B-Gyan

Weekly Newsletter

13 October 2010 – 19 October 2010

Power & Energy | Finance | FMCG | IT & Telecom | Manufacturing

 POWER & ENERGY

Suzlon wins orders totalling 168.5MW

The biggest of the many deals are from Gujarat State Fertiliser and Chemicals for 33MW and from
Sai Regency Power for 18.9MW. The deals are in addition to recent orders for 202.2MW from Indian
wind developer Techno Electric for projects in Tamil Nadu and 30MW from the Altrade Group.

Suzlon has had rapid growth in India with over 40 sites across eight states, and an installed base of
more than 5,000 MW. Suzlon and REpower, if taken together, stand as the world's third leading wind
turbine supplier group with market share of 9.8 percent.

< http://in.ibtimes.com/articles/72208/20101015/india-suzlon-energy-wind-turbine-manufacturer-
new-orders-from-corporate-medium-business-segments-gen.htm >

The wind power sector in India has an installed capacity of over 12,000 MW. The total estimated
wind power potential in India, as per Ministry of New and Renewable Energy data is over 48,000 MW
and according to the Global Wind Energy Council (GWEC), the world's wind power generation
capacity is projected to become 1,000GW by 2020.

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ONGC strikes hydrocarbons in two blocks

ONGC has found oil and gas in two of its exploration blocks – one in an onshore block in the Kaveri
basin and another in an offshore block in the Krishna-Godavari basin - the company said in a
statement. The company did not give details of the potential reserves in the statement issued late
on Friday.

< http://economictimes.indiatimes.com/news/news-by-industry/energy/oil--gas/ONGC-discovers-
hydrocarbons-in-two-blocks/articleshow/6767241.cms >

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Hydropower firm SJVN signs deal with Bhutan

Hydropower firm Satluj Jal Vidyut Nigam Ltd. has signed a contract worth `20.75 crore with the
Bhutan Government's Department of Energy for the preparation of a detailed project report (DPR)
for a 600MW project in the Himalayan kingdom.

< http://www.thehindubusinessline.com/2010/10/15/stories/2010101553360300.htm >

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B-Gyan Newsletter 13.10.2010-19.10.2010 1

Bombay High Court approves RPower-RNRL merger
Anil Ambani-led Reliance Power and Reliance Natural Resources Ltd (RNRL) said the Bombay High
Court has approved the merger of both entities. Following the arrangement, RPower's net worth
would rise by over `16,000 crore, with the contribution of about `1,900 crore from RNRL, the filing
added.

In addition, RNRL's gas supply agreement with Reliance Industries will accelerate the
implementation of RPower's plans for setting up over 8,000MW of gas-based power generation
capacity.

< http://www.domain-
b.com/companies/companies_a/ADA_Enterprises/20101015_approves_merger.html >

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Govt. fixes Coal India IPO price band at `225-245

The Government fixed the Coal India Ltd initial public offer (IPO) price between `225 and `245 a
share. At this price band, it expects to mop up between `14,211 crore and `15,475 crore from the
issue that will open for subscription on October 18.

The IPO will be the largest ever from an Indian firm till date, surpassing that of Reliance Power that
raised `11,500 crore in January 2008. The Government aims to divest a 10% stake in Coal India
through the IPO.

< http://in.reuters.com/article/idINIndia-52136720101012 >

Coal India Ltd is the largest coal mining company in the world based on its annual production of 431
million tonnes for the year ended March 31, 2010. It caters to around 82 per cent of India's needs.

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B-Gyan Newsletter 13.10.2010-19.10.2010 2

 FINANCE

SKS Micro seeks legal clarification on AP Ordinance

SKS Microfinance is seeking legal clarification as to whether the Andhra Pradesh Government's
Ordinance will apply to NBFC microfinance institutions (MFIs) as SKS Microfinance is not an NBFC as
defined under Section 58 A of the RBI Act 1934 as outlined in the Ordinance.

The Andhra Pradesh Government's Ordinance to protect “women self-help groups” was signed by
the State Governor on October 15.

This Ordinance does not have an interest rate ceiling on MFI loans except a mention that “no MFI
shall recover from the borrower towards interest... an amount in excess of the principal amount”.
“This works out to a flat interest rate of 100 per cent compared to our flat rate of 12.5 per cent with
1 per cent upfront interest (26.7 per cent effective on a declining balance).”

<http://www.thehindubusinessline.com/2010/10/19/stories/2010101952320600.htm >

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Coal India Launches Country's Largest IPO

State-run Coal India launched its $3.5 billion share sale on Monday, with its lower-than-expected
pricing and exposure to India's booming electricity demand expected to draw solid investor interest
to the country's largest-ever IPO.

