Honda zips past TVS Motor to reach third spot in motorcycles

Yogesh Sapkale

Japanese automaker Honda is rapidly gaining grounds in India either on its own or through its joint venture and has replaced incumbent TVS Motor from third spot in motorcycles category

Honda Motorcycles & Scooter India (Pvt) Ltd (HMSI), a unit of Japanese Honda Motor Co Ltd, has emerged as the third largest motorcycle seller in the country, replacing TVS Motor Co Ltd. The only thing that saved TVS Motor from losing its third position in overall two-wheeler ranking is mopeds, where no other company has a presence at the moment.

During April, HMSI sold 58,041 units in the motorcycle category compared with TVS Motor's 49,008 units. Similarly, in scooters, HMSI, the current leader, surged ahead with 71,477 units while TVS Motor sold 25,159 units. In the mopeds category, TVS Motor sold 51,829 units compared with 40,915 units a year ago.

However, in the scooters category, HMSI is still feeling the effects of last year's workers strike and has an active waiting list. This probably has given newcomers such as Mahindra Two Wheelers Ltd and Suzuki Motorcycle India Ltd, a chance to increase sales. During April, Mahindra Two Wheelers reported total scooter sales of 9,009 units from 1,609 units while Suzuki Motorcycle sold 19,893 units of scooters compared with 8,129 units a year ago.

Earlier, while speaking with reporters, Shinji Aoyama, president and chief executive, HMSI, said that the company expects to keep its leadership in scooters but want to expand in motorcycles and by FY12 sees motorcycles sales exceeding scooters. He said until HMSI's new plant starts production, there is a limitation on production of scooters.

With an aim to penetrate the scooters market further, TVS Motor launched ‘TVS Wego’, its new 110cc scooter, in Pune and Nagpur. Over the next two months, the metal-bodied scooter with unisex styling will be made available across the country.

Hero Honda Motors Ltd, in which Honda Motors holds 26% stake, continued its leadership position in the overall two-wheeler category, despite a marginal decrease in April due to supply side constraints. Due to a shortage of batteries, the company could not dispatch about 50,000 units during April and expects the problem to be sorted out by second week of May. Bajaj Auto Ltd also maintained its second spot with robust motorcycle sales. Bajaj Auto's motorcycle sales grew 84.4% led by variants of its popular ‘Pulsar’ and ‘Discover’ brands.

While Honda is gaining ground rapidly in India either on its own or through its joint venture, the other Japanese automaker Suzuki is finding it difficult to make inroads in two-wheelers despite a strong brand image. The company's unit, Maruti Suzuki India Ltd is the country's largest carmaker. While Suzuki Motorcycle reported higher sales in the scooters category, in the motorcycles category, its sales tumbled over 65% to 1,834 units from 5,356 units, in the same month last year.

"Automobile sales continued to remain upbeat in April 2010 on a year-on-year basis on account of a low base of the corresponding month of the last year and the prevailing healthy demand environment. However, the automobile companies, except for Bajaj Auto, failed to log in a sequential sales growth compared to March 2010 mainly due to a marginal slowdown that traditionally happens in April of every year," said Sharekhan Ltd in a note.

After sales declined by about 89% during FY10, electric two-wheelers failed to get a single customer in April 2010, raising questions about their future.
(Read more http://www.moneylife.in/article/8/5285.html)

Courtesy: Moneylife.in and SuchetaDalal.com

Banks cut issuance of credit cards due to lower use, falling profits

By Yogesh Sapkale

About 80% of users of credit cards in India do not pay any interest to banks, by using the grace period, reveals a senior RBI official

Ever wondered why there are fewer calls from telemarketers offering you a platinum, lifetime free credit card? It has nothing to do with the Do Not Disturb (DND) facility from telecom operators. Credit cards have become unprofitable, especially after various banks suffered huge delinquencies in 2005-07, the boom years. Since the bankers or card issuers are not earning much money on credit cards, you now have to really struggle to get one.

Speaking at a seminar on banking services, organised by Moneylife Foundation, Kaza Sudhakar, chief general manager, customer services department, Reserve Bank of India (RBI) said, "Earlier there were complaints that I don’t want a credit card, now there are complaints that I am asking for a card and banks are not giving one. That’s because credit cards are not a profit-making business. Banks are losing money on credit cards."

On an average, there are higher interest rates associated with credit cards—ranging from 1.5% to 4% per month. However, this has not deterred people from opting for a credit card, simply because it gives a user the much-needed flexibility to repay. Credit cards also come with a grace period, where the user can pay his credit card balance in full within the specified time period which can go up to 45 days.

"There may be higher interest rates associated with credit cards, but about 80% of people don’t pay interest charges on a credit card (They may be using the grace period smartly, thus avoiding interest),” said Mr Sudhakar.

According to reports, there are about 26 million (2.6 crore) card users in India with an average person’s wallet containing at least one debit and credit card. However, out of these cards, only 50% are active or in use. Out of the active users almost 80% or about 1.04 million (10.4 lakh) users are not paying any interest on their credit cards, leaving all the issuers with just 260,000 (2.6 lakh) users from whom they can earn some money.

A few years ago or before the 2008 recession, people used to receive a lot of marketing calls for credit cards, free for life from any annual fee. Now the trend seems to have reversed. With the slowdown, many people defaulted on their credit card payments. Usually, during a slowdown, the number of defaults goes up rapidly. However, people don’t default on their home or car loans, since there is a danger of the creditor taking possession of the collateral. However, the same is not true for a credit card. Even if the user defaults on his credit card payment, the recovery takes much more time.

According to media reports, India’s second largest lender ICICI Bank Ltd has closed around 1.5 million credit card accounts, thus reducing the number of its total credit card users to 7 million. Other card issuers like State Bank of India, HDFC Bank Ltd, Citibank, HSBC and Standard Chartered Bank are also following the same route, but nobody likes to talk about it openly.

On the other hand, the number of debit card users is increasing. “We are seeing a shift in consumer behaviour as debit cards take on a greater role in everyday spending. More places that were traditionally cash only—from rail operators, to restaurants to retailers—are now accepting payment cards, so consumers can enjoy convenient access to their funds by using their debit cards with a level of control and protection not offered by cash,” said Uttam Nayak, country manager, South Asia, Visa.

Echoing the same sentiment, Piyush Khaitan, managing director of transaction management company Venture Infotek said, “Banks are going slow on credit card issuance and have been promoting spends through debit cards by offering various incentives to consumers such as loyalty rewards, discounts by select retailers and cash-back options. The increasing acceptance of debit cards at both physical and online merchants is also driving spends through debit cards."

Courtesy: Moneylife.in and SuchetaDalal.com

Retired bank employees get a raw deal in new wage agreement

Yogesh Sapkale

Retired bank employees who want to join a pension scheme will have to refund the entire amount paid by the bank to their provident fund account and the interest accrued thereon, along with their share in the contribution

Retired bank employees, who had opted for provident fund (PF) and gratuity at the time of retirement instead of a pension, are feeling left out from the benefits of the new wage settlement signed between the Indian Banks Association (IBA) and the United Forum of Bank Unions (UFBU), a body comprising nine bank unions.

According to the new wage agreement signed on 27 April 2010, about 8 lakh employees from 26 public sector banks (PSBs), 12 private sector and 8 foreign banks will get a salary hike of about 17.5%. The revision will cost banks Rs4,816 crore, including arrears payment from November 2007, which will be given in a lump sum, K Unnikrishnan, deputy chief executive, IBA said.

A total of 2.7 lakh employees and 60,000 pensioners will be benefited by the second pension option in the agreement. For employees who had not joined the pension scheme in 1995, the new agreement gives them another opportunity to join the scheme. However, there is a catch. They will have to refund the entire amount of the bank's contribution to their PF and interest accrued thereon received on retirement with the employee’s share in the contribution.

"On an individual basis, this payment over and above the bank's contribution to PF and interest thereon has been worked out at 56% of the said amount of the bank's contribution to the PF and interest thereon received by the employee on retirement," the agreement, a copy of which is with Moneylife, says.

According to a comment posted by ‘Bhas’ on forestlaneshul.com, new pension optees will have to pay 2.8 times of their November 2007 revised salary from the earlier agreed 1.6 times. "All unions kept mum on this, which came to light only after signing and yet they say this is historic. All plans were accepted as per IBA modifications, and for this it has taken almost two and a half years," the comment reads.

CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA) and convener for the UFBU, said, "People had made the mistake of not joining the pension scheme earlier and some of them are still not ready to accept it. What they are not willing to understand is with the pension scheme, they can receive a regular income more than the interest they may earn. Plus this pension has a provision for dearness allowance to be revised every six months."

Refunding the entire amount of the bank's contribution to their PF and interest accrued thereon received by the employee on retirement with the share in contribution has not gone down well with some retired bank employees. Whether the employee retired in 1997 or in 2007, there is no differentiation and both have to refund the entire amount of bank’s contribution along with interest. For example, an employee who retired in 1997 might have received Rs6 lakh as terminal dues. If he invests the same amount at an average interest rate of 8%, then he would receive about Rs48,000 per year just as interest. From 1997 to 2010, he most probably would have received more amount as interest than his investment.

"This second pension offer is nothing but a cruel joke on retired bank employees. Retired bank employees, especially those above the age of 66, are finding this offer unviable and unfair since they have to pay a heavy sum and chances of recovering the principal amount are less," said Jagdip H Vaishnav, a retired bank employee.

