Unilever wants seniors to invest bonus back in company, freezes pay again

Source :31 May 2010, 0238 hrs IST,Kala Vijayraghavan,ET Bureau



MUMBAI: Unilever, the global consumer goods giant, has frozen the base salaries for executive directors and senior management members for the second consecutive year even as it formalises a new plan that will allow managers to invest a chunk of their bonus in company’s stock.

Coined as the ‘Management Co-Investment Plan’, senior Unilever managers worldwide will have the opportunity to invest as much as 60% of their annual cash bonus in Unilever shares and receive a corresponding award of performance shares. The new plan replaces the existing Share Matching Plan and encourages managers to take a greater financial interest in the performance of the company and the value of Unilever shares over the long term.

From 2010, the bonus or the variable pay will be subject to a clawback arrangement in the event of a significant downward revision of results. In clawback, the previously given benefits are taken back due to specially arising circumstances.

The changes are being spearheaded by Paul Polman, who took over as the CEO in January 2009. Polman, the first outsider to become the CEO, was given the task to revive the fortunes of the Anglo-Dutch MNC. One of his first moves was to freeze salaries of senior managers—a decision the company management has extended for the second year.

The proposals, structured as part of Unilever’s `pay for performance’ mantra, have been outlined in the company’s 2010 annual general meeting notice, and are the outcome of a remuneration committee’s findings. The committee reviewed the share-based reward arrangements that apply to executive directors and other executives across Unilever subsidiaries.

With effect from 2010, the shareholding commitment is being increased from 150% to 400% base salary of the chief executive and from 150% to 300% base salary for other executive directors and members of the Unilever executive. Unilever will seek shareholder’s approval to ratify the changes.

A Unilever spokesperson said “The proposed new remuneration policy is aimed at supporting Unilever’s drive for profitable growth and a level of performance amongst the best of our peers. The wider share ownership, and the revised measures for Global Share Incentive Plan (GSIP), will encourage greater commitment, engagement and alignment with our shareholders”.

The performance shares will vest after three years, depending on Unilever’s performance, continued employment and maintenance of the underlying investment. The vesting of 40% of the shares under award has been based on Unilever’s relative total shareholder return (TSR) against a comparator group of 20 other companies.

Mr Polman also issued a warning over the risk of overheating in China and India. “Unilever’s focus of disproportionate attention is India. There is still much to do in India but we are confident we are doing the right things. Local, low cost competition has been winning share at our expense and recently, international branded players have rediscovered the opportunity for growth in India” he said in an analyst presentation post 2010 first quarter results..

Unilever is now upgrading 30% of its portfolio and rolling out the improved mixes faster to other markets, Mr Polman said. The CEO is keen that Hindustan Unilever delivers growth even as rival Procter & Gamble and Nestle step up focus on the fast-growing Indian market. HUL, which once commanded about half the market for many products, is fighting to protect turf from nimbler rivals such as Godrej Consumer and P&G.

Earlier in a chat with ET, Unilever Asia & Africa president Harish Manwani said: “We want to inculcate a performance culture where people should feel rewarded for the results, for what they produce and not for the way they talk or just on account of a good bureaucracy. We want to do away with that and now there is a lot of transparency around in terms of clarity.”

Now withdraw Rs one lakh at ATMs; shop for Rs 1.25 lakh a day

Source :ET :31 May 2010, 0351 hrs IST,PTI


NEW DELHI: Bank customers can soon withdraw up to Rs one lakh in a single day from ATM machines, and can shop for even an higher amount of Rs 1.25 lakh with their debit cards.

Also, as much as Rs three lakh can be transferred in a day to another account through ATMs as also over phone.

The enhanced limits for ATM withdrawals, debit card swiping and fund transfers would save the consumers from running to bank branches, that too within banking hours, for such large transactions. Currently, the maximum the customers of most of the banks can withdraw through ATMs is Rs 50,000 in a day.

