” I told him. “I hope India gets it right before we’re in the same mess.”

When I left, Bill was sitting under this number: $9,536,566,088,99.

Your comments are welcome

Pakistan on its knees

Would India be ready to play Russia to Pakistan’s Iceland?

We have seen banks go bust. And it could be a matter of time before a few countries go bankrupt as well. The two most likely candidates right now are Iceland and Pakistan.

With some eerie timing, the International Monetary Fund has recently put out a research paper on the costs of such sovereign defaults. Though this research does not reflect IMF’s official view of the matter, it does tell us some important things.

There are three economic costs—to reputation, trade and the financial system of that country. And there is also a fourth cost: political. These can be “dire” for the incumbent government and its leaders. Their survival is at stake.

Political tremors can also be felt in the neighbourhood. Iceland has unsettled its European neighbours by asking Russia for a bailout, rather than the European Union or IMF.

It is worth speculating now what a Pakistan default might politically mean for India. There is already some reason to believe that Asif Ali Zardari is trying to win brownie points, as when he rightly called the fighters in Kashmir terrorists. So, here’s a hypothetical question: Would India be ready to play Russia to Pakistan’s Iceland?

India, Pakistan to allow trade across the Line of Control

For the first time in 61 years, India and Pakistan will allow daily commerce across the de facto border dividing Kashmir from Tuesday, moving to boost mutual confidence, promote economic dialogue and open a trade outlet for people of the Himalayan region.

The trading, one of the key so-called confidence building measures (CBMs) agreed to at a meeting between Prime Minister Manmohan Singh and Pakistan President Asif Ali Zardari in New York on 25 September, begins two days after India announced elections in the state of Jammu and Kashmir.

Trade across the Line of Control (LoC) will initially be restricted to 21 items: fresh and dry fruit, masalas, honey, Peshawari leather slippers, walnut-wood furniture, wall hangings, embroidery items, tamarind, green gram, carpets, shawls, black mushrooms, pillows and pillow covers, medicinal plants, rice, blankets, rugs, woollen garments, saffron and a popular vegetable known as kadam.

The trade will be duty-free and in either currency — the Pakistani or Indian rupee. Some analysts suggest this is an economic union of sorts between the two parts of Kashmir controlled by the two neighbours. To others, the move is an attempt by New Delhi and Islamabad to further trade ties, following a July initiative by Pakistan to allow more imports from India.

LoC trade, as it is being called, will be operational at two points — from Srinagar to Muzaffarabad and from Poonch to Rawalakot (to be formally opened on 28 October) — even while the two countries continue to observe the line as the de facto border. A commerce ministry official, who spoke on condition of anonymity, said LoC trade is “not really an international trade”.

“Conceptually you are trading within the territory of the same country. There will be no concept of customs duty,” this official said. “The moment you charge import and export duty you are recognizing bilateral trade, which would imply the recognition of the disputed Pakistan-occupied Kashmir as part of Pakistan.”

In their New York meeting, Singh and Zardari agreed on several measures that would enable a closer economic dialogue between the two countries that have fought three formal wars — including two over Kashmir — since Pakistan was carved out of India in 1947.

Psychological suffocation

LoC trade is also designed to dent the isolationist approach adopted by separatist groups in Indian Kashmir and call the bluff of Hindu groups in Jammu that had blockaded Srinagar during the civil unrest that roiled the region this summer, by opening up an alternative trade route.

Fashion clashing as India puts on the glitz

(Reuters) - There may be a global financial crisis going on, but in India, one of the engine rooms of the world's pre-crash production boom, there is a clash of the flash fashion.

Three high-profile fashion weeks vie for attention in October with no shortage of glitz and glamour to beguile local and oversees buyers.

Two of India’s premier fashion events clashed in New Delhi last week while a third, the Lakme fashion week in Mumbai, kicked off on Monday.

International buyers said the country’s designers were in sync with global trends in fashion, and their creations met international standards.

I think they lack in nothing, Jessica, a buyer from American retailer Anthropologie, told Reuters.



And there was no sign of the global credit crunch at the earlier Wills Lifestyle India Fashion Week and Delhi Fashion Week, where spring-summer collections for 2009 featured an eclectic mix of jumpsuits, high-waisted pants and short tunics with Indian motifs and geometric prints.

Sumeet Nair, head of the Delhi Fashion Week, said it might be a good opportunity for Indian fashion designers to offer international buyers trendy clothes at low prices and make inroads abroad.

Indian fashion, with its legacy of handicraft, colour and durable motifs, has garnered growing global appreciation, and some designers at the fashion weeks showcased the best of fabric and craftsmanship from the country.

The designer trio of Ashish, Viral and Vikrant espoused the cause of the kota fabric, a light, airy natural fabric that they say is perfect for summer.

Newcomers like Urvashi Kaur used a lot of Indian fabrics without prints or embellishments -- a rarity in the country’s fashion circles -- while designer duo Parvesh and Jai dipped into unfamiliar waters with a separate line of beachwear -- a rarity in India.

All that the Indian designers need now is better finishing of their clothes, said Sunil Sethi, president of the Fashion Design Council of India, which organised the Wills Lifestyle India Fashion Week.

Ratan Tata gives $50 mn to Cornell University

The endowment consists of $25 mn to establish the Tata-Cornell Initiative in Agriculture and Nutrition and will contribute to advances in nutrition and agriculture

Ratan Tata has gifted $50 million to his alma mater, Cornell University in New York, to help recruit top Indian students to support joint research projects with Indian universities in the areas of agriculture and nutrition.

The gift from the Tata Trusts, a group of philanthropic organizations run by Tata -- chairman of Tata Sons Ltd, will allow Cornell to establish and expand partnerships with Indian scientists that build on its strength in applied agriculture research.

The endowment will be used to set up a scholarship fund to bring more Indian students, who may be discouraged by Cornell’s price tag, to the university. The gift could eventually help support as many as 25 Indian undergraduate and graduate students at a time.

The endowment consists of $25 million to establish the Tata-Cornell Initiative in Agriculture and Nutrition, which will contribute to advances in nutrition and agriculture for India and $25 million for the Tata Scholarship Fund for students from India, to help attract more of the best and brightest talents to Cornell.

Cornell President David Skorton announced the gift during his State of the University address Friday last, calling it “one of the most generous endowments ever received from an international benefactor by an American university.”

The Tata Group is one of India’s oldest and largest conglomerates, operating in seven business sectors and employing around 320,000 people. Tata graduated from Cornell in 1959.

Sebi ‘disapproves’ of overseas stock trade

The Sebi “disapproval” is significant in the backdrop of local brokers, politicians and chief executives of some companies whose share prices have slumped sharply, crying foul at intense short-selling by FIIs

The Securities and Exchange Board of India (Sebi), India’s capital markets regulator, said on Monday evening that it “disapproves” of overseas lending and borrowing activity of stocks bought and held by some foreign institutional investors (FIIs) on behalf of other investors under the so-called participatory notes (PNs), although initial reports show such activity to be almost insignificant.
Sebi’s statement, which stopped short of spelling out penalties for overseas lending and borrowing of Indian stocks or the mechanism through which it hopes to stop these, comes after the removal, earlier this month, of a year old ban on PNs which some analysts say could have led to a spike in overseas lending and borrowing of stocks.

“Sebi disapproves the overseas lending and borrowing activity of FIIs and the consequent selling pressure in the cash market in India,” the statement said. Sebi has communicated this to FIIs.

“The lending and borrowing activity of FIIs is being monitored and if necessary stronger measures will be taken by Sebi, as considered appropriate,” the regulator said.

The Sebi “disapproval” is significant in the backdrop of local brokers, politicians and chief executives of some companies whose share prices have slumped sharply, crying foul at intense short-selling by FIIs.

Sebi had earlier denied the existence of a parallel offshore market

Sebi had earlier denied the existence of a parallel offshore market. According to Sebi, revelation about such activity came after reviewing data submitted by FIIs.

Mint reported the existence of such a market on 12 August. FIIs had lent equities worth Rs348 crore to overseas entities for the purpose of short selling, during 10-14 October, as per Sebi data compiled from reports submitted by 17 FIIs.

This amount is very small compared to the size and trading volumes of Indian equity markets. Short sales involve the selling of stocks by investors who do not own these stocks and who, therefore, have to borrow them.

