An organization that has

been in existence and, by

all indications, thrived for

175 years clearly knows

a thing or two about

sustainability...P2

Volume 25 – No.3 – June 2011

In this issue4President’s message

4Chamber’s activities

Seminar on Revised Schedule VI and XBRL

Investment & Business Oppor tunities in the Piemonte Region (Italy)

Round Table Discussion on Fiscal policies for low carbon investments

4175th AGM of the Chamber

4MCCI-MMA Video discussion on

Middle Manager as Innovator

4General Committee

4Expert Committees

4SPOT LIGHT

National Manufacturing Policy

4Policy Watch

4Trade Fairs & Exhibitions

4Economic Review

1

PRESIDENT’S MESSAGE

Dear members,

It is a pleasure to greet you, through this letter, af ter the grand 175th Annual General Meeting of the Chamber, held recently. I take this oppor tunity to thank all of you for your suppor t in the past year and I am confident that I shall continue to be as for tunate this year, as well.

You are all aware that the Chamber’s theme for the 175th year is “Sustainable Development”. We have been working around this theme and a number of initiatives and activities on the dif ferent components of Sustainable Development like energy, environment, skill and education, to name a few, are being pursued by the Chamber.

Perhaps one of the important elements of Sustainable Development is the whole debate around climate change and reduction of the carbon footprint. Recently, the Chamber held a Round Table with the Climate Change Team of the British High Commission on the low carbon measures and initiatives. What is our role in this, as a responsible voice of industry?

As people engaged in businesses and also as responsible citizens of the country, two issues stare at us now. On the one side, we have the grim reality of acute power shor tages which have a direct impact on our business competitiveness as well as the quality of life. On the other side, there are the well ar ticulated issues on climate change and sustainable development which are areas of concern for the entire world.

As is well known, the Indian economy has been experiencing tremendous

growth over the past decade and energy, in all its forms, underpins both past and future growth. For the economy to continue on this growth trajectory, India needs to address its energy challenges across all sectors, immediately. India is one of the fastest growing countries in terms of energy consumption and is currently the fif th largest consumer of energy in the world, and will be the third largest by 2030.

At the same time, the country is heavily dependent on fossil sources of energy for most of its demand. Green house gases, a by-product of fossil fuels, are stated to be causing global warming which refers to the ear th heating up at a faster pace than before. Exper ts warn that the consequences of this global warming are likely to be devastating.

The obvious solution to both these problems seems to be developing and using green energy or clean energy. The goal of green energy is stated to be creating power with zero or minimum pollution.

Today, India can well be identified as an energy guzzler. The demand for power is growing exponentially and the scope for growth of this sector is immense. India’s power supply-demand gap has averaged between 8 and 10 per cent over the last decade, where electricity access exists. By 2012, India’s energy requirements are projected to touch 975,222 MU (and peak demand 1,571,070 MU) an increase of 31.9% and 44.3% respectively from the current levels. India’s grid-connected power generation capacity will need to scale from 148GW currently, to 460GW by 2030 while the country’s primary energy demand is expected to grow from 400 million tons of oil equivalent to well over 1,200 million by 2030. It is feared that by 2030, the country will impor t 94% of its petroleum requirements. Clearly, renewable energy appears to be the answer, both from an economic and ecological perspective!

However, this requires a concer ted and aggressive push for alternative energy sources - solar, wind, bio fuels, small hydro and more. The Government’s renewable energy target by 2030 is said to be 200 gigawatts, estimated

to require US$200 billion in capital investment. That seems Himalayan when you consider that currently, only 3.5% of installed capacity is in the renewable sector, producing 3700 MW and is projected to reach 10,000 MW by 2012.

On the positive side, the country has an estimated renewable energy potential of around 85,000 MW from commercially exploitable sources: Wind, 45,000 MW; small hydro, 15,000 MW and bio mass/bio energy, 25,000 MW. In addition, India has the potential to generate 35MW per square km using solar photo voltaic and solar thermal energy. Wind energy has posted the highest growth and Tamilnadu is one of the leading States in wind energy production, with a share of more than 48% of the total wind energy produced in the country.

The Jawaharlal Nehru National Solar Mission under India’s Action Plan on Climate Change, was launched to make the country a world leader in solar energy and aims to ramp up capacity of grid-connected solar power generation to 1000 MW within three years of launch, by 2013.

India has tremendous potential to harness the much-needed energy from renewable sources and is considered one of the ideal investment destinations for renewable energy. However on the flip side, the prohibitive cost of setting up renewable energy plants like solar, the seasonality of sources like wind, non-availability of suitable technologies, economic viability and a host of other factors act as deterrents to the green energy movement. There is clearly a need for appropriate policies and political will, to go green in the energy sector while simultaneously encouraging energy ef ficient economic development.

There are dif ficult choices that we must make, not perhaps for ourselves, but for the future generations who shall inherit our planet.

With best Wishes

T T Srinivasaraghavan President

2

CHAMBER’S ACTIVITIES

4th June 2011

Seminar on Revised Schedule Vl and XBRLThe Madras Chamber organized a

Seminar on Revised Schedule Vl and

XBRL to inform the corporates about the

recent changes made by the Ministry

of Corporate Af fairs. Mr.D.K. Mittal,

Secretary, MCA who was to inaugurate

the Seminar could not make it at the last

moment.

Mr T Shivaraman, Vice-president of the

Chamber in his welcome said there

have been lot of changes happening

in the procedures and accounting

standards for the corporates. IFRS had

been in the air for quite some time now.

We now have XBRL which stands to

refer Extensible Business Repor ting

Language, which is a language for

electronic communication of business

and financial data. It is stated to help

both suppliers and users of data. It

is mandated now for cer tain class of

companies to prepare their financial

statements according to the Taxonomy

developed for this purpose. This is set to

become the standard way of repor ting

and sharing business information.

On the other side the revised Schedule

Vl to the Companies Act, 1956 which

deals with the Form of Balance sheet,

Profit & Loss Account and disclosures to

be made therein, is becoming applicable

shor tly. This introduces many new

concepts and disclosure requirements

and some of the classification

requirements spelt out in the guidelines

are apparently, more in line with IFRS.

Even the format of presenting the

Balance Sheet and the P& L Accounts

will be undergoing considerable

changes.

Mr S Venkatesan, Chairman of the

Exper t Committee on Company Law/

Corporate Matters, MCCI, giving the

Chamber’s observations said MCA

has been very happy since things have

been happening too fast . The MCA

website needs to be Visited daily,

else you are going to miss something

he said. Everyday new circulars are

uploaded on the website. The pace

at which changes are taking place is

making the corporates breathless he

felt. Corporates have to take quick action

to comply with these changes. MCA

has been very pro-active and there

are time bound implementations to

be done.

As regards Schedule Vl and XBRL

he felt suf ficient time has not been

given for the corporates to understand

the changes. Some clarifications are

needed; however, even the interim

accounts will have to be filed in the

new format.

On XBRL he said the Institute of

Char tered Accountants of India has

taken this as number one priority for the

current year. XBRL is more complex and

a technical one. A circular was issued by

MCA on 31st March indicating that it is

applicable for everyone.

The Madras Chamber has already

made a representation to MCA to

extend the time until the corporates

were suf ficiently educated. Though the

Chamber’s voice is heard,

only slight postponement has been

done. The Chamber will take it

up fur ther with MCA the suggestions

emanating from this seminar to make

the life of the corporates easier.

