7 posts tagged “management consultant”
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Source: Times of India
Namrata Singh | TNN
Mumbai: With Dublin firm AgCert becoming the first carbon credits company to go into examinership, the signal to Indian companies pursuing clean development mechanism (CDM) projects is loud and clear: Understand project risks and manage them well. AgCert ran into financial problems as it could not meet its carbon credit delivery commitments to polluting companies.
As a result, its debts mounted to E90 million.
With the UN methodology to register emission reduction projects getting tougher, Indian industry is worried about similar outcomes, if risks are not entirely covered.
JSW Steel deputy GM Suresh Iyer said, “Companies need to do proper due diligence for CDM projects to assess the quantum of carbon credits expected to be generated. Factors like operational efficiencies, plant availability, etc, need to be taken into account before contracting part of the volume based on conservative estimates.’’
Risks across the carbon asset monetisation cycle are varied. According to CantorCO2e India MD Ram Babu, “Price risk can be mitigated by entering into at least part forward contracts or options. But project, technology and regulatory risks are to be managed by project developer/advisors. CDM revenue,as expected,will not accrue if companies don’t understand and manage the risks involved in the CDM process and project.’’
Issuance of CDM projects are falling short of registration by at least 30%.This is due to a shortfall in project performance, changes/clarification in the methodology.
There are times when companies, in a bid to get a better price for future credits, enter into contracts giving delivery guarantees even though their project type are known to have huge fluctuation in annual carbon credit generation.
Enam Holdings emerging business head Vishal Kedia said: “In some hydro projects, for example, there will be considerable annual fluctuations, as it is a ‘spill-over’ dam that only comes into play when there is enough water to fill the main dam and sufficient surplus to fill the second. In such a scenario, companies take unnecessary risks of fulfilling delivery guarantees by buying carbon credits from the open market.’’
Hence, though the contracted rate for delivered carbon credits is high in the agreement, in reality, the company’s realisation is much lower or even negative (after account for the loss they incur by buying credits in open market at higher rates). “In case the buyer of delivery-guaranteed credits gets into a financial mess, there is a risk of the buyer initiating litigation to enforce delivery guarantees offered by Indian company,’’ said Kedia.
According to JSW’s Iyer, companies can mitigate the risks by building in suitable “condition precedent’’ clauses/automatic termination clauses and non-guarantee clauses in the emission reduction purchase agreement (ERPA).
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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Source: Times of India
Have Raised $263 Billion From Sovereign Wealth Funds, Governments And Public Investors To Shore Up Capital
New York: Banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show.
Citigroup subtracted $2 billion from equity for the declining value of home-loan bonds in its quarterly report to the Securities and Exchange Commission on May 2 without mentioning the deduction in the earnings statement or conference call with investors that followed. ING Groep NV placed 3.6 billion euros ($5.6 billion) of negative valuations in its capital account, while disclosing only an 80 million-euro depletion to income.
The balance-sheet adjustments are in addition to $344 billion of writedowns and credit losses already reported on the income statements of more than 100 banks. These companies have raised $263 billion from sovereign wealth funds, their own governments and public investors to shore up capital. The balance-sheet writedowns also reduce equity, which needs to be replenished. Adding the $35 billion leaves the banks with a $116 billion mountain of losses to climb.
“The smart people are the ones who’ve identified the problems, put them out there in full transparency, and addressed them by raising more capital,’’ said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co in New York. “There are still billions of dollars of crap out there that hasn’t worked itself through the system. Banks need more capital to work that all out.”
Banks that are more willing to acknowledge their balance-sheet writedowns, such as Amsterdam-based ING, say the valuations of assets will be reversed when markets recover. ING, the biggest Dutch financial-services company, said in its firstquarter earnings report last week that the drop in the value of bonds tied to home loans that are held to maturity is irrelevant as long as the underlying mortgages don’t default.
With that logic, most of the writedowns on the income statements could be reversed if asset prices recover. While some declines in valuations may reverse, most of the losses are permanent impairments caused by surging defaults on US mortgages, said Janet Tavakoli, author of “Collateralized Debt Obligations & Structured Finance,’’ published in 2004 by John Wiley & Sons Inc.
“Of course we can’t tell how much of a bank’s portfolio may actually be good stuff that will pay back at maturity,” Tavakoli said. “But there’s tremendous value loss that’s fundamental, not just due to credit market gyrations.”
Keeping those markdowns off income statements just delays the realisation of the losses, according to Brad Hintz, a New York-based analyst at Sanford C Bernstein & Co.