Last week, Sebi had asked FIIs to submit data twice every week on overseas lending and borrowing of stock.

During the first half of this year, many foreign entities not registered as FIIs in India, were queuing up to borrow stocks from the idle inventory of PN issuers to short local stocks.

Sebi’s blanket ban on issuing PNs on derivatives was an important factor that led to the creation and growth of a parallel overseas market for shortselling.

As a result of the ban, foreign entities, which wanted to take a negative view on Indian stock valuations and index levels, could not go short through buying such PN contracts from FIIs, pinned to local derivatives. The idle inventory of stocks held by FIIs on behalf of their clients was thus borrowed to set shorts abroad, which has strong and direct impact on the market valuations of the underlying stocks, traded on Indian bourses.

Early this month, Sebi lifted the ban on issuing PNs pinned to Indian stock derivatives and other curbs on the instrument, reversing its year-old agenda of gradually phasing out PNs, as part of a hunt for so-called “anonymous investors”.

Currently, if a non-registered foreign entity wants to go short on Indian stocks or stock index, it can simply buy such a contract from its client brokerage, which has an FII account.

FIIs, however, have already done enough damage to local stock valuations, as they have taken out about $12 billion from Indian equity markets this year, driving down India’s bellwether stock index Sensex, from 21,000 levels to sub-10,000 levels last Friday.

The benchmark index closed at 10,223.09, up 2.48% or 247.74 points on Monday. Sebi is also taking a relook at the local stock lending and borrowing norms. “Sebi is reviewing the difficulties in the use of the lending borrowing facility and would be taking steps to make this mechanism more effective,” the regulator said.

Khushboo Narayan contributed to this story.

Idea profit falls on expansion costs

Idea Cellular Ltd, India’s fifth largest mobile phone company said in a statement on Monday its net profit for the three months ended September almost halved from Rs263 crore in the preceding quarter, and a senior executive attributed the decrease to the company’s increased investments in expanding operations and marketing in a quarter when it launched its service in Mumbai and acquired smaller telco Spice Communications Ltd.

The results surprised analysts. “Nobody anticipated this and probably this will continue as the Bihar launch is round the corner,”said Sanjay Chawla, senior telecom analyst at Anand Rathi Research, a Mumbai brokerage, referring to the company’s imminent launch in Bihar.

Idea’s results do not include those of Spice. The company, part of the Aditya Birla Group, ended the corresponding quarter of last year with Rs220.33 crore in net profit after tax on total revenue of Rs1,564.35 crore.

Revenue for the quarter ended September was Rs2,303.7 crore, 5.7% higher than Rs2,178.1 crore in the preceding quarter and 47.26% higher than Rs1,564.35 crore in the September quarter last year.

Sanjeev Aga, managing director of Idea Cellular, said in an interview that the “strain” was “anticipated”, and reasoned that the dip in profits was due to being “in a phase of strengthening and growing the company”.

Idea’s market share grew from 9.4% on 30 June to 9.8% on 30 September and the company ended the quarter with 30.30 million subscribers.

In the six months to September, the company added 6.38 million subscribers.

Chawla, however, said that the company’s average revenue per user, or Arpu, had fallen significantly in this period. In a report, Anand Rathi had predicted a 3.4% drop in Arpu for Idea in the quarter ended September compared with the preceding quarter.

According to Chawla, the actual drop was 5.9%, and the fall could be on account of the company’s launch in Mumbai.

Idea launched its service in Mumbai in late August. By the end of September, the company had 100,211 subscribers, a number Aga termed “satisfactory”. Mumbai is one of India’s most competitive telecom markets. Vodafone Essar has close to four million subscribers in the city and Bharti Airtel 2.61 million. The key challenge for Idea, say analysts, is on the operating side.

According to a report by HDFC Securities, fund infusions by Providence Equity Partners Llc. (of Rs3,500 crore) and Telekom Malaysia (of Rs7,293 crore during the Spice merger) will help Idea meet its expenses in expanding its reach.

The Spice acquisition gave Idea a pan-Indian presence. On Monday, the company said in a statement that it would spin off licences in two service areas, Punjab and Karnataka, to comply with India’s guidelines on telecom mergers.

Idea has its own licences in these areas where Spice was also present and according to Indian law, one company cannot own more than 10% in two competing licences. It wasn’t immediately clear whether the company would receive a refund of the licence fee from the government. The statement was silent on this and Aga declined comment on the issue.

“Their balance sheet will be strengthened further (with the equity infusion). The point is that they have to deliver on the operating side,” said Anand Rathi’s Chawla.

Reuters contributed to this story.

The IT boom is far from over

Is the tech boom over? I decided this week to look at the other side of the technology picture, while many people are busy singing sad songs about India's information technology (IT) companies.

True, companies like Infosys, Wipro and Satyam Computer Services have been strongly hit by the US financial crisis. But then, that is because their hottest customers giving the most lucrative business were precisely the financial companies that have gone bust or have gone nearly there. Like a restaurant whose customers go missing during a riot, these companies are busy applying the brakes on hiring.

But did you notice how Wall Street perked up on Thursday after positive results from IBM and Google? The fact is that finance-centric IT is in a deep crisis, but not the entire sector.

Last week, I met Sudip Nandy, recently named Chief Executive Officer of Gurgaon-headquartered Aricent, in a new role after quitting Wipro as Chief Strategy Officer. He was complaining about how his company is looking for 800 people (that's 10 per
cent additional work-force) while the media was writing about jobs under threat.

Now, why is that? Aricent, which once was Hughes Software, is now a cutting-edge design software company that helps telecom manufacturers and service providers and mobile handset companies with new features. From 3G services for stock trading to Wi-MAX technology to take the Internet to rural areas, such companies are in a market in which more people are buying cellphones and even rural vegetable growers are looking to use the Web. From washing machines to cable TV boxes, everything will increasingly sport some specially designed microchips and software. That's all IT for you.

Sure, the money men will lick their wounds before funding others, but things will look up again – though I suspect it would be with a more balanced worldview.

Why exporters aren’t cheering the rupee’s fall

We run companies. We do not know how currency markets operate. Volatility doesn’t help us because we do not know how to hedge on a daily basis.
M. Rafeeque Ahmed, Chairman, Farida Group

As the head of a company that exports footwear, Ahmed is a small businessman with a big worry —the cost of his raw materials like leather and shoe uppers is changing every day, with fluctuations in the value of the rupee.

Close to its all-time low (it closed at 48.43 to a dollar), the rupee has companies worried. For exporters, smarting under earnings erosions last year as the rupee rose 30 per cent, a falling rupee (generally considered good as they get more rupees per dollar) comes alongside a drying up of orders abroad. Continued from page 1

For importers, the loss equation is clear: a falling rupee means they have to pay more in rupee terms to buy the same products — capital goods for heavy industry and intermediate products like shoe uppers as in the case for Ahmed, for instance.

In addition, the falling rupee offsets the gains of falling oil prices. As a result, while oil marketing companies like Indian Oil lose money, the country faces a higher import bill that leaves a yawning trade deficit, sending macroeconomic managers scurrying for options.

In August alone, India imported goods worth $29.94 billion, an increase of 51.2 per cent over the previous year.

Small, medium and large exporters in around Tiruppur in Tamil Nadu, the world’s knit- wear backyard, aren’t stitching a happy tale around a falling rupee. “The weakening rupee is yet to fully offset our heavy losses we suffered earlier when it had strengthened six months back,” said Premdurai, CEO, Premdurai Exports, an exclusive T-shirt supplier to the “Switcher” brand of Switzerland.

The rupee started depreciating during March this year. After trading in a range of Rs 39.89-40.02 to a dollar, the rupee broke above the Rs 40 mark in the last week of April and has depreciated continuously thereafter.

This fall reflects large capital outflows by foreign institutional investors due to bearish stock market conditions and increased demand for dollars by importers.

About a third of these imports were of crude oil, and a falling rupee has meant the country’s oil marketing companies have not been able to reap the gains of falling crude oil prices.

“There is uncertainty and anxiety among companies,” said O.P. Lohia, managing director, Indo Rama Synthetics. According to him, while there have been no cancellation of orders, apprehension is gripping the community.

(With inputs from M.R Venkatesh in Chennai)

‘We should be able to sustain high growth’

India's resilience to the current crisis is also a proof of how important it is to have strong government supervision of the financial sector, says Deputy Chairman of Planning Commission Montek Singh Ahluwalia in an interview with
Rajesh Mahapatra.