Mr N. Ramanathan, Managing Director,

Ponni Sugars (Erode) Ltd., made a

presentation on Analysis & Issues in

Schedule Vl. He said the old Schedule

Vl has stood the test of time. Between

2006 & 2011 there have been lot of

changes and the Companies Act is

under total revamp. He hoped that

within a year, the new company law

will be in place. Before that, the

Government wants to align to new

business environment and hence the

need for new Schedule Vl.

He said the accounting standards are

becoming dominant in the preparation

of the financial statements. Schedule Vl

is par t of the Act as well as the Rules.

The balance sheet has to disclose more

than what was required earlier. He said

we are becoming global. Hence, we

have to align with the world.

New Schedule Vl is not very complex.

There is no impact on basic records.

95% work gets undisturbed by new

Schedule Vl. It will have impact on

current ratio and debt equity ratio.

There is need to exercise due care and

understand so that the presentation is

done without any hitch.

Earlier schedule Vl was only for Balance

sheet but now it applies to Profit & Loss

account as well.

Summarising he said – it is better to

remove the confusion between AS-4

and Schedule Vl. Clause 41 for listed

companies needs to be amended.

Clarification from MCA or ICAI to be

requested on many issues such as what

is “current” and “non-current”, etc.

Mr S A Murali Prasad, Director, SAM

Consultancy Services Ltd., made a

presentation on Analysis and Issues

in XBRL. He explained XBRL to be

Extensible Business Repor ting Language.

It is an open, royalty-fee, sof tware

specification, implemented by use of

3

CHAMBER’S ACTIVITIES

tools based on XBRL.

How does XBRL work? He said XBRL

makes the data readable with the help

of two documents – Taxonomy and

instance document. Taxonomy defines

the elements and their relationships

based on the regulatory requirements;

By using the taxonomy, users map the

elements in the repor ts and generate a

valid XBRL instance document.

He said ICAI published a taxonomy two

years back. What is filed with MCA is

an instance document – a document

which has been prepared on the basis

of taxonomy.

Companies will have to write a sof tware

to map it with taxonomy.

He fur ther said the XBRL is truly global

as it is used by several jurisdictions in

regulating financial repor ting. The last

date for filing for the year 2010-11 has

been extended up to 30th September

2011 without additional fee. He said

a new taxonomy will have to be

prescribed next year when the new

schedule Vl becomes operational and

possibly the following year when the IND

AS becomes operational.

Coming to cost of compliance he said

people in the corporates need to be

trained and it will take sometime.

As regards the tool, he said MCA is

not implementing or recommending

any par ticular sof tware; vendors

are developing such sof tware and

companies are free to choose the one

that is suitable to them.

MCA has advised the stakeholders

and companies not to buy accounting

sof tware before final rules are made

available to avoid any inconvenience.

MCA website will host a validation tool

for doing the required pre-validation

and checks before the documents are

finally accepted by MCA por tal.

We need to insist on MCA that

whatever change is required in XBRL

implementation, we should be able to

see the output before filing the XBRL

document. He said XBRL implementation

in other countries provides for it.

He said the MCCI should ask the MCA

to commission some corporates to

produce simple sof tware or a simple

tool.

With regard to tools available, he said

XBRL– aware accounting sof tware

products are becoming available which

will suppor t the expor t of data in XBRL

form. These tools allow users to map

char ts of accounts and other structures

of XBRL tags. Financial statements can

be mapped into XBRL using XBRL sof ter

tools designed for this purpose. Tools

can transform data in par ticular formats

into XBRL e.g. excel, word, etc. Some of

these are add-on products while some

of them are free.

He said the product is unlikely to be

cheap as they are bundled with training

and consultancy.

On how long will it take to upload the

first XBRL document, he said:

ltime for the tools based on the

MCA taxonomy to be available in

the market. Tools presently

of fered are based on other

taxonomies e.g. IFRS taxonomy.

lTraining the staf f, time to evaluate

the tools, doing the conversion;

validating against MCA validation

tool, and

lUploading window of MCA

which will be available by

15th July.

On adding new elements in XBRL

statement he said generally XBRL

taxonomy is extensible but MCA

taxonomy may not be extensible.

The following points emerged from the

Seminar:

While welcoming the move to implement

XBRL, it was the considered view of the

par ticipants that it should be voluntary

initially before making it mandatory. In

the other jurisdictions the corporate were

given a longer testing time. It was also

their experience that errors were noticed

in XBRL filings on implementation. It is

new to India and needs training in the

tools for XBRL conversion/re-conversion .

Unlike in other jurisdictions, our XBRL

taxonomy is not iXBRL enabled, which

would let the user see their filing in

readable format like html etc. They are

also not extensible by the user.

Keeping costs of compliance by

corporates in mind, MCA should

make available a basic, no-frill tool for

conver ting data in word or excel format

into XBRL – At present they have to incur

significant costs for doing so.

XBRL as sought to be implemented now

is based on old Schedule Vl and new

Schedule Vl is applicable from 1/4/2011.

This will require new taxonomy to be

given.

Later Taxonomy has to be revised

for IndAS standards (IFRS converged

standards) to be implemented .

Investing in technology and training

in it every year with new taxonomy is

definitely costly and unavoidable.

In shor t it should be made voluntary

now and mandatory af ter 2 to 3

years af ter new taxonomy for revised

Schedule Vl / Ind AS (IFRS converged

4

CHAMBER’S ACTIVITIES

standards) schedule Vl are prescribed.

As regards applicability, as per revised

circular, MCA needs to clarify the

wordings.

It is stated that it will apply to ‘listed

entities and THEIR subsidiaries with

a paid up capital of Rs. 5 crore or

turnover of Rs.100 crore” - other than

Banks, Insurance companies, NBFCs,

Power sector etc. It is inferred that all

conditions are cumulative.

It is possible to interpret that subsidiaries

of listed entities having the paid up

capital / turnover prescribed may be

required to file XBRL statements while

their listed parent companies are not

required if they belong to exempted

sectors, which may not be the intention!

It should be clarified that it would

apply to subsidiaries only where the

parent company is required to file XBRL

documents.

Financial sector is excluded, presumably

because they may require a dif ferent

taxonomy, but Housing Finance

companies regulated by NHB should be

clubbed with NBFCs and Banks, as they

belong to the same category.

The Chamber has sent a representation

on this to the appropriate authorities.

16th June 2011

Investment and Business Opportunities in the Piemonte Region (Italy) – Meeting with Italian Delegation:A high level delegation from Piemonte

Region visited Chennai on the 16th June

and the Chamber organized a business

meeting with them. The Italian Trade

Commission and the Piemonte Agency

par tnered with the MCCI in organizing

this progamme.

Piemonte Agency was created by

Piemonte Region in 2006 as a reference

point for companies wishing to locate in

Piemonte.

Mr T T Srinivasaraghavan, President,

MCCI, welcoming the gathering said

today’s world is an integrated world.

Businesses across the globe have

spread their wings. Alliances and

collaborations are the order of the

day and as a natural consequence,

Chambers like us have to act as bridges

between businesses of dif ferent regions.

He said there are leading sectors

common in both our regions namely

engineering, automotives, information

technology, clean technologies, etc.

Tamilnadu is one of the fastest growing

economies and one of the most

industrialized and urban States. The auto

and auto components industries sector

is one of the most prominent players.

Tamilnadu also is a leading player in

sectors like IT, textiles, leather, non-

conventional energy like wind,

bio-tech etc.

He said the team from Piemonte can

advise on every aspect of star ting

and running a business in Piemonte,

providing assistance at every stage of

the project.

Our Chamber is happy to provide a

platform for interaction and identifying

oppor tunities for both investment and

business collaborations, whatever shape

of form they might take.

