Wednesday, January 31, 2007

Bride Corus Ties The Knot With Tatas

It is a great day for Indians, Indian steel industry and India as a whole. In a fierce battle to win the hands of the Anglo-Dutch steel company Corus, Tata Steel - the oldest steel manufacturer and the second largest in India has come out victorious. As the curtains come down in melodramatic films churned out in dozens by Bollywood, an one-liner usually appear just before the final words "The End" so that no one is left in doubt. The one-liner says 'and they lived happily ever after'. I learnt just an hour back about the happy ending of the Corus acquisition, the popular Hindi song 'Le jayenge, le jayenge, dulhaniya le jayenge'(I will take the bride, I will take the bride) spontaneously started ringing in my mind.
Tata's bid of 608 pence as against the rival Brazilian offer of 603 pence clinched the deal and like a magic wand transformed the Indian steel company from its 53rd position globally to an enviable fifth largest manufacturer. So, there is a lot of wisdom in the saying "Marriages are made in Heaven". But just to remind ourselves lest we forget in such euphoric moments, steel is made by men and he pays the piper who calls the shots.
It is a historic moment for India. Nearly three hundred years back, a British company by name 'East India Company' had touched the shores of eastern India initially for trading in textiles and spices. The British Empire kept the whole of India under its thumb for nearly two hundred years. Now the table has been turned. Tatas have taken over Anglo-Dutch giant steel conglomerate Corus.
My congratulations to Tatas-Corus on their wedding!

Monday, January 29, 2007

Wedding Bells Ringing For Corus

It is billed as a mega event - it is the wedding of Corus. It is also something unprecedented. The wedding is not going to be over in just a few hours. It will start by 10pm Indian Standard Time on 30th January, 2007 and depending upon what transpires, it may continue up to 8-30am on 1st ebruary, 2007. Interestingly, the groom has not been fixed as yet and there are two suitors.
Yes, I am referring to the acquisition drama of the steel giant Corus for which initially the only suitor was Tatas. But CSN of Brazil came out of the blue and demanded the hands of Corus. I was very thrilled at the prospect of Tata-Corus acquisition as it would have been the biggest by any Indian company for about $9 billion and made it the fifth largest steel manufacturer in the world. Though the earlier acquisition by Mittal Steels of Arcelor (which turned out to be a long-drawn corporate tug-of-war) ended making the combine the biggest steel company in the world, it was, in any case, launched from the foreign soils unlike the acquisition bid by Tatas - the oldest steel manufacturer and the biggest in the private sector in India.
There are contradictory press reports emanating from London about who will win the hands of Corus. 'Daily Telegraph' has said "CSN has the great desire to win Corus and may go as far as 600 pence." The Sunday Times quoted sources saying :"Do not write off Tata yet ...they are serious and they believe they can win." The irony lies in the highest bidder getting Corus despite a general impression prevailing that Tatas and Corus want each other.
In my post 'The eternal triangle of Corus-Tata-CSN', I had already said that I would be happy to see Tatas emerge as winner. I had, at the same time, expressed my misgivings about the drama ending like the film Devdas in which the hero (read Tatas) ruins himself without trying to save Paro (read Corus). Barely 30 hours are remaining for the curtains to come down. The suspense is building up. But then, I am keeping cool being reminded of the wise saying: "By all means get married. If you get a good wife, you will live happily ever after. If you do not, you will become a philosopher."
I do not want Tatas to become a philosopher.

Thursday, January 25, 2007

Do You Believe India's Economy Will Be Second Largest By 2050?

