A £600-million contract won by Tata Consultancy Services (TCS) from Britain’s Personal Accounts Delivery Authority (Pada) has come under renewed media scrutiny. This was after the new government’s chancellor (finance minister), George Osborne said yesterday all major expenses approved by the former Labour government after January 1 would be reviewed. No contract was named in this regard. However, speculation began on this one. Some details of the cost cuts the new government proposes would emerge only next week. Osborne and his team are hoping to cut expenses worth £6 billion a year. The new government is to also present an emergency budget on June 22. In March this year, the UK’s pension manager, Pada, had awarded the £600 million deal to TCS as the only remaining vendor who had bid for this contract, after other bidders withdrew. Both Pada and TCS refused to comment on the outcome of a possible review. A TCS spokesperson in India said, “We, just like Pada, are also under an obligation to not comment on any speculation.” Pada released the contract to TCS in two parts — the designing and implementation part. The designing part is to end this October. The 10-year implementation part starts after that, subject to a go-ahead. “The contract is divided into two stages and runs for 10 years, with possible extensions for up to a further five years. The first stage will run to October 2010, allowing TCS to begin the activity required to set up and administer NEST (National Employment Savings Trust). Prior to the expiry of the first stage, a decision will be made on whether to proceed with the contract for the remainder of the contract term,” Pada had said in March. “Clearly, whoever approved this contract, had obviously provided for the possibility of a non-Labour government in UK after May 2010 and also expected that the new minister in-charge might want to review it,” said a source here. |
Wednesday, May 19, 2010
British govt may review TCS contract with UK pension body
Vodafone turns clock back to 2007 value in India
Competition forces lower valuation, despite strong results. Britain's telecom giant, Vodafone Group Plc, has written down the value of its Indian operation by £2.3 billion (Rs 15,156 crore) to an estimated £5.7 billion (Rs 37,530 crore). The reason given is the intense competition it has faced since it took the acquisition route to enter the world’s fastest-growing mobile telecom market in 2007. Globally, Vodafone today reported a nearly three-fold growth in net profit at £8.61 billion ($12.4 billion) for 2009-10. The company today released its annual results for the year ended March 31, 2010, and said, “Although our operational performance in India since acquisition in 2007 has been strong, the award of six new national licences in the market one year after our entry and the resulting intense price competition have led to an impairment charge of £2.3 billion.” Interestingly, the company’s current valuation of its Indian business at £5.7 billion is the same as the price it had paid in 2007. Apart from a cash consideration of £5.7 billion, Vodafone also took on itself debt worth £1 billion ($2 billion at that time) when it acquired the stake in Hutch Essar.
Strong Indian growth The lower valuation also comes after a year when its revenues grew by 14.7 per cent in India. The company’s Indian operations attracted 32 million customers in March, making it the second largest mobile telecom company in India. “In a very competitive pricing environment, we were pleased to have confirmed our number two position in the market. Since Vodafone’s entry into India in 2007, our performance has been strong. We have gained about one percentage point per annum in revenue market share, added 72 million customers, moved the business into operating free cash flow generation and launched Indus Towers, the world’s largest tower company, with more than 1,00,000 towers under management.” Despite the robust growth in revenues and customer-base, the Ebitda (earnings before interest, taxes, depreciation and amortisation) margin for the Asia Pacific region (of which India is a part) fell by 2.2 per cent, primarily reflecting lower margins in India caused by the competitive pricing environment and operating investment in new circles, the company said. Vodafone India reported a total revenue of £3.11 billion (Rs 20,500 crore) for 2009-10, against £2.69 billion a year earlier (Rs 17,700 crore), a growth of f around 15 per cent. Ebitda for the year improved to £807 million (Rs 5,315 crore) against £717 million (Rs 4.720 crore) in 2008-09, a growth of 13 per cent. Due to non-cash expenses like depreciation and amortisation, the company reported an adjusted operating loss of £37 million (Rs 244 crore) for its Indian operations. The company had reported an adjusted operating loss of £30 million (Rs 197 crore) a year earlier. The company’s India operation was the major contributor for its growth in the Asia-Pacific region. While APAC region service revenues grew by around 9.8 per cent, the India operations reported 14.7 per cent growth. The rest of APAC grew by only 2.9 per cent. The Group also said it had granted put options exercisable between May 8, 2010, and May 8, 2011, to members of the Essar group of companies that, if exercised, would allow the Essar group to sell its 33 per cent shareholding in Vodafone Essar to the Group for $5 billion or to sell up to $5 billion worth of Vodafone Essar shares to the Group at an independently appraised fair market value. On the government of India’s tax claim of around $2 billion on its acquisition deal (that brought it to India in 2007), the company said it continued to seek resolution. The company had become a majority shareholder in the company through the acquisition of Hutchison Telecommunications International in 2007 for a cash deal of £5.5 billion ($11 billion at that time). Global group revenue increased by 8.4 per cent to £44.5 billion. Group Ebitda was £14.7 billion, up 1.7 per cent. The Ebitda margin declined in line with expectations, the company said. On a consolidated basis, the group’s net profits more than doubled to £8.62 billion against £3.08 billion in 2008-09. |
