New Delhi/Tokyo, December 9
Europe's Volkswagen will buy 19.9 per cent stake in Indian carmaker Maruti's Japanese parent Suzuki for about $2.5 billion, a move aimed at enhancing its presence in small car segment in Asia.

Maruti Suzuki accounts for over half the cars on Indian roads, giving Volkswagen the volumes it needs to topple Toyota as the world's largest carmaker with an estimated sales of seven million units this year. In return, Suzuki would benefit from the European company's expertise in hybrid cars.

"The automobile industry is going through a fundamental shift. Alliances are at the top of the agenda and they are indispensable for competition," Volkswagen CEO Martin Winterkorn was quoted by Bloomberg telling reporters in Japan.

While Volkswagen would pay $2.5 billion (over Rs 11,500 crore) for the partnership that will focus on making cars for emerging markets, Suzuki would use half of this amount to buy Volkswagen shares.

Suzuki CEO Osamu Suzuki was quoted by Bloomberg as saying that the two companies plan to develop hybrids and electric vehicles under the brand of both the companies.

The cross-border deal is expected to have a positive fallout for Maruti Suzuki, which could become a global hub for supplying small cars through Volkswagen's strong network.

"Volkswagen has looked at Suzuki obviously from a small car angle," Maruti Suzuki India chairman RC Bhargava told PTI. He said India could become an original equipment manufacturer and supplier of small cars for Volkswagen.

"It is too early to speculate on its (deal's) implications on India (Maruti). The deal means Volkswagen and Suzuki see much value in the arrangement in terms of technology sharing," Bhargava said.

VW's brands include Audi, Skoda and Porsche.

Suzuki holds 54 per cent stake in Maruti, which contributes an estimated 20 per cent of the Japanese giant's global revenues.

Experts said the deal is expected to catapult Maruti into a small car hub for Volkswagen, which is the world's No.3 car maker and is aiming for the top slot by 2018.

"It is too early to speak about concrete projects and plans that Volkswagen and Suzuki might jointly take in India. Details will be worked out in the weeks and months to come," a VW Group official said.

He said the two auto giants are likely to focus on synergies in supply chain and vendor development. But the two firms will maintain their independent dealership network.

"Both parties are focussed on achieving synergies in the areas of rapidly growing emerging markets as well as in the development and manufacturing of innovative and environment friendly compact cars," Suzuki said.

"...even with existing gasoline and diesel powered cars, it is necessary to improve engines and make the automobile frames lighter to improve fuel efficiency and decrease the output of carbon dioxide," it added. — PTI

New Delhi, December 9
The government today expressed confidence that exports, which have been falling for over a year now due to the global slowdown, would grow by 15 per cent next fiscal and the pace of decline has already been arrested.

"The government expects the position to improve in the coming months," Commerce and Industry Minister Anand Sharma said in the Rajya Sabha during question hour.

Recalling the steps taken by the government and the Reserve Bank to neutralise the impact of the global financial meltdown on the country's exports, the minister said India's exports would grow by 15 per cent during the next fiscal despite global recession.

India's exports have been falling since October 2008, though the pace of decline had been arrested in recent months.

The country's merchandise exports, which had declined by 38.9 per cent in May 2009, Sharma said, have started showing signs of improvements and the downturn has been arrested to a single digit level (6.6 per cent) in October this year.

Exports fell short by $11 billion of target of $200 billion in 2008-09 due to slump in global demand. Exports stood at $189 billion in the last fiscal.

During April-October this year, the oveaseas shipments declined by 26 per cent to $91 billion compared to $123 billion in the same period last year.

The progressive reduction in the decline, Sharma said, "indicates that while the impact of global recession is still continuing on our exports ... the steps taken by the government and RBI are contributing to arrest the steep decline in exports.

He further said that sectors like handicraft, handloom and gems and jewellery sectors suffered badly due to recession and witnessed job crunch between October 2008 and March 2009.

Answering a supplementary on SEZs, Sharma said till date 570 SEZs have been approved by the Centre in consonance with state governments.— PTI

Mumbai, December 9
Mahindra Satyam, formed after the takeover of the troubled Satyam Computer Services by the Mahindras, has reached a settlement with Upaid Systems which has sued the former for more than $1 billion.

In a statement released today, Mahindra Satyam said its board has approved the settlement under which it would pay $45 million to Upaid Systems immediately and another $25 million in a year's time. In return, Upaid is required to dismiss all lawsuits it had brought against the Indian company.

