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US
Downturn a Blessing
in Disguise for
Indian Auto Component
Firms
When US automobile
sales skid, the
wheels of fortune
turned in favour
of the Indian auto
component industry.
America's loss-laden
auto makers and
their OEM component
suppliers are already
looking towards
low-cost component
manufacturers in
India and China
for a bail-out.
And at the same
time, Indian auto
component makers
have turned their
eagle eyes on possible
preys in the US.
Mark Warnsman, an
auto analyst with
Calyon Securities
said, "It has
been a long standing
practice for American
OEMs to buy components
from China, India
and Mexico whenever
their margins are
under pressure.”
This time around,
OEMs are learnt
to be advising their
component manufacturers
to also cut corners
innovatively like
paring weights of
components, etc.
without compromising
on quality. "And
India is an ideal
destination."
Warnsman expects
US companies, in
their bid to trespass
competition, to
join hands with
counterparts in
India and China
by starting up plants
or signing up joint
ventures.
Indeed, requests
for quotation (RFQs),
a measure of the
interest of American
firms to do business
with Indian companies,
are already on the
upswing. "There
is a 100 percent
increase in RFQs,"
says Ashok Taneja,
Chief Executive
Officer of Sriram
Pistons and Rings,
a supplier to GM
and Ford.
Gurgaon-based automobile
lighting systems
maker Lumax is negotiating
a significant deal
with Chrysler. "It's
a huge opportunity.
The big three -
GM, Ford and Chrysler
are focusing more
on outsourcing to
India to pare costs.
We are hoping that
the deal with Chrysler
would come through,"
says the company's
chairman DK Jain.
Current trends indicate
global autocomp
outsourcing from
the US will reach
$25 billion by 2015.
India, China and
Mexico would benefit
the most from this.
Currently, India's
exports to the US
account for $3.5
billion with a potential
to reach $15-20
billion by 2015.
Says Yezdi Nagporewalla,
national industry
director, industrial
markets at KPMG,
"Ideally players
like GM, Ford and
Chrysler depend
on two to three
vendors for a particular
component, what
is now happening
is the quantity
of the outsourcing,
especially to India
and China has increased.”
Needless to say,
Taneja and Jain
want a share of
this business. It
usually takes anywhere
between six to eighteen
months to close
a deal. Of course,
there are others
who perceive this
as an opportunity
to get a better
foothold in the
US market by acquiring
companies there
or by tying up strategic
partnerships. Margin
pressures have put
many American and
even South American
component makers
on the block.
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GE
Healthcare to Invest
$200 mn
in Indian Rural
Diagnostics Market
GE Healthcare, the
$17-billion healthcare
business of General
Electric Company,
is planning to invest
$200 million in
India to tap the
rural market for
diagnostics and
disease monitoring
equipments such
as ultrasound, computed
tomography (CT scanners),
magnetic resonance
imaging (MRI) and
X-rays.
While the company
has already signed
agreements with
Gujarat and Madhya
Pradesh governments
to outsource radiology
equipments in government
hospitals, it plans
to cover over 12
states in three
years.
Following a public-private
partnership (PPP)
model, the medical
device maker, with
a revenue of $500
million, would facilitate
the rural population
with technologies
and equipments like
to diagnose their
diseases at an early
stage and would
also enable them
to monitor it.
"As per the
agreement we would
try and usher in
radiological technologies
and experts to provide
services to patients.
The rural market
for diagnosis still
remains largely
untouched. Our idea
is to how to reach
the masses and make
it affordable,"
said GE Healthcare
South Asia President
and Chief Executive
V Raja.
GE Healthcare has
earmarked an investment
of around $60 million
for equipments under
this programme.
In Gujarat, the
company has already
installed devices
in five medical
colleges, said Raja.
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Suncast
of US to Launch
Solar
Heaters to Indian
Villages
Foreign companies
are increasingly
trying to grab a
hold of rural business
opportunities in
India. From fast-moving
consumer goods and
electronics items,
to even manufacturing
solar water heaters,
companies have been
trying to enter
the country through
the rural belt.
In a major initiative
to push the use
of solar water heaters
in rural areas,
US-based Suncast
Energy Corp would
be launching light
weight solar (LSW)
heaters in the country
over the next two
months. The product
would provide new
business opportunities
in rural areas,
particularly in
those 1.25 lakh
villages which are
yet to get any power
connection.