“The banks that have taken advantage of this accounting approach are going to have a price to pay later,” said Hintz, the third-highest ranked securities analyst in an Institutional Investor magazine survey. “You don’t avoid the price. Those that have taken it all in their income statements will come out with clean balance sheets and move on.” Ignoring bad debt and postponing inevitable losses was one of the main reasons behind Japan’s decade-long economic slump that began in the 1990s, said Boston University law professor Charles Whitehead.
Faced with new capital requirements and a weakened ability to meet them, Japanese banks deferred the recognition of their losses, aided by regulators who refrained from implementing the rules, Whitehead wrote in a 2006 paper published in the Michigan Journal of International Law.
“US regulators may be tempted to go soft on banks too,” said Whitehead, who teaches securities regulation, in an interview. A review of the balance sheets and regulatory filings of more than 50 banks showed that 20 of them chose to keep some subprime-related losses off their income statements. The marks were recorded instead on balance-sheet items labeled “other comprehensive income” or “revaluation reserves.” Seattlebased Washington Mutual, which has taken $217 million of subprime-related writedowns against profits, kept a bigger amount on the other-comprehensive-income line of its balance sheet.
Merrill Lynch, which has booked $31.7 billion from market markdowns in its income statements, is keeping another $5.3b of losses on its balance sheet. Declines in asset prices have spread beyond subprime though, affecting other mortgage bonds, securitised car and student loans, leveraged lending that backs PE buyouts and credit derivatives. The writedowns aren’t finished yet. Fitch Ratings expects $110 b in additional losses. When all that is included, the IMF estimates that total losses from the US subprime debacle will reach $1 trillion, of which $510 billion will be born by banks. That means some $130 billion in losses remains to be taken. “The $100 billion hole between writedowns and capital raised so far needs to be filled,” said Michael Mayo, a New York-based analyst who tracks the financial-services industry at Deutsche Bank AG. “If you don’t fill that hole, with the 20-to-1 leverage existing on average out there, you need to de-lever $2 trillion of assets. You can do that or raise more capital.” One way to increase capital has been to halt or slow down the pace of share buybacks. AGENCIES
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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Ganesh Srinivasan's Comment: This is one of the best practices, to be emulated by others in auto sector and even from other industry segments
Source: Times of India
Pankaj Doval | TNN
New Delhi: The recent rise in prices of key inputs like steel has led automobile companies go for placing major bulk orders by combining their requirements and that of their key vendors.
While fighting the rising material costs, companies are increasingly focusing on new ways to keep purchasing costs low as part of efficiency measures to keep margins healthy. Community purchase, which involves adding the commodity requirements of vendors to the company’s own plans, is one such way.
Major automobile companies like Hero Honda, Maruti and Ashok Leyland have been consolidating key purchasing requirements for more bargaining power and striking better and more cost-efficient deals. Ajay Seth, GM (finance) at Maruti Suzuki, said aggregation of purchasing is being done in the company for many key commodities.
“For steel, we have been doing this for many years and with rising commodity prices becoming a problem in various others markets, this programme is gradually going global.”
Seth said the philosophy firming up within Suzuki is to aggregate requirements of various big markets and then buying in bulk for all of them. “For example, the requirements of Hungary, China, India or Japan can be aggregated and the sourcing can be done from anywhere in the world,” he said.
Maruti not only sources its steel from India but also buys from abroad from companies like Posco.
Pawan Munjal, Hero Honda MD, also said the recent spate in prices of commodities had prompted the company to go for such steps. “Consolidation is certainly going on in terms of purchasing and we are thinking of joint procurement for Hero Honda and some important vendors.” This, he said, was among the steps the company was taking to cut down manufacturing cost and maintain margins that have come under pressure due to the rising commodity prices.
K Sridharan, chief financial officer at commercial vehicle manufacturer Ashok Leyland, agreed common procurement helped in keeping the purchasing costs under check. He said the company was aggregating requirements of the company along with 7-8 other vendors. Apart from this, the company was also sourcing fully-built components from other cheap locations, including China, to keep purchasing costs low.
“Yes, China is one of the locations we buy components from and it offers us cost benefits. The procurement of components from China has been building up over the last few years and now is to the tune of a few million dollars,” he said.
Surinder Kapoor, chairman of the Sona group that manufactures a variety of components, agreed that automobile companies had been engaging them for joint purchasing of commodities. “All OEMs have been working on this and this is something that helps in keeping purchasing costs under check.”
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Source: Times of India
Italian truck maker Iveco, a company owned by Fiat, has said it will resume talks with India’s Tata Motors for a commercial vehicle joint venture in Latin America, South Africa and southeast Asia.