When asked to explain the contribution and pension per month, Mr Venkatachalam said that if for example, an employee had received Rs10 lakh as PF and gratuity on retirement, then he will have to refund this Rs10 lakh plus around Rs5.5 lakh as his own contribution. However, the bank will also contribute around the same amount and the actual amount an employee has to refund comes to Rs10 lakh. To add to this, he will receive pension arrears of eight months at a rate of about Rs15,000 per month. If he can use this money for the refund amount, then his actual contribution to the new pension scheme comes to just about Rs8.5 lakh. He will continue to receive Rs15,000 every month thereafter. In addition, after every six months, the dearness allowance component in his pension will increase, so he will receive more money. On the other hand if he invests Rs8.5 lakh, then he would get an interest of about Rs68,000 for a year or Rs5,700 per month. Now he has to decide whether to opt for Rs15,000 per month or Rs5,700 per month, Mr Venkatachalam said.

One problem with the pension scheme is that some of the retired employees may not have enough cash left with them since usually people try to buy expensive things such as a home or a four-wheeler from the money earned at retirement. They most likely would find it very difficult to garner the required money so as to receive monthly pension or regular income.

Vishwas Utagi, secretary, AIBEA said, “We have been advising employees to keep the funds they received at the time of retirement separate, in case they plan to opt for the new pension scheme. So, I think refunding the bank’s contribution and interest should not be an issue.”

The UFBU has been asking the IBA to allow another option to for those to join the pension scheme—employees who were in the service of banks prior to 29 September 1995 in case of PSBs, and 26 March 1996 in case of associate banks of the State Bank of India (SBI) and who did not opt for the scheme. IBA, however, was not ready for the same due to cost considerations. The UFBU then offered to share a portion of the initial funding liability on a one-time basis for extending pension to the non-optees.

An actuarial valuation of liability by actuaries showed an estimated funding gap of Rs6,000 crore. The UFBU offered to contribute 30% or about Rs1,800 crore to bridge the gap for retired employees. An actuarial valuation on similar lines as conducted for serving employees had estimated the funding gap as Rs3,115 crore for those retirees or their families.

“Moreover, as per the new wage agreement, bank employees, both in service and retired, will receive arrears effective from November 2007 and it would help them while contributing to the 30% funding gap,” Mr Utagi said.

UFBU is receiving calls from children of retired bank employees asking how much their parents will have to pay to get a regular monthly income and these children are ready to pay from their own pockets, Mr Venkatachalam added.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Will the 3G windfall, disinvestment help rein in fiscal deficit?

Yogesh Sapkale

With the government set to garner more revenues than expected from the 3G and BWA auction and its disinvestment programme, it may be able to rein in the fiscal deficit to 5.5%, a level not seen after FY07

The robust response to the Indian government's plan to auction the 3G spectrum and broadband wireless access (BWA) and disinvestment is likely to help the government to rein in the rising fiscal deficit. India commenced the auction for 3G and BWA on 9th April and set itself a target of Rs35,000 crore as the spectrum licensing fees. On Wednesday, the provisional all-India 3G bid price reached Rs11,047 crore, an increase of 213% over the base price of Rs3,500 crore at the end of the 128th round. With no excess demand in any of the total 22 circles and the activity level set to reach 100% in round 132, the auction may end on Thursday itself. With the provisional figures, the government is set to garner a minimum of Rs45,000 crore as against its target of Rs35,000 crore. This is just from the 3G auction. With the 3G auction bid crossing Rs11,000 crore, the government may receive about Rs15,000 crore from the auction for BWA, which will begin in two days after the close of the 3G auction. In short, the government may earn about Rs60,000 crore from the 3G and BWA auctions alone.

Similarly, the government can earn about Rs40,000 crore by selling its stake in 10 more units this year including Indian Oil Corp (IOC), MMTC Ltd, Coal India Ltd, Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL) and Shipping Corp of India Ltd (SCI).

According to a PTI report, Sidhartha Pradhan, joint secretary in the disinvestment ministry, had said, "Engineers India is likely to be disinvested in June; Coal India in August; Hindustan Copper in August-September; SAIL in September and Power Grid in November this year."

This would be followed by disinvestment in IOC and Manganese Ore India Ltd in December, RINL in January 2011, MMTC Ltd in February and SCI in March next year, he added.

The government expects to earn Rs40,000 crore by selling its stake in the State-run companies. During FY10, the government earned Rs25,000 crore by divesting its stake in Oil India Ltd, iron ore miner NMDC Ltd, Rural Electrification Corp Ltd (REC) and power producer NTPC Ltd.

Together, the government may earn Rs1 lakh crore, from the 3G+BWA auction and disinvestment. For FY11, the government needs to borrow about Rs4.57 lakh crore from the domestic markets to fund the fiscal deficit at a time when the credit needs from the private sector are rising.

During FY10, India's fiscal deficit that measures excess expenditure of the government over its revenues rose to 6.7% of gross domestic product (GDP). This was mainly due to the stimulus provided by the government to reduce the impact of the global slowdown. India has already started withdrawing the stimulus by increasing excise duty and duties on fuels.

Prime minister Dr Manmohan Singh, while speaking at the platinum jubilee celebrations of the Reserve Bank of India (RBI) in Mumbai had said, “We allowed a large increase in the fiscal deficit in the past two years as we responded to the global economic crisis. This must now be reversed. We are therefore, firmly committed to bring the economy back to a fiscally sustainable path. This involves a reduction in the fiscal deficit to 5.5% in 2010-11 from 6.8% of GDP in 2009-10 with a further reduction in the next two years reaching 4.1% in 2012-13.”

Dharmakirti Joshi, chief economist, CRISIL said," Divestment and 3G revenues are one time gain. To bring lasting fiscal benefits, the government will have to initiate steps such as decontrol of fuel prices, gradually withdraw stimulus and implement general sales tax (GST) as soon as possible."

Earlier, ratings agency Standard & Poor’s, while revising India’s outlook to ‘stable’ from ‘negative’, had said that the revision reflects its view that the country’s fiscal position could now begin to recover and the economy will remain on a strong path. S&P also affirmed 'BBB-' long term and 'A-3' short-term sovereign credit ratings on India. The ratings continue to be constrained by the high government debt burden and deficit, and India's weak fiscal profile, the ratings agency said.

“For the moment, the rub of the green seems to be going the government’s way: The ongoing 3G+BWA telecom auctions indicate that the government should be able to garner about Rs8,000 crore to Rs10,000 crore more than its target of Rs35,000 crore, which would help alleviate some of the resource crunch. Also, the IMD has forecast that the monsoon will be normal, helping tame food inflation which at present is at 17%,” said Enam Securities Pvt Ltd, in a note.

Inflation has remained a major concern for the RBI. The central bank, in its annual monetary policy review, hiked the repo, reverse repo and cash reserve ratio (CRR) by 25 basis points each. By increasing the key rates and CRR, the RBI has reinforced its stance of containing inflation and anchoring inflationary expectations.

"If government gets the resources from 3G and divestment as expected, fiscal deficit and hence government borrowings will remain within target. This will lower the pressure on government bond yields and make RBI's task of smoothly conducting government program easier," Mr Joshi added.

With the government set to garner more revenues than expected from the 3G and BWA auction and its disinvestment programme, it may be able to rein in the fiscal deficit to 5.5%, a level not seen after FY07.

(Courtesy: Moneylife.in and SuchetaDalal.com)

What ails the RIL scrip?

Yogesh Sapkale

During the past 30 days, the share price of Reliance Industries is falling continuously, despite some good news coming out from the company. What are the reasons?

The Supreme Court verdict on the Reliance Industries Ltd (RIL) and Reliance Natural Resources Ltd (RNRL)'s five-year fight and the prospect of a downgrade of RIL’s D-9 block has affected the share price of RIL over the past one month.

During the past 30 days, the weekly average price of RIL has fallen to Rs1,028 from Rs1,102 despite some good news coming out from the company. For FY10, RIL’s total revenues crossed the Rs2 lakh crore mark; it made a fourth discovery in the Cambay basin in Gujarat; the company announced a joint venture with Atlas Energy and also invested some money in Deccan 360.

“Although these (developments) were good news for RIL, there is no material impact of it on the share price. More so, the good news was evened out by downgrade of RIL’s D-9 block and there is the Supreme Court verdict expected next week, which may be a trigger point for the company’s share price movement,” said Saeed Jaffery, research analyst, Ambit Capital Pvt Ltd.

Last month, independent evaluator Hardy Oil and Gas PLC, a partner of RIL, evaluated a cut in the estimates in the company’s D-9 block by 51% following the first well in that block turning out to be dry. Hardy Oil said that the D-9 block in the Krishna-Godavari (KD) basin off the Andhra Pradesh coast, is likely to hold about 5.2 trillion cubic feet of gas compared with the earlier estimate of 10.6 trillion cubic feet.

Earlier this month, the company announced its fourth discovery in the Cambay basin in Gujarat. “The discovery is significant as this is expected to open up more oil-pool areas, leading to better hydrocarbon potential within the block,” the company said in a statement. Analysts, however, said that the discovery and its potential have already been factored into RIL’s share price.

Mr Jaffery said, “Although the discovery is good news, we have still not been able to quantify the same and cannot put any value on it. Since the discovery or potential of the field has already been factored into the share price, we do not expect the share price to react."

There has been relatively less exploration effort in other blocks and little news flow on RIL’s plans for its large inventory of discoveries as the company is more focused on KG-D6 in terms of both development and litigation. However, with exploration efforts moving up, and after the Supreme Court ruling, the company could surprise the market with more concrete plans for other KG-D6 discoveries and other discovered blocks, said an analyst who does not want to be named.