Suncast Energy is
the first company
to enter a virtually
untapped rural solar
heating market,
which is estimated
to be more than
$5 billion.
The company, which
has already started
the distribution
of LSW to countries
like Mexico and
Brazil, would initially
source LSWs from
the US. The cost
of each unit would
then be around $250,
which the company
expects to come
down after it sets
up manufacturing
facilities in India.
The product comes
with a warranty
for 10 years.
"We are in
talks with Haryana
and Himachal Pradesh
government for setting
up a manufacturing
facility for LSWs,"
Sonny Sharma, chief
executive officer,
Suncast Energy Corp
India said.
The company is specifically
targetting those
rural areas in the
country which have
a substantially
longer spell of
winter. "We
want to bring in
rural consumers
into the water heating
market through LSW,"
Sharma said. The
company also hopes
that the government
would extend financial
incentives for popularising
the use of LSW,
as were provided
by the governments
in Brazil and Mexico.
Recently, Prime
Minister Manmohan
Singh has also approved
a proposal to promote
solar lanterns in
rural areas.
Easy to install,
LSW can be easily
fitted into existing
water supply systems,
Chris Castillo,
president of Suncast
Energy Corp India,
said. As per the
present arrangement,
Suncast would distribute
LSWs manufactured
by another US-based
company, Heilocol,
which is the market
leader in swimming
pool heating systems.
Most of the solar
water heating products
in the country have
been targeted at
urban and institutional
buyers. States such
as Delhi, Haryana
and Tamil Nadu have
offered a subsidy
of up to 50 percent
to consumers using
solar water heaters.
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India's
Growth Story Offers
Great
Opportunity for
Diaspora FDI
Three concurrent
sessions at the
Pravasi Bharatiya
Divas 2009 held
in the southern
Indian city of Chennai
from 7 to 9 January,
addressed opportunities
presented for investment
in India, especially
for the Indian diaspora.
The PBD convention,
organized by the
Ministry of Overseas
Indian Affairs in
partnership with
the Government of
Tamilnadu and the
Confederation of
Indian Industry
CII, continued its
objective to deepen
economic engagement
with the Indian
diaspora.
The consensus was
that the Indian
growth story is
still intact and
overseas Indians
can take advantage
of business opportunities
across sectors such
as real estate,
education and healthcare.
Addressing the session
'Building Bridges:
Trade and Investment',
Dr Ashwani Kumar,
Minister of State,
Ministry of Commerce
and Industry, pointed
out that India is
still a good growth
story, as its economic
fundamentals are
strong. A GDP growth
of 6.5 percent is
expected, even while
most countries are
suffering economic
downturn. He stressed
that the diaspora
must bring funds
into India. At the
same time, it should
engage in skill-building
activities in the
country.
Gopinath Pillai,
Ambassador-at-large
and Chairman, Institute
of Asian Studies,
Singapore, said
that compared to
the Chinese Diaspora,
Indian Diaspora
has brought in less
investments, but
on the other hand,
it has brought better
skills which is
also of enormous
significance. He
suggested that to
properly utilize
the skills of returning
workers, they should
be involved in developmental
activities.
Hari Pandey, President,
Wealth Management,
North American Region,
ICICI Bank Group,
Canada , stressed
that overseas Indians
must show the world
how to invest in
India. Ravi Pillai,
Managing Director,
Nasser S Al-Hajri
Corporation, Bahrain,
said the diaspora
should uncompromisingly
endorse India and
Indian products
should be used by
them to the maximum.
Jayadev Galla, Managing
Director, Amara
Raja Batteries Ltd,
Hyderabad, India,
stressed the importance
of returning to
the roots. Chairing
the session, Venu
Srinivasan, Vice
President, CII,
felt that with a
large and growing
middle class with
increasing purchasing
power, and exports
at 15 percent export
intensity, the investment
potential for India
is high.
Continuing the emphasis
on education and
knowledge exchange
at the concurrent
session on Education
and Diaspora Knowledge
Network, Chief Guest,
Smt. D Purandeswari
Devi, Minister of
State for Human
Resource Development,
urged the Indian
diaspora to supplement
the efforts of the
Indian Government
to make India a
knowledge-based
economy. The Minister
outlined the educational
initiatives of Sarva
Siksha Abhiyan and
Mid-Day Meals Scheme,
which have attracted
more students to
schools. However,
she urged, there
is a long way to
go as seven million
children are still
out of school and
about 25 percent
faculty shortfall
is being experienced.