Q With everything turning gloomier around where is India headed?

A. We are in a situation where economic conditions are not very favourable and the financial system globally is in a very bad shape. I think the Indian financial system is quite strong, the economy is sound and I think with proper management and injection of liquidity we should be able to retain a reasonable growth rate in the current year.

Q. Do you think the RBI took a little longer to cut the CRR?

A. The severity of this financial crisis is a very recent one. It’s only in the last two weeks or so that so many banks in Europe and Japan seem to be showing signs of problems. So, I think what the RBI did in two steps, was to make sure that liquidity is not a problem and there should be no uncertainty in the system. A 150 basis point reduction in CRR is a very impressive reduction.

Q. What you are doing is basically providing banks with liquidity, but that’s not enough to enable to reduce interest rates?

A. If the banks have a huge amount of liquidity they make more liquidity available at the existing interest rates. Some of the people, who have been complaining about high rates in short run, will find liquidity is available. If it turns out, 2-3 weeks down the road, that basically the conditions, with inflation pressure coming off, are right for a further reduction in interest rates, they could consider that.

Q. How do you see the current global crisis affecting India’s growth prospects?

A. India has had healthy investment boom. Yet, exports may slow down a little bit. Investment may also slow down, if there is a fall in domestic demand and it’s quite possible that the decline in stock market values can have an effect on people's expenditure. On the other hand, we have scope for increasing investment in certain areas especially in infrastructure.

Q. Your expectations for growth this year?

A. The recent statement we had made was between 7.5-8 per cent is the likely growth rate in the current year. I do not know how far the present crisis will take for the (global) economy to get back to normal. And many people because of the severity of the international crisis are now saying that India might grow at 7 percent. Now, I have to say that it is less than the previous year but by any standard it's a very good growth rate, if we can achieve it.

Time to take lessons from global crisis

The crisis in the global financial markets holds several lessons for policy reform of the Indian financial system. It would be sad, if the crisis made us more complacent. Our banks do not have global size; our markets do not have adequate products; our institutional investors do not hold diversified portfolios; these portfolios are not actively managed; and growth in credit and free capital flows are something we need quite desperately. Despite extensive work and road maps, our financial sector reforms are seriously delayed. This crisis should prod us ahead, given the valuable lessons that will play out.

Product Structures
When an economy adapts a market-led approach to financing assets, the assumption is that risks are priced, spliced, and distributed across several entities. Securitisation of home loans, the subsequent structures and swaps were based on this assumption. The crash in asset values across several balance sheets, when housing prices fell steeply, tests this assumption. Several of our local financial institutions have not even begun to experiment with new product structures. A better understanding of risk will emerge from this crisis and more choices about how we could deal with risks in product structures.

Bail Outs
Proponents of capitalism swear by creative destruction. The cyclical corrections in markets are seen as the much-needed purging of excesses. The events in the US show that the choice between allowing failure as a natural consequence and bailing out a failing entity, is not a simple one to make. The modified capitalism of bail-out based on judgment is something that appeals to our psyche, but is currently applied selectively (Would the bail-out have been the same, if UTI were in the private sector, for example?). Our handling of IFCI illustrates our muddled thinking. Rather than fantasise a world without crisis, we need ability and willingness for swift action.

OTC Vs Exchange-traded
The large leveraged positions in derivatives, which lost value rapidly and triggered losses for several players, is at the centre of the current meltdown. But much of the risk came from the structure and not the product itself. The credit default swaps were not exchange-traded products, but over-the-counter (OTC). This meant that the counter-party risks were high; there was no margining based on open positions; and valuation and liquidity were questionable. India’s exchange-traded currency contract is a great first step. Introducing exchange-traded products in the interest rate and credit markets is the next crucial step for us.

Mark-to Market
The drop in value of assets in the balance sheets of investment banks, banks, investors and others, has led to the plea that ‘marking-to-market’ might not be the correct thing to do. Several are asking for assets to be shown at costs, and for a write-off of the value, after manifestation of risk, through accounting entries in the income statement. This thinking assumes that a risk, unless accounted for, does not exist. We in India subscribe to this view, allowing banks to value assets depending on how they are classified, and keeping most institutional portfolios (like provident funds) at cost. We need alignment with global standards that will emerge.

Regulation
Every crisis creates spill-over of risks from one segment to another. The defaults of global investment banks have spread into money markets. The takeover and conversion of investment banks by commercial banks, creates dual regulation by the Fed and the SEC. Back in India, we have regulators for each type of institution, with limited understanding of the commonalities in functions they perform and the markets they operate in. We need unification of regulation, as has been recommended for a very long time in financial sector reforms.

Size
We may be fooled into thinking that only large-sized entities can extend themselves. The financial sector in India is badly compartmentalised. Several companies clamour to create new banks; many small banks hope to be taken over at good value; some thousands NBFCs operate with limited supervision; existing banks are constrained from expansion; and we are loathe to allow foreign banks in. The growth of multiple small entities, working in the credit markets in their own ways, creates risks and regulatory challenges, about which we may not even know. We need to implement reforms that enable larger institutions, that are easier to supervise. Regulatory and policy resistance to such change, remains a puzzle.

Leverage
Leverage is seen as the villain of the piece. As asset sizes shrink, spreads increase and lenders shy away, the credit markets in the US will shrink. This may lead US into a recession, as much of their growth is credit-driven. Without the advantages of leverage, it is not possible to expand in size, but this lesson may be lost on several regimes like India, which traditionally discourage borrowing. In an economy that needs capital to grow to its potential, we need more long term borrowing options. If we picked up only the disadvantages of leverage, and shrunk back, we might scuttle growth

Currency
Several economies including India, have built up large reserves as a defence mechanism. They also practice various forms of currency management. They will be impacted by the global recession and dollar depreciation.

The current crisis will have its impact on the currency markets. Last time around, we were able to claim ‘insulation’ due to lack of currency convertibility. Given the size of our resources, and the depreciation of our currency, we may need to act. Our stance on global capital flows, capital controls and currency will need review.

The lessons from this crisis will flow in over the time it takes to spill over, initiate another round of regulatory reforms, and create global realignment of macro-strategies. It is up to us to use the opportunity to implement long overdue reform of our systems, structures and institutions.

(Uma Shashikant is the Managing director, Centre for Investment Education and Learning)

‘We are paying the price for being a pioneer’

Kundapur Vaman Kamath worked the whole of last weekend to deliver the final punch to defeat rumour mongers out to hammer down the share price of his bank, ICICI Bank. Kamath, the managing director and CEO of the bank, was in a “combative” mode always, as he puts it, for the past three weeks. In an interview with Rajendra Palande, at the ICICI Bank corporate headquarters in Mumbai on Tuesday, Kamath said these three weeks “very interesting” and not stressful. Excerpts from the interview.

Do you think the perception that ICICI Bank is a high-risk bank totally out of context?

The perception that the bank is brazenly driven is clear rumour spreading mill out there. I am not a detective, so I don’t want to start assuming I know the answers. All the answers that I know are that the bank is safe. I have articulated what is our net worth, what is our position with regard to our debt investments. Yet, the rumours persisted. Then, finally last week, when rating agencies came out and indicated what they have to say and there was also articulation by regulators, we could nail those rumours. So, I think it is clearly a play on perceptions. For what reasons, it was very apparent.

What were the reasons?

It was clearly to manipulate (our) stock price. Short selling is not illegal. But it is clear manipulation. Otherwise, I don’t see why the rumours are spread with such vigour or force. To me, it is clearly a manipulation.

But SEBI has said it has not found anything abnormal in the pattern of trading in ICICI Bank shares…

Our job is to basically bring out the facts in terms of what we have seen. Nobody is denying that there was this large rumour mill. We basically leave it to the authorities and now it is for law enforcement authorities to take a look at in what order there was manipulation.

It is for the law enforcement authorities to decide whether it is an economic offence or not. We will bring this out to the authorities. That is the due process, which we are following. Everything is with the authorities.

Why was ICICI Bank singled out?

I guess it is all a question of where you see the results would be the best. We have probably the largest people out in the market. We have a very large FII holding. We have fairly large GDR holding. There are a lot of interesting fundamentals about ICICI Bank, which makes it a target.

