Bharti - Airtel's Profit Soars

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The financial results of the first quarter for FY'07 of Bharti
Airtel, India's largest cellular provider showed an increase in net
profit by 48% to Rs.755 crore as compared to FY'06. The growth was
on account of increase in its customer base and expansion of
cellular phone market in the country.




The Company: Overview
Bharti, a New Delhi based company is the country's largest
telecommunication and wireless service provider, covering almost 46%
of the population. Around 30.8% of the company is owned by Singapore
telecommunications ltd. and nearly 10% by Vodafone Group Plc.

Reasons for the growth
Growth could be attributed to mainly 3 reasons.
Firstly, a strong growth in the Indian mobile market with cheapest
local mobile calling rates has attracted 4million new users. The GSM
market constitutes about 75% of Airtel's revenue. Owing to the
expanding markets, firm's sale was up by 53%. The mobile base of the
firm rose by 88.2% earlier this month and wireless services
accounted for the 74% of the quarter sales. The total customer base
grew by 86%, which included fixed line users.
Secondly, with lowering of entry barriers through lifetime pre-paids
and reduced handset prices, there has been a decline in monthly
mobile average revenue per Airtel user, which also has triggered the
growth.
Thirdly, the firm has a strong network cover reaching 4026 towns and
101614 villages with more than 100 million subscribers to its
services. The company plans to invest around $2million by March to
cover 5200 towns and thousands of villages across the country all
over.

Company's analysis
Bharti Airtel has been ranked among the top 10 best performing
companies in the world by business week in its IT100 list.
Currently, Bharti's shares have been trading at 373.30 on the BSE
and have a 3.8 percent weighing in the BSE-30 share index. The co's
CMD is confident that with a strong operational performance in the
beginning of the year and new management structure, it will be able
to sustain the growth and improve.
surabhi

WTO : Ministers Try to Salvage Doha Talks

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Courses on conflict management often say how it is better to have
a win-win resolution to a conflict, but it is seldom told by the
pedagogues the difficulty that lies lurking. The Doha round of talks
among the heavyweights of WTO to create a global free trade policy
is a classic lesson that can be taught to every student of the fore
mentioned course. It has been four long years and the talks have not
yet resulted in a fruitfull agreement. It is difficult to comment on
the outcome of the talks that would take place soon, some quoting
them as the last attempt to come to an agreement. With the likes of
India, China and Brazil on one side representing the 149
strong "developing nations" group and the EU along with the
Economic gaint United States on the other it is a very difficult
possibility that a Win-Win Situation is the ultimate outcome.

A look at the history shows that the primary reason in
establishing a World Trade Organization is to allow countries to
levrage the oppurtunities existing all over the globe rather than
those specific to a region. Free Trade above all is the main motto
with which WTO functions. Reducing the high tariffs and other trade
barriers that were in operation in the past can be said to be the
most successful of WTO's achievements overall. But having said all
this it is not to claim that the WTO has been really successful.
Countries have found other ways of mitigating competition from the
external sources and the US is the perfect example. The US in order
to protect it's local farming sector has ganted subsidies in the
range of billions of dollars to it's farmers. The EU on the other
hand, still maintains huge tariffs, thus protecting itself from the
competition. The "Developing nations" meanwhile are seeing a lot of
growth in services sector and other manufacturing areas where
factors like resource abundance and low cost of labour paly a major
role. In order to protect their local industries from the higly
advaced western manufacturing sector these developing nations have
levied high duties on imports from the west.

The Doha Round of Trade Talks was aimed at resolving all these
disputes and creating a trade atmosphere benificial to all the
countries. The trade talks have not been fruitful because of some of
the following reasons.
a ) The pressure within the US against the cut in the large scale
subsidies enjoyed by the local farmers.

b) EU's reluctance to decrease it's tariff rates to the extent that
countries like India and Brazil are demanding.

c) Reluctance on part of Brazil, China and India to lower the
tariffs in their countries as long as the Western countries do not
carry out the required reforms from their side.

