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Sectoral Snippets India Industry Information Issue 32 - June 2009 KPMG IN INDIA

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Page 1: SectorSnippets Issue 32:TP4 WhitePaper A4.QXD...Page 2 of 18 Sectoral Snippets About Sectoral Snippets Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter

Sectoral SnippetsIndia Industry Information

Issue 32 - June 2009

KPMG IN INDIA

Page 2: SectorSnippets Issue 32:TP4 WhitePaper A4.QXD...Page 2 of 18 Sectoral Snippets About Sectoral Snippets Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter

Page 2 of 18

Sectoral Snippets

About Sectoral Snippets

Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter brought out by

KPMG in India. This newsletter provides an overview of the Indian economy in the form of

news-briefs from across key sectors.

Contact [email protected] if you are interested in receiving this newsletter on a

regular basis, or wish to unsubscribe.

Table of Contents

1. Indian Economy 3

2. Auto and Auto Components 4

3. Banking and Financial Services 5

4. Consumer Markets and Retail 6

5. Hospitality 7

6. IT / ITeS 8

7. Media 9

8. Oil and Gas 10

9. Pharma 11

10. Power 12

11. Real Estate and SEZs 13

12. Telecom 14

13. Transport and Logistics 15

Sectoral Snippets, Issue 32

With�the�newly-elected�government�in�powerand�the�summer�reaching�its�peak�in�India,�itremains�to�be�seen�how�the�monsoon�will�affectIndia’s�economy�in�the�near�future,�as�the�farmsector�contributes�around�one-fifth�of�thecountry’s�GDP�and�provides�employment�tothree-fifths�of�the�country’s�population.�Thesector�is�hopeful�for�a�robust�kharif�crop(monsoon�harvest)�to�boost�rural�demand,�andincreased�public�investment�in�agriculture�in�theannual�budget,�which�is�scheduled�to�bereleased�early�next�month.�

Last�year’s�budget�increased�public�investmentin�agriculture,�raised�procurement�prices�andwaived�farm�loans�worth�INR�650�billion.�Thisyear,�India�bought�record�quantities�of�grain�andincreased�quantities�of�rice�from�farmers,�helpingprotect�them�from�open�market�distress�sales.The�impact�of�the�monsoon�and�the�budget�onthe�agriculture�sector�and�economy�is�awaited.�

I�hope�you�find�this�edition�of�Sectoral�Snippetsuseful�and�informative.

Regards,

Russell

Russell Parera

Chief Executive Officer

KPMG in India

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Page 3: SectorSnippets Issue 32:TP4 WhitePaper A4.QXD...Page 2 of 18 Sectoral Snippets About Sectoral Snippets Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter

India’s�economy�seems�to�be�taking�shape�of�a�new�growth�cycle�with�thecountry�expanding�by�an�unanticipated�5.8�percent�in�the�final�quarter�to�March2009.�Despite�a�retrenchment�in�manufacturing,�a�growth�in�the�services�sectorand�pick-up�in�agriculture�enabled�the�overall�growth�rate�to�touch�6.7�percent.The�Reserve�Bank�of�India�(RBI),�India’s�central�bank’s�estimate�for�the�year�wasbetween�6.5-6.7�percent.�At�current�prices,�India’s�GDP�measured�USD�1.1trillion�(INR�49.33�trillion)�for�the�year,�ensuring�it�remained�a�trillion-dollareconomy.

The�country’s�execution�of�beating�the�slowdown�has�been�far�better�than�itspeers�trapped�in�the�global�slump.�Additionally,�the�turnaround�indicators�likecement,�automobile,�steel�etc.�have�shown�recovery�and�registered�positivegrowth�since�December�last�year.�This�could�be�attributed�to�the�positive�impactof�the�fiscal�stimulus�packages�and�duty�cuts�announced�by�the�Government.

Foreign�capital�too�seems�to�be�drawn�back�into�India�with�the�benchmarkSensex�share�index�hovering�around�a�9-month�high�of�14,625.

Policymakers�and�economists�alike�are�now�looking�forward�to�the�budget�thatthe�new�Finance�Minister�Mr.�Pranab�Mukherjee�is�likely�to�present�in�the�firstweek�of�July�for�the�steps�that�will�be�taken�to�open�up�India's�comparativelyinward-looking�economy.�

One�of�the�concerns�for�policymakers�has�been�India’s�rising�fiscal�deficit�whichhas�swelled�thanks�to�Government-funded�stimulus�measures�and�a�soaringsubsidy�bill.�The�RBI�has�admitted�that�the�combined�federal�and�state�budgetdeficit�for�FY2008-2009�will�come�close�to�10�percent�of�GDP.�While�ramping�upspending�in�the�form�of�stimulus�packages�may�prove�to�be�problematic,�stakedivestment�in�PSUs�may�bolster�Government’s�funds�at�a�time�when�it�is�lookingto�spend�to�combat�the�slowdown.

Nevertheless,�if�the�domestic�market�witnesses�an�early�recovery�on�the�back�offavorable�global�factors�and�the�already�taken�stimulus�measures,�policymakerswould�be�less�burdened�by�the�need�for�further�stringent�measures�to�spurgrowth.

Indian EconomyPage 3 of 18

Analyst: Asmita Deshmukh©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

GDP at Market Prices (%)

Source: CSO

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• Apollo Tyres to acquire Vredestein BandenIndia’s�Apollo�Tyres�Limited�has�reportedly�acquired�Dutch�tyre�manufacturerVredestein�Banden.�The�deal�is�expected�to�be�closed�in�a�month�at�a�cost�ofUSD�300�million.�Vredestein�Banden�is�a�100�percent�owned�subsidiary�ofRussia's�largest�tyre�maker�Amtel-Vredestein�NV,�which�was�declared�bankruptin�April.�Vredestein�is�a�premium�tier�I�tyre�manufacturer�with�a�portfolio�ofhigh-end,�high�speed�rated�passenger�car�tyres.�The�transaction�is�expected�toprovide�Apollo�Tyres�full�control�of�the�Dutch�company.

• Birla Power Solutions (BPSL) considering a foray in diesel enginemanufacturingBirla�Power�Solutions�(BPSL),�a�Yash�Birla�group�company,�is�reportedlyconsidering�a�foray�into�the�diesel�engine�segment�through�an�acquisition�in�therange�of�USD�100�million.�The�company�is�already�reported�to�be�innegotiations�with�four�to�five�domestic�and�overseas�companies.�BPSL�plans�toacquire�a�company�manufacturing�diesel�engines�of�capacities�ranging�between25�horse�power�and�200�horse�power.�The�acquisition�is�expected�to�be�fundedthrough�debt�and�equity.�The�company�plans�to�open�about�250�outlets�of�BirlaPower�Shoppe�across�40�cities�by�Mar�2010.

• Robert Bosch Engineering to expand India operationsRobert�Bosch�Engineering�&�Business�Solutions,�a�wholly-owned�subsidiary�ofRobert�Bosch�GmBH,�plans�to�expand�its�operations�in�India.�The�companyplans�to�increase�its�employee�base�by�15�percent�and�invest�about�USD�24million�for�the�expansion.�About�80�percent�of�the�expansion�is�expected�to�bein�Coimbatore.�The�company�at�present�employs�about�5,800�people�atBangalore�and�Coimbatore�and�focuses�on�engine�management,�automotivesafety�systems,�driver�assistance�systems,�automotive�body�electronics�andautomotive�diagnostics.

