Key facts on India’s retail sector

• In one of the most eagerly anticipated economic reforms of Prime Minister Manmohan Singh’s tenure, India has approved foreign direct investment in supermarkets, paving the way in for foreign retailers such as Wal-Mart Stores Inc.
• After years of delay due to political opposition, Singh’s cabinet on Nov. 24 approved 51 percent foreign ownership in multi-brand retail, with conditions, and full ownership in single-brand retail.
•  The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $500 billion, with nearly 90 percent of the market controlled by tiny family-run shops.
• Organised retail, or large chains, makes up less than 10 percent of the market, but is expanding at 20 percent a year. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people that is growing at nearly 2 percent a year.
•  India also allows FDI in cash-and-carry, or wholesale, ventures. Restrictions on foreign investment in retail existed because of opposition from millions of small shopkeepers who are valuable vote banks during elections.
•  Previously, India allowed 51 percent FDI in single-brand retail and 100 percent in wholesale operations, but no ownership in multi-brand retail.
• Pantaloon Retail, India’s largest listed retailer and part of the Future Group, runs stores under its lifestyle brands Pantaloon and Central. Future also operates the Big Bazaar hypermarket chain and supermarket brand Food Bazaar, under the unlisted Future Value Retail.
• The group has 500 stores across formats, and occupies a total retail space of 15 million square feet in India.
• Future has for long been linked to France’s Carrefour for a partnership in hypermarkets. Pantaloon’s net profit increased 69 percent to 1.42 billion rupees ($27.33 million) in the year to end-June, on net sales of 122.1 billion rupees
• Second-ranked Reliance Retail is part of Relaince Industries , India’s largest listed group headed by Mukesh Ambani, who tops the Forbes India rich list. Reliance Retail operates 1,050 stores across neighbourhood stores, supermarkets and hypermarkets.
• In the year to end-March, it posted a net loss of 4.46 billion rupees on sales of $1.1 billion, a tiny share of the group’s total revenue of $53 billion. It has said it doesn’t plan to partner with any global retailer.
• Shoppers Stop, part of the K Raheja Group which operates in real estate, has around 644 stores across brands and formats and 12 Hypercity hypermarkets.
• It operates 3.93 million square feet of retail space and its loss-making Hypercity is open to partnerships with foreign groups. It posted a net loss of 15.1 million rupees on sales of 5.81 billion rupees in the year to end-March.
•  Trent, part of the salt-to-steel Tata Group, operates 72 stores across formats and runs the Westside range of apparel stores, and hypermarkets under Star Bazaar. It signed a franchisee agreement with Tesco Plc under which Star Bazaar shops use the British firm’s supply chains and infrastructure.
• Trent made a net profit of 74.9 million rupees on net sales of 15.2 billion rupees during fiscal 2011.
• Aditya Birla Retail is the unlisted retail arm of India’s telecoms-to-cement conglomerate Aditya Birla Group headed by Kumar Mangalam Birla, who ranks 97th on the Forbes global rich list.The company operates around 580 supermarket and hypermarket stores under the More brand. The loss-making retail unit expects to be profitable after tax by 2015. It has said it will evaluate partnerships with global firms.
• Wal-Mart Stores Inc has a cash-and-carry operation with Indian partner Bharti Enterprises, the parent of leading mobile provider Bharathi Airtel, and will add up to 10 new cash-and-carry stores this year to its 6 existing stores.
• Tesco, Britain’s largest retailer, has a tie-up with Trent’s Star Bazaar hypermarket chain. Tesco is also looking to enter the wholesale market through the tie-up.
• Germany’s Metro AG operates 6 wholesale stores in India and will add up to 4 new stores this year.
• Carrefour has 2 cash-and-carry stores in India’s capital, New Delhi. The world’s No. 2 retailer has been seeking a local partner to enter the hyper or supermarket sectors.