Delivering a special address, Dr Augusto

Di Giacinto, Italian Trade Commissioner

thanked the Chamber for organizing the

seminar. He said Italian Associations

for Leather have been working closely

with leather tanneries in India. He said

there is lot more to be done. At the

beginning of November, there will be a

very important delegation of more than

100 Italian companies visiting India. He

said that will of fer a bigger oppor tunity

for business for both the par ties.

Presentations were then made by the

Italian side as follows:

Ms.Stefanis Novelli

Invest in Tornio Piemonte on “Torino

Piemonte, a welcoming region”

In her presentation, Ms Stefanis said that

Piemonte is the first and unique Italian

region to have created a dedicated

financial tool for FDI and over 600 local

units of foreign companies are located

in Piemonte. It has good infrastructure

system and accessibility with 3 logistics

hubs connected to the main European

corridors. It has ecologically equipped

production areas.

She said the goal of Invest in Torino

Piemonte unit is to attract high added

value investment through:

lThe region’s competitive positioning

lThe development of

attractiveness factors

lThe networking of new

investments; and

5

CHAMBER’S ACTIVITIES

17th June 2011

Round Table Discussion on Fiscal Policies for Low Carbon Investment:In response to a scientific consensus

linking Greenhouse Gas (GHG)

emissions from human activities to

global climate change, many local

governments globally have star ted

looking towards various oppor tunities to

reduce GHG emissions.

In the context of Government of India’s

recent international commitment of

reducing its GHG emission intensity of

GDP by 20-25% between 2005 and

2020, it has become imperative for

all States in the country to individually

chalk out their action plan to achieve

this target within their jurisdiction to

help the country as a whole achieve its

objectives.

Fiscal instruments and incentives have

been recognized as one of the important

tools for mitigating climate change by

various Governments.

A round table discussion was therefore

organized by the Chamber to explore

interest in the following incentives

of fered:-

lcapital investment subsidies

for installation of energy-saving

equipment

llow interest rate loans to suppor t

enterprises investment in energy

saving technologies

lenergy review subsidy –

reimbursement of fees towards

energy-audit and environment

audit and cer tification

lDirect incentive for energy saving

The aim of the discussion was to

facilitate climate friendly industrial

development in the State by developing

suitable fiscal instruments.

The Chamber invited a cross section of

people to have their Views. From the UK

side, Dr Philip Douglas, First Secretary,

Climate Finance and Technologies within

the joint British Commission – DFID

India Climate Change and Energy Unit

and Ms Rachel Brass, First Secretary,

Climate Change and Energy in the cross

governmental unit of FCO, DEC and DFID

of the British Government were present.

Mr T T Srinivasaraghavan, President,

MCCI, welcoming the guests said this

discussion is more relevant for the

Chamber which is in the midst of its

175th year. We have chosen sustainable

development as our theme and this

fits into our theme well. He said the

Chamber was happy to co-host this

round table jointly with the Climate

Change Department of the British High

Commission. He said we can jointly

explore new ideas.

lThe consolidation of foreign

companies already active

in Piemonte

Mr Gianfranco Di Salvo on Investment

Oppor tunities in Piemonte

He said Piemonte Agency is the

unique, free reference point for foreign

companies that want to locate in

Piemonte, providing confidential,

responsive and tailored assistance

through all the phases of the

investment project.

It is the one stop shop for foreign

companies providing advice on how to

set up a legal entity in Italy; suppor t in

identifying a location for manufacturing,

services, research; selection of grants

and incentives for investment, R&D,

training projects; link with universities

and centres of excellence; pre-feasibility

studies etc.

Mr Giuseppe Barile, Director General,

Webasto S.p.A on

Webasto and the mechatonics sector in

Piemonte

Mr Barile made a presentation on

success stories. Referring to the

company Webasto – manufacturers of

roofing systems for various applications,

he said the company has a presence in

India – Webasto Motherson

Sunroofs Ltd.

He also mentioned about Magnetic

Marelli, the international company

committed to the design and production

of hitech systems and components for

the automotive sector.

Mr Fabrizio Righetti, CEO of Magneti

Marelli UM Electronic Systems Pvt Ltd.

on “Piemonte – India: our business

experience”

Mr Righetti mentioned about Magnetic

Marelli, the international company

committed to the design and production

of hitech systems and components for

the automotive sector.

There was lively interaction during which

the visitors replied to the many queries

of the par ticipants.The vote of thanks

was proposed by Mr Bernard Prevete,

Deputy Trade Commissioner.

The programme was followed by

cocktail and dinner.

CHAMBER’S ACTIVITIES

6

23rd June 2011

175th Annual General MeetingBusiness Session:

The 175th AGM of the Chamber was held

on 23rd June at Sheraton Park Hotel &

Towers. At the Business Session, Mr T T

Srinivasaraghavan, Managing Director,

Sundaram Finance Ltd., was re-elected

as the President while Mr T Shivaraman,

Managing Director & CEO, Shriram EPC

Ltd. was re-elected as Vice-president for

the year 2011-12.

The list of those declared elected as

Members of the General Committee

appears in the proceedings of the

Business Session.

The Chairmen/Co-Chairmen were

also appointed to the various Exper t

Committees of the Chamber. The

proceedings of the Business Session

appear in the following pages.

Public Session:

The Public Session of the AGM was

organized soon af ter the Business

Session. Mr T T Srinivasaraghavan,

President, welcomed the Chief Guest, Dr

Subir Gokarn, Deputy Governor, Reserve

Bank of India and all those present and

gave an outline of the activities of the

Chamber for the year. His address is

published at the end of this note.

The theme of Dr Subir Gokarn’s address

was “Economic Reforms for Sustainable

Growth”. He said food, human capital,

infrastructure and financial sector

development are critical areas for

reforms to achieve sustainable growth.

On food inflation, he said the enduring

solution to the persistent demand-

supply imbalances in food is to increase

supply rapidly. Production of relevant

items has to be increased, mostly

by increasing productivity. Cultivation

risk has to be mitigated for farmers to

find these products more attractive.

Transpor tation, storage and distribution

ef ficiency has to be increased to keep

losses and distribution margins down.

On human capital he said India is

the second most populous country in

the world and will become the most

populous in a couple of decades. It

is also one of the youngest and will

remain so for some decades to come.

This demographic dividend provides

an enormous oppor tunity. The Chinese

pool of workers is going to shrink as

the population ages over the next two

decades during which period India will

add a substantial number of workers.

This is an oppor tunity to take over the

mantle of the “factory to the world”

with hundreds of millions of relatively

low cost workers producing goods that

the rest of the world will consume.

On Infrastructure the rapid growth

has raised demand for infrastructure

services far in excess of available

capacity. Meanwhile a combination of

policy, regulatory and financial factors

has slowed the pace of investment in

infrastructure, leading to a persistence

of the gap.

The impact of inadequate supply of

power and transpor t infrastructure,

among other things is quite significant

on manufacturing activity he said.

In a nutshell, the infrastructure problem

has two dimensions – sectoral and

geographic. Each needs distinct focus in

order to arrive at meaningful solutions.

Speaking about Financial sector, he

said looking back over the past 20

years, there have clearly been massive

changes in the financial sector, which

have completely changed the nature

of intermediation, the range of products

and services available and the intensity

of competition .

Mr P M Belliappa, (IAS Retd)

moderated the proceedings. He

said he had worked on environment

related subjects with the national and

international bodies and was very much

aware of the issues connected with it.

The speakers then explained in detail

the subsidies of fered by various energy

related studies, capital investment

subsidies, etc.

