Wednesday, December 31, 2008

Several cops involved in engineer's murder, admits UP police

The Uttar Pradesh police has finally admitted that some policemen were involved in the murder of PWD engineer Manoj Kumar Gupta in Auraiya.

"Some of the local cops were involved in the murder conspiracy and investigations have also revealed direct involvement of a few in the killing," said State Additional Director General of Police (Law and Order) Brij Lal.

Gupta was lynched to death, allegedly by local ruling Bahujan Samaj Party legislator Shekhar Tiwari and his associates, who broke into the engineer's house and tortured him to death.

Tiwari's official gunners, provided to him by the state for his personal security, remained party to the entire criminal act, according to the police.

"We have reason to believe that the two police gunners provided to the MLA for personal security too were involved in the attack on Gupta's residence. While they were put under arrest on Tuesday, they would now be booked not only for criminal conspiracy but also for their direct role in the killing," Brij Lal told reporters.

"Auraiya police inspector Hoshiar Singh, who has already been placed under suspension, is likely to be arrested and booked for his passive role in the criminal conspiracy," said Lal.

"We will award the severest punishment to these men in uniform so that it acts as a deterrent for other shady policemen who indulge in criminal acts or act as abettors of crime," he added.

Singh was reportedly posted at Auraiya at Tiwari's behest, who was then a member of the Samjwadi Party.

Tiwari had dumped Gupta's body in front of the local police station. Police officials had dilly-dallied for two hours before taking Gupta's body to the district hospital, where he was declared 'brought dead'.

Senior, mid-level staff eye options outside Satyam

NEW DELHI: The shakeout in Satyam isn’t restricted to its board alone. A significant percentage of the Hyderabad-based IT major’s senior brass is

also on the lookout for new job opportunities.

Headhunters told ET that several employees from Satyam have approached them to explore options in other IT firms. These include heads of verticals — who are part of the company’s senior management team — and mid-level managers.

“We have received a number of calls in the last few days and resumes have not stopped floating in since the Maytas buyout was called off by Satyam. We have already received more than 100 such CVs so far,” said Head Hunters India CEO Kris Lakshmikanth.

“One cannot rule out the possibility that the top management in Satyam is unhappy over how the entire controversial takeover was handled, or mis-handled, which is posing a lot of problems in dealing with clients right now. If matters get worse and there is any major change in leadership, as many as 2-5% of its employees will soon be looking out for jobs,” said a Mumbai-based headhunter, who did not wish to be named.

A senior company executive with a customer-facing role recently confessed to the headhunter that he was facing difficulty dealing with clients and convincing them to renew their contracts with Satyam. The clients are in re-evaluation mood as they are ‘no longer satisfied with the intent and focus of the company’.

When asked if other IT companies would be willing to employ Satyam brass in the current market scenario, he said, “Those who are performers and have the right talent will get good opportunities. Those who specialise in certain verticals will get preference.”

However, he added that finding a job would not be easy for everyone. “It will take a few months before one actually sees employee movement from Satyam to other companies.”

Real estate: No more an attractive investment

Rags to riches’ and ‘to rags again’ — this is the current state of the real estate industry. From a high of 13848 on January 8, to a low of 1403 o
n December 2, the BSE realty index has fluctuated wildly this year and is still trading near its lows. A movement of almost 90% in one year is unprecedented.

In early ’08, land was the most coveted asset for individuals and corporates, be it textile companies, cement makers or commercial banks (which began to revalue themselves based on their land assets). Sky-rocketing property prices offered an easy route to rake in the moolah via capital appreciation or stocks of realty companies. But not anymore. Earnings capability will now come into play, rather than valuation of one’s land bank.

Companies with low borrowings do not have to bother about rising interest costs and can focus on completing projects. Developers whose business models are skewed towards mid-market or affordable housing will be better placed than those in the luxury segment. Hence, the business models of HDIL, DLF and Puravankara can work well for them.

The land-buying spree was so rampant that most builders ignored liquidity constraints. The industry’s borrowings have now shot up to a few thousand crores from a few hundred crores earlier. With sales drying up, highly leveraged companies are facing the pressure.

Cash flows are constrained, thus affecting working capital cycles. This may lead to consolidation in the industry but bigger players will be able to survive the mayhem. Amidst this chaos, one cannot ignore the mass wealth creation for promoters and investors. The primary market, which was an easy route to build equity wealth, has also helped to organise the sector. The real estate industry has matured greatly and become more transparent.

At its peak in January, DLF emerged as the fourth most valuable company and its promoter KP Singh became the world’s richest realty tycoon. The realty sector’s share in the Sensex grew to almost 4% then. But after the market crash, the sector’s outlook has undergone a 360-degree shift.

Investors have shed 50-60 % of their investments in realty stocks. Investors’ perception has been dealt a severe blow. Measures like interest rate cuts for low-value homes and correction in property prices don’t seem to be working. But a further 200-250 bps rate cut and a 20-25% price cut can spur demand. And people may once again start buying houses to live in them, rather than for investment purposes.

Neuromarketing: How the brain decides what to buy

As a marketer, are you ready for neuromarketing, the holy grail where science meets marketing to reveal the workings of the human mind, the ultima

te no-bullshit zone? For a moment, keep your prejudices and ‘learnings’ from your storied institutions in abeyance, and just fathom this.

Warnings, even gory pictorial ones, on cigarette packs actually encourages smokers to light up. Product placements in films hardly works. Fragrance and sound are more potent marketing tools than brand logos. Increasingly, rituals and religion is playing an important role in consumers’ buying behavior. Sorry to disappoint you ad folks, but sex in advertising doesn’t really work, says Martin Lindstrom in his seminal new book, buy.ology, How Everything We Believe About Why We Buy is Wrong.

It isn’t that big, street-smart global marketers haven’t known what works with their consumers. Only that in most cases their assumptions on why and how it works are wrong. For long marketers have broadly relied on just two tools to judge the efficacy of their marketing efforts—tracking sales and traditional market research of asking questions to consumers or observing them.

Nothing wrong with it, only that we know that consumers often don’t mean what they say, and sales audits merely reveals the market share dynamics, and “validates your victories and losses without really explaining why they’re happening,” as Paco Underhill, the celebrated retail anthropologist and author of Why We Buy: The Science of Shopping puts it in the foreword of buy.ology.

It took Lindstorm help of two thousand volunteers, two hundred researchers, ten professors and doctors, and the most sophisticated brain-scanning machines in the world—the functional Magnetic Resonance Imaging (fMRI) and the advanced version of the electroencephalograph which tracks rapid brain waves in real time—to conduct the most exhaustive neuromarketing experiment in history to uncover how our unconscious minds control our behaviour. buy.ology is the repository and the end of this “three-year-long, multimillion-dollar journey into the worlds of consumers, brands and science,” as Lindstrom, who describes himself as a global branding expert, puts it.

So why does warnings on cigarette packs fail to deter smokers? “Cigarette warnings—whether they informed smokers they were at risk of contracting emphysema, heart disease, or a host of other chronic conditions—had in fact stimulated an area of the smokers’ brain called the nucleus accumbens, otherwise known as “the craving spot”.

The statutory skull-and-bones warnings that the tobacco marketers grudgingly accepted in the West had infact become a “killer marketing tool” for the industry! Union Health Minister Anbumani Ramadoss, who has justifiably been at the forefront of anti-smoking movement in India, of late, has reason to pick up issue with Lindstrorm here!

There is no sure-fire way to sponsorship success, but knowing the rules of engagement may help here. Despite spending similar ad monies on Americ

an Idol, Coca-Cola and Ford walked out with very different results. Coke’s integral play in the programme’s storyline, vis-à-vis Ford’s traditional spot ads during commercial time, meant not just a better memory score for the brand, but critically for Ford, “watching a Coke-saturated show actually suppressed subjects’ memories of Ford ads.”

It seems fashion trends and fads go much deeper than simple desires. The concept of imitation—whether it is copying other consumers, brand ambassadors, even mannequins—is hardwired into our biology, and for good reasons.

Neuroscience points to the mimicking region of our brains—mirror neurons—that works in tandem with dopamine, one of brain’s pleasure chemicals. “Because consciously or not, we calculate purchases based on how they might bring us social status—and status is linked with reproductive success.” So whether it is cool gadgets like iPhones or luxury purchases in a slinky new Prada dress, all consumption is geared to our “need to attract a mate who could possibly carry our genetic line or providing for us for life”.