For FY10, RIL's total turnover rose 37% to Rs2 lakh crore from Rs1.5 lakh crore, while its net profit increased 6.1% to Rs16,236 crore. However, during the same period, its gross refining margin (GRM) fell to $6.6 per barrel from $12.2 per barrel. The company said during that period, light-heavy crude differentials were at their lowest in the past few years, while the Middle-East distillate cracks were under pressure due to industrial activity, low demand from the transport sector and high inventory.

“During the quarter to end-March, RIL clocked average GRM of $7.5 per barrel, significantly below our estimates of $9 per barrel. Premium in Singapore margins narrowed to $2.5, the lowest level seen in the past four years. However, the impact of lower-than-expected GRM was offset by strong volume growth of 111% to 16.7 million tonnes per annum (mtpa), which indicates refinery utilisation of 108%,” said KR Choksey Shares and Securities Pvt Ltd, in a report.

Speaking about the petrochemicals (petchem) business of RIL, where the company's margins increased 14.4% against 13.9% in the previous quarter, the brokerage said that robust domestic demand is building expectations of strong consumption in the coming quarters for the company.

"However, once the new large petchem plants in the Middle-East and China start operations, higher product supplies will put pressure on margins. Nevertheless, in the short term, strong domestic demand, coupled with planned maintenance shutdowns at crackers will continue to maintain healthy petchem margins," KR Choksey added.

Rohit Nagraj, research analyst, Prabhudas Lilladher Pvt Ltd, said that the brokerage believes that the worst is over for refining and it expects refining margins to improve hereon. "Near-term worry on the ongoing battle between RIL and RNRL continues to remain a concern," he added.

Next week, the apex court is likely to announce its verdict on the natural gas price war between RIL and RNRL. Last year in July, the Bombay High Court had asked RIL to supply 28 million standard cubic metres a day of gas to RNRL at $2.34 per million British thermal unit for 17 years. RIL then moved the Supreme Court alleging that the High Court had erred in deciding quantity, tenure and price of gas supply to the power plants owned by RNRL or its units.

Although no one is willing to speak on the record, some analysts believe that looking at the earlier judgements of the apex court, which were filed challenging the High Court orders, one gets a feeling that the verdict may not be positive for RIL.

(Courtesy: Moneylife.in and SuchetaDalal.com)

PayPal to allow withdrawal for Indian customers with 'Purpose Code'

Yogesh Sapkale

From 3rd March onwards, PayPal will allow new bank withdrawals for its customers in India after receiving a 'Purpose Code' for the transaction

Electronic payment gateway PayPal has said that it would allow new bank withdrawals for its customers in India after receiving a 'Purpose Code' for the transaction.

In his blog, PayPal's business head for Asia-Pacific, Farhad Irani said, “When you select the ‘Withdraw Funds’ option on your PayPal account after 3rd March, we will ask you to fill out a new field entitled ‘Purpose Code’. This information is required under the laws of India in order to identify the nature of cross-border merchant transactions."

Mr Irani also clarified that Indian users will no longer be able to receive personal payments. Customers of Indian PayPal users will have three options for making any payment such as using the pay for purchases (goods or services) tab, completing PayPal checkout at the user's website and responding to PayPal “Request Money” instructions (invoices). However, for each payment, transaction users will have to provide a purpose code for the transaction.

The purpose code will help banks in India to furnish information required by the Reserve Bank of India to identify the nature of cross-border transactions, Mr Irani said.

He also said that according to Indian law, based on the value of withdrawal and the purpose code in the Indian customer's declaration, banks may require him/her to provide documentary proof such as invoices or goods receipt forms as applicable to reconcile with withdrawal.

Here is the list of purpose codes for Indian users of PayPal:

(Courtesy: Moneylife.in and SuchetaDalal.com)

Two (wheelers) to tango over the next few years

Yogesh Sapkale

Allaying the fears of higher input costs, two-wheeler manufacturers in India are aiming for higher targets. Can they keep up the growth momentum?

Two-wheeler makers in India are likely to show a huge growth of more than 25% in sales volume in FY10 after two years of muted growth. With this robust performance, many automakers are aiming to achieve a growth of above 30% during FY11. Bajaj Auto Ltd, the country's second-largest two-wheeler maker, aims to sell 4 million units in FY11, up from 2.5 million units it sold during FY10.

While analysts believe that the Indian two-wheeler industry can grow at a compounded annual growth rate (CAGR) of 12% to 15%, the target set by Bajaj (around 60% year-on-year, including exports) looks like a bit on the higher side.

“The road ahead in FY11 is likely to be bumpy on account of a high base of FY10, as automobile manufacturers will have to deliver substantial volumes to show growth on this high base. The volumes are also likely to be tapered down by up-tick in interest rate cycle, price increase due to rise in raw material cost and mandatory up-gradation of vehicles to meet Euro IV emission norms. Thus, we believe that FY11 is going to be a testing time for auto companies to maintain the strong volume growth momentum," said Sharekhan Ltd in a research report.

Last month, some auto financiers, such as ICICI Bank Ltd, HDFC Ltd and Kotak Mahindra Bank raised interest rates by 25 basis points (bps) to 50 bps (100bps=1%). Similarly Ceat Ltd and Birla Tyres Ltd increased tyre prices while other tyre producers are seeking to increase prices by 3% to 5% due to hike in natural rubber prices and growing demand. Amidst all these concerns, the auto sector has reported strong sales volumes in March 2010 due to the strong demand across urban, rural and industrial segments.

While the strong demand from the rural segment drives the figures for Hero Honda Motors Ltd, the country's largest two-wheeler maker, it’s the urban demand for premium bikes that pushes up the numbers for Bajaj Auto. Both the players, which together hold about 79% share in the domestic market, are gearing up to meet this growing demand by ramping up their respective capacities.

"Rural market growth is expected to remain stable with higher income visibility and disposable income through non-farm sources and low two-wheeler penetration levels. Despite margin contraction from current levels, we expect industry profitability to remain above historical levels. Higher competitive intensity is unlikely to trigger a price war, as we expect the top two players to continue to remain dominant with a combined domestic motorcycle market share of 78% in FY12 (estimated) from 79% in FY10 (estimated)," said Ambit Capital Pvt Ltd in a report.

India's market is divided roughly into two categories, urban and rural, depending on the needs and resources of consumers in these areas. For example, pricing and fuel efficiency matters most for rural consumers whereas the urban consumer would prefer more power and style in a motorcycle. Rural demand has assumed significant importance with contribution to total motorcycle sales increasing to 36% in 2008 from 21% in 1984.

According a report by Enam Securities Pvt Ltd, under the Rs50,000 price tag category, Hero Honda is the undisputed two-wheeler king in India. In the entry level segment of Rs40,000 and below category, Hero Honda's market share is 43% while Bajaj Auto and TVS Motor Co Ltd's share is 30% and 25%, respectively. However, in the executive or Rs40,000-Rs50,000 price category, Hero Honda rules supreme. Its market share is a whopping 74%, while Bajaj Auto and (surprisingly) Honda Motors and Scooters Ltd (HMSI) stand a distant second and third place with a market share of 16% and 7%, respectively. TVS Motor, the country's third largest two-wheeler maker, stands far away at fourth place with a mere 1% market share in this category.

After launching two new products in the premium band of motorcycles, Bajaj Auto has once again switched its focus to the highly lucrative entry-level motorcycle market with the new ‘Platina 125’ motorcycle. The price-tag of Rs36,000 makes the new ‘Platina’ the cheapest motorcycle in the country with an electric start as a standard fitment.

Going ahead during FY11, demand would be driven by recovery in urban areas, while in the rural market, the secular demand would continue. "Demand from urban areas, which constitutes about 40%-50% of the total market, is likely to grow in FY11 as consumer sentiment improves. We expect demand for higher-end motorcycles to benefit as a result. While rural demand will also grow, pace of growth is expected to be lower on account of withdrawal of stimulus packages like the Sixth Pay Commission, increase in minimum sales price (MSP) and high base effect of FY10," said Enam. The brokerage expects two-wheeler sales to touch 15 million units by FY15.

(Courtesy: Moneylife.in and SuchetaDalal.com)

3G or 4G: What will be the final call?

Yogesh Sapkale

Mobile operators in India are battling for 3G spectrum—while the world is getting 'hands on' experience on 4G technology. Moreover, going by the telecom minister's statement, mobile operators will have to be ready to shell out more money for 4G even as they roll out 3G networks

Even as mobile operators in India are battling with each other for 3G spectrum, the world is gearing up for 4G technology. In February, the Telecom Regulatory Authority of India (TRAI) had also started consultation for the next level of telecom services or 4G, which offers download at faster speeds (ultra-broadband) and high-definition video on demand, among other such services.

Even as the bidding process for 3G spectrum is going on, the minister for telecommunications A Raja's statement regarding 4G is sure to disturb incumbent mobile operators. According to media reports, Mr Raja has said that the auction for 4G spectrum will begin as soon as operators roll out their 3G networks. This means that operators, who are spending huge sums for acquiring 3G spectrum, will have to shell out even more for 4G spectrum—immediately after rolling out their 3G networks.

"Given the supply-demand mismatch (for three 3G spectrum slots) and its importance from a long-term growth perspective, we expect significant overbidding to take place. We expect the auction amount to reach Rs80,000 crore compared with the base price of Rs35,000 crore at a pan-India level. We expect all the leading operators to strive to get 3G spectrum in most of the key circles such as ‘Metro’ and ‘Circle A’ areas. Failing to win 3G spectrum in these areas could place them at a disadvantage versus competing players. As a result, operators will likely end up bidding aggressively, incurring higher cash outflows," said Ambit Capital Pvt Ltd, in a research note.