• BMW in phase – II expansionBMW�India,�a�fully-owned�subsidiary�of�BMW�Group,�is�in�the�process�ofphase�II�of�their�expansion.�As�a�part�of�their�expansion�strategy,�the�companyis�expected�to�launch�its�new�vehicle�Roadster�Z4�in�the�second�half�of�2009and�is�expected�to�add�10�new�dealers�in�tier-II�cities�such�as�Coimbatore,Jaipur,�Lucknow�and�Ludhiana.�In�the�year�2008-09,�BMW�surpassedMercedes-Benz�in�terms�of�sales�volume.�BMW�India�is�also�planning�to�doubleits�presence�in�Delhi,�it’s�one�of�the�biggest�market,�by�adding�two�showroomsin�Gurgaon�and�West�Delhi�to�take�the�total�number�of�dealers�from�12currently�to�24�by�year�end.�The�company�is�planning�to�launch�three�newmodels�to�keep�pace�with�the�growth�momentum�in�the�country.

• Setco forms a joint venture (JV) to manufacture clutches for carsSetco�Automotive,�manufacturer�and�supplier�of�clutches�for�medium�andheavy�commercial�vehicles,�has�formed�a�51:49�JV�with�FTE�Automotive�ofGermany.�It�is�through�this�JV�that�Setco�is�likely�to�foray�into�the�passengercar�market�over�the�next�two�years.�Setco�is�expanding�into�three�new�areas:supplies�to�passenger�cars,�supplies�to�the�fast�growing�Light�CV�segment�andenhancing�presence�in�the�non-auto�market�by�beginning�supplies�of�marineclutches.�The�capacity�expansion�and�other�investments�are�expected�to�beabout�USD�41�million�over�the�next�two�years�and�which�are�to�be�financedthrough�a�combination�of�debt�and�equity.�The�JV�with�FTE�is�expected�torequire�a�capital�of�USD�10�million.�FTE�Automotive�is�a�global�manufacturer�ofhydraulic�brake�and�clutch�systems�for�passenger�cars�and�commercialvehicles,�with�more�than�50�percent�market�share�globally�for�clutch�hydraulicsystems.

Page 4 of 18

Auto and Auto Components

Analyst: Rajiv Somani©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

"We are looking at incremental sales fromuntapped cities. Already, Ludhiana andCoimbatore are giving us sizable sales andwe expect similar numbers from othertier-II cities." Mr. Peter Kronschnabl, President, BMW India. (Source: The Economic Times, May 5, 2009, BMW Indiato roll out Roadster Z4 sports car.)

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• Religare forms JV with Swiss Re for health insurance forayIndia-based�financial�services�firm�Religare�Enterprises�has�signed�a�non-binding�agreement�with�Swiss�Reinsurance�Company�(Swiss�Re)�to�set�up�ahealth�insurance�company�in�India.�Swiss�Re�would�be�a�minority�shareholderin�the�joint�venture�(JV),�which�is�expected�to�be�operational�by�2010.�The�newcompany�will�leverage�Swiss�Re’s�actuarial,�risk�management�and�underwritingexpertise,�while�Religare�would�offer�distribution�capabilities�through�itsfinancial�services�business.�

The�Indian�health�insurance�industry�is�expected�to�grow�at�a�CompoundAnnual�Growth�Rate�(CAGR)�of�25�percent�to�reach�nearly�USD�5.7�billion�by2015.

• Spice Finance forms alliance with 3 Degrees to launch privateequity fundB�K�Modi�Group�controlled�Spice�Finance�has�entered�in�to�strategic�alliancewith�3�Degrees�Asset�Management�to�launch�the�Spice�3�Degrees�SpecialOpportunities�Fund.�The�fund’s�objective�is�to�invest�in�distressed�assets�andspecial�situations�spanning�India�and�Southeast�Asia.�The�fund�is�expected�toclose�its�first�round�of�financing�of�USD�21�million�comprised�of�commitmentsfrom�Spice�and�3�Degrees,�while�final�closing�with�third�party�commitments�areexpected�to�reach�USD�100�million.

• HDFC Standard Life plans capital infusion of USD 71 million inFY10HDFC�Standard�Life,�a�joint-venture�between�mortgage�lender�HDFC�and�UK-based�Standard�Life,�plans�to�infuse�around�USD�71million�for�expansion�duringFY10.�The�Company�has�earlier�infused�nearly�USD�113�million�in�FY09.�HDFCStandard�Life�plans�to�go�at�a�slower�pace�towards�expansion�and�do�a�need-based�expansion�during�FY10.

The�company's�generated�a�total�premium�income�of�USD�1197.7�million�inFY09,�registering�a�year-on-year�growth�of�15�percent.�Its�renewal�premiumalso�witnessed�a�growth�of�34�percent�at�INR�627.1�million�for�FY09.

• Union Bank of India and Hyundai Motor ink pact for car finance Union�Bank�of�India�has�signed�a�Memorandum�of�Understanding�(MOU)�withHyundai�Motor�to�offer�car�finance�to�customers.�The�tie-up�with�Hyundai�willoffer�Union�Bank�of�India�with�the�status�of�preferred�financier�of�Hyundai,which�will�benefit�the�large�customer�base�of�the�bank�in�urban,�semi-urbanand�rural�areas.�Union�Bank�of�India�has�2,614�branches�and�74�extensioncounters�across�the�country�to�cater�to�the�needs�of�its�customers.�

• IndusInd Bank launches NRI Banking Services in Middle-EastIndusInd�Bank�announced�the�launch�of�its�enhanced�NRI�Banking�serviceoffering�for�its�Non�Resident�Indian�(NRI)�account�holders�based�in�the�UAE�andGCC�region.�Through�the�NRI�Banking�services,�IndusInd�Bank�plans�to�assistits�customers�for�filing�their�taxes,�undergo�Permanent�Account�Number�(PAN)application�processing�and�pay�income�tax�as�well�property�tax.�

Page 5 of 18

Banking and Financial Services

Analyst: Kunal Jain©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Life Insurance APE Market Share (Percent)

Source: IRDA, India Infoline Research

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• Germany's Aqua Montana seeking partnership with Indiancompanies Aqua�Montana,�one�of�the�largest�soft�beverage�producers�in�Germany,�is�indiscussion�with�two�Indian�business�groups�to�ink�a�JV�with�them�for�bottlingoperations�in�north�and�west�India.�The�beverage�player�is�likely�to�pick�upminority�stakes�of�around�26�percent�in�each�of�the�ventures.�The�Indiansubsidiary�Aqua�Montana�India,�in�which�the�local�management�team�is�likely�toown�a�minority�stake,�is�expected�to�operate�as�a�sales�and�marketing�verticaland�launch�a�range�of�soft�beverages�such�as�diet�isotonic�drinks,�flavoredmineral�water�and�energy�drinks,�targeted�at�niche�segments.

• India’s FMCG player, Godrej Consumer Products Ltd (GCPL), plansacquisitions in emerging markets worth USD 1 billionGCPL�is�eyeing�acquisitions�worth�USD�1�billion�in�emerging�markets�infinancial�year�2010.�The�acquisition�price�range�is�likely�to�be�around�USD�50-100�million�and�would�be�funded�entirely�through�internal�accruals.�Thepreferred�acquisitive�markets�according�to�GCPL�include�China,�Brazil,Indonesia,�Philippines,�Thailand,�Egypt,�South�Africa�and�Mexico.�Godrej�is�opento�buy-outs�that�are�synergistic�and�accretive�to�its�growth.�In�2005,�Godrejbought�UK-based�personal-care�products�firm--Keyline�Brands--followed�by�twoSouth�African�hair�product�firms--Rapidol�and�Kinky--in�2006�and�2008.�Twenty-five�percent�of�GCPL's�revenues�come�from�outside�India.�

• Whirlpool to invest USD 20 million in India for productdevelopment and product portfolio expansionHome�appliances�maker�Whirlpool�is�expected�to�invest�up�to�USD�20�million�inIndia�over�the�next�two-three�years�on�product�development�and�expansion�innew�segments�of�water�purifier�and�modular�kitchen�products.�The�investmentswould�be�made�in�upgrading�technology,�adding�features�to�existing�modelsand�in�making�changes�in�the�production�line.�Besides,�Whirlpool�is�alsoexpected�to�focus�on�in-built�appliances,�a�concept�which�is�relatively�new�inIndia.�The�company�has�around�22�percent�share�in�the�India’s�4.6�million�units(per�annum)�refrigerators�market�and�around�15�percent�share�in�India’s�2million�units�washing�machine�market.