Govt dilutes retail reform amid opposition

• The Indian government appeared to be backtracking on Monday over a move to allow foreign supermarket giants such as Wal-Mart to enter Asia’s third-largest economy, as political opposition grew over one of the most far-reaching economic reforms in years.
• Powerful chief ministers of several government-allied states and some legislators within the ruling Congress party are pressing the government to reverse the decision, which was announced only late last week.
• Parliament was adjourned for a fifth day amid uproar from legislators, and the Press Trust of India reported that Congress party head Sonia Gandhi discussed how to end a standoff which threatens some key bills.
• The government, with a parliamentary majority of around 18 seats, may call a meeting of the main political parties on Tuesday.
• “There has to be some kind of rollback,” said one government minister, who declined to be named.
• In a statement, the government said foreign retailers would have to source 30 percent of their goods from small Indian industries, after previously saying these purchases could come from any small industries globally.
• The uproar could force a vote on one of the government’s biggest reforms in years, one that would allow global chains like Wal-Mart Stores Inc and Carrefour up to a 51 percent stake in retail ventures.
• Losing that vote could, in theory, spark a wider vote of no-confidence in the Congress party-led ruling coalition.
• The DMK and Trinamool Congress parties, two of the government’s crucial parliamentary allies, oppose the reform, and the Bharatiya Janata Party (BJP) said it will push for a vote, known as an “adjournment motion”, over the new retail regulations.
• The reform briefly breathed new life into the government of Prime Minister Manmohan Singh, who ushered in free market reforms 20 years ago, but who has since been bogged down by corruption scandals and increasingly has been seen as a lame duck leader.
• The reform was always seen as a politically risky move, coming ahead of major state elections next year that could redraw the political map ahead of 2014 general elections.
• The opposition claims the retail move will cost millions of small shopkeepers’ jobs. Supporters say it will draw in much-needed investment to a sputtering economy, with more spending on cold storage and warehousing that will ease supply-side pressures that have driven inflation close to double digits.
• “The government has lost its mind. Does it not know what its impact on the U.P. elections will be?” a Congress party lawmaker said, referring to elections next year in Uttar Pradesh.

