The Tribune, Chandigarh, India

TRIBUNE EXCLUSIVE
Foreign pharma buys 6 Indian cos in 4 yrs
Indian firms relying disproportionately on exports despite unmet domestic demand
Aditi Tandon
Tribune News Service

India ranks third in volume of drug production (9.3 % of global share)

India is 14th in value terms (1.5 % of global share)

National Health Accounts figures say medicines account for 38 to 62 % of inpatient expenditure in rural and urban areas

65 pc Indians without access to essential drugs: WHO

New Delhi, October 20
Foreign pharmaceutical companies are increasingly consolidating presence in the Indian market. This is even as local availability of critical medicines is still not guaranteed. Nearly 65 per cent Indians are without access to critical medicines, despite India being the fourth largest producer of drugs gloablly. This data is ironic given handsome export growth and profits, the Indian pharma industry has been posting for about two decades.

Data gathered by the Tribune show that the industry’s gross sales increased from Rs 14, 200 crore in 1994-95 to Rs 75,500 crore in 2008-2009. However, exports jumped more than proportionately — from Rs 2,512 crore (1994-95) to Rs 39, 538 crore (2008-09). Last year, export growth rate of the sector was 29 per cent — higher than the industry growth rate of 8 per cent. No surprise then that domestic drug consumption fell from Rs 45, 953 crore to Rs 44, 579 crore, despite a large unmet domestic medicine demand.

Another evidence collected from the Centre for Monitoring Indian Economy shows that while consumers are suffering, pharma firms are making profits. While the rate of sales growth of pharma firms declined to 14.2 per cent annually in 2001-2009 from 19.5 per cent in 1988-2000, their profit ratios after tax to total income actually doubled- from 4.9 per cent to 9.7 per cent over the said period.

There has also been another grave trend - heightened foreign interest in India where drug manufacturing costs are very low. Beginning tomorrow, a delegation of PhRMA (representatives of US-based drug firms) is also visiting India to likely argue against the regulation of Indian drug sector. So much so that concerned activists in the sector, led by Dr Amit Sengupta of All India People’s Science Network, today wrote to the PM warning him against foreign interests in India’s drug market.

The six domestic firms taken over by foreign players in the past four years include Matrix Lab taken over by US-based Mylan Inc for $736 million in August 2006; Dabur Pharma taken over by Singapore-based Fresenius Kabi for $219 in April 2008; Ranbaxy Labs taken over by Daichi Sankyo of Japan in June 2008 for $4,600; Shanta Biotech taken over in July 2008 by France-based Sanofi Aventis for $783 million; Orchid Chemicals taken over in December 2009 by US-based Hospira for $400 million

Strategic alliances are also being forged by several foreign companies with Indian drug makers for licensing and supply. Some recent alliances are between GlaxoSmithKline and Dr Reddys; Pfizer and three Indian firms namely Aurobindo, Strides Acrolab and Claris Life Sciences; Abbot and Cadilla Health Care and Astra Zenecca and Torrent.

The Tribune has also learnt that some of the taken over Indian companies have been recipients of substantial government grants and tax concessions. Others were transferred patents owned by the CSIR at concessional prices. Though a major portion of their market value arose due to state support, they are now moving under foreign control, negating local benefits.

CIL issue oversubscribed nearly 12 times
Shiv Kumar
Tribune News Service

Mumbai, October 20
The initial public offering (IPO) of Coal India Ltd has been oversubscribed 11.61 times with most of the subscriptions coming in hours before the issue closed for large investors today. Retail investors will be allowed to invest in the issue till tomorrow.

According to data from the stock exchanges the issue received bids for 733.21 crore shares as against the issue size of 63.16 crore shares. The portion reserved for Qualified Institutional Bidders including Foreign Institutional Investors saw nearly 25 times oversubscription while the portion reserved for retail investors and employees remains undersubscribed so far.

Analysts say even these will receive excess subscription by the time the issue closes tomorrow.

The shares are being priced at between Rs 225 to Rs 245 a piece.

The final allotment price will be decided by the Group of Ministers. If the issue is priced at the top-end of the price band, it will mobilise more than Rs 15,000 crore making the CIL IPO the largest issue offering in India.

It would surpass Reliance Power's $3 billion listing in 2008 as India's largest new issue. The stock is set to begin trading on November 4.

CRISIL upgrades rating of 253 cos
Sanjeev Sharma
Tribune News Service

New Delhi, October 20
Corporate India seems to be in the pink of health on the back of strong domestic demand, boost in economic activity and fund availability. Ratings agency CRISIL has upgraded 253 of its outstanding ratings in the first half of this fiscal, the highest number of upgrades in any six-month period in the company’s history.

The upgrades have been on a vastly expanded base of around 5,300 outstanding ratings as on September 30 and have been broad-based-across rating categories and industries.