• Shoppers Stop, India’s leading retailer, plans to set up more storesIndia’s�leading�departmental�store,�Shoppers�Stop,�plans�to�invest�about�USD�8million�in�the�current�financial�year�to�roll�out�3-4�stores,�investing�USD�2million�in�each.�The�expansion�is�likely�to�be�funded�through�internal�accruals.The�company�currently�operates�27�stores�pan-India�and�operates�in�thelifestyle,�value,�specialty,�and�airport�retailing�segments.�

Page 6 of 18

Consumer Markets and Retail

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“With the presence of limitedbrands in India markets, thecountry holds big opportunity forthese brands as this would alsohelp companies re-routeinventories and orders to newmarkets and keep their saggingsales volume intact. At the sametime, their Indian counterparts arefinding this a right opportunity tostrike negotiations to theiradvantage” Gaurav Marya, franchising expert and president,

Franchise India Holdings

(Source: Economic times, May 7, 2009, ‘Foreign brandslook to Indian market to survive slowdown’)

Analyst: Sonia Topiwala

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• Ginger plans to rejig its brandGinger,�the�budget�hotel�brand�of�Indian�Hotels,�is�planning�a�subtle�revamp�forits�new�properties.�It�is�setting�up�bigger�lobbies�and�restaurant�structuresalong�with�the�addition�of�Café�Coffee�Day�outlets�(CCD)�in�some�of�itsproperties.�Ginger,�being�a�budget�or�no-frill�brand,�initially�planned�smallrestaurant�space�since�it�was�meant�to�be�used�only�by�their�guests.�However,the�company’s�properties�located�near�the�IT�hubs�are�experiencing�a�largenumber�of�walk-ins�during�lunch�hours.�This�has�led�the�company�to�implementbigger�restaurant�formats�and�addition�of�more�CCD�outlets.�The�company�is�ofthe�view�that�these�activities�will�attract�more�customers�and�strengthen�itsbrand.�Ginger�currently�operates�19�properties�with�1,900�rooms�across�Indiaand�is�targeting�1,000�more�rooms�by�December�2010.

• Mahindra holidays plans major expansionMahindra�Holidays�and�Resorts�plans�major�expansion�through�its�Homestaysbrand.�The�company�plans�to�add�1000�holiday�homes�under�this�brand�in�thenext�5�years�and�plans�to�add�120�Homestays�units�by�the�end�of�2009.�It�hasalready�signed�agreements�with�the�Kerala�tourism�department�and�isreportedly�in�talks�with�the�concerned�bodies/�authorities�of�Tamil�Nadu,�WestBengal,�Uttarakhand�and�Delhi�to�sign�more�properties.�The�Homestays�brandwas�launched�in�July�2008�primarily�targeting�foreign�tourists.�However,�nowthe�company�is�eyeing�the�rising�number�of�domestic�tourists�as�well.�

Homestays�currently�has�around�50�family�properties�in�10�states.�The�companyalso�plans�to�count�on�the�2010�Delhi�Commonwealth�Games�and�has�signed�8Homestays�partner�in�the�NCR�region.

• Marriott to add 24 new properties to its management portfolio by 2012 US-based�Marriott�International�plans�to�add�24�more�properties�in�India�overthe�next�3�years�with�a�Pan-India�focus.�The�company�is�expected�to�launch�fiveproperties�under�the�Courtyard-brand�in�Pune,�Ahmedabad,�Gurgaon,Hyderabad�and�Mumbai�and�a�sixth�hotel�under�the�Marriott�brand�this�year.�Inall,�the�company�intends�to�have�14�hotels�operating�under�the�Courtyardbrand.�The�company�works�with�real�estate�developers�and�partners�for�buildingits�properties.�Some�of�the�regional�real�estate�players�with�whom�thecompany�has�tied�up�for�properties�are�K�Raheja�Corporation�(Mumbai),Salgaonkar�(Goa),�Viceroy�Hotels�(Hyderabad)�and�Panchshil�Realty�(Pune).�TheCompany�has�already�signed�up�with�real�estate�players�for�its�announced�24properties�and�is�in�talks�with�their�real�estate�partners�for�further�additions.

Marriott�currently�has�six�properties�in�Mumbai,�Goa,�Hyderabad�and�Chennaiand�operates�through�five�different�brands,�including�Marriott,�JW�Marriott,Courtyard,�Renaissance�and�Marriott�Executive�Apartments.�

• DLF likely to sell 50 percent of new Saket Hotels for USD 15 millionIn�line�with�DLF’s�strategy�to�sell�off�the�non-core�assets�to�raise�funds�for�itscore�operations,�the�company�is�likely�to�sell�50�percent�of�its�120-roomupcoming�property�-�Saket�Hotel�in�New�Delhi.�The�property�is�expected�toraise�USD�15�million.�A�month�before,�the�company�sold�another�60-roomproperty,�located�adjacent�to�its�mall�at�Saket,�for�around�USD�11.0�million.DLF’s�Saket�property�has�a�management�tie-up�with�international�hotel�chainHilton�and�is�expected�to�be�branded�as�Garden�Inn.�The�company�is�innegotiations�with�several�buyers�for�the�sale�of�its�8-9�hotel�plots�across�India.It�is�expected�to�raise�around�USD�180.6�million�through�these�sales.

Page 7 of 18

Analyst: Pallavi Phatak

Hospitality

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“Things are improving for thehotel industry after March but notin a very dramatic way. We can'tquantify the amount of losses wemade last year but I think theCommonwealth games willcertainly give a major boost to thehotel industry.”Bharat Bhushan, Director, Hotel Association of India

(Source: The Economic Times, May 26, 2009, ‘Hotelindustry gears up for Cwealth Games’)

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“There are tremendousopportunities in the currentcontext for holistic technologyfirms within the BFSI sector inIndia. The sector is facingchallenges due to the economicimpact of the liquidity crisis whichwill require the industry to re-lookat its IT strategy and currentusage of software andtechnology.”Kalpesh Desai, CEO, Agile Financial Technologies.

(Source: The Financial Express, May 21, 2009)

• TCS bags five year IT contract from VolkswagenTCS�has�won�a�five-year�outsourcing�contract�from�Volkswagen�UK�(VW)toprovide�transformation�and�IT�support.�This�is�the�first�time�that�VW�hasimplemented�an�onshore-offshore�model�for�its�IT�systems�as�earlier�all�its�ITwork�was�done�onsite.�As�part�of�this�engagement,�TCS�has�to�manage�thecorporate�IT�systems,�data�centers�and�applications�of�VW�TCS�is�expected�tohelp�consolidate�and�standardize�the�IT�platform�for�the�company�across�allbrands�like�Skoda,�Audi,�etc.,�increasing�flexibility�and�reducing�costs.

• Geodesic acquires U.S. based Interactive NetworksIndia-based�Internet�communication�infrastructure�provider�Geodesic�hasacquired�South�America-based�Interactive�Networks�(IN).�IN�specializes�inproviding�comprehensive�messaging�and�collaboration�solutions�to�enterprisesand�mobile�operators.�The�acquisition�expands�Geodesic’s�global�footprint�intoSouth�America�and�Africa.�The�deal�would�also�help�Geodesic�expand�beyondthe�retail�and�consumer�markets�segment�into�the�mobile�carrier�andenterprise�markets.�As�per�the�terms�of�the�deal,�IN�is�likely�to�become�awholly-owned�subsidiary�of�Geodesic.�

• HCL bags ~USD 50 million BSNL ProjectHCL�Infosystems�has�bagged�about�USD�50�million�(INR�240�Crore)�systemintegration�project�from�state-owned�telecom�operator�Bharat�Sanchar�Nigam(BSNL).�As�per�the�terms�of�the�contract,�HCL�has�to�migrate�BSNL’s�finance,commissioning�and�operations�functions�onto�a�single�ERP�system.�The�projectcontract�is�for�seven�years,�including�configuration,�business�process�re-engineering,�hardware,�networking,�operations�&�maintenance�customization,training�to�BSNL�employees�and�program�management.�It�also�includes�settingup�the�main�data�centre�at�Hyderabad�and�the�disaster�recovery�data�centre�atKolkata.�BSNL�has�also�selected�HCL�to�provide�ongoing�support�services�forthe�project.

