Camels in the desert ...One of the best pictures of the year!!

Watch it closely and you'll get what is so great about this pic.

Thanks to: Bhargavendra Tripathi

ICICI played mindful and tricky game in pricing its FPO

As I was pretty tired yesterday evening, I didn't get a chance to go through business pages, which is unusual, but sometimes it happens. Being an auxiliary activity for me since last two years now, equity market has become a very real part of my daily life. It so happens that in late evening a friend of mine conveyed me that ICICI has declared its price-band and its 885-950. My first reaction was "oh my God its another DLF, it has put an aggressive price as well". But as I started going through its RHP and other news, I realized it's mindful and tricky too!

Huge money is involved in market, talented minds too… Institutional buyers are getting smart and the firms smarter…

Well, for all those who are wondering what I am talking about, read this, where I've put whole saga about ICICI FPO in financial and technical terms.

If you have even niggling idea about equity market and how it goes, you must be knowing, its more unpredictable than a cricket match where India plays and much more vulnerable than wendy house made in sand-heap at sea-sore and much more filled with floating information than any page of well known matrimonial site.

When you go finding about ICICI FPO in news, amid all brouhaha, you'll be left confused. I am trying to make a point here.

Somebody said to me once, if you have to find how rich a person is, don't look for his branded cloth, watch, perfume or tie; instead look for his shoes… the idea is very clear, if you have to find how a firms fundamentals are, don't look for those orbits where everyone is managing beautifully, but look for how it is performing where others concentrate very little. Look how fundamentally strong a company is where others don't care…

When it comes to ICICI, I read somewhere its Hinterland to foreign soil, and it certainly is.

With a strong franchise, the parent bank has its growth drivers firmly in place. Offering a wide range of products from credit card to mortgages, the bank is a clear market leader in the retail segment, which constitutes about 65 per cent of its loans.

While the retail market has grown in the range of 30-40 per cent over the last three years, ICICI Bank has consistently beaten the industry with a 60 per cent growth each in 2004-05 and 2005-06, and 39 per cent in the last fiscal, a slowdown mainly due to fluctuation in interest rates.

The retail market is expected to grow at 20-25 per cent in next few years and going by the past track record ICICI Bank should outpace the industry growth rate. Brushing aside the rising interest rate impact on loans, Kalpana Morparia, joint managing director, ICICI Bank, said that the bank expects to grow its retail business profitably.

After making its presence felt in the urban retail segment, the bank is turning to opportunities in the rural sector. Though the urban retail segment will continue to be the bank's growth engine, ICICI Bank wants to reach the consumers in the hinterland, not serviced by banks currently.

"We feel that if properly serviced, rural areas can offer greater opportunities than even retail," says Mulye. To grab this opportunity, the bank has formed a multi-product and multi-channel strategy primarily by partnering with various micro-finance organisation, self-help groups and even corporate targeting the retail as well the SME customers.

Also, looking at the big volumes of cross border M&As, growing aspiration of Indian companies to have a global size and to meet the needs of the NRI population, the company is looking forward to enhance its international presence. Currently, the bank has the largest international business among Indian banks with presence in 18 countries outside India.

Currently, this forms 19 per cent of its total consolidated balance sheet. Going forward, the bank will also focus on the international retail i.e. fees and liability (deposits) generation business. It already has a 25 per cent market share in inward remittance market of $28-30 billion.

In total, banks shoes are firm and robust and certainly a branded one.

There is real good scope for good medium/long-term returns, given the prospects for the core banking business, strong brand value and possible contributions from the insurance subsidiary. Moreover ICICI strategically has provided Rs. 50 discount to lure retailers, which certainly is a plus point and it diminishes downside risk to a large extent. Unlike Vishal retail, here the scenario of having " too good a news is a bad news" can be ruled out, as its huge issue size won't let it oversubscribed in double digit in any case in Retail section.

Having said all that, one cannot expect it to grow overnight, may be in adverse situation its price may come below issue price in short term, but when it comes to medium to long term story, its only win situation. Be there, and remain firm for a longer period. You'll get reward.