While HDFC Bank is allowing these enhanced banking limits to its customers with effect from June 1, other banks might soon follow the suit.

The ATM withdrawal limit for HDFC Bank Imperia Gold Debit Cards now stands increased to Rs 1 lakh, and that for shopping to Rs 1.25 lakh, from Rs 50,000 per day.

Besides, the ATM card and shopping limit for Easy Shop Regular International/ Maestro/ NRO Debit Cards would stand increased to Rs 25,000 and Rs 40,000 respectively, from Rs 15,000 and 25,000 respectively.

The bank is currently in the process of informing its customers about these enhanced debit card limits. Given the competitive nature of the banking business, other banks would have to soon follow HDFC Bank in increasing their own card limits for ATM withdrawals, shopping and fund transfers, a senior official at a rival bank said.

Also the holders of Kid's Advantage Debit Cards can withdraw and shop for Rs 2,500 in a single day, higher from Rs 1,500 and Rs 1,000 currently.

Further, for Women debit Card holders will get to withdraw Rs 25,000 from ATMs from Rs 20,000. Also customers can shop for up to Rs 40,000 crore with debit cards, from the present Rs 30,000.

"The above revised limit are not applicable to the card holders whose current limit are different from the ones stated above and will continue to enjoy their requested/offered limits as sanctioned before," HDFC said.

Realizing the value of your estate

Source : ET :Sumeet Vaid  Friday May 28, 2010, 12:07 PM

 
About Author:

With just over 13 years experience in Wealth Management, business & distribution of financial products, Sumeet Vaid is considered a veteran in the industry.

He is currently the Founder and CEO of Ffreedom Financial Planners, set up in March 2009. Sumeet is a graduate from Delhi University in Industrial Relations and Personnel Management. During his career he has worked with renowned companies like Bajaj Capital, Prudential ICICI, ING Vysya, Optimix, Networth Stock Broking; where he worked at various positions from Sales Manager to National Head, Retail Sales.

He has even worked at top management positions like CMO & CEO.

Your parents always valued only three kinds of investments - bank deposits, gold and real estate. Anything else for them was always risky.  And today, as you go about your finances and investment portfolio, somewhere amidst the equities, insurance policies, mutual funds, ULIPs, etc. many of us have undervalued real estate while creating financial plans and portfolios.

During the steep increase in property prices between 2004 and 2007 I had several clients who would come up to me and tell me, “I want to buy a place too.” They had seen the potential of this asset class to yield returns and provide stability.

For most individuals, especially those employed in the service industry, buying a second house purely for investment is difficult. After all there are several considerations one has to make like – paying the EMI on the second place you buy, additional maintenance charges, taxes and insurance, etc. Secondly, if you are going to buy it for investment, then how long should you hold on it and what is the return that you should expect?

When you are looking to buy into real estate for investment, ensure that you consult with your financial planner on each of these –

Liquidity 

The Achilles’ heel for real estate investments is liquidity. Unlike equities or even mutual funds, real estate investments cannot be realized settled fast. It takes time to find a buyer and complete the transaction. If the seller is in a hurry, then he has to resort to distress selling. Hence, you need to have a balance between your liquid and illiquid investments. 
 

Appreciation 

While property is considered to a safe investment, conduct a proper market study before you decide on the market where you plan to invest. Some markets are likely to appreciate more than others, a study that you can do along with your financial advisor. Before you put in your money, know that you are putting it in the best place. 

Tax benefits 

Like you primary residence, you can write off the EMI that you pay against your income tax returns (up to a specific limit). If you plan it properly, this investment can work as towards both – generating high returns on investment and saving tax outflow. 

Income 

A common practice among people is to rent out property purchased for investment. I have come across several clients who have managed to create a reliable source of income by renting their premises or atleast being able to meet their EMI outflow against the rent that they earn.  

Risk 

Like any asset class, real estate too has its share of risks associated with the investment. You need to consult with your advisor about your exposure to the investment. 

