Wednesday, December 30, 2009

When India Inc had a rough Raj in UK

S Kalyana Ramanathan / London December 31, 2009

Even before 2009 started, all initial indicators suggested that India Inc’s year in the UK would be that of the Tatas. The close of the year simply confirmed this with plenty of interesting developments leading to that foregone conclusion.

Tata’s daring double acquisition — first steel maker Corus in 2007 and later luxury car marquees Jaguar and Land Rover in 2008 — provided the perfect background for 2009 to unfold and become the year when the name Tata would be the most spoken about Indian business group in the UK.

The year started with some bad news coming from two of Tata’s most prominent investments. In January, Corus said the total job loss in its European operations would be close to 3,500 — 1,100 in South Wales, 1,400 in the United Kingdom and another 1,000 in Holland.

Corus had already embarked on a major restructuring exercise to mitigate the impact of the worst global recession since 1930. A major body blow for UK’s largest steel maker came bang in the middle of the year, when a consortium of four steel buyers for Corus withdrew half-way from a 10-year contract, forcing Corus to announce plans to mothball (temporarily close) some of its major works in the north-east.

This decision, expected to be implemented in January 2010, would lead to 1,700 job losses in the region in Corus alone and another estimated 1,300-1,500 jobs in dependent sub-contractors’ plants. Unofficial estimates from the unions suggest this number could bulge by another three times at least. Despite the problems on the ground, Tata decided to dig its heel deeper into Corus by announcing plans to drop the 12-year brand name with a massive re-branding exercise that should unfold by the summer of 2010.

The situation for Jaguar Land Rover (JLR) was a shade better than that at Corus. Despite announcing voluntary redundancies of around 2,000 jobs, the car maker put in motion a new business plan and managed to get the approval for a £340-million (nearly Rs 2,527-crore) loan from the European Investment Bank (EIB) to develop eco-friendly cars. This loan came with a caveat that it would need the UK government’s guarantee.

Among other conditions, the UK government demanded a board berth, forcing JLR to turn down the government’s support. The company, however, went on to raise twice the value of the EIB loan from other banking sources in the UK and in India.

Almost right through 2009, the global demand for luxury cars remained sluggish. In June, Tata Motors (the owner of JLR) said a severe erosion in demand for premium and luxury cars impacted the business of JLR, which posted a loss of Rs 2,400 crore for the 10 months starting June 2008, when it was acquired by Tata. JLR was strongly profitable (Rs 4,770-crore net) in the 18 months to May 31, 2008, when it was owned by Ford Motor Company of the US.

The year was not entirely bad for JLR. In February, it got a £600-million (Rs 4,460-crore) order for supplying 13,000 cars to Chinese buyers over the next three years.

Despite cutting production by nearly 100,000 units over the year, recovery was in sight towards the end of the year. JLR reported a 30 per cent jump in sales (nearly 19,000 units) in November, giving some hope that 2010 might be a better year for JLR.

Vedanta’s troubles
While the Tata Group was managing its problem-ridden acquisition in the UK from Bombay House, the UK-based metals major Vedanta Group (founded by Anil Agarwal) ran into rough weather in Orissa.

The bauxite mining project (to extract aluminium) in Orissa came under fire in the UK with human rights campaigners claiming that the $8-billion (Rs 37,4165-crore) group was trampling over the fundamental rights of the Dongria Kondh community in the Niyamgiri hills of Kalahandi district, which is considered holy by the community.

Questions were raised about the Church of England’s investment in the company and a high decibel campaign was run outside the venue where the company held its annual general meeting in July.

In October, the UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises said that Vedanta had failed to engage the Dongria Kondh in adequate and timely consultations on the construction of the mine and it did not consider the impact of the construction of the mine on the rights and freedom of the community, or balance the impact against the need to promote the success of the company.

Of business and politics
Vedanta was not the only group under severe media scrutiny in the UK. Lord Swraj Paul-controlled Caparo Group took a severe beating to its topline due to falling steel prices and global recession. The group’s topline dropped by nearly a third to £650 million (Rs 4,836 crore) in 2009 from £950 million (Rs 7,067 crore) in 2008.

With a greater focus on Indian customers in the next two to three years, the group’s CEO Angad Paul said that growth numbers would be reinstated from 2010, while he projected the overall turnover to cross £1.2 billion (nearly Rs 9,000 crore) by 2011.

While his business took a beating in 2009, Lord Paul was caught in an MP expenses scandal with sections of local media accusing him of breaking rules to claim expenses as a member of the House of Lords. Paul later denied these charges and invited an inquiry into his claims.

India-UK diplomatic relations received a major boost when President Pratibha Patil undertook a three-day visit to the UK, the first state visit by the President of India to the country in nearly two decades.

With rising unemployment numbers in the UK inching closer to 2.5 million by last count and with an eye on the next general elections set to be held by mid-2010, both the ruling Labour and Conservatives on the opposition were forced to promise tighter rules to tackle immigration.

Britain’s shadow home secretary Chris Grayling, during the party’s annual conference in Manchester in October, said his Conservative Party will, if it comes to power, introduce a ceiling on immigration to check the “gaping hole” in policy. He said, should the conservatives be elected to form the next government, measures will be introduced to check the “rampant abuse” of students’ visas.

This was later followed by a statement from UK’s Prime Minister Gordon Brown who said his government will seek to tighten rules, while he assured that his government’s new points-based system was very effective in keeping a check on immigration.

While it is not yet clear if the UK will be out of the recession in 2010, plenty of action is definitely in store. The most awaited development would, of course, be the results of the General Elections that would define the next government’s policy, not just on immigration but also those that would affect businesses.

Rising interests of India Inc in the UK, will make it a closely-watched election by Indian business groups, next in line only to a similar jamboree India witnesses every five years.

England plays down Commonwealth Games pullout fears

S Kalyana Ramanathan / London December 31, 2009

Amidst fear that England may pull out of the Commonwealth Games 2010, to be held in Delhi, the British Foreign Office and the Commonwealth Games England have issued a strong statement stressing that the country is likely to send its team to India in October 2010.

The Daily Telegraph, in a front page report today, said that due to security concerns England might pull out of the Games, scheduled to take place from October 3-14. The report suggested that the overriding fear was that terror groups from Pakistan might target the athletes participating in the game. Ann Hogbin, chief executive of Commonwealth Games England, said: “That is definitely not the case. Our current and strong intention is to field a team for the Games in Delhi next year. Of course, we have a duty of care to the athletes and other team members which we take very seriously. Despite having been given extensive briefings from relevant authorities, we have not received any indication that we should not participate in the Games and we will continue to work hard to put in place the best possible arrangements for our team.”

Suresh Kalmadi, chairman of the Organising Committee, Commonwealth Games 2010 Delhi, strongly denied the report and said: “We have not received any official intimation to this effect, and in fact the British Foreign Office as also the statement from the Foreign and Commonwealth Office (FCO) has emphasised that it has not advised any of its teams not to compete in next year’s Commonwealth Games on security grounds.”“The security commanders’ meeting was held at the home ministry recently and all Commonwealth Games Associations were satisfied with the security arrangements outlined for the Games,” he added.

Both Mike Fennell, president, Commonwealth Games Federation, and the Coordination Committee of the Commonwealth Games Federation earlier this month had lauded the preparations of Delhi Police in ensuring the secure conduct of the Games.