Yes, I do. After all, I am a hard optimist. Why should I doubt the findings of a study that places India in No2 position ahead of USA by the year 2050 especially when the report has been prepared by the internationally reputed Golden Sachs. It had earlier projected India to No3 position just after China and USA by 2032 overtaking Japan.
The sweet music now released also says that India's GDP will quadruple from 2007 to 2020 and the per capita income will increase 35 times by 2050. This will enable Indians to buy cars five times and increase consumption of crude oil by three times. I do not know whether to rejoice at such projections. The scenario of so many cars in congested cities polluting dangerously the already highly polluted environment besides causing other problems is nightmarish and has been touched in my post 'Small cars boom spell urban doom'.
How I wish each word of the projection comes out true by 2050. Many readers may be around then to determine how much of it was realistic and how much was hog-wash. Of course, it is well known that war, natural calamities, epidemics like AIDs and political upheavals may upset the applecart. Nevertheless, I have a wish-list which should materialise preceding what has been forecast by Golden Sachs. My wishes are:
1. India is a strong, vibrant democracy where honest and capable people get elected as their representatives - not by rigging elections, or by use of money or muscle power.
2. India has eliminated hunger and poverty.
3. Every Indian has access to education, health care and social benefits. Cast, creed, language divide created and perpetrated by wily politicians no longer matter.
4.Every village has electricity as well as drinking water and every citizen has a roof over his head
5. Every nook and corner of the country is easily accessible by modern transport.
6. Every citizen is conscious and concerned about environmental degradation and reaches out to do his part to fight air, water and noise pollution.
7. Corruption has been removed from the public life. No one needs to grease the palms of anybody for getting things done.
8. AIDs and other serious diseases have been controlled or eradicated.
9. Women empowerment is visible in every walk of life.
10. Merit has become the sole criterion for advancement and selection in all spheres of life. Political interference, nepotism and sycophancy no longer work. If my wish-list becomes reality, how glorious it would be for India even if the projections of Golden Sachs attain only 50% accuracy.
Is it not?

Monday, January 22, 2007

Dumping Bio-Fuels

India is racing to emerge as a super economic power. Its rapid progress, however, has got some gaping holes which threaten coordinated and sustainable development. Take for example, the acute power shortage or the lack of infrastructure such as highways and expressways. Measures taken in fits and starts have failed to ensure uniform growth of different segments of the economy.
Bio-fuels can be partial solutions to the whopping needs of petroleum products of the country. Oil extracted from jatropha is blended with diesel to produce bio-diesel which serves as a substitute of diesel. Jatropha can be cultivated even in non-agricultural lands; its farming should receive governmental support by way of subsidies and relief from taxes so that at least for a part of its diesel consumption, India could become self-sufficient. The international crude oil price recently dropped to $50 a barrel and the whole economics of bio-fuels have gone up in smoke. As per a report in Economic Times, the cost of conversion of extracting jatropha oil and blending to produce bio-diesel is Rs5 (.09$) per litre. The current selling price of jatropha is Rs12, 000 ($265) per tonne. The cost of bio-diesel works to Rs43 ($.95) per litre as against the prevailing price of Rs35.75 ($.80) per litre of diesel. A price difference of Rs6 ($.15) per litre cannot compensate customer preference, if any. If more plantation of jatropha is undertaken, the competition should bring down the price of jatropha. The conversion cost will be also reduced if more bio-diesel manufacturers take up production and use efficient technology. By proper pricing of diesel vis-a-vis bio-diesel prices, bio-fuels will be accorded the importance in the economy from a long-term perspective. India will then be less dependent on foreign sources for its crude oil supplies.
Let diesel and bio-diesel thrive together and not at the cost of each other.

Monday, January 15, 2007

Let's Have More Watches To Make Up Lost Time

Modern life demands that man should be strapped to a time-machine. Can you imagine managing your life without a watch? I remember the tension and inconveniences experienced on occasions when my watch had refused to move.Yet, only 25 out of every 1000 Indians have got the prized possession of watch whereas the global average is 250.
According to a report, India manufacturers about 12 million watches a year and the world annual production is 600 million watches. It is claimed that over 50% - 75% of watches sold in India is imported through illegal channels. Time was when having a Swiss-made watch was considered by many as a status symbol. Thanks to the brand building efforts by the domestic watch manufacturers, watches made in India meet a sizeable demand of the domestic market.
India is racing to become a super-economic-power and Indians need to imbibe the value of time. Whether having merely more watches will usher in the change, time alone will tell. Those who are at the top echelon of society should lead by setting examples of respecting the importance of time. Others will follow suit.
So, let us have more watches and a whale of a time!