Tuesday, May 18, 2010
JLR set to wrap up $850-mn order one year in advance
| | S Kalyana Ramanathan / London May 18, 2010 The times, they are a-changin’... From a painful 2008-09, when global car sales plummeted, the signs of recovery in 2010 have never been clearer. Tata Motors-owned Jaguar Land Rover (JLR) is set to wrap up the £600-million ($850 million) three-year Chinese deal it had bagged in February 2009, one year ahead of schedule. A JLR spokesperson told Business Standard the company was confident of completing delivery of the 13,000-car deal by the end of 2010 itself, as against the schedule of 2011-end. In February 2009, when luxury and premium car maker JLR was under stress with sales numbers sinking, it got its first big break with the order from a Chinese delegation that visited the UK at the start of 2009. The order was for 10,000 Land Rovers and 3,000 Jaguars. The status of the delivery breakup for these two parts of the deal is not known, though. The Chinese order was a major morale booster for JLR-owner, Tata Motors. The order by value is a little over half the price Tata Motors paid (£1.15 billion) for the two iconic name plates in 2008. The massive order is from an importer based in Shenzen, in South China's Guangdong province. It is not clear at this stage if this impressive delivery performance will have any major impact on other difficult decisions the company has been forced to take recently. In April 2009, JLR had asserted it had no plans to reconsider an earlier decision to close one of its plants in the UK — a decision that expected to enable production rationalisation. An announcement on this, as scheduled originally, will be made by the middle of 2010. In September 2009, the company had announced it would be forced to close one of its three midland plants as a cost-cutting measure. The company as a whole employs around 14,000 people and the three assembly plants employ 9,000 workers — 5,000 in Solihull, 2,000 in Castle Bromwich and 1,800 at Halewood. Castle Bromwich makes some Jaguar models, Solihull makes the Land Rover Defender and Discovery, the Range Rover Sport and Range Rover, and Halewood makes the Jaguar X-Type and Land Rover Freelander models. Apart from the new cost-cutting measures, the company has also revamped its top management. It has brought in Carl Peter Forster, former head of General Motors Europe and Ralf Speth from BMW to lead the turnaround. The start of 2010 also saw the exit of the then CEO, David Smith, who had spent 18 months to revamp the company’s operations. Since the start of 2010, JLR has reported impressive improvement in sales. JLR’s global sales in April 2010 were 17,909, higher by 61 per cent. Jaguar sales for the month were 3,559, almost the same as last year in spite of the withdrawal of X-Type. The Jaguar XF sales were up 23 per cent, while Land Rover sales were 14,350, higher by 89 per cent. In March 2010, JLR sold 23,538 vehicles, higher by 43 per cent. Jaguar sales for the month were 4,642, higher by eight per cent, while Land Rover sales were 18,896, higher by 55 per cent. However, cumulative sales of JLR for the financial year are 193,982 units, lower by 11 per cent. Cumulative sales of Jaguar are 47,418, lower by 24 per cent, while cumulative sales of Land Rover are 146,564, lower by six per cent. |
New UK govt's emergency budget on June 22
| S Kalyana Ramanathan / London May 18, 2010 The UK’s new Tory Chancellor, George Osborne, has said the first emergency budget will be unveiled on June 22 and a new independent Office for Budget Responsibility (OBR) has been formed that will make forecasts of growth and borrowings by the government. The Emergency Budget would be released exactly 42 days from the date of formation of the new government. Prime Minister David Cameron had earlier promised to present the Budget within 50 days of the formation of the new government. Addressing the media here on Sunday, Osborne said that with the OBR in place, the UK would for the first time have a “truly independent assessment of the state of the nation’s finances”. Noted British economist Alan Budd would head the OBR. He was the founding member of Bank of England’s Monetary Policy Committee formed in 1997 by the then Labour government. “We need to fix the budget to fit the figures, not fix the figures to fit the budget. To do this, I am today establishing a new independent Office for Budget Responsibility. For the first time we will have a truly independent assessment of the state of the nation’s finances. So they can get to work immediately, the OBR will initially operate on a non-statutory basis, just as the Monetary Policy Committee operated before it was enshrined in legislation,” said Osborne. At 38, he is the youngest chancellor of the exchequer (finance minister) in the UK in the last 120 years. Summarising the