Rupee and the bears

• THE result of headless-chicken financial markets or a canary in the coal mine? India is grappling with this question. On November 22nd the rupee fell to an all-time low against the dollar. The speed of the rout has been scary for a place that was supposed to be largely insulated from the rich world’s troubles. It is 20 years since India had a balance-of-payments crisis and for a long time the talk has been about it becoming an economic superpower. But there lingers a memory of when it felt it was a financial hostage to the world, and this helps explain the whiff of panic now in the air. Mumbai’s financial types say that firms are scrambling to find dollars and that desperate euro-zone banks, which supply about half of India’s foreign loans, are cutting off credit lines.
• That sense of fear strikes some as overdone. Jonathan Anderson, of UBS, a bank, has tagged the rupee a “drama queen”. India’s high inflation and chunky current-account deficit, financed by capital flows, mark it out from most of Asia. But neither attribute is new. Chetan Ahya, an economist at Morgan Stanley, thinks India has its problems, but that the weak rupee mainly reflects the trauma in global markets, which has caused capital flows to dry up. Hardest hit by global risk aversion are countries with external deficits. The currencies of other places with current-account gaps, such as South Africa and Turkey, have been walloped too.
• To be sure, the rupee deserves a beating, given how India’s prospects have dimmed. “The currency markets have been late in reacting,” reckons Samiran Chakraborty, of Standard Chartered, another bank. “The Indian business community has been more negative than foreigners for some time,” adds Roopa Kudva, the boss of CRISIL, a ratings and research firm. India’s growth model has been to run a small current-account deficit, financed with high-quality capital inflows, such as foreign direct investment and equity purchases. As a poor country this makes sense: India should invest more than it saves. But bits of its approach look rickety.
• For a start the current-account deficit is likely to overshoot projections of about 3% of GDP for 2011, if October’s trade figures are anything to go by. Exports slowed faster than imports, a chunk of which are non-discretionary commodities and oil. The investment climate has soured due to stubborn inflation, high interest rates and GDP growth that may dip below 7% in the coming quarter. Pessimism about the government’s appetite for reform has surely hurt India’s ability to attract capital. Neelkanth Mishra, a strategist at Credit Suisse and a longstanding bear on the economy, reckons the quality of capital coming in is falling too, with flightier and riskier debt rather than stickier equity investments.
• The falling rupee, then, partly reflects India’s economic failings. But will a cheaper currency add to these problems or help solve them? It should eventually narrow the external deficit, by boosting exports and limiting imports. Still, a sharp fall in the currency can be deadly if a country has borrowed in other people’s money. India’s indebted government sells its rupee bonds to locals, mainly banks, not jittery foreigners. The trouble is that since India’s banks are forced to stuff themselves full of loans to the state, Indian firms have had to borrow abroad. Sanjeev Prasad at Kotak, a broker, says that the recent results season saw a host of firms booking losses as the value in rupees of their foreign debts rose. He worries about them being able to refinance these borrowings.
• And a lower rupee will fan inflation, which is already at 9-10%. The Reserve Bank of India (RBI), India’s central bank, and the government have been praying that it will slow. But a rough rule of thumb is that a 10% depreciation adds 60-100 basis points to inflation, says Mr Chakraborty at Standard Chartered. That’s unhelpful.
• For the authorities there are three possible responses. They have already done the first: easing the rules on foreign lending to India, to try to attract short-term funds. The second option would be to intervene in the currency markets by selling dollars and buying rupees. That might, though, complicate domestic policy, by tightening monetary conditions further. If the RBI bought banks’ rupees then those lenders would have fewer available to buy government bonds, further increasing the already high borrowing costs of the state. The RBI could try to offset this by buying government bonds directly, but that might in turn hamper its efforts to support the rupee.
• And has India enough firepower? The country has $314 billion of reserves, largely thanks to the central bank intervening in the past to stop the rupee appreciating too much. But that cushion is not as big as it seems. Mr Mishra reckons foreign debts that must be repaid within a year now equal 48% of India’s reserves. Using a similar approach of deducting short-term debts from reserves, Mr Anderson reckons India’s net position has deteriorated. Compared with other countries it is only middlingly good (see chart) and the RBI may be nervous of using too much ammunition.
• That leaves a third option: for the politicians to make tough choices. If it cut its fiscal deficit the state would probably lower the current-account deficit. And if reforms were sped up, growth might recover, inflation could fall and foreign investment would pick up. The priorities include freeing the supply chains that have caused high food prices and cutting the red tape that is choking industrial projects. So far the omens are not promising. On November 22nd, the first day of the winter sitting of India’s parliament was adjourned due to raucous behaviour. Sadly, the rupee is not the only drama queen around

India supply chain chaos next hurdle for global retailers in the context of India allowing FDI in retail sector