Investment in real estate involves a mix expertise of understanding the market conditions as well as your financial position. If you are buying a property to build your portfolio, get expert advice from your planner to safeguard yourself against possible emergencies. The planner can also help you to diversify your portfolio creating an ideal balance of liquidity and appreciation potential.

Panasonic aims to be Japan No 1 in solar business

Source :31 May 2010, 1300 hrs IST,AGENCIES


TOKYO: Panasonic Corp is banking on the solar-panel business that it gained by acquiring domestic rival Sanyo, aiming for top market share of at least 35 percent in Japan by 2012.

New solar generation products, being offered in Japan starting next month, combine Sanyo Electric Co's solar technology with Panasonic's sales networks in appliances and housing, said Panasonic Executive Vice President Toshihiro Sakamoto.

Panasonic will be able to provide overall energy-saving systems for homes that will include rechargeable batteries, heating and air conditioning, security systems and Net-linking gadgets besides solar panels, which will all be hooked up to each other, he said.

Homes will be able to save on utility costs by selling surplus power from solar power generation systems, and using water heaters at night when utility rates are cheaper, he said.

``You will be living with virtually zero carbon-dioxide emissions through creating, saving, storing and managing energy,'' Sakamoto said in Tokyo.

Panasonic took over Sanyo in December and gained its solar-panel business as well as other businesses such as home appliances and batteries.

Although overlap in consumer electronics in the two companies is being eliminated, Panasonic has much to gain from Sanyo's technological prowess in solar panels and lithium-ion batteries, which are expected to be in stronger demand as the popularity of green vehicles grows.

The Osaka-based maker of Viera plasma panel TVs, has made being environmentally-friendly a major theme in its growth strategy, hoping to become ``the No 1 green innovation company in the electronics industry'' by 2018.

Anil Ambani forms equal joint venture with CBS for small-screen debut

Source :31 May 2010, 0631 hrs IST,Rohini Singh & Sruthijith KK,ET Bureau



NEW DELHI: Billionaire Anil Ambani’s Reliance Media World will form an equal joint venture with iconic American media company CBS Corporation to launch a potentially disruptive network of television channels under the brand BIG CBS, a person familiar with the development said. The companies have reached an agreement on the JV and an announcement is expected to be made this week.

There is no restriction on foreign investment in TV channels, except in news. Reliance Media World is a Mumbai-listed company belonging to the Anil Dhirubhai Ambani Group (ADAG).

The joint venture will start operations from January next year and will launch a slew of channels, starting with those featuring syndicated content from CBS, which owns several hit shows such as NCIS, The Young and the Restless, CSI and America’s Top Model, as well as sitcoms such as Two and a Half Men.

The JV will eventually enter the Hindi general entertainment space, which corners most of the television ad revenues. The company will launch movie channels as well as regional entertainment channels, but won’t enter the news space, the person, who spoke on the condition of anonymity, said.

Reliance Media World operates FM station BIG 92.7. On May 10, the company informed the stock exchanges that it has sought shareholder approval for a change of name to Reliance Broadcast Network to better reflect the upcoming changes in its business. It has also sought permission for an unspecified increase in authorised share capital, an issue of preference shares up to Rs 500 crore, a QIP issue of up to Rs 300 crore, and an issue of securities in the international markets up to Rs 300 crore.

Host of media MNCs in India

For the year ended March 31, Reliance Media World reported a net loss of Rs 76.13 crore while total income was Rs 180 crore. Once the joint venture is finalised, Reliance Media World will continue to run the radio business and will have a 50% interest in the TV broadcast unit.

CBS will join a clutch of multinational media companies with interest in India’s burgeoning media and entertainment space, which has registered strong double-digit growth for several years till last year, and was estimated to be a $12.3-billion (Rs 58,700 crore) industry in 2009 by consultant KPMG.


Other multinational entertainment majors doing business in India include The Walt Disney Co, Bloomberg, Viacom, News Corp, and Time Warner. Several others, such as Reuters and CNBC, have syndication and branding arrangements. Format owners such as Fremantle Media and Endemol have been doing brisk business in recent years, with the popularity of reality shows surging.

