Byapaar.com -The Indian Business Blog

Its not always good to write only about business all the time specially  when things are not going that good - isn’t?

So, I do some personal posting from time to time just to change some moods.

Before I indulge into some local ranting, let me just do some routine update on India business scene.

• Petrol prices are slated to come down by Rs. 5 anytime this week which is great news for us using petrol engines. Price of Gas and Diesel will also come down.
• Government and IT industry doing its best to recover from Satyam scandal.
• Pan-India license fee for 3G mobile to be doubled.

Well thats it in short. On a personal note, our state government is slated to raise our salaries by a good margin but it will still fall short on Central government employees by 30-33% depending on position of the employee. It has angered the employees to no end as our tiny state depends on central government for 90% of the state budget and center has already given written assurances to seven backward states including ours that it will provide full support if they implement the central pay-scale. Lets see what happens!

Now the main topic. Last week, local municipality organized a book fair on the central open compound of our small town which has a population of over 100,000 (very big town by western standard but its just a big village by Indian standard). I usually don’t like to visit any of the fairs held in our village but this time I had to go with a friend of mine who needed some books. Once there, I was really impressed by the size and magnitude of the fair. There were more than hundred stalls - big and small showcasing their publications and products. What amazed me more were presence of some very big publication houses from Kolkata who have come all this way to a tiny and remote place in a landlocked, backwater state. So we went around the galleries and looked for books he wanted.

While browsing through pavilion to pavilion I noticed stark contrast of qualities of books published by local publishers and those of Kolkata who also had some international books on their shelf.  Its not only the catalog printing that differentiates the books, but also contents. One just has to browse through local books for few minutes and see the so many misspelled words that he or she would rather leave the book alone. Read the rest of this entry »

In an unprecedented move, Mr. Ramalinga Raju, promoter and Chairman of Satyam Computer Services, the fouth largest IT company in India has announced that he has been showing false and inflated data in the company balance sheet for years. He stated that from what was a minor gap in the company book when it was a company with only handful of employees, the magnitude of the problem grew with that of size of the company that currently employs around 53,000 and has operations in 66 countries worldwide. It boast of serving one third of Fortune 500 companies and also the US government.

Satyam has been under scrutiny since World Bank banned the company in October for allegedly installing spywares in some of their computers which Satyam denies. Then, in December Satyam management faced a revolt by investors for a proposed takeover of two companies engaged in construction for approximately $1.6 billion. It has later been found that Mr Raju has big stakes in those two companies.

Since then a tussle between the board and shareholders has been going on and shareholders have been demanding resignation of the Chairman and complete overhaul of the board. In the meantime it was found that promoters were just holding meager stake in Satyam as they have pledged most of their shares with lenders against loans. All these controversies led to huge loss of Satyam’s shares at the stock market. Already speculation was doing the round that Mr. Anil ambani - the Chairman of cash rich ADAG group might step in for a friendly takeover.

The problem got so big that Mr. Raju had no alternative but to reveal all his frauds and resign because he no longer has enough stake to control the company and if others seek to take over- they will find all the wrongdoings by him once they go through Satyam’s books.

Analyst say that Mr. Raju has not only damged future of Satyam but has created a bad impression on whole IT and outsourcing industry of India. Some commentators say that foreign clients might loose confidence in Indian companies as there is a big question mark on India’s corporate governance and transparency of their operations. Otherwise how could Satyam keep on with the fraud despite being auditored by world renowned accounting firm Pricewaterhouse Coopers?

Amidst all these, top leadership at Satyam has resolved that they would carry on and make Satyam a transparent corporation. But the maimum damage has already been inflicted not only for Satyam but questions are being raised on corporate ethics of whole Indian Corp. Shame on Satyam.

First of all, Happy and Prosperous New Year -2009 to all my readers and others. Hopefully, the New Year will bring much joy to all of us which were gone in 2008 due to economic downturn that occurred suddenly. And it seems governments are not sitting idle – indeed Indian government is trying its best to lessen the effect of global economic meltdown on Indians. Last Friday, the Prime Minister cum Finance Minister of India, Dr. Manmohan Singh announced second round of packages meant to stimulate the economy and protect it from global slowdown. In the first package , the government mainly focused on releasing more funds in the market by way of reducing interest rates and thereby improving liquidity. It also offered soaps to exporters. It seems the first package was aimed at immediate goals whereas the second package is more fundamental and might go a long way in reviving the economy.

In the first place the government doubled the cap on foreign investors in bonds and made ways for states to raise around Rs. 300 billion market loans. Moreover, the new initiative has given special emphasis on the automobile industry that has gone back gear after the economic crisis started. A plan of depreciation of fifty percent on car finance has been announced to shore up demand for the beleaguer industry. Exporters have seen rollback of entitlement passbook scheme rates amidst negative export growth in experienced in November.

On the financial sector, The Reserve Bank of India has announced further reduction in REPO and reverse-REPO rates. Special vehicle has been announced for improving liquidity in the non-banking financial market that may raise up to 250 billion Rupees. Rs 200 billion has been earmarked for state owned banks over net two years.

The government says it is not possible for more stimulus packages within this financial year that ends on March 31^st due to political and electoral compulsions. Over all, the two packages announced will take the country’s fiscal deficit to 5-6 percent from a comfortable 2.5 percent now.

Industry has more or less welcomed the anticipated second round of package and the stock market gained more than around 3 percent. But as always, industry want more from the government and argues that these schemes are not enough to push industrial growth which has come down to 0.4 percent from 5 percent at this time last year.