• Agile Financial Technologies launches its india operations Agile�Financial�Technologies,�a�global�technology�company,�launched�itsoperations�in�India�with�its�first�office�in�Mumbai.�The�new�operations�areexpected�to�provide�resources�for�domestic�on-shoring�services�for�Indian�BFSIinstitutions.�The�company�has�already�acquired�and�merged�the�insurancesoftware�business�division�of�India-based�Access�Information�Systems,�a�nicheplayer�in�the�core�insurance�space.�

• Patni opens new EMEA headquarters in London Mumbai-based�Patni�Computer�Systems,�has�opened�its�new�EMEA�(Europe,the�Middle�East�and�Africa)�headquarters�at�Heathrow�in�London.�The�companybelieves�that�this�new�regional�headquarters�with�dedicated�operationalfacilities�would�enable�it�to�increase�focus�across�Europe�and�the�Middle-Eastto�achieve�both�operational�efficiencies�and�continue�to�innovate�in�newproducts�and�services.�The�building�would�be�spread�over�14,000�sq�ft�and�hosta�dedicated�delivery�centre�together�with�business�development�andadministrative�functions.

Page 8 of 18

Analyst: Parnika Patil

IT / ITeS

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Page 9: SectorSnippets Issue 32:TP4 WhitePaper A4.QXD...Page 2 of 18 Sectoral Snippets About Sectoral Snippets Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter

• Cinepolis forays in IndiaMexican�multiplex�operator,�Cinepolis,�plans�to�invest�USD�347�million�in�Indiain�the�next�7�years�for�its�film�exhibition�business.�The�multiplex�operator�hasalready�setup�its�Indian�subsidiary�and�is�in�talks�with�mall�developers�to�setup500�screens�by�2016.�For�the�1st�phase,�the�company�plans�to�invest�USD�70million�for�opening�110�screens�across�8�locations�and�expects�to�launch�itsfirst�screen�by�end�of�this�year.�The�Mexican�company�also�plans�to�foray�inother�emerging�markets�like�Brazil�and�Peru�amongst�other�South�Americancountries�after�India.�Cinepolis,�operates�2000�screens�globally�of�which�90percent�are�in�Mexico.�

• BIG Cinemas forays into the NetherlandsBIG�Cinemas,�part�of�Anil�Ambani�Group,�has�partnered�Dutch�firm�PathéTheatres�for�setting�up�screens�in�the�Netherlands.�The�company�is�expected�toroll�out�three�Big�Cinemas�screens�in�Pathé�Theaters'�existing�megaplexes�inAmsterdam,�Rotterdam�and�Hague.�The�cinema�chain�plans�to�target�othercountries�in�Europe�and�expects�to�break�even�within�a�year�of�startingoperations�in�Netherlands.�Pathé�Theatres�is�a�part�of�EuroPalaces�movietheatre�chain�that�runs�834�screens�in�France,�Switzerland,�Italy�and�theNetherlands.

• Zee acquired partner firm in Zee Studio for USD 56 millionZee�Entertainment�Enterprises�Ltd.�(Zeel)�has�acquired�Resource�SoftwareLtd.’s�40�percent�stake�in�Zee�Studio�to�take�complete�ownership�of�the�Englishmovie�channel�aimed�at�the�Indian�market.�The�stake�was�acquired�for�USD�56million�placing�the�valuation�of�the�channel�at�USD�140�million�as�highlyexpensive,�involving�one-year�forward�multiples�of�almost�10�times�its�revenue,18�times�its�operating�margins�and�20�times�its�net�profit.�Mauritius-based�AsiaBusiness�Broadcasting�Ltd.�(ABBL),�which�owns�and�operates�Zee�Studio,clocked�revenue�of�USD�14.3�million�for�FY’09.�Net�profit�was�at�USD�7�millionwhile�EBITDA�stood�at�USD�7.9�million.

• Spice Enfotainment plans to invest in Media and EntertainmentSpice�Enfotainment�Ltd.�has�proposed�to�invest�USD�80�million�in�the�mediaand�entertainment�business.�The�company�plans�to�undertake�projects�in�filmand�TV�production,�exhibition�and�distribution,�music�and�gaming.�The�companyis�expected�to�co-produce�two�films�which�are�expected�to�hit�the�productionstage�in�January�2010.�

• Forbes launches in IndiaInternational�magazine�Forbes�in�collaboration�with�Network�18�has�launchedits�first�Indian�issue.�The�magazine�is�expected�to�be�published�on�a�bi-weeklybasis�with�a�focus�towards�being�a�critic�of�Indian�Business.�

Page 9 of 18

Media

Analyst: Mehul Desai©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“We will make India the countrywith our largest presence outsideMexico. We will open around 500screens in the next seven yearsand for every screen, we will bespending around USD 700,000,"Milan Saini, Country Head, Cinepolis India

(Source: Business Standard, May 22, 2009, ‘Mexicanmultiplex chain to invest USD 347 million in India’)

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• RIL strikes two more gas reserves in KG basinHardy�Oil�and�Gas�has�claimed�that�along�with�Reliance�Industries�Ltd.�(RIL),�ithas�struck�two�more�gas�reserves�in�the�Krishna�Godavari�(KG)�basin.�The�twoblocks,�namely�D3�and�D9,�are�expected�to�have�gas�reserves�of�approx.�9.5and�10.8�trillion�cubic�feet�(Tcf)�respectively.�Reliance�is�the�operator�of�theblock�with�90�percent�participating�interest�and�Hardy�Oil�and�Gas,�a�leadingBritish-based�exploration�and�production�company,�owns�the�remaining�10percent�stake�in�each�of�the�two�blocks.

• Essar to ramp up its refining capacityThe�Ruia-owned�Essar�Oil�Ltd.�(EOL)�is�planning�to�augment�its�refiningcapacity�to�1�million�barrels�a�day�(bpd).�EOL’s�Vadinar�refinery�is�expected�toramp�up�its�capacity�to�16�million�tonne�per�annum�(MTPA)�by�December�2010and�34�MTPA�by�December�2011.�The�company’s�refining�capacity�is�thusexpected�to�increase�to�four�times�its�current�volumes,�thereby�making�EOLthe�country’s�third�largest�refining�firm.�Approximately�three-fold�of�the�plannedcapacity�expansion�is�likely�to�be�domestic�whereas�the�remaining�capacityexpansion�is�expected�to�take�place�in�the�overseas�market�throughacquisitions�or�the�organic�route.

• Govt. issues oil bonds for 2008-09The�state-owned�oil�marketing�companies�(OMC’s)�comprising�Indian�OilCorporation�Ltd.�(IOC),�Hindustan�Petroleum�Corporation�Ltd.�(HPCL)�andBharat�Petroleum�Corporation�Ltd.�(BPCL)�have�received�another�tranche�ofGovernment�bonds�worth�approximately�USD�2.1�billion.�Over�the�last�fiscal,the�three�OMC’s�incurred�a�loss�of�about�USD�21�billion�by�selling�petroleumproducts�such�as�petrol,�diesel,�kerosene�and�cooking�gas�below�cost�price.