The Daily Telegraph today said that Metropolitan Police Commissioner Paul Stephenson, after visiting Delhi earlier this month, had voiced serious concerns about the security arrangements. However, there were no direct statements attributed to Stephenson in the report.

Monday, December 21, 2009

Caparo eyes 30% of revenues from India operations

S Kalyana Ramanathan / London December 22, 2009

UK-based diversified conglomerate Caparo Group expects a third of its revenues (sales) to come from India by 2011 against the present level of 20 per cent. While a sizable portion of the group’s presence in India is in the automobile component sector, it is planning to diversify its interests in India as supplier of components to the railways and in the oil & gas sector as well.

Talking to Business Standard, Caparo Group CEO Angad Paul said the group’s projected revenues of around £1.2 billion (over Rs 9,000 crore) by 2011 will mostly come from the investments completed over the last two-three years. The Caparo Group has a dominant presence in Europe and North America, with India emerging as a strong market for its component businesses.

Paul said revenues from India this year will be a little shy of Rs 1,000 crore. Revenues are expected to rise to Rs 1,600-2,000 crore in 2010 and to Rs 2,500-3,000 crore (around £400 million) in 2011. Also, in 2011, the group’s total revenues are expected to be around £1.2 billion, up from the present level of £650 million (nearly Rs 4,900 crore).

Lower demand for steel products and a general slump in prices drove down the group’s turnover by nearly a third from £950 million (nearly Rs 7,160 crore) in 2008 to the current year’s revenue of around £650 million, said Paul. The group, however, expects demand for steel products to rebound with 2010 revenues to be reinstated to £850-900 million (over Rs 6,400 crore).

The group’s share of revenues from India (in percentage terms) also rose considerably in the current year due to the slump in demand in the western markets. Based on its current business plans, Caparo Group’s top line is expected to be equally divided between Europe, North America and India by 2011, with each region contributing roughly around £400 million, Paul said.

Explaining the group’s ambitions in India, Paul said: “(The plan is) that we get the best customers, the best customer satisfaction, best quality and best delivery performances. It’s actually that simple. There is nothing world-dominating about it.”

Caparo Group in the UK was formed in 1968 by India-born British industrialist Lord Swraj Paul with a small engineering unit in Huntingdon (located about an hour’s drive north of London).

Today, the group has expanded to over 50 locations across the UK, North America, India, Spain and Dubai. It employs over 6,000 people worldwide. The Caparo Group established its presence in India in 1994 though a joint venture with Maruti Udyog (now Maruti Suzuki) and has a presence in over 16 locations in the country with primary interests in manufacturing automobile components. It is also a major supplier for Tata Motors’ Rs 1-lakh car Nano.

Angad Paul, the youngest among Swraj Paul’s three sons, was elevated to the role of Group CEO in 2003 with Lord Paul continuing as the chairman of the group. The group’s interests in India, which is currently restricted to automobile components and aerospace (to a limited extent), is set to expand as supplier of components to new sectors like railways and energy (oil & gas). With nearly 75 per cent equity held by the Paul family, there is no immediate plan to list the group either in the UK or India. Paul said that the immediate priority is to build size and scale in a market like India before contemplating listing in Indian bourses or raising fresh capital.

Saturday, December 19, 2009

Joint task force to try and avoid Corus' Teesside closure

BS Reporters / London/Bangalore December 19, 2009

Tata Group-owned European steel maker Corus and Britain’s National Steel Co-ordinating Committee have agreed to establish a joint task force to ensure that all alternatives to mothballing the former’s Teesside Cast Products (TCP) facilities are examined.

Appropriate preparations would continue, should mothballing be still required. The task force will also oversee individual consultations with the workforce, which will begin in January. The decision was taken after the steel committee and Teesside Multi-Union representatives met Corus officials on Thursday to discuss the situation at TCP.

“The task force will work with local and national government agencies to mitigate the potential loss of Teesside's core skill base and the effects on the local region and its economy. The unions will be engaging their own steel industry experts to assist with the process,” a joint statement said.

This is the first official announcement from Corus (along with the National Steel Co-ordinating Committee) that it is willing to look at alternatives to mothballing the plant. On December 4, Corus had said that after due consideration since May, it had decided to mothball a major part of its facilities in Teesside, that would lead to 1,700 job losses.

The government of UK’s intervention is being seriously considered as an option to mothballing. Peter Mandelson, the UK'S secretary of state (minister) for business, innovation & skills, who was in Bangalore for a lecture at the Indian Institute of Science on Friday, said: "I will be having discussions with Tata Steel management about the future of Corus' Teesside plant and I have been in contact before and we will have further discussions."

Earlier this week, Ashok Kumar, the area’s Member of Parliament had, in a debate in the House of Commons, said he had spoken to representatives of Ratan Tata on the issue and was assured that the latter would be willing to meet Prime Minister Gordon Brown if the invitation came from Brown's office directly.

Keith Hallowed GMB (Union) National Secretary who attended the talks said : “GMB will take a full part in this agreed process and GMB members will be looking for positive inputs from all parties.”

Corus added that Karl-Ulrich Köhler, a 53-year old steel industry veteran, was set to join the company as its Chief Operating Officer from February 1, 2010. Köhler succeeds Rauke Henstra, who held the position until his retirement last year. He will report to Kirby Adams, MD and CEO, Tata Steel Europe.

Köhler will be based at Ijmuiden in the Netherlands. A statement issued by the company said Köhler had worked during his 30-year steel industry career at the companies that today comprise ThyssenKrupp Steel, where he was most recently Chairman of the Executive Board and a Member of the Board of the parent company, ThyssenKruppAG.

Until October, he was President of Eurofer, the European steelmaking federation, in which role he succeeded former Corus CEO Philippe Varin. "He brings to Corus a wealth of knowledge and experience of steelmaking in Europe, as well as of the European steel supply chain and customer base," the company said.

Kirby Adams said: “This appointment demonstrates Tata Steel’s ambition to further enhance its European business, as well as the determination of this management team to emerge from the financial crisis in a strong and highly competitive position.

Thursday, December 17, 2009

Tata ready to discuss Teesside with British PM

S Kalyana Ramanathan / London December 18, 2009

The closure would lead to loss of 1,700 jobs

Hopes to stop the mothballing of Corus’ Teesside Cast Products (TCP) plant in northeast Britain were revived as a local Member of Parliament opened a fresh channel of communication between Tata Group Chairman Ratan Tata’s office and 10, Downing Street, official residence and office of the UK’s prime minister.

Ashok Kumar, MP for Middlesbrough South and East Cleveland, in a debate in the House of Commons yesterday, said he had spoken to representatives of Ratan Tata on the mothballing of TCP and was assured the latter would be willing to meet Prime Minister Gordon Brown if the invitation came from Brown’s office.

The objective of the proposed meeting is whether and how the UK government can help Corus avoid mothballing a large section of the steel works that would lead to loss of 1,700 jobs in Corus and another 1,300-1,500 job in sub-contractors’ plants that work for Corus.

“There is a 10 per cent chance that we can still avoid mothballing of this plant. Every day we delay (discussing it), the chances of keeping the plant running is diminishing,” Ashok Kumar later told Business Standard.

