Business

Soon it came back, with a message from a subordinate.

The official was not playing ball-at least not at that price.

"He refused to accept it, and now he is cooking up a problem," the factory manager said as the envelope was handed back. "I will have to pay the bugger Rs20,000 in the evening."

The manager had wanted a second power line for an extension for his small factory in the Hajipur industrial area in Bihar. A simple request, the official had threatened to tie it up in endless red tape, unless he was paid.

The routine way the bribe was offered, and the way the episode unfolded in front of a Reuters correspondent, offers a tiny insight into the problems of doing business in a state that has become a byword for poverty, lawlessness and corruption.

India's boom has not reached Bihar, a state of 90 million people almost completely disconnected from the global economy.

It is the country's poorest and one of its slowest growing states, with "exceptionally low" levels of private investment, according to the World Bank. There is no sign of any foreign investment at all.

Chief minister Nitish Kumar took over two years ago, promising to turn things around.

Since then he has been wooing rich Indians at home and abroad, trying to attract the investment his state so desperately needs.

Last December, the World Bank said he was moving in the right direction. His government, it said, had initiated comprehensive reforms, improved the investment climate, stepped up public investment and improved the delivery of health and education services-albeit from an extremely low base.

The bank loaned Kumar's government $225 million (Rs893 crore today), but private investors have not been so enthusiastic. India's biggest industrialists have been visiting the state capital Patna, but so far they have kept their money firmly in their pockets.

The sad fact of Bihar is that it has little or no raw materials, intermittent power, terrible roads, a reputation for kidnapping businessmen and some of the least business-friendly bureaucrats in the capitalist world.

Reports said the project, once completed by December 2010, would make Jamshedpur the single largest unit and one of the most efficient steel plants in the world by doubling its present capacity from five million tones per annum.The groundbreaking ceremony for the expansion project was conducted at Jamshedpur on Monday.

The project was said to be linked to Tata group's objective of growth and globalisation as the company was also making steady progress on its three greenfield steel projects in Jharkhand, Orissa and Chhattisgarh, to add 23 million tonnes to its present capacity.

Lalu Prasad, Union Minister of Railways, said this in a conference here today without sharing any further details.

Addressing state industrialists and traders at an interactive session at Bihar Industries Association (BIA) office here on Tuesday, Wehrmann said the Eastern India is a terrific tourism destination and Bihar must go the whole hog to market its tourism potential by first getting an entry into the "Incredible India". He said that German export to India were quality capital equipment and power plants. In return, Germany offers a huge market for quality tea, spices and farm produce, he said adding that Bihar should explore the export market to Germany in this regard. For this, entrepreneurs should find out good business partners in Germany for which the Indo-German Chamber of Commerce and German representatives in Delhi would be of help, he added.

The project cost would be $5 million and the JV would have a capacity of 12,000 tonnes per annum, the company said in a statement.

The government had engaged SBI Caps as a consultant to conduct a diagnostic study for their revival. SBI Caps in its report submitted to the government had recommended that of the 15 state-owned closed sugar mills, eight were viable units.

There is also a plan to establish a handloom park at a cost of Rs 2 crore with the state government providing 20 per cent subsidy of this amount, according to a state government (industry) release.

The cabinet committee on economic affairs (CCEA) has given a go ahead for Rs 787 crore project in the 11th five-year plan. But, the government is yet to decide whether it should be a separate centrally sponsored scheme or should be included in Jawaharlal Nehru Urban Renewal Mission.

The Urban Development (UD) ministry has, however, requested the Planning Commission to carve out a separate scheme for e-governance, as urban renewal mission covers only 43 cities and its fxmding pattern is also different. The Urban Development ministry says that in the year 2007-08 as many as 35 cities will be covered under the e-governance programme.

Of the 12 major Indian cities covered by the report, Hyderabad has the most business-friendly regulations, followed by Bangalore and Jaipur. Mumbai came in second-to-last and Kolkata last as these cities impose the most complex and costly business regulations. Bhubaneswar, Chandigargh, Chennai, Lucknow, New Delhi, Patna and Ranchi fall in the middle.

Typically, large urban centres such as Mumbai and Kolkata have a high volume of business, so regulatory and administrative bottlenecks there create serious congestion, says the report.

The study tracks a set of regulatory indicators related to business start-up, operation, trade, payment of taxes and closure by measuring the time and cost associated with various government requirements.

It, however, does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates.

India, the region’s top reformer, implemented reforms to simplify business registration, cross-border trade and payment of taxes as well as to ease access to credit and strengthen investor protection, the report said.