TRAI chairman, JS Sarma, while rolling out the consultation process for 4G, had said,"3G has been delayed badly. I don't want 4G or LTE (Long Term Evolution) to meet the same fate. Other countries are catching up with 4G and that is why we are taking advance action."

In fact, a number of foreign players like US-based Motorola and Ericsson have already started testing 4G or LTE technology in various parts of the world. To be more precise, on 3 March 2009, Lithuanian Radio and TV Centre (LRTC) announced the first operational 4G mobile WiMAX network in Eastern Europe. This was followed by Swedish-Finnish network operator TeliaSonera and its Norwegian brand name NetCom (Norway). These network operators, on 14 December 2009, deployed the first commercial LTE in Scandinavian capitals Stockholm and Oslo.

Back home, mobile operators are in dire need of cash flows, not only for deployment of 3G networks, but also to win the bids. According to the Department of Telecommunications (DoT), on Tuesday—the fourth day of bids—the price for a pan-India licence rose 31% to Rs4,582 crore over the base price of Rs3,500 crore. The Indian government has set itself a target of Rs35,000 crore by selling 3G spectrum and broadband and wireless access (BWA) services.

The Gujarat circle, for the first time since the e-auction started, moved to the top in the provisional winning bid price at Rs459.52 crore against Delhi's Rs437.65 crore. Telecom players have been showing keen interest in Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu circles out of the total 22 circles.

Ratings agency CRISIL has said that large debt funding of the additional investment on 3G spectrum licenses may exert pressure on the financial risk profiles of CRISIL-rated players over the near to medium term. The pressure on the players’ financial risk profiles will be offset by their strong cash flows, underpinned by a mature pan-Indian presence for most rated players or support from their parents, it added.

In technical terms, 3G allows simultaneous use of speech and data services and higher data rates of up to 14 megabits (Mbits) per second on downlinks and 5.8 Mbits per second on uplinks. On the other hand, 4G offers a data rate of at least 100 Mbits per second. While 3G allows services like wireless broadband access, multimedia messaging service (MMS), video chat and mobile TV—4G, in addition, can offer new services like HDTV content, minimal services like voice and data, and other services that utilise high bandwidth. 4G may also allow roaming with wireless local area networks, and can be combined with digital video broadcasting systems.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Mobile batteries: 'Cheap' may cost you dear

Yogesh Sapkale

Original batteries always perform better than those bought from street vendors at rock-bottom rates

India is one of the fastest-growing mobile markets in the world. According to latest figures released by the Telecom Regulatory Authority of India (TRAI), at the end of February, the country's total wireless (mobile) subscriber base reached 563.73 million (56.4 crore), with an overall tele-density of over 51%.

With this kind of growth, no wonder, all kinds of mobile handset manufacturers and accessory makers are reaping huge profits, by using any method. For example, out of the total 563 million users, if about 10% of them have to replace a battery annually, then there is a market for 5.6 million or 56 lakh batteries, every year!

This 'potential' has attracted numerous cheap (and mostly fake or refurbished) batteries which are available at various streets. Last when I checked, I found 'long-lasting' mobile batteries of almost all handsets available at a street vendor for as low as Rs50 a piece. This is in contrast to the sky-high prices of original mobile batteries. For example, BST-36, an original battery from Sony Ericsson costs Rs1,299; a battery which looks the same is available for about Rs100 at any street vendor.

Most batteries available with street vendors are fake and mostly refurbished batteries. Sometimes, these batteries may even explode, causing damage to both the battery and the phone. (I have witnessed one such incident, where the battery was purchased from an Indian manufacturer, in the hope that it would be better in quality than Chinese ones). Second, the life and output of these cheap batteries is always lower than original batteries.

One techie, Doug Simmons, actually did a study comparing original and third-party or 'duplicate' batteries. Checking the claims of original and duplicate battery manufacturers on the output and life of these units, Mr Simmons found that original batteries made by original equipment manufacturers (OEMs) are reasonably accurate and live up to their promised ratings, such as output and life span. Third-party batteries are consistently 20% to 30% weaker than their claims. (Check the results of this test here: http://batteryboss.org/).

Now, the question is, how can you distinguish an original battery from its duplicate counterpart? First and most important, buy the original battery from an authorised dealer of the particular mobile handset and get a bill for it. Second, know the type/model (e.g. BL-C5) of your battery along with its output—measured in mAh (milliampere-hour) or in volts. Inspect the contact pins on the battery; they should be bright yellow without any scratches. Last, dispose your used battery properly and carefully, since there are chances that it may come back to you as a 'new and original' battery by way of refurbishing.

In 2004, Nokia had come out with a hologram sticker on its OEM battery. The hologram label on Nokia batteries consists of a holographic image as well as an authentication code hidden under a scratch-off area on the label. However, there is no such initiative from other mobile handset manufacturers.

To curtail this phenomenon of refurbishing mobile batteries, both OEMs and users will have to take some initiatives. For starters, OEMs can offer certain discounts on new batteries to customers who return the old unit for recycling, similar to the discounts offered on inverter batteries. In our country, the word 'discount' often works like a magic wand and may help both OEMs and customers.

Customers should also refrain from buying mobile batteries from roadside vendors or from the Internet, since here the chances of you being taken for a ride are high. Paying a little more can actually save you money, as far as mobile batteries are concerned.

(Courtesy: Moneylife.in and SuchetaDalal.com)

FCCBs may hold the key in battle for Fame India

Yogesh Sapkale

The FCCB issued by Fame India in 2006 and the stake owned by some inconspicuous parties could tilt the balance in either Inox's or RML's favour

The fierce battle between Reliance Mediaworks Ltd (RML) and Inox Leisure Ltd (Inox) to buy Fame India Ltd has turned the multiplex industry into a battleground. Although RML has said that its open offer to buy additional 52.72% stake in Fame has been delayed pending approval from market regulator Securities and Exchange Board of India (SEBI), there are some other aspects that could impact the final outcome of the deal.

One issue relates to the foreign currency convertible bonds (FCCBs) issued by Fame in 2006 and the second issue is the stake owned by some inconspicuous parties, which could turn the balance either towards Inox or RML.

At present, three companies of the Anil Dhirubhai Ambani Group (ADAG)—RML, Reliance Capital Ltd and Reliance Capital Partners—hold a combined 13.79% stake in Fame. Inox holds 50.48% stake in Fame, including the 43.3% share that it had bought from South Yarra Holdings for Rs67 crore. As of end-December 2009, Gulshan Investment Co Ltd (Gulshan) and Shail Investments Pvt Ltd (Shail) held 6.54% and 5.26% stake, respectively, in Fame. On 25 March 2010, Religare Securities Ltd (Religare) increased its stake to 5.82% from 0.7% in Fame. Since Religare is a broker, shares are held in the ordinary course of business towards margin or collateral on behalf of clients.

In April 2006, Fame issued two series of FCCBs, the 12,000 ‘Series A Bonds’ and 8,000 ‘Series B Bonds’, of face value of $1,000 each, aggregating to $20 million. The FCCBs are convertible at any time up to 12 April 2011 at the option of the holders into newly issued shares with a face value of Rs10 per share at an initial conversion price of Rs90 per share for ‘Series A Bonds’ and Rs107 per share for ‘Series B Bonds’.

The only condition before these FCCBs get converted into shares is that the stock price has to be higher that the conversion price. During 2007-08, out of the total $20 million FCCBs issued, about 3,000 ‘Series A Bonds’ and 4,000 ‘Series B Bonds’—together worth $7 million—have already been converted into shares. That leaves FCCBs worth $13 million which are outstanding, which may hold the key to Fame for both RML and Inox.

In case Fame’s share price goes above Rs90 and Rs107, then it will lead to conversion of FCCBs—from both series—into shares and reduce Inox's stake in Fame to 42.67%. Upon conversion, FCCB holders may have around 15.07% stake in Fame. This together with the stake of Gulshan, Shail and Religare will play a crucial role in determining the winner in this race.

ADAG companies are shopping for Fame’s shares through open market deals, thereby increasing the group’s stake to 13.79% as of 8th March from the level of 4.65% before 5th February.

However, even after the FCCB conversion, Inox would hold about 42.67% and thus can easily buy additional 8% stake in Fame from the markets.

With Fame share prices now touching Rs90 and above, purchase of even a single share of Fame will considerably hike the Inox offer price. This may also lead to a situation like that of the Great Offshore Ltd (GOL) takeover battle, where ABG Shipyard Ltd sold its stake in GOL just one day prior to the open offer and made huge profits.

Now, the moot question is, why are both Inox and ADAG fighting for Fame? The answer is simple. Fame owns 95 screens across 12 cities. ADAG wants to consolidate its position as the market leader in number of screens (to 337 screens from 242 screens). Similarly, after the acquisition, the number of screens for Inox would go up to 210 from 115, thus making it the second-largest player in the film-exhibition business.

Apart from the rankings and consolidation, there is another crucial aspect to the acquisition of Fame. The acquisition doesn't just involve the film-exhibition business of Fame, but it brings along Fame's film distribution subsidiary, Shringar Films Ltd, and food courts and restaurant management subsidiary, Big Pictures Hospitality Services Pvt Ltd.