It was informed that the UK Government

has set apar t 2.9 billion pounds for

Low Carbon initiatives and that there

will be good share of that available for

countries like India to pursue some of

the initiatives in this regard. However

since these findings are channelized

from Government to Government,

there could be procedural hurdles and

bureaucracy coming in the way of

speedier action. It was suggested that

an independent agency should be set

up for this purpose.

Dr Douglas indicated that the carbon

credits are likely to continue beyond

2012.

The Chamber was represented

by a good mix of climate exper ts,

management consultants, academicians

and Government representatives.

CHAMBER’S ACTIVITIES

Expanding the reach of financial

services to those individuals who do not

currently have access is an objective

that is fully consistent with the people-

centric definition of sustainable growth.

Going by the evidence there is a long

way to go in achieving this objective.

He fur ther said the Reserve Bank has

been laying a great deal of emphasis

on the expanding access to the banking

system. The broad objective is to ensure

access to all households in villages with

a population of over 2000 by 2012.

The full text of his address can be

viewed from our website www.

madraschamber.in

The vote of Thanks was proposed by

Mr T Shivaraman, Vice-president of the

Chamber.

Address by Mr T T

Srinivasaraghavan, President:

Salutations,

It gives me great pleasure to welcome

you all for the 175th AGM of the

Chamber. This is indeed a special

and momentous point of time, as we

commemorate 175 years of service to

trade and industry. We have traversed

a long and sometimes arduous road,

but through it all, we have remained

committed to the fundamental values

and objectives of the Chamber. Over the

decades, the Chamber has come to be

seen as a responsible and credible voice

of trade and industry in Tamil Nadu.

The 175th year celebrations were

launched on September 29th last

year, following which several new

initiatives were flagged of f. The ‘Food

For Thought’ (FFT) series, a monthly

forum on wide ranging issues of

topical interest, which we commenced

in September 2010, has evoked great

interest and drawn wide appreciation

from members. These discussions have

served to bring into sharper focus the

burning issues of the day and helped

the Chamber reach out to a larger

audience. A number of spin of f activities

are being planned arising out of these.

The flagship initiative of the Chamber

in its 175th year, is the establishment of

a Skill Development Centre. It is a well

accepted fact that one of the major

problems faced by industry today, is

the non -availability of manpower. As

the debate on Unemployment versus

Employability continues, the stark

reality is that there is a crying need

for formally trained manpower, to keep

our factories running. It is in this context

that our Chamber has embarked on

an ambitious project to set up a Skill

Development Centre. Thanks to the

foresight of my predecessors, we have

the necessary land at a very strategic

location between Sriperumbudur and

Thiruvallur. A significant amount of

ground work has already been done

towards this end and we are actively

talking to potential sponsors and donors

for setting up the facility. While, on the

one hand, this would help our member

companies fill their manpower gaps, on

the other, it would provide meaningful

career oppor tunities to young people

from the neighbouring communities.

Going back in history, the Chamber

had been instrumental in the setting up

of the Chennai Por t. Sadly, the por t is

today beset with several problems and

has increasingly become a bottleneck

for expor ters and importers alike. The

Chamber has been active in voicing the

concerns of industry and has recently

commissioned a study on the current

Logistic and strategic issues of the

Chennai Por t. Another important study

on the Entrepreneurial Eco System in

Tamil Nadu is also in the of fing.

An interesting and special task taken up

during the year, was the commissioning

of a Cof fee Table book, which will be

released at the conclusion of our 175th

year celebrations in September this year.

The Book traces the history and heritage

of the Chamber and its significant

contributions to the development of

trade and industry in the region. The

Book is shaping up very well and I am

sure that it will be a collector’s item.

A number of important events such

as India Corporate Week, All India

Workshop on Indirect Tax Laws,

Conference on Mainstreaming Green

Energy, National Seminar on Emerging

Role of Business – Not just for Profit,

par ticipation in high level discussions

with Government authorities on GST

and IFRS, the Parliamentary Standing

Committee on Finance on DTC and the

RBI Working group on NBFCs, improved

networking and collaborative events

with other organisations such as the

British High Commission and Italian

Trade Commission also marked the year.

The Chambers’ Exper t Committees with

true exper tise on dif ferent subjects

have been our pillar of strength and

have acted as think tanks for dif ferent

issues we took up from time to time.

The Chamber is also keeping updated

with use of technology and our

revamped website strengthens our links

with the members and also provides a

good platform to members to interact

between them.

In summary, I am pleased to repor t

that the Chamber has had an activity

7

CHAMBER’S ACTIVITIES

8

packed year. We are also working on

a grand celebration for the completion

of our 175th year which falls on 29th

September, 2011. We are indeed

for tunate to be par t of this moment in

history.

I am confident that this momentum will

take us far beyond September 2011. In

fact, this marks a new beginning and

together, we can lay the foundations for

the next 175 years!

With a long term Vision for the Chamber

as well as for the economy, we took the

theme for the 175th Year as Sustainable

Development and many of our activities

now are woven around this. No doubt

India is recognised as one of the fastest

growing economies, with speculations

that India will reach 8.5 to 9 % in the

current fiscal. There is also optimism that

we may over take China in the next few

years. Our aim of reaching the double

digit growth is still to be achieved. We

have also shown great resilience during

times of recession while the rest of the

world still struggles to come to terms,

which proves our fundamentals are

strong. Indian growth story is positive

and economic development ushered

in by the economic reforms is sure to

continue.

What probably now the concern is the

sustainable long term development.

Economic Development has to be

inclusive, has to be balanced among

sectors, regions and communities,

has to foster present growth without

compromising on the future growth,

has to express concern for environment

and natural resources, has to improve

the quality of human life. In all it has to

strike an ef fective balance between

various factors. We are now talking

about equitable development as a

component of sustainable development.

Social infrastructures , Green businesses

are gathering momentum and are

becoming critical factors in sustainable

development .

When we initially introduced economic

reforms, the objective might have been

shor t term and limited – to overcome

the immediate crisis. The fur ther reforms

now have to expand to meet the goal

of sustainable development. There are

current challenges like rising inflation,

wide spread pover ty, rural urban divide

etc. which are road blocks for the

sustainability of our development.

As a Chamber we appreciate this fact

and we are concerned, and it is in this

background we requested

Dr Subir Gokarn, who is an economist

himself and also who is par t of the

policy makers, to address on Economic

Reforms for Sustainable Growth. Dr Subir

has been a friend of the Chamber and

has been with us earlier in a dif ferent

capacity.

We are very happy to have him

with us again on this important occasion

and to address on this important theme.

I am sure we are in for a Vibrant public

session and I take this oppor tunity to

once again welcome you all for this

meet.

CONGRATULATlONS

The Madras Chamber congratulates

Surana & Surana International Attorneys,

a Member of the Chamber, on being

conferred the International Financial Law Review’s (IFLR)

“Law firm of the year – 2011 Chennai” award.

The Chamber also wishes them

many more awards in the years to come.

29th June 2011

MCCI-MMA Video Discussion – Middle Manager as InnovatorThe monthly video discussion

programme in June was on the theme

“Middle Manager as Innovator”. The

video was based on the path breaking

ar ticle by Rosebeth Moss Kantger, Ph.D.

In this tough new business environment,

innovation is the propeller for survival

and the aim of the discussion was

to learn the value of innovation, how

to spot the oppor tunities and to get

clear steps for achieving the increased

involvement and implementation.

Ms Jerina Jahaffar, Consultant and

Corporate Trainer conducted the

programme. She said the world is

changing every day and if we are

not competent enough, we will be

lef t behind. Hence there should be

innovation always. She gave examples

of Intel Processors and Gillette blades

where they do not rest on the best

features of their products but keep on

innovating. She said innovation is the

end result of creativity.