Coming back to cigarettes, Lindstrom’s experiments in subliminal messaging—visual, auditory, or any other sensory messages that register just below our level of conscious perception and can be detected only by our subconscious mind—provides more fodder for the anti-smoking lobby. Pushed against the wall on advertising and promotion, cigarette marketers have fast-forwarded to the future and employed underground tactics like logo-and-name free mnemonics like he Marlboro-red Ferrari, a camel riding off into a mountainous sunset et al.

The good news, for the tobacco marketers at least, is that it seems to be working better than traditional advertising! “Logo-free images associated with cigarettes, like the Ferrari and the sunset, triggered more craving among smokers than the logos or the images of cigarette packs themselves.” Speak of law of unintended consequences.

But why does subliminal cigarette advertising work? For one, since it’s devoid of any brand name and logo, the message is not construed as an ad and hence the smokers’ guard drops. And the tobacco industry’s “efforts to link ‘innocent images’—whether of the American West, purple silk, or sports car—with smoking in our subconscious minds have paid big time”.

In fact, taking the results of the cigarette experiment as a benchmark, Lindstorm even poses an existential question—is the logo-led marketing al

ready on life support, if not already dead? If cigarette makers can create stimuli powerful enough to replace traditional advertising, what stops other marketers to follow suit? A caveat here. Even though a majority of logos may be losing their power, “certain simple yet powerful icons are increasingly taking hold, creating an instant global language, or shorthand”. Think Apple’s bitten apple, McDonald’s Golden Arches, Nike’s swoosh.

Lindstorm’s most provocative research though was an inquiry into how the brain experiences religious beliefs and brands. And is there any commonality between the two? fMRI study on over 65 volunteers revealed that brain activity pattern was almost identical (not just similar) when people viewed images of strong brands (iPod, Harley-Davidson, Ferrari) as they did when they viewed religious images (the Pope, Virgin Mary, rosary beads, Mother Teresa and the Bible).

And it wasn’t that these volunteers were agnostic, but devouts who scored themselves seven (average for the group), on one-to-ten scale (ten being highest) on spirituality. “The results of the brain-study show that most successful products are the ones that have the most in common with religion ... a sense of belonging, a clear vision, power over enemies, sensory appeal, storytelling, grandeur, evangelism, symbols, mystery and rituals”.

In a visually overstimulated media environment—where logos saturate our every waking hour—the findings of buy.ology’s sight-and-smell experiment could be a godsend for marketers. “Odor activates many of the exact same brain regions as sight of a product.”

Smart marketers are already tacking on fragrance to products, like Samsung’s flagship store in New York which “smells like honeydew mellon, a light signature fragrance intended to relax consumers and put them in South Sea-island frame of mind—maybe so they don’t flinch at prices”.

And most supermarkets in the US and Europe now have bakeries close to the entrance to enable “the fragrance of just-baked bread signal freshness and evoke powerful feelings of comfort and domesticity” with shoppers to push them to a point where they discard their shopping lists and start picking up food products they had not even planned to buy.

This multi-sensory approach to marketing is being termed ‘Sensory Branding’—the term is even trade-marked. The right pairing of sensory inputs can work wonders for marketers—they can use fragrance to make you see and sound to smack you lips, all to their brand’s advantage.

But surprisingly, sensory ubiquity—like Nokia’s signature tone—may not necessarily be an unqualified brand asset. In an image-sound brain experiment, it was discovered that volunteers displayed a “across-the-board negative emotive response to Nokia’s famous ring,” even while the images of Nokia’s phones were rated favourably. “In short, Nokia’s ring tone was killing the brand.” But just why? Peering into part of the volunteers brain circuits that processes information about emotion, Lindstorm and his research partner Dr Calvert found that the respondents’ brain “connected the familiar sound with intrusion, disruption, and feeling of annoyance... (like) a romantic dinner or tropical vacation shattered by a phone call from a boss or a movie or yoga class ruined by the ill-timed ring of an unsilenced phone.”

Is there an ethical dimension to neuromarketing, of being abused to manipulate and subjugate the mind for commercial gains or political propaganda? As the discipline’s biggest researcher, Lindstrom doesn’t shy away from the question.

“I believe it is simply a tool, like a hammer. Yes, in the wrong hands a hammer can be used to bludgeon someone over the head, but that is not its purpose, and it doesn’t mean that hammers should be banned, or seized, or embargoed. The same is true for neuromarketing ... Because the more we know about why we fall prey to the tricks and tactics of advertisers, the biter we can defend ourselves against them.”

Top 10 NRI Newsmakers of 2008

Sun, Dec 28 08:59 AM

After the enthusiastic response to the first list of NRI newsmakers for 2007, here is the updated version before 2008 ends. The selection is based on news value and the degree of interest and concern to NRIs.

1. Lord Swaraj Paul: A consistent NRI newsmaker for over three decades, he just made history by being installed Deputy Speaker in the House of Lords. He is the first Indian to sit on the woolsack, the traditional seat. He has extensive investments in India for his multi-billion pound company Caparo Group. Conferred the Peerage in 1996 and honoured with the Padma Bhushan by India in 1983, 77-year-old Lord Paul is one of the most famous Indian origin entrepreneurs in Britain.

2. Sonal Shah: Appointed to the Transition Team of US president-elect Barrack Obama, she is a member of a three-person team to coordinate technology, innovation and government reform during the transition. She earlier headed the philanthropic department of Internet giant Google; and was vice president at Goldman, Sachs and Co and developed and implemented the firm's environmental strategy. Shah, who raised funds for victims of the 2001 earthquake in Gujarat through the Vishwa Hindu Parishad-America, has denied any links to this organisation.

3. Vikram Pandit: The Citibank CEO shocked everyone with his sudden appointment to the world's biggest banking company. After a year, he is right in the eye of the global financial tsunami to save his bank and spearhead its recovery. He makes news with the US government's multi-billion dollar recovery package for his bank, job losses, restructuring and reviving an icon of the American financial sector. Facing a difficult recovery, Pandit faces one of the toughest challenges ever seen in the banking industry.

4. Karpal Singh: A Malaysian-Indian veteran lawyer and human rights activist, he fought the general election as an opposition candidate for equal treatment of all Malays for government contracts, employment and appointments. He has highlighted the woes of all underprivileged for 30 years and has been compared to Martin Luther King and Nelson Mandela.

5. Sir Salman Rushdie: His long-time bestseller 'Midnight's Children' was, following a public vote, declared the Best of the Booker in the award's 40-year history.

6. Navanethan Pillay: A South African Indian judge, he was appointed for four years as the UN Human Rights Commissioner - a significant achievement for NRIs. Her grand-parents migrated from Tamil Nadu to South Africa as sugarcane indentured labourers in the late 1800s, and she became the first woman to start law practice in South Africa's Natal Province in 1968. Pillay defended several anti-apartheid activists and successfully fought for the right of political prisoners, including Nelson Mandela.

7. Lakshmi Mittal made some news for the wrong reasons this year. The world's largest steel maker after he took over Arcelor, Mittal has had to take tough decisions on staff sackings, respond to environmental concerns and acquisitions and mergers. On the positive side, he was honoured with Padma Vibhushan by India and the third Forbes Lifetime Achievement Award for heroes of entrepreneurial capitalism and free enterprise.

8. The Great Khali, Dilip Singh Rana: One of the largest athletes in the World Wrestling Entertainment and World Heavyweight Champion, Khali calls himself after the Hindu Goddess Kali. This towering giant at seven feet three inches enjoyed a hero's welcome during his visit to India this year. He also landed up film contracts.

9. Anand Jon: He was convicted of rape after a glamorous career as the fashion designer to Hollywood stars. From Beverley Hills to prison wards, he made headlines with court proceedings when he was accused of luring young women and girls, as young as 14, to an apartment where he acted out sadistic fantasies. The powerful, strident campaign for his innocence mounted by his sister Sanjana claims that he was framed.

10. Dev Patel... Dev who? Well, he is an 18-year actor in the new Hollywood hit 'Slumdog Millionaire'. Based on a novel 'Q&A' by Indian diplomat Vikas Swarup and crafted into a film by the acclaimed director Danny Boyle with music by A.R. Rehman, this film is ready to grab some awards at the next Oscars. Patel plays Jamal, a slum child who becomes a national hero after he reaches the final question on India's TV show 'Who Wants to be a Millionaire?' Watch him! He could win the best supporting actor award.