The bank was expected to be mindful in its pricing strategy of the fact it is following close on the heels of one of India's largest initial public offerings last week. DLF, the property group, raised $2.25 billion. Yet the deal is still far behind the benchmarks set by China. Industrial and Commercial Bank of China, China's largest bank, raised $19 billion last year. That tells how far Indian equity market has to go to mature globally.

Also read ICICI meant for medium to long term investor.

Are you interested in Equity Market? Check-out Saturday watch on Market Outlook
Want to know market? http://knowmarket.blogspot.com/

TCS: First Mover In India - CEO speaks to Forbes.com

To what extent and for how long will you and the industry be able to weather the impact of the rising rupee [which has appreciated over 8% against the dollar since January]? What do you expect from the government on that front?
The rupee's appreciation vis-à-vis the dollar is definitely of concern to the industry and TCS. Hedging is a mechanism by which you cover your losses. We've done that fairly well in the last quarter. But because of the mechanism and costs involved, we can only go to a certain point. So anything below 43 rupees vs. the dollar will continue to worry us.
To what extent the government will succeed in the short term in addressing inflation will determine how the rupee's rise will play out. The industry has expressed its views on a number of policies, and we've said what interventions are possible from our perspective.

TCS has a huge workforce, to which you're adding substantially every quarter. What percentage is global and how much is that going to expand in the next few years?
We have a network model where we deliver from multiple global locations, including Uruguay, Chile, Mexico and China. It's becoming a scale play even outside the country. At present, 9.6% of our employees are from other nationalities; it'll grow to 10.5% in two years.

We're hearing so much about the talent crunch today. What are you doing to attract and, more important, retain employees in India? How much is the fight for talent contributing to rising costs per employee?
The war for talent will only get tougher. [In India] the demand is not from IT alone--there are also industries like retail, financial services, banking. The brand which TCS has built has some attraction for young graduates. The number of colleges we go to in India alone each year just crossed 300. We've been successful in ensuring we get invited [to campuses] early in the game. We also engage students through summer projects, training and have strong ties with the faculty. We have centers of excellence on campuses, fund projects there.
Having gotten people from campuses, the second level is the quality of work, what kinds of opportunities they have. We have a dedicated [two-month] training program for all new employees. Experienced professionals have two-week trainings every year. Our attrition rates are 11.3%, way below the industry average. We trained 32,000 professionals last year.

What are your favorite global locations for TCS centers? Why?
North America tops the list because of its proximity to our customers. Another favorite is Uruguay, from where we are able to address European and North American requirements and cater to companies that need Spanish capabilities support. Canada is another asset.
In China, we can address the domestic as well as Asia-Pacific market. Countries in Eastern Europe and Africa help us to identify talent and draw professionals. They want us to employ their graduates. And in India, tier-two cities are definite destinations of the future.

There's growing interest from global firms in setting up captive centers in India. For how long will our infrastructure and talent pool be able to sustain that?
This will be one of the mechanisms global corporations will adopt for their own strategic reasons. They see India as a good destination, but the size of such centers will not exceed a couple of thousand employees. And some global majors also exit these centers after a certain period of time. Some will never have captives. Most companies realize their main brief is to run their business rather than run their IT capabilities. The bigger portion [of their technology needs] will always be outsourced.

What keeps TCS ahead of the competition? What do you do that makes the firm unique?
The experience of the last 38 years is a very clear and powerful differentiator. We're present across geographies. We do strong deployment of capabilities in the domestic market, where 12% of our revenue comes from. Our ability to handle large turnkey, total-responsibility projects is also a very important differentiator. Another factor is, we've integrated our global workforce and reached out to markets that are far beyond traditional non-English-speaking markets. We did it successfully in Uruguay and China. We're a global player with a global presence.