I think we are paying the price for being a pioneer.

What is the greater concern for you — falling share price or the fear of deposit withdrawals?

Falling share price frankly is not a concern. We are well capitalised. But a falling share price could then be used, against in the context of pushing misinformation, to indicate certain things which are not there.

Recently ICICI Bank began a course correction, which included going slow on retail credit. Will those plans change in any way now?

In the context of very high interest rates, we took a call to slow down retail. In the last one-and-a-half years, corporate lending has provided the momentum. Retail will have a place, but at a lower pace. Based on the opportunities that today’s India presents, it does not mean we will quit retail, nor does it mean that we exit any other business. We will be in all businesses.

Are there any lessons to be learnt from the happenings of the last few weeks?

The lessons are very clear. The lesson is that for running any financial institution, get your capital right, which we had. Otherwise I don’t think we would have been in a comfortable position, get people right, get technology right, get products right and focus on your business. That my lesson that I learnt long back and I don’t think I need to correct it at this point in time.

Sensex melts below 10k level, hits over 2-year lows - Diwali Help India

The Bombay Stock Exchange benchmark Sensex on Friday 17 OCT 2008 sank to more than two-year lows under 10,000 points on panic selling by funds and general investors.

After a promising start, the Sensex dropped by 606.14 points, or 5.73 per cent, to 9,975.35, a level last seen in June 2006. The key-index dipped to 9,911.32 during the day and a high of 10,786.93.

Similarly, the wide-based National Stock Exchange index Nifty tumbled by 194.95, or 5.96 per cent, to 3074.35 after touching the day's low of 3046.60 and a high of 3335.95 points.

Marketmen said the Sensex dipped to the lowest level in over two years on concerns of a sharp global economic slowdown and sluggish corporate earning.

They said a series of measures announced by the government and the Reserve Bank of India failed to check rising capital outflow by foreign funds.

The market barometer turned significantly down as market major Reliance Industries dropped by 6.58 percent, DLF Ltd. By 10.34 per cent, Bharti Airtel by 7.47 per cent, ICICI Bank by 5.61 per cent and State Bank of India by 8.42 per cent.

Sector-wise, Realty stocks suffered the most as segment index meltdown by 10.25 per cent at 2,524.89 followed by Power sector index by 8.09 per cent at 1,712.27.

SRK launches $2.1 bn Boulevard in UAE

Bollywood icon Shah Rukh Khan today teamed up with a UAE-based real estate firm to launch a $2.17 billion signature beachfront residential project in the gulf country.

The development project, a tribute by King Khan in response to the love and affection shown by the people of the UAE to Indian cinema, Shah Rukh Khan Boulevard will be located on the Dana Island in Ras Al Khaimah.

This is the latest in the series of endorsements and signature developments that are coming up in Dubai with names such as Brad Bitt, Boris Becker and Tiger Woods continuously doing the rounds.

SRK will work closely with Los Angeles based architect Tony Ashai in the design concept of the beachfront community comprising 10 residential towers, it was announced during a press conference here.

Announcing the project with TSA Group, Shah Rukh Khan said, "Indian cinema has enjoyed strong emotional ties with the UAE and Arab cine-goers for decades. The Arab world is Hindi film industry's strongest foreign market."

"Shah Rukh Khan Boulevard is my tribute to the love and affection shown by the people of the UAE to Indian cinema. I have lent my name to the project and I intend to share and transfer my passion for design and living spaces into this world class community that residents will be proud of."

Scheduled for completion in 2012, Shah Rukh Khan Boulevard will have residences including specially designed studios, and one-and two-bedroom apartments and townhouses. It will also have beachfront features piers and boardwalks besides marine sports and leisure facilities.

Jet to take back 1,900 employees

Jet Airways today decided to withdraw plans to layoff 1,900 employees...

Naresh Goyal, chairman, Jet Airways said: "My conscience does not allow me to look only at the economics....when I saw tears, I could not sleep.... I want to see happy faces...."

Goyal added that he was not acting under pressure...

An emotional Goyal said economics of the company will be taken care off by all the employees together. He denied that the move to layoff employees had anything to do with the alliance proposed with Kingfisher Airlines.

"Don't ask me any more questions... I am emtionally disturbed... I hope as head of the family, I have taken the right decision...."

The plan of Jet Airways to layoff 1,900 employees had seen Maharashtra Navnirman Sena (MNS) leader Raj Thackeray threatening to stop Jet's operations in Mumbai and Maharashtra.

Goyal, sources said, had met political leaders across the spectrum today before announcing this decision.

Shirish Parkar, a senior leader of MNS, said the Jet management had acted in haste..."they did not look at options... employees were ready for pay cuts...We are happy that Raj Thackeray took up the issue..."

He added that Jet officials wanted to talk to Thackeray who refused to speak till all the employees were taken back by the management.

Monica Gawande, a Jet staffer who was asked to leave, thanked Thackeray for taking up their cause and settling the crisis.

Why is Reliance under pressure?

Market participants are saying Reliance Industries is no longer under conviction list despite cheap valuation.

The cut in FY09-FY10E EPS due to the D6 gas output delay is likely to be around 4-9%.

D6 gas output is now likely to start by end-November 2008 as against the earlier expectation of 2Q08.

OTHER HIGHLIGHTS

Benchmark Singapore GRM at US$5.4/bbl is down 15% YoY

Q2 profit growth expected to be in the range of 7-8%

Petrochemical margin expected to remain muted for full year

FII Shareholding

Sept 2008 16.97%

June 2008 17.11%

March 2008 17.83%

Dec 2007 18.72%

Sept 2007 20.64%

TECHNICAL VIEW

Reliance trading at lowest level seen in February 2007

Trading below 200-DMA since May 9, 2007

Reliance traded above 200-DMA from May 2005

Annualised volatility increased to 74.64 in futures market

Price Performance

Reliance Ind Sensex

1 Month -28% -10.71%

YTD -52% -43.40%

From 52-week high -57% -50.40%

VALUATION

PE at FY09 PE for FY10

At current Price 12.11x 7.75x

One mth back 16.91x 10.83x

YTD 28.26x 18.56x

From 52-week high 25.27x 16.18x

Brokerage EPS FY 09Estimate

Now Earlier Change

CLSA 120.50 124.00 Down

ENAM 106.70 111 Down

Macquarie 109.54 115.50 Down

Motilal 111.80 109.90 Up

Kotak 105.80 97.40 Up

Credit Suisse 103 114 Down

JPMorgan 115.87 119.41 Down

Edelweiss 104.90 100.20 Up

Can't be called global until you're in India

Banks aspiring to become global must have a presence in India and other emerging economies, who are set to become a major source of financial sector revenue and profit growth, according Ernst and Young.

"In the near future, banks will not be able to say they are global unless they have a presence in China, India and a few other countries, because these emerging markets are going to be a major source of financial sector revenue and profit growth," the international consulting firm said in a report prepared jointly with UK-based research firm Oxford Analytica.

The report, titled 'Strategic Business Risk 2008 – the Top 10 Risks for Business', noted that a late entry into these Asian markets would make it difficult for foreign banks to keep up with competition.

For the Asian banks themselves, the report pointed out, one of the main threats is the rapid transformation from "government bureaucracies into corporate governance and transparency-driven organisations".

The report also noted emerging markets as one of the ten strategic business risks for year 2008. Other risks included regulatory and compliance, global financial shocks, aging consumers and workforce, industry consolidation or transition, energy shocks, executing strategic transactions, cost inflation, radical greening and consumer demand shifts.

According to the report, regulatory and compliance risk has been considered as the "greatest strategic challenge facing leading global businesses in 2008".

"This is being driven by an escalating regulatory burden in many markets, as well as numerous compliance challenges as companies extend their value chains well beyond Europe, North America, and the BRICs (Brazil, Russia, India and China)," it said.

US subprime crisis may affect India in many ways: Parekh

The ongoing US subprime crisis may not have a direct impact for the time being, but is likely to hit Indian markets in various other ways.

Speaking to reporters on the sidelines of the ‘Global Trade & Investment Conference: India Your Partner’ in Mumbai on Friday, Deepak Parekh, chairman, HDFC, said, “We have not been hit by the US subprime crisis as our loan books are good.”

HDFC’s non performing loan is below 1%, he said.