The video related to two dif ferent

companies – Data General Corporation

and New England Telephone Company

– where the top management motivated

and nur tured their co-workers to

successfully complete innovative projects

under very dif ferent circumstances.

It was brought out that freedom should

be given to the employees to innovate -

team work was important.

It was also brought out that the quality

of Managers should be :

lto protect his subordinate team

members

lkeep up the motivational levels

lprovide incentives

lrecognise at the end of the

project

lgive them a patient hearing

lcelebrate success

laccept mistakes; and

lgive them a free hand

Successful innovators were those :

lComfor table with change

lClearly directed

lThorough in their approach

lParticipative and those

who are persistent

There is no specific time for

innovation she said and no

one is a genius innovator. On

improving creativity, it was felt that one

should take risks.

With a brief Q & A Session, the

programme concluded.

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CHAMBER’S ACTIVITIES

PRESENT

Mr. T T Srinivasaraghavan

President

Mr.T Shivaraman

Vice President

Ms.K.Saraswathi

Secretary General

REPRESENTATIVES OF MEMBERS

M.V Ananthakrishna, R Anand, Bhavani

Balasubramanian, R. Barath, Clynton

Almeida, D P Devnath, K V V Giri,

S Ganguly, N Ramadoss,

K Vaitheeswaran, Rupa Gurunath,

M C Kapur, N Vaishnavi, S Ramalingam,

Srinivas Acharya, S Ravi, S Gopal,

R Narasimhan, B Bhaskar,

M V M Sundar, S Sasikumar,

K L Parameswaran, N Srinivasan,

P.K. Krishnakumar, V K Vijayaraghavan,

M J Sivakumar, K V Rajendran,

S. Subramanian, S Mohan, N Ramesh,

V Sriram, A Sankarakrishnan,

L Sabaretnam, G Srinivasan,

M R Venkatesh, P R Sudhakar,

J Krishnan, U Udayabhaskar Reddy,

Vijay Chordia, G V Raman,

R Mahadevan, S G Prabhakaran and

S. Vaitheeswaran.

Mr. T.T.Srinivasaraghavan, President,

chaired the meeting and conducted

the proceedings. Before taking up

the agenda items, he apprised the

members about the activities of the

Chamber during the year. He said, the

175th year celebrations were star ted on

September 29th, 2010 and following this,

several new initiatives were planned.

The Food for Thought (FFT) series, a

monthly breakfast meeting, which

focuses on current topical interests,

was one of the successful events.

Besides, the Chamber had organised

many useful programmes such as

celebrating India corporate Week with

the then Minister for MCA, Meeting

with RBI Working Group on NBFCs,

Representations on various issues to

the Government, associating with the

British High Commission and Italian

Trade Commission for joint events,

meeting the Parliamentary Committee

on DTC, etc. The Chamber’s premises

were also given a new look. Another

important initiative by the Chamber is

establishing a Skill Development Centre

in view of the dif ficulty in getting trained

manpower. This is being planned at

MCCI’s own place at Koppur village

in Tiruvallur district which is one of the

prominent industrial area. The Chamber

had discussions with various corporate

leaders, regulators, academic par tners

etc. and the project proposal is almost

completed. Before conver ting the

open land to a structured building

for the training centre, the Chamber

would be commencing sof t skill training

programmes near Sriperumbudur from

rented premises. It is the Chamber’s

endeavour to star t the sof t skill

programme before September 2011.

The President thanked the members for

their suppor t and active par ticipation

in the various events being organised

by the Chamber and hoped that they

would continue to render their suppor t.

He said the Chamber has a number of

plans on the completion of 175th year

celebrations as well.

He then took up the agenda items for

consideration.

1. To adopt the Repor t for the year

2010-11

The President referred to the printed

Annual Repor t containing the activities

of the Chamber during the year 2010-11

which had already been circulated to

the members. He informed the General

Body that the Repor t had been well

brought out with a new look and its

contents were informative and excellent.

The General Body also appreciated

the Repor t. In the absence of any

queries, he proposed that the Repor t be

adopted. Mr.G.V.Raman seconded the

proposal. Put to vote, the general body

unanimously adopted the Repor t.

2. To adopt the Audited Statement

of Accounts for the year 2010-11

The President referred to the audited

Statement of Accounts for the year

2010-11 sent to members as par t of the

Annual Repor t.

Since there were no questions,

Mr.N.Srinivasan proposed that the

audited statement of accounts for the

year 2010-11 be adopted. This was

seconded by Mr.G.Srinivasan.

The President thanked M/s RGN Price

& Co. for auditing the accounts of the

Chamber.

175TH ANNUAL GENERAL MEETINGPROCEEDINGS OF THE BUSINESS SESSION HELD AT 10.15 A.M. ON 23RD JUNE 2011 AT

SHERATON PARK HOTEL & TOWERS, CHENNAI - 600018

10

CHAMBER’S ACTIVITIES

CHAMBER’S ACTIVITIES

3. To determine the Rates of

subscription payable by dif ferent

classes of members for the year

2011-12

The President informed that there is

no proposal to revise the subscription

for the year 2011-12 and the rates as

prevalent in the previous year would

continue. He said that the Chamber had

revised the subscription four years back

and also collected one year’s additional

subscription last year in view of 175th

year celebrations.

He then proposed that the present

rates of subscription be adopted for the

year 2011-12. This was seconded by

Mr.R.Anand.

4. To declare the election of

Members of the General

Committee for the year 2011-12

The President informed the General

Body that the Chamber had so far 10

members in the General Committee

including the President, Vice President

and 8 members. Considering the

growth of the Chamber in all areas and

also considering that there has been

increase in membership, this was the

oppor tune time to enhance and broad

base the General Committee to have

fruit ful and sector specific discussions.

Fur ther, the Chamber had approval

from the General Body at the last

AGM held in 2010, to increase the size

of the General Committee from 10 to

20 including President, Vice President

and 18 members of the Committee.

Accordingly nominations for the

Committee were called and there was

overwhelming response from members.

The President requested the Secretary

General to read out the names of

the elected members of the General

Committee for the year 2011-12.

The Secretary General read out the

names of the elected members for the

year 2011-12 as follows:

PRESIDENT

Mr.T.T.Srinivasaraghavan

Sundaram Finance Ltd.

VICE PRESIDENT

Mr.T.Shivaraman

Shriram EPC Ltd.

MEMBERS OF THE COMMITTEE

Mr.R.Anand

Ernst & Young Pvt. Ltd.

Mr.M.V.Ananthakrishna

M K Raju Consultants Pvt. Ltd.

Mr.G.S.Anil Kumar

Jumbo Bag Ltd.

Mr.R.Arjun Durai

San Media Ltd

Mr.Gautam Venkataramani

India Pistons Ltd.

Mr.KVV Giri

Vaishnavi Freight Logistics Pvt.Ltd.

Mr.S.Gopal

Chemplast Sanmar Ltd.

Mr.Ishwar Achanta

Viking Shipping (Chennai) Pvt.Ltd.

Mr.Joseph Eugene Uthaman

I Sense Technologies P.Ltd.

Mr.V.Murali

Victor Grace & Co.

Dr.K.V.Rajendran

Neophyll Agrisciences Pvt.Ltd

Mr.G.V.Raman

Shriram Transpor t Finance Co.Ltd.

Ms.Rupa Gurunath

The India Cements Ltd.

Mr.A.R.Subramanian

Schwing Stetter India Pvt.Ltd.

Mr.Vijay Chordia

Stone Colour EXIM Pvt.Ltd.