Global investors in search of higher returns have been pouring money into emerging markets
including India in recent months. The Coal India offering is expected to draw billions of dollars in
overseas demand that will add to upward pressure on the rupee.

Coal India, based in the eastern city of Kolkata, produced 431 million tonnes in 2009/10 and
accounts for nearly 80 per cent of coal output in Asia's third-largest economy.

At the top of its price range Coal India would be valued at 15.7 times trailing earnings.

The company made a net profit of 98.3 billion rupees ($2.2 billion) in 2010 fiscal year on revenue of
525.9 billion rupees. It expects profits to rise by a quarter this fiscal year, fuelled by growing demand
for power in Asia's third-largest economy.

< http://www.businessworld.in/bw/2010_10_18_Coal_India_Launches_Countrys_Largest_IPO.html
>

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B-Gyan Newsletter 13.10.2010-19.10.2010 3

US set to rake up yuan at G20 meet
China’s exchange rate policy, which is under growing attack, could figure high on the agenda of the
upcoming G20 meeting. What the US and many other countries want is for China to allow its
currency — the yuan — to rise, which would lead to a reduction in the country’s exports and help
rebalance the global economy. “The issue is not a narrow trade advantage coming from changed
relative prices associated with the exchange rate.

In general, countries that are prepared to allow their exchange rates to fluctuate are less dependent
on the monetary policies of other countries. And so those concerned with the posture of US
monetary policy are likely to be less troubled, if they allow the currencies to fluctuate freely

< http://economictimes.indiatimes.com/news/international-business/US-set-to-rake-up-yuan-at-
G20-meet/articleshow/6766191.cms >

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Banking on IT
Cooperative banks, which perform all the main banking functions such as deposit mobilisation,
supply of credit and provision of remittance facilities, are faced with growing challenges.
Competition is intense, managing risk and responding quickly to change is a necessity.

While huge upfront investment in technology is a major issue for these small banks, IBM India says it
has a solution — taking care of the entire information technology requirement of the bank. In other
words, a bank needs to identify its IT or seek the help of IBM to identify it, and leave the rest to IBM
to manage on payment every quarter, says Sriram Rajan, Vice-President, India (south), IBM India Pvt
Ltd. “We call it smart outsourcing of their non-core things and concentrating on banking alone,” he
says.

< http://www.thehindubusinessline.com/ew/2010/10/18/stories/2010101850110300.htm >

____________________________________________________________________

Caution, the watchword for any action on MFIs

Many MFIs which started off as service-oriented NGOs to provide succour to the downtrodden and
the neglected sections of the rural population have assumed commercial complexion, working for
profits.

Beneficiaries, social groups, political parties and administrators have reacted on predictable lines.
There were arrests, raids on offices of the MFIs, demands for regulation of MFI activities and an
announcement by a State Government of an Ordinance to discipline them. The significant role of the
MFIs in the rural areas and their size of operations do not warrant any knee jerk reactions, which
can, besides directly affecting the MFIs, trigger avoidable upheavals in the financial sector. Caution is
the watchword for any action.

< http://www.thehindubusinessline.com/2010/10/18/stories/2010101850831000.htm >

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B-Gyan Newsletter 13.10.2010-19.10.2010 4

 FMCG

Mudra to sell 25% stake to E-Land for `72 cr

Mudra Lifestyle will issue 1.2 crore equity shares, constituting 25 per cent equity in the company, to
South Korea-based textile chain E-Land for around `72crore. Mudra Group, started operations in
1986 and is involved in the business of fabrics/garments manufacturing, processing, design
development and sampling for domestic and export market. The company registered sales of `365
crore in 2009-10 with net profit of `12.83crore.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fashion-/-cosmetics-
/-jewellery/Mudra-to-sell-25-stake-to-E-Land-for-Rs-72-cr/articleshow/6770897.cms >

____________________________________________________________________

High food prices take sheen off FMCG cos’ rural script
Big marketers such as Hindustan Unilever, Britannia and PepsiCo may be busy expanding their rural
presence, but there are early signs of a slowdown in rural demand, which helped India, avoid the
global downturn over the past two years. Big marketers such as Hindustan Unilever, Britannia and
PepsiCo may be busy expanding their rural presence, but there are early signs of a slowdown in rural
demand, which helped India, avoid the global downturn over the past two years. Consumer
companies plan to introduce smaller stock-keeping units (SKUs), or packets with less grammage to
keep retail prices down, and focus on more rural market centric innovation to boost demand.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/High-food-
prices-take-sheen-off-FMCG-cos-rural-script/articleshow/6772417.cms >

____________________________________________________________________

Godrej Consumer merges Godrej Household Products with itself

Personal care products maker Godrej Consumer Products Ltd’s board has approved merging its unit
Godrej Household Products Ltd with itself. The merger has been effective since April 1, 2010, post
the acquisition of the remaining 51 percent stake in Godrej Sara Lee, owned by its joint venture
partner Sara Lee Corp.