(28.12.2008 - Kul Bhushan previously worked abroad as a newspaper editor and has travelled to over 55 countries. He lives in New Delhi and can be contacted at: kulbhushan2040@gmail.com)

Tuesday, December 30, 2008

Kerala, alcohol's own country?

The Kerala Beverages Corporation is scaling new heights every year in sale of liquor.

There are no signs of economic recession at Corporation's outlet in Thiruvananthapuram. It sold Rs 55 crores worth liquor this Christmas, which is a whopping Rs 13 crores more than last year.

But the corporation is now planning to open a de-addiction centre near one of its distilleries in central Kerala. It is also planning to open a medical college and a hospital and will spend about Rs 100 crores on the ambitious project in the next four years. That is part of the corporation's social responsibility initiative.

A recent demand study done by IIM Kozhikode suggests that IMFL sales in Kerala will cross Rs 200 lakh cases by 2009.

"We need to have certain guidelines so that supply is also restricted. Such kind of law enforcement on one side and equally important is the attitudinal change. When you couple these two, you can have some amount of positive effect," said Dr Girish, clinical psychologist.

Kerala already has the dubious distinction of highest per capita alcohol consumption in the country with 8.5 litres alcohol per person.

Salaried crorepatis double in 2 years

NEW DELHI: The number of taxpayers earning more than Rs 1 crore annually has doubled in just two years, thanks to buoyant economic growth. Corpora
te sales and profits have risen by more than 30% in the last few years. That has encouraged companies to pay record salaries to their top managers, say tax experts.

According to data compiled by income-tax department, the number of salaried taxpayers earning more than Rs 1 crore (Rs 10 million) crossed 5,000 in fiscal 2008 from 2,200 in fiscal 2006. The total number of millionaires is much higher as it includes non-salaried taxpayers.

“Individual earning, especially through bonus and incentives, has seen a stupendous rise recently, especially last year. We can only hope the trend continues in the current fiscal,” said Amitabh Singh, partner at leading audit and consultancy services company Ernst & Young.

However, after two straight years of exponential increase in the number of millionaires, the pace may slow down in 2009-10. India’s GDP grew by 7.8% in the first six months of fiscal 2008 from over 9% in the previous year, and corporate bottom lines have also seen a similar dip. That will put pressure on salaries.

“With the slowdown looming large, it is unlikely that we will add as many crorepati taxpayers in the salaried category in the coming times. Compensations, especially at the senior management levels, had seen stupendous growth largely on account of long-term stocks and performance-linked bonuses. Salaries in this category particularly are expected to remain stagnant, or worse, see a drop. Frills like stock options and performance-linked bonuses will take a beating,” said Gangapriya Chakraverti, leader at HR consulting firm Mercer Consulting India.

The data on millionaires, gathered from employee tax deducted at source (TDS), shows the number of people earning between Rs 50 lakh and Rs 1 crore per annum has also more than doubled. It has increased from 4,400 persons in fiscal 2006 to 10,500 in fiscal 2008. The number of those earning more than Rs 10 lakh also increased to 2.24 lakh in FY08 from 87,000 in FY06.

The majority of Indian millionaires earn between Rs 10 lakh and Rs 20 lakh. In 2007-08, more than 1.5 lakh employees were earning in this income bracket. That is a 250% jump over 2005-06. Given their large number, these millionaires also contributed the maximum to the TDS kitty in FY08. While TDS from those earning more than Rs 1 crore was Rs 4,415 crore, TDS from those earning between Rs 10 lakh and Rs 20 lakh was Rs 5,770 crore. The number of taxpayers earning between Rs 5 lakh and Rs 10 lakh has also doubled in the last two years.

Now, pants that absorb smell of people breaking wind!

Thu, Dec 25 12:40 PM

London, Dec 25 (ANI): Fearing that too much gorging on spicy delicacies this festive season might leave you breaking the wind in front of anybody and everybody? Well, then here's a solution for the 'stinky' problem-pants that absorb the bad wind when people fart!

Scientists at a US firm have developed strips of an activated carbon fabric, called Subtle Butt, which, when secured in underwear with self-adhesive strips, can neutralise the gas.

The firm markets a range of products to tackle embarrassing human excretions, such as underarm sweat stains.

Available at 6 pounds for five sheets, the product is flying off the shelves.

A spokeswoman revealed that initially the strips were designed to combat sweat smells.

But the firm's boss got the idea of its new use after catching a plane from Mexico.

"The passengers had drunk a lot of beer and eaten too many fajitas. The owner had the idea that the fabric could be used to prevent the smells," The Daily Express quoted her as saying.

She added: "The strips are simply attached to underwear and will filter flatulence all day. Some of our customers say they have waited their whole lives for this product." (ANI)

Monday, December 29, 2008

Satyam employees caught unawares

CHENNAI: It was bad enough when Rohit, working with Satyam in Chennai, read about Chairman B Ramalinga Raju’s move to acquire his son’s property and infrastructure companies sans shareholder’s approval.It was even worse when a week later he read about World Bank blacklisting Satyam on charges of data theft. But of late things are getting scary with rumours about Raju’s resignation and possible dilution of promoter’s stake. Surrounded by panic and uncertainty, he did the obvious: registering in a slew of online job portals.Like Rohit, thousands of employees across the globe are groping under amplified fear and are likely to relook at their long-term commitment with the company.This, in the wake of the ongoing recession in US and UK markets have made the situation worse.“We were asked not to panic and the rumours about Chairman’s resignation are baseless. All said, Satyam, as a corporate brand, is losing steam and no one with the skill set would like to be associated with it for long,” says Archana Shukla* an entrylevel employee based in Hyderabad.A BT-Mercer-TNS Best Employer Survey in 2006 ranked Satyam as the third best place to work for in India. Similarly, a study conducted by Hewitt Associates in partnership with The Wall Street Journal Asia in 2007 ranked Satyam as one of top three employers in India. “It was one of the top five Indian IT employers but I am not sure if that’s true anymore. Attracting top quality talent across the levels will be difficult in the near future,” said Manish Sabharwal, Chairman, Teamlease Services, a manpower and temping services company in Bangalore.In September 2008, it was named the Most Admired Knowledge Enterprise (MAKE) for the third year in a row by a panel of Asian Fortune Global 500 business executives. But whether it will retain the honour in 2009 remains to be seen. “The recent incidents will impact all the stakeholders including employees, whose services are vital for the company’s growth.The strategic team should gather as much confidence as it can to revive its position,” said Kaustubh Dhavse, Deputy Director- ICT Practice, Frost and Sullivan, South Asia and Middle East.Meanwhile, the company is pulling out all stops to allay fears among associates and other stakeholders. “We are doing all we can, in every possible way to restore confidence. We have gone through many ups and downs and survived them all,” said a senior Vice President, Satyam Computer Services.

Why did Sensex crash from 20K to under 10K?

Had the Sensex been at 30,000 today, we might have justified the level by quoting many facts and statistics. Some of them could have been: The
interest rates are on their way down and back to the levels of two years ago. Inflation is down to nearly 6.5%. The rupee is at an all time low of 50 against the dollar. The crude prices are below $50 a barrel.

With the new pay commission for the central government employees and significant pay hike just announced for the PSUs, the urban purchasing power should be strengthening. The year has had its standard quota of monsoon. The last quarter ended fairly well, at 7.5% growth. Nearing elections, the government has been bending backward, easing up on an array of policies. The government has already announced its continuing commitment to invest heavily in infrastructure.

Real estate prices are down to more realistic levels and home loans are headed southwards as well. The worst hit suffered by an Indian bank by the subprime crisis is the ICICI Bank, according to which the hit is a mere $32 million that has been accounted for by the bank. Our foreign exchange reserves remain a healthy $260 odd billion. The Mumbai terror attack has unified the country like never before. Mumbai is on the move again.

But Sensex is not at 30,000. It is closer to 10,000. Not counting the Mumbai terror attacks, which were a later phenomenon, our gloom about the financial crisis is all about the Sensex plummeting below 10,000. So our financial crisis is really a crisis of Sensex rather than any real effect of the subprime related crisis.

Why did Sensex crash from 20,000 to under 10,000 within a year? Not because our economic fundamentals have crashed overnight. Why did Sensex climb from 10,000 to 20,000 earlier in the first place (a question rarely asked)? Not because our economy had performed some unheard of miracle. The Sensex soared because some foreign institutions, with their home markets hardly offering any investment opportunities invested heavily in our market. And it plummeted when they took a big hit back home, needed their money real bad and fast and pulled back their investments. Soon they will have no option but to bring the investment back to our doorstep.