Tuesday, January 09, 2007

Moribund Ministries Flushed With Funds

Every year, come January, ministries go overdrive with their unfinished projects and unspent allocated funds. That is because the allocations are for the 12-month period April-March and first 9 months usually pass in warming up and frenetic activity is seen during the last quarter of the financial year (January-March). Reports usually appear about unspent funds in January and then the war cry is given.
One such report in Times of India 'Ministries sitting in funds, may loose unspent chunk' is an eye-opener. The worst ranking ministries are civil aviation 1%( Rs130 crores or $30 million), steel 16% ( Rs45 crores or $10 million), Non-conventional energy 18%( Rs597 crores or $130 million) and tourism 27%( Rs830 crores or $180 million) besides others who have not spent even 40% of allocated funds. So the usual excuse of funds shortage cannot be forked out for miserable progress of these ministries. It is the lethargy and inefficiency of the concerned ministries which is responsible for such a deplorable state of affairs despite a separate Expenditure ministry being there for monitoring expenditures.
I find the non-performance of the ministry of non-conventional energy, tourism and steel particularly very disappointing. India is heavily dependent upon imports for its oil needs and exploiting non-conventional energy can mitigate to some extent its energy crisis. Poor performance in such crucial areas is therefore alarming and unpardonable. So is the case with the steel ministry as growth of steel industry holds the key to removing infrastructural weakness. In case of tourism which has got such a huge potential, opportunities are being frittered away while other competing nations benefit out of our inaction.
Why cannot the concerned officials be held responsible for their callousness and inefficiency? The slogan should be 'Perform or perish' and anyone failing including ministers should be shown the door.
What do you say?

Thursday, January 04, 2007

Indian Steel Industry Gasping For Real Autonomy

For the steel industry, the New Year 2007 has brought a mixed bag of news. The good news - International Iron and steel Institute has informed that the global steel production during the year 2006 has been 1.21 billion tonnes registering a robust growth of 9.4% over the previous year. The other good news is that China continues to dominate as the largest steel manufacturer in the world with a production of 421.33 million tonnes and growth of 19.4%. Such growths globally and in individual nations including India is indicative of good demand for steel. It is expected that the market during the year 2007 will have a growth of 10% and thus give the industry some breather.
The bad news is for the Indian steel industry. Demonstrating a typical bureaucratic mindset, the government is reportedly contemplating to regulate steel prices for which a high level committee to monitor price movement has already started working. The industry which was languishing due to governmental controls were freed from the shackles only in 1991. There has been a surge for setting up new steel projects both by Indian investors and foreign giants like Posco and Arcelor-Mittal. This is in line with the National Steel Policy which has fixed a target of 110 million tonnes by 2019-20. But the present government's move to backtrack and reintroduce price control is going to affect the rapid growth of the steel industry which is the need of the hour for India's infrastructure development.
For reasons best known to the government, it has been flexing its muscles from time to time for imposing price controls. India and china both produced measly 2 million tonnes in 1950s. Today China produces the 421 million tonnes ten times the steel produced by India. It is the policy vacillations and lack of political will that have stifled India's steel industry. Remember in what pitiable state our civil aviation industry was before competition was permitted? Today airlines which offer minimum fare of rupees nine have turned corners in just 3 years.
Such are the dramatic changes that take place whenever governmental interference is withdrawn. But packing up existing authority and bringing new order is a far cry. If such stumbling blocks remain, India's steel production may not attain its target and it could slide down further from present level of a mere 10% of China's production. I just cannot accept such a pitiable scenario.