However, as the crisis widens in the US, the companies, including outsourcing units and IT enties that heavily depend on their overseas clients for getting their revenues, may get affected in days to come. The subprime crisis may lead to a slowdown and then to a recession in the US economy.

In case it happens, the chief technical officers (CTO) of US-based companies, having their back-office operations in India, will be compelled to lower their budget, which will further have a cascading impact on Indian companies, said Parekh.

The good part of the story is that unlike China, which had an export oriented economy, the Indian economy was based on the domestic market, he added.

On the interest rate, Parekh said that it must be softened by 25-50 basis points within three months from now, if the RBI doesn’t go for a further CRR hike, when it reviews its policy on January 29.

However, he maintained that HDFC would wait until the policy was announced by the RBI before going for the cut in lending rates.

“We would like to see the spread in lending rates at the same level where it was at the end of the second quarter,” he explained.

Asked to comment on the repeal of ULCRA by the Maharashtra government, Parekh said that merely repealing the Act, which took 8 years for the government to do, would not help, and the cases related to land disputes pending in courts will have to be tackled at a fast pace for the real benefit to take place.

Switzerland pumps billions into bank rescue plan

Like Swiss chocolate, Swiss watches and Swiss knives, Swiss banking had a reputation for high standards and top quality. But Swiss banks have not been immune to the global financial crisis and the government stepped in Thursday with a nearly USD 60 billion bailout for the nation's largest bank.

Most of the bailout money will go to create a USD 54 billion fund to buy bad securities backed by subprime US mortgages and other high-risk securities from UBS AG, whose move into risky investments departed radically from the Swiss tradition of cautious money management.

UBS and the country's second-largest bank, Credit Suisse, account for 67 per cent of USD 3.1 trillion on Swiss banks' balance sheets. They employ almost half of the 109,000 people who work for banks in the country of 7.5 million.

The rescue plan includes tighter regulation for banks, including new caps on the maximum debt they can incur and closer scrutiny of management pay and incentives.

"The state serves society, and there are moments when the state has to step in," Swiss President Pascal Couchepin said.

Credit Suisse Group turned down the bailout and said it would raise USD 8.75 billion on the open market. The largest amount would come from the Qatar Investment Authority, a government-controlled fund.

The government's move was a dramatic break from repeated assurances that the Swiss system was immune to meltdown. Swiss officials on Thursday said that the country's other 300-plus banks remain healthy because of large deposits from Swiss and wealthy foreigners.

The bailout announcement caused turmoil on the Swiss stock exchange, sending UBS shares down 4.93 per cent for the day.

Govt will try to help domestic airlines: Patel

Domestic airlines in India are facing losses of 70-80 billion rupees ($1.4-$1.6 billion) due to high jet fuel costs, and the government will try to help them tide over the difficulty, the aviation minister said on Friday.

Civil Aviation Minister Praful Patel did not give details as to how the government would help the airlines, but said it was trying to persuade state government's to reduce taxes on jet fuel and was asking oil firms to help out.

"We must try to rationalise taxes. Oil companies must also co-operate," he said.

GM cuts 1,600 jobs at three US plants

General Motors will lay off 1,600 workers at three US plants, as it slashes production in the face of a sharp drop off in sales, officials said.

"Unfortunately we've had a lot of these announcements lately," said GM spokesman Christopher Lee on Thursday, noting that the automaker said in June it planned to bring production into line with demand.

General Motors has shuttered scores of plants and laid off nearly half its workforce since 2000 as it restructures its business in the face of a steady loss of market share to Asian competitors.

These latest job cuts will not actually come off GM's books immediately because of a labor agreement that requires the company to retrain temporarily laid-off workers.

GM's unionised US workforce stood at 72,000 people in June, down from 133,000 in 2000. Most of the reductions were made through buyouts and attrition.

About 4,500 other jobs cuts have been announced in recent weeks.

The latest cuts will reduce the workforce at GM's truck plant in Pontiac, Michigan to about 1,000 people, said Jim Hall, the bargaining chairman for United Auto Workers union Local 594.

That will halve production of Chevrolet Silverado and GMC Sierra pickup trucks from 55 units to 24 units an hour, Hall said.

About 500 workers at GM's sedan factory in Detroit will be laid off starting January 12, Lee said.

In addition, 400 workers at a two-seat sports car assembly plant in Delaware will be out of work starting December 8.

Satyam Q2 net up 42 pct at Rs 5.81 bn

Satyam Computer Services Ltd, India's No. 4 software services exporter, reported a 42 per cent jump in quarterly net profit, beating expectations, but cut its full-year revenue guidance in dollar terms.

Satyam, which specialises in business software and offers back-office outsourcing services, said on Friday consolidated net profit for the quarter ended Sept. 30 rose to 5.81 billion rupees ($120 million) from 4.09 billion a year ago.

A Reuters poll had forecast a net profit of 5.36 billion rupees for Satyam, whose customers include General Electric, Nestle, Qantas Airways, Emirates Bank International and Fujitsu Services.

Last bigger rival Infosys Technologies also cut its forecast for full-year dollar revenues due to the global financial crisis, even after it beat expectations with a 30 per cent rise in quarterly profit.

India's export-driven software service firms, used to a scorching pace of growth, have been badly hit by a slowdown in the United States, which contributes more than half their revenue, and the spreading global financial turmoil.

Shares in Satyam, based in the southern city of Hyderabad, fell 32 per cent in the September quarter, worse than a 23 per cent decline in the IT sector index and the main Mumbai index's 4.5 per cent fall.

Tax implications on inherited gold

PLANNING to sell that meenakari choker that grandma gave you? The taxman could knock for his share. wealth gives reader Yogesh some tips.

I received gold ornaments from my ancestor 15 years back. Now I want to sell them. Since I do not know the cost at which they were bought, do I have to pay capital gains tax? If yes, what is the tax rate?

-- Yogesh

1. Yes, you will need to pay capital gains tax.

2. For the tax rate, see if the asset (gold in this case) is long term or short term.

Long or short
Gold ornaments held for a period of more than 36 months are long term capital assets and attract long term capital gains (LTCG) tax. If held for less than 36 months, then they are short term capital assets and attract short term capital gains (STCG) tax.

Since you inherited the jewellery 15 years back, LTCG tax is applicable.

How to calculate

LTCG tax = (Sale price of ornaments – Indexed cost of acquisition) x 20 per cent

What is indexed cost of acquisition?
The tax laws allow you to take the benefit of rising prices or inflation. That is, your original purchase price will be adjusted to current prices. That way, your inflation adjusted gains will be lower than the absolute gains.

You can calculate inflation adjusted purchase price by using the formula:

Indexed cost of acquisition = Actual purchase cost x (CII for the year of sale/ CII for the year of purchase)

Purchase cost for inherited assets

Date and cost of purchase for previous owner = Date and cost of purchase for you

For example, if your ancestor had bought the ornaments on 14th August, 1975 for Rs 50,000, then, when you sell these ornaments, the date of purchase would be taken as 14th August, 1975 and the cost would be taken as Rs 50,000.

Smart tip: In case your ancestor had bought the ornaments before 1st April, 1981, then the cost of ornaments will be the fair market value (FMV) as on 1st April, 1981. You can obtain the FMV from a government approved valuer. Find out if your jeweller is an authorized valuer.

Why Indians work 12 hours a day

AS far as work hours are concerned, 10 is the new eight. And if you really want to distinguish yourself, better aim for a good 12 hours in the office every day.

The new high road to the corner office doesn't run through progressive ladder-climbing and years of company loyalty. It runs through being available to your customers 24X7 (which, incidentally, are sprinkled across an increasing number of time zones), and a willingness to 'marry the job'.

So what is lengthening our days in office? The list of answers no doubt includes the usual suspects, evil corporations and global competition, but the issue also forces us to ask: have our lives fundamentally shifted towards an office-centric lifestyle?

A study published in the Harvard Business Review by authors Sylvia Ann Hewlett and Carolyn Buck Luce, The Dangerous Allure of the 70-Hour Workweek , came to the startling conclusion that a large part of this shift is coming from blue-collar professionals themselves.

Individuals who have discovered their niche and are highly invested in their career, or those who are aiming for a quick route to the rich and famous lifestyle, embrace the idea of work days which never come to an end. The sheer love of the profession translates into a willingness to spend upward of 70 hours a week at work. And the prestige, money and power that come with it don't hurt, I guess.