A Crisil statement said the credit quality of India’s companies has remained buoyant this fiscal too. The buoyancy in credit quality is reflected not only in a surge in rating upgrades: positive outlooks have increased to a three-year high of 3.8 per cent, while negative outlooks have reduced to around 10.2 per cent as on September 30.

Both debt and equity are more readily available now than they were 18 months ago.

Raman Uberoi, senior director, CRISIL Ratings, says: “Healthy domestic demand, and the resurgence in infrastructure, services, and domestic-consumption-oriented sectors, are likely to support buoyancy in credit quality over the medium term.” The profitability margins of India’s companies will be impacted by rising input costs with commodity prices firming up, intensifying competition and increased cost of funding.

Somasekhar Vemuri, head, CRISIL Ratings, says: “Stronger economic growth and improving customer spending in the past six months have encouraged capacity expansion. While we expect economic growth to remain buoyant, disruptions due to factors such as protracted recovery in the global economy, build-up of inflationary expectations, or severe profitability constraints, can result in pressure on credit ratings, given the likely increase in debt because of capital expenditure.”

Eurocopter becomes first global chopper co to open arm in India
Ajay
Tribune News Service

New Delhi, October 20
Eurocopter, a company owned by European consortium,European Aeronautic Defence & Space Co. NV (EADS), today announced the setting up of its Indian subsidiary to provide maintenance, servicing and engineering support to the fast-growing helicopter market. Eurocopter is one of the two contenders in the $ 700-million deal for 197 military light utility helicopters for the Indian Army and the Air Force.

Marie Agnes Veve, CEO, Eurocopter India, said: “We are the first global helicopter maker to set up a full-fledged subsidiary in India” She listed that the company will set up an engineering base. By next year the company plans to have offices in Mumbai and Bangalore for commercial and engineering support.

“We are looking at 50 per cent of the Indian market by 2015... that selling some 25 helicopters a year ... that will translate into an annul business of euro 100 million.”

Eurocopter has 53 per cent of the global civilian chopper market but its share in India in 30 per cent. American helicopter maker Bell leads the market.

One of the key elements of the Indian military demand is that the helicopter must be able to service areas like Siachen and high-altitude posts of the army some of which are 22,000 feet high. Eurocopter Excecutive VP Joseph Sapurito, said the ‘Ecureuil’ chopper of the company that landed on the Everest to set a ‘world record for the landing at the highest point in the world’ is very similiar to the one fielded by the company for the military trials. He expresssed his inability to share details, citing a confindentiality clause.

Replying to a question on rival Agusta Westland's allegations that Eurocopter was being 'favoured' in the 197 chopper deal , Sapurito said: “ We cannot comment on rivals...... our chopper has passed all trials successfully”. Maria Agnes Veve, the CEO explained the military aspect of eurocopter will be handled directly by the company in France... that is a company policy.

Eurocopter's sales for 2009 was 4.6 billion Euros ( about Rs 34,000 crore) and the company was committed in India in the long term, Veve said while adding the target is not just the civilian market the company was also looking at the government’s growing needs for choppers in the Naxal belt. The Home Ministry had asked the IAF supply Mi 17 choppers, which are now being gradually withdrawn from UN duties.

Australia keen to operate banks in India
Ruchika M Khanna
Tribune News Service

Michael Carter Chandigarh, October 20
The Indian growth story, even as the world reeled under recession, is now attracting a lot of foreign investment. Having tasted considerable success in trade with India, Australia is now looking at getting a share of the banking sector success.

Four of the top lenders in Australia- Australia and New Zealand Banking Group (ANZ), National Australia Bank, Commonwealth Bank of Australia and Westpac have sought permission from the RBI for setting up retail banking operations here.

Michael Carter, Trade Commissioner, Australian Trade Commission, told The Tribune that while Commonwealth Bank of Australia has opened its branch in Mumbai, ANZ Banking Group, too, has received a banking licence.

“The other banks, too, have applied for the same with RBI. This is one sector that is attracting a lot of new investment from companies in Australia. In fact, most of these banks had been active in the Indian market since year 2006. These banks had been outsourcing several jobs like credit card processing and accounting jobs to India,” he said.

“The total trade between India and Australia is estimated at A$ 21 billion, and is growing 32 per cent a year. Compared to exports from India amounting to Aus $ 3 billion, he imports from Australia to India amount to Aus $ 18 billion,” said Carter.

Carter added Australian companies were also looking at business opportunities in India in the infrastructure and design sector, and in providing clean energy solutions. “Companies like Leightons have already entered India for cashing in on the infrastructure expansion boom here.

France invites Indian investment
Tribune News Service

Chandigarh, October 20
France’s location makes it an ideal gateway for Indian companies to enter not only Europe, but also Africa. So, a number of Indian companies are now investing in France. Guillaume Page, inward investment officer, Embassy of France, said this while addressing businessmen from the region.