The above factors are some of the most important. EU is especially
adamant at the lowering of tariffs because it fears competition from
not only the latin american and Asian countries but also from the
US. EU has agreed to lower the tariffs to approximately 38p.c, but
Brazil and India are firm about decreasing it further. On the Other
hans the US is still in a fix upon the cut in the subsidies demanded
by the developing nations. With the fast approaching mid-term
elections President Bush cannot take a step that would adversly
effect his party. However it is all over the news that an agreement
has been reaches behind the doors that US would cut down the
subsidies by 60p.c and India and Brazil would lower the tariffs from
their side. However it is just a speculation and it remains to be
seen, what the outcome of the talks will be.

To Sum it up, Given the huge stakes that are involved, it is really
difficult to come to a perfect solution that can be agreeable to all
the parties. Havin said this it is not to say that there is a lot of
skepticism about the outcome. Every one is waiting with plenty of
anxiousness for the result, For this would provide an entirely new
dimension the world wide trade.
Prasad

Government Nods 6th pay commission

Ignoring recommendations of 2 finance commissions in a row, govt
noded to set up the sixth pay commission. It will cost additional
22000 crore. VEry soon PM with the consultation of FM will announce
a chairman and other officials of the commission.
It seems more or less have been stablished being politically
motivated and for political benefit instead of the essentiality and
need of the hour.
Let me vindicate my views with facts. If everything will be
positive, this commission will come up with their report and
recommendations in 2008 which is the year for elections and its goin
to be mandated to revise the remuneration paid to central employees.
so clearly indicate that govt is trying to reap up the seeds of
commision establishment at the time of election in 2008. Central
govt employees are ecstatic and they r lookin forward for increase
in remuneration which is not clear at all but the trends say that
its more likely going to be happen.
However it cannot be said completely wrong and done only for
political benefits, since commission is more likely going to address
some other issues of performance-linked benefit and the role of
employees in the wake of change in governance practices. Also soring
inflation rate of recent time also vindicate the move.
To sum up it would have been better if Govt wud have delayed the
establishment and have waited for another finance commission's rep
[ort.
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Oil surged to record highs above $78

Burning Fuel:

The crude prices have surged further! A news that has become
the talk of the household in India and is in everybody's lips
everywhere in the world.

The causes are attributed to

1) The West Asian Crisis that is bleeding after the Victory
of Hamas in Palestinian Polls,

2) The ambitions of United States over Iran and

3) Several unimportant issues as the Nigerian Crisis.

Impact on the world:

Crude oil prices are expected to rise to a three digit
further and it is not far in sight. But if an analysis of the impact
is made, it can be found that the worst hit is the developing
nations such as India and China.

This is because the developed nations have the ability to
bear the impact that is created by their own ambitions (The United
States) or atleast have control over it. The under developed nations
need not be worried because this is only one of the reasons that is
keeping them backward and it is only an addition of woes.

The one who is terribly affected are the developing nations
that has to bear the impact for a cause that is in no way related to
them except that they are the fellow beings of the world.

Impact on economy:

India is one of the nations whose consumption of petroleum
products is rocketing every year.A rise in crude prices means a rise
in prices of petroleum products. It has a direct impact on the
prices of essential commodities and hence a rise in inflation. The
factors are so complicated but interrelated. The ultimate reason
attributed however is the rise in prices of fuel.

Central Government vs. Oil Prices

The ex refinery costs of Petroleum is said to be only
Rs18.50.But the price paid for a litre of petrol is Rs.50(approx) in
India thanks to the taxes that have been levied. Even though the
Central Government is not reform oriented (the result of being a
coalition) and has not pushed for reforms seriously, it has brought
a little of it by reducing the subsidy on petroleum drastically. The
ultimate loser is the common man.

A Government is for the people and when it is necessary the
reforms have to take a reverse track. It is unfortunate that the
Central Government (the real benefitter of the price hike)is
reluctant either in reducing the taxes or in rising the subsidy.

Remedy:

Hope for the best (disaster)!

Possible solutions:

India is one of the nations whose importance in the world is
beyond question. India can bring the developing nations together and
the developing nations should have a say in every activity in the
world. The WTO conference is an indication.

