Wednesday, September 30, 2009

UK sets Nov 9 deadline for Kraft's Cadbury bid

S Kalyana Ramanathan / London October 01, 2009,

UK’s Takeover Panel today asked US confectioner Kraft Foods Inc to make its final offer (popularly known as “put-up or shut-up”) to take over Cadbury Plc by November 9, or announce that it does not intend to make any fresh offer at all.

This ultimatum from the regulator comes a month after Cadbury rejected Kraft’s 745p-a-share (Rs 571 a share) takeover offer, which valued the UK confectioner at £10.2 billion ($16.3 billion, or Rs 79,000 crore).

Should Kraft fail to make an improved offer, it would be barred from making any offer for six months after the issued deadline, according to takeover regulations in the UK.

Kraft had made a proposal to the Cadbury board on August 28, which was rejected in a letter to the chairman and CEO of Kraft on August 31.

On September 7, Kraft published the terms of this proposal and the board of Cadbury confirmed that it had rejected the proposal on the grounds that it made no strategic or financial sense for Cadbury and fundamentally undervalued the group and its prospects. “The board’s view has not changed since then and the board reiterates its rejection of Kraft’s approach,” Cadbury said today.

Cadbury Chairman Roger Carr said: “Cadbury has a strong position in the global confectionery market and the board is confident in Cadbury’s standalone pure-play strategy and growth prospects. We have made our position on Kraft’s proposal very clear and we welcome the panel’s decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity.”

Any prospective change in Cadbury’s ownership or future structure, should the suitor plan to merge it with itself, will have a direct impact on the confectioner’s operations in India as well. Cadbury considers India as one of its most important market in its global operations.

The £5.4-billion company, which operates out of 60 countries, names India as one its strongest growth drivers among other markets like the UK, the US, Australia, France, Mexico, Canada, Brazil, Japan, South Africa and Turkey. Recent investor statements have shown that primary growth for this company in Asia has come mainly from India, with Asia as a market contributing 6 per cent of its total revenues but registering growth at 12 per cent a year, while overall growth for the company has been around 7 per cent.

While India and Japan are two major markets for this company in Asia, it is yet to make a strong presence felt in a market like China.

Since the last offer from Kraft, the share price of Cadbury has moved up to around 800p.

Tuesday, September 29, 2009

Ratan Tata bags award from The Economist

S Kalyana Ramanathan / London September 29, 2009

UK-based news magazine, The Economist, today named Tata Group Chairman Ratan Tata as the winner of the eighth edition of its annual ‘Business Process Innovation Award’ for the successful development and launch of the world’s cheapest car, the Tata Nano. In a statement, the magazine said Tata was selected for “...forging a company that is shaping businesses across the globe and changing the way Indian companies conduct business. The company is also responsible for inventing the Tata Nano, the world’s lowest-cost car. Innovative methods through which the car is designed and manufactured enable Tata Motors to offer a more affordable, safe and efficient form of mobility to families in emerging markets.”

“Innovative ideas are everywhere,” said Mark Langley, executive vice-president and COO of the Project Management Institute. “What we salute with the Business Process Award is rarer: The implementation, through effective projects and programmes that translate ideas into lasting change. Tata Motors’ Nano challenges the way automobiles have been made and marketed for a hundred years. The application of project management is testimony to Tata Group’s record of refining its processes, from boardroom to manufacturing floor, and promises transformation of an industry facing a billion new customers over the next generation.”

This award from a prestigious UK-based magazine comes at a time when Tata’s acquisition of British car brands Jaguar and Land Rover is being severely criticised, for reporting big losses after the take-over and also the most recent decision to rationalise one of its plants in the Midlands.

Thursday, September 24, 2009

JLR unveils new plan for revamp, unions restive

S Kalyana Ramanathan / London September 25, 2009

Promises mega investment in green vehicles, new models, jobs

Tata Motors-owned Jaguar Land Rover today unveiled what it called a new business plan for the next decade, under which it will invest substantially in a new range of eco-friendly vehicles.

The plan, designed to increase global competitiveness, drive growth and sustain profitability, envisages an investment of £800 million (over Rs 6,200 crore) on environmental innovation alone, part-supported by the European Investment Bank.

The plan will also see the company shutting one of its plants in the UK, but, it promises, without any job loss. Rather, it says, it is likely to add 800 more jobs by the middle of 2010.

A company spokesperson also said the new Range Rover production will start by 2011, the preparation for which will commence by the middle of next year. Apart from the new Range Rover, the company also proposes to develop a new light weight sedan, sports cars and sports utility vehicles and "electrification technology" (to produce hybrid cars).