The American company would also give Mahindra Satyam worldwide royalty-free licence on software written by the latter under the agreement.

Upaid had sued the Indian company alleging fraud and forgery by the former management of Satyam in a case pertaining to transfer of title to software.

Appoints Deloitte as auditor, Damodaran on board

Mahindra Satyam on Wednesday appointed Deloitte as auditors, within days of CBI charging Price Waterhouse of complicity in the Rs 14,000 crore accounting scam.

The company also brought on board former market regulator M Damodaran, and former World Bank executive Gautam S Kaji.

"The board has also appointed Damodaran and Gautam S Kaji as members of the Audit Committee," the company said in a filing to the stock exchanges.

Deloitte Haskins & Sells, one of the two audit firms roped in by the post-scam Satyam Board to restate accounts, will vet the accounts of Mahindra group company for the 2008-09 and 2009-10 fiscals as statutory auditor.

The company, which was acquired by Tech Mahindra in April, has secured time until June 2010 from the Company Law Board to file financials, including quarterly results, in the aftermath of founder B Ramalinga Raju disclosing that he fudged accounts for years. He has since been arrested and is awaiting trial.

Deloitte is also the principal auditor of Tech Mahindra, which owns 43 per cent in Mahindra Satyam, as well as that of Mahindra group flagship firm M&M. Ramesh Rajan, who was Price Waterhouse's India head, when the scam came to fore, has since stepped down. — PTI

Ludhiana, December 9
The local industry, garment and textiles in particular, has raised objections over large quantity of cotton being purchased by certain traders for the purpose of export, which, in turn, will cause a hike in the price of yarn. Sore over the increased prices of cotton, industrialists have urged the Central government to intervene at the earliest for the betterment of industry.

A letter in this regard has been sent to Dayanidhi Maran, Union Minister of Textiles, by the Knitwear Club here.

Vinod.K.Thapar, president, Knitwear Club, said the government should put a ban on the exports of cotton and fulfil the requirement of cotton within India till next season. Only then, the textile products, produced either for domestic consumption or for exports, will be available at competitive prices.

The industrialists feel during the procurement period, cotton had witnessed an abnormal increase as against the normal prices. "The major reason for this anomalous situation is that a large quantity of cotton is being purchased by many traders for export purposes. It will be surprising to know that traders are exporting cotton at the rate of Rs 22,000 per candy during the season but are being forced to import the same for Rs 28,000 per candy at the end of the year. It is not just causing loss of foreign exchange but the interests of large number of fabric/garment manufacturers, workers and labourers were being sacrificed at the hands of certain traders", said Thapar.

Due to increase in prices of raw material, there has been a tremendous increase in the prices of yarn/threads, especially of cotton and polyester cotton (PC) yarn. The yarn which was available between Rs 110 and 120 in October, was now being sold between Rs 130-140 per kilogram.

BRIEFLY

Rupee gains 14 paise
Mumbai: In contrast to equities, the Indian rupee on Wednesday snapped three-session of losses moving up by 14 paise against the US dollar on waning fears of fresh capital outflows amid a weak American currency overseas. Forex dealers said the dollar selling by exporters and weakness in US currency against its rivals aided the rupee to recover to settle the day at 46.53/54 a dollar from its previous close of 46.67/68. — PTI

JP Dua, who has taken over as chairman and managing director of Allahabad Bank.

Godrej Properties IPO over-subscribed
Mumbai: Godrej Properties Ltd's public offer, through which the realty developer expects to raise up to Rs 500 crore, got over-subscribed 1.13 times on the first day of issue on Wednesday. The IPO received bids for over 87.68 lakh shares of the company against 77.32 lakh equities on offer for public, the latest data with the National Stock Exchange (NSE) shows.— PTI

Bajaj launches new Pulsar
New Delhi: Two-wheeler maker Bajaj Auto on Wednesday launched Pulsar 135 cc bike priced at Rs 51,000 (ex-showroom Delhi). The new bike, Pulsar 135 LS, is powered with a 4-valve DTS-i engine.— PTI

Nomura to expand in India
Tokyo/New Delhi: Japanese financial services major Nomura on Wednesday said it was planning to expand its base in India and China next year, says a media report. In an interview with the Financial Times, Nomura CEO (Asia operations, excluding Japan) Minoru Shinohara said the bank intended to expand significantly in China and India next year. — PTI