However, India has sometimes proved to be a difficult market for global entertainment majors to navigate, with a regulatory environment sensitive to foreign investment, diverse consumers with fickle loyalties to content genres, and a distribution system that can hurt a company’s margins. Viacom’s majority owner, billionaire Sumner Redstone, is also the majority owner of CBS.

Senior ADAG executive Amitabh Jhunjhunwala led the negotiations with CBS executives in New York and Los Angeles last month, the person said. Mr Jhunjhunwala and RMW CEO Tarun Katiyal could not be reached for comment. A spokesperson of ADAG declined comment for this story.

A media buyer, familiar with the development, said ADAG has already started hiring for the new JV and has also commenced discussions with corporate houses and media buying agencies for sponsorships and advertisements. He asked not to be named.

ADAG, which owns the DTH platform BIG TV, had applied for licences to launch about 20 channels in 2008. These included four news channels. While the group had even commenced hiring for some of the channels, this was abruptly shelved as the advertising market shrank following a global economic slowdown.

In all, ADAG has three companies in the media and entertainment space, of which two are listed. Besides Reliance Media World, there is also the similar-sounding Reliance Media Works, also a listed company, that owns the multiplex chain called Big Cinemas and is involved in various parts of the movie-making chain such as pre- and post-production activities. Reliance Media Works also owns TV content production unit BIG Synergy and animation studio Big Animation. Reliance Capital, a financial services major and part of ADAG, is the biggest shareholder in both the listed companies.

An unlisted company, called Reliance Entertainment, owns the production house BIG Pictures and several portals such as gaming platform Zapak.com and social networking site Bigadda.com.

Anil Ambani revealed the true scope of his ambitions in the entertainment space last year, when he acquired a 50% stake in Steven Spielberg’s Hollywood studio DreamWorks. Ambani agreed to invest $825 million to acquire the stake and fund a pipeline of films.

CBS Network’s parent, CBS Corporation, is one of the US’ largest diversified media companies, with revenues of $13 billion during the 2009 financial year.

General Motors may drive in Nano rival with Chinese help

Source :31 May 2010, 0326 hrs IST,Nandini Sen Gupta,ET Bureau




SHANGHAI: General Motors may use its Chinese associations to launch a rival for Tata Nano in India, a top company executive told ET.

“We will look at every market segment and I wouldn’t rule out anything,” said Timothy E Lee, president, GM International Operations, when asked about competing in India’s new entry-level segment.

The US carmaker believes its joint venture with Shanghai Automotive Industry Corporation (SAIC), one of the top three automakers in China, will help it introduce a car to compete with the world’s cheapest car at Rs 1 lakh.

GM’s small cars already in India such as Chevrolet Beat, Spark and Aveo are designed in South Korea, at erstwhile Daewoo Motors.

“When you harvest from your partnerships the collective wisdom of other cultures, it’s incredible what you can do,” Mr Lee said.

This marks a u-turn in the US carmaker’s earlier stand when its global officials indicated that they did not think the Nano segment was viable for the company.

But now GM bets on its China connection to break new grounds. SAIC has already acquired 50% stake in GM India.

The first products from General Motors’ three-way joint venture in China with Wuling and SAIC will be introduced in India end 2011 when it will roll out two minivans — Wuling Rongguang and Sunshine. These will be built at GM India’s Talegaon and Halol plants.

“The portfolio of GM, SAIC and SGMW will be looked at for India,” said Mr Lee.

GM India now has access to the complete portfolio of GM, SAIC as well as the SAIC-GM-Wuling Automobile Company combine to be introduced in the country, said Mr Lee.


This will include several cost-effective products in both passenger and commercial vehicle space from the SAIC-Wuling alliance.

Meanwhile, the Chinese carmakers are happy coming to India with a GM tag.