Mr.V.K.Vijayaraghavan

Auro Mira Energy Company Pvt.Ltd.

Dr.Vinod Surana

Surana & Surana International Attorneys

Mr.R.Vittal Raj

Kumar & Raj

The General Body congratulated the

President and other members of the

General Committee on their election for

the year 2011-12.

5. To appoint auditors for the year

2011-12

The President informed that M/s RGN

Price & Co. have been auditing the

Chamber’s accounts for the last many

years and the Chamber has been

paying a sum of Rs.20000/- per annum

plus out of pocket expenses. The

President sought the concurrence of

the General Body that the Auditors’

remuneration be fixed at Rs.30000/-

per annum plus out of pocket

expenses from the current year 2011-12.

He also sought the approval of the

General Body for their continuance as

Auditors for the year 2011-12.

The General Body unanimously

accepted the revision of remuneration of

Rs.30000/- plus out of pocket expenses

and also agreed for the re-appointment

of RGN Price & Co. as Auditors for the

year 2011-12.

The motion was carried over

unanimously.

6. To declare the appointment of

members of the Exper t

Committees

The President informed the General

Body that the various Exper t

Committees have been a source of

11

CHAMBER’S ACTIVITIES

12

strength to the Chamber and the

deliberations at their meetings have

been fruit ful. Under the auspices of the

Exper t Committees, a number of

programmes were organised during

the year, including some programmes

outside Chennai.

The President informed the General

Body that the Chamber’s existing

exper t committees have been doing

very well in their respective areas.

The membership of the Chamber has

increased substantially and about 60

new members have been enrolled

during last year. Added to this, the

Chamber has been pro actively taking

ef for ts in organising programmes in

many areas relevant to our members.

Hence, it was time to broad base the

exper t committees and recommended

that 3 more exper t committees be

constituted as follows:

a. Education

b. Health care & Pharma

c. Manufacturing

He sought the opinion of the

General Body and the General Body

unanimously accepted the proposal.

Af ter taking the Members’ approval, the

motion was passed to constitute the

above 3 exper t committees.

The Secretary General read out the names of the Chairmen and Co-Chairmen of the following Exper t Committees appointed for

the year 2011-12.

NAME OF THE COMMITTEE CHAIRMAN CO-CHAIRMAN

Company Law / Ms.Bhavani Balasubramanian Mr.S.SrinivasaraghavanCorporate Matters Deloit te Haskins & Sells Simpson & Co.Ltd.

Direct Taxes Mr.Sriram Seshadri BMR & Associates

Economic Af fairs Mr.M.R.Venkatesh GSV Associates

Energy Mr.P.Krishnakumar Mr.N.Mani Orient Green Power Co Ltd. Shriram Capital Ltd.

Environment, Mr.R.Barath Mr.N.Ramadoss Pollution Prevention Wheels India Ltd. Industrial WasteAnd Control Management Assn.

Financial Sector Ms.Subashri Sriram Mr.V.Sriram Shriram City Union Finance Ltd. ICRA Management Consulting Services Ltd.

HRD & CSR Mr.S.Ganguly Mr.M.Ramakrishnan Larsen & Toubro Ltd. W S Industries India Ltd. (ECC Division)

Indirect Taxes Mr.K.Vaitheeswaran Mr.K.K.Sekar K.Vaitheeswaran & Co. Ashok Leyland Ltd.

Industrial Development/ Mr.S.Kanappan Infrastructure Larsen & Toubro Ltd. (ECC Division)

IT& ITES Mr.Clynton Almeida Mr. Malli J.Sivakumar Redington India Ltd. Sundaram Infotech Ltd.

Logistics Mr.J.Krishnan Mr U.Udayabhaskar Reddy S.Natesa Iyer & Co. Sanco Trans Ltd.

VAT Mr.P.R.Sudhakar Mr.P.R.Subramaniyan Brakes India Ltd. Larsen & Toubro Ltd. (ECC Division)

CHAMBER’S ACTIVITIES

13

7. Any other business

Code of conduct for General Committee

The President informed the General

Body that the Chamber’s activities were

growing and presently the strength

of the General Committee has been

increased from 10 to 20. He said he was

happy to note that representatives of

member companies have been taking

keen interest to serve on the General

Committee. To maintain the standards

of the General Committee, members’

par ticipation, the smooth functioning

of the General Committee, maintaining

confidentiality etc. the President informed

the General Body that the Chamber

needs to adopt a Code of Conduct /

Governance to become a member of

the General Committee. He gave broad

details of the code and sought the views

of the General Body and af ter clarifying

some of queries raised by the members

, he asked the concurrence of the

General Body for the adoption of the

code of conduct to become a member

of the General Committee.

The General Body approved the

proposal and it would be suitably

incorporated in the Memorandum of

Association.

Fur ther, the President informed the

General Body that the Chamber

will be bringing out a new Directory

of Members and the same will be

released on the Chamber Day on

29th September 2011. The Chamber has

already sent circulars to all Members

seeking the required information for

the Directory. He said some of the

members have so far not responded.

The President requested the Members

to send the same to the Chamber as

early as possible to enable the Chamber

Secretariat to star t the process.

The President informed the General

Body that the Chamber’s website has

been revamped and it provides a host

of information to the members on its

current activities; a separate page has

been created titled “Ask the Exper ts”

wherein members could post their

queries. He requested the members

to see the website and make use of

the same ef fectively and also provide

suggestions to improve it fur ther.

He then informed the General Body

that the Chamber is in the process

of bringing out a Cof fee Table Book

which would be released on 29th

September 2011 at the Chamber Day.

The book would explain the history of

the Chamber right from its inception,

the Chamber’s role in the development

of railways, por t, telecommunications,

etc., and how it interacted with the

Government and various stakeholders.

It would also contain a number of

photographs depicting the Chamber’s

growth. He said the book would be a

collector’s item and a great reference

point for the business community.

Since there were no other issues to

be informed to the General Body,

the President thanked the Members

of the Chamber, Members of the

General Committee, Members of the

various Exper t Committees and the

Secretariat for the excellent work done

and requested their co-operation and

suppor t to the Chamber as hither to.

He then requested the Members to join

the fellowship and attend the Public

Session to be held at 11 a.m.

Forthcoming Programmes

27th July - 6.00 p.m. to 7.00 p.m.

@ MCCI Conference Room

MCCI-MMA Video Discussion on

“Between You and Me”

Faculty: Ms.Shripriya Srinivasan,

Corporate Trainer

This video discussion uses

believable, realistic role-plays

to help employees embrace

teamwork and solve their own

conflicts without management

intervention.

Tea: 5.30 p.m

30th July – 9.00 a.m. (proposed)

FFT on Land Acquisition Policy

Raintree Hotel Anna Salai

19th & 20th August 2011

Two day All India Workshop on

Indirect Tax Laws

Hotel Deccan Plaza

Par ticipation fee:

Rs 3500 per delegate(Member)

Rs 4000 per delegate (Non-

Member)

27th & 28th August 2011(Proposed)

Employment Fair

Chennai K.Saraswathi

27th June 2011 Secretary General

GENERAL COMMITTEE

23rd June 2011

GENERAL COMMITTEE

The President welcomed the

members to the meeting and said

there was one unfinished agenda

and that was about updating on

the progress made with regard to

the Cof fee Table Book. He said Mr

V Sriram, historian and the author of

the book, has been invited to give

the highlights of the book.

Mr Sriram through his presentation,

briefed the members about the

current status and said the text and

picture sourcing, scanning, etc. has

been completed. The printing will be

done in July/August.