Jaguar Land Rover Chief Executive Officer, David Smith said: "This is a plan that recognises the impact the economic collapse has had on our business, and at the same time the opportunities that lie ahead for these two great brands. We are confident that a new more efficient and competitive structure, combined with future investment, will unlock the true potential of this business."

The company said it plans to rationalise production between two of its plants in the West Midlands. The plan could result in the moving of production from one plant to another, leaving one of the plants redundant. At the moment, one produces Jaguars and the other makes Land Rovers.

However, workers are suspicious. GMB, a key union in the company's 14,500 strong work force, in its initial reaction to news of a possible plant closure said wants details “GMB will be opposing everything we have heard so far. We will fight the company on this – of that I have no doubt,” said Bert Hill, their regional officer.

"The car industry has been through an unprecedented recession. New car sales, including those of Jaguar and Land Rover, are down globally by 25-30 percent. This has resulted in manufacturing capacity utilisation of less than 60 percent at Jaguar Land Rover, which combined with the credit crunch, has exposed fundamental weaknesses in the structure of the business," a JLR statement said.

Over the past year, production in JLR was reduced by more than 1,00,000 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. Actions taken have started to reverse the trend, quarter over quarter, and we now have to take the company to the next level of competitiveness," the statement from JLR said.

Though no firm decision has been made, the company is also looking at potential local manufacturing in cost-competitive markets like India.

Wednesday, September 23, 2009

It is wise for India to go for greater energy efficiency'

Q&A: Richard Lambert, director general, Confederation of British Industry
September 24, 2009

RICHARD LAMBERT, director general, Confederation of British Industry and former editor of the Financial Times worries that protectionist measures taken by leading G20 nations are not a good sign for the discussions that will continue in Pittsburgh, USA, later this week. He commends India’s recent stand on issues like climate change, in an interview with S Kalyana Ramanathan. Excerpts:

Despite the repeated commitments made at the earlier meetings, most members of the G20 continue to execute protectionist measures to safeguard their own interests. Your comments?
I agree there have been some lamentable moves by the developed economies in the recent past, which run counter to what they have said at the G20 meetings, like the US move on the tyres (against China).

Wouldn’t that raise the question of the relevance of the G20 itself, when major developed nations are reeling under the strain of the current recession?
The question is where would we be if the G20 did not exist. If the G20 was not there, would things be worse? I think the answer is yes. If you look at what has happened in the last year to 18 months, we see protectionist measures have taken place. But these add to a modest share in the global GDP, like 1 per cent. But if you look at the time of the great depression in the 1930s, at the end of the very first year, protectionist measures were adding up to 10 per cent of the global GDP. Compared to what might have happened if the G20 did not exist, its a good story.

You had earlier commented on the signs of recovery in developed countries like the US and Germany. What’s your take on the emerging economies?
I am not up to speed on the Bric countries generally. But my perception of China is that it will reach its growth target for this year. It is very heavily driven by the stimulus. China will need global and fiscal stimulus to continue to grow. For India, the numbers look promising, but we have to see what the bad weather (drought) is going to do the the economy. I haven’t seen the numbers on that.

Is it fair on the part of developed nations to press India to reduce carbon emission if it needs financial support from the west, when India is not a major polluter, relatively speaking?
I don’t think it is a fair summary of the position. If you look at the European Union, it has committed to make massive cuts in greenhouse gas emission in 30 years. The US is debating its approach to cut emission. We hope it will arrive at a position in time for the Copenhagen meet (in December). The greenhouse gas emission per head in India is very low,a quarter of what they are in UK. But there are a billion Indians (laughs). I think Prime Minister Manmohan Singh is making wise comments on the need for greater energy efficiency and for India to find ways of cutting emission in a efficient way when the demand for energy is going to grow.

Tuesday, September 22, 2009

SocGen looks to India for growth

S Kalyana Ramanathan / London September 22, 2009

After having a minor presence in India for more than three decades, French banking group Societe Generale (SocGen) is now counting on India along with China to offer major growth opportunities in the next three to five years.

SocGen’s Deputy Chief Executive Officer Severin Cabannes said that group was gradually focusing its presence in India, China and Brazil. He said though the group would not be expanding simultaneously in all three countries, it would increase its investments in these markets based on local responses over the next three to five years. “We are learning from these countries...for our expansion over the next three to five years,” he said.