On December 4, Corus had announced it would proceed with the decision to mothball the TCP, some months after a consortium of steel buyers from Europe, Latin America and Asia prematurely terminated a buying contract. The consortium that includes Marcegaglia SpA, Dongkuk Steel Mills, Duferco Participations Holding and Alvory SA had in May walked out of a deal that should have seen them buy 80 per cent of TCP’s output over a 10-year period ending in 2014. After several attempts to find alternative buyers, Corus finally gave in and decided to mothball the plant by the end of next month.

Apart from budgeting £80 million for the redundancy package (on account of the mothballing), Corus claimed it had already lost close to £130 million in trying to keep the plants running while looking for alternative buyers.

“Tata has gone the extra mile to keep the plant running. They still want to keep it open,” Kumar said. He said the UK government can definitely help the Tatas overcome the current crisis in its northeast operations. “The government can help Corus find new partners from the Pacific Rim, Europe or the Far East. It can do more than just offer tea, sandwiches and sympathies,” Kumar said.

Pressure on Corus has also been mounting from the unions on account of the carbon credits the group holds. Some members of the union said Corus would actually stand to gain by mothballing parts of the TCP plant ,as it would release carbon credits worth ¤90 million that can be sold in the open market. In a response to an email from Business Standard, a Corus spokesperson said any allegation of this nature is false and without foundation.

Corus is Europe’s second largest steel producer, with its main steel-making operations primarily in the UK and the Netherlands. Corus was acquired by Tata Steel in January 2007 for $12 billion. The combined Tata Steel enterprise has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.

Friday, December 11, 2009

Gloom spreads on Teesside as hope on Tata fizzles

S Kalyana Ramanathan / Middlesbrough/london December 11, 2009

‘If the Tatas can hold their nerves, profits will come back to this plant’

It is Tuesday afternoon. Probably the reason why the high streets in Redcar, Middlesbrough, show little signs of activity. Yet, the sight seems a sharp contrast to other larger cities in the UK like London or Birmingham, where shoppers throng the streets ahead of Christmas and New Year.

Middlesbrough (population, 142,000), in the northeast of England, is the home of Britain’s largest steel maker, Corus, owned by India’s Tata Group. Local community members say that being a smaller town, the blow of the recession has been more pronounced in this steel-making capital. The recent announcement to mothball a good portion of the Teesside plants has been a very ill-timed “body blow” said members of the Community union.

On December 4, after seven months of struggle, the management of Corus said the final decision to mothball the Teesside Cast Products plant has to be taken in the larger interest of the company. The decision will take effect by the end of January and render 1,700 people in the company jobless.

Earlier this year, a group of four steel consuming companies who had earlier agreed to buy 80 per cent of the plant’s output over 10 years had pulled out, halfway through the contract. The last seven months were spent on finding other buyers to keep the blast furnaces burning. Corus is now legally challenging the decision of the consortium of Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd and Alvory SA.

Craig Brooks and Richard Green, senior union members at Community (union) say their hopes have been shattered. “We were expecting better news to break. Maybe some new equity partner,” said Brooks.

“Operating a 3 million tonne per year merchant slab plant is not sustainable without a long-term strategic partner,” a statement from Corus last week said.

Driving his eight-seater Mercedes Benz from Middlesbrough station to Corus’ Redcar plant, cabby John Finn claims the quality of the steel made in his home town is unparalleled anywhere in the world. “The cost of making is probably much lower in India. Obviously, the wages must be much lower there,” Finn said.

The region has a 150-year history in steel making. The genesis was based on the iron-ore deposits discovered here in the early 19th century. The scenario today is very different. Raw material is now hauled from all over the world to feed this plant, making it logistically a very costly economic exercise. Brooks and Green are more concerned about their local economy than the overall health of the company. “We cannot look at the big picture. We are more worried about the 150-year culture,” Green said. They proudly cite landmark structures like the Golden Gate Bridge in San Fansisco and Sydney Harbour Bridge in Australia that were built with steel made in Middlesbrough.

The news of Tatas buying the company in 2007 was welcomed by the unions. “We though the Tatas were a very ethical company, only to find little sign of that now. If the Tatas could hold their nerves, profits will come back to this plant,” said Green. He said Corus’ earlier owners had made a similar mistake, of closing a coil plate mill that led to a loss of 1,000 jobs. “Looking back, that was a very bad decision. It could have kept the plant profitable,” say the union members.

There are a handful of other employers in the region like chemicals major ICI and a few sub-contractors who work for Corus. But fallback options for the workers who will be given the pink slip seem limited. Apart from 1,700 who will lose their jobs in Corus, another 1,300-1,500 will be jobless in the sub-contracting companies.

Given the region’s already higher unemployment rates, compared to national averages, it would be difficult to find alternative jobs. Migrating out of the region is an option but a difficult one to make. Locals are also worried about the impact of the rising unemployment on social issues like crime and alcohol-induced problems. Unofficial statistics claim that crime rates in Middlesbrough are already four times the national average.

Willy, 33, sitting at the O’Grady’s ale house on Queen Street in Redcar and drinking his favourite brew, says he might hold on to his job till March. He seems not too worried about his future. He used to work at this pub before he moved to work for a Corus’ sub-contractor some three years back. “I will find another job in some pub or something. It is these guys who have been working at Corus for more than 30 years that is worrying.” Many like Brooks and Green are third-generation Corus workers. Looking for a back-up job never seemed to have occurred to them until now.

Roy Myers, the owner of O’Grady’s, said he bought the business only six years before, when economic conditions where much better. Today, he largely depends on the 27 rooms he rents out on the first floor of his pub to keep the place running. “Good food, good booze and telly should keep this place going. And then, there is God,” he says, pointing his finger up.

Whether God comes to his help or not, the UK government has announced a £60 million recovery package for the region, which should ease the blow from Corus’ decision to mothball its operations. The unions are yet not ready to give up. They are asking for a meeting with the top bosses at Tata and expect them to justify their decision with more facts. “The fight is not over yet,” says Green.

Sunday, December 6, 2009

ArcelorMittal to gain Rs 7,000 crore from EU carbon credits

S Kalyana Ramanathan / London December 07, 2009

ArcelorMittal, the world’s largest steel maker, will benefit from a windfall of £1 billion (Rs 7,000 crore), thanks to the carbon credits issued to it under the European Trading Scheme. The Sunday Times today reported that ArcelorMittal will be the single largest beneficiary under the ETS due to its dominant presence in Europe.

Under the ETS, companies are issued permits called carbon credits that allow them to emit carbon dioxide and other greenhouse gases with a specified cap. Any emission above this cap will have to be bought by the companies by buying globally traded carbon credits.

According to The Sunday Times, ArcelorMittal has been issued carbon credits far in excess of its requirements. This would allow the company to sell these credits, thus providing a windfall estimated at £1 billion by 2012.

“The investigation has also shown that ArcelorMittal and Eurofer, which represents European steel makers at the European level, have lobbied intensively in Brussels. This has included threatening to move plants out of Europe at a cost of 90,000 jobs, and asking European commissioners to meet Mittal,” the report said.

Anna Pearson, an expert on the ETS who carried out the analysis, said: “Between 2008 and 2012, ArcelorMittal stands to gain assets worth £1 billion at today’s prices for scant effort. For them, the ETS has been turned into a system for generating free subsidies.”

Luxembourg-based ArcelorMittal (controlled by India-born Lakshmi Mittal) is the world’s number one steel company, present in more than 60 countries and with more than 80 steel plants around Europe. ArcelorMittal’s key financials for 2008 show revenues of $124.9 billion and crude steel production of 103.3 million tonnes, representing approximately 10 per cent of world output.