“We are going to position ourselves as a GM partner in India to create opportunities for everyone,” said Zhu Xiang Jun, executive director at SAIC Motor Corporation.

“These models are not Chinese models but GM’s global models which will be taken to India to create jobs and opportunities,” added Mr Jun.

While GM gives them access to a name that ruled the global automobile market till recently and an established network in India, an equally compelling reason might be India’s sensitivity to Chinese companies.

New Delhi recently told Indian telcos not to place orders with Chinese equipment makers Huawei Technologies and ZTE Corp due to security concerns.

GM officials, however, say that there has been no indication that Indian authorities have a problem with SAIC buying 50% stake in GM India.

“This sector has automatic approval and its not sensitive like telecom,” said P Balendran, spokesman of GM India. “We have had a detailed discussion with Indian officials and they don’t have a problem,” he added.

He said that the architecture for the Wuling products will come from China but they will be made in Halol and Talegaon.

Apart from the Wuling minivans, GM’s Chinese alliance could spawn other products for India including the recently launched Chevy Sail, touted as its first car totally developed at Shanghai GM.

GM officials say the Chinese alliance will help GM India emerge as a volume player in this market quickly.

India among least favorable to SWF investment:Report

 

Source : FC:PTI May 31 2010 , Dubai

India has been placed alongside the US and the UK as the least familiar

and least favourable to sovereign wealth fund (SWF) investment, a new survey has revealed.

According to the Sovereign Brands Survey, conducted by research and communications strategy consultants Hill & Knowlton and Penn Schoen Berland, Egypt, Germany, Brazil and China are among the most familiar and the most favourable.

The survey looks at the factors on which SWFs intended to invest in their country or industries.

Stephen Davie, Hill & Knowlton's head of financial communications in the Middle East, said: "Despite being considered one of the least volatile forms of investment compared to other sources of capital, it is surprising that low familiarity still drives low favourability towards this type of funding.

The survey results show by working on their reputation and by increasing awareness of their SWFs is a key step for Middle East countries looking to open up significant investment opportunities."

The survey identified transparency as essential, 72 per cent citing this as very important, closely followed by accountability (68 per cent) and good governance (65 per cent).

Dubai did not score well on transparency with Western countries only 3 per cent of UK, 9 per cent of the US and 14 per cent of German respondents believing its SWFs to be transparent.

Asian countries had a more positive view with 29 per cent of Chinese and 30 per cent of Indian elites having confidence in Dubai's approach.

Nearly three quarters (73 per cent) of elites would approve of investment coming from Dubai, according to the Sovereign Brands Survey 2010, the most extensive study into the attitudes of global broad elites to sovereign wealth as a concept, the reputation of host nations and sovereign wealth funds (SWFs).

The study interviewed elites in 7 markets on their views of 19 host countries and their SWFs.

Nearly all (98 per cent) of the respondents felt the reputation of the country directly influences the reputation of SWFs.

It also identified that lack of familiarity with SWFs may lead to suspicion about the overall objectives of the funds.

The survey showed that knowledge of Dubai is still low.

When elites were asked whether they thought Dubai shares their values, only 1 per cent of the respondents from Germany believed this to be true, while it was 3 per cent in the UK and 5 per cent in the US, compared with 84 per cent in Egypt.

Most countries have a positive view of investment from Dubai, and when asked about the areas they would like to see Dubai investing, the respondents pointed to construction, leisure and finance.

Joel Levy, Chief Executive Officer, Penn Schoen Berland,EMEA, said: "The economic downturn has created a real opportunity for sovereign wealth funds.

SWF's images are largely determined by country reputation, and despite low familiarity and concerns over transparency, broad elites see SWFs as least likely to have contributed to the recent market turmoil.

This puts sovereign wealth funds in a prime position to consider their positioning and reputation in contrast to other funds and asset classes

India, China firms sign MoUs for expanding cooperation

Source : :PTI May 31 2010 , Shanghai

Business representatives of India and China signed three MoUs today to expand cooperation, under

which leading Indian firms Infosys and Wipro committed to undertake projects in the world's fastest growing economy.