The French group’s private banking arm’s senior executives said that it had secured a non-banking finance company (NBFC) licence from the Reserve Bank of India and would start lending money to local customers. The group has also applied for a licence to offer portfolio management services here.

At a media briefing in London hosted by senior management, SG Private Banking’s global CEO Daniel Truchi said the initial plans would be to expand its geographic presence in India by adding Pune to its existing locations at Mumbai, Delhi and Bangalore. Through its offices in Hong Kong, Singapore, Dubai and the United Kingdom, the private banking arm proposed to offer services to non-resident Indians who wished to invest in India, said Truchi.

SocGen also has a joint venture agreement with Indiabulls for undertaking life insurance business here. Cabannes said that it was awaiting a licence for this new business for over a year now. In 2004, Societe Generale Asset Management entered into a partnership with State Bank of India, the country’s largest bank, taking a 37 per cent stake in SBI Funds Management, its asset management subsidiary. SBI Funds Management is one of the top players in the fast growing asset management market. SocGen, is a minority shareholder (around 37 per cent) in a company that will provide custody and fund administration services from the end of 2009.

Wednesday, September 9, 2009

Slaves to their PDAs

S Kalyana Ramanathan / London September 10, 2009

A recent survey has revealed that a little over a third of Britons are slaves to their e-mail enabled cellphones. Further, one in five of 5 BlackBerry and iPhone users say they spend a minimum of 10 extra unpaid hours every week making calls, responding to emails and sorting work problems in the evenings and at the weekends, and nearly a fourth of those surveyed showed they go to sleep with their mobile phone beside the bed.

The study of 1,226 British workers by mobile phone price comparison website,, has found that one in three admit to working out of office hours on a weekly basis; replying to emails via theirBlackBerry and making urgent calls.

Despite that, 43 per cent consider their BlackBerry to have made their lives less stressful and 28 per cent prefer to stay connected with the office and their emails.

Almost 20 per cent now feel pressured to respond to client and colleague e-mails out of office hours and 35 per cent say they have had their evening or weekend ruined because of reading an email from an annoyed or demanding client.

The Co-Managing Director of, Neil McHugh, said: "The problems start when clients and management expect emails to be dealt with at the weekends and when alerts are going off through the night, with various problems that need to be sorted. A day out of the office no longer has to mean a day out of the loop; people can now work remotely and keep up to date with all emails and enjoy more flexibility and freedom.”

The survey also found that for 53 per cent of people, their mobile phone is one of the first things they see in the morning. A fourth of the people surveyed check their emails via theirBlackBerry before they leave for the office and 14 per cent have already read and replied to emails before they even officially start their working day!

The study also revealed that 18 per cent of people do not put their 'Out of Office' sign on when they are off work, as they know they will still be contactable via their mobile even if on holiday.

Unsurprisingly, more than a third say their family members would prefer them to leave their BlackBerry device off when not at work and instead devote time to them.

“Family time is however extremely important and even though I fully understand the urge to check my emails in the morning, perhaps our loved ones should be the first people to get our attention,” said McHugh.

Tuesday, September 8, 2009

Britain puts up more barriers for non-European workers

S Kalyana Ramanathan / London September 08, 2009

The British government today accepted the month-old recommendations of the Migration Advisory Committee (MAC) to provide better access to jobs for local workers before allowing non-European workers to tap work opportunities here.

This comes just two days after it promised, with other industrialised nations at the G-20 finance ministers’ meet, to go easy on protectionist policies.

The Home Office, in a statement here today, said the government has accepted the MAC recommendations to tighten the rules controlling migrant skilled workers taking jobs in the UK under the government’s points system. Job openings in the UK will be advertised for four weeks for local workers, before considering a non-European worker for the same position.

“This will mean that from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks, extended from two weeks, before companies can seek to employ individuals from outside Europe. This will ensure that British workers are not only first in line for jobs but also now have more time in which to apply,” the Home Office communication said.

The government will also extend the qualifying period for all those overseas workers who want to transfer to work at the UK base of their company: they must have worked for their company for at least a year prior to the move, rather than the present six months.

The minimum annual salary that will allow an individual to qualify as a skilled worker and be eligible to work in the UK will also rise from £17,000 to £20,000.

Home Secretary Alan Johnson said: “The introduction of the points-based system has radically improved our ability to respond quickly to changing economic circumstances. We have now accepted all of the Migration Advisory Committee’s recommendations and we will continue to work with them to make sure that we use the flexibility in the points-based system to the best advantage of society and the economy. These changes will ensure that businesses can recruit the skilled foreign workers the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce.”