Carbon credits have been a controversial subject, with climate warriors across the world terming it immoral, and an idea that allows prospective polluters to make money out of it.

Friday, December 4, 2009

1,700 to lose jobs in Corus' UK unit

S Kalyana Ramanathan / London December 05, 2009

Unavoidable, says management; unions demand government rescue.

After months of attempts to save its plant in Northeast Britain, Tata Steel-owned Corus finally gave in to the financial pressure and decided to "mothball" part of its operations at the Teesside Cast Products (TCP) unit, resulting in loss of 1,700 jobs. The losses are, however, 600 lesser than originally envisaged.

The mothballing was forced when a consortium of buyers (from Europe and Asia) prematurely terminated a 10-year contract with Corus entered into in 2004. The consortium of Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd (through Steel Invest Trading SA) and Alvory SA (a wholly owned subsidiary of Ternium SA) had originally agreed to buy nearly 80 per cent of the plant’s capacity over 10 years.

The estimated redundancy costs on account of the mothballing will be £80 million, according to Kirby Adams, chief executive of Corus.

The mothballed unit accounts for about 15 percent of Tata’s European steelmaking capacity. Excluding Teesside, Corus is producing at 75 percent of capacity. The Anglo-Dutch company Corus was bought by Tata Steel in 2006 (announced in January 2007) for $12 billion.

According to a statement issued by Corus, TCP’s Redcar Blast Furnace, Lackenby steelmaking and the South Bank Coke Ovens will be mothballed at the end of January. Corus intends to keep open a number of other operations.

The Corus spokesperson later clarified that technically the plant has not been "closed". Mothballing would mean the shut units could be put back into operation when the right buyer with a sufficient order size is found to warrant such a move. Said Kirby Adams, “This is the last thing we wanted and we feel deeply about what is happening. Sadly, it has become unavoidable, through no fault of our people on Teesside.”

The statement from the company further said that since the consortium broke this legally-binding agreement, from which it made an estimated $800 million profit, Corus has been diverting internal orders to TCP. The company has also been securing external orders on an ad hoc basis to keep the plant open, while an alternative future for it was sought. This has cost the company about £130m. "Operating a 3 million tonnes per year merchant slab plant is not sustainable without a long-term strategic partner," the statement added.

A Corus spokesperson later said all attempts would be made to ensure workers who will lose their jobs due to this latest decision get support, either through relocation to another site or in securing a job elsewhere. "All options will be explored," the company spokesperson said.

Since negotiations to make the consortium honour the contract failed, Corus has been pursuing legal options. However the company refused to discuss the status of the case.

Unite's (union) joint general secretary, Derek Simpson said: "This is a dark day for British manufacturing. Unite will do everything possible to prevent this closure from going ahead. The government must now act to save Teesside as decisively as it acted to save the banks last year. The plant needs urgent financial support to secure a future for the workers and prevent its closure."

Keith Hazlewood, GMB (union) National Secretary, said: "What a terrible contrast, with 1700 workers losing their jobs on Teesside, while multi-millionaire bankers gorge themselves at the expense of the tax payers.”

Thursday, December 3, 2009

Corus to drop 11-yr-old badge for Tata identity

S Kalyana Ramanathan & Ishita Ayan Dutt / London/kolkata December 03, 2009

The Tata Steel-owned steel maker Corus is preparing for a major rebranding initiative, which can result in the 11-year-old Corus badge being replaced with the Tata brand name. The £12-billion (nearly Rs 93,000-crore, at latest exchange rate) Corus’ legal identity was changed last November to Tata Steel Europe.

The change in the brand name can show up on the company’s locations, stationary and vehicles. The rebranding process, if approved by the company, is expected to commence next summer. A Corus spokesperson said: “Tata Steel can confirm its intention to adopt the Tata Steel brand as the visual identity of its Corus operations, continuing a transition that began more than a year ago when Tata Steel Europe became the legal name for Corus. Should the next stage of this transition get final approval, implementation is expected to start by the middle of 2010.”

Corus is yet to formally decide on the makeover. According to sources in Tata Steel, the company had appointed in-house teams and external agencies to work out a proposal, which will have to be ratified by the management. The cost of this rebranding exercise is not known yet. “If approved, the implementation will be in a phase-wise manner,” the sources said.

Corus, as an entity, was founded in 1999 with the merger of British Steel and Koninklijke Hoogovens. In April 2007, Corus became a subsidiary of Tata Steel in a deal which cost the Indian steel maker $12 billion (over Rs 55,000 crore, at latest exchange rate).

Corus is the single largest unit under the Tata Steel banner. It contributes nearly 70 per cent of the group’s 28-million-tonne crude steel production capacity and employs half of its 80,000-strong workforce.

Tata Steel has rebranded Thailand’s Millennium Steel — which it acquired in 2005 — as Tata Steel Thailand. According to sources, this rebranding as Tata Steel Thailand is still under different stages of implementation. However, Singapore-based NatSteel, which was acquired in 2004, is yet to be rebranded.

“We are not rebranding NatSteel as yet. We are taking up Corus now,” sources said.

Apart from Corus, the other major brands Tata owns in the UK are Tetley Tea and Jaguar-Land Rover (JLR). While the websites of Corus, Tetley and JLR carry the ‘Tata Enterprise’ tag, Tetley Tea carries the Tata name on its products as well. In the case of Corus, it is not yet clear how the Tata brand name would reflect on products that have a presence in over 50 countries across the world.

Tata Group reportedly declines UK loan offer

S Kalyana Ramanathan / London November 29, 2009

The £10-mn loan was offered to develop electric cars in the UK.

Tata Group, which owns British car maker Jaguar Land Rover, has rejected a £10 million loan offered by the UK government to develop electric cars at the group's European Technical Centre, according to a report in The Times today.

A Tata Motors' spokesperson refused to comment on this.

The £10-million loan was part of the Automotive Assistance Plan announced last month by UK Business Secretary Lord Peter Mandelson, to help car makers in the UK recover from the worst recession to hit the industry in recent memory and also help in developing new technologies in the automotive sector.

This development is another clear sign of the strained relationship between Tata Group and Mandelson's Department for Business, Innovation and Skills. Earlier this year, Tata's JLR and Mandelson's office were engaged in intense negotiation to secure a loan guarantee from the UK government for a £340 million loan approved by European Investment Bank. This negotiation finally broke down and Tata Group finally raised the money from other sources in India and the UK.

It was widely reported that the negotiations broke down on account of some of the conditions put forward by Mandelson's office, including a demand for a berth on the board of JLR that would give the UK government a say in the car maker's future business plans. JLR had openly rejected the idea of having a UK government representative on its board.

JLR's CEO David Smith, in an interview to Business Standard earlier, had said JLR would accept support from the British government only on regular commercial terms.

David Bailey, of Coventry University Business School and an expert on the Midlands (in Britain, where Tata’s technical centre is) economy said, "The government wants to make UK the centre for making electric vehicles. The £10 million loan to Tata was for making electric cars in the UK. I hope the Tata Group (despite rejecting the loan) still intends to make electric cars in the UK."

Last week, Tata Motors' vice-chairman Ravi Kant, in an international automotive conference in London, attended by Mandelson, reminded the audience that the Tata Group was as British as any other British Group and the UK government must support the manufacturing sector as much as it is supporting the financial services sector.