new government’s plans to get to work on war-footing, Osborne said, in a space of one week since the Cameron-led coalition government was formed, it has already changed the way budgets are made, has created a new independent office to monitor government spending, set in motion the creation of the first independently audited national balance sheet and plans to cut £6 billion worth of wasteful spending without affecting frontline services. The government also announced that it would re-examine all spending approvals made since January 1 by the previous Labour government. “If we don’t get on top of our debt, every family in Britain will be poorer and the dreams of millions of young people will be dashed. Mortgages will be higher, businesses will go bust and debt interest will become one of the largest items of government spending. We urgently need to restore confidence in our economy. And we need the determination to act quickly in the short-term in order to establish credibility for the longer term,” said Osborne. The government’s chief secretary would meet the Cabinet colleagues this week to agree on £6 billion of cuts in this year’s spending. “This is to make an immediate start on tackling the UK’s unprecedented £163 billion deficit, boost credibility and help keep interest rates lower for longer,” HM Treasury said today. As part of cutting government spending, the new Conservative-Lib Dem government last week agreed to cut ministers’ pay by 5 per cent and freeze it over the next five years of the government. Ministers’ pay would also not get any raise to reflect inflation as well. Yesterday, Cameron announced that bonuses for senior civil servants and NHS managers would be cut by two thirds. This intends to save around £15 million. The new government is also expected to raise value added tax to 20 per cent from the present 17.5 per cent. On May 11, the new coalition government formed by Conservatives and Liberal Democrats was put in place, ending a 13-year Labour-led government headed by Gordon Brown. |
Sunday, May 16, 2010
New ash cloud disrupts UK, Ireland air traffic
S Kalyana Ramanathan / London May 17, 2010 Ash from a volcano in southern Iceland is back over the UK airspace, disrupting flights from nearly a dozen airports in the country. However the main airports in London — Heathrow, Gatwick and London City Airports — are functioning normally as of now. In the mainland, East Midlands, Manchester, Liverpool, Doncaster, Humberside and Carlisle airports have been hit by the Civil Aviation Authority’s no-fly zone. Airports in Northern Ireland, Prestwick near Glasgow, some on Scottish islands and the Isle of Man are also affected, according to initial reports. Between April 15 and 23, air passengers across Europe were affected by the ash plumes from Eyjafjallajokull in southern Iceland. Three weeks after the ash subsided, they are back now. From Saturday evening, aviation authorities in the UK started issuing warning about the ash clouds from Iceland moving towards the UK. The only sliver lining to this problem now is that the southern part of the country’s airspace remains unaffected, thus allowing flights from London airports to function normally. It was estimated that the airline industry in Europe lost $1.7-2 billion during the week-long ban on flight movement declared by European navigation authorities in April. UK’s navigation service provider NATS, in its latest notice, said: “The CAA’s no-fly zone required by the high density volcanic ash cloud will not affect London airports for the period 1300-1900 (local time) today. The no-fly zone for this period has moved east to a line stretching from Prestwick on the west coast to Humberside on the east coast and south to a line just north of Birmingham. Airports which fall within the no-fly zone include all those in Northern Ireland, Ronaldsway, Prestwick, Carlisle, Manchester, Liverpool, Doncaster, Humberside and East Midlands and some Scottish island airports including Campbeltown, Islay and Barra. |
Saturday, May 15, 2010
An era ends for Labour party in British politics
It was hardly a summer evening — cold, grey and depressing. But, an appropriate setting for the outgoing Prime Minister of Britain. On that evening of May 11, Gordon Brown, with his wife, Sarah, and two sons John and James, were getting ready to depart 10, Downing Street. It is very unlikely either Brown or his wife will ever step into the highest executive office in the UK again. Brown wore the look of a defeated warrior. Even for a couple entrenched in the British tradition of not displaying their emotions in public, it was a hard battle holding back their tears. The husband and wife just about managed to veil their true feeling with a gentle smile. Before the final departure, Brown had delivered his last speech outside this office, on his way to meet the Queen and give his resignation. He used all the strength gathered from 27 years in cut-throat politics, gracefully accepted his defeat and said his last good-bye. Even his most ruthless critics in the media watched him quietly and later admitted it was a truly touching moment. The fact that his toughest critics shared and empathised that brief moment of grief with him spoke volumes about the legacy Brown was leaving behind. Speaking of legacy, the first thought that comes to a Brown-basher’s mind is the gaping hole in the country’s finances left behind for the new Conservative-Liberal Democrat government to deal with. The public sector showed a deficit on the