The common man should be spared of price hike that is taking
place often. The government should drop the attitude of raising the
prices for every 5 dollar hike in a barrel of crude. (Interestingly
a barrel of crude oil contains 79 litres but we are charged at
almost a barrel of crude for a litre.)
M.V.Balaji Arunkumar and amit


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THE STATEMENT : Realty prices to fall by 20%

as of now there have been a upward swing in the prices of real estates across the India specially the Mumbai, whre the record high has been marked recently and was largely covered by media. It has been seen from previous six months.
And now Mr. Parekh , chairman of India's largest housing loan bank, indicating for the southward move of reality prices.

The remark of Mr. Parekh can be seen as the well researched statement in the light of some relevent facts like the recent hike in reverse repo rate from RBI and the peak of housing loan rate to 9.25 percent.SO it can be infer as after the peak there nust be faal of prices. its true for almost every economic activity. Reality state is not an exception.

On the other hand rising prices of reality state is least likely to fall in next few months as the Govt is ready to increase FDI in almost every crucial area which is responsible for stunning economic growth. India is witnessing high economis growth of 8-4 % previous year, and likely to maintain this growth . In turn India is a favourable destination for investment in many sectors. If we consider partcularly Mumbai, this metropolis is also attracting a lot of investors coupled with the huge population coming here for employment will surely increse demand for land, in the wake of this surge in real state price seems imminent.

Mr. parekh's statement is based on facts however the current trend say the other story so only time can vindiacate Mr. parekh's statement.






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Mittal's takeover of Arceler

After five months of tussle, Lakshmi Mittal finally managed to
acquire world's second largest steel manufacturing company Arcelor.
The merger would lead to the Arcelor-Mittal co, which will be 3 times
as large as its nearest rival. It would account for 10% of the world
steel.
The deal
Mittal steel has offered 25.6 billion euro for the take over. It
raised it bid for the second time to almost double offering 40.40 per
share. Mittal had initially offered 23.6 billion euros for the
merger. Arcelor shareholders will receive 13 Mittal shares for 12
Arcelor shares. The new company is expected to have projected annual
sales of 38 billion euros.
The Challenge
One of the challenges which Mittal faced was to convince culture
conscious European about the deal. Initially the Belgian co. Arcelor,
was extremely hostile towards non-EU nation taking over the co.
Oppositions came mainly from the CEO Guy Dolle who planned to merge
with Russian steel co. Severstal to become world's largest steel
producer. The government of Belgium and France where Arcelor has most
of its steel plant located also opposed the Mittal offer.
One step more to go…
The only hurdle now remains is the shareholders meet of Arcelor on
3oth June, where they are to vote for the Severstal's proposal.
Arcelor will pay a break up fee of 140 million euros to the Russian
entity, if the shareholders halt the deal.
Benefits
After the merger, the newly formed entity will be able to meet the
demands of Chinese market that is currently in the process of
developing its infrastructure. China is currently in need of approx
730 tones of steel for its projects. In the past few years, the
demand has increased over 50%. The new co. will have a strong hold on
the world steel supply, and would still not gain monopoly in any
specific area. This is so because both Arcelor and Mittal steel have
targeted different parts of the world and would be able to fulfill
global needi.
Effect on world market
The shares of the new entity are expected to be listed in NYSE among
others. After the merger was announced the shares of Mittal steel
closed down by 2.4% while that of Arcelor jumped up by 7.2%.
Investments after the new entity is formed are expected to rise
higher.
Conclusion
With the acquisition of Arcelor, Mittal has been able to create a new
economic culture where countries with different mindset can work. The
deal is a victory of corporate democracy and makes Mittal of the
largest steel producer of the world.
Mittal steel has grown over the past years through various mergers
one the most important being merger of International steel based in
Chicago two years back.
The deal also reflects the excellent entrepreneur abilities possessed
by the Mittal who was able to convince Arcelor board, shareholders
and president Joseph Kinsch about efficacy of the merger taking
place



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Inflation in India Hits 56-Week