But Hewlett and Luce are talking about what can be called the Delta Force of the corporate world, the highly paid, highly ambitious jetsetters. But Gallup's last survey estimated that only about 30 per cent of the workforce is actively engaged in their jobs.

So what is keeping the rest of us sitting at our desks so late? There is also some buzz around the fact that lengthening work hours are far more evident in India, compared to some Western nations.

Thomas Friedman has been frequently quoted for his observations on the Indian penchant for hard work. According to the The New York Times, he said, "It is interesting because French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day. Good luck."

To dig in a little more, I asked Indians working abroad (mostly in the United States and the United Kingdom), and those working in India, how many hours on average they spent at work. Their answers didn't vary that much. Most spent an average of eight to 10 hours at work.

But the few in my sample who did spend more than 10 hours a day came squarely from the Indian quadrant.

What did vary were their reasons for the longer hours and their perceptions around how necessary they were to their career growth. The Indian workers in the US and the UK felt that as long as they came through on their work commitments, whether it took five hours or 10, it didn't matter.

Their counterparts in India, on the other hand, gave a lot more weightage to face-time. For instance, a young organisation development specialist working in an Indian MNC observed, "Office begins at 8.30 am sharp and the last shuttle leaves at 7.30 pm. Given the workload, I barely manage to make it to the last shuttle."

When asked if working fewer hours would impact her career negatively, she added, "Yes, it adds to impression management."

Another senior manager in his late 20s, high up in the organisational hierarchy, adds, "It would impact my career negatively because my peer group does not complain (about the long work hours). Plus it is an opportunity for me to take the lead. Not healthy, I know. Apart from that, you are just asked to make it happen."

A young HR consultant chips in, "If you don't work long hours, it negatively impacts how your bosses perceive your dedication/effort."

Fierce competition for the roles higher up in the ladder definitely plays its role. But what is most disturbing is the answer to what makes these youngsters stay at work longer, despite the negative impact it has on their lives, day after day. Those working in India almost unanimously agreed, "Not working long hours isn't an option. There is just too much work to get done!"

And, predictably, we are back to pointing fingers at evil corporations. Organisations seem to be quite blasé about getting the work of two done from one. The shorter hierarchies and leaner organisations mean that young people can now rise through the ladder way faster than their parents ever did. But these opportunities come at a heavy price and work hours are only the beginning of that.

Relationships between spouses and between parents and their children are the first to suffer. Health is not too far behind either. Hewlett and Luce observe in their article, "More than two-thirds of professionals we surveyed don't get enough sleep; half don't get enough exercise; and a significant number overeat, consume too much alcohol, or rely on medication to relieve insomnia or anxiety."

If it were just a choice made by the few who wanted to prioritise their work over wholistic living, it wouldn't be so disturbing. But longer work hours are becoming an unavoidable part of just staying in the game. And a heady cocktail of changing work norms, the constantly connected technology, and employers willing to take advantage of these trends is fundamentally shifting the fulcrum of our lives.

One hopes organisations will realise that given the limited talent pool, driving their best towards exhaustion is not a smart strategy.

As a young management student succinctly observes on his blog, "What about diminishing returns when one works 100 hours a week? There is no magic formula to boost productivity -- it's pretty obvious that after a (sic) 20 hours of work in a single day, your productivity will be pretty low."

Point well made, my friend!

Bharti Airtel partners with Infosys to deliver next-gen interactivity on its DTH service

Bharti Airtel, India leading integrated telecom services provider has entered into an innovation and technology partnership with Infosys Technologies to deliver superior customer experience to the customers of Airtel digital TV, its Direct (DTH) TV service. As part of its Digital Convergence Platform, Infosys will provide a suite of products including devices, application servers and interactive applications that will focus on providing an enhanced digital lifestyle to Airtel digital IV customers.

Airtels revolutionary digital TV technology in combination with Infosys' digital convergence platform will bring digital lifestyle applications offering interactivity and personalization into the living room. This will include interactive and non-intrusive applications like widgets that can be invoked by the user to view relevant and customized information. For the first time in the country, TV-viewers will now be able to access local city information through interactive applications such as iCity, enjoy hassle-free Internet- like experience on their televisions with iNet, and get live and personalized stock quotes, breaking news, horoscopes, cricket scores and shopping deals in the city without. interrupting their TV-viewing experience. With this path breaking offering, Airtel digital TV customers will also have select websites packaged suitably for TV-viewing, in an application called tPortal. In addition, a host of other innovative applications are slated for release over a period of time.

The company made this announcement during the trading hours today, 15 October 2008.

7 reasons why you won't get a raise this year

IN the grand scheme of things a big raise won't make much difference in your life, but we'll all keep chasing it anyway.

Maybe it's the big number, maybe it’s the increased value that society places on us when we make a lot of money, or maybe we all just want more stuff.

Whatever it is, everyone's gunning for that big raise. Unfortunately, most of us won’t be getting anything more than the standard three to six per cent Cost of Living Adjustment anytime soon.

Here are a few reasons you won't be getting a raise this year, and some ideas for how you can fight back.

You don't deserve it

Of course you want a big raise, but maybe you just don't deserve one. Did you go above and beyond? Did you schmooze with all the big shots at your office? Did you find a unique way to make a good name for yourself in your company?

Take a good look at what you did this year and honestly ask yourself if you deserve a raise. I didn't deserve one my first year out of school and I didn't get one. But I was fine with it because I worked my ass off in other areas. Work wasn't priority number one for me, so giving me a raise probably wasn't priority number one for my old company.

You deserve it, but you're too young

Maybe you do deserve a raise. You tackled new projects, you started a company social committee, you made as many great contacts as you possibly could and you even asked for a raise, but you still didn’t get one.

Don’t worry, the corporate world is a little behind the times. A couple of years with a company might seem like a lifetime to you, but to the old folks in the corner office, it’s just a blip on the radar.

Sometimes, you have no chance of getting a raise when you're 24–you're basically chasing your own tail trying to do everything right for little payoff. If you determine that this really is the case, you may want to re-evaluate your career and your current company.

You didn't ask for one

This one is pretty obvious. Or so you would think. If you don’t ask for a raise, you're not going to get one. As nice as it would be, there is no one sitting around watching out for you or your career. No one will tell the boss to give you an extra ten grand, you have to ask.

Create a list of everything you accomplished this year, talk about the numbers you hit, the deliverables you produced and milestones you surpassed. When review time comes around, bring the list to your boss and tell him you want a raise.

If that doesn't work, put your resume online, get a couple job offers, and bring the offers back to your boss. He won't be so quick to brush off your request if he knows you have somewhere else to go.

You worked too hard

Working hard is not equal to working smart. Working hard is burying your head in a stack of papers and spending day after day pounding away on your keyboard. Working hard is coming to work an hour early and leaving an hour late, every day.

You can do these things. You can work really hard and still not get a raise because you got so lost in making sure your 'work' was done that you forgot to do the right kind of work.

You didn't do the right kind of work

The right kind of work may not always feel like work and it definitely won't feel like the most 'productive' thing you can do, but it pays off in the end. The right kind of work is putting aside your daily to-do list for an hour and strategising with the boss after lunch instead.

It’s blowing off a night with your friends or significant other to go to the quarterly get-together and network with company big shots. And it’s syncing your schedule with your boss’s, so you come in when he’s in and leave after he’s gone.

Doing the right kind of work makes you a visible and valued asset, and it puts you in the position where you can ask your boss for a raise because you have invested time and energy into forming a solid relationship with her.

You got comfortable

It’s easy to get comfortable at your job. When you do a certain job long enough, you learn the ins and outs. And more importantly you learn the shortcuts. What once took you half a day, now takes an hour.

When you get to that point, it's very easy to get comfortable. But the people who make the real money and get the big raises, don’t settle for comfortable. Overachievers don’t feel comfortable feeling comfortable.

You can only learn and grow when you challenge yourself, and you can only get a big raise after you learn and grow into the new position and higher salary you’re chasing. If you’re comfortable being comfortable, don’t bank on that big raise.

Your boss sucks (and you didn’t do anything about it)

To get a big raise you have to make people like and respect you, but you also have to produce great work. But it's nearly impossible to produce great work if your supervisor doesn't provide you with great direction.