Fame also holds a 50% stake in Headstrong Films Pvt Ltd (a film-production unit) and Swanston Multiplex Cinemas Pvt Ltd (primarily engaged in managing a multiplex in a Mumbai suburb), thus making the acquisition deal a complete package.

With both the parties trying to become market leaders in this business, the battle is bound to heat up in the future. Amidst this scuffle, the debt of over Rs100 crore on Fame's account books seems to have taken a backseat.

On Thursday, Fame India ended 0.06% down at Rs85; Inox surged 5.18% to Rs66.05 and RML shares inched up 1.04% to Rs218.40 on the Bombay Stock Exchange. The BSE 30-share Sensex closed 164.9 points up at 17,692.60 points.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Why is Apple inviting piracy?

Yogesh Sapkale

By keeping new gadgets limited to certain markets, Apple and Google are openly inviting piracy. The Chinese have already started rolling out ‘original-looking’ fake iPads before the official Apple launch

Apple, the maker of iconic products—like the Mac, iPhone and iPad—and Internet search giant Google, which has entered the mobile handset business, seem to be avoiding the real growth markets, China and India.

There are a number of product manufacturers in these booming Asian countries like Suzuki and Nokia, who are doing extremely well for themselves. But, for reasons unknown, Apple and Google appear to be avoiding these countries and are restricting their new products to limited markets, mostly in the West.

A latest report indicates that the Chinese, known for their bulk production and duplicating capacities, have already started manufacturing and selling fake iPads in that country. But why is China not getting the real thing? And is India not technologically savvy enough for Steve Jobs?

There is a good demand for both iPhones and iPads and Google’s Nexus One in China and India. But these manufacturers seem overwhelmed by the demand for their products in Western countries. It looks like they are incapable of satisfying demand from other countries, even if their respective marketing departments want the same.

But by not carrying out parallel product launches across the globe, both Apple and Google are openly inviting piracy.

According to research firm Ovum, there are already an estimated 1 million knock-off iPhones sold in China, muddying the waters for Apple and its local partner China Unicom. Last week, Microsoft won a case against Chinese Dazhong Insurance for intellectual property violation. While the damages sanctioned by the local Chinese court amount to just $318,000, small change for the software giant, the ruling is significant because Microsoft loses more than 80% of its revenues in that country to piracy.

So what would be the best strategy for both Apple and Google to gain more from their latest products? First, both companies should look at simultaneous product launches across the globe. You just cannot ‘deny’ certain markets a new product—people will either buy these products from online stores (you can even get devices which are ‘broken’ from innumerable websites, not attached to any particular service provider).

Second, to stay competitive, these manufacturers have to drop the prices of their devices, not sell them at currency conversion rates—they have to retail them considering the purchasing power parity in these countries, much in the way books are sold in India. For the record, the iPhone 3G is sold in India through Bharti Airtel for Rs29,500—way above what the local market would pay for this product, not counting Apple aficionados.

Product leaks are also very common—a few days back, a prototype of Apple's 4G mobile phone was left behind at a bar by an Apple employee, Gray Powell. What if the prototype had landed up in the wrong hands? It would have been back to the drawing board for Apple. One can only hope that Western manufacturers will learn the right lessons—after all, we are all living in a truly global village now.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Nita Ambani may head RIL's world-class university

Yogesh Sapkale

Reliance Foundation is planning to set up a world-class university in the country and it may be headed by Nita Ambani

Refinery-to-retail giant Reliance Industries Ltd (RIL) is planning to set up a world-class university in the country, marking its foray into the education sector. The university may be headed by Nita Ambani, wife of RIL chief Mukesh Ambani. Ms Ambani is president of Dhirubhai Ambani Foundation and also heads the Dhirubhai Ambani International School.

"Reliance Foundation, the new philanthropic initiative of the Reliance Group, has decided to set up a new age world-class university in India and it will promote education and research in all disciplines of knowledge," RIL chairman and managing director Mukesh Ambani said.

He was speaking after receiving the first Dean's Medal by the University of Pennsylvania’s School of Engineering and Applied Science.

The proposed university would be set up on the lines of great American universities like UPenn, Mr Ambani said, adding that it will also forge partnerships with reputed educational institutions around the world. "It will be international in scale and in best practises, but with an Indian soul," he said.

Noting that there was a need to bring about changes in the methodology of education, Mr Ambani said that education in India is also at the doorsteps of transformation.

"Access to world-class education is not only a necessity but a strong prerequisite to building a strong India. It is by far the strongest aspiration of young Indians," he said.

The RIL chairman said that in the aftermath of the global financial crisis, a new world is emerging, which is fundamentally different from the old.

Noting that Asia is witnessing unprecedented prosperity, Mr Ambani said that the centre of economic activity was shifting from the West to the East.

However, many parts of Asia also present a picture of deprivation and under-development and employment creation remains a challenge for all countries.

"Countries left behind in the race for development are fast catching up. Asia is witnessing unprecedented prosperity. Yet, many parts of Asia also present a picture of deprivation and under-development," he said.

Calling for equitable development, he said that the deprived are demanding their due share.

"The poor are still denied access to food, water, housing, electricity and transport... the basic necessities of life. Therefore, the challenge of equitable development has become most urgent. So has the imperative of sustainable development," Mr Ambani said.

Urging to devise new developmental models that provide growth with sustainability, and development with equity, he said that sustainable development demands more out of less from finite resources.

The new developmental models will require partnerships and newer ways of solving problems and problems cannot be segregated into separate silos, Mr Ambani said.

"In this new and interdependent world, we have to become silo-breakers in our thinking, policies and strategies of development. Every single challenge that the world is facing demands a creative response from scientists, engineers, entrepreneurs and policy-makers," he said.

Science, technology and engineering have an epoch-making opportunity to evolve to the next level, by making common cause with social sciences, responsible entrepreneurship and good governance, he said.

"I believe that technology, wedded to the Gandhian vision, can create a better future for our children in all parts of the world," the RIL chief said.

He observed that the world was facing crises on several fronts including financial, energy, food, water, environmental and international terrorism. "The decade gone by taught many important lessons to the world. 9/11 at the beginning of the last decade reminded the world about the barbarity of terrorism. 26/11 towards the end of the last decade was yet another reminder," Mr Ambani said.

The financial crisis highlighted the inter-connectedness of the world, he said, adding that the crisis taught the world that money cannot produce money.

Mr Ambani expressed his deep appreciation for all staff of the Oberoi, hit by the deadly terrorist strike in November 2008, for facing and overcoming terror with courage, reports PTI.

Earlier in November, Mr Ambani had said that RIL was planning to invest Rs500 crore to set up a philanthropic entity called Reliance Foundation with plans to scale up its contribution to Rs1,000 crore.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Mobile banking needs regulatory framework for growth

Yogesh Sapkale with Aaron Rodrigues

Mobile commerce and mobile banking have the ability to get every user into the banking system provided there is a regulatory framework and clear guidelines for banks, mobile operators and end-users

The Reserve Bank of India (RBI) has been trying to push mobile banking in a big way across the country as a medium for financial inclusion. However, due to lack of a regulatory framework, clear guidelines and security, bankers are treading with caution. They feel that in case of a fraudulent activity in any mobile banking transaction, they would be held accountable.

“The issue lies as to where the banks’, customers’ and mobile operators’ jurisdiction starts and ends,” said a senior official from the Indian Banks’ Association (IBA).

While banks agree that they are the channels through which mobile banking transactions would take place, mobile companies prefer to call themselves as facilitators.

“There are too many things which have to come into place for this kind of service (mobile banking). It’s not only the mobile service providers but also the banks (who have to take responsibility in case of any illegal activity). As of now, what we really are doing is providing a medium for these transactions,” an official from Vodafone said.

Besides the illegal activity issue, mobile banking does not provide facilities like ‘stop payment’ as banks are unable to cancel a transaction after approving the same.

Given the convenience and the number of mobile phone users in India, mobile banking is bound to pick up. The central bank has been very active in trying to take advantage of the reach and penetration of mobiles in the county. Last month, the RBI increased the amount of money that can be transacted through mobile phones to Rs50,000 every day, up from Rs5,000 per day.

Speaking at the India Telecom 2009 conference, RBI’s deputy governor Dr KC Chakrabarty had said, “While e-commerce has skipped the majority of the population due to the cost of setting up of such channels, mobile commerce (m-commerce) has the capability to be inclusive due to the widespread use of mobile phones.”

In India, out of the 32 banks which have been given approval to provide mobile banking facilities, only 21 have started providing these services. However, there is not much activity in this space, resulting in low transaction volumes, Dr Chakrabarty added. According to the deputy governor, the reason for low uptake of mobile banking facilities is the requirement of end-to-end encryption that makes implementation expensive.

Echoing the same view, German scientist Karsten Nohl, a security researcher at the University of Virginia, said hackers can easily intercept the wireless network of GSM operators in less than a second. In an interview to CIOL, he said that SMS applications used for banking and financial services are also vulnerable to this breach of security and current security solutions available for mobile phones are not capable of detecting such security leaks. During his research, Mr Nohl found that devices to decrypt an encryption code are present in India and people are unethically and illegally bugging phones of subscribers.

With the alarming status of security measures for mobile banking, many bankers think that they would be made liable for any illegal activity or financial loss to the m-commerce consumer. “Since we are the channels through which the transactions take place, we will have to take up the responsibility,” an official from Axis Bank said.