• Seven years ago, when India’s Future Group retail giant sent shipments from Mumbai on the country’s west coast to Kolkata in the north-east, the products took 10 nervous days to arrive.
• “You sent the goods, and until you received them, you just prayed,” said Anshuman Singh, managing director and chief executive officer of Future Supply Chains. “There was just a black hole until they finally reached the destination.”
• Since then, he has wrestled with shoddy roads, minimal cold storage capacity and a myriad of state regulations and taxes to cut the journey to 72 hours. That challenge is all to come for foreign retailers eyeing a slice of India’s $450 billion market.
• Major cities in Asia’s third-largest economy are thousands of miles apart, connected by pot-holed and clogged roads or creaking railways where wagons are in short supply.
• Global giants such as Wal-Mart may be eager to start selling their wares to 1.2 billion people, but a need to first tackle India’s logistical headaches will likely mean they will be heavily dependent on local expertise.
• India’s government last week approved 51 percent foreign direct investment in supermarkets, ending years of legislative hand-wringing over a policy seen modernising the industry.
• To appease those who say it will destroy local shopkeepers, rules mean foreign retailers must source almost a third of their produce from small industries, invest a minimum of $100 million and spend half of that on “back end” supply infrastructure.
• “Global retailers have expertise from around the world, but in India they will have to develop it,” said Singh, who ships 2 million items a day, including 95 percent of the goods sold by Future Group’s retail arm, Pantaloon Retail India Ltd.
• “They will all have to go through the learning curve on their own.”
• Today, GPS tracking means each of his firm’s consignments are monitored every metre, from a vast warehouse outside Mumbai to the bright aisles of an air-conditioned Kolkata supermarket.
• At 4 a.m. every day, hundreds of vegetable traders begin to pack the pavements of one of Mumbai’s trunk roads. Hours later, milling retail customers and piles of pungent produce bring three lanes of traffic to a halt in the morning sunshine.
• Mounds of potatoes lie inches from the tyres of trucks and cars trundling past, as traders dodge commuters to carry sacks of coriander and boxes of cabbages on their shoulders through clouds of exhaust fumes and the stench of rotting produce.
• Around 30 percent of India’s vast fruit and vegetable production goes to waste due to a traditional supply network that uses hand-pulled wooden carts more than refrigerated freight wagons and keeps fresh produce highly regionalised.
• “India cannot be seen as easy,” Viney Singh, managing director of Max Hypermarkets, a six-year old local supermarket chain with a licence from European retailer Spar told Reuters.
• “There are some players that have been in the retail business for more than 10 years, and til date there is no hypermarket player that has made any money.”
• The chaos of Mumbai’s Dadar market is a universe away from Future Supply Chain’s chilled 125,000 square foot (11,600 sq metre) warehouse 50 km (30 miles) from the city, where fork-lifts move crates on shelves rising up to the 17 metre-high (53-foot) roof, and 150 workers feed hundreds of metres of computer-controlled conveyor belts.
• “Retail is all about filling the shelves, on time, every time,” said Future Supply Chain’s Singh.
• “In India, the technical know-how, expertise… requires a lot of learning, it is not common knowledge here.”
• His six-month old site in Bhiwandi is one of 50 warehouses across the country that supply the Future Group’s outlets in 300 cities — attracting over 300 million footfalls a year.
• Some global players with sourcing operations in India, such as London-listed Tesco Plc, have first-hand experience of the country’s poor warehouse space, unreliable transport links and chronic lack of cold-chain storage.
• Without local expertise or a huge amount of investment, domestic retail executives say overseas players could struggle to stack the shelves.
• “It certainly will not be easy for players coming in,” said Max Hypermarket’s Singh, whose chain has nine stores in India and plans for five more before March 2012.
• A race to gain market share in one of the world’s largest untapped markets is likely to spur lucrative deals for local players with established supply chains, industry analysts say.
• That could mean a windfall for firms such as Pantaloon, the Tata Group’s Trent Ltd and Shopper’s Stop Ltd, and make local expertise a valuable currency in getting products to market quickly and cheaply.
• “If some of them want to throw dollars, burn some cash to build it, they can,” said Future Supply Chain’s Singh.
• “We are ready made for them. They can use us.”