Datuk Dr. S Subramaniam,
Minister of Human
Resources, Malaysia,
and Guest of Honour,
pointed out that
Diaspora Knowledge
Network should not
only focus on Diaspora-Home
country relations
but also strengthen
Diaspora-Diaspora
relations. In response
to his call, the
Minister for Overseas
Indian Affairs Vayalar
Ravi, who was present
among the audience,
readily accepted
his suggestion.
S Ramadorai, Chief
Executive Officer,
Tata Consultancy
Services, Mumbai,
pointed out that
Internet has become
an important means
of global integration
and Diaspora Knowledge
Network has great
potential. However,
he urged that the
portal should result
in concrete collaborations
and generate ideas
and transform them
into community actions.
Lord Diljit Singh
Rana, MBE, Founder
and Chairman, Andras
House Ltd., UK,
mentioned the successful
Irish experience
of knowledge network.
Talking about the
role of diaspora
in the delivery
of education, he
recommended that
an Advisory Panel
at district-level
be considered in
order to better
coordinate with
the diaspora.
Ravi Seethapathy,
Chair, Canadian
Advisory Council
of the Sastri Indo-Canadian
Institute, Canada,
talked about possible
operational difficulties
in the Global-INK
concept. He pointed
out that the Government
should think about
the ways and means
of sharing the knowledge
in different layers
of civil society.
Raj P Warrier, Vice
Chancellor, Manipal
University, Manipal,
in his address outlined
the plans for the
PIO university and
its proposed role
in greater integration
with the Diaspora.
P Kishore, MD, Environ
Systems, offered
three solutions
for the present
education problems
in India - technology
as a solution; technology-enabled
institutions and
enhanced private
investments in education.
The concurrent session
was chaired by Renu
Khator, Chancellor,
Houston University,
USA.
The concurrent session
'Building Bridges:
Media & Entertainment'
was chaired by N
Ravi, Editor of
the Hindu. The Guest
of Honour was P
Ramasamy, Deputy
Chief Minister,
Penang, Malaysia.
The speakers included
Shan Chandrasekar,
President &
CEO, Asian Television
Network International,
Canada, Loganathan
Naidoo, Executive
Councillor &
Deputy Mayor of
eThekwini (Durban),
South Africa, Venkat
Raman, Correspondent,
The National Business
Review Editor, Indian
Newslink, New Zealand,
Prakash M Swamy,
Indian American
Journalist, USA
and Ranvir Nayar,
Managing Director,
Media India, Paris.
The session focused
on the role of media
played by two spheres
of Indians - the
diaspora and the
Indians. The image
of Indians abroad
has progressed over
the past 150 years
across the globe-from
South Africa to
New Zealand. There
is great visibility
and pride being
felt in the Indian
diaspora. Ramasamy
raised the plight
of Tamil Indians
in Malaysia and
the need for greater
support and networking
within the Indian
community, both
in India and abroad.
The discussion stressed
that the role of
third-generation
diaspora is significant
in sustaining the
growth of cultural
roots irrespective
of the country of
immigration. Though
the Indian media
has grown in certain
countries like Canada,
there is relatively
slower growth in
Europe. Prakash
Swamy from New York
mentioned that the
primary focus of
Indian media has
shifted to community-focused
publications to
enhance the participation
of the Indian community
in politics in the
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Global
Meltdown, a Chance
to
Further Strengthen
Indo-US Ties
The transformation
based on strong
strategic relationship
between India and
the United States
comes from our well
established shared
values and growing
common interests
is widely understood
and welcomed in
both the countries,
US Ambassador to
India David C Mulford
said. This relationship
will further deepen
and will yield rich
and abiding benefits
as yet uncounted,
he added.
“Millions
of our citizens
pursue people to
people ties in commerce,
education, science
and countless other
endeavors. They
are the driving
force that shapes
our official relationship-
because both Americans
and Indians benefit
from our shared
values of freedom,
democracy, diversity,
entrepreneurship,
education and opportunity,”
Mulford said addressing
a meeting in New
Delhi recently.
He further said,
"In the shadow
of the global economic
slowdown and the
fall out from the
tragedy in Mumbai,
fruitful cooperation
is all the more
vital. Both are
major challenges
for each of us.