More so, the fears of bankers may well be justified. According to a senior official from the National Payment Corporation of India (NCPI), banks would have to pay for any faulty transactions and money theft through cell phones. NCPI, a newly established company promoted by Indian banks, is building a robust and state-of-the-art national level retail electronic payment system infrastructure in the country. “NPCI would soon be building a central infrastructure for mobile payments which will monitor intra-banking (activities),” said AP Hota, chief executive officer, NCPI.

The other issue banks face in providing mobile banking is that they are required to tie up with individual service providers for enabling such services. Banks face difficulties in entering into such partnerships. Again, mobile service providers do not open up channels for facilitating mobile banking services by banks.

“The successful partnering of banks and mobile service providers would also need the resolution of the issue related to customer ownership,” the deputy governor of RBI had said.

Currently, there are three modes of transactions—Short Messaging Service (SMS), client applications and mobile web. Banks are offering mobile banking tie-ups with various mobile providers to offer the back-end solutions. PayMate is a service provider offering back-end solutions to 24 leading banks and has seen a nearly 100% rise in subscribers since its inception.

In India, SMS transactions are the most popular for conducting basic bank transactions. According to Ajay Adiseshann, founder and managing director, PayMate, “All basic banking transactions such as balance information, cheque book request, etc, can be accomplished via SMS or on mobile-based applications that some banks use.”

Due to the use of a two-factor authentication process of mobile number and mPIN authentication over Interactive Voice Response (IVR), the risks involved in using mobile banking are lower than other modes of transactions. In mobile banking, there is enhanced risk control. When a consumer enrols for this facility he provides the mobile number through which the transactions have to be carried out.

According to a research report by Juniper Research, by 2014, the international mobile money transfer market will be worth in excess of $65 billion. The growth will be driven by migrant workers based in developed countries, rising global unemployment and increased immigration controls by governments. By 2010, mobile money transfers will see massive expansion in African countries, India and the rest of Asia, the report added.

The number of telephone subscribers in India increased to 543.2 million at the end of November from 525.65 million in October 2009, thereby registering a growth rate of 3.34%. With this, the overall tele-density in the country had reached 46.32, said Telecom Regulatory Authority of India (TRAI), in its latest report. When you compare this figure with the total number of bank customers across the country, there is a wide gap.

With initiatives like boosting financial inclusion, the government is trying to lower the gap. Planning commission deputy chairman Montek Singh Ahluwalia, had said that under financial inclusion, the government is trying to develop a system where people below poverty line or whose income is around Rs600 per month would be given access to financial institutions like banks. This will help them to have less dependency on money lenders, who usually lend at very high interest rates of around 60% per annum, he said.

Mobile phones, with their wider reach and depth, would definitely play a very big role in financial inclusion, provided there is a regulatory framework that can allow secure and safe transactions.

(Courtesy: Moneylife.in and SuchetaDalal.com)

High Court passes strictures against NSE & dismisses its appeal in the Sebastin case

Yogesh Sapkale

As things stand, NSE and its top brass will face a criminal case in a lower court. But before that, the Exchange may approach the Supreme Court for relief

The Bombay High Court has dismissed a criminal application filed by the National Stock Exchange (NSE) for quashing and setting aside proceedings pending before the Mumbai Metropolitan Magistrate in the matter of A Sebastin. Mr Sebastin, a former employee of NSE, had filed a defamation case against NSE and its managing director Ravi Narain in the Mumbai Metropolitan Court over alleged character assassination. NSE, the Exchange with loads of funds at its disposal, had moved the High Court seeking a stay on the proceedings pending before the Metropolitan Magistrate.

Mr Sebastin, a compliance officer at the National Stock Exchange (NSE) who resigned in October 2008 to switch to the Multi Commodity Exchange (MCX), became a victim of the NSE’s wrath. The High Court, in its order issued on 25 March 2010, said: "… since the matter appears to be nothing but the result of an ego clash between the applicants and the respondent no.1, if an apology is published in the same newspapers in the same manner, it will give an end to the criminal litigation. While Mr Sebastin was ready to accept an apology and consequently to end the criminal litigation, the Exchange, on the other hand was not ready for the same.

On 25th March, the NSE filed an affidavit in the court stating that it is not possible for them to publish a fresh apology. Senior counsel Shirish Gupte, appearing for the NSE, reiterated the contentions which were made earlier and added that NSE had no intention to make any imputations on the character or efficiency of the complainant.

The Court specifically asked the Exchange whether it had published the clarification by way of an advertisement, as was done with the notice which is the subject-matter of the complaint, and also whether such a prominent notice, along with the photograph, has also been published in case of other employees who have either resigned or who are terminated from the services of NSE. The Exchange replied in the negative.

The Court order then said: "At least prima facie, the very fact that the complainant has been singled out for issuing such an advertisement along with a photograph and, further, the fact that the applicants themselves received various queries with respect to the said advertisement, would prima facie establish that the said advertisement has adversely affected the reputation of the present complainant."

The Court, while dismissing the criminal application filed by the NSE, said:"From a bare perusal of the complaint and from the documents placed on record by the applicants themselves, I am of the view that the ingredients so as to constitute an offence under Section 500 are prima facie made out in the present case and, as such, no case is made out for interference in the extraordinary jurisdiction of this Court under Section 482 of the Cr.P.C. Accordingly, the Criminal Application is dismissed." The High Court has extended the ad-interim relief granted to the NSE for a period of four weeks, starting 25th March.

According to sources, the NSE is planning to move the Supreme Court and will file an appeal soon. Since the Exchange is flush with funds, it can afford to fight a case of 'ego clash' (as mentioned by the High Court order). But the question is whether this is necessary. The NSE has, over the years, created a perception of being a government entity with its virtual monopoly.

The Exchange's non-promoter executives, managing director Ravi Narain and deputy managing director Chitra Ramakrishna, had a gross annual income of Rs6.89 crore and Rs4.21 crore, respectively, besides other perks in 2008-09. The salary of Mr Narain was more than that of the London Stock Exchange (LSE) chief, Xavier Roulet (around Rs5.6 crore), and equal to that of the NYSE Euronext chief, Jean-Françoise Theodore (around Rs7 crore). Comparatively, NSE’s supposed competitor Bombay Stock Exchange’s (BSE) chief executive Madhu Kannan earned a gross income of Rs1.6 crore in the same period.

The Sebastin Case
On 6 April 2009, the NSE issued a ’public notice‘ in all leading business newspapers with the employee’s photograph announcing that anyone dealing with the “said Mr A Sebastin” would do so at their own risk.

Normally, such notices are published only if an employee is guilty of financial fraud or a serious betrayal of trust. However, there is no such mention. Instead, the NSE issued a clarification in response to media queries, saying that Mr Sebastin’s “services were terminated” because he ”had not met the company’s requirements.” It also indicated, without being specific, that the employee had failed to complete “severance” formalities.

Mr Sebastin, however, has evidence of a formal handover of charge, an exit interview and an email assurance that he would be relieved. He says that the public notice was issued after he sent a legal notice to the NSE on 4 April 2009, demanding severance benefits like Provident Fund (PF) and gratuity.

Holding back PF is illegal, so the NSE reportedly credited his PF account immediately after he served the legal notice but simultaneously issued him a termination letter followed by the public notice, almost six months after he had quit the Exchange.

When we published the case under the title of "Vindictive Action?" on our website www.suchetadalal.com, it received (so far) 28 comments from readers. One reader, Mr Golak, said: "NSE should try to find out why NSE ex-employees are willing to join MCX-SX and sort out the problems rather than take this kind of vindictive action. As an organisation, it has failed to come out of the whims of a few people who run the exchange on their own sweet terms."

Another reader, Satish Swaminathan, commented, "If there is attrition, then the HR should be pulled up for explanations and probably try to get to the root cause and address it. I also fail to understand how the NSE is proposing to beat its competition by stopping people and being vindictive when they join a competing firm."

"It is highly unethical behaviour by a highly professional company like NSE. Such a step by any company cannot be justifiable as employees are a company’s human assets and not physical assets," said SS, another reader.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Steel prices on the rise, SAIL hikes rates by Rs600 per tonne

Yogesh Sapkale

Prices in the retail market for hot rolled coil have already gone up by almost Rs2,000 per tonne and analysts believe a price hike from April is imminent on account of excise duty hike and jump in raw material contract prices

Following in the footsteps of other mills, state-owned steel major Steel Authority of India (SAIL) on Wednesday hiked steel prices by up to Rs600 a tonne, effective from 1st March, on account of increase in excise duty.

According to a PTI report, SAIL chairman SK Roongta told reporters on the sidelines of an All India Induction Furnace Association meet that there would be a price increase of about Rs500 to Rs600 a tonne due to the excise duty hike and it would be effective from 1st March.

Partially rolling back the fiscal stimulus in the Budget, the government raised excise duty by 2%-10% across the board. To spur economic activities, the government had earlier initiated massive spending programmes and slashed duties from December 2008 in three stages following the global financial crisis that began in September in the same year.

Indian mills have increased domestic commercial hot rolled coil prices for April production on rising international prices and higher costs of production. Prices have risen by at least Rs1,000-Rs1,500 (about $21-$31) per tonne ex-mill to Rs30,500-Rs32,000 per tonne. Prices for end users are also rising because of an increase in excise duty, which has risen to 10% from 8%. While mills have yet to officially increase the price of cold rolled steel, basic prices, exclusive of taxes, have already risen by Rs1,000-Rs1,500 per tonne to Rs36,000-Rs36,500 per tonne.

The price hike from April is imminent on account of excise duty hike and jump in raw material contract prices for major players across the globe. Both iron ore and coking coal contracts for 2010 are expected at 35%-45% higher levels than last year, and this could push up the cost of production by about $75 per tonne of steel.