Sunday, November 29, 2009

Tata Group as British as any British company: Ravi Kant

S Kalyana Ramanathan / London November 26, 2009

Tata Motors’ Vice-Chairman Ravi Kant said Tata Group should be perceived as British as any other British group or company by people here.

In a speech delivered at the International Automotive Summit in London, hosted by the industry body, The Society of Motor Manufacturers and Traders (SMMT), Kant said the Group’s presence in the UK is formidable, with 19 businesses employing over 47,000 people in this country.

Kant’s projection of the Tata Group as an integral part of the British industrial landscape comes at a time when Tata Motors’ owned Jaguar Land Rover had faced some challenges in convincing the UK government to lend support in raising money.





Tetley Tea


£271 million

Tata Motors European

Technical Centre


Set up by Tata Motors

Corus Group


$12 billion

Jaguar Land Rover


$2.3 billion

The summit was attended by Britain’s Secretary of State for Business, Innovation and Skills, Lord Peter Mandelson. Earlier this year, Tata Group was in a series of intense negotiations with Mandelson’s office for a guarantee from the UK government for a £340 million loan approved by the European Investment Bank. The negotiations failed to bear fruit, forcing JLR (Tata Motors) to raise money on its own. Since the breakdown of negotiations, JLR has managed to raise twice as much money (around £670 million) on its own from sources in Europe and India. According to media reports, the negotiations between JLR and the UK government broke after the group refused to accommodate a government nominee on its board.

Highlighting the significance of the manufacturing sector in the UK (that is today seen to depend on its financial services sector for economic prosperity), Kant said, “UK needs to take care of manufacturing and not just financial services. Even the great city of London cannot carry the entire UK economy on its back.”Nearly 65 per cent of Tata Group’s $71 billion revenue today comes from outside India. Outside India, Tata’s strongest presence is in Britain.

Brown vows to tighten immigration rules

S Kalyana Ramanathan / London November 13, 2009

Only a few months away from a general election, British prime minister Gordon Brown today promised to tighten immigration rules. The change will be fair and considerate to the needs of domestic industry, he said.

Defending the labour government’s points-based system for allowing non-EU immigrants to settle and work in UK, Brown said that this system had helped bring down net-immigrants into the country by 44 per cent.

“It is because we believe those who look to build a new life in Britain should earn the right to do so that we will now push forward the points-based system to the next stage, by introducing a points-based test not just for entry but also for permanent residence and citizenship,” Brown said in a speech delivered in West London today.

Skills in engineering roles, skilled chefs and care workers could soon be taken off the “shortage list”, a category that allows more flexible immigration rules for non-EU workers to fill up. “We set up the expert Migration Advisory Committee to advise on the effects of the points-based system on the labour market, and while their latest report confirms that there remain skills we need to recruit from abroad, it confirms also that we no longer need to recruit civil engineers, hospital consultants, aircraft engineers and ships’ officers from abroad -- and so these and other jobs are being taken off the list.”

Brown said a case for raising the minimum level of courses for which foreign students can get a visa will also be looked into, based on a report to be given by the Home Office and the Department for Business, Innovation and Skills, and “key stakeholders”. Brown said his government will also examine the case for introducing mandatory English language-testing for student visas other than for English courses.

Brown’s new policy initiative also comes at a time when his government is under constant attack for keeping UK’s borders too porous and allowing a large number of migrant workers to compete with locals for a shrinking job market,

Brown today said, “I have never agreed with the lazy elitism that dismisses immigration as an issue or portrays anyone who has concerns about immigration as a racist.”

Brown also said criminals from within the EU will be treated the same way as those from outside the EU and offenders who are sentenced to more than 12 months in jail will be deported, irrespective of their country of origin.

Conservative leaders in the opposition said they were not appeased by Brown’s new policy. Shadow home secretary Chris Grayling said: “Gordon Brown’s speech had a completely hollow ring to it.”

Earlier last month, at his party’s annual conference, Grayling had said if the Conservatives comes to power, their government would introduce a ceiling on immigration to check the “gaping hole” in policy. He has also promised to put a check on the “rampant abuse” of students’ visas.

Tuesday, November 10, 2009

Incredible India struggles for an incredible recovery

S Kalyana Ramanathan / London November 11, 2009

A two-year long global recession, Mumbai terror attack and then swine-flu, each coming on the back of the other. The tourism industry in India could not have expected anything worse than this. It however is starting to see its own green-shoots popping up. October 2009 saw the rate of fall in foreign tourist arrivals making a sharp decline to less than one percent against a 17 per cent fall in January 2009 (over January 2008). The Ministry of Tourism believes this is the beginning of recovery of the industry and things can only get better from here.

India’s Union tourism minister, Selja, addressing the media here on the eve of the World Tourism Mart in London said with 6 per cent of GDP and 9 per cent of employment in India coming from tourism industry, recovery of this industry will be paramount to the overall economic recovery as well. Global recession should have ideally driven more foreign tourists to India, given that money travels much farther in a relatively low cost economy like India. But the November 2008 terror attack in Mumbai and mid-2009 swine flu scare denied India to cash in on this opportunity, she said.

Selja said the next big opportunity for India’s tourism industry will be the Commonwealth Games that Delhi will host in October 2010, when nearly 100,000 tourists are expected to arrive during the 15-day period. The minister assured that Delhi will be ready with the estimated demand for 40,000 hotel rooms during the games. “We already have 10,000 and by mid next year, we should be ready with the rest,” she said.

Between January and July 2009, fall in arrival of tourists was successfully arrested from a peak fall of 17.6 per cent in January to a growth of 0.6 per cent in July 2009. However, arrivals dropped sharply again in August to 8.6 per cent and another 4.1 per cent in September, following fear of swine-flu. Despite the optimism of a gentle recovery, the overall numbers for the full year 2009 is expected to be lower than 2008.

In 2008, India welcomed 5.3 million tourists, while the arrivals between January and October 2009 has been only 4.2 million, suggesting the last two months of this year will not make up for the shortfall witnessed until October 2009.

Despite the fall in foreign tourist arrivals, foreign exchange earnings in US dollar terms has improved considerably. While the forex earnings in January shrunk by a third over January 2008, it had increased by 17.8 per cent in October, due to the weakening of the dollar against the rupee (and other major currencies). However the overall earnings between January and October this year is still 10.3 per cent less than the earnings for the same period last year.

Despite the recession, US and UK continue to hold the top two slots for “source countries”, contributing 15.73 per cent and 15.67 per cent, respectively. The position of these two countries and their contribution to arrivals has remained unaltered over the last two years.

The minister said state- owned India Tourism Development Corporation could be one of the PSUs in which the Union government can disinvest.

5G to set up base in northeast UK

S Kalyana Ramanathan / London November 09, 2009

Chennai-based software company Fifth Generation Technologies India (5G) will soon join a long list of small and large Indian businesses to set base in the northeast of Britain, with its new research and development centre in Sunderland Software City.

The company will commence its operations in this new centre by mid-November and will initially focus on using the centre as a sales and marketing platform for fresh businesses in Europe. The company plans to invest £2 million in this new centre.

Ananth Seshan, CEO and MD, said 5G would also use the strong academia base in the region (like Durham, Newcastle and Teesside universities) to develop non-invasive software for improving energy efficiency in the manufacture sector.

5G specialises in developing business intelligence platforms, analytic applications and performance management products in the manufacturing sector.