How will a reduction in discretionary spending in the U.S. affect TCS and the industry as a whole? Is a global slowdown good for Indian tech growth?
When discretionary spending gets reduced, that plays out well to our strategy and the India strategy, because of our ability to take costs out through process improvements and by shifting from high-cost to low-cost locations. We provide value-added, low-cost arbitrage for firms. The ability to ramp up in offshore locations rapidly is a dimension we bring in.
But I don't see any such indication of a slowdown in spending as we speak. About 18% of our revenues last year came from new services that we launched.

Opponents of an increase in the H1-B visa cap argue that since Indian firms file the highest number of those applications for visiting Indian professionals, the program isn't really being used to retain talent. Is that a fair argument?
To us, whether the number of visas gets increased or decreased or stays the same, we look at our business model differently, where we should not be dependent on just the movement of people from here to there. How do you localize, globalize, how do you hire the locals as well as distribute the workforce, not just in the U.S. alone. We view this in totality. We don't make recommendations saying, "Increase the number of H1-Bs...we're having problems."
Our whole view is the mobility of employees, and the ability to execute projects in any part of the world, is going to be critical for any global company, whether you go for one year or a couple of weeks. The same is for whether a U.S. company needs access into India or any other country. That's the way we need to look at this, rather than as a U.S. "visa situation."

Are you interested in Equity Market? Check-out Saturday watch on Market Outlook
Want to know market? http://knowmarket.blogspot.com/