"We believe that companies like Tata Steel and SAIL will be the major beneficiaries of the price jump on account of their backward integration. Global steel demand scenario is also improving with strong last quarter growth in US and Japan. Overall, we remain bullish on the steel sector as a whole and we could see further hike in the next quarter," said Kisan Ratilal Choksey Shares and Securities Pvt Ltd in a research note.

On the demand side, improvement is being seen in developed economies particularly in the flat segment on account of pick up in automobile sales. However, long product demand still remains subdued as no major revival is seen in construction activities which are the major consumer of longs.

Enam Securities Pvt Ltd said, "We believe higher raw material spot prices could lead to an annual rise in FY11 contract prices (negotiations going on), which will support steel prices. However, we believe credit tightening in China is likely to put a brake on the substantial price hike in raw materials as well as steel.”

Echoing the same view, steel secretary Atul Chaturvedi also said that steel prices were set to go up. "They (steel prices) will go up now. You have to decide between inflation and recession. Companies have to earn money and this can be done either if raw material prices go down or steel prices go up," Mr Chaturvedi said.

When asked if the price rise was alarming, he said, "If we see steel prices in the last 30 months, the current scenario is not alarming."

Last week, BHP Billiton in its coking coal contract negotiations with Japanese steel makers pushed the April-June 2010 contract price by almost 55% over last year to $200 per tonne. This was a major shift for BHP from the earlier annual contract system to a quarterly system. But Japanese steel makers rejected the offer.

Similarly, huge disparity between spot and long-term contract prices is prompting large iron ore miners to shift away from annual contracts to shorter duration contracts.

With the delay in contractual negotiations, steel prices are likely to remain at higher levels in the near term.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Special Court re-orders sale of Harshad Mehta’s flats in ‘Madhuli’

Sucheta Dalal with Yogesh Sapkale

Justice DK Deshmukh of the Special Court—for the third time—has ordered sale of eight flats belonging to Harshad Mehta and his family in ‘Madhuli’ at Mumbai

For the third time since the saga began in 1992, the Special Court set up to try matters relating to the securities scam has asked the Custodian to initiate the process of selling eight out of nine flats belonging to Harshad Mehta at 'Madhuli'. This was once among the most sought-after addresses in Mumbai.

Spread over two floors and 10,400 sq ft, these interconnected flats at Madhuli Co-operative Society occupied by the extended Mehta family then spelt the ultimate in aspiration and achievement for investors and speculators in India’s recently liberalised economy. The property included a billiards room, a putting green and a mini theatre… things that were unheard of in 1992. The Mehtas owned five flats on the third floor and three flats on the fourth floor which were occupied by four brothers and their families and their mother.

The sale of the flats was first ordered in October 2003 after which the case has seen incredible twists and turns with multiple appeals and stay orders before being reverted to Justice DK Deshmukh's court. In an extremely detailed, 140-page order issued on 30th April, which is repeatedly underlined to highlight various aspects, the learned judge has spelt out the basis of his decision. It remains to be seen if this finally settles the issue or will Ashwin Mehta, the late Harshad Mehta's brother, continue his fight to retain the family home. It may be recalled that Harshad Mehta, once described as the Big Bull, died of a heart attack in December 2001 while still facing charges of having diverted several hundred crores of rupees from banks to the capital market. His brothers, Ashwin and Sudhir Mehta, are co-accused in many cases. Over the past 18 years, they have been embroiled in never-ending and messy litigation which includes some absurd tax claims by the government.

Justice DK Deshmukh says:”Because these properties are attached properties and as per the judgement of the Supreme Court in Jyoti Mehta's case, the Custodian is entitled to receive income from the attached properties and because the notified persons are occupying those properties, the Custodian is not getting any income from these properties, the Custodian shall initiate the process of sale immediately and complete it as soon as possible and submit a report to the Court."

The Special Court order also says that all the notified parties and entities operated in tandem with Harshad Mehta in conducting the securities transactions as members of one family constituting a group. Since the various notified parties in the petition are members of the Harshad Mehta group, the properties of each notified party and entity can be sold for discharge of the liabilities of Harshad Mehta, the court order said.

Last year in July, the Supreme Court had ordered that the sale of these eight flats owned by Harshad Mehta’s family shall be confirmed by the Special Court.

Members of the Mehta family had been trying to stall the auction of ‘Madhuli’ by filing various litigations. However, all of them, after reaching the apex court, have come back to the Special Court. Earlier in January, the Special Court had even said that the Mehta family was adopting delaying tactics to stall the sale of these eight flats.

Each notified member of the Mehta family had said that since their property or share in the said property is not funded by Harshad Mehta or brought before the securities scam, it should not be attached or termed as ‘benamidar’ of Harshad Mehta by the Custodian.

Rejecting these arguments at the outset, the Special Court said:"In our opinion, the attachment of all the properties in terms of sub-section (3) of Section 3 of the Special Act is automatic. The said sub-section does not provide for any qualification that the properties which are liable to be attached should relate to the illegal securities transactions in respect of which the Act was enacted."

The Court said that it came to the conclusion that Harshad S Mehta had funded all the residential properties and they could therefore be disposed of accordingly. In this regard, the Court said, it relied on the report of the auditors Vyas and Vyas, who had considered the flow of funds from Harshad Mehta to various notified parties. “This was the fact that the funds had specifically been transferred for purchase of the properties just before the purchase. There was also a huge amount outstanding in the accounts of the notified parties to Harshad Mehta on 1-4-1990 and 1-4-1991,” the Court said.

An interesting aspect of the judgement is the detailed recording of various charges made by Harshad Mehta's widow Jyoti Mehta, while challenging Justice DK Deshmukh's earlier order in the Supreme Court. Some of Jyoti Mehta's arguments were that the judge had "misread" and "misconstrued" the Supreme Court directions in the Ashwin Mehta case, that the judge had "committed a serious illegality in so far as he relied upon the Janakiraman Reports and other reports which are wholly inadmissible as evidence" and that the judge had "reproduced large amounts of the Custodians' report" raising the question "as to whether he took into account the arguments of the appellants in the case". The rejection of each of these contentions forms a big chunk of the report.

The Mehta property, at its current market price (about Rs40,000 per sq ft), could fetch around Rs42 crore. According to the Supreme Court ruling, a part of the proceeds from the sale would be used to pay off income tax, banks and other debts of Harshad Mehta.

(Courtesy: Moneylife.in and SuchetaDalal.com)

Wipro's stunning silence over death of an employee

The IT giant had reportedly admitted that one of its employees committed suicide after the company caught him embezzling $4 million in December. However, till date no criminal charges have been filed against the employee.

It has been over two months since the body of 26-year-old Anup Kumar Agarwal was recovered from railway tracks between Byappanahalli and Krishnarajapuram stations. Mr Agarwal was working with IT giant Wipro Ltd as an assistant manager in the finance department.

According to media reports, Mr Agarwal committed suicide shortly after the company caught him embezzling $4 million (about Rs18 crore) from its account. Last week, Wipro had said it was conducting internal investigations into alleged fraud by the employee who had gained access to a colleague's online password, and had embezzled funds for over a year.

The entire team of six employees that worked with Mr Agarwal has been sacked for negligence, said a news report.

Wipro had managed to recover around 50% of the embezzled amount and was not sure whether to file charges in the case. However, there is a stunning silence over the whole episode and netizens are raising questions over the company's responsibility.

From the limited facts narrated in the newspapers, it appears that the offence is made out at least under Section 379 of the India Penal Code (IPC) and Section 66 of the Information Technology Act, 2000. Depending upon the facts to be revealed in this case, Section 381 IPC (Theft by clerk or servant of property in possession of master) may perhaps also be invoked and there could also possibly be a forgery-related offence. "However, none of these offences is covered in the legal obligations cast on members of the general public under Section 39 of the Criminal Penal Code, to report the offence to the police. Therefore, it may be difficult to hold Wipro legally responsible for not reporting the matter to the police, its moral obligation notwithstanding," said a legal expert.

Wipro officials were not immediately available for comments. We are not sure whether by not reporting the matter to the authorities, the company was trying to recover its money or shield its employee and reputation.

"The issue of non-reporting of such a matter to the police may perhaps be stretched and called an act of 'mismanagement', more so if a mala fide intention to save the employee (or the like) could be attributed to the management," said the legal expert.

According to a PTI report, the police had said that Mr Agarwal has committed suicide, and his wife had given a statement in writing that her husband was going through financial problems and was worried and hence had resorted to the extreme step.

The post-mortem report said he had died of shock and haemorrhage and had suffered multiple fractures.

DC Rajappa, Railway SP, Bangalore, told PTI that Wipro had so far neither registered any complaint with the Railway Police nor asked for a probe. On the next course of action, he said no complaint was filed until now and the police will act on receiving one.

However, the death of Mr Agarwal and Wipro's silence over the period has once again raised questions about corporate governance procedures, especially after the Satyam fiasco.