Wipro signed an agreement to set up a hydraulic cylinder manufacturing unit in the eastern Chinese city of Changzou.

The MoU was signed between Harish J Shah, head of Wipro's Global Operations and Shen-Ruiqing, Secretary General of the Standing Committee of the Communist Party of China of Changzou.

Under the agreement, Wipro will set up a plant that will manufacture high pressure precision hydraulic cylinders, and an R&D facility will be established to enable this centre.

Software giant Infosys will set up an education centre at Jiaxing to develop software talent in huge numbers to meet its growing business demand.

The Indian company will train up to 1000 engineering graduates under this agreement, an MoU for which was signed by Rangarajan, COO of Infosys China and Bong Miaohu, the Mayor of Nanhu district.

The agreements were signed during a meeting of business leaders of the two countries here today on the sidelines of President Pratibha Patil's visit to Shanghai.

Chinese electric power company SEPCO has undertaken to develop a 1050 MW coal-based thermal power project in Orissa.

The company, which is already working on the thermal power project, has committed to expand its capacity by adding a 350 MW unit to it.

The agreement to this regard was signed by Wang Lingfang, President of SEPCO Electric Power Construction Corporation from SEPCO's side and K V V Rao, Managing Director of GMRK Energy Limited.

As part of the agreements, the Fudan University in Shanghai agreed to consider to establish an annual Visiting Chair in Humanities and Social Sciences.

The agreement to this effect was signed between the Indian Council of Cultural Relations (ICCR) and Fudan University.

While S Jayshankar, Ambassador of India to China, signed the agreement from the Indian side, Yu Liang Yang, President of the Fudan University sealed it from the Chinese side.

The proposal concerns inviting a Professor from India during a four-month semester of each academic year.

As many as 57 business delegates represented 50 companies including Aargus, GMR, Infosys and Wipro, among others.

The Indian business leaders emphasised the need to have a balanced trade and equidistant trade relationship.

Businessmen from both countries also sought identification of new areas of cooperation

Insurers to call you after policy sales

Source : FC: Sneha Shah May 30 2010 , Mumbai

Soon, life and general insurance companies will have to call up individuals to whom policies are sold by telemarketers to confirm the sale before issuing the policy document.

Insurance Regulatory and Development Authority (Irda) is in the process of formulating telemarketing guidelines, which are expected to be announced by next month, a senior Irda official said.

According to him, the guidelines aim to curb rising cases of mis-selling among life and general insurance companies, where the policy details are not explained to customers before selling. “Often, policies that are sold to people, do not match their requirements and income and they lapse. That is why the rate of policy lapsing is high,” the official said.

The guidelines will ask companies to follow a set format of questions before trying to sell a policy over phone. In case an agent sells a policy personally, the terms and conditions have to be reiterated to the buyer over phone after the application reaches the insurer.

There are three aspects of telemarketing in case of life and general insurance companies. First, when the policy is solicited and the entire process is done over the phone. Second, when an agent has sold a policy, it needs to be reconfirmed with a call. And third, when travel and motor insurance policies are sold bundled with other products such as a credit card or car, the customer has to made fully aware what she is getting into. “We will ask insurance companies to record and preserve call details until the end of the contract,” the official said.

Customers will now be asked about their eligibility, income and needs over the phone again before completing the sales process. Companies such as Aegon Religare Life, Star Union Daiichi Life, among others, are already following the post sale call process. Irda will now make it mandatory for all companies to follow.

Irda is also mulling a proposal to allow only trained personnel to sell insurance policies over phone. “Discussions are on whether to allow only insurance companies and their trained agents to do telemarketing or to allow third parties to do it. In the second case, the telemarketer has to be a trained agent,” official said.

In developed markets such as the US and the UK, telemarketing is prevalent, but the process is not regulated. Irda has requested the South Korean regulator, the only market where telemarketing guidelines are in place, to send its templates for analysis.