Cyrus Mistry, the new boss of India’s biggest firm, has huge shoes to fill

• Company  bosses come and go, and their importance is often exaggerated by credulous business hacks. But in Ratan Tata’s case, the attention is merited. Since he took over Tata Sons in 1991, he has built a decaying family firm into India’s biggest and most international business, with sales of $83 billion. He is the undisputed colossus of corporate India. Small wonder the announcement of his successor on November 23rd made a splash.
• Cyrus Mistry will be the new chairman; the last person without the Tata surname to hold that post died in 1938. He will take over in December 2012, after shadowing Mr Tata for a year.
• Tata stands for a very Indian way of organising a firm. It is a giant, complex 143-year-old conglomerate under its fifth generation of family leadership. One Tata bigwig recently joked that were “Neutron” Jack Welch, a former boss of General Electric, to take charge of Tata, the firm would be ripped apart in the name of shareholder value. So Indians are curious to know whether Tata under Mr Mistry will move beyond family management without breaking up. What happens at Tata could influence the other great family businesses that dominate India’s private sector and aspire to be global champions.
• Of the candidates for the top job, there was one family member: Noel Tata, Ratan Tata’s half-brother (Ratan has no children). Over a 15-month selection process a committee also considered people from America and Europe, outsiders from the Indian business scene and internal candidates.
• In retrospect its choice seems obvious, even though Mr Mistry, a non-executive director of Tata Sons, the group’s holding company, was originally a member of the selection panel, and joined the shortlist of candidates only a few months ago. He is young, at 43. He studied engineering and management in Britain, at Imperial College and London Business School—an important connection given Tata’s vast acquisitions in Britain, which include Corus, a steelmaker, and Jaguar Land Rover, a carmaker. And he has had hands-on experience as managing director of his family’s big, India-based construction business since 1994. One person involved in the selection process describes him as having “a stable head and good vision. He doesn’t just jump up and down and [he] has a long-term view of investment.”
• An outsider, then, but one with deep connections with Tata, whose unique culture sits somewhere between that of a charity, a national champion and a profit-hungry corporation. With an 18% stake, Mr Mistry’s family is the second-largest shareholder in Tata Sons after the Tata family’s charitable trusts, a position built up by his grandfather in 1930. He joined the board in 2006, taking over from his father, and has had plenty of time to feel the vibrations.
• Other signs also point to continuity. Mr Tata will linger as the chairman of the family trusts that own 66% of Tata Sons—these are supposed to be independent of the firm itself, but played a part in the selection process. Key lieutenants and true believers in the Tata way, such as Ishaat Hussain and R. Gopalakrishnan, are expected to remain on its board. And Mr Mistry’s previous firm (from which he will stand down) diversified under his watch.
• So a sudden change of tack looks unlikely. But Mr Mistry will inherit problems. Tata is often accused of being flabby and undisciplined. This isn’t entirely true. After a string of risky foreign acquisitions in recent years, its return on equity bounced back handsomely last financial year . Still, profits are likely to take a battering again as the slowdown in the rich world hurts demand for steel and cars. And within the Tata empire there are underperforming assets: not least its large mobile-phone business in India, which has been losing money for some time.
• The group’s structure needs attention, too. Its cash generation and debts are mismatched among its subsidiaries. The steel business, for example, is highly indebted and investing heavily, while the technology business, TCS, generates lakes of cash and has a balance-sheet with a net cash position. To make Tata’s rickety structure more durable and capable of further global expansion, Mr Mistry may have to increase its stakes in some listed subsidiaries using funds raised from selling down others, while also working to put its liabilities closer to where the money is made.
• Running a firm that is so devolved may be the hardest challenge of all. Ratan Tata took a close interest in some parts—cars, for example—but remained hands-off with others, such as TCS. Mr Mistry will have different interests and priorities, and may feel the need to assert clearer control. This is exactly what Mr Tata felt two decades ago, but with luck Mr Mistry will find the going easier than Mr Tata, who, when he first took over, had to fight to impose his authority over the old guard. Two decades later, those battles are hard to imagine. But with so much at stake, you never know.