Enough food buffer, also ready to import: Pranab

S Kalyana Ramanathan / London November 10, 2009

Pranab Mukherjee Finance minister Pranab Mukherjee said that despite the shortfall in agriculture production, India has adequate buffer stocks of rice and wheat and the government will import what is needed to maintain demand and supply.

Addressing the media here on Sunday evening after attending the G20 Finance Ministers' meet in Edinburgh over the weekend, Mukherjee said shortage of rainfall in the country will have some impact on GDP growth in the current financial year, now estimated at around 6.5 per cent. He, however, added the country holds eight million tonnes and seven million tonnes of wheat and rice buffer stock, respectively.

"Agriculture output has been reduced due to adverse impact of shortfall in rain or floods in some parts of the country. There might be some shortfall of agricultural production which will adversely impact the overall growth which would have given more than 6.5 per cent GDP growth. Now we are assessing that it might be around 6.5 per cent. There is inflationary pressure, but to what level it will go beyond the manageable limit is yet to be seen. Seasonal factors have contributed to high prices of some of the essential commodities. I do hope that it will be possible to have a moderate impact after a month or so, particularly those that are affected by the seasonal factors," Mukherjee said.

"Therefore, though there might be shortfall of grain production, to depress the inflationary pressure we have taken adequate care to maintain the demand and supply position by allowing commodities of shortfall to be imported. Most of these foodgrains)come under OGL (open general licence) without any duty and imports are taking place," he added.

Mukherjee reiterated the Prime Minister's assessment yesterday that if rainfall is adequate, India's GDP will have a higher projection (next year), of more than 7 per cent. "I am also optimistic to that extent," he said.

For want of clarity on details, India is yet to take a stand on the proposed tax on financial transactions (popularly known as the Tobin tax) under the G20 forum, he said. "I would, however, like to make a general observation. Taxation laws have territorial jurisdiction. Article 265 of the Indian Constitution clearly says that no tax can be levied other than under the authority of the law. The competent authority to pass law in respect of this is the Parliament of India," he said.

Mukherjee said the current levels of fiscal deficits cannot be sustained for a longer period of time. "By the medium term, India will have to reduce the fiscal and revenue deficit. By 2012, we will have to reduce the fiscal deficit from the present level to 4 per cent and revenue deficit to 1.5 per cent," he said.

On India's recent decision to import 200 tonnes of gold, Mukherjee said that in value terms this is very insignificant. While India's foreign exchange reserves currently stand at $285 billion, the import value of 200 tonnes of gold will be around $6 billion only, he said.

Thursday, November 5, 2009

India offsets M&S' strong growth

S Kalyana Ramanathan / London November 05

Marks & Spencers, the British retail group, today said a strong 21 per cent growth in operating profits in its international operations were offset by tough market conditions and start-up losses in its India and China business.

The retail group today reported an international operating profit before property disposals at £65.9 million. In its first-half financial results for 2009-10, reported today, the group said it was, however, on track to open 10 stores with Reliance Retail over the next two years, spread over 200,000 sq ft. Two retail outlets were opened during the first half of this financial year, it said. On March 31, Marks and Spencer Reliance India Pvt Limited, a 51 per cent subsidiary of the group, completed the acquisition of 100 per cent of the issued share capital of Supreme Tradelinks Pvt Ltd, which up until that date was the group’s franchisee in India, for cash consideration of £6.1 million and transaction costs of £0.8m, it said. The acquisition contributed £2.9 million to sales and a £1 million loss to operating profit in the period since acquisition.

Monday, November 2, 2009

Online MS Office for Rs 120 a month!

S Kalyana Ramanathan / London November 03, 2009

For just about Rs 120 a month, you can now access the online version of Microsoft’s Office ’07. Thanks to ‘cloud computing’ company Nivio, it is now possible to rent MS Office for a fraction of its shelf cost and use it at the click of an icon without having the memory-guzzling software residing in your computer. And, it’s completely legal.

Nivio, a four-year-old Swiss technology company promoted by Sachin Duggal, 26, and his partner, Saurabh Dhoot, 25 (of the Videocon family), provides storage and rent-a-software service to over 2.5 million online customers around the world.

Duggal belives the potential for the rent-a-software business in India is enormous, given the rampant piracy in the country due to high cost of professional software and easy access to illegal copies. A typical Microsoft Office Suite, depending on its components and buyer profile could cost around Rs 14,000 for a single user licence, making it a prime target for pirates.

Duggal says most users in India do not relate the price of the software with its usage, leading to wide-scale piracy. Nivio finds a killing business proposition in this anomaly, in providing legal software at a price making piracy unprofitable. Duggal believes that with software companies’ never-ending war against piracy, his business model will bring incremental customers and revenues that have so far been left untapped.

Nivio also plans to take its rent-a-sofware business from its current online version to a complete offline format. It plans to provide a complete hardware suite for an upfront and one-time fee of Rs 3,000 and a monthly subscription of Rs 1,100, for which customers will get a set-top box (replacing a computer's CPU), an LCD screen, mouse and keyboard. This new offering will also come with a broadband connection. Duggal says a typical broadband connection in India anyway costs Rs 700 a month, thus bringing down the effective cost of his new product to just Rs 400 a month. The new hardware suiteNivio plans to offer is also expected to be super-energy efficient. “On a eight hours a day usage basis, a typical computer consumes energy worth Rs 220 a month. Our product will have a monthly energy bill of Rs 35 only,"Duggal contends. This Rs 185 a month saving on energy bill further brings down the monthly cost to Rs 215.

The company has so far raised $8 million in equity and plans to raise another $11.5 million in two tranches — $3.5 million soon and another $8 million in about 16 months. Duggal says the enterprise value (EV) of his company, based on the last stake sale, is $100 million and he hopes to make it a $1 billion EV in the next six years. The company is presently owned by 17 shareholders, of which the only institutional investor is Deutsche Bank Pension Scheme.

Tata Motors mulls letting assemblers brand Nano

S Kalyana Ramanathan / London November 2, 2009

We call it Nano, they don’t have to, says Vice-Chairman Ravi Kant

Seven months after the launch of Nano, Tata Motors is toying with the idea of letting local garage assemblers put together the world’s cheapest car and also sell it under a brand of their own.

The company, which is revisiting the concept of distributed manufacturing mooted by Chairman Ratan Tata when he first talked of the Rs 1 lakh car several years ago, will become the world’s first to attempt such a "federal" structure of manufacturing.

Speaking at The Economist Innovation conference in London on Friday, Tata Motors Vice-Chairman and former managing director Ravi Kant said with the new Nano plant likely to start commercial production in the last quarter of this financial year ending March 2010, the company may allow enterprising assemblers to set up micro-assembly sites across the country, with each producing some 10,000 cars a year.

Ravi Kant"We call it Nano, they (assemblers) don't have to," said Kant, who received the The Economist Innovation award 2009 (for business process) on behalf of Tata for developing and rolling out the world's cheapest car.

Experts, however, said handing over the branding power to small assemblers may not be easy. For one, the perceived and actual safety of a car has always been associated with the brand.

Tata Motors will have to be extra careful about safety concerns after a small number of Nanos sold in India reported technical problems last month, forcing the company to conduct a preemptive audit of the quality of cars already shipped as well as those in the inventory.