With regard to the title of the book,

he said for the time being it could

be “Championing Enterprise”

with subtitle “The 175 years of The

Madras Chamber of Commerce

& Industry”. However, this will be

finalised shor tly since the Chamber

has received a few suggestions

from members.

The President said Mr Sriram’s

commitment to this project has

been extraordinary and thanked

him for his presentation. Members

appreciated the ef for ts put in by

Mr V.Sriram.

Skill Development Initiative

Progress

The President said that ef for ts are

on to do the sof t launch of the

project. A facility has been identified

near Thirumazhisai and it will be

taken on rent from 1st August. NTTF

has of fered resource suppor t. Others

like Everonn, C-PAT are also being

approached. So far the progress has

been good.

Study of the Por t Sector in Tamilnadu

The President said the Por t is

one of the focus areas of the

Chamber. Once the study is

over, the Chamber will organise

a Seminar in September to

discuss the recommendations

made by the Study and convey

it to the concerned Government

Department/Agencies.

The President then repor ted on the

various meetings organized by the

Chamber since the last meeting of

the committee as follows:

a. MCCI-MMA Video Discussion on

“The Miracle Man”

These joint programmes by the

Chamber and MMA are going on

every month and the response has

been quite good.

b. FFT on Right to Education -

28th May.

Dr Vasanthi Devi, former Vice-

Chancellor, Manonmaniam

Sundaranar University, Ms Aruna

Rathnam, Education Specialist, Mr C

Sathish, Senior Principal, RMK Group

of Schools and Mr David Brock,

Vice-Consul, American Consulate

addressed the meeting.

The salient features of the Right

to Education Act and also serious

concerns in the implementation of

the Act were discussed at

the meeting.

The Vice-President who had

presided over the meeting said it

was a very good programme and

the discussions were lively. The

Vice-Consul, US Consulate informed

about their Act “ No child Lef t

Behind “. Comparing that with India,

it was felt that not enough has been

done in our country for primary

education while higher education

has been getting due attention.

c. Seminar on Revised Schedule

and XBRL

This programme organised on 4th

June was well attended. Mr D K

Mittal, IAS., Secretary, MCA who

had confirmed his par ticipation

as Chief Guest could not make it

due to unavoidable circumstances.

However, the programme

was held as scheduled. Mr N

Ramanathan, Managing Director

of Ponni Sugars (Erode) Ltd. and Mr

S A Murali Prasad, Director, SAM

Consultancy Services made excellent

presentations on Schedule VI and

XBRL respectively.

Though the Chamber had already

made a representation to the

Government on these issues, a

number of issues emerged during

the Seminar and the Chamber

will be sending a fur ther

representation shor tly.

The Committee felt that there is

no uniform format and this makes

14

EVENTS IN PICTURES

15

175TH ANNUAL GENERAL MEETING

l to r: K Saraswathi, T T Srinivasaraghavan & T. Shivaraman

Dr Subir Gokarn addressing

A view of the audience

T T Srinivasaraghavan delivering the welcome address

T T Srinivasaraghavan welcoming Dr Subir Gokarn

T Shivaraman proposing the Vote of Thanks

Business Session

Public Session

GENERAL COMMITTEE 2011-12

Members

PRESIDENT VICE- PRESIDENT

Mr S GopalManaging Director

Chemplast Sanmar Ltd.

Mr T Shivaraman

Managing Director & CEOShriram EPC Ltd.

Mr Ishwar Achanta

Managing DirectorViking Shipping (Chennai) Pvt. Ltd.

Mr Joseph Eugene Uthaman

DirectorI Sense Technologies P. Ltd.

16

Mr R AnandPartner

Ernst & Young Pvt. Ltd.

Mr M V Ananthakrishna

Executive DirectorM K Raju Consultants Pvt. Ltd.

Mr G S Anil Kumar

Director – FinanceJumbo Bag Ltd.

Mr R Arjun DuraiManaging Director

San Media Ltd.

Mr Gautam Venkataramani

Executive Director – Corp. Af fairsIndia Pistons Ltd.

Mr K V V Giri

Managing DirectorVaishnavi Freight Logistics (P) Ltd.

Mr T T SrinivasaraghavanManaging Director

Sundaram Finance Ltd.

Ex-Officio

Mr Srinivasan K SwamyChairman & Managing Director

R K Swamy BBDO Pvt. Ltd.

GENERAL COMMITTEE 2011-12

17

Mr V K VijayaraghavanVice-President – Finance

Auro Mira Energy Company Pvt. Ltd.

Dr Vinod Surana

Partner & CEOSurana & Surana International Attorneys

Mr R Vittal Raj

PartnerKumar & Raj

Mr V MuraliSenior Par tner

Victor Grace & Co.

Dr K V Rajendran

Advisor Neophyll Agrisciences Pvt. Ltd.

Mr G V Raman

Executive ChairmanShriram Group of Companies

Ms Rupa GurunathDirector

The India Cements Ltd.

Mr A R Subramanian

Chief Financial Of ficer & Company SecretarySchwing Stetter India Pvt. Ltd.

Mr Vijay Chordia

DirectorStonecolour Exim Private Ltd.

EVENTS IN PICTURES

18

T T Srinivasaraghavan welcoming the gathering

Investment & Business Opportunities in the Piemonte Region (Italy)

A view of the dignitaries on the dais

Ms Stefanis Novelli making a presentation

A view of the meeting

Round Table on Fiscal Policies for Low Carbon Investment

Ms Jerina Jahaffar making a presentation

Video Discussion on Middle Manager as Innovator

GENERAL COMMITTEE

it more complicated and costly.

Fur ther, it was suggested that the

Chamber should organise one more

programme with the par ticipation

of Secretary, MCA as this is an

important issue af fecting the

corporates.

d. Investment and Business

Oppor tunities in Torino Piemonte

- Meeting with the Italian

Delegation – 16th June:

The Italian Trade Commissioner

in Mumbai and senior of ficials

from Government of Italy made

presentations on the investment and

business oppor tunities in Piemonte,

India-Italy relationships, incentive

schemes of fered, etc. which were

impressive. The President said a

bigger team will be visiting India

in November and the Chamber

should invite representatives of

TIDCO,SIPCOT, etc. to the meeting

which will be organised by the

Chamber to learn from them some

of the best practices in attracting

investments to the State.

e. Round Table discussion on Fiscal

Policies for Low Carbon

Investment

This programme was held on 17th

June in association with Climate

Change Team of British High

Commission.

Dr Philip Douglas, First Secretary,

Climate Finance and Technologies

within the joint British

High Commission-DFID India Climate

Change and Energy Unit and Ms

Rachel Brass, First Secretary, Climate

Change and Energy in the cross

Governmental Unit of FCO, DEC

and DFID of the British Government

joined the round table discussion.

Dr R Mahadevan who had attended

the programme said that UK

Government has set apar t

2.9 billion pounds for Low Carbon

initiatives and that there will be

good share of that available for

countries like India to pursue some

of the initiatives in this regard.

However since these findings are

channelized from Government

to Government , there could be

procedural hurdles and bureaucracy

coming in the way of speedier

action. It was suggested that an

independent agency should be set

up for this purpose.

He also mentioned about

Dr Douglas indicating that the

carbon credits are likely to continue

beyond 2012.

For thcoming Programmes

Members were informed that

the following programmes were

scheduled to take place:

a. MCCI-MMA video discussion:

29th June

A joint video discussion by the

Chamber and MMA on 29th

June on “Middle Manager as an

Innovator”. Ms Jerina Jahaffar will be

the trainer for this programme.

b. Business Immigration – Getting

a Green Card through Investment

–EB5 immigrant visas

This programme is to be held

in association with Fox Mandal

Associates at Hotel Savera

commencing at

3.30 p.m. on 1st July.