The news of rose of inflation to 5.74%, the highest over the previous
56 weeks , was the headline of all indian dailies and webportals. The
rose is the effect of hike in essential food stuffs like lentils,
sugar, vegetablesand hike of price in diesal and petrol.
The impact of this will be open and hidden both, even it may cost
heavily to the UPA govt. in the coming elections as the indian voters
are very sentimental to this issue. It is to be seen that whether RBI
will firther hike the interest rate or not since it already have
hiked the rates recently. These all collectively are going to affect
a normal middle class indian's life which inturn will afect India.
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Comments on Jet -Sahara merger deal off

Not much time,when media was full with newses of jet sahara merger . Now after more that 2 months, Jet boss Naresh Goel is taking his hands back from the deal, whatever will be the reason because the one party is silent on the issue till date but its the high profile war of two of India's biggest corporates. Prima facie it seems the breach of pact from Jet side but delving into the matter it is easily seen that Just after announcing the deal of merger Naresh Goel realised that the deal is not worth of Rs. 2300 crore and since then he is demanding of around 10-20% reduction . However Sahara is rght on his own way because its not the way to get reverse like this.

Its going to be very intersting in days to come, the war is in court now and every body is just guessing what next? including other players of the same fields (Kingfisher , GoAir etc.)




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JV between MS and Nortel

Ubiquitous computing is the philosophy that Microsoft strongly
belives in and yesterday it took a gaint step in realising it's
dream. The colloboration between Nortel and microsoft certainly is a
step that can pioneer a massive change in the way people communicate
all around the world. The technology, outreach and the money that
microsoft has, no doubt will play an important role in making this
collobaration a successful one. As Microsoft CEO Michael Ballmer
said "It is Shame on Microsoft if this does not work out ". I
provide some examples to stregthen my argument.

A look at history of computing provides the evidence for
communications and software are bound to cross eachother at some
point. Original invented for doing large scale calculations the role
of computer has changed over the years. Computers today are being
used not only to prepare software and do large scale computations
but also for communicating with your peers whereever you are.
Electronic mail has had a deep impetus on the way people keep in
touch all round the globe. VOIP, Online Chat are some of the othere
examples which would emphasize the merger of communication and
computing.

As I Stated before Microsoft takes ubiquitous computing very
seriously and it comes as no surprise that it is chartering into the
unknown waters of Communications. Microsoft Office is on of the
largely used softwares all around the world and the company can
obviously leverage on it's oureach by writing additional plug-ins
for this project. The market is expected to be close to 40bn$ in a
couple of years. If this proves to be true and the alliance provides
a breakthrough, it stregthens Microsoft's position beyond
imagination. It is understood from the excerpts from an interview
with Microsoft's business head Jeff Reiks that the software that
would be written would have the capability to analyse where to
transfer your call (a choice between your office phone, home, your
mobile) depending on your status. Such an indepth analysis and
programming requires a lot of skill which microsoft has got in loads.
Networking company Nortel stands to gain a lot from the deal.It's
share has already seen a 6p.c growth and the people at Norton are
optimistic about this growth being sustained over a long period in
the future. Norton estimates that they are going to gain
approximately 1bbn$ from this deal. If the alliance continues for a
longer period (the current deal is for 4 years), the stakes might be
much higher.

Having said all this , it is not to say that this alliance is going
to be unchallenged and the sailing is going to be smooth. Microsoft
may be the largest software company in the world but the world of
networks and communication is an entirely new domain to them. There
are well established comapnies like AVAYA and CISCO who have lot of
domain knowledge and industrial experience along with the monetary
power. These comapnies also have a similar vision and they have
already entered into tie-up with IBM, another large scale provider
of software. This battle for the highly productive market is going
to be a treat for all the analysts out there.

To sum it up, This alliance marks a transformation of the industry
dynamics. It also shows the changing strategy of Microsoft , willing
to come out of the traditional software that has proved to be highly
successful and experiment on other fronts. The clash for the market
share is going to be huge. With the likes of AVAYA, CISCO, IBM,
MICROSOFT, NORTEL in the battle field it can be called as "The Clash
Of The Titans".

Prasad



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