A total of 16 recommendations were put forward by the MAC, all of which will now be put in place to ensure the points-based system does more to support UK workers, while continuing to facilitate the levels of trade, travel, and study that benefits the UK.

This new policy that favours local workers comes in the wake of rising unemployment that has now reached a record high level of 2.5 million. Further, a general election is due by the middle of next year, with the ruling Labour government expected to fight hard to stay in power.

India, along with other Bric economies — Brazil, Russia and China — have not spared any opportunity, including the G-20 platform, to remind the US and the UK that it expects the developed countries to go easy on protectionist trade policies and provide higher quota and voting powers in the World Bank and International Monetary Fund. G-20 countries had agreed to this view in its communique issued on Saturday.

Sunday, September 6, 2009

G-20 agrees to control bankers' bonus

S Kalyana Ramanathan / London September 06, 2009

Finance ministers of the world’s 20 largest economies, including India, today agreed on the need to have an “institutional cap” on bonuses paid to bankers. At the conclusion of a day-long G-20 finance ministers’ meeting here today, the nations agreed on more disclosures and transparency in the level and structure of remuneration along with global standards on pay structure, including deferral, effective clawback, relationship between fixed and variable remuneration, and guaranteed bonuses.

Based on today’s deliberations, the Financial Stability Board (FSB) will report to the Pittsburgh Summit, which is scheduled to meet on September 24 and 25, with detailed specific proposals for developing this framework, which could be incorporated into supervisory measures and closely monitored, said a G-20 communique.

The final implementation of the cap on bonuses will, however, vest with the financial regulator in each country — in India’s case, this could be the Reserve Bank of India.

Addressing the media at the end of the meet, Alistair Maclean Darling, chair of today’s meeting and the UK's Chancellor of the Exchequer (equivalent of a finance minister), said there was no plan to implement a cap on bonuses of individual bankers. He said from a practical viewpoint, it would be impossible to do so as bankers would ultimately find a way to reward themselves in some other way. He, therefore, said the bonus issue in banks must be tackled as a function of the risks that came with it and a “cap on the pool” must be framed in a way that did not jeopardise the future of the institutions due to reckless risk-taking by bankers. A UK-based global chairty organisation, in a statement here, said, “It is disappointing that the G-20 finance ministers put the issue of bankers’ bonuses ahead of the needs of the millions of poor people suffering as a result of the economic crisis. If the G-20 was serious about making banks work for ordinary people, they would have agreed to a global tax on currency transactins.”

Friday, September 4, 2009

Bric FMs demand IMF quota shift to emerging economies

S Kalyana Ramanathan / London September 05, 2009

Photo caption:
Indian finance minister Pranab Mukherjee, Brazil's Guido Mantega, China's Xie Xuren and Russia's Alexey Kudrin committed more financial support for IMF and World Bank but also reiterated the group's demand for higher quota (and voting powers) in these two international financial institutions. (Photo by: S Kalyana Ramanathan)

Hours ahead of the G-20 finance ministers’ meet in London tomorrow, the representatives of the Bric nations (Brazil, Russia, India and China) today said they were willing to commit a total of $80 billion to the International Monetary Fund and the World Bank, but also demanded a substantial shift of quotas and shares in favour of emerging markets — 7 per cent in IMF and 6 per cent in World Bank — by doubling from the current levels.

“For IMF and World Bank Group, the main governance problem, which severely undermines their legitimacy, is the unfair distribution of quotas, shares and voting power. Priority should be given to a substantial shift of quotas and shares in favour of emerging market and developing countries,” the Bric nations said in a communique issued here today.

After the April 2009 meeting of leaders of G-20 nations, the finance ministers of these countries will meet here tomorrow to take stock of the world economic situation and agree on the future course of action to maintain the momentum of exit from a two-year global recession. The meeting will culminate in the G-20 Nations’ leaders meet in Pittsburgh, United States on September 24 and 25.

The Bric finance ministers also agreed that the the world has overcome its most serious economic crisis since the 1930 Great Depression and many of the G-20 members are on the way to a complete recovery.

Of the $80 billion of funding committed by these four countries to IMF and World Bank, India will contribute $10 billion, said its finance minister, Pranab Mukherjee. China, with a commitment to pump in $50 billion to IMF and World Bank, will the largest contributor from this group.

Meanwhile, Mukherjee said he was hopeful of 6-7 per cent growth in 2009 and 2010. He said India would continue its domestic fiscal support of 3-4 per cent of GDP through 2008-09 and 2009-10.

World War II -- 70th Anniversary

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