UBI looks to enter factoring business

Source : FC: Falaknaaz Syed May 30 2010 , New Delhi

Public sector lender Union Bank of India is working on entering the domestic factoring


The bank is in preliminary talks with foreign players and may consider setting up a subsidiary, instead of a separate division within the bank.

“We will be entering domestic factoring business, which has volumes, and not international factoring. This could be done in a joint venture with a foreign player. The plans are at a drawing board stage and we will take a few months to finalise it, after which we will approach the Reserve Bank of India for a licence. Like other banks, which have set up subsidiaries for factoring, we will also set up a subsidiary,” Union Bank executive director S Raman told Financial Chronicle.

Factoring is a business of managing and financing receivables, designed to improve cash flow of sellers/exporters and cover their risk.

Unlike other financing services, factors do not ask for collateral.

The factor turns the seller’s invoices into cash and advances up to 90 per cent of the invoice value.

This helps sellers as they can have instant access to their earnings and do not have to wait for the usual long period to get paid by buyers.

Sellers will, therefore, have a healthier cash flow, helping them to accelerate growth.

In India, the turnover in factoring business was Rs 25,000 crore in 2009-10. It had a static growth due to the financial crisis.

More than 95 per cent of this turnover was domestic factoring.

The compounded annual growth rate for the factoring business is 30 per cent. Besides government-owned Export Credit Guarantee Corporation, there are several players in the factoring segment, including IFCI Factors, BB Financial Services, Tata Capital, HSBC Factors, Standard Chartered Factors, SBI Global Factors and Canbank Factors.

Zara makes New Delhi its first stop; Mumbai next

Source : FC: Manisha Yadava May 30 2010 , New Delhi

The Euro 11.1-billion Inditex group plans to open Zara stores in all the major Indian cities. The Spanish fashion retailer opened its first Zara store in Delhi’s Select City Walk on Friday.

It plans to open a store in Mumbai’s Palladium mall and in Delhi’s DLF Promenade this year.

“The brand’s expansion would depend on the feedback we get from customers, we also want to open stores in Bangalore, Hyderabad and Chennai very soon. The average size for a Zara store would remain 1,200-1,500 sqm,” chief communication officer, Inditex, Jesus Echevarria said.

Inditex has a 51:49 joint venture with Tata Group's retail arm Trent. Zara is the second Spanish fashion brand to enter India, after Mango. Of late, many international fashion retailers are making a beeline for the country besides the already existing ones — Diesel, Marks & Spencer and Tommy Hilfiger.

Echevarria said the company would ship new clothing designs to its Indian stores within two weeks of manufacturing. “For us, every fashion brand present in the vicinity is a competitor, specially the local brands,” he said.

Foreign audit firms may get full practising rights

Source : FC:Falaknaaz Syed & Ritwik Mukherjee May 30 2010 , New Delhi/Kolkata

Foreign audit firms may soon get full practising rights in India. Recommendations to give them full rights and make them accountable are in the final report on the multi-crore Satyam Computers scam submitted by the Institute of Chartered Accountants of India (ICAI) to the ministry of corporate affairs.

The ministry of corporate affairs, the ministry of commerce and the Reserve Bank of India are examining the ICAI recommendations, minister of corporate affairs Salman Khurshid told Financial Chronicle in an interview.

“ICAI has given us a report on how foreign firms should be brought under the purview of ICAI. They should first be allowed to practise so that they can be made liable. So, we have to work out a system. Discussions are under way. We are talking to the commerce ministry and the RBI on the level of permission that can be given to the foreign firms,” said Khurshid.

Advocating full rights to foreign audit firms, Khurshid said, “If you have to make them liable for negligent practices, you have to first allow them to practise. You can’t have both ways where you prevent them from practising and say that you can be punished. So the whole picture has to be sorted out. We are looking at it.”

A senior ICAI member said the whole idea was to hold someone responsible and bring the right person to book in case of any wrongdoing.