With both bidders locked in a battle for Corus, the race for Corus went into an auction process as mandated by Britain's takeover laws. The auction was to have lasted 10 hours but concluded in 8.5 hours when the Tatas bid five pence higher than CSN's 603 pence per share to win Corus and emerge as the world's fifth largest steel maker.

The Tatas said here today that they would now approach the Board of Corus Group Plc to formally accept the bid. The acquisition is to be completed in about six weeks.

The acquisition of Corus marks the largest such takeover by an Indian company.

"This feels good as it shows resilience of the Indian economy. Global perception about India is changing. Consolidation in the industry is an important step for competitiveness," said Mr Kamal Nath, Minister for Commerce and Industry, in a statement.

The auction process comprising nine rounds called by the UK Takeover Panel began at 10 p.m. (IST) on Tuesday.

Tata Steel had initially bid $9.2 billion against CSN's higher $9.6 billion last month, prompting the UK Takeover Panel to intervene and pick the winner through open bidding.

Under the auction norms, each suitor was required to raise bids by a minimum of five pence per share.

Markets Regulator Securities and Exchange Board of India (Sebi) has launched a sophisticated integrated market surveillance system, which will track data from all market players – stock exchanges, securities depositories and their associates, as well as online and offline (physical) clearing house data, to detect and track “abnormal” market patterns and behaviour.

The system, developed at a cost of Rs 22 crore by Australian financial markets software specialist SMARTS Pty Ltd and HCL Technologies, will go live from Friday December 1. Though sim , ilar systems are being used by market regulators around the world, Sebi has scored a global first by integrating the entire range of market activity in both the cash and derivatives sections of the BSE and NSE, as well as stock depositories, depository participants and clearing houses.

Announcing the launch of Sebi’s Integrated Market Surveillance System (IMSS) in Mumbai on Thursday, Sebi whole-time member G Anantharaman, who also heads its surveillance and investigation sections, said the objective was to capture market transaction data and develop sophisticated “alert engines” which will quickly detect “potential market abnormalities”. “Given the increasing complexity and sophistication of market instruments, transactions and technology, developing an audit trail has become difficult,” Anantharaman pointed out. That job will now be done by IMSS.

Locked behind ultra-secure access controls (the security system which controls access to this information includes sophisticated biometrics, as well as “double-level” access barriers, which combine passwords with knowledge unique to the individual accessing the system), a 50-strong team of Sebi officials will be able to monitor and “replay” every securities-related transaction.

400 Women join a self-help group (SHG) every hour in India. One NGO joins Nabard’s microfinance programme every day.

Rs 8,000crore is the total microcredit disbursed. Estimated demand is around Rs 150,000 crore and the average loan size is Rs 4,000.

66% microcredit is disbursed through SHGs and the rest by microfinance institutions (MFIs). 2.23 million SHGs are linked to banks today.

560 banks --- 48 commercial banks, 196 regional rural banks and 316 cooperative banks are involved in microfinance.

98% Is the repayment rate of microcredit. Interest rate charged by SHGs/MFIs is between 15 to 30 per cent.

Newspaper Columns on poverty invariably sound preachy. Mohammad Yunus, this year’s Nobel Peace Prize winner, has partly solved that problem by making poverty mitigation a sound business proposition.

With disbursements worth $5.72 billion so far, and $15.21 million in profits last year, no one doubts the viability of his Grameen Bank. It has 7.6 million clients together with Bangladesh Rural Advancement Committee (BRAC). These two microfinance institutions (MFIs) have made group lending- and recovery- an art form while keeping transaction costs absurdly low.

Economist Jeffrey Sachs cites the observation of Dr Allan Rosenfield, Dean of Columbia University’s Mailman School of Public Health, that most women participants of MFI in Bangladesh followed the two-child-norm in 2003, against six to seven children in the sixties. Their independence and empowerment seemed a by-product of their successful micro-enterprises. Bangladesh’s fertility rate has come down from 6.6 in 1975 to 3.1 in 2000. Sachs believes that the modest rise in household incomes, as a result of family planning, will get invested in health and education.

In a 2004 paper, Fazlul Hoque, a senior BRAC associate concedes that the Bangladeshi poor are still largely excluded from development management process but gives evidence of a modest, positive change in the countryside.

The main driving forces for the index are strong corporate results, along with a steadily growing economy, stable crude prices, and stable interest and inflation rates, market players said. Institutional investors too are pumping in money into the market and supporting the bullish run. The day's rally added a little over Rs 56,000 crore to investors' wealth with BSE's market capitalisation now at Rs 3,316 lakh crore.