Let's face it, a lot of bosses just aren’t good. It’s not necessarily their fault that they were promoted to manager without the skills to manage well. We’re all stuck in a system that often promotes based on 'experience' rather than competence or managerial skills.

Make his/her sidekick your best friend

So, if your boss sucks, do something about it. Find the person in the office who is best at playing office politics. Take a look around at who can usually be found sitting at their desk, and who can be found hanging out just talking with others.

The person who's chatting the day away probably has the most influence outside of his direct reports, so he’s the guy to talk to.

What you're after here is a mentor, someone who actually wants to help you grow. After you find the right one and develop a solid relationship, tell him why you deserve a raise and why you’d rather not go to your boss with the request.

He can help you find all the reasons why you should, and shouldn’t, get that raise–and help you make real progress in your career.

Now get a new job

If all else fails, there is always one final way to get a raise. Find a new job! If you're young and you have the skills that employers are looking for, there’s a good chance you can get a significant raise by going to another company.

The trick is to start laying the groundwork for a potential exit before it’s too late. Put your resume on the right sites, start blogging about the field you love to work in, and connect with the right people.

When you find yourself in a bad position, you’ll have the network in place to jump ship at the right time and start working for the right company, at the right price.

Sensex at 2-year low, hovers near 10K

A rout in global markets and the India stock market regulator's decision to tighten margins in derivatives sent Indian stocks tumbling to their lowest level in more than two years. The BSE Sensex was down 754.08 points or 6.98%. IT stocks slumped on fall in American depository receipts overnight. Reliance was at 52-week low, tanking more than 11%. Latest measures by the central bank to boost liqudity in the banking system failed to avert the sharp slide on the bourses.

Hindalco Industries, Jaiprakash associates and Tata Motors fell more than 10% each. Tata Consultancy Services fell more than 11%. PSU OMC stocks rose on sharp fall in crude oil prices. The market breadth was weak as selling was witnessed across the board.

The market regulator Securities & Exchange Board of India (Sebi) has tightened margins the derivatives segment in a bid to ward of defaults and curb volatility. The exposure margin for gross open positions in single stock futures and gross open positions in stock options will now be higher of 10% or 1.5 times the standard deviation in the notional value of the positions.

A warning of tough times ahead by Federal Reserve Chairman Ben Bernanke sent global markets sharply lower, as investors brace for looming recession. Shrugging-off recent optimism about massive government efforts to prop up the global financial system Wall Street , yesterday, 15 October 2008, suffered its worst one-day percentage decline since the stock market crash of 1987.

At 10:21 IST, the BSE 30-share Sensex was down 754.08 points or 6.98% to 10,055.04. The index declined 781.32 points at the day's low of 10,027.20 hit in mid-morning trade lowest since 24 July 2006. The Sensex fell 391.11 points at day’s high of 11,418.01, in early trade.

The S&P CNX Nifty was down 233.70 points or 7% to 3,104.70. It hit a low of 3,099.90, its lowest level since 26 July 2006.

The BSE Mid-Cap index was down 4.77% at 3,543.11 and The BSE Small-Cap index was down 3.94% at 4,220.30. Both the indices outperformed the Sensex.

The market breadth was very weak. On BSE, 238 shares advanced as compared to 1,921 that declined. 47 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries slumped 11.9% to Rs 1,338.50, tumbling for the second day in a row on fears the company may report fall in its gross refining margins in Q2 September 2008 over Q2 September 2007 largely due to sluggish demand for petroleum products in key Western markets. The stock hit a 52-week low of Rs 1,332 today. The stock had slumped 6.2% yesterday, 15 October 2008

All the stocks from the 30 stock Sensex pack were in the red. Among the major losers were Hindalco Industries (down 10.58% to Rs 71), Sterlite Industries (down 8.95% to Rs 266), Jaiprakash associates (down 10.39% to Rs 65.1535), Tata Motors (down 10% to Rs 253.85).

PSU OMCs rose between 1.07% to 3.68% after crude oil fell for a third day, taking its decline from the July 2008 record to more than 50%. State-run oil marketing firms suffer revenue loss on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Crude oil for November delivery fell as much as $1.58, or 2.1%, to $72.96 a barrel on the New York Mercantile Exchange on 15 October 2008, the lowest since 30 August, 2007 .

IT stocks fell on sharp plunge in their American depository receipts (ADR) in US on 15 October 2008. BSE IT index slumped 7.96% and was the major loser from the sectoral indices on BSE.

India’s third largest IT exporter by sales Satyam Computer Services down fell 5.75%. Satyam’s ADR was down 11.54%. India’s largest IT exporter by sales Infosys fell 8.28%. Infosys ADR was down 10.98%. Wipro fell 9.17% on fall in its ADR by more than 5%

India’s largest IT exporter by sales Tata Consultancy Services fell 11.45%.

India’s largest private sector bank by net profit ICICI Bank fell 5.7%. ICICI Bank ADR slumped 14.19% in US on 15 October 2008.

India’s largest private sector bank by net profit HDFC Bank dipped 5.77%. HDFC Bank ADR fell 13.21% in US on 15 October 2008. The bank will announce the Q2 September 2008 result today, 16 October 2008.

Container Corporation of India declined 3.80% on BSE, despite net profit surging 28.48% to Rs 223.68 crore in Q2 September 2008 over Q2 September 2007.

Biocon fell 7.8% after the company’s net profit fell 23.81% to Rs 33.53 crore on 11.16% rise in total income to Rs 268.27 crore in Q2 September 2008 over Q2 September 2007.

Reserve Bank of India (RBI) on Wednesday, 15 October 2008, cut the cash reserve ratio (CRR) by a 100 basis points to 6.5% The CRR cut would release Rs 40000 crore into the banking system. The CRR cut takes effect from the current two-weekly reporting period for banks, which began on 11 October 2008.

With a view to ease the liquidity in the banking system, the central bank has also allowed banks to borrow an additional 0.5% of their net demand and time liabilities using their SLR holdings as collateral under the LAF to meet liquidity requirements of mutual funds. The RBI will also release the first installment of Rs 25,000 crore under the agricultural debt waiver and debt relief scheme to banks immediately, at the government’s behest.

Asian markets declined sharply today, 16 October 2008 on global recession concerns. China's Shanghai Composite, Hong Kong's Hang Seng, Japan's Nikkei, Singapore's Straits Times, South Korea's Seoul Composite and Taiwan's Taiwan Weighted fell between 2.8% to 11.1%

The partially convertible rupee was at 49.00/15 per dollar compared with Wednesday's close of 48.525/540.

Happy Diwali likely for India's investors!

We have witnessed the worst of stock market last week (6-10 October 2008). Now one should be prepared to cheer for the best of stock market this week (13-17 October 2008). If Nifty gains by 1000 points in 10 days, no one should get amazed. Of course, there is a logic behind this optimism.

Last seven days have been the days of turmoil for stock market. Sensex and Nifty suffered unprecedented calamity. Front running stocks turned into game spoilers. This is where our regulators jumped into action. Finance Minister Shri P Chidambaram assured and reassured investors about strength of Indian economy and promised swift and timely action. SEBI’s tough talk deterred manipulators from creating mess and RBI acted to infuse ample of liquidity into system. Regulators’ timely action has started soothing nerves of the market. The reassuring words of Finance Minister at 9.40 in the morning on October 13, 2008 has led the BSE sensex jump by nearly 800 points.

The Logic Behind Optimism
Capital market is ready to cheer in this festive season. There are several reasons. First, there is nothing wrong with Indian Economy or Indian Capital Market as such. Second, oil prices has tumbled below 80 dollar per barrel. Third, Indian Regulators are proactive and geared up to insulate Indian economy from the heat of global credit crisis.

Global Heat Felt In India
Sensex and Nifty have been tumbling down due to global financial market turmoil. For last fifteen days, global financial market turmoil has been dominating Indian capital market. In panic, we forgot that our market, our companies are not affected to the extent, we are speculating. We have a robust banking system, we have stiff regulatory measures, we have tight monitoring mechanism. It’s true that global recession may affect us, but not to the extent we are afraid of.

Regulators In Pro-Active Role
To the investor’s delight, our banking regulator has been so swift to inject liquidity into the system, that RBI cut CRR twice in five days. Finance Minister chose to address media before the opening bell. PM’s economic panel came out with more positive observation. One would feel comfortable to note that Ministry of Finance decided to prepone the release of inflation data on 10th October 2008 to cushion stock market. There is a buzz of interest rate cut, SEBI may tighten grip over financial intermediaries for spreading rumors and manipulating stock prices. Government may relax ECB norms further. FM has assured that he is taking stock of situation on hourly basis.