RBI says opening up retail will help growth, curb inflation

• India’s growth story is still “credible” and the move to open up the economy to global supermarket chains will help growth and control inflation, RBI governor Duvvuri Subbarao said on Friday.
• “It’s commendable that government has taken the initiative. Let’s hope that it will improve the logistics chain and supply chain management in agriculture,” Subbarao said in a speech in Chandigarh.
• Late Thursday, the government approved 51 percent foreign direct investment in the supermarket sector, paving the entry of firms such as Wal-Mart, Tesco and Carrefour into one of the world’s largest untapped markets.
• “It’s important for not only raising overall growth but also important for containing inflation and improving quality of life over 50 percent of population,” Subbarao said.
• Opening up the retail sector to global players has been a much awaited reform but has been long hobbled by political differences. The Congress-led government’s biggest ally Trinamool Congress is opposed to the move.
• The RBI chief said that inflation needs to be brought down to 5 percent initially and then even lower, consistent with India’s integration with global economy.
• Subbarao said the current inflation situation is a consequence of both supply shocks and demand pressures.
• Monetary tightening needs to be supplemented by supply side measures to raise potential economic output, he said.
• “Raising agricultural production and productivity is, important for containing price pressures, raising rural incomes and making growth more inclusive,” Subbarao said.
• India’s inflation, which is largely driven by high food and global commodity prices, plus expansive fiscal policies, is the highest among major economies in Asia. It’s wholesale prices rose more than expected in October as the cost of food and fuel increased.
• The high inflation print, above 9 percent for the 11th month, was further evidence of the Reserve Bank of India’s (RBI) inability to achieve a breakthrough in its fight against inflation despite 13 rate rises since March 2010.
• In its Oct. 25 mid-quarter review of monetary policy, the RBI had said that a rate hike may not be warranted if inflationary pressures start to ease by December.
• Slowing growth, stubbornly high inflation, rising interest rates, political gridlock, gloom in the West and a sliding rupee have conspired to dampen investor and corporate sentiment in Asia’s third-largest economy.
• The RBI has lowered the country’s growth forecast to 7.6 percent for the current fiscal year ending in March from 8 percent previously.
• Subbarao says a reduction of federal and state fiscal deficits are important steps for a stable macro environment.
• India’s fiscal deficit during April to September was 2.92 trillion rupees, or 70.8 percent of the full-year target, government data showed. Most expect it to breach the 4.6 percent of GDP target for the fiscal year.
• The government said it would sell debt worth 2.2 trillion rupees, sharply above the budgeted 1.67 trillion rupees in the October to March period.
• Subbarao said that India being a emerging economy with a partly open capital account, floating exchange rate and a monetary policy that takes into account global developments, has to continue to manage the “impossible trinity.”
• The impossible trinity refers to the economic hypothesis that a country simultaneously cannot have a fixed exchange rate, an open capital account and an independent monetary policy.
• Subbarao said the volatility in the foreign exchange market will remain until the euro zone crisis is resolved.
• “Until there is a credible solution to the sovereign debt problem in Europe, we will see movements in the exchange rate,” Subbarao said.
• He added that the central bank is watching the rupee, but could not say whether it will intervene in the forex market directly.
• The rupee has skidded nearly 17 percent from a 2011 high reached in late July as risk-averse investors flee emerging markets, increasing the difficulties for a government already struggling with high inflation, slowing economic growth and a widening trade gap.
• The rupee touched an all-time low of 52.73 on Tuesday and state-run banks were spotted selling dollars in the market in recent sessions, sparking talk of RBI intervention.
• On Wednesday, RBI deputy governor Subir Gokarn said intervention has been aimed at smoothing sharp movements in the rupee.