He said France was the second-largest economy in Europe and provided the best business opportunities to foreign companies.

Page said that in France, besides the domestic market a company also benefits from strategic geographical localisation at the heart of the five main European markets, the most attractive European R&D tax credit and the competitive cost of setting-up a project in Western Europe.

Life sciences industry, chemicals, IT, automotive industry, metal working industry, renewable energies, logistics are some of the sectors that France looks at while welcoming Indian investments, he added.

Lionel Petit, legal expert, manager, Karl Waheed Law firm, focused on the recent regulation in favour of intra-group transfer, the recent and so-called ‘employees on assignment’ mission facilitating professional mobility to France.

Petit also presented the recent social security agreement between France and India that should come into effect early 2011, resulting in the possibility for Indian employees to be exempted from around 20% of French social taxes.

Corporate Results
HCL Tech Q1 consolidated net up 3% to Rs 331 crore

New Delhi, October 20
The country's fourth largest IT firm, HCL Technologies, today reported 3.1 per cent increase in consolidated net profit to Rs 331.1 crore for its first quarter ended September 30, despite rising wage bill. The company said there was growth in all business verticals, and it also narrowed forex losses during the first quarter last fiscal.

However, on a quarter-on-quarter basis, net profit decreased 1.6 per cent mainly due to wage hike, increase in sales staff and taxes. During Q1, three industry verticals including retail, healthcare and financial services registered a double-digit growth, it said.

"All cylinders across the world are firing. In last ten quarters, this is for the first time all verticals have reported of a positive growth," HCL Technologies CEO Vineet Nayar, who will take over as VC from November 1, said.

He said that during the quarter the company announced wage hike, besides adding 5,661 employees and taking the total head count to 70,218.

PowerGrid PAT up 41.6% at Rs 651.4 cr

State-run transmission utility PowerGrid Corp today reported a growth of 41.62 per cent in profit after tax of Rs 651.4 crore for the quarter ended September 30. The company had a profit after tax of Rs 459.97 crore in the same period last fiscal. Total revenues of the company were up 23.44 per cent at Rs 2,222.97 crore from Rs 1,800.9 crore in the three-month period a year ago, the company said in a filing to BSE.

The company's profit in the first half of this fiscal (April to September) increased by 34.57 per cent at Rs 1,354.58 crore against Rs 1,006.58 crore in the six month period last fiscal. Total revenue of the company also increased by 20.95 per cent to Rs 4,372.66 in the first half of this fiscal compared to Rs 3,615.23 crore in the same period in last fiscal.

Canara Bank's Q2 net profit up 10.7%

Buoyed by growth in total business, public sector lender Canara Bank's net profit rose 10.7 per cent to Rs 1,008 crore for the July-September quarter, bank's chief S Raman said today.

“The bank has posted over Rs 1,000 crore in net profit for two consecutive quarters," Raman told reporters here while announcing the results for the quarter-ended September 2010. — PTI

Industrialists praise Chinese work ethic
Sushil Goyal/TNS

Bathinda, October 20
A strong work ethic among ordinary Chinese citizens and the Chinese government’s commitment and support to industry have helped China carve a niche for itself in the global industrial arena.

President Bathinda Chamber of Commerce and Industry Raman Watts expresses these views today, while in conversation with the Tribune. Watts led a group of 21 industrialists, which was in China from Oct 14-Oct 19.

Watts said the delagation attended a trade fair, held at Guangzhou (China), in which large machinery and equipment, small machinery, bicycles, motorcycles, tools, household electrical, consumer electronics and other products had been displayed. He said he felt that exposure to China’s industry and machinery would help them expand here.

The government is encouraging large-scale production and exports. The government also provides land on lease for setting up industrial units.

In fact, Sumer Garg, president of the Sangrur District Industrial chamber, who led a 51-member team to Chinawas of the view that CHian’s progress was due to the fact that the government owned land and no industrialist could purchase land.

Ban on new units in Mandi Gobindgarh likely to go
Vibha Sharma/TNS

New Delhi, October 20
The environment ministry is likely to lift the moratorium on new industries in the country’s steel and iron hub Mandi Gobindgarh. Sources say the action plan prepared by the Punjab Pollution Control Board has been found to be ‘satisfactory’ and the ministry may soon take the decision to lift the moratorium.

The ministry had banned the setting up of new factories in 43 critically polluted areas in the country till August, by when the Central Pollution Control Board and state boards were asked to prepare a plan to improve the environment. In the absence of a plan, the moratorium limit was stretched to October 30.

The PPCB’s action plan apparently proposes shifting industries running in residential areas to non-residential areas besides segregating water polluting units from air polluting units.