• OVL to invest in Iraq oil blockONGC�Videsh�Ltd.�(OVL),�the�overseas�arm�of�Oil�and�Natural�Gas�CorporationLtd.�(ONGC)�is�expected�to�invest�USD�1.45�billion�in�an�Iraq�oil�block.�Block-8,located�in�southern�Iraq�is�estimated�to�hold�reserves�of�645�million�barrels.The�service�contract�is�likely�to�be�signed�in�a�couple�of�months�and�OVL�isexpected�to�be�given�18�percent�rate�of�return�on�its�investment.�The�companyhas�committed�investments�to�the�tune�of�USD�86�million�in�two�phases�ofexploration.�Thereafter,�it�would�invest�USD�1.45�billion�in�development�of�thereserves.

• RIL acquires Chevron’s five percent stakeRIL�has�purchased�Chevron’s�5�percent�stake�in�Reliance�Petroleum�Ltd.�(RPL)for�an�amount�of�approx.�USD�270�million.�With�this�RIL�now�has�ashareholding�of�75.38�percent�in�RPL.�Chevron�had�acquired�the�stake�in�RPLfor�USD�300�million�three�years�back.�The�acquisition�was�undertaken�throughinter-se�transfer�of�shares�amongst�the�promoters.

• ONGC to redevelop MHState-run�ONGC�is�expected�to�invest�approx.�USD�1.8�billion�in�the�coming�3-4years�in�order�to�enhance�the�Mumbai�High�(MH)�field.�The�enhancement�ofthe�oil�and�gas�output�is�a�part�of�the�phase�II�redevelopment�process.�The�firmhad�invested�USD�1.6�billion�for�its�phase�I�plan.�The�MH�and�its�adjoining�fieldsproduce�about�12.8�million�standard�cubic�metres�of�gas�per�day�(mmscmd).

Page 10 of 18

Oil and Gas

Analyst: Sidharth Balakrishna and Suman Lala©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Note: USD = INR 50.00

‘’Mumbai High reached its peakoutput level in 1989 with 20mmtpa* production and there isno way one can go back to peak-levels. Plans are already on thedrawing board to take ultimaterecovery to 40 percent.’’Sudhir Vasudeva, Director (Offshore), ONGC

(Source: The Economic Times, May 13, 2009, ‘ONGC toinvest USD 1.8 billion over 3-4 years for MHredevelopment’)* million metric tonnes per annum

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• Dr Reddy’s restructures R&D businessDr�Reddy’s�Laboratories,�one�of�India’s�leading�pharmaceutical�companies,�istransferring�its�entire�drug�discovery�and�development�assets�to�Aurigene,�itswholly-owned�independent�subsidiary�with�effect�from�July�1,�2009.�It�isexpected�to�create�a�new�facility�that�focuses�on�development�of�proprietaryproducts�in�partnership�with�other�players.�The�existing�intellectual�property�isexpected�to�be�owned�and�managed�by�the�new�group.�Dr�Reddy’s�has�alsoannounced�that�it�is�shutting�down�its�R&D�unit�in�Atlanta.�

• Ranbaxy’s anti-malarial combination drug enters finaldevelopment stage Ranbaxy�Laboratories,�one�of�India’s�leading�pharmaceutical�companies,�hasannounced�that�its�anti-malarial�combination�drug�is�now�in�the�final�developmentstage�and�has�commenced�phase�III�clinical�trials�in�India,�Bangladesh�andThailand.�It�is�expected�to�complete�the�clinical�trials�and�seek�marketingauthorization�by�late�2010.�This�drug�is�being�targeted�for�sale�in�malaria�endemiccountries�such�as�India,�Africa,�Latin�America�and�the�Asia�Pacific.�The�drug�is�aonce-a-day�therapy�for�three�days�compared�to�existing�alternative�of�consuming24�tablets�over�three�days.��

• Jubilant Organosys enters into research partnership withAstraZenecaJubilant�Organosys,�an�Indian�custom�research�and�manufacturing�servicescompany,�has�entered�into�a�research�agreement�with�AstraZeneca�to�developproducts�in�the�area�of�neuroscience-related�disorders.�Jubilant�is�expected�toreceive�research�funding�for�an�initial�five-year�time�period.�It�is�also�expectedto�receive�development�milestones�payments�and�royalties�upon�successfulcommercialization.�AstraZeneca�is�expected�to�retain�the�rights�to�thecompound�developed�and�the�commercialization�rights.�

• Ranbaxy acquires dermatology and lifestyle product portfolio In�a�major�reorganization�exercise,�Strides�Arcolab�Limited,�an�Indianpharmaceutical�company,�has�regrouped�its�operations�into�three�separateentities�–�Specialty�Pharmaceuticals,�Pharmaceuticals�and�R&D�operations.�Thespin-off�of�the�R&D�unit�into�a�separate�entity�reinforces�this�industry�trendstarted�by�several�leading�pharmaceutical�companies�in�the�recent�years�toincrease�focus�on�this�new�business�segment.�

• Pfizer enters into marketing agreement with Claris LifesciencesPfizer�inc.�has�entered�into�a�marketing�agreement�with�Claris�Lifesciences,which�specializes�in�injectables,�to�commercialize�15�of�the�latter’s�productsacross�North�America,�Europe�and�Australia�under�its�own�brand�name.�Theproducts�are�in�multiple�therapeutic�segments�such�as�anti-infectives�and�pain.This�deal�will�facilitate�in�providing�Claris’�products�a�greater�market�penetrationin�the�regulated�pharma�markets.�

Page 11 of 18

Pharma

Analyst: Nandita Kudchadkar

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“Our new anti-malaria drug, likelythe first NCE from India, willbenefit patients immensely andprovide a more potent solution todeveloping nations where malariais endemic.”Mr. Malvinder Mohan Singh, Former Chairman, CEOand MD, Ranbaxy Laboratories(Source: Company Press Release, May 4, 2009,‘Ranbaxy commences Phase III clinical trials for its newanti-malarial molecule’)

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• BHEL to invest USD 2.4 billion in 4 years for expansionPower�equipment�maker�Bharat�Heavy�Electricals�Limited�(BHEL)�announcedan�investment�of�USD�2.4�billion�over�the�next�four�years.�The�company�plansto�pick�up�equity�in�power�projects�and�to�ramp�up�its�capacity�to�support�thegeneration�of�about�20,000�MW.�The�current�manufacturing�capacity�cansupport�power�generation�of�10,000�MW.�It�includes�2,500�MW�of�hydroelectricity�production,�and�500�MW�captive�power�plants�for�the�industrialsector.�By�the�end�of�this�fiscal,�the�company�hopes�to�make�equipment�forgenerating�15,000�MW.

• Indian Government selects eight private sector power firms to bidfor UMTP ProjectsThe�Indian�Government�has�chosen�eight�private�sector�power�firms�to�placeprice�bids�for�three�ultra�mega�transmission�projects�(UMTP)�worth�USD�1.2billion,�which�are�based�on�the�ultra�mega�power�projects’�model.�Thegovernment�has�hired�Power�Finance�Corporation�(PFC)�and�Rural�ElectrificationCorporation�(REC)�to�supervise�the�execution�of�the�projects�by�establishingshell�companies.�The�eight�companies�chosen�include�Essar�Power,�ReliancePower�Transmission�(RPTL),�JSW�Energy,�Larsen�&�Toubro,�Jindal�Power,�CESC,Sterlite�and�Lanco-Deepak�consortium.�According�to�a�power�ministry�official,14�transmission�projects�worth�USD�4.1�billion�are�expected�to�be�given,�basedon�global�competitive�bidding.�In�September�2009,�the�shortlisted�firms�areexpected�to�submit�their�request�for�proposal�(RFP)�for�the�projects.