(Courtsey: Moneylife.in and SuchetaDalal.com)

Mobile Number Portability: Quality will survive

While mobile number portability would help harassed subscribers to change their operators, for the mobile services providers it will result in high churn of subscribers
Finally, mobile subscribers across the country will be able to keep their 'beloved' number unchanged despite changing their service provider. Following an order by telecom regulator Telecom Regulatory Authority of India (TRAI), from 31st December onwards, mobile subscribers would be able to change their operators while keeping their number intact. However, according to some media reports, the move may be delayed due to technical issues like network up-gradation.Mobile Number Portability (MNP) allows subscribers to retain their existing mobile telephone number when they move from one access provider to another, irrespective of the mobile technology—or from one cellular mobile technology to another of the same access provider—in a licensed service area. This means a CDMA subscriber can opt for other a GSM or CDMA service providers and vice-versa.For subscribers harassed by their current mobile operator, this has come as a blessing. From next year they can simply hang up on their current operator and choose another one—whom they think will provide better services and lower tariffs. However, the subscriber must have stayed with the service provider for at least 90 days before he can transport his number to another service provider. According to the TRAI notification, subscribers changing their services provider will have to pay Rs19 as porting charge to the recipient operator. However, TRAI has said that operators are free to charge any amount lesser than or equal to this charge. This would prove to be another headache for mobile operators, already reeling under pressure due to the tariff war. Many operators may provide this service free in order to increase subscriber base.Although MNP is beneficial for both post-paid and pre-paid subscribers, according to analysts, lower porting charge would give further impetus to prepaid churn. “The TRAI-notified porting charges (PC) is lower than our—and industry—expectations and this would boost higher uptake of MNP among the low average revenues per user (ARPU) segement, mostly prepaid subscribers, leading to higher churn rates than current 4.5%-8.0% per month at least in the short run,” said Anand Rathi Financial Services Ltd, in a report.The regulator feels that the facility of retention of existing mobile telephone number despite moving to a new telecom service provider would help in increasing competition between the service providers and act as a catalyst for the service providers to improve their quality of service.This also means that incumbent mobile operators would have to upgrade network quality and customer services which may result in higher capacity expansion and operating expenditure.However, the ongoing tariff war has discouraged fresh investments from operators, except new players, due to longer payback periods. Many incumbent mobile service providers (MSPs) have not only put on hold their expansion plans but have also reduced capacity expansion (capex) provisions.The aggressive launch and lower tariff plans from new entrants are not only snatching away customers but are also hurting the top and bottom line of incumbent MSPs. During the recent quarter, all mobile operators have reported a sharp fall in ARPU and minutes of usage (MOU).Although MNP may prove to be more beneficial for both post-paid and pre-paid subscribers, the question over service quality of almost all mobile operators remains a pertinent one. According to TRAI, during the April-June quarter, the performance of wireless service providers has deteriorated as compared to the previous quarter, in respect of call set-up success rate, call drop rate, response time to the customer for assistance, complaints and percentage of complaints resolved within four weeks.So before being wooed by a lower tariff plan or offer, subscribers going in for MNP need to check with existing subscribers of the new operator about the service and network quality. Of course, the subscriber has got an option to switch back to his original operator, once this 24-hour period gets over, he will have to wait for another 90 days before going in for another switch.

Courtsey -Moneylife.in and SuchetaDalal.com

Unwanted calls, SMS

Despite registering your cell phone with the NDNC registry, many of us continue to receive telemarketers’ calls and SMSes. Is there any respite from this menace?Almost everyone who uses a mobile phone is upset today due to unwanted calls and SMSes from telemarketers. The authorities, particularly the Telecom Regulatory Authority of India (TRAI), have tried to stop this menace by introducing the National Do Not Call (NDNC) registry. However, with the lukewarm response to the NDNC registry, TRAI is now thinking of introducing a ‘Do-Call’ registry. The problem of unwanted calls and SMSes is growing bigger by the day. There really is no escape from this menace; but, I would like to share some ways to reduce it based on my own experience. The first thing, of course, is to register your mobile number with the NDNC registry. Simply type ‘START DND’ and send a free SMS to 1909. You can also call the same number. Your mobile service provider is required to acknowledge the request within 10 days and it is supposed to take effect 45 days from the date of request. If the request goes unheeded beyond the stipulated 45 days and you continue to receive unwanted calls or SMSes, you will have to file a complaint with your service provider, mentioning the call-originating telephone number, date and time of the call and type of the commercial message. Bear in mind that you need to file your complaint within 15 days from the receipt of such a call or SMS. If you receive an unwanted call or SMS from a bank, mobile service provider or an insurance company, you can visit the website www.donotdisturb.in. Register your mobile phone number using the links provided on this site to these entities so that they do not disturb (DND) you again. It takes 45 days for the DND trigger to get activated.Nowadays, your handset is clogged with SMSes prefaced with codes like ID, TM, TA, AT, VK, etc. TRAI has mandated all mobile operators in India to prefix an identification tag before all application-to-peer (A2P) commercial bulk SMSes which would identify the name of the service provider and the location where the SMS originated along with the name of the company sending the SMS. The alpha-numeric identifier is in the form of ‘XY-Z’, where X stands for the code for the service provider and Y for the area of origin of the SMS. Generally, Y should indicate the name of the company; often, it does not. Okay, that was all about the tech part of the menace, but what about the solution? Frankly, there is no single-point solution. First, check if your mobile handset has a facility to blacklist a number. If so, add the number from where you received the call/SMS to the blacklist; your handset will auto-reject the call. But the facility works only for numbers and not for alpha-numeric characters. Second, don’t give your mobile number to any unknown person. Some notorious spammers, like DNAinfoline, usually procure the number data from local mobile shops, so be extra careful when buying a new connection or recharging your pre-paid mobile.Third, all mobile service providers routinely share your number with a lot of value-added service (VAS) providers, like Mauj, Indiagames, Hungama, Soundbuzz and Mobile2win. They keep sending messages which have access and delete options; since the access option always appears first on your mobile screen, it may get activated inadvertently. From April 2009, TRAI has mandated all mobile service providers to offer two keys for subscribing to any VAS, instead of just ‘*’ or ‘9’ as in case of ‘press star to copy hello tune’; but it is hardly effective.The question is: If we can use technology like pressing a key or combination of keys to activate/de-activate VAS services, why can’t it also be used to record and stop unwanted calls or SMSes? The mobile operator can be alerted during a call from a telemarketer by pressing certain keys. Similarly, why can’t we forward the spam SMS to the mobile operator by just pressing a combination key?

Courtsey -Moneylife.in and SuchetaDalal.com

Screen Scene

The world of display screens is witnessing technological advances that can completely transform the way we view TV, surf the Net or use our mobile phone. Here is a preview of things to come...Display screens are now as ubiquitous in our lives as the air we breathe. Whether at home or the workplace, they come in a spoilt-for-choice array of sizes and technologies and are a reliable indicator of the quality and cost of a product.Basically, there are three types of screens we encounter in our day-to-day life, if we categorise them based on usage rather than size or technology: television (TV) screens, personal computer (PC) screens and mobile-phone screens. TV and PC screens are more akin in terms of their size and technology while mobile screens, which are fast outnumbering their TV and PC counterparts, come in smaller sizes, increasingly with more advanced features like touchscreen and biometric capabilities.Display technology has come a long way from the days of black-and-white CRT (cathode ray tube) monitors to super-sized LCD (liquid crystal display) screens, and we are now moving into the era of 3D (three-dimensional) screens. Some of the bigger players have already unveiled prototypes of their 3D display products, and 3D TVs will soon be available for viewers who are willing to shell out $2,000 or more. Broadcasters are also gearing up to air eye-popping footage for their viewers. In Europe, the England vs Wales Six Nations rugby union international scheduled in February at Twickenham will be the first live 3D sporting event. Sky TV is also planning to launch a 3D channel, possibly by May 2010. The only irritant is that you will still need special glasses to watch 3D TV. While TV is poised to go 3D, PC displays are gravitating towards touchscreen technology. A touchscreen display can detect the faintest touch as well as its precise location within the display area. Touchscreen displays are becoming common in mobile handsets.Earlier, software compatibility issues pre-empted the integration of a touchscreen display on PCs, but that problem has been resolved and you can now use a touchscreen display for your PC if it runs on the Windows 7 operating system or the Mac OS X Snow Leopard 10.6. There are three popular technologies used for touchscreen devices: resistive, capacitive and surface acoustic wave. A resistive system uses two very thin metallic, electrically conductive layers separated by a narrow gap. When the user presses at a point on the display area, the two metallic layers become connected at that particular point, causing a change in electrical current. A special driver on your device (PC or mobile handset) translates this change into bits and bytes that the OS can understand and you get the desired result. On the other hand, a capacitive system consists of an insulator like glass, coated with a transparent conductor such as indium tin oxide. When you touch the surface of the screen, a distortion of the local electrostatic field, measured as capacitance, is caused. The capacitance from that particular point is sent to the device and the OS responds accordingly.Capacitive touchscreens are typically used in high-value mobile handsets like Apple’s iPhone, Google’s Nexus One and Motorola’s Droid. There are two advantages of using a capacitive touchscreen. It transmits almost 90% light, so the resultant display is sharper and clearer than in the case of a resistive system which transmits around 75% light. Also, a capacitive screen is more sensitive to touch, so you can just use your finger, while a resistive screen might require the use of a stylus or pen. Falling prices are set to make capacitive touchscreens du jour in mobile handsets.Some other contemporary display technologies that are vying for your eyeballs are plasma, DLP (digital light processing) and OLED (organic light emitting diode). So how should we view the future of display screens? In terms of size, it is safe to say that big and small will co-exist, depending on the application. For instance, 42-inch LCD TVs will eventually edge out the bulky 21-inch CRTs that have been beaming the world into our homes since ages. And with the advent of 3D TV, reality shows will take on a new dimension, and it’s not inconceivable that someday, you may even be a part of your favourite TV show.

Courtsey-Moneylife.in and SuchedaDalal.com