It is strange that when prices fall in general, we are all happy because goods are now better value. But when stock prices fall, we shed copious tears. Exactly the same stocks with exactly the same economic fundamentals were great buys with Sensex at 20,000; but they are bad investments today with Sensex at some 10000 odd!

I think ours is a crisis of confidence, and an imagined one at that. Consider this. Last month, a young graduate I know received an offer through a large recruiting process, as an executive in one of the leading software companies of the country.

They gave him 48 hours to join with a set of documentation an inch thick, including an “agreement” that he will serve for a minimum of two years backed by a surety of Rs 1,25,000. As this had to be provided by me and I was travelling, I asked him to seek three days time, which he did. During the week when all this was happening , the story of Lehman Brothers folding up and other related stories from the west hit the news-stands.

On the third day, with all documentation complete, when the lad appeared before the company to join, all the offers had been put on hold and then effectively withdrawn , on account of “the financial crisis” ! Now what kind of national company would do that, except as a knee-jerk reaction? Incidentally, this is not the only company to do so.

Only last year, as the rupee was under 40 to the dollar, our IT companies were crying hoarse for the government to weaken the rupee. And today, when the rupee is down 25% from a year ago, we only get to hear about loss of contracts. Assuming that there are cancellations in some contracts for these IT companies, doesn’t the rupee devaluation of the tune of 25% in less than a year even partially offset that fact?

Doesn’t the slowdown also open up a greater case for some more outsourcing for greater competitiveness in the US and Europe? This is not to say that some individual sectors have not been hit severely by the slowdown in the western economies. But they hardly account for the entire economy. Besides, isn’t the Indian market big enough? If steel, cement and hotel prices are down today, did they not see a phenomenal rise in tariffs the last few years?

Today, our only cause for concern should be the issue of dealing with Pakistan. Whatever the attributed reasons for systemic failure leading to the attacks, the issue is being dealt with some degree of maturity by the government. So let us be more upbeat.
Our financial crisis is only in our minds. So let us not over-react irrationally. Look at the brighter side of the crisis — namely some of the best jokes that are coming our way. My own favourite is: “This is worse than a divorce. I lost half my money and still have my wife.”

(The author is CEO, GMR Varalakshmi Foundation)

India targets $58 billion software export this fiscal

The ninth edition of the largest IT global networking event in India, INDIASOFT 2009, to be held in Kolkata, is targeting the new emerging markets of South Africa, Spain, France and Germany for software exports and services.

Last fiscal, the country exported software worth $45 billion and the target this fiscal is around $58 billion. Out of this, $3.6 billion has been earmarked for electronics hardware and $55 billion for software and services.

"The software market in South Africa is estimated to be around $12 billion and we want to tap this potential market. At present, we export 0.7% of it only and want to increase it," said DK Sareen, executive director of Electronics and Computer Software Export Promotion Council (ESC).

INDIASOFT 2009 will have around 120 buyers from these focus regions and also from Latin America, he said. The event will be held in Kolkata on February 26 and 27, 2009.

Around 80 domestic exhibitors will participate in the event. When asked about the last fiscal figures of the IT industry, Sareen said the industry did a business of $25 billion from April to September, involving $2 billion in the electronics hardware and $23.65 billion in software services segment.

"We have already achieved 45% of the total target of $58 billion in the first six months and let us see how we fare in the coming months," Sareen said. The first six months recorded a growth rate of 30%.

West Bengal IT minister Debesh Das, who was present in the curtain raiser of the event, made it clear that INDIASOFT 2009 is a big opportunity for the city's small and medium scale enterprises in the IT sector. "IT SMEs in the city are surpassing the SMEs of Hyderabad, Pune and Chennai in quality," Das told reporters.

Now, a machine that will make wine hangovers history

Fri, Dec 26 12:25 PM

London, Dec 26 (ANI): Even the most cautious wine drinkers wake up with what one can call post-Christmas hangovers. But a new invention by a South African company provides a magical cure to the headache, nausea and shaking associated with excessive drinking.

What's more, the technology improves the taste of the drink in the process.

Headaches after drinking wine are usually caused by sulphites - sulphur dioxide added to the bottle to kill off unwanted microbes and yeasts and limit oxidation.

Now, a new machine by L'Ormarins, near Stellenbosch in the Western Cape wineland, work towards reducing greatly the volume of sulphites by using ultraviolet rays to do the job.

Called Surepure, the technology is being tested by a many South African wine estates including Steenberg, Alluvia Stellar Organics, Clarius, Bouchard Finlayson and L'Ormarins, as well as winemakers in California, Chile, New Zealand and Australia.

According to Neil Patterson, cellar master at L'Ormarins, a wine that is almost free of sulphites cannot come too soon.

Patterson has a sulphur intolerance, causing blotchiness around his eyes, and was looking for a solution before hearing about Surepure.

"I'm lucky that I work for someone who is keen to embrace new technology. The use of sulphites in wine is a problem. It does control microbacterial activity and prevents oxidation but it also kills nonharmful elements which can add to the taste and flavour of a wine," Times Online quoted Patterson, 28, as saying.

Guy Kebble, CEO of Surepure, said: "We think this will change the way wine is made. It is a conservative industry but people's attitudes to sulphites and demands for a healthier diet and lifestyle are making winemakers look at alternatives."

Roughly the size of two fridge-freezers, the new machine, has wine piped in and out through two pipes, while the passing liquid is exposed to UV-ray lamps.

This way, Surepure can process 4,000 litres in an hour and the process can be repeated as many times as the winemaker wants.

"Using this technology we can cut down the need for sulphites and improve the quality of our wine," said Patterson. (ANI)

BSP MLA an extortionist, alleges engineer

There's mounting evidence against BSP MLA Shekhar Tiwari arrested for the murder of a PWD engineer in UP.

The engineer's predecessor in the public works department C D Rai says Shekhar Tiwari would regularly extort money for party funds along with his supporters.

Tiwari has been charged the National Security Act and the Gangster Act for the murder of engineer Manoj Gupta but his boss Mayawati denied that it was because of party pressure to raise funds.

Shekhar Tiwari and his supporters were booked for murder after a Public Works engineer Manoj Gupta was beaten to death. The engineer had reportedly refused to pay a donation for chief minister Mayawati's birthday.

"They were banging the door, and when I asked them who they were they said they were from the CID. I woke my husband and when he asked who they were, they said they were from the CID. When he asked them why they had come, they broke open the door and came inside. My husband locked me up in the bathroom, and they took my husband away," said Shashi Gupta, wife of Manoj Gupta.

Sunday, December 28, 2008

KPIT staff sent on compulsory leave without pay

PUNE: The cheer traditionally associated with the festive season at this time of the year is missing in many IT companies. Local companies are
feeling the heat of the economic slowdown in the West where companies and their employees are taking longer-thanusual holidays.


Technology solutions provider KPIT Cummins Infosystems is one of these. It has sent some employees on compulsory leave and is weighing a salary cut for all employees next year. Sending employees on leave without pay is an effort to reduce operational costs. While a company spokesperson said there was no compulsion in sending employees on leave, some employees told ET: “We have been told to go on a fortnight’s leave without pay,” thus indicating the compulsion behind the leave.

These employees added that they have been told the ‘bench’, which is a group of employees reserved for emergency work, would be reduced next year because revenues from clients has fallen.

The company spokesperson said, “We are restructuring the business because of the global recession. We are working out how to reduce operational costs in order to sustain the business if conditions worsen in the next few months. The only step we have taken regarding employees is warning them of the possibility of a reduction in the variable pay, although a decision on this has not yet been taken. There are no plans to reduce the number of employees.”

The Pune-based KPIT had a market cap of Rs 210.20 crore as on December 24. Among its investors are the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which invested $2.5 million in 2006. This was preceded by an investment of $8 million for an 8% stake by LB 1 Group Inc, an affiliate of the now defunct investment banker Lehman Brothers.

This preferential allotment had brought down promoter share holding to 42%. The IFC investment was in addition to its prior commitment of $11 million long term debt to KPIT Cummins. Cargil Ventures and Cummins Inc are the other strategic investors in the software company.

KPIT Cummins’ moves now follow a 2% across the-board salary cut by Persistent Systems, a Pune-based outsourced software product developer.

IT job losses in India can top 50000 in '09

Over 50,000 IT professionals in the country may lose their jobs over the next six months as the situation in the sector is expected to worsen due to the impact of global economic meltdown on the export-driven industry, a forecast by a union of IT Enabled Services warned.