Following the acquisition, Godrej Consumer has become the largest homegrown household and
personal care company in India and second largest household insecticides company in India. No
shares will be issued post-merger as GHPL is a wholly-owned unit of the company, the statement
added.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Godrej-
Consumer-merges-Godrej-Household-Products-with-itself/articleshow/6746571.cms >

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B-Gyan Newsletter 13.10.2010-19.10.2010 5

Nirma's strategy fails to breathe new life into pharma biz
Nirma’s attempt to replicate the detergent price war in the pharma segment has not yielded similar
results. It acquired the ailing business of Core Healthcare in 2006, reportedly for `300 crore, to enter
the pharma sector, Core was manufacturer of IV fluids (parenteral). Even after four years, Nirma is
yet to bring about a turnaround of the loss-making entity it had renamed Nirlife. The company
incurred a loss of `49.21 crore for 2009-10, 43% lower than a loss of `86.75 crore incurred in the
previous year.

Nirma tried to cut prices in IV fluids (parenteral) drug segment, a strategy it adopted to challenge
multinationals like HLL and P&G in the detergents space. However, the strategy did not work in a
drug segment that often deals with critical care treatment where quality and not price is a premium.

The low-price strategy was bound to fail as there are many small companies who can cut prices to
match those of the branded products. Also, Big Pharma with its strong marketing network has an
upper hand in pricing.

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Nirmas-
strategy-fails-to-breathe-new-life-into-pharma-biz/articleshow/6738515.cms >

____________________________________________________________________

Emami gets board nod to raise `5,000 cr

The board of Emami group has approved a plan to raise up to `5,000 crore through debt and equity
dilution, throwing open speculations that the Kolkata-based company may still be a contender for
buying Paras Pharmaceuticals. The company is looking to move from its earlier export-led strategy to
become a strong local player in Indian markets

< http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fashion-/-cosmetics-
/-jewellery/Emami-gets-board-nod-to-raise-Rs-5000-cr/articleshow/6771498.cms >

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B-Gyan Newsletter 13.10.2010-19.10.2010 6

 IT & TELECOM

Oracle planning to buy EMC?

EMC, the disk storage giant and owner for VMware is rumoured to be on sale and none else than
middleware leader, Oracle is speculated to be the owner for it. The rumours for sure have pumped
up the stock prices for EMC. The storage vendor has witnessed a rise of 5% in its stock prices. The
only interest for Oracle in this deal is storage and server virtualization wares from EMC.

< http://itvoir.com/portal/news/Corporate-News/Oracle-planning-to-buy-EMC--8-434.asp >

____________________________________________________________________

Rising rupee could spell trouble for small IT companies

The rising rupee could spell big trouble for India’s export-focussed software industry, especially for
many of the small and mid-sized software companies that are yet to recover from the slowdown.

In the last one month, the rupee has appreciated nearly 4.6% to `44.15 from `46.32, and analysts
fear that with the mega Coal India IPO, the rupee could go for a roller coaster.

< http://economictimes.indiatimes.com/infotech/ites/Rising-rupee-could-spell-trouble-for-small-IT-
companies/articleshow/6756524.cms >

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Facebook Acknowledges Privacy Issue With Applications

Facebook said on Monday that it was talking to application developers about how they handle some
personal data, after a report said some applications had been improperly sharing the data with
advertisers and Web tracking companies. Facebook’s statement came after The Wall Street
Journal reported late on Sunday that it had found that several Facebook applications were
“providing access to people’s names and, in some cases, their friends’ names” to advertisers and
Internet tracking companies. The report said that all 10 of the most popular applications on
Facebook, including games like FarmVille and Mafia Wars, were transmitting user IDs to third
parties. Three of those applications were also transmitting information about a user’s friends, The
Journal said.

< http://bits.blogs.nytimes.com/2010/10/18/facebook-admits-to-privacy-issue-and-makes-
fixes/?ref=technology >

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B-Gyan Newsletter 13.10.2010-19.10.2010 7

Value Added Services do not prove cash cows to telcos
Value added services are ray of hope for telco operators in this cut throat competition; but
apparently it is also not helping.

As per the recent survey, out of five only two people download apps; the percentage sums to just
39%. What more, since last month, around 50% of Smartphone users have not even downloaded an
app. The VAS was considered as a life line to telco operators since the current price battle is taking
toll on margins and quarterly revenues.