current budget of £14.8 billion in March 2010, compared with a deficit of £12 billion in March 2009. Brown was the prime minister in the last 32 months of the 13-year Labour rule in Britain. He came and left as “Gordon the unelected”, after he took charge from predecessor Tony Blair in June 2007. With his failings, Brown got one thing right. In his closing remark at the third and last televised debate of the leaders on BBC, he said, “I know that if things stay as they are, perhaps in eight days’ time, David Cameron, perhaps supported by Nick Clegg, would be in office.” The prognosis was wrong only on the timing. It took 12 more days for the Brown-Labour era to end. Brown’s political nemesis came with two heads. One of LibDem leader Nick Clegg and another one of Sky News and The Sun newspaper’s owner, Rupert Murdoch. Just six months before the May 2010 election, The Sun, the country’s leading tabloid, announced it would not support Labour any more. Its front page on September 30 screamed, ‘Labour’s lost it’. Despite the shrugs from Brown and his Labour colleagues, this must have come as a massive blow. The Sun had supported Labour in the 1997, 2001 and 2005 election. A persistent campaign ensued. The day after Brown’s infamous ‘bigot’ gaffe, The Sun had the shortest and most damning title — ‘Brown Toast’. If the papers had a one-a-day chance to ram Brown’s campaign, Murdoch’s news channel, Sky News, did so 24x7. Sky’s political editor, Adam Boulton, led this campaign from the front. Despite some last-minute hiccups when it was not clear which side Clegg would slant his support, the Murdoch-backed Boulton team came on top. Mission accomplished. It would be difficult to answer why Murdoch and his media empire had abandoned Labour in the 2010 election after 13 years of generous support. After all, The Sun had claimed it was the force behind Blair’s 1997 victory. The only man who can answer this question with certainty, Murdoch, is never going to answer it. Brown’s defeat was best summarised by Brown’s former spin doctor, Alastair Campbell, when he said Brown’s defeat was one led by the media. This was true. As the election date neared, there was not a single paper or TV channel in country that even remotely supported Brown or Labour. The best Brown and his team could expect was some sense of neutrality, that the BBC provided. While Murdoch and his team played their part in Brown’s downfall, the real and final blow to his political career came from a completely unexpected person, Clegg, LibDem party leader. In his election campaign, he had in no ambiguous terms that he would not talk to Labour for a possible post-election coalition if Brown was its leader. Hence after the electorate returned a hung Parliament on May 6, Clegg walked over to the Tory party to start negotiations. As the talks slowly and painfully progressed, Brown and his team watched, hoping Clegg would change his mind. This did not happen. Under severe pressure, on May 10, Brown stepped down as leader of Labour, thus effectively ending any chance of becoming the next PM should the Lib-Lab coalition click. For a brief six hours the following day, it seemed like a “rainbow coalition’ of Lib-Lab with other smaller parties was taking shape. As it turned out, this was just a smoke-screen. It was a Tory-Lib that made it to the finishing line. At 59, and after nearly three decades in politics, Brown went home to his constituency as a common man, holding no office in the government or his party. In his own words, he said he was going back to doing his most favourite job in the world — being a husband and a father of his two children. |
Prince Charles to visit Corus' beleaguered unit
Tata Steel-owned Corus will have a special visitor calling on them the coming Wednesday, May 19. Prince Charles, heir to the British throne, will visit the troubled Corus Teesside Cast Products (TCP) plant in Redcar and meet representatives from there. The prince’s plans to visit TCP was announced as a diary entry in his website. The object of the visit and what he hoped to achieve was unclear. Corus executives could not be reached to clarify the purpose of the visit. The royal family has no role in the running of the government or its various departments. The prince, however, does take an active interest in various issues that concern the British people and is believed to be in the habit of writing to various government departments. This correspondence is not shared with the public. Prince Charles is also known for this active interest concerning environmental issues. During his visit to India in March 2006, he launched the Bhumi Vardaan Foundation in Punjab, to promote sustainable agriculture and help ensure a viable way of life on the land. His visit to TCP might just be a courtesy visit to get an idea of the issues faced by the local community in Teesside. Ever since TCP was mothballed in February, around 1,700 jobs have been put at risk, with another 3,000-odd jobs that indirectly depend on TCP likely to be affected, too. After a consortium of buyers prematurely terminated a 10-year contract in April 2009, Corus said it had no option. The last few months also saw Corus attempting to find a suitable buyer for the plant. Corus recently appointed Citibank to help find a buyer for the plant. The company has admitted that it is in talks with more than one party. Most recently the plant was visited by a team from Bangkok-based Sahaviriya Steel Industries. The outcome of this visit has not been revealed. |