The day's trading showed a trend similar to the one witnessed during the recent rally. While frontline stocks continued to attract huge buying interest, small and midcap stocks lagged behind. As a result, compared to a 1.5% rise of the sensex, BSE's Midcap Index gained a marginal 0.2% while the Smallcap Index showed a modest 0.3% decline during the day. As a result, despite the rise in the benchmark index, there were 1,446 laggards on the BSE compared to 1,097 gainers.

Banking shares led the day's session. Investors bought bank stocks on the hope that RBI might not raise interest rates in its month-end policy review. The expectations were fuelled by, among other factors, a decision by SBI to cut bulk deposit rates, dealers said. Among the frontline gainers from the sector were HDFC Bank, up nearly 6% at Rs 1,047 and ICICI Bank, higher by 3.6% at Rs 720.

The state government is planning a two-pronged strategy to put a “resurgent Bihar” on the fast track. It will host a global investors meet in January next year, besides giving emphasis to areas where NRIs are possibly interested in putting their money. Bihar Foundation, an agency to be put in place by the government, will coordinate such efforts.

“We are planning a 500-member meet of global investors in January. Efforts are on to get the participants at the Pravasi Bharatiya Divas to be held in January to evince an interest in the state,” Deputy Chief Minister Sushil Kumar Modi said. The Deputy CM has already visited Britain, Canada and Italy to woo investors.

Modi knows it’s not an easy task, considering many states have better NRI investment-friendly policies plus Bihar has a reputation of being a “badly-governed” state. “But we are putting our best foot forward. Like most investment-friendly states we have a single window system for clearance, our infrastructure policy is akin to that of Andhra Pradesh,” he said, adding that the state government will also soon announce the new policy for hotel industry and Information Technology. The state government is also planning to project education and healthcare as attractive investment proposals for the NRIs.

It is a point Singh has been making right from the time he left early on Monday for the two-nation visit, to raise the level and content of India's business links first with the UK and then the rest of Europe.

"Several Indian companies have expanded their global presence in various sectors across the world, including in the UK," Singh told the community at a reception hosted by the Indian High Commis sion. He called the "transformation" back home one of the "most far-reaching revolutions of this century". Singh had noted just hours earlier that "Indian companies are among the major investors in the UK".

The UK Trade and Investment's (UKTI) report this year ranked India the third largest investor in 2005-06, up from rank eight in terms of the number of projects the previous year. An Ernst and Young report released last week estimated that India had jumped one more rank in the first six months of 2006.

Proposals worth Rs 762 crore for the expansion of eight existing sugar units have also been approved by the government in the past 10 months.

Talking to The Tribune, Sugarcane Development Minister Nitish Mishra said the sugar complexes would be set up in Madhubani, East Champaran, West Champaran Saran, Muzaffarpur, Madhepura, Begusarai, Siwan and Nalanda, among other districts.

All 14 units together would have the capacity of crushing 65,000 tonne of sugarcane per day, besides generating 500 to 600 direct employment opportunities per unit and 5,000 indirect employments. The foundation stone of the first sugar complex would be laid in Madhepura in November.

Mr Mishra said the other major focus would be power generation. The units together would generate 372 MW. The complexes would also consist of distillery plants.

The state government has constituted a five-member committee led by the state Sugar Commissioner.

He stated that while investors had been given the opportunity to choose their own locations for setting up the complexes, the incentive package comprised reimbursement of Central excise duty for five commercial years and exemption from purchase tax and registration fees.

The government would grant 10 per cent subsidy on capital investment or a maximum of Rs 10 crore, whichever was less, after the completion of the first year of commercial production.

American Private equity investor W.L. Ross & Co. LLC, which specialises in corporate turnaround, is entering the Indian market though the $37-million (Rs. 1.70 billion) acquisition of textile company OCM India Ltd.

OCM has a state-of-the-art worsted textile manufacturing facility, according to a press release. The company's products are marketed globally.

Ross's all-cash acquisition of OCM follows a scheme of arrangement between Birla VXL Ltd and its existing lenders, creditors and shareholders and OCM and its shareholders. The process is being carried out through the Asset Reconstruction Company of India (ARCIL).

ARCIL CEO and Managing Director Sudhamoy Khasnobis said, "The OCM acquisition is the first 100 per cent buyout of a major Indian enterprise by a global turnaround fund."

W.L. Ross has sponsored over $4.5 billion of alternative investments since its founding in 2000. Known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles, W.L. Ross's notable principal transactions include rolling up five bankrupt US steel companies into the International Steel Group, which was sold in 2005 to Mittal Steel for $4.5 billion.