"There would be 50,000 job losses (IT and BPO put together) over the next six months," Karthik Shekhar, general secretary of UNITES India, a politically neutral union of ITES professionals said.

The job loss in the IT and BPO sector in the country topped 10,000 in the September-December period, Shekar said.

While employees of medium-sized companies bore the brunt of job losses in the September-December period, it's going to be their counterparts in the big and small firms who would increasingly face the axe in the coming six months, he said.

UNITES India, affiliated to the global union United Network International, suggested that the companies in trouble could resort to salary and incentive cuts without trying to "squeeze" the staff, rather than adopting the "layoff path".

Employees are willing to take such cuts for 12-16 months till the demand picks up again, when such benefits should be restored to them.

Shekhar said senior officials of the industry had concurred with the figure of 10,000 job loses in September-December, stating that it accounted for "bottom five per cent of the performers".

Consultations with the union's counterparts in the US and UK suggested that slowdown would continue to hit the offshore sourcing space, he said.

He said factors like continued slowdown, likely "tax application" to companies outsourcing jobs under the new US regime and tightening in regard to H1B visas were among the key reasons cited for the acceleration in issue of pink slips.

Santa guns down three in LA, hunted

Los Angeles: At least three people were found dead after a man dressed as Santa Claus started shooting at a Christmas Eve party in suburban Los Angeles, police said Thursday.

An 8-year-old girl and a woman in her 20s were hospitalised with gunshot wounds that authorities do not consider life-threatening.

Crews took a third person to a hospital with an injury that wasn't life-threatening and wasn't caused by gunfire, said police in Covina, a city about 20 miles east of downtown Los Angeles.

The shooting started around 2330 hrs (local time) on Wednesday.

When police arrived at the two-story house, they discovered a fire that caused "significant damage." Authorities found three people dead inside but said they do not know how the three died. Their identities had not been released Thursday morning.

"There was some source of ignition that caused the fire," Covina police Lt. Pat Buchanan said at a news conference Thursday morning. "We've not been able to identify it yet."

Covina police identified "a person of interest" in the assault as Bruce Jeffery Pardo, 45. Pardo was described 6 feet 3 inches and 250 pounds with brown hair and blue eyes.

Authorities said Pardo's name was given to them by people who were at the party.

Buchanan said Pardo was "going through some type of marital problems."

Police believe the residence where the shootings occurred belongs to one of Pardo's relatives, Buchanan said.

According to police, the gunman arrived at the party wearing a Santa Claus outfit but changed into regular street clothes before leaving. The gunman is considered armed and dangerous, Buchanan said.

Friday, December 26, 2008

The lack of female Einsteins is all down to numbers

Why are there so few female Einsteins? Many people share a belief that while women can do science, there are far fewer women than men at the very top of the science hierarchy because women just aren't as innately good at science as men. Others feel this view is wrong but cannot easily put their finger on why.

They should be able to now. There are few women at the top of science because there are so few women in science. It's simple statistics.

The absence of women at the top in scientific endeavour is real. There is not one woman in New Scientist's list of scientific heroes for 2008, for example. And in chess, which is arguably as intellectually rigorous, there has never been a female champion, and fewer than 1% of grandmasters are women.

But chess has something science doesn't: a clear ranking system based on performance in competitions from school age up. Using the records of the German chess federation, Merim Bilalic of the University of Oxford and colleagues found that statistics can explain the absence of women at the top. "More extreme values are found in larger populations," she says.

Those rare exceptions

Individuals at the top are, by definition, rare. In two groups with the same average performance and variability, the larger group is simply more likely to have more of these rare individuals, just because it is larger. The greater the difference in group size, the greater the chance the bigger group will have more exceptional individuals.

To test this idea, Bilalic's team checked the records of the German chess federation – in which males outnumbered females 16 to one. They found that the statistical effect of this difference in numbers accounted for 96% of the observed difference in performance between the sexes. "There is little left for biological differences to explain," says Bilalic.

While statistics may explains the absence of females at the top, they don't explain why there are fewer females in the first place. If this is due to any innate differences in chess ability between the sexes it would have to influence whether children start to play the game at all, because the dropout rates for girls and boys once they do start are similar.

Many other factors might keep girls from ever getting into chess, such as cultural expectations, the difficulty of breaking into an activity dominated by boys, or just having been told they're less good at it. "But you can no longer cite the greater number of men among the most successful people as evidence of innate differences until the effects of participation rates have been allowed for," says Bilalic.

In short, it's hardly surprising that there are so few women Einsteins when there are so few male ones – and so many more men are trying.

Journal reference: Proceedings of the Royal Society, DOI:10.1098/rspb.2008.1576

Thursday, December 25, 2008

Meltdown aftermath: No takers for GRE?

In the last seven years, the most foreign students in the US were from India. That was a record 94,563 in 2008. But economic recession, bleak job prospects in the US and increase value of dollar against the rupee seems set to bring that down by more than 20 per cent.

Those taking the mandatory Graduate Record Exam (GRE) this year is down 22 per cent and in colleges that train students for GRE, the dip is more than 50 per cent.

Archana Kamalakar, MSc Microbiology Gold Medalist 2007 from Osmania University, took the exam last year hoping to pursue a doctorate degree in the US. Now she has changed her plans.

"Primarily because of the recession and there is a job crunch. So there was a lot of apprehension from my parents point of view whether I will be able to survive there in terms of paying my rent for the house, food all the expenses," she says.

A student on an average spends 60,000 to one lakh rupees to take the GRE and complete formalities for admission to a US university. College fees add up to anywhere between 17 and 21 lakh rupees.

Jaideep Chowdhary, National Programming Head GRE, says: "US education has become much more expensive because last year the dollar was around 40-42 rupees. Now it has gone up to 49-50 rupees. So in the immediate term the impact on the economic condition of the family also plays a role.''

According to a recent report of the Educational Testing Service in the US, the number taking the GRE in India has dropped from 74,000 to less than 58000. Some say it is not because the US has become any less attractive as a study destination.

Anoop Kumar of Visu Consultants says: "There has been a career shift among engineering and science students. Many are going for MBA and hence people are taking GMAT than GRE.''

Interestingly, in the last 7 years, India was topping the number of foreign students admitted in US universities.

Now it seems the grass is looking greener on this side as many now feel that India presents loads of opportunity in a more secure social and economic environment.

Satyam shares pull back on takeover talk

MUMBAI: Satyam Computer shares plunged as much as 18.3 per cent to a five-year low of Rs 114.65 after it was barred from business with the World Bank for eight years, dealing another setback for the No 4 Indian outsourcer following a botched move into the construction industry. However by close, the stock, which had fallen 13.6 per cent on Tuesday, clawed back to limit losses to 3.9 per cent at Rs 134.95 as some investors termed the loss “excessive” after the stock fell nearly 50 per cent in just six trading sessions.

Speculation was also rife that the company could soon come under a takeover move as the stock valuation is now considered very cheap. “The promoter stake is low at around 8-9 per cent. It’s easy for any acquirer with deep pockets to mount a takeover of the IT company. Given its weak reputation, I don’t think other shareholders will object,” said BSE dealer Pawan Dharnidharka.

Mutual funds, insurance companies and FIIs together hold around 61.5 per cent stake in the company. As per the current Sebi guidelines, an acquirer will have to purchase 15 per cent before making an open offer for 20 per cent from shareholders. Who would be interested in Satyam? “It can be a foreign company also,” said a dealer.

Satyam has fallen 41 per cent in the last one week while Maytas Infra has crashed over 60 per cent to Rs 181.25 in a week. Market capitalisation of Satyam has fallen Rs 6,000 crore and Maytas Infra by Rs 1,800 crore, leading to a total loss of Rs 7,800 crore for their shareholders.

There was no Christmas cheer on Dalal Street on Wednesday. Stocks skidded for a third day, falling 1.2 per cent on Wednesday to their lowest close in more than two weeks, as investors braced for poor quarterly earnings due next month. The main 30-share BSE Sensex shed 118.03 points to 9,568.72, its lowest close since December 8. The market, which is closed on Thursday for Christmas, has lost 5.3 per cent this week after rising 4.2 per cent last week.

Understanding the psyche of acid attackers

Srinivas, an engineering college dropout in Warangal town of Andhra Pradesh, attacked a girl who spurned his love, with acid. The reason -- he could not take no for an answer. Some undergraduate college students also helped him in the act.