“We are considering an agreement (with Tata) in Latin America, South Africa and southeast Asia for joint development of vans and trucks. From the Indian part there was a pause to allow closure of the acquisition of Jaguar and Land Rover. Soon, however, dialogues will resume,” Iveco CEO Paolo Monferino told the Il Giornale daily.
Tata has a JV with Fiat to produce and market cars, engines and commercial vehicles, while Iveco has dissolved a relationship with Ashok Leyland.
A tie-up with India’s largest automobile company will help Iveco leverage on the technologies that Tata Motors bought from Daewoo. AGENCIES
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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Source: Times of India
Udit Prasanna Mukherji | TNN
Kolkata: Singapore-based infrastructure and hospitality firm Universal Success Enterprises (USEL) is planning a major foray in India’s power sector. Universal Success Energy — the newly floated USEL subsidiary — is in the process of acquiring four coal blocks in Indonesia and China for the power venture in India.
Discussions have already been initiated with a few state governments for the power plants. The group is on the lookout for coastal locations like Maharashtra, Orissa, Andhra Pradesh and West Bengal for the power plants.
Promoted by NRI industrialist Prasoon Mukherjee, USEL has a strong presence in South-East Asia’s oil sector and is undertaking infrastructure projects in India through JV with Unitech group and Indonesia-based Salim group. Mukherjee said the group wants to become one of the top power entities in India within 5-7 years. “Lot of companies have acquired power trading licenses, but most of them do not have coal mines or coal linkages. But, we would soon have coal blocks with a capacity of 50-60 million tonne per year,” he said.
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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Source: Times of India
TIMES NEWS SERVICE
Puducherry: The IT sector in Puducherry recorded a 20-40% growth in revenue during second last half of fiscal 2007-08, according to a bi-annual industry monitor survey conducted by the Confederation of Indian Industry (CII), southern region.
The overseas billing also increased by 10-11% while the manpower utilisation grew by 10%, the survey revealed that a 7% increase in price led to a 10% increase in profit margin. The survey also predicted that the industry demand would go up by 40-50% and the industry revenue and overseas billing would increase by 10% and 15-20% respectively.
The chemical industry too recorded a 20-30% increase in production during the same period fuelling a 30% increase in sales and 40% increase in exports. The capacity utilisation levels went up 43% and the industry witnessed 20% increase in value of production. The industry would continue to perform well in the first half of the financial year 2008-09.
The survey predicted a demand of 30-40% that would push the sales by 20-30% and production by 15-20% and exports by 30-40%.
Automotive and auto components witnessed 5-10% increase in production and 5% increase in sales while the capacity utilisation went up by 10%. This industry is poised for better performance between April-September 2008 and would register a 10% increase in production and 5% increase in sales.
The food processing industry witnessed missed trends in the last half of 2007-08. The food processing industry’s production level and capacity utilisation grew by 10% and 33% respectively while the sales increased by 10%.
The tourism industry too witnessed mixed trends with a 5% increase in tourist inflow, 3% increase in revenue and 12% increase in foreign exchange. The industry would witness 8-10% increase in tourist inflow.
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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Source: Times of India
Mumbai: Financial services major HSBC today said it plans to acquire 73.21% stake in brokerage firm IL&FS Investsmart for a consideration of USD 241.6 million (around Rs 1,002.5 crore). The acquisition will enable HSBC to use Investsmart’s platform for distribution of other financial products, including mutual funds, and help in accelerating growth of the group in the domestic market, HSBC India’s Chief Executive Officer Naina Lal Kidwai said.
“We would like to use the wide presence of Investsmart and its rich client-base to further tap opportunities in the market. The existing management and workforce of the company would be maintained,” Kidwai said.
HSBC will make an open offer for another 20% share in Investsmart and this decision is likely to be announced on May 20. If the open offer gets full response, HSBC may go for delisting, said Kidwai. “We will take a decision on the delisting issue only after seeing the response for the open offer,” she said. “The retail brokerage business will be a great addition to our offering in India. The company’s local expertise and strong management team will play a key role in strengthening our service proposition in India,” HSBC India CEO Naina Lal Kidwai said. The acquisition, which will enable HSBC to grow its presence in the domestic brokerage space, will be per-formed through the group’s Indian subsidiaries, including its security arm, HSBC Securities and Capital Markets, HSBC said.
E*Trade Mauritius is a wholly-owned subsidiary of E*Trade Financial Corporation and had recently indi-cated its intention to exit from IL&FS Investsmart following the losses it suffered in the US subprime turmoil. AGENCIES
Note: Contents from other well known sources are for Knowledge Exchange and Not for Any Commercial Gains. Also they provide Authenticity - Ganesh Srinivasan
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