• Reliance Power co raises USD 198 million for transmission projectReliance�Power�Transmission,�an�Anil�Ambani�group�company,�has�tied-up�USD198�million�for�its�first�transmission�utility�project�in�the�western�region�of�thecountry.�The�project�involves�setting�up�of�400�KV�double�circuit�transmissionlines�covering�about�1,500�Km�in�Maharashtra,�Gujarat�and�Madhya�Pradesh.�Itwill�connect�the�eastern�region�to�the�power�deficit�western�region.�The�projectis�expected�to�be�completed�by�2010.�

• NTPC lines up USD 12 billion capex over 3 yearsState-run�National�Thermal�Power�Corporation�(NTPC)�plans�to�invest�USD�12billion�in�the�next�three�years,�to�add�24,000�MWs�of�generation�capacity.�Theincreased�capacity�is�likely�to�generate�additional�revenue�of�up�to�USD�7.8billion�by�the�end�of�fiscal�2011-12.�The�funds�are�expected�to�be�raised�in�adebt�to�equity�ratio�of�70:30.

• PowerGrid bags USD 210.9 million transmission project from PSEBState-run�power�transmission�utility�PowerGrid�signed�a�bilateral�agreementwith�Punjab�State�Electricity�Board�(PSEB)�for�turnkey�execution�of�400�circuitKms�of�400�kV�D/C�transmission�lines�and�four�400�kV/220kV�substations�at�anestimated�cost�of�USD�210.9�million.�The�project�is�expected�to�be�completedin�phases�from�October�2011�to�February�2012.�The�scope�of�work�includesdesign,�engineering,�tendering,�evaluation,�supervision�of�erection,�projectmanagement�and�testing�and�commissioning�of�the�project.

Page 12 of 18

Power

Analyst: Rajiv Parekh and Sonam Gosalia©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Source: Ministry of Power, CEA Cygrus Research

Note: 1 USD= 48.99 INR

Electricity Generation Target Vs

Achievement in the Country

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• Ambuja to invest USD 205 millionAmbuja�realty,�a�Kolkata-based�real�estate�developer,�is�planning�to�invest�aboutUSD�205�million�in�developing�various�real�estate�projects�in�Kolkata.�Thecompany�is�planning�to�develop�malls,�residential�townships�and�IT�parks�in�thecity.�The�company,�at�present,�is�developing�four�malls�in�Siliguri,�Haldia�andRaipur;�an�IT�Park�spread�over�1�million�square�feet�and�a�150�room�hotel�inKolkata.

• Government amends SEZ rulesThe�Government�has�made�an�amendment�to�the�Special�Economic�Zone�(SEZ)rules�recently.�As�per�the�amendment�the�area�limit�of�5000�hectare�for�SEZswould�not�be�applicable�if�two�or�more�such�zones�are�merged.�It�has�alsoallowed�developers�more�freedom�on�selecting�the�location�by�defining�‘vacantland’.�By�definition�vacant�land�is�where�there�are�no�functional�ports,manufacturing�units,�industrial�activities�or�structures�in�which�any�commercialor�economic�activity�is�in�progress.�This�is�in�line�with�the�permission�given�bythe�empowered�group�of�ministers�(eGoM)�on�SEZs�in�the�earlier�UPA�regime�toAdani�Group’s�Mundra�SEZ�in�February�this�year�to�merge�its�three�SEZs�into�asingle�6,100-hectare�entity.�

• Low cost housing by TatasTata�Housing,�a�Tata�Group�Company,�announced�the�launch�of�its�pan-IndiaShubh�Griha�brand,�a�low-cost�housing�township�in�Boisar,�98�kilometers�fromSouth�Mumbai.�The�complex�would�be�spread�over�67�acres�and�is�expected�tohave�1,000.�The�size�of�the�small�and�larger�flat�is�said�to�be�283�square�feetand�360�square�feet�respectively.�The�flats�are�to�be�priced�between�USD�7,963and�USD�13,680.�The�flats�are�to�be�allotted�on�a�lottery�basis.�There�is�alsoreported�to�be�a�lock-in�period�whereby�a�flat�allotted�to�a�buyer�cannot�be�soldbefore�nine�months,�to�discourage�speculators.

• Kerala builders launch real estate fundThe�promoters�of�Hi-lite�Group�and�a�group�of�real�estate�professionals�inKerala�have�launched�a�real�estate�focused�venture�capital�fund�called�SecuraIndia�Real�Estate�Fund.�The�fund�has�received�recognition�from�Securities�andExchange�Board�of�India�(SEBI)�and�is�said�to�be�a�Shariah�compliant�fund.�Thefund�is�targeting�an�initial�corpus�if�USD�10.21�million�with�a�minimuminvestment�limit�of�USD�10,209�and�one�can�invest�in�installments.�An�investorcan�pay�only�20�percent�of�the�total�investment�as�the�first�installment�and�theremaining�amount�can�be�paid�over�a�period�of�18�months.�The�fund�is�lookingat�investing�in�projects�at�the�land�cost�stage�to�provide�capital�for�acquisitionof�land.

• Developers looking at QIP route to raise fundsMany�real�estate�players�in�India,�like�LIC�Housing�Finance,�HindustanConstruction�Company,�Purvankara,�are�looking�at�tapping�the�qualifiedinstitutional�placement�(QIP)�route�to�raise�capital.�Companies�like�Unitech�andIndiabulls�Real�Estate�have�raised�a�total�of�USD�1�billion�from�foreigninvestors.�The�route�is�said�to�be�becoming�attractive�as�SEBI�has�amendedsome�rules�last�year.�Currently,�the�floor�price�for�a�QIP�issue�is�based�on�just�atwo-week�average�of�the�stock�price,�while�earlier�it�had�to�be�done�at�higherof�the�average�of�the�weekly�high�and�lower�of�the�closing�prices�of�the�sharesduring�the�two�weeks�or�six�months�preceding�the�relevant�date.�This�route�isalso�said�to�be�giving�an�opportunity�for�investors�as�they�are�getting�shares�atlow�prices.�

Page 13 of 18

Real Estate and SEZs

Analyst: Nitin Dehadraya©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Company QIP StatusAmount

(USD million)

Unitech�Ltd. Done 325

Indiabulls�RealEstate

Done 533

ParsvnathDevelopers

Received�BoardApproval

530

HDIL Received�BoardApproval

600

Purvankara Considering 170

HCC Considering 318

PTC�India Done 106

Gammon�Infra Considering 100

SobhaDevelopers

Considering Undisclosed

LIC Considering Undisclosed

Omaxe Considering Undisclosed

Source:�vccircle,�‘The�Grand�QIP�Party�Of�Indian�RealEstate’,�May�28,�2009

Real Estate QIPs

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Page 14 of 18

Telecom

Analyst: Neha Dayal©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

• DoT issues notification for MNP service from SeptemberThe�DoT�has�issued�a�notification�saying�that�Mobile�Number�Portability�(MNP)is�to�be�implemented�in�Delhi,�Mumbai,�Maharashtra�and�Gujarat�service�areasof�Zone�1�and�in�Kolkata,�Tamil�Nadu,�Chennai,�Andhra�Pradesh�and�Karnatakaof�Zone�2�by�September�20,�2009,�and�in�the�rest�of�the�country�by�March�20,2010.�Syniverse�Technologies�(Zone�1)�and�MNP�Interconnection�(Zone�2)�havebeen�licensed�by�the�DoT�to�carry�out�the�MNP�exercise.�The�DoT�further�saidTRAI�will�decide�on�all�kinds�of�tariffs�related�to�MNP,�with�number�portabilitycharges�likely�to�be�below�INR�300.

• Alcatel-Lucent and Huawei win USD 400 million contract fromUnitech WirelessAlcatel-Lucent,�the�Franco-American�telecom�equipment�company,�and�Chinesevendor�Huawei�have�won�a�USD�400�million�GSM�equipment�contract�fromUnitech�Wireless.�Norwegian�telecom�major�Telenor�has�67.25�percent�stake�inUnitech�Wireless,�which�in�January�2008�got�licenses�to�roll�out�GSM�mobileservices�in�all�telecom�circles�in�the�country.