India threw open its $450 billion retail market to global supermarket giants

• India threw open its $450 billion retail market to global supermarket giants on Thursday, approving its biggest reform in years that may boost sorely needed investment in Asia’s third-largest economy.
• The world’s largest retail group, Wal-Mart Stores Inc, and its rivals see India’s retail sector as one of the last frontier markets, where a burgeoning middle-class still shops at local, family-owned merchants.
• Allowing foreign retailers to take stakes of up to 51 percent in supermarkets would attract much-needed capital from abroad and ultimately help unclog supply bottlenecks that have kept inflation stubbornly close to a double-digit clip.
• Millions of small retail traders vigorously oppose competing with foreign giants, potentially providing a lightning rod for criticism of the ruling Congress party ahead of crucial state elections next year.
• Food Minister K.V. Thomas said the government will allow 51 percent foreign direct investment in multi-brand retail — as supermarkets are known in India. It will also raise the cap on foreign investment in single-brand retailing to 100 percent from 51 percent, the minister added.
• The new rules may commit supermarkets to strict local sourcing requirements and minimum investment levels aimed at protecting jobs, according to local media.
• Under fire for a slow pace of reform, Prime Minister Manmohan Singh’s embattled government appears to be slowly shaking off a string of corruption scandals to focus on policy changes long desired by investors.
• A heavyweight member of Singh’s coalition government warned on Thursday it totally opposed opening the sector.
• Political opponents of the proposal, with an eye to the ballot box, argue an influx of foreign players — which could include Carrefour and Tesco Plc — will throw millions of small traders out of work in a sector that is the largest source of employment in India after agriculture.
• India previously allowed 51 percent foreign investment in single-brand retailers and 100 percent for wholesale operations, a policy Wal-Mart and rival Carrefour, among others, have long lobbied to free up further.
• India’s biggest listed company, Reliance Industries, was forced to backtrack on plans in 2007 to open Western-style supermarkets in Uttar Pradesh after huge protests from small traders and political parties.
• The main opposition Bharatiya Janata Party (BJP) opposes opening up the retail sector, arguing that letting in “foreign players with deep pockets” would bring job losses in both the manufacturing and service sectors.
• “Fragmented markets give larger options to the consumers. Consolidated markets make the consumer captive,” the BJP’s leaders of the upper and lower houses of parliament said in a statement before the decision. “International retail does not create additional markets, it merely displaces (the) existing market.”

Finance Minister Mukherjee expects inflation to moderate

• India’s inflation is expected to moderate if the current easing trend in weekly food and fuel prices continues, Finance Minister Pranab Mukherjee said on Thursday after the latest weekly inflation figures showed food inflation at a nine-week low.
• India’s food price index rose 9.01 percent and the fuel price index climbed 15.49 percent in the year to Nov. 12, government data showed. In the previous week, annual food and fuel inflation stood at 10.63 percent and 15.49 percent, respectively.
• “If this trend continues for the next two weeks for the month of November, I hope there will be a moderation in inflation,” Mukherjee said.
• India’s headline inflation in October hovered above 9 percent for the 11th month, in further evidence of the central bank’s inability to achieve a breakthrough in its fight against price rises.