< http://itvoir.com/portal/news/Corporate-News/Value-Added-Services-do-not-prove-cash-cows-to-
telcos-8-440.asp >

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Regulations and Security Concerns Hinder Asia’s Move to Cloud

Computing
The Youth Olympic Games here in August presented organizers with a formidable, but temporary,
computing hurdle: Manage 3,600 athletes, 20,000 volunteers and 370,000 spectators for two weeks.
Rather than buy or lease the equipment necessary to run the event, organizers rented the required
computer capacity from a data center run by Singapore Telecommunications. What is giving Asian
customers pause, though, is the same concern being voiced elsewhere: that a company’s precious
financial and customer data could be lost, stolen or even rendered temporarily inaccessible through
no fault of its own. To many, the threat posed by hackers, possible government interference and
even power failures justifies keeping their data housed on their own premises, in their own
countries. As a result, cloud computing in Asia is taking off faster among small, more cost-sensitive
start-ups than among larger companies. China’s big state-owned businesses, for example, tend not
to trust third-party providers with their data.

< http://www.nytimes.com/2010/10/11/technology/11cloudasia.html?ref=business-computing >

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B-Gyan Newsletter 13.10.2010-19.10.2010 8

 MANUFACTURING

India industrial output growth slows to 5.6%

Industrial growth slowed down to 5.6 per cent in August from 10.6 per cent in the corresponding
period last year, on the back of a 2.6 per cent contraction in the capital goods production. Among
the main industry segments, manufacturing activity declined to 5.9 per cent from 10.6 per cent a
year ago. Mining sector growth was at 7 per cent as compared to 11 per cent in August last year.
Industrial growth for the first five months of this fiscal stood at 10.6 per cent in comparison to 5.9
per cent growth in the same period a year ago. Experts had projected that the industry growth might
slip to single-digit level because of the high base effect of last year.

< http://timesofindia.indiatimes.com/business/india-business/India-industrial-output-growth-slows-
to-56/articleshow/6735492.cms >

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Minda Corp acquires assets of Germany's Aks

Minda Corporation, a privately-held auto component company, has acquired assets of German
specialist component-moulding manufacturer Aksys. The acquisition amount was not disclosed.
Aksys has an annual turnover of $ 40 million and the acquisition will give Minda Corporation access
to assets worth $ 20 million. Minda Corporation plans to invest over `1,000 crore across the group
companies in the next two years to expand capacity and for more acquisitions to achieve the
turnover target. Minda Corporation also plans to raise funds through private equity placement in the
next one year.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/Minda-
Corp-acquires-assets-of-Germanys-Aksys/articleshow/6695538.cms >

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HC cracks whip on car imports

In a landmark order that would prevent illegal imports of all-terrain vehicles, MUVs and superbikes
into India, the Bombay high court has said that ‘‘if the importer is a person who has lived abroad
continuously for two years, then he or she must necessarily be the owner of the vehicle’’. The HC
also ordered immediate confiscation of a Toyota Cynos car imported in 2000, confiscated by the
customs immediately but released in 2004 by the customs appellate tribunal, which held that the
importer doesn’t have to necessarily be the owner.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/HC-cracks-whip-
on-car-imports/articleshow/6762768.cms >
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B-Gyan Newsletter 13.10.2010-19.10.2010 9

Tata Motors shelves plan to shut JLR plant in UK
Tata Group-owned Jaguar Land Rover has scrapped plans to close one of its three factories in the UK
after an agreement was reached with the worker's union. The agreement, which trade unions
representing the Jaguar Land Rover workforce will unanimously recommend to their members, sees
Jaguar Land Rover revising its plans to consolidate manufacturing operations. Subject to employees
endorsing this deal over the next few weeks, Jaguar Land Rover will now retain three plants in the
UK -- at Castle Bromwich, Solihull and Halewood -- building Jaguar and Land Rover vehicles.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Tata-Motors-
shelves-plan-to-shut-JLR-plant-in-UK/articleshow/6755079.cms >

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TVS group firms' bottomline soars on auto recovery

Three frontline closely-held companies of the TVS group, TV Sundaram Iyengar & Sons, Lucas-TVS
and Sundaram Industries (SIL), have reported a big surge in net profit during 2009-10 riding on the
robust recovery in the auto sector after the 2008-09 slowdowns. TVS & Sons clocked a record 200%
jump in net profit at `116.10 crore in 2009-10 against `38.70 crore in the previous year. On a paid-
up capital of `11.44 crore, its reserves & surplus improved to `340.20 crore (`266.91 crore). The
company has business interests such as distribution of auto parts and vehicle dealership.

< http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/TVS-group-
firms-bottomline-soars-on-auto-recovery/articleshow/6727202.cms >

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B-Gyan Newsletter 13.10.2010-19.10.2010 10