India Will Cheer Amidst Global Turmoil
No doubt, global credit crisis has created difficult situation. But we have created a robust mechanism for stormy days. IMF has reaffirmed Government’s view that Indian economy will register 7.9 percent growth in current fiscal year. Our only problem has been inflation. But inflation has started receding and will go into single digit by March 2009. Added to that, the most prominent factor behind inflation- sky rocketing crude prices have come down to 78 dollar per barrel from the peak of 147 dollar per barrel. There is fear, that upswing in global stock market may lead to a rally in crude prices as well, but it may consolidate around 100 dollar per barrel.

Nifty Support And Resistance Levels
Market technicals suggest that if sensex crosses the barrier of 11300 with good volume, it may go up to 12200. I hope, that this level of 12220 will be attained this week. Similarly, if Nifty crosses the barrier of 3539, it may go up to 3750. This may also take place this week itself. There are huge shorts in the system. If these start unwinding, market may see new highs. Let us remain hopeful to see a better Diwali emanating from a battered capital market. (Courtesy: PIB Features), Mr Mishra is Editor at Pearl News Network.

Indian stock market and the Diwali Effect

Just like western world celebrates Christmas, the Indian subcontinent celebrates Deepavali or Diwali. Diwali not only is a festival of lights, but also marks the beginning of new fiscal year for many businesses in India. Besides, Diwali also marks a busy holiday shopping season for Indians. For these reasons, it may be interesting to watch the performance of Indian stock market index with respect to Diwali season. The three day festival of Diwali this year is celebrated from November 8th through 10th.

I considered four cases around Diwali event; 30 days, 60 days preceding Diwali and 30 days, 60 days after Diwali. I used BSE sensex of Indian market, which is a market capitalization weighted index of 30 large and well established companies. The table below shows the performance of BSE sensex before and after Diwali shopping season for the previous 10 years.


As you can see from the average (arithmetic) performances, the index has comparatively done better after the Diwali season than before. One of the caveats with this point is that BSE sensex has only 30 stocks and may not be broad enough to generalize.

The Chart below shows how some of the main Indian ETFs and Mutual funds have performed YTD. Although all the funds have done splendidly this year, the US slowdown can have a dent on BSE sensex too.

Diwali seems to have positive effect on Indian stock markets, but I think, this year the global growth story has a much bigger impetus to drive Indian markets higher than the "Diwali Effect". But the Diwali Effect can certainly add to the growth story in Indian markets.

We are engaged in $2-billion deals: HCL Tech

HCL Technologies has declared its consolidated first quarter results. The company's Q1 net profit stood at Rs 356.2 crore versus Rs 141 crore. Its consolidated net revenue stood at revenues were at Rs 2639.3 crore versus 2168.8 crore. The company's forex loss was at Rs 97.4 million.

The revenues were flat at USD 504 million. Its net profit was at USD 75.9 million versus USD 32.8 million.The company's EBITDA margin was at 22.4% versus 23.4%; drop of 100 bps.

Shiv Nadar, Chairman and Chief Strategy Officer, HCL Tech; Vineet Nayar, CEO, HCL Tech; Anil Chanana, Executive Vice President of Finance, HCL Tech; and Ranjit Narasimhan, President and CEO of HCL BPO spoke to CNBC-TV18 in an exclusive interview.

Vineet Nayar said that the environment — referring to the global financial crisis — is concerning, but added the company has not seen any specific actions by clients. The company, Nayar said, had signed USD 270 million worth of deals last quarter. "We are currently engaged in about USD 2 billion of deals."

On the Axon deal Shiv Nadar said that the Axon's client base was complimentary to its own client base. "It gives us a big opportunity for large a drag on revenues and that’s a fundamental which has attracted us towards Axon."

Here is a verbatim transcript of the exclusive interview with the HCL management on CNBC-TV18. Also watch the accompanying video.



Q: How bad is the environment out there globally and have you had reason because of this environment to relook at your medium-term annual guidance?



Shiv Nadar: Currently we have a set of results in front of us and I would like to give a preamble because that’s the ambience in which these results should be looked at. HCL has more than half of its cost in Indian rupees. More than 80% of the disposable surplus is distributed between dividend or capital equipment creation and they are all in rupees.



Our revenues in the last quarter grew at 38.6% YoY (year-on-year) and 9.2% sequentially. We deal with in something like 55% in US currency, 30% in European currency and the rest in Asian currencies. I believe it is a significant growth. The company’s net income is at 356 crore up 15.5% YoY and 152% sequentially. We would be declaring an interim dividend of 150%, which is a 23rd consecutive quarterly dividend payout our company has done.



Our total EBITDA went up to 536 crore which is a 46% increase YoY. It is a huge increase and EBIT went up by 49% YoY. This is the money available to us for redistribution and this money goes towards dividend and that is why we are able to sustain our dividend policy continuously.



The purpose of the dividend policy is to ensure that income is received by the shareholders of HCL with regularity. The definitiveness of our quarterly dividend has been well appreciated by all shareholders. In today’s uncertain market conditions when private debt funds themselves are struggling to give an yield, which is around 8-9% where the certainty is low - as on today’s price if somebody buys it, the return post tax from HCL dividend alone is 8%. So it is a substantial dividend policy that we are maintaining over this entire period.



Our gross addition during this quarter is about 2,000 employees, In the BPO (Business process outsourcing) there had not been substantive addition. Actually there is a decrease considering that Liberta people and CPS (Control Point Solutions) employees were added into our headcount.



Nayar: The environment we see outside is of concern. But this has not resulted into specific actions negative or positive by our customer. We signed USD 300 million worth of deals last year and we signed USD 270 million of deals this quarter. Currently HCL is engaged in about USD 2 billion worth of deals, which spans across the globe with about 55% of them engaged with global majors.



So despite what we see in the market and despite the TPI (Technology Partners International Inc) report, which is not very positive about the July to September quarter, we continue to see deal flows, we continue to see engagement. There is a headwind that all of us are feeling but I believe that the way the customers are responding with increased offshoring and outsourcing contract the company’s future is bright.



Q: Before I talk about the quarterly numbers just want your thoughts on the Axon deal because some analysts of your stock have observed that given the current SAP environment which seems to have worsened over the last quarter or so it could turnout to be an expensive proportion for you – what are your thoughts on the strategic nature of the deal and the value that you are laying on the table?



Nadar: Given the current market situation Axon would offer addition avenues for HCL to expand its services, expand its client base. The client base of Axon is very complementary it’s not parallel to that of HCL. It gives us a big opportunity for large a drag on revenues and that’s a fundamental which has attracted us towards Axon. They are quite deeply to reign into many of the customer locations, their customer engagement have been long and there are three-five year kinds of engagements and their order book too is good. So we were looking for something in company and it is there.



Q: I am going to read out something which has come from an investment bank after your results yesterday and it highlights that – a quote from this report ‘high hedges with 100% forward cover are a major overhang on HCL Technologies earnings’ and it goes on to say that ‘HCL Tech’s policy of hedging for as high as compared to nine quarters is quite disagreeable.’ How would you respond to that concern?



Chanana: We have hedges in dollar/rupee terms of something like 1.8 billion and others in euro and GBP (Pound Sterling) of another 100 million put together. On the average rate there is about Rs 41.6 paise covering us for the next seven quarters. Except 20-30 million of range bound options we have used plain vanilla forward covers which can be understood and can easily be comprehended. The mark to market covers are about USD 350 million and the rest goes into the OCI (Other Comprehensive Income). As it gets realised it will be booked through the P&L (Profit & Loss) account.



Q: A word on the BPO performance which doesn’t seem to have been very robust this quarter. Are you witnessing some pressures?



Narasimhan: This quarter has been strategically important for the BPO. During this quarter we completed the acquisition of Liberta Financial Services and Control Point Salutations successfully. This re-enforces our strategy of de-linking from linear monotonic growth and de-linking the growth in revenue from the growth in headcount and total strength of value based, platform based services offering. The QoQ increase in revenues with QoQ decrease in manpower and the results will be more visible in the quarters to come.