it’s Cyrus Mistry to run Tata empire next

• His surname may not be Tata, but Cyrus Mistry is as close as an outsider could come.
• Announced on Wednesday as the heir apparent to Ratan Tata, the group’s long-standing chairman, Mistry will become head of one of India’s most storied business groups.
• A five-man selection team – which included the 43-year-old Mistry himself – spent 15 months searching for a successor to 73-year-old Tata, in a closely guarded process that had India Inc guessing.
• In the end, the panel didn’t have to look far.
• Mistry’s grandfather first bought shares in Tata Sons in the 1930s, a stake that currently stands at 18.5 percent in the hands of Mistry’s father, Pallonji Mistry, the largest single shareholder in a firm mostly controlled by trusts.
• The chairman-in-waiting, who will head a group with revenues in excess of $83 billion, is brother-in-law to Noel Tata, Ratan Tata’s half-brother. Noel Tata was considered by many observers to have been the front-runner in the race for the chairmanship.
• Mistry’s father, a reclusive billionaire with an estimated wealth of $7.6 billion according to Forbes, paved the way for his younger son’s ascendancy to the top of a group founded by Ratan Tata’s great-grandfather.
• In Tata circles, Pallonji is dubbed the “Phantom of Bombay House” for the quiet but assured way he commands power around the south Mumbai headquarters of the Tata empire.
• When Pallonji retired from the board of Tata Sons in 2006, having been granted a year’s extension past the 75-year age cap, his then 38-year-old son stepped into his shoes.
• According to Ratan Tata, he didn’t let the family name down.
• “I have been impressed with the quality and calibre of his participation, his astute observations and his humility,” Tata was quoted as saying in a statement on Wednesday.
• “He is intelligent and qualified to take on the responsibility being offered.”
• Mistry will be the sixth chairman of the group and the second not named Tata.
• Two fund managers with holdings in Tata Group companies who wished not to be identified told Reuters that Mistry is relatively unknown in Indian business circles.
• “I’m surprised, yes, but at the end of the day he is not controversial, given his position as the largest shareholder,” A.M. Naik, chairman of engineering conglomerate Larsen & Toubro told Bloomberg UTV news channel.
• The youngest of Pallonji’s two sons, Mistry has two sisters and is married to Rohika Chagla, daughter of a prominent lawyer. Known for sharing his family’s love of horses, Mistry describes himself as a voracious reader of business books and a golfer.
• A civil engineering graduate of Imperial College, London, the bespectacled Mistry has a Master’s of Science in Management from the London Business School, and was until Wednesday the managing director of the Shapoorji Pallonji Group.
• He resigned from that post after his nomination was announced in order to avoid possible conflicts of interest.
• “I feel deeply honoured by this appointment. I am aware that an enormous responsibility, with a great legacy, has been entrusted to me,” Mistry said in a statement on Wednesday.
• “I look forward to Mr Tata’s guidance in the year ahead in meeting the expectations of the Group.”
• Mistry, who received unanimous backing from the selection committee, becomes Tata’s deputy chairman immediately and will work alongside Ratan Tata for the next 12 months before taking the reins of the Group in December 2012.
• He is no stranger to the stresses and strains of life at the top of a vast business empire, having headed his family’s Shapoorji Pallonji Group since 2003, where he oversaw revenues in excess of $2 billion.
• A 147-year-old firm, Shapoorji boasts the tallest residential building in India and the largest cement clinker plant in Asia.
• “I thought him to be a very sharp and astute business person,” Ajay Piramal, chairman of India’s diversified Piramal Group, told the NDTV Profit news channel.

 

IMF beefs up lending tools as debt crisis spreads

• The IMF on Tuesday beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis.
• By updating its lending tools, the IMF hopes to ensure it can make liquidity available to countries that may be struck by contagion from the crisis, as opposed to nations already deep in the mire.
• The announcement comes as concern grows over a crisis that has moved from debt-stricken Greece to larger economies such as Italy and Spain where bond yields have risen sharply, raising questions about the euro’s very survival.
• The IMF said it was establishing a precautionary liquidity line as “insurance against future shocks and as a short-term liquidity window to address the needs of crisis bystanders.”
• The IMF said the new liquidity line would be available for six months to countries with relatively good policies that are facing short-term balance of payments needs due to events not of their own making.
• Access under the six-month arrangement could be as much as 500 percent of a IMF member nation’s quota, and the funds would come with few conditions. IMF quotas are calculated roughly according to the size of a country’s economy, trade and reserves, and they determine the amount each nation can borrow from the global lender.
• The new instrument, called the Precautionary and Liquidity Line, could also be used for longer programs under 12- to 24-month arrangements, with access up to 1,000 percent of a member’s quota, the IMF said. This arrangement would come with more IMF conditions attached and would be subject to regular reviews by the IMF board, it said.
• The IMF did not elaborate on which countries could qualify for the arrangements.
• The fund also adopted a new rapid financing instrument for nations facing urgent balance-of-payment needs caused by so-called exogenous shocks, such as countries in the Middle East and North Africa hit by political upheaval. It will also be available to countries hit by natural disasters.
• Funding under the instrument would be available immediately, with access of up to 100 percent of members’ quotas.
• “We have acted quickly, and the new tools will enable us to respond more rapidly and effectively for the benefit of the whole membership,” IMF Managing Director Christine Lagarde said in a statement.