• Bharti Airtel looking to acquire 49 percent in MTNBharti�Airtel�Limited�is�believed�to�be�exploring�a�potential�transaction�wherebyit�would�acquire�a�49�percent�shareholding�in�MTN�and,�in�turn,�MTN�and�itsshareholders�would�acquire�an�approximate�36�percent�economic�interest�inBharti,�of�which�25�percent�would�be�held�by�MTN�with�the�remainder�helddirectly�by�MTN�shareholders.�Bharti�and�MTN�have�agreed�to�discuss�thepotential�transaction�exclusively�with�one�another�until�July�31,�2009.�Thebroader�strategic�objective�is�believed�to�be�to�achieve�a�full�merger�of�MTNand�Bharti�as�soon�as�possible�to�create�an�operator�having�combined�revenuesof�over�USD�20�billion�and�a�combined�customer�base�of�over�200�million.

Telecom Subscriber Base and Teledensity

Source:�TRAI�Press�Releases

Subscriber Base

(millions)

Teledensity

(percent)

April,�2008 308.5 26.9

May,�2008 317.0 27.6

June,�2008 325.8 28.3

July,�2008 334.8 29.1

August,�2008 343.9 29.8

September,�2008 353.7 30.6

October,�2008 364.0 31.5

November,�2008 374.1 32.3

December,�2008 384.8 33.2

January,�2009 400.1 34.5

February,�2009 413.9 35.7

March,�2009 429.7 37.0

April,�2009 441.5 37.9

The previous issue had included data on RCOM’s GSM subscriber base, as sourced from

BNP Paribas. However, RCOM itself does not provide technology based subscriber

breakup. The previous issue has now been modified to reflect the appropriate data. This

issue can be accessed at

http://in.kpmg.com/Sectoral_Snippets/Misc/SectoralSnippets_Issue31.pdf

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• Shubham Logistics plans to pump USD 120 million to set up agrilogistics parksA�unit�of�Essar�Shipping�Ports�&�Logistics�Limited�is�in�talks�with�investmentbankers�in�the�UK�to�raise�USD�250�million�loan�for�refinancing�the�purchase�ofan�oil�rig.�The�funds�raised�are�likely�to�be�used�to�refinance�semi-submersiblerig�-�Essar�Wildcat.�This�is�being�done�to�reduce�the�interest�costs�on�an�earlierdebt�taken�by�Essar�Oilfield�Services�Ltd.�in�2006�to�buy�the�rig.

• Varun Shipping to increase offshore exposureVisakhapatnam�Port�Trust�(VPT)�one�of�the�largest�cargo�handling�ports�plans�toinvest�up�to�USD�530�million�to�double�its�cargo�capacity�from�the�present�52million�tonnes�by�2012.�VPT,�plans�to�raise�funds�with�the�help�of�privateinvestors�and�internal�accruals.�The�capacity�increase�is�likely�to�be�throughmodernization�of�existing�facilities�and�creation�of�new�berths.�VPT�plans�toinvest�USD�249�million�from�internal�accruals.

• Safexpress plans USD 204 million investments in 5 yearsSafexpress�one�of�the�leading�supply�chain�and�logistics�firm�plans�a�USD�204million�investment�over�a�5-year�span�for�setting�up�new�logistics�facilities�andexpanding�its�existing�network.�Out�of�the�USD�204�million�investment�plans,USD�122�million�is�likely�to�go�into�setting�up�logistic�facilities�while�the�balanceUSD�82�million�is�likely�to�go�towards�expanding�its�existing�network,�ramp�upmanpower,�upgrade�information�technology�capabilities�and�increase�its�fleetsize�by�another�300.�In�so�far�as�its�upcoming�national�investments�go,Safexpress�plans�to�deploy�the�funds�for�setting�up�as�many�as�32�logisticsparks�with�a�total�area�of�5�million�square�feet.�The�company�also�plans�to�addanother�30�-�40�new�branches�its�existing�562�branch�network.�

• Air Deccan launches Deccan 360Air�Deccan,�the�low-fare�carrier�plans�to�launch�a�new�air�and�surface�deliveryservice�Deccan�360.The�company�is�aiming�to�cover�almost�all�of�the�populouscountry�with�a�hub�and�spoke�distribution�network�headquartered�in�centralIndia.�The�company�plans�to�invest�USD�25�million�in�this�latest�venture�and�isseeking�a�further�USD�30�million�in�investment�for�the�business�which�thecompany�is�likely�to�secure�once�its�operations�are�under�way.�Deccan�360�islikely�to�offer�express�logistics�services�within�India�and�between�and�somemajor�international�markets�starting�with�Dubai�and�Hong�Kong.

Page 15 of 18

Transport and Logistics

Analyst: Ashish Punjabi©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

“There is a huge growthopportunity for the warehousingbusiness in India. SpecialEconomic Zones (SEZs) are one ofthe major driving forces forWarehousing business in India. Alarge number of upcoming SEZshave necessitated thedevelopment of Logistics Parks forthe domestic market as well asfor global trade.”Mr. Vineet Kanaujia, General Manager – Marketing,Safexpress(Source: www.indiaprwire.com, May 25, 2009, ‘Drivingthe Warehousing Revolution, Safexpress on a massiveexpansion spree’)

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Page 16 of 18

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

Reference material for preparing this document was takenfrom the following sources:

• LiveMint,�Worst�over�for�economy,�UPA�details�more�reforms,�May�30,�2009

• IndianExpress,�First�glimmer�in�India�growth�slowdown�story,�May�30,�2009

• ExpressIndia,�Rays�of�recovery�-�Indian�economy�may�recover�late�2009�–�RBI,�May�24,�2009

• Prime�TASS�News�Agency,�Apollo�Tyres�to�buy�Vredestein�Banden�for�around�USD�300�million,�May�7,�2009

• Business�Standard,�Birla�Power�eyes�diesel�engine�manufacturing�companies,�May�7,�2009

• Business�Standard,�Robert�Bosch�engineering�to�expand�India�operations;�to�invest�USD�24�million,�May�5,�2009

• The�Hindu�Business�Line,�BMW�India�in�phase�2�of�expansion,�May�2,�2009

• DNA�Money,�Setco�to�make�clutches�for�cars,�May�23,�2009

• The�Economic�Times,�Religare�inks�pact�with�Swiss�Re�for�health�insurance�venture,�June�02,�2009

• The�Economic�TImes,�Spice�Finance,�3�Degrees�AMC�launch�PE�fund,�June�01,�2009

• Business�Standard,�HDFC�Standard�Life�plans�capital�infusion�of�Rs�350�cr�in�FY10,�May�08,�2009

• India�Infoline�Newsletter,�May�08,�2009

• Projectstoday,�Germany's�Aqua�Montana�plans�two�bottling�JVs,�May�26,�2009

• Live�Mint,�GCPL�earmarks�up�to�USD�1�bn�for�acquisitions�in�emerging�markets,�May�03,�2009

• Economic�Times,�Whirlpool�to�invest�Rs�100�cr�for�development�of�products,�May�20,�2009

• Live�Mint,�Shoppers�Stop�to�invest�Rs�40�cr�to�open�4�stores�in�FY10,�May�31,�2009

• The�Hindu�Business�Line,�Ginger�building�up�brand�flavour,�May�14,�2009

• The�Economic�Times,�Mahindra�holidays�to�add�1000�holiday�homes,�May�15,�2009

• Business�Standard,�Marriott�to�add�24�new�hotels�by�2012,�May�27,�2009

• Economic�Times,�DLF�may�soon�sell�50%�in�new�Saket�hotel�for�Rs�75�crore,�May�05,�2009

• Business�Standard,�TCS�bags�5-year�IT�contract�from�Volkswagen,�May�13,�2009

• VCCircle.com,Geodesic�Acquires�South�American�Firm�Interactive�Networks,�May�19�2009

• The�Economic�Times,�HCL�bags�240�crore�BSNL�project,�May�26,�2009

• The�Financial�Express,�Agile�financial�technologies�starts�India�operations,�May�21�2009