Some like it hot: India's invader - An article on the Tata group

When Jamsetji Tata, perhaps India's most revered industrialist, aired the idea of starting the subcontinent's first steel mill in 1907, Sir Frederick Upcott, the British commissioner of railways in India, seemed to think it was no more than hot air. He is said to have remarked at the time that he would "eat every pound of steel rail" the plant produced.
So executives at the Mumbai headquarters of Tata Steel, the country's largest steel producer, could be forgiven a chuckle after the board of Corus, the former British Steel, recommended Tata's audacious £5.1bn bid last week. If shareholders back the offer, the deal will be worth more than three-quarters the combined value of all previous foreign acquisitions by Indian companies.
Yet Tata Steel is just a small part of the massive empire of Tata Group, which numbers more than 100 companies and is now pursuing an aggressive push beyond its domestic borders. It is virtually impossible in India to get through the day without somehow adding a few rupees to Tata's coffers. Cup of tea? How about a drop of Tetley, which the company bought in 2000, served in a mug made by Tata Ceramics? How about a holiday? Try a stay in one of the five-star properties run by the Taj Hotels and Resorts, the country's largest luxury chain and also part of the group. The heaving streets of Mumbai are clogged with cars and trucks made by Tata Motors; the new skyscrapers puncturing the city's skyline are built with Tata Steel.
The group, which was started as a trading firm by Jamsetji Tata in 1868, today accounts for 2.5 per cent of India's GDP. It is majority owned by a Tata family trust that funds a range of initiatives including hospitals, universities and disaster relief.
Yet for all its ubiquity at home, Tata is still relatively unknown abroad. Until now. If the purchase of Tetley, once famous for its Yorkshire "tea folk" marketing campaigns, was its coming-out party in the UK, the offer for Corus, a company four times the size of Tata Steel, is its coming-out to the world.
Under the 68-year-old Ratan Tata, who took over as chairman in 1991, the group has been an active buyer of businesses, but these have generally been small. Now, fuelled by an economy that Standard & Poor's predicts will grow at 7.5 per cent annually for the next few years, and by a sudden willingness on the part of international banks to lend to acquisition-minded Indian enterprises, Tata is looking beyond its borders like never before.
None of the group's sprawling portfolio of companies encapsulates its growth and ambition more than Tata Consultancy Services (TCS). Already the largest of India's booming information technology outsourcing companies, it writes software, runs call centres and manages back-office systems for an array of big international names, including Virgin Atlantic and Alliance Boots in the UK, and Lehman Brothers and retail giant Target in the US. It accounts for roughly half of the group's $49.1bn (£26.1bn) market value and has set itself the goal of growing annual turnover from $2.9bn last year to $10bn by 2010.
To do so, TCS is in the midst of a massive recruitment drive. Within the next 12 months, it expects to hire 30,000 engineers - more than a third of its current workforce of 78,000 - at a rate of around 100 people every day. While some critics worry about such breakneck expansion, bigger rivals such as IBM and Accenture are pushing into India and domestic competitors Infosys and Wipro are growing at similar rates. And for now the market loves TCS, giving it about the same market value as Accenture, though the latter has six times the turnover.
S Ramadorai, the avuncular chief executive, who started at TCS over three decades ago as a trainee engineer, acknowledges the scale of the task but exudes complete confidence that the plans will work. "Our biggest challenge is managing growth," he says in an interview at his 11th-floor office in the Air India building in Mumbai. (JRD Tata, an aviation enthusiast who led the company for five decades after Jamsetji died, started Air India. It was later nationalised by the Indian government.) "It does get harder day in and day out, but then good companies will always attract the numbers."
Much of the growth will come in the city of Chennai, a technology hub where many international and domestic firms have set up shop. After a job fair earlier this year, TCS received over 26,000 applications in one day. Using the kind of automation software it sells to clients, it whittled down the pool to 13,000 candidates, who were then tested. A week and a few thousand interviews later, it offered jobs to around 1,000.
Wages for Indian engineers are on the rise and the number of companies providing similar services is increasing. As that happens, the cost advantages enjoyed by TCS and its ilk will erode. So the company is betting that the future lies in a shift of focus from low-cost outsourcing to hi-tech innovation and consulting, which can be sold at a premium to Western clients.
Like much of Indian industry, TCS is in transition: instead of making someone else's widgets, it wants to design them. For example, it is putting the finishing touches to an airline innovation lab in Chennai, where executives can walk into a room mocked up as the interior of a commercial jet and test-drive new software or any other ideas the company is coming up with.
Ramadorai says TCS is open to more acquisitions "when it makes sense", but that it will not buy companies that might dent its chunky 25 per cent margins. TCS looked at Vertex, the call-centre business now being auctioned by United Utilities in the UK, but walked away because its 3 per cent margins were too low. Instead, it is scouring low-cost markets such as South America and Eastern Europe.
Analysts expect TCS to list in either the US or London within the next couple of years as a way of increasing its profile and beefing up its balance sheet.
Yet looking out from the top floor of one of TCS's innovation centres on the "IT highway" - a road through Chennai that houses numerous technology companies - one can't help but be struck by the obstacles that stand before it. The IT highway, for one thing, looks anything but.
Across the street from TCS's sleek brick-and-glass building, which would not be out of place in Silicon Valley, a naked, emaciated child squats defecating on the side of the road. The highway is flanked by thatched huts and open ditches, while motorised rickshaws jostle among the tangle of cars and cows on the potholed road. The government promised years ago to improve the thoroughfare, but roadworks lie abandoned. Criss-crossing the city is an unfinished elevated railway system, the empty stations serving as temporary shelter for the homeless.
In contrast to China, where big infrastructure projects are relentlessly pushed, things here move at a glacial pace. "In the next few years, they need to build a lot more roads, a lot more ports, a lot more everything," says Standard & Poor's analyst Ping Chew. "When they build new highways, they're almost coming to capacity as soon as they are done."
Whether or not such projects get off the ground, Tata is used to the government being more hindrance than help.
Consider the story of the Taj Mahal Hotel in Mumbai, a palatial building on the waterfront. In the early 1900s, Jamsetji Tata was already a successful businessman, yet he was, so legend goes, denied entrance to a British hotel because he was Indian. So he decided to build his own. When it opened in 1903, the Taj Mahal was the first hotel in India to have electricity; it remains the group's flagship property.
"There is a very strong pioneering sprit here," says one TCS executive. "We all grew up with Tata soap and Tata shampoo." And if the group has its way, Tata will become a hosehold name in the rest of the world too.

Source:The Independent [22 Oct 2006]

Are you interested in Equity Market? Check-out Saturday watch on Market Outlook
Want to know market? http://knowmarket.blogspot.com/