Yet both also offer
opportunities for
America and India
to leverage our
transformed ties
- strengthened by
our understanding
and appreciation
- in order to better
meet the needs of
the hour".
Agreeing that India's
cautious financial
regulatory policies
have helped shield
it from the worst
of the 2008 financial
crisis, just as
they did in the
Asian crisis of
1997, Mulford said
the country has
to liberalize. India
has huge savings,
this money has to
be put into the
system. India's
steps to facilitate
credit and investment
flows into India
not only blunt the
negative global
financial impact
but position India
to regain its impressive
9.0 percent growth
trajectory once
global conditions
improve. Through
the current global
downturn, with all
its pain and uncertainty,
India will remain
one of the world's
fastest growing
economies.
On the civil nuclear
agreement, he said
"With India's
membership in the
global nuclear regime,
India will now diversify
and improve its
energy base, it
will be a home to
vast new industry
and become a world
leader in the filed
of civil nuclear
energy and US intends
to partner this
vision."
Hari S Bhartia,
Managing Director,
Jubilant Organosys
Ltd. said, "The
civil nuclear agreement
has really been
a strong move forward
for India to be
self-sufficient
in energy. A lot
of partnership collaborations
have grown in both
the countries. Jubilant
Organosys prides
itself with investing
USD 0.5 billion
in North America."
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Pepsico
Allowed 100 pct
Stake in
Indian Subsidiary
The
Cabinet Committee
on Economic Affairs
of the Indian
Government has
given its approval
to the proposal
of Pepsico Holding
Private Limited
for 100 percent
ownership in its
Indian operations
subject to the
conditions that
it brings in an
additional investment
of $50 million.
This has been
done as per the
recommendation
of the Foreign
Investment Promotion
Board (FIPB).
According to the
earlier foreign
investment norms,
Pepsico India
Holding was to
divest 49 percent
equity in bottling
firms to Indian
companies. But,
with the government
making changes
in the FDI policy
in the food processing
sector since then,
Pepsico has been
exempted from
the obligation.
The new FDI policy
allows 100 percent
foreign equity
in the food processing
sector in the
country. The CCEA
decision follows
this.
''The government
has relaxed the
investment conditions
for the company
to invest in India,''
Science &
Technology Minister
Kapil Sibal said
after a meeting
of the cabinet.
''It would now
no longer be asked
to divest its
49 percent stake
in its Indian
subsidiary, PepsiCo
India Holdings
Pvt. Ltd,"
he added.
At the time of
Pepsi's initial
investment in
India, rules capped
foreign holdings
in the sector
at 51 percent,
and approval for
the venture mandated
the firm sell
49 percent of
its local unit
within the first
five years of
operations.
That deadline
was later extended
and when rules
were relaxed to
allow full foreign
ownership in the
food processing
industry, Pepsi
asked the government
to amend the approval
and waive the
stake sale condition.
The approval would
result in FDI
amounting to Rs250
crore in the country,
a government press
release said.
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ITC
Infotech acquires
US firm
IT services provider
ITC Infotech India
Ltd, a fully owned
subsidiary of ITC
Ltd, has said it
had acquired Pyxis
Solutions, a US-based
company offering
quality assurance
solutions and testing
services.
The enterprise value
of Pyxis Solutions
is $25 million,
said Sanjiv Puri,
Managing Director,
ITC Infotech. He
said it was an all
cash deal, and has
been funded internally.
"Pyxis Solutions
brings on board
differentiated capabilities
and expertise which
compliment our service
offerings,"
Puri said. Pyxis
has become a wholly-owned
subsidiary of ITC
Infotech (USA) Inc,
he added.
Pyxis offers software
quality assurance
to the banking,
financial services
and insurance segment.
It has deep domain
expertise and unique
testing methodologies
that would benefit
ITC Infotech, Puri
said.
The acquisition
will also help ITC
Infotech to cross-sell
its existing services
to Pyxis's customers,
he added. Amar Duggal,
Chief Executive,
Pyxis Solutions,
said they can now
bring on board the
benefits of scalability,
a robust global
delivery model and
strong offshore
base.
The global testing
market is valued
at $13 billion,
of which about 50
percent is outsourced,
said Puri. He said
the benefits of
the acquisition
would be seen in
the next few months.
The employee strength
in ITC Infotech
would increase to
3,300 after acquisition
from 3,000, it said.
The company had
revenue of about
Rs 400 crore in
fiscal 2008.
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