• Business�Standard,�Patni�opens�new�EMEA�headquarters�in�London,�May�28,�2009

• Business�Standard,�BBK�Opts�for�Nucleus�Software's�cash�management�solution�CASH@WillTM,�May�12,�2009

• Financial�Express,�Adlabs'�BPO�announces�big�plans�for�media�space,�May�08,�2009

• Financial�Express,�Spice�Enfo�to�invest�USD�80�million�in�media�business,�May�10,�2009

• Indiantelevision.com,�Zee�buys�out�partner�firm�in�Zee�Studio�for�$56�million,�May�04,�2009

• The�Economic�Times,�Big�Cinemas�forays�into�the�Netherlands,�May�26,�2009

• Indiantelevision.com,�Forbes�launches�in�India,�May�22,�2009�

• Business�Standard,�Mexican�multiplex�chain�to�invest�USD�347�million�in�India,�May�22,�2009

• The�Economic�Times,�RIL�strikes�two�more�gas�reserves�in�KG�basin,�May�27,�2009

• The�Economic�Times,�Essar�Oil�to�step�up�refining�capacity�to�one�million�barrels�a�day,�May�28,�2009

• The�Economic�Times,�Oil�companies�get�a�USD�2.1�billion�lifeline

• The�Economic�Times,�OVL�to�invest�USD�1.45�billion�in�Iraq�oil�block,�May�4,�2009

• The�Economic�Times,�RIL�acquires�Chevron’s�five�percent�stake�in�RPL�for�USD�270�million,�May�1,�2009

• The�Economic�Times,�ONGC�to�invest�USD�1.8�billion�over�3-4�years�for�MH�redevelopment,�May�13,�2009

• The�Economic�Times,�Petronet�gets�Exxon�LNG�feed�for�its�Kochi�plant,�May�9,�2009

• Company�Press�Release,�Dr.�Reddy’s�receives�approval�for�Three�INDs�and�announces�reorganization�of�its�DrugDiscovery�Operations,�May�21,�2009

• Company�Press�Release,�Ranbaxy�commences�Phase�III�clinical�trials�for�its�new�anti-malarial�molecule,�May�4,2009

• Company�Press�Release,�Jubilant�Enters�Research�Collaboration�with�AstraZeneca,�May�5�2009

• Company�Press�Release,�Ranbaxy�consolidates�presence�in�Dermatology�segment,�May�21,�2009

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Page 17 of 18

©�2009�KPMG,�an�Indian�partnership�and�a�member�firm�of�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.�All�rights�reserved.

• Company�Press�Release,�Claris�partners�Pfizer�to�strengthen�regulated�market�presence,�May�2009

• The�Economic�Times,�BHEL�to�invest�Rs�12,000�cr�in�4�years�for�expansion,�May�05,�2009

• Energy�Business�Review,�Indian�Government�Selects�Eight�Private�Sector�Power�Firms�To�Bid�For�UMTP�Projects,May�12,�2009

• The�Economic�Times,�Rel�power�co�raises�Rs�970�cr�for�transmission�project,�May�21,�2009

• The�Economic�Times,�NTPC�lines�up�USD�12�bn�capex�over�3�years,�May�29,�2009

• The�Economic�Times,�PowerGrid�bags�Rs�1,033�cr�transmission�project�from�PSEB,�May�29,�2009

• Hindustan�Times,�Ambuja�Realty�To�Invest�Rs�1,000�Crore�This�Fiscal,�May�31,�2009

• Business�Standard,�Government�Clears�The�Way�For�Big�SEZs,�May�30,�2009

• Times�of�India,�Tatas�bring�Nano�touch�to�Mumbai's�realty,�May�7,�2009

• Vccircle,�Kerala�Based�Builders�Launch�Real�Estate�Venture�Capital�Fund,�May�8,�2009

• Vccircle,�The�Grand�QIP�Party�Of�Indian�Real�Estate,�May�28,�2009

• The�Economic�Times,�DoT�notifies�mobile�number�portability;�service�from�September�20,�May�10,�2009

• The�Financial�Express,�Alcatel-Lucent,�Huawei�bag�$400-m�contract�from�Unitech�Wireless,�May�11,�2009

• The�Economic�Times,�Bharti-MTN�renew�acquisition�talks;�to�acquire�49%,�May�25,�2009

• Asia�Pulse,�India's�SSLL�to�invest�USD120�million�to�set�up�agri�logistics�parks,�May�4,�2009

• Reuters,�Varun�Shipping�to�step-up�offshore�exposure,�May�21,�2009

• Business�Line,�Vizag�Port�Trust�to�invest�INR�2,600�crore�by�2012,�May�3,�2009

• Economic�Times,�Safexpress�sees�1000�crore�investment�in�5�year,�May�23,�2009

• www.airwise.com,�Air�Deccan�Founder�Launches�Express�Delivery�Company,�May�25,�2009

Page 18: SectorSnippets Issue 32:TP4 WhitePaper A4.QXD...Page 2 of 18 Sectoral Snippets About Sectoral Snippets Sectoral Snippets is an India-focused, monthly, freely-distributable newsletter

in.kpmg.com

©�2009�KPMG,�an�Indian�Partnership�and�a�member�firmof�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.All�rights�reserved.KPMG�and�the�KPMG�logo�are�registered�trademarks�ofKPMG�International,�a�Swiss�cooperative.

The�information�contained�herein�is�of�a�general�nature�and�is�not�intended�to�address�the�circumstances�of�any�particular�individualor�entity.�Although�we�endeavour�to�provide�accurate�and�timely�information,�there�can�be�no�guarantee�that�such�information�isaccurate�as�of�the�date�it�is�received�or�that�it�will�continue�to�be�accurate�in�the�future.�No�one�should�act�on�such�informationwithout�appropriate�professional�advice�after�a�thorough�examination�of�the�particular�situation.

KPMG�in�India

MumbaiKPMG House, Kamala Mills Compound448, Senapati Bapat MargLower ParelMumbai 400 013Tel: +91 22 3989 6000Fax: +91 22 3983 6000

DelhiDLF Building No. 10,8th Floor, Tower B,DLF Cyber City, Phase 2, Gurgaon 122 002Tel: +91 124 307 4000Fax: +91 124 254 9101

Pune703, Godrej CastlemaineBund GardenPune 411 001Tel: +91 20 305 85764/65Fax: +91 20 305 85775

BangaloreSolitaire139/26, 3rd Floor,Inner Ring Road, Koramangala,Bangalore 560 071Tel: +91 80 3980 6000Fax: +91 80 3980 6999

ChennaiNo.10 Mahatma Gandhi RoadNungambakkamChennai 600 034Tel: +91 44 3914 5000Fax: +91 44 3914 5999

Hyderabad8-2-618/2Reliance Humsafar, 4th FloorRoad No.11, Banjara HillsHyderabad - 500 034Tel: +91 40 6630 5000Fax: +91 40 6630 5299

KolkataInfinity Benchmark, Plot No. G-110th Floor, Block – EP & GP, Sector VSalt Lake City, Kolkata 700 091Tel: +91 33 44034000Fax: +91 33 44034199

Contact�us:

For further information about thisnewsletter, please contact:

Ramesh SrinivasHead - Consumer Marketse-Mail: [email protected]: +91 80 3980 6800

Abizer DiwanjiHead - Financial Servicese-Mail: [email protected]: +91 22 3983 5301

Rajesh JainHead - Information, Communication &Entertainmente-Mail: [email protected]: +91 22 3983 5300

Jai MavaniHead - Infrastructure & Governmente-Mail: [email protected]: +91 22 3983 5724

Yezdi NagporewallaHead - Industrial Marketse-Mail: [email protected]: +91 22 3983 5101

Vikram UtamsinghHead - Private Equitye-Mail: [email protected]: +91 22 3983 5302

Research�Inputs�by�KPMG’s�IndiaResearch�Center