“The Indian car market has still not come to this stage. Given that a car like Nano is three or four year’s investment, customers will still go for established brands from strong OEMs (original equipment manufacturers; in this case Tata Motors). So this idea may not fly very well,” said Abdul Majeed, leader, automotive practice, with PricewaterhouseCoopers in India. There would also be concerns about after-sales services and spare parts, he added.

Ratan Tata spoke of distributed manufacturing when he first went public with his desire to make a Rs 1 lakh car, as Nano was referred to for years until it was christened. Though this idea was never officially abandoned, the company spent the next few years absorbed in developing the car and setting up the new plant, which had to be shifted in a hurry from Singur in West Bengal to Sanand in Gujarat owing to problems over land acquisition.

The Sanand plant is expected to go into commercial production in the January-March quarter of 2010 with an initial capacity of 250,000 a year, scalable to 350,000.

Nano is expected to be launched in Europe in 2011. Although its price here is yet to be decided, Kant said it may well be the cheapest to hit these markets. On the potential competition to Nano, Kant said it might take a combination of a global car maker and an Indian one to mount a credible challenge. “I am not saying it cannot be done alone, but we clearly have the first-mover advantage,” he said.

* 80 per cent of Nanos sold in India so far are the middle-and top-end versions (priced way above Rs 1 lakh)
* 45-50 per cent Nanos are chauffeur-driven in India
* Tata Motors holds 37 patents connected with Nano
* Assemblers from over 50 countries have shown interest in it
* During its six-and-a-half years in development, the material costs of Nano went up three times, but the car came out on the promised price

Friday, October 16, 2009

Global banks in UK to follow G-20 pay code

S Kalyana Ramanathan / London October 15, 2009

The UK subsidiaries and branches of leading overseas banks have agreed to support the reforms related to bankers’ pay that were agreed by the G-20 in Pittsburgh last month, the Financial Services Secretary, Lord Myners, has said.

Bank of America Merrill Lynch, Citigroup, Credit Suisse, Goldman Sachs International, JP Morgan Securities, Morgan Stanley, Nomura and UBS have confirmed their commitment to the FSA Rule and the supporting Code on remuneration practices. These were published in August and would come into force on January 1, 2010 (and cover payments for performance year 2009).

European Union banks with major branches in London, like BNP Paribas, Deutsche Bank and Société Générale, confirmed that they would implement the G-20 agreement in accordance with the rules of their home regulators and voluntarily comply with the norms for their UK-based employees.

In a joint statement, the banks said, “In a competitive and global business, banking remuneration must be consistent with effective risk management and there must be national and international consistency on this issue. We will work with the FSA (Financial Services Authority) and regulators in our home countries in adopting the reforms, recognising that all G20 nations have also committed to their implementation to ensure a level-playing field.”

Lord Myners said, “The financial services industry must take a responsible and long-term approach to remuneration if it is to retain its competitiveness and regain public trust. I will be writing to the chairs of their parent companies’ remuneration committees to share with them the outcome of this meeting.”

The reforms will have little impact on the Indian banking sector for many reasons, according to experts. For one, the remuneration of senior bankers in India is much lower than what their counterparts in the west get. Further, the Reserve Bank of India has a strong control over bankers’ remuneration, though the mechanism is not transparent. Indian banks are yet to make any statement on their stand after the Pittsburgh meeting earlier last month.

Under the new G20 guidelines, major financial institutions are to have their independent remuneration committees. Also, the institutions are supposed to ensure that the total variable pay is consistent with ensuring their ability to maintain a sound capital base over the long term while managing the risks that arise if they cannot pay competitively to retain the right people. Also, multi-year guaranteed bonuses can’t be a part of future arrangements – any minimum bonus agreements have to be limited to one year. Poor performance will lead to a considerable contraction of bonus payments, including through clawback arrangements.

Failure to implement policies in line with the FSB standards will result in corrective measures by the FSA to offset the extra risk due to this. These may include asking the institution concerned to hold additional capital.

Monday, October 12, 2009

UK reprimands Vedanta over Orissa mining project

S Kalyana Ramanathan / London October 13, 2009

Company accused of overlooking local community’s interests.

The UK government today pulled up metals major Vedanta Resources over its controversial mining project in Orissa, stating that “a change in the company’s behaviour is essential”.

The UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises upheld Survival International’s allegation that Vedanta Resources has not complied with Chapter V(2)(b) of the guidelines. The UK NCP concluded that Vedanta failed to put in place an adequate and timely consultation mechanism to engage the Dongria Kondh, an indigenous community whose health and environment would be directly affected by the company’s plans to construct a bauxite mine in the Niyamgiri Hills in Orissa.

The UK NCP also concluded that Vedanta failed to engage the Dongria Kondh in adequate and timely consultations on the construction of the bauxite mine and it did not consider the impact of the construction of the mine on the rights and freedom of the community, or balance the impact against the need to promote the success of the company.

The verdict came after a nine-month investigation into a complaint submitted by Survival International against Vedanta’s proposed bauxite mine on the Dongria Kondh’s sacred mountain. The complaint, upheld by the government, was brought under the OECD Guidelines on Multinational Enterprises — the key principles for ethical corporate behaviour.

Human rights campaigners have been up in arms against Vedanta’s mining project in Orissa that has allegedly affected the lives of tribals in the state. Apart from holding pickets outside the company’s annual general meeting venue in London, campaigners had also recently forced investors like the Church of England to reconsider their position in the company.

A Survival International spokesperson said the UK government’s latest stand on this issue was a moral victory for campaigners, though it may have no obligatory impact on the way the company conducts its business. Survival International’s Lindsay Duffield said, “Public opinion can have a very serious impact on the company’s operations. We do hope that the OECD guidelines would have more serious impact in the long run.” Duffield further said that after nine months’ investigation, Vedanta did not provide a “shred of evidence” to vindicate its position in the Orissa project.

Vedanta Resources did not answer the queries raised by Business Standard following the UK government’s statement.

In July this year, after persistent campaigning by human rights activists, the Church of England’s Ethical Investment Advisory Group agreed to meet the management of Vedanta Resources to assess for itself if it should continue to stay invested in the company. The Church of England’s investment in the company is valued at an estimated £2.5 million. The results of this investigation, however, is yet to be made public.

Though the possible divestment by such groups cannot have a direct impact on the company, they can create strong public opinion against the company.

Friday, October 9, 2009

National Grid to outsource work to TCS

S Kalyana Ramanathan / London October 09, 2009

UK-based electricity and gas company National Grid today said it has decided to outsource some its back office administrative support services to Tata Consultancy Services (TCS) in India, even as the workers’ union represented by GMB protested this move.

After months of negotiation with the union representatives, National Grid today said it had decided to outsource some of its “Shared Services” to TCS in India. The value of this order bagged by TCS is not known yet.

The job losses at National Grid on account of this could be around 300. A company spokesperson said the consultation process with the affected employees will start soon and employees who can be accommodated into other functions and departments would not have to lose their jobs. However, there will be some compulsory job losses, and the company will help those affected find alternative jobs.

Steve Noonan, director of UK Shared Services at National Grid, said: “We recognise that these are sensitive and difficult times for those employees affected by the result of the review. However, National Grid has a great track record in looking after its employees through change. We strongly encourage staff to take up positions elsewhere in the company and to investigate retraining for other available roles. And for those who choose to leave the company, we offer generous severance packages, and we provide outplacement support to help them find alternative work.”