The aim of the Seminar is to talk

about securing a US Green card via

EB-5 programme. The US Congress

created the EB5 programme

to encourage foreign investment

in the US to create jobs and to

provide expeditious US residency

and citizenship to qualified foreign

investors. Mr Gregory Win and

Mr Satish Khalay will be making

presentations.

c. Chamber Day – 29th September

2011

The President informed that the

closing of the 175th year celebrations

will be on 29th September and this

will be celebrated in a befit ting

manner.

Code of Governance for

Committee Members

The President stated that there is a

code for becoming members of the

Chamber. However, there was no

such thing for becoming a member

of the Committee. Assocham and

other organisations follow a code

of governance and it was time

our Chamber also introduced this.

The draf t code of governance was

tabled and the President informed

members that he will bring it before

the Business Session of the AGM for

adoption.

19

GENERAL COMMITTEE EXPERT COMMITTEE

Assocham Managing

Committee nominations

The Secretary General informed

that Assocham has called for

nominations to the Managing

Committee by 8th July and the

Chamber would be sending its

nominations shor tly.

This being the last meeting before

the AGM, the President thanked the

Vice-President, Mr T Shivaraman and

all the members of the Committee

for their unstinted suppor t during the

year. He said their attendance and

par ticipation in the meetings made

the proceedings of the Committee

lively and purposeful. He sought

their cooperation and suppor t in the

ensuing year as well.

Members of the Committee

reciprocated the sentiments

and expressed their happiness

at the leadership shown by the

President.

30th June 2011

IT / ITESThe first meeting of the reconstituted

committee was held on 30th

June. While discussing the terms

of reference, members gave

some suggestions which will be

incorporated.

The Committee dwelt at length

on its work plan for the year and

decided as follows:-

l take the web por tal to the next

level and make it more inter

active; also see how best the

Chamber could market it

l Increase the membership

base by bringing in more IT/ITES

companies

lIdentify 2/3 programmes for the

year – first event to be held in

the first quar ter.

The committee came out with

a proposal to have an exclusive

e-newsletter.

The Committee felt that the

Chamber should on its own,

under the guidance of the Exper t

Committee, organize some

programmes. The Committee also

felt that IT programmes should

be conducted in Tier II cities like

Madurai, Coimbatore,Trichy,etc.

MCCI – revamped website –

suggestions

Members made a few suggestions

as follows:

lMembers of the Chamber could

be given 3-4 additional ids to

enable them to view all the

details

lOnline updation should be made

possible

lThere should be an online

directory of members

l As and when the bulletin is

uploaded, a message could be

constantly flashed

lMost wanted question to be

highlighted

lSectoral repor ts when uploaded

will be for the use of members

only

lJob Board – only members could

post their job requirements.

lAfter 2 months, the website

needs to be revisited

20

NATIONAL AWARDS FOR EMPLOYMENT OF PERSONS WITH DISABILITIES

The Ministry of Social Justice and Empowerment has invited nominations of disabled persons for National

Awards on the occasion of International Day for Disabled Persons falling on 3rd December 2011.

Various categories for these awards and other details can be seen on their website www.socialjustic.nic.in

Companies/individuals who have done commendable work for the empowerment of lthe persons with

disabilities and need to be recognised may send the nominations to the Ministry.

The last date for receipt of nominations is 16th August 2011.

SPOTLIGHT

The draf t National Manufacturing

Policy has received in principle nod

from the government. The policy is

aimed at creating 10 crore additional

jobs by 2025. The implementation

is expected to increase the share

of manufacturing sector in the GDP

from the present 16 per cent to 25

per cent in the next 14 years.

Extracts from National

Manufacturing Policy -

Discussion Paper

The discussion paper focuses on

1. National Manufacturing &

Investment Zones: Concept

2. Exit Policy

3. Green Technologies: New Avenue

of Growth

4. Incentives and Benefits for units in

NMIZs

5. Simplified Clearances & Approvals

for Setting up units in NMIZs

6. Skill development programme to

cater to the needs of Manufacturing

Sector.

1. National Manufacturing and

Investment Zones( NMIZ) -

Concept

OBJECTIVES

lTo promote investments in the

manufacturing sector and make

the country a hub for both

domestic and international

markets;

lTo increase the sectoral share

of manufacturing in GDP to 25%

by 2022.

lTo double the current

employment level in the sector

lTo enhance global

competitiveness of the sector

The National Manufacturing

and Investment Zones (NMIZs)

would reap the benefits of co-

sit ting, networking and greater

ef ficiency through the use of

common infrastructure and suppor t

services. They would have high-

class infrastructure, and provide a

competitive environment conducive

for setting up businesses. They

would thus provide a boost to

manufacturing, augmentation

of expor ts and generation of

employment.

CONCEPT OF NMIZ

An area would be specifically

delineated for the establishment of

manufacturing facilities for domestic

and expor t led production, along

with the associated services and

infrastructure.

The NMIZs would be a combination

of production units, public utilities,

logistics, environmental protection

mechanisms, residential areas

and administrative services. It

would have a processing area,

where the manufacturing facilities,

along with associated logistics

and other services and required

infrastructure will be located,

and a non- processing area, to

include residential, commercial

and other social and institutional

infrastructure. The processing area

may include one or more Special

Economic Zones, Industrial Parks

& Warehousing Zones, Expor t

Oriented Units, DTA units duly

notified under the relevant Central

or State legislation or policy. All the

benefits available under the relevant

legislation or policy will continue to

remain available to the said Zones

The internal infrastructure of the

NMIZ will be built and managed

by a Developer, or a group of Co-

developers. The external linkages

will be provided by Government

of India and the concerned State

government. The users of external

as well as internal infrastructure will

pay for its use, except to the extent

that the government suppor ts the

service through budgetary resource.

The NMIZ would have a governing

body, which would be in the form

of a Special Purpose Vehicle (SPV)

formed with the constituents of that

specific NMIZ. The SPV would have

delegated authority from the State

Government, Ministries in the Central

Government and other Government

Agencies for issuing necessary

clearances, as may be necessary

NATIONAL MANUFACTURING POLICY

21

SPOTLIGHT

for the inception and continuation of

business ventures inside the NMIZ.

The key feature of the NMIZs would

be a more business friendly policy,

procedures and approval ecosystem,

combined with superior physical

infrastructure.

INSTITUTIONAL FRAMEWORK

1. The Department of Industrial

Policy and Promotion (DIPP) will

be the nodal depar tment of the

Government of India for the NMIZs.

2. A High Powered Committee

constituted by the Government of

India will scrutinize applications

for setting up the NMIZ, and

subsequently monitor and expedite

the progress of implementation.

3. The SPV would be constituted

for each NMIZ and will be

responsible for its development

and management. It will also be

empowered to issue/expedite

approvals and pre-approvals.

2. Exit Policy for units in NMIZs

It is proposed that the closure of a

unit in NMIZ should be made easier

by settling the dues of the labour

in time. There should be a fast

mechanism for settling the assets

of a sick company so that they are

redeployed for production.

For settling labour dues independent

of other creditors claim a sinking

fund should be created for each

NMIZ to be maintained by the SPV

which would be built through a

contribution out of the profits of all

the units in NMIZ. Alternatively the

companies in NMIZ will be obliged

to take a job loss policy from any

insurance company.

3. Green Technologies

Indian manufacturing needs to

focus on four areas:

lExplore oppor tunities in the

rapidly growing carbon trading

market.

lDrive “greening of operations” to

reