India emerging as global role model for economic development

by Ashok Handoo*

The forward march of the Indian economy is continuing on the expected lines. The comfortable indicators promise to drive the economy out of the slowdown it faced in 2008-9, when the growth rate dipped to 6.7 per cent, after experiencing a 9 per cent growth for five consecutive years.

The most gratifying is the fall in food inflation which has been coming down consistently for the last five weeks and has now touched the 17 month low of 10.3 per cent. It stood at about 14 per cent in the corresponding period last year.

High food inflation has been a major source of worry to the Government for the past one year as it has been hitting hard the poorer sections of the society. Fall in food inflation is attributed to a better Kharif crop leading to increased supplies of agricultural products in the markets. With the end of the rainy season, disruptions in production and supplies of agricultural commodities have also ended. Economists believe that the stage is now set for food inflation to come down to a single digit soon. It was first witnessed in July this year but that was a brief relief.

The Centre for Monitoring Indian Economy (CMIE) has, in its latest report, estimated a 10 per cent rise in Kharif crop to 114 million tonnes against a 2 per cent decline a year ago. It estimates the Rabi crop to rise by 2 per cent, compared to 1.7 per cent drop in the last season. That should be quite reassuring for the country.

A good monsoon at 102 per cent this year, led to increase in sown area by 7 per cent during the current Kharif season, said the CMIE. It thus predicts an all round rise in agricultural commodities with oilseeds expected to grow at 11 per cent, sugarcane at 15 per cent and food grains at 5.3 per cent.

All this has naturally led to easing of pressure on the headline inflation as well. It has thus come down to a 9 month low at 8.58 per cent in October against 8.62 per cent in September. The Government expects the overall inflation rate to fall to 5-6 percent by the end of this financial year.

It is in this backdrop that forecasters have revised upwards the growth rate for India this year. RBI’s professional forecasters have predicted the growth rate at 8.5 per cent this fiscal. It had put the figure at 8.4 per cent earlier.

Other economic parameters also are showing encouraging trends. FDI inflows during September rose by 40 per cent to $ 2.11 billion. Net capital inflows are expected to reach $ 91 billion by the end of this fiscal. Last fiscal, this figure was only $53.6 billion. The Government expects to touch the target of one trillion dollars in public- private investment in the next five years.

The remarks made by the Chairman of the World Economic Forum Klaus Schwab at the just concluded India Economic Summit in New Delhi, were therefore in line with the ground situation. He said “at a time when the world is searching for a new model of economic development India’s experience as a crucible for new types of economic growth gives it a special role among developing economies.” The conference took note of the fact that amid the slowdown in the world economy, India stood alongside China to register impressive growth rate.

At the leadership summit in New Delhi too, former British Prime Minister Gordan Brown said that the Indian economy will double in size in next 7 years and that achieving a 10 per cent growth is possible. India’s role at the G-20 is ‘absolutely critical’ and is right at the centre of discussion, he said.

India and China provide a huge market to the world. While the US and Europe account for 20 per cent of world’s consumption, India consumes less than 1 percent while China stands at 3 percent.

A fall in food inflation and slackness in industrial production could now perhaps prompt the Central bank to ease its tight money policy which it has adopted to control inflation. Obviously, the bank will look at other indicators as well at its policy review meeting on December 16.

What is of concern is the sharp fall in industrial growth to 4.4 per cent in September, against 8.2 per cent in September last year. This was because of a slackening in the manufacturing sector which forms about 80 per cent of industrial production in the country. But the fact that industrial growth stood at over 10 per cent in the first six months against 6.3 last year, gives confidence that it would improve in the coming months, more so when agriculture is showing a rebound.

The challenge however remains to ensure inclusive growth to enable the marginalised sections of the society to share the fruits of development. As Dr. Manmohan Singh put it at the Leadership Summit, welfare of vulnerable segments of the society, reducing regional imbalances and increasing social and economic opportunities for backward classes, minorities and women remains the key challenge for the country. The Government has taken a number of steps in this direction which should help in achieving the objective. Its flagship programmes like the Mahatma Gandhi National Rural Employment Guarantee Act are doing wonders to reach to the economically weaker sections in rural areas. Similar other programmes need a push to speed up the process. (PIB Features)

EIL offer to kick-start fresh PSU divestment

Mumbai, July 26, 2010: Public sector undertaking Engineers India Limited proposes to enter the capital markets tomorrow with its follow-on public offer of 33,693,660 equity shares of Rs 5 each. The Offer comprises a net offer to the public of 32,981,660 Equity Shares and reservation of 712,000 Equity Shares for subscription by Eligible Employees. 

The Offer marks a divestment of 10% in EIL by the President of India, acting through the Ministry of Petroleum and Natural Gas, Government of India.

The Offer is being made through a 100% book building process wherein up to 50% of the Net Offer will be available for allocation on a proportionate basis to Qualified Institutional Buyers. Further, not less than 15% of the Net Offer will be available for to Non-Institutional Bidders and not less than 35% of the Net Offer  will be available to Retail Individual Bidders.

The Selling Shareholder currently holds 90.40% of the pre-Offer paid-up capital of the Company. The object of the Offer is to carry out divestment of 33,693,660 Equity Shares held by the Selling Shareholder, wherein all proceeds of the Offer will go to the Selling Shareholder.

EIL has provided a range of engineering consultancy and project implementation services on more than 49 refinery projects, including eight greenfield refinery projects, seven petrochemical complexes, 35 oil and gas processing projects, 205 offshore platforms projects, 37 pipeline projects, 11 ports and storage and terminals projects, eight fertilizer projects and 26 mining and metallurgy projects. In the infrastructure space, it has provided a range of engineering consultancy services for more than 26 projects, including for airports, highways, flyovers, bridges, water and sewer management, as well as energy-efficient “intelligent” buildings. The Company has also completed 16 turnkey projects, including refinery and petrochemicals projects and offshore platforms.

About Engineers India Limited:

EIL was incorporated on March 15, 1965 under the Companies Act as a private limited company under the name Engineers India Private Limited pursuant to a formation agreement dated November 20, 1964 and in accordance with a memorandum of agreement dated June 27, 1964 between the GoI and Bechtel International Corporation. In May 1967, it became a wholly-owned GoI enterprise. In 1996, the GoI disinvested approximately 6.0% of its shareholding in the Company and it became a public listed company. It has two wholly-owned subsidiaries, Certification Engineers International Limited and EIL Asia Pacific Sdn. Bhd. incorporated in India and Malaysia, respectively, and two strategic joint venture companies, TEIL Projects Limited and Tecnimont EIL Emirates Consultores e Servico, LDA, incorporated in India and Portugal, respectively.

EIL is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas and petrochemicals industries in India and internationally. It also operates in a diverse set of other sectors including nonferrous mining and metallurgy and infrastructure. The Company is also a primary provider of engineering consultancy services for the Government of India's energy security initiative under its Integrated Energy Policy for strategic crude storages. EIL’s portfolio includes various technologies for petroleum refining, oil and gas processing and aromatics. It currently holds 10 patents and has 20 pending patent applications relating to various process technologies and hardware developed by the Company.

EIL’s services in these industries and sectors cover the entire spectrum of activities from concept to commissioning of a project. The Company's services include preparation of project feasibility reports, technology selection, project management, process design, basic and detailed engineering, procurement, inspection, project audit, supply chain management, cost engineering, planning and scheduling, facilitation of statutory and regulatory approvals for Indian projects, construction management and commissioning.

EIL has leveraged its track record in India to successfully expand its operations internationally, and has provided a wide range of engineering consultancy services on various international projects, particularly in the Middle East, North Africa and South East Asia. It has established strategic international offices in Abu Dhabi, London, Milan and Shanghai to expand its international operations.

The Company's total income increased at a CAGR of 47.28% from Rs.6,876.5 million for the year ended March 31, 2007 to Rs.21,969.6 million in the year ended March 31, 2010, while its profit after taxation, as restated, increased at a CAGR of 47.31 % from Rs.1,390.0 million in the year ended March 31, 2007 to Rs.4,443.4 million in the year ended March 31, 2010.

During the quarter ended June 30, 2010 of the current financial year, EIL recorded a net profit of Rs. 1,145.6 million as against net profit of Rs. 942.2 million for the the corresponding quarter ended 30^th June 2009 of the previous financial year. The Net Sales for the quarter ended June 30, 2010 was Rs. 6,060.3 million as against Rs. 3,914.3 million for the corresponding quarter ended 30^th June 2009 of the previous financial year.

ARSS Infra PAT jumps by 80%

• Q1 FY11 PAT up by 80% to Rs.34.05 Cr.
• Income up by 59% to Rs.356.48 Cr.
• EPS increased by 52% to Rs.22.94 Cr.

Mumbai, July 26, 2010: The Bhubaneswar based ARSS Infrastructure Projects Limited, a growing corporate in the infrastructure space focusing on construction of roads, highways, bridges, irrigation projects and EPC activities for railways continues to show good growth. It’s PAT in the first quarter of FY 2011, stands at Rs 34.05 crores as against Rs 18.90 crores in the same period in the previous fiscal.

The company’s Net Income from Operations in the first quarter of the current fiscal stands at Rs 356.48 Cr., an increase of 59% from Rs. 224.28 Cr.in the previous fiscal.

In the first quarter of FY 2011, the company has bagged six prestigious projects collectively worth Rs 458.75 crores. This indicates a strong order book and company’s potential for positive performance this year.

In the first quarter of the current fiscal year, ARSS Infra received an order worth Rs 114.49 crores from RITES Limited for construction of earthwork, bridges, supply of P-way material, supply of ballast and P-way linking for proposed private railway siding. It also bagged project worth Rs 99.90 crores from Madhya Pradesh Road Development Corporation Ltd. in May this year.

Similarly, it has secured assignments worth Rs 80.32 crores and Rs 71.62 crores from Greater Mohali Area Dev. Authority (GMADA) and SAIL, Bokaro Steel Plant respectively. ARSS Infra received another project from Northeast Frontier Railway, Guwahati worth Rs 41.56 crores.

Early June this year, the company has also bagged a project worth Rs 50.86 crores from Rayagada (R&B) Division, Rayagada, Odisha.

Mr. Sunil Agarwal, President & CEO, said, “We are pleased to continue the same growth that we showed last year. As we spread ourselves to other parts of the country and move up the infra value chain, this growth will continue.”

About ARSS Infrastructure Projects Ltd.:

Incorporated in 2000, ARSS Infrastructure Projects Limited (abbreviated as “ARSS.”) is an ISO 9001:2008 company. The Company is engaged in construction activities in India, and undertakes construction of railway infrastructure, roads, highways, bridges and irrigation projects. It started operations as a construction company in the field of railway infrastructure development, mainly in the state of Orissa and subsequently expanded its business activities in the zonal jurisdictions of East Coast Railway, South Eastern Railway, South East Central Railway, Southern Railway and North Western Railway. ARSS has developed expertise in railway construction projects, which includes earthwork, major and minor bridges, supply of ballast, sleepers, laying of sleepers and rails, linking of tracks etc. Over the years it has diversified its field of activities into other construction segments such as development and construction of roads, highways, bridges, irrigation projects, EPC activities for railways.

ARSS has been listed on the NSE & BSE since 3^rd March, 2010. For further details log on to www.arssgroup.in 

For more details contact : Mr. Shahab Shaikh,

                                             E-mail : shahab@conceptpr.com,

                                             D: 022.40558927, M: + 91 93208 97525

Big bucks in the air: Aviation sector to attract $120 billion in 10 yrs

The Prime Minister, Dr. Manmohan Singh has inaugurated the integrated tehe T-3 Terminal of Delhi’s Indira Gandhi International Airport.

Here are some of the points that he has made:

• We are all very happy and indeed very proud of the completion of our one of the world’s largest airport terminals in a record time of 37 months.
• This airport terminal establishes new global bench marks. It also exemplifies our country’s resolve to bridge and bridge fast enough the infrastructure deficit in our country.
• It proves the success of the Public Private Partnership model in execution of large infrastructure projects. It also proves our capacity to coordinate across agencies and governments and work as a united team.
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• The aviation sector is a vital to India’s sustained economic growth. It plays a major role in generating tourist flow, accelerating industrial development, creating new jobs and integrating our country. In a span of a few years, India has become the 9th largest aviation market in the world. We now have 10 scheduled airlines operating in our country, compared to 2 in 1990.
• It is estimated that India’s aviation sector has the potential to absorb up to US$ 120 billion of investment by the year 2020. Analysts predict that domestic traffic can reach 160 to 180 million and international traffic in excess of 50 million by the year 2020.
• An airport is often the first introduction to a country. A good airport would signal the arrival of new India, committed to join the ranks of modern, industrialized nations of the world. We should have airports that are receptive to the comfort of passengers even as they meet the highest standards of efficiency and safety. They should employ the most modern of technologies but also exude cultural warmth.
• Let me end by once again emphasizing the need to rapidly improve our physical infrastructure. This is one area where we have been lagging behind but I am confident that in the time to come we will achieve much more than in the past. I hope to see many such successful projects in the future.
• This will be in keeping with our ambition, our aspirations and our new found confidence in recent years.

Budget - Heads I Win, Tails You Lose!

I  look at the common investor as the one who has his finger in every pie. He would like to spend if he has enough and save if he has little. With this psyche, he looks at the Budget with not only eyes wide open, but with a mouth to enjoy the benefits.

So what does the FM show us and give us?

Tax reliefs are fine prima facie. But the real effects do  not last long...not even till Pranab Babu finishes his speech. The din created in Parliament by the opposition-of-convenience sends fears. There is something astonishingly wrong.

The Common investor was happy that he’s got relief and can save and spend. And, as the FM himself said:  “to use for savings and consumption”. It’s like the rosy picture painted on the front page of the Times of India! The real picture is in inside pages. The Rs 50,000 dream carrot quickly disappears into the oblivion as one visualises the “broader picture” as analysts put.

This was exactly why Mr G V Nageswara Rao, MD & CEO, IDBI Fortis Life Insurance reminds us within ten minutes of FM’s speech that Pranab Babu has given with one hand and taken back with the other! Typical case of a Kabhi Khushi Kabhi Gham!

If FM has left an average of Rs 50,000 (though I do not understand as to how the analysts arrived at this super savings amount!), the cascading impact of taxes, fuel price hikes will continue to increase the unbearable burden on him.

Whether it is a developer, businessman, vegetable vendor, transport operator – all will pass on the tax impact to the common investor. The oil companies have already done so! In fact, I have already heard someone saying at the top of his voice: 50,000 bachaa kar kya karogey (What will you do with the savings of Rs 50,000?)?

There are many women like my wife who are worried about the expenses on te education and marriage of their children. You see, gold also costs more than yesterday!

One is very happy to note that the tax allowance on long-term infra bonds is extended to investment of additional Rs 20,000, allocations for infrastructure, rural housing, power, education and health are all up. This will surely help in spreading the small investor movement to tier-2 and 3 towns. The financial services industry has quite a bit coming its way in this new and ever growing market.

But the goodwill that FM wanted to earn will prove to be very short living.