New Delhi, November 29
Investors globally pulled out US $2.7 billion from the emerging market focussed funds during the week ended November 23, amid concerns of worsening debt crisis in Europe, global fund-tracking agency EPFR Global, has said.

This was the biggest weekly outflow from emerging market equity funds since early October and has taken the total outflow from these funds since the beginning of 2011 to $39.9 billion, EPFR, the leading provider of market-moving global fund data said.

"Emerging markets equity fund groups and sub-groups struggled in the face of the headwinds flowing out of developed Europe during the third week of November," it noted.

EPFR further said in its weekly report that "the direct proximity of key markets to the Eurozone kept the pressure on emerging market equity funds ...ahead of a ratings downgrade for Hungarian debt that took it into 'junk' territory and speculation that Russia's economy faces a credit squeeze."

EPFR did not disclose India-specific fund outflow data. But, according to information available with Indian capital market regulator, Sebi, the foreign institutional investors pulled out $624 million from the Indian market during the week under review.

Most of emerging market focussed equity funds invest in India as FIIs and the capital flows through this route are a key factor in the stock market trends here.

Overall, the global equity funds saw a net outflows of $15.6 billion for the week ended November 23, taking the year-to-date total to over $100 billion mark. "Equity funds had their worst week since early August as investors digested the failure of the US deficit reduction panel, a poor German bond auction and the prospect of another recession in Europe," the report noted.

Apart from emerging market equity funds, funds dedicated to Europe, the US and Latin America were under pressure and saw outflows. Among the Asia excluding funds dedicated to Japan, funds focused to China and Korea too witnessed outflows, but Vietnam, Thailand, Indonesia and Taiwan equity funds had attracted modest inflows.

In contrast, Japan-focused equity funds managed to attract modest inflows despite the yen's persistent strength and the pain that is causing key export plays.

In terms of sector, EPFR said, the commodity sector funds posted inflows. — PTI

New York, November 29
American Airlines and its parent company AMR Corp filed for bankruptcy protection on Tuesday after failing to win a deal with pilots earlier this month to pare its labor costs.

AMR had been the only major US carrier to avoid bankruptcy proceedings in the past decade, a move its rivals had used to restructure their labor agreements and cut costs.

That left AMR, the third-largest US airline behind United Continental Holdings Inc and Delta Air Lines Inc, with the highest costs in the industry, and the only major airline that still must fund worker pensions. The airline said last month it was also suffering from soaring fuel prices that sent its costs 40% higher in the third quarter from a year earlier.

AMR also on Tuesday named Thomas Horton as its chairman and chief executive, replacing Gerard Arpey, who retired, the company said in a separate statement. Under its Chapter 11 filing in a New York court, the company listed assets of about $24.72 billion, while it has liabilities of $29.55 billion. The company said it has $4.1 billion in cash.

AMR said both American Airlines and American Eagle are expected to fly normal schedules throughout the Chapter 11 process. — Reuters

New Delhi, November 29
Opening up of the retail sector to foreign players like Walmart is tipped to be as transformational as the IT and telecom revolution which after initial fears have benefitted the economy and people’s lives in a huge way.

The move that was cleared by the cabinet last week has met with huge political opposition and protests across the country. So why is retail FDI a holy cow? One of the reasons why FDI in retail is witnessing such huge protests is that it is among the last few sectors left that have not been opened up for foreign investment. The retail sector is largely unorganized and has tens of millions of people self-employed in various roles including kirana (mom & pop) stores and, therefore, forms a huge political constituency.

Though MNC players like Walmart are being allowed to enter retail now and there is a phobia around the $400 billion retail giant, the fact is that many large Indian corporate houses are already in the business for almost 4-5 years now.

In his letter to opposition leaders, Commerce & Industry Minister Anand Sharma made this point to drive home the message that small retailers have been co-existing with these large format stores and chains.

Reliance, Bharti, Aditya Birla, Tata, Pantaloon and Spencer’s have all been present in organized retail and there is evidence to suggest here has not been much displacement. It can be argued this maybe because some of these players have not really succeeded in a big way and therefore the impact felt is not much. It is interesting none of the local retail players actually opposed allowing FDI, which domestic industry sometimes does. It could be they have not been able to yet hit a killer business model or are under lots of debt and some of them could look at partnerships with foreign players.

Observers point out that the neighbourhood mom-and- pop stores have a lot of advantages over large format organized retailers. Organized retail has high overhead costs that include salaries, prime real estate, expensive rentals and a whole lot of laws and regulations to comply with. Small stores on the other hand are mostly in the unorganized sector and are more nimble at dealing with potential costs and expenses.

There is a view that if more of the retail trade gets organized, it will result in higher tax revenues, as currently it is difficult to tap millions of shopkeepers for taxes and it is easier to collect taxes from larger corporations.