A statement from the union said it will not accept that National Grid, which makes multi-billion profits as a monopoly supplier, has the right to export these jobs from the UK at a time of very high unemployment across the land.

According to union estimates, the company’s Newcastle site will be closed with a loss of 189 jobs in total, of which 163 are permanent jobs. The other 137 job losses will be at the Warwick and Northampton sites. The Newcastle jobs are being outsourced to India.

Tory chief says much expected of Tata's Corus

S Kalyana Ramanathan / London October 09, 2009

Conservative party head David Cameron has said Corus and British steel industry should be "at the heart of our economy." In an interview to a regional paper, Scunthorpe Telegraph, Cameron said any form of government subsidy or protection for the industry is not the right answer. "Corus is a great British company, employing many thousands of people in our country," he told the Telegraph. "We want a strong British steel industry, it should be at the heart of our economy and as we look for recovery in the economy and recovery in things like construction, housing, commercial property, the car industry, clearly steel making is a very important part of the whole process."

UK Conservatives vow to cap numbers of migrants

S Kalyana Ramanathan / London October 09, 2009

Britain’s shadow home secretary Chris Grayling on Wednesday said his Conservative Party will, when it comes to power, introduce a ceiling on immigration to check the “gaping hole” in policy. He said, should the conservatives be elected to form the next government, measures will be introduced to check the “rampant abuse” of students’ visas.

Speaking on the third day of the party’s annual conference in Manchester on Wednesday, Grayling said he would encourage immigrants to live and work in the UK, if their talent and skills would help fix the domestic economy, but will introduce a cap on the number of immigrants who can settle in the UK.

“A Conservative government would be “robust” about immigration. (But) there will be no open door to Britain,” Grayling said.

Grayling said the “gaping hole” in the student visa system would be closed and there would be a crackdown on traffickers. Britain would have its own, specialist border police force. “I will not tolerate more of the chaos of the past few years,” he added.

Though the current Labour government does have checks on immigration through a two-year-old, points-based system, it did not have a policy of putting a quantitative cap on the number of immigrants who can settle and work in the UK. The proposed policy by the Conservatives, should they be elected, will be more in line with the American system of issuing a fixed number visas for any given year.

Britain is getting ready for its next general election, to be held before next June. The latest opinion polls have indicated the 12-year Labour government has very little chance of retaining power, falling behind the Conservative party and the Liberal Democrats. The Conservative party is led by David Cameron, 42, who will be the next Prime Minister should his party win the elections.

Thursday, October 8, 2009

Jaguar secures Rs 1,300 cr loan from SBI

S Kalyana Ramanathan / London October 08, 2009

Tata Group-owned British car maker Jaguar Land Rover today announced it had secured a £175 million (Rs 1,300 crore) from State Bank of India. This comes over and above the $90 million (Rs 420 crore) committed export financing facility with ABC International Bank, the company said.

In a statement to the media, the company said it has been in the process of enhancing its funding facilities and made significant progress. In all, £500 million (Rs 3,700 crore) of new facilities have been completed this year, including the facilities from SBI and ABC, and those secured earlier in the year from Standard Chartered Bank, Bank of Baroda, and Burdale Financial Ltd, a subsidiary of the Bank of Ireland.

JLR’s Chief Financial Officer Kenneth Gregor stated: “We are pleased our funding plans are progressing and appreciate the confidence shown by our banking partners in our business.”

Barely two months earlier, after prolonged negotiation for a guarantee from the UK government for a £340 million loan (Rs 2500 crore) from European Investment Bank, the company decided to pursue other options to raise funds on its own.

Fresh loans from banks in India and other countries that the company has managed to secure should help it tide over what is becoming one of the most challenging times in its history. Due to weakening demand for expensive cars globally, the company in the past year had reported heavy losses. As part of its restructuring, JLR had recently announced it would rationalise some production facilities that could lead to closure of one of its plants in the Midlands. It said this plan, to be implemented by the “middle of next decade”, will not result in any job loss. It further said its new plan will lead to fresh investments in new technologies and products and is likely to add 800 more jobs by the middle of 2010.

Over the past year, production in JLR was reduced by more than 100,000 units; spending and costs were cut; jobs reduced by 2,500; pay frozen and bonuses cancelled. “But this was not enough to offset the full magnitude of the downturn and the company swung from profit in 2007 to significant losses over the past 12 months. This was not a sustainable situation, the company had said.

Lakshmi Mittal tops football rich list

S Kalyana Ramanathan / London October 8, 2009,

ArcelorMittal’s boss and India-born steel billionaire, Lakshmi Mittal has topped the Football Rich List 2009-10 as ranked by football magazine

According to this British magazine, 59-year-old Mittal, who bought a 20 per cent stake in Queens Park Rangers Football Club for £200,000 in December 2007, is considered the wealthiest man among football club owners, with an estimated value of £18.4 billion at his command. With the stake acquisition in the QPR FC, Mittal made his foray into the club owners group two years earlier.

The wealth estimate of Mittal is based on his stake in the steel giant, valued at £15.4 billion, and “another £3 billion for past dividends and property”, the magazine’s website has said. Mittal’s son-in-law Amit Bhatia sits on the board of QPR as its vice chairman.

With the latest ranking, Mittal effectively replaces Sheikh Mansour bin Zayed Al Nahayan, (brother of Abu Dabhi’s ruler) whose wealth is now estimated at £17 billion and owns Manchester City FC.

FourFourTwo is a monthly English football magazine that started in 1994 and has a circulation of 112,000 copies a month. It derives its name from the basic formation in British football (4-4-2), with 11 players on each side.

India wants to open legal sector to foreign firms

S Kalyana Ramanathan / London October 03, 2009,

But it would tread cautiously on this decision

Union Minister for Law and Justice M Veerappa Moily said India was committed to opening its legal sector to foreign law companies as agreed under the World Trade Organization (WTO) negotiations, but would tread cautiously on this decision. At the same time, the country would not do anything that undermined the autonomy of the Bar Council of India, he added.

Interacting with the Indian media in London, Moily said since the issue was under consideration in the Bombay High Court and the bar council had some reservations on opening the sector to foreign companies, the matter needed to be dealt with caution. He hinted at reciprocity issues involved, where countries like the UK also needed to offer a similar privilege to Indian lawyers who wish to practise here.

“(It is in) active consideration of the government of India. But we will not overreach and will take the Bar Council along,” Moily said.

Moily was here as a state guest for the inauguration of the country’s new Supreme Court, which from October 1, will be the final court of appeals, replacing the House of Lords for performing this function.

The opening of the legal sector has been a contentious issue and Indian lawyers have resisted this move, as they feared they would lose to well-bankrolled foreign firms.

Leading law practitioners in India also face the disadvantage of not being able to treat their vocation as a business, whereby they cannot advertise their practice like other regular businesses, nor can they seek clients like other business consulting firms.

Moily said several steps had been taken to hasten judicial reforms in India. His ministry plans to set up 5,000 Gram Nyayalayas (village courts), the first of which was opened today (on the occasion of Gandhi Jayanti).

By March 2010, the country would have 200 village courts that would deal with pending cases in rural areas, Moily said.

The government would also set up “high value commercial courts” to deal with litigation involving large sums of money, he said, adding this move would improve investor confidence in India.

He also said the government would actively work towards reducing the number of cases the government files. “The government should not be the biggest litigant,” he said. In the next three to four years, the average pendency of cases would be brought down to one year, he said.