Hours before being killed, the accused said they had plotted the attack for one month. Srinivas said he practiced throwing water on a doll 17 times over 10 days to get an accurate throw and cause maximum harm.

Srinivas's father disowned him and even refused to take his son's body for last rites.

"Whenever someone seems abnormal, parents also have to take some responsibility, monitoring the person's actions and may be getting psychiatric help. Otherwise this will not stop," said a local.

Parents of Swapnika who suffered 55 per cent burns said they empathised with the parents of the accused but say there is a lesson there for other parents.

"Parents have to take at least 50 per cent responsibility. The parents need to monitor what the child is upto. When he does something wrong, you should not continue supporting him. The child needs to know that he is doing wrong," said Sreelatha, mother of the acid attack victim.

But, could parental and societal monitoring of the activities of youth to stop them from taking a road to nowhere minimise acts of violence? And are there any warning signals that one can get from the personality profile of such youth?

"They are selfish, very demanding and self-centred. They want all wishes fulfilled immediately. They want immediate gratification, low frustration-tolerance, so they resort to these acts. When their wishes are not fulfilled, they have extreme anger and hatred. They would like to ruin somebody else's life. We hear of people sending bad SMS, letters to defame, they show anti-social traits," said Dr Gowri Devi, Superintendent at the Institute of Mental Health.

Behaviour patterns and habits get set over time; the earlier the intervention, the better.

"It becomes a habit and behaviour pattern. When I demand, I cry, scream and threaten for it. As a result, I get it. When parents identify such violent behaviour, breaking articles, sulking when wishes are not fulfilled, they have to be taken to psychologist. Go for behaviour modification. Limit-setting of behaviour. How much parent should accept? How child should develop frustration-tolerance. But this is not being screened, identified or accepted. Only when behaviour becomes very destructive, attacking parents, other children, by that time it is generally too late," Dr Gowri said.

Wednesday, December 24, 2008

Wipro buys Citi Technology Services for $127 mn

In a move that can well send out a signal to the industry about the state of the affairs in the captive delivery centres of global banking giants in India, Wipro Technologies, the flagship business of consumer care to IT major Wipro, has announced to acquire Citi Technology Services, the captive delivery centre of IT services and solutions centre of Citigroup in India, for a consideration of $127 million (around Rs 609 crore) in an all cash deal.

This is Citigroup's second India-based asset which is being sold out to one of its service provider, after the company recently sold its captive BPO arm Citigroup Global Services to TCS for about $505 million.

While acquiring Citi Technology Services along with 1,650 odd employees working across its four delivery centres in Mumbai and Chennai, Wipro has managed to get a revenue commitment of about $500 million over the next six years, what Citi's Global Technology Head Jagdish Rao termed as 'minimum commitment' to the buyer.

Citi Technology Services which started its operations in India in 2004, has reported a revenue of $53 million in the calendar 2007, and the company is expecting to corner a revenue of $80 million in the ongoing calendar.

"It is just the starting point. We feel there will be greater demand for their services as we go forward. This ($500 million of committed revenue) is what the minimum commitment we are making at this point of time," Rao told media persons on Tuesday.

Citigroup has been working with Wipro for technology services during the last four years. The present commitment along with a BPO service contract what Citi has awarded to Wipro in the ongoing quarter, will make Wipro the 'top service provider for the company from anywhere in the world', he added.

Wipro's BFSI practice which was one of the largest revenue earning vertical for the company with contribution of about 27 per cent to the company's consolidated revenue is under pressure much in the same way like most of its peers owing to global financial turmoil, which has hit the BFSI sector the hardest. The committed revenue from Citi as a part of the transaction is supposed to be the driving factor for going after the deal, according to industry analysts.

Girish S Paranjpe, Joint CEO, of Wipro's IT Business, however, said the company decided to acquire the unit because of the values it brings to the table.

"We acquired it because of the quality of the unit that has been set up; and the knowledge and expertise of the people there. A very few global banks actually have done this kind of sophisticated works out of India. This brings us a unique capability which is not only in terms of people, but the experience on how to run a global operation like this. More than that, it also gives us the chance to scale it up and take it to the next level. I think this is a wonderful opportunity," Paranjpe told Business Standard.

Wipro said that the Master Services Agreement that they have signed with Citi does not restrict them from serving other clients out of the centres. "We are under obligation to make sure that the works for Citi does not suffer," Soumitro Ghosh, senior vice president, Finance Solutions, Wipro said. Wipro will provide technology infrastructure service and application development & maintenance services to Citi as part of the transaction.

Wipro has a cash reserves of close to $1 billion, including a short-term loan of close to $500 million it raised in March last year.

Engineer killed for not 'funding' Maya's b'day party

An executive engineer of Public Works Department (PWD) was allegedly beaten to death by some unidentified persons, believed to be supporters of the local BSP MLA here, about 100 kms from Kanpur.

Uttar Pradesh Engineers Association has gone on an indefinite strike to protest the incident.

According to a report lodged with the police by Shashi Gupta, wife of deceased M K Gupta, two unidentified men entered their house in Gail Vihar in Dibiyapur forcibly yesterday night and started beating her husband badly.

They locked Shashi in a bathroom and continued beating the engineer, injuring him seriously, the report said.

Later, local BSP MLA Shekhar Tiwari allegedly reached the spot and left the seriously injured engineer at a nearby police station, from where he was rushed to the hospital, the wife said, adding that he was declared dead at the hospital.

ADGP (Law and Order) Brij Lal said in Lucknow that police were looking for Tiwari who is absconding. The role of Tiwari is under the scanner, according to police.

Tiwari is believed to have demanded a huge amount of money in connection with the birthday celebration of party leader Mayawati from the engineer, who is understood to have turned down the demand.

According to Shashi, the two unidentified men were addressing each others as Tyagi and Bhatia, police said.

"We have registered an FIR in this connection and probing the entire matter", Additional Superintendent of Police, Sureshwar Mishra said.

While the motive of the crime is being ascertained, police is not ruling out the possibility of the extortion angle being behind it. Mawayati's birthday falls next month.

When asked about it, Mishra said that it was matter of investigation.

Senior police officers including the IG and the DIG have rushed to the spot.

World Bank Admits Top Tech Vendor Debarred for 8 Years

For months, the World Bank has been stonewalling and denying a series of FOX News reports on a variety of in-house scandals, ranging from the hacking of its most sensitive financial data to its own sanctions against suppliers found guilty of wrongdoing.

But last week the world's most important anti-poverty organization suddenly came clean — sort of — in its tough sanctions against a vitally important computer software service supplier that has been linked not only to financial wrongdoing but also to the ultrasensitive data heists.

A top bank official, FOX News has learned, has admitted that a leading India-based information technology vendor named Satyam Computer Services was barred last February from all business at the bank for a period of eight years — and that the ban started in September.

The admission confirms what FOX News reported from its own bank sources on October 10 — a report the World Bank officially disparaged at the time.

The World Bank's revelation of the ban on Satyam comes at a watershed moment for the $2 billion (sales) outsourcing giant, which boasts more than 100 Fortune 500 companies as clients and which trades on the New York Stock Exchange. Last week, India's securities commission announced that it would investigate Satyam.

The move came after the company's founder-chairman suddenly announced the company would spend $1.6 billion to buy two distressed real estate and infrastructure companies that are run and partially owned by his two sons. After Satyam's stocked dropped 55 percent in value, the company reversed course.

The World Bank debarment — the harshest sanction the world's largest anti-poverty agency has imposed on any company since 2004 — was meted out for "improper benefits to bank staff" and "lack of documentation on invoices," according to Robert Van Pulley, the top World Bank information security official.

True to its secretive ways, the bank did not make the admission in public. Instead, Van Pulley made the comments in a meeting and two telephone conversations with officials of the Government Accountability Project (GAP), a 30-year-old whistle-blowing organization based in Washington.

One of the phone conversations was recorded, and FOX News was allowed to listen to the tape after the World Bank backed away from its initial insistence that the conversation remain unreported.

Even so, when asked to comment on the recorded conversation, Van Pulley did not return telephone calls from FOX News. But in a conversation last Thursday with GAP, he conceded the Satyam case had been turned over to the Justice Department in 2006 — as FOX previously reported — as well as to the U.S. Treasury Dept.

It is not known if a case against Satyam or World Bank officials is being pursued by either government agency.