The basis for opening the retail trade started with the ICRIER report on impact of organized retailing on the unorganized sector submitted to the industry ministry in 2008. The study noted that unorganized retailers in the vicinity of organized retailers initially experienced a decline in their volume of business and profit after the entry of large players.

The adverse impact on sales and profit, however, weakened over time. There was no evidence of a decline in overall employment in the unorganized sector as a result of the entry.

It is also interesting to note that the FDI policy on retail is probably one of the few government policies where states have been given primacy. It is up to the states to decide whether to allow foreign chains to come in or not.

The thinking was that states are best placed to assess the impact of these players coming in and to take any measures to mitigate the impact.

However, as things stand now, most of the non-Congress states have said no to the proposal, which means that 28 of the 53 cities with a population of more than a million are out of bounds.

This kind of situation may have a negative impact on the attractiveness of the sector as global players may want to see a clear and settled picture before making their investments. For instance, Delhi may allow it but Noida and Ghaziabad will not and the chains may want to see a proper footprint before investing.

New Delhi, November 29
A day after the government said it would speak to some of the country's telecom operators to resolve the contentious issue of the 3G roaming pacts between some of them, Telecommunications Minister Kapil Sibal said Tuesday he would soon meet telecom industry leaders to work out an amicable solution to the dispute.

Some of the top telecom service providers and the department of telecommunications (DoT) have been at loggerheads over the roaming pacts entered into by them, which the government says are illegal and against 3G licence regulations.

"I'll meet with the telecom operators soon to discuss the 3G roaming issue. Industry players have sought time and I'm hopeful to resolve the issue," Sibal told reporters on the sidelines of the Skoch summit here.

The trouble has been on some time now after Bharti Airtel, Vodafone Essar and Idea Cellular entered into pacts for providing a 3G roaming network on a pan-India basis, which would allow their subscribers to have seamless roaming on 3G across the country.

Other service providers like Tata Teleservices and Aircel also entered into a similar agreement to offer services in six telecom circles.

Such pacts, according to the telecom operators, were necessitated as none of them won a pan-India licence in the auction held last year, which made the government richer by Rs 68,000 crore and forced the telecom operators to spend upwards of Rs 12,000 crore to launch their 3G services.

DoT and the Telecom Regulatory Authority of India (TRAI) have been of the view that these pacts were against the 3G licence norms and wanted to levy penalties on the telecom operators for these violations.

Recently, DoT said in an internal note that the roaming agreement among telecom companies for 3G services would lead to a significant loss of revenue for the government.

Earlier, the top officials of three leading telecom firms — Bharti, Idea and Vodafone — had sought Prime Minister Manmohan Singh's intervention in the dispute over 3G roaming pact in a jointly signed letter, failing which they threatened to surrender spectrum.

Meanwhile, the government also said on Tuesday that employees of BSNL and MTNL would have to wait for some more time before they could apply for the voluntary retirement schemes (VRS) proposed by the state-owned firms.

The telecom ministry is yet to take a final call on their demand for financial support to implement the VRS.

"BSNL has formulated a proposal on which view has not been taken. There is obviously major financial obligation involved. That needs to be seen before any view is taken," telecom secretary R Chandrasekhar said on the sidelines of the summit. He added this would not be possible in this fiscal.

MTNL has also worked out a proposal, but it is a different proposal because MTNL and BSNL are not in identical footing.

Both BSNL and MTNL had submitted a proposal duly approved by their respective boards to seek financial support from the government for implementation of the VRS.

MTNL has sought 100 per cent financial support from the government for bringing out a cadre-specific VRS for MTNL employees.

New Delhi, November 29
India's largest car-maker Maruti Suzuki India has finalised a deal to buy diesel engines from Italy's Fiat. Fiat will supply up to 1 lakh diesel engines per year to Maruti. With this deal Maruti plans to raise Swift hatchback output from January 2012.

Last week, Maruti Suzuki chairman RC Bhargava said recent rises in petrol prices have boosted demand for diesel cars, but Maruti did not have capacity to meet the demand. Earlier this month, Maruti raised diesel car prices by up to Rs 10,000 rupees, taking advantage of the demand for the segment as input costs continue to go up. "We’ve a waiting list of diesel cars and we have surplus capacity of petrol cars," Bhargava said.

Maruti, which until last year sold nearly every other car in India, faces tough competition from global car makers such as Hyundai Motor Co, Ford Motor Co, General Motors Co and Honda Motor Co and has seen its market share slide to just over 40 percent.

Maruti, which has installed capacity to make about 1.5 million cars a year, is expanding one of its existing plants to reach 1.75 million annual capacity.

The company is in the process of buying land to build a new factory in Gujarat, but will start work at the plant depending on the demand scenario and when it feels it needs to expand capacity beyond 1.75 million, Bhargava said.

Maruti, 54.2-percent owned by Japan's Suzuki Motor Corp. reported a more than halving of its quarterly net profit, wider than industry estimates, hit by labour unrest at Manesar plant and rising interest rates in Asia's third-largest economy. — Agencies