“When the Satyam accounting fraud broke out, the general perception was that PricewaterhouseCoopers (PwC) India was the auditor. But on paper it was Pricewaterhouse Hyderabad or Lovelock & Lewis, which is the Indian associate of Pricewaterhouse and interestingly there was overlapping of partnership. There are individuals who are partners of both PwC India and Lovelock & Lewis. This unnecessarily creates a lot of confusion. Such complications should be done away with," the member said.

At present, foreign firms such as Deloitte, Ernst & Young, PwC, and KPMG have tie-ups with domestic accounting firms. The Indian affiliates of PricewaterhouseCoopers include Pricewaterhouse firms and Lovelock & Lewis, while Deloitte has tie-ups with C C Chokshi, A F Ferguson, Fraser & Ross and S B Billimoria. Similarly, KPMG has a tie-up with BSR, and Ernst & Young has a tie-up with S R Batliboi.

Under the existing World Trade Organisation agreement, India has no obligation to open its market to foreign audit firms. However, in the Doha Rounds, India can agree to open its market to its trade partners.

The role of global audit firms came under scrutiny when two partners of Satyam’s auditor Pricewaterhouse were arrested.

A partner and director of one of the Big Four firms told Financial Chronicle, "I have heard of such a move. In fact, this is a very progressive move. Often some negative perception is being created unnecessarily against Big Four firms. This would also create a level-playing field among audit firms. Those who cannot use the parent company's name while auditing will now be able to use that name. Having said that, I must add that there has to be a rider: partners of the parent firm or the parent firm should not be held responsible for any wrongdoings at the Indian operations’ end. The Indian outfits are accountable anyways."

Apollo to manage Khazanah hospitals

 Source : F C:Sangeetha G. May 30 2010 , Chennai

Apollo Hospitals, in which the Malaysian sovereign fund, Khazanah Nasional, has a little over

12 per cent equity, is taking the association a level higher. It will now participate in the management of hospitals in which Khazanah has equity stakes.

This adds a new dimension to the battle of control over the Singapore-based Parkway.

Khazanah is trying to wrest control of Parkway from Fortis. To that end, it has made an open offer, at a 25 per cent premium over last Thursday’s market price, to take its shareholding above 50 per cent. Apollo tacitly supports the Khazanah campaign.

Suneeta Reddy, Apollo’s executive director of finance, told Financial Chronicle that the higher level of association with Khazanah would not involve any investment commitment from her company.

“But we will leverage synergies in the healthcare services and education ventures of Integrated Health Holding of Khazanah. We will share clinical best practices, participate in the management of hospitals and medical universities owned by them,” she said.

Khazanah has 60 per cent in the Panthai group, which runs nine hospitals in Malaysia. Besides, it owns 70 per cent in International Medical University in Malaysia and 26 per cent in Parkway.

Apollo is also directly associated with Parkway through a joint-venture partnership in Apollo Gleneagles Hospital in Kolkata. It is yet to be seen how Apollo reconciles with the fact that Fortis, which is in control of Parkway after having bought 23.9 per cent equity in the Singapore company for $685 million in March, now faces a challenge from Khazanah.

By virtue of that control, Fortis is in charge of Parkway’s hospital chain with presence in China, Malaysia, Brunei and Singapore. If Khazanah succeeds in wresting control with the help of $835 million offer, many of these hospitals will come under the management of Apollo.

Much depends, though, on how Fortis will handle the Khazanah open offer. It has three options: 1) cash out, 2) stay as a minority shareholder and accept Khazanah’s control of Parkway, and 3) stave off Khazanah by making a counter-offer. So far, it has not indicated which way it will go.

If Fortis opts to stay in Parkway as a minority stakeholder, Khazanah may divest it of its management functions and hand over the running of the hospitals to Apollo. Asked about this possibility, Reddy said it was “premature to comment”.

To a query by Financial Chronicle, a top Fortis official said: “I have no news to give you on Parkway. Wait for developments to unfold”.