Van Pulley was recently named acting head of information security of the World Bank Group, as part of a management shakeup in the wake of a FOX News series about cyber breaches, corruption and cover-ups at the bank. He is also in charge of the bank's procurement department, where he oversaw the Satyam contract.

From 2003 through 2008, as FOX News reported, the World Bank paid Satyam hundreds of millions of dollars to write and maintain all the software used by the bank throughout its global information network, including its back-office operations. That involved overseeing data that ranges from accounting and personnel records to trust funds administered for many of the world's richest nations.

But at the same time, Satyam was straying badly across the bank's ethical warning lines. In 2005, the bank's chief information officer, Mohamed Muhsin, was ousted after being accused of improperly buying preferential stock options from Satyam, even as he awarded the firm major contracts. A top-secret investigation led to Muhsin being banned permanently from the bank in January 2007. But for reasons that remain unclear, Satyam was allowed to remain in control of the bank's information network until early October 2008.

Van Pulley initially agreed to talk with GAP only off the record after the organization raised questions based on the FOX News reports with World Bank president Robert Zoellick. But GAP international program director Beatrice Edwards, a participant in the talks, objected.

"In this investment climate, there is really very little tolerance for maintaining secrecy about malfeasance at high levels of publicly traded companies," she warned Van Pulley. "And if your own vendors are engaged in bribery of high-level bank officials, and that is secret and off-the-record, that is a problem."

Van Pulley then reversed himself and allowed GAP to make his remarks public — but still refused to provide a written version of his admission. At press time, however, an anonymous World Bank spokesman conceded to FOX News that Satyam was "suspended" in February, declared a "non-responsive vendor" and then "made ineligible to be a bank corporate vendor" until the year 2016.

To date, the World Bank boasts it has banned 343 individuals and companies from doing business with the bank — in many cases permanently. A list of the debarred firms is on the bank's website, but Satyam's name is not included.

In October, Satyam declined to speak with FOX News about anything related to the World Bank, including any ban. But during a press conference several days after the article was published, a Satyam board director and senior executive, Ram Mynampati, denied the company had been banned from future work.

Securities lawyers contacted by FOX News say the debarment by the World Bank — one of Satyam's largest and most important customers — should have been announced by the company to its shareholders immediately and also filed with the U.S. Securities and Exchange Commission.

The World Bank's denials and quiet admissions about its troubled relations with Satyam also refocuses attention on an earlier set of bank denials, after FOX News in October reported that the Satyam-supervised computer network of the World Bank Group had been hacked repeatedly by outsiders for more than a year.

According to FOX News sources, one of the worst breaches apparently occurred last April in the network of the bank's super-sensitive treasury unit, which manages $70 billion in assets for 25 clients — including the central banks of some countries.

Sources told FOX News that bank investigators had discovered that spy software had been covertly installed on workstations inside the bank's Washington headquarters — allegedly by one or more contractors from Satyam. "I want them off the premises now," Zoellick reportedly told his deputies. But at the urging of the bank's then-chief information officer, Satyam employees remained at the bank through early October while it engaged in a "knowledge transfer" with two new contractors.

The bank has vociferously denied that any breaches of its treasury unit took place. And, in his discussion with GAP's officials Thursday, Van Pulley denied that Satyam was behind any of the bank's security breaches. Asked by GAP's Edwards who is responsible for the breaches, Van Pulley stated, "I'm not in a position to tell you," adding that "we're confident" it wasn't Satyam.

Tuesday, December 23, 2008

Satyam's credibility in line of fire







BANGALORE/NEW DELHI: Concerns surrounding corporate governance and the decision-making capabilities of the management of Satyam Computer Services

could adversely affect the way the company is viewed by potential customers such as Australian phone firm Telstra and existing clients such as Applied Material, IT industry insiders and analysts say.

While customers look at the consulting and technical capabilities of a vendor, any ambiguity around management and corporate governance will send the wrong signals, especially when an outsourcing decision is being taken, an expert familiar with outsourcing decisions at Telstra and several other customers said, requesting anonymity.

India’s fourth largest software exporter faced a backlash from financial investors after it announced a decision to buy companies run by the sons of Satyam founder-chairman Ramalinga Raju for $1.6 billion. Within a few hours, a chastened Satyam called the deal off. Satyam, which ironically won Golden Peacock Award for corporate governance this year, might have some explaining to do while bidding for large deals worth $50-$100 million.

Existing customers such as Applied Material, which awarded a $200-million contract to Satyam last year, are also concerned. “In fact, Applied Material earlier thought Satyam was acquiring an IT infrastructure company. After they got the true picture, they are concerned,” said a person familiar with decision-making at Applied Material. The company itself could not be reached for comment on Wednesday. A Satyam spokesperson did not reply to an email query by ET.

Many large customers, including US conglomerate GE, are expected to review and plan their IT budgets over the next two months, and several others will be looking to renegotiate their existing contracts. “We fear collateral damage as Satyam defends its customer base from predatory attacks from competition, and perhaps pricing will get even weaker,” said Bhavtosh Vajpayee of CLSA.

While any ambiguity will send the wrong signals to potential customers and existing clients of Satyam, there are concerns that the rest of the Indian IT industry may be tarnished with the same brush. “When a company such as Satyam attempts to do something like this, it also raises questions about the industry as a whole in the minds of customers,” said Sabyasachi Satyaprasad, founder of outsourcing advisory firm Mindplex.

“Customers planning to reduce the number of vendors they work with will also think twice before retaining Satyam,” he added. A Mumbai-based investment banker said the knee-jerk reaction demonstrates that Satyam is losing interest in the IT business. “Why will any client give its IT contract to Satyam? At a point when growth is the single most challenge, the move sends a wrong signal to the market.’’

Analysts such as James Friedman of Susquehanna Financial Group, described the developments as “reckless behavior with regard to corporate governance and cash balance usage for other considerations while its (Satyam’s) peers instead are contemplating and/or pursuing share repurchases.” In a note on Wednesday, Mr Friedman observed that that it will be a hard grind to restore management credibility at the company, “but we believe a share repurchase would go a long way.”

Anil Advani, research head at SBICAP Securities, said that customers might reconsider their decisions fearing a possible takeover of the company and a potential management change. Meanwhile, industry veterans such as Raman Roy, who helped outsourcers such as GE establish their IT offshoring programs in India, said the impact might not be severe for Satyam.

“Corporate governance is a hygiene issue, which is significant in cases where the relationship is strategic and larger than a simple client-vendor relationship. In a normal vendor-client relationship, the impact will be less significant,” said Mr Roy, who is now the managing director of Quatrro BPO Solutions.

(With inputs from Shelly Singh in Delhi)

Recession hits liquor sales in Kerala

Sun, Dec 21 11:30 AM

Thiruvananthapuram (Kerala), Dec 21 (ANI): The ongoing global economic meltdown has pulled down liquor sales in Kerala, one of the highest liquor consuming states of the country.

The beeline at counters of beverages corporation during peak hours in the evening has dried up. Barely more than five to six people are seen at leading shops in Thiruvananthapuram.

Biju Ramesh, owner of the leading liquor giant in the state, owing about 20 bars here, said that he is facing about 20 per cent decline in his sales.

"We are not getting the medium segment and cheap segment liquor. It's not available in the Kerala State Beverages Corporation. Now in December, we are facing a lot of problem. There is very scarcity in the medium segment also," said Ramesh.

According to figures, in the last month, the sales of Indian Made Foreign Liquor (IMFL) dropped by 22.23 per cent. The sales might increase in December due to Christmas and New Year.

Residents feel that as the purchasing power of common man has gone down. They think twice before purchasing liquor.

"Liquor sector has the dubious distinction that Kerala stands first in the consumption of alcoholic beverages. The purchasing power or spending capacity of the common man has come down drastically. The daily bread earner is thinking twice on pending so much money on liquor," said Prakash, a resident.

In September last year, the sale of liquor was 4.8 billion rupees, but this year it went down to 3.81 billion rupees.By K S Ashik (ANI)

GM equity may be wiped out: Credit Suisse

General Motors SUV's are displayed in an autosales lot in Troy, Michigan in this June... Enlarge Photo General Motors SUV's are displayed in an autosales lot in Troy, Michigan in this June...

Mon, Dec 22 07:58 PM

Reuters - General Motors Corp's equity may be largely if not entirely wiped out as it complies with the restructuring targets laid out in the federal auto bailout, an analyst at Credit Suisse said, cutting his price target to $1 and his rating to "underperform."

GM shares were down about 7 percent at $4.19 in trading before the bell Monday.

"Over the next two months...it will become increasingly clear that the enormous sacrifice of value on the part of the union and bondholders will require the complete or near-complete elimination of the existing GM equity," analyst Christopher Ceraso wrote in a note titled "Game Over for Existing Equity."

The U.S. government on Friday came to the rescue of U.S. automakers with $17.4 billion in emergency loans, some $13.4 billion of which will be made available in December and January, taken from a $700 billion Wall Street bailout fund originally designed to rescue struggling financial institutions.

The government attached a string of conditions to the three-year loans and set a deadline of March 31 for the automakers to prove they can restructure enough to ensure their survival or have the loans called back.

As part of the rescue, GM is required to reduce debt by two-thirds via debt-for-equity swaps, pay half of the contributions to a retiree health care trust using stock, make union workers' wages competitive with foreign automakers and eliminate the union jobs bank, which pays laid-off workers.

"If GM and its stakeholders can navigate through a tricky set of negotiations, and all parties can agree to sacrifice value in a manner consistent with the targets laid out by the government, we still arrive at a discounted cash flow-derived equity value of less than one dollar per share," Ceraso said.

If the bondholders and unions cannot come to an agreement over the amount of value to be sacrificed, GM may still end up in bankruptcy court, Ceraso said.

Ceraso previously rated the stock "neutral" with a price target of $2.

Monday, December 22, 2008

Satyam's big guns may run out of ammunition

18 Dec 2008, 0413 hrs IST, Jessica Mehroin Irani & Dev Chatterjee, ET Bureau


MUMBAI: Satyam’s abortive bid to acquire Maytas Properties and Maytas Infrastructure has given rise to some uncomfortable questions on the

actions of the Satyam board. As it happens, some of the independent directors on that board have storied reputations which are likely to take a knock in the wake of the bizarre episode.

Despite attempts by this paper, some of the big guns on the board were not reachable at the time of going to the press. Vinod K Dham, famously known as `father of Pentium’ and an ex-Intel employee, when contacted by ET in the United States first refused to talk, saying that it was midnight in the US. Early morning, calls were forwarded to an answering machine.

ET’s detailed mail to Krishna G Palepu, a famous Harvard professor, also remained unanswered at the time of going to press. Mr Palepu and Mr Dham attended the board meeting via conference calls as both were in the US Tuesday evening. The board was again consulted over the telephone to revoke the decision early Wednesday. The board was alerted late on Tuesday after investors, in the course of the now-famous conference, made it clear what they thought about the decision.

The dean of the Indian School of Business, Mr Mendu Rammohan Rao, chaired the infamous meeting whose decisions, and their rapid reversal in the wake of shareholder fury, is now part of India’s corporate history. Mr Rao did not respond to repeated calls to his mobile by ET.

Other directors were more forthcoming, and defended the board’s decisions. Two independent directors on the board of Satyam Computers defended the Maytas acquisition, saying it was in the best interests of all shareholders as margins from the infotech business was falling whereas they saw a huge upside in the infrastructure and realty sector.

“Even your uncle will not sell you the land at the price Maytas was selling it to Satyam,” said T R Prasad, an independent director on the board of Satyam Computers and former cabinet secretary of India. He spoke to ET from Visakhapatnam.

The land was valued at Rs 1 crore an acre, Mr Prasad said, thus giving a valuation of Rs 6,500 crore for the entire 6,500 acre owned by Maytas. E&Y, Mr Prasad said, had given a report on Maytas which was considered by the board. However, in a statement to ET, E&Y denied doing any work for Satyam in relation to the deal. An E&Y spokesperson said that the firm had “no connection of any kind with the transaction”.

“We used common sense in this deal as prospects for infotech industry is not looking very bright and we think that realty prices have now bottomed out,” Mr Prasad said. “Infrastructure has great potential and Maytas Infrastructure could be compared to tomorrow’s L&T or Punj Lloyd,” he said.

Mr Prasad said all directors were unanimous in their decision to acquire Maytas Infrastructure and Maytas Properties and there was no dissent note. A Satyam spokeswoman said that Ramalinga Raju and Rama Raju, the promoters of the IT firm, were not present at the meeting when the other seven directors were voting on the deal. V S Raju, another independent board director and Mr Prasad, told ET that the two promoters did not take part in the voting.

The deal wasn’t sprung on the board of directors as they had been informed of the meeting’s agenda earlier. Mr Raju, a former director of IIT-Delhi and currently the chairman of the Naval Research Board, Defence Research and Development Organisation (DRDO), said that it was a well considered decision and that the agenda for the meeting had been circulated ‘well in advance’.

“It (decision) was done with all good intentions. We were surprised the market did not see it in the same light as us. We expected a normal or flat response, but not this,” Mr Raju said. Mr Raju was in agreement with Mr Prasad on the falling margins of Satyam. It was difficult for Satyam to reach its targets with its core IT business and hence they believed the acquisition would have helped them achieve those targets in the long-term, Mr Raju added. Mr Prasad said the company’s board had done its due diligence properly and adds the valuation looks reasonable considering the home prices in Hyderabad are at around Rs 3,500 to 4,000 per square foot while Maytas’ cost of building homes will be around a maximum of Rs 1,500 a square feet. “I still think it was a good deal for Satyam’s acquisition cost as land prices at Rs 300 a square feet was based on the state government’s notified prices,” Mr Prasad said.

On the conflict of interest, Mr Prasad said the board gave precedence to common sense and business potential rather than looking at promoter’s family connections.

Bankers pointed that valuers normally also look at the cash flow and the earnings report. On the question of the land value, normally a report from a real estate consultant is used for decision-making. Though there were reports that another bank was appointed for a fairness valuation, this could not be confirmed. The fairness valuation informs the board if the proposed transaction is fair to the shareholders.

Madoff scandal may be biggest in Wall Street history

1 Dec, 2008, 1924 hrs IST, AGENCIES


NEW YORK: When Bernard Madoff allegedly admitted that his investment company was a "big lie," few realized just how big -- and even now, as repor
ts of damage spread, no one is quite sure.


The alleged multi-billion-dollar Ponzi scheme revealed with Madoff's arrest December 11 may be the biggest in Wall Street history.

Already the scandal has sent shockwaves through Madoff's ex-clients worldwide and underlined systemic problems at the heart of the US financial industry and the government agency meant to watch over it.

As the investigation enters its second week, no one can tell where the damage will end.

The list of victims is already staggering, ranging from a charity run by Hollywood mogul Steven Spielberg to Japanese bank Nomura and European banks, where exposure ran into the billions of dollars.

Prosecutors allege that Madoff has confessed to losing upward of 50 billion dollars over years of running a pyramid scheme, where new investors were secretly fleeced to pay returns to existing investors.

What investigators don't know is where all that money went. This will be one of the main focuses this week, as victims clamor for compensation.

Other key questions include whether Madoff acted alone, and why the Securities and Exchange Commission failed to nail his alleged scam.

There were numerous red flags, not least the eerily consistent returns he provided investors and the bizarre fact that accounting for the huge enterprise was handled by a three-person office at an obscure firm outside New York.

Not only this, but the SEC actually opened an enquiry in 2006, following explicit accusations by a rival investor to Madoff, yet dropped the matter shortly after.

"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations," SEC chairman Christopher Cox said.

The probe will "include all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm," he said.

According to the Wall Street Journal, SEC investigators will be looking into Madoff's niece and a former SEC official she married in 2007.

The actions of Madoff's family members are an integral part of the extraordinary drama.

According to prosecutors, the affair first came to light when Madoff bared all to select employees. The Wall Street Journal says these were in fact Madoff's two sons.

But just a week later, Madoff was apparently unable to rely even on his sons for help.

Madoff, former pillar of Wall Street, former chairman of the Nasdaq stock market and a mainstay of the powerful American Jewish community, had been required by the court to sign up four bail guarantors.

He could only find two -- his wife and brother.

Following that humiliation, a court ordered Madoff to wear an electronic tag and to remain confined to his seven-million-dollar Manhattan apartment.

The mess has soured a public already disgusted with Wall Street as the source of the rotten practices that brought down a string of financial institutions in September.

In some quarters on the Internet that anger has emerged as crude anti-Semitism that the Anti-Defamation League on Friday called "deeply offensive."

"Jews are always a convenient scapegoat in times of crisis, but the Madoff scandal and the fact that so many of the defrauded investors are Jewish has created a perfect storm for the anti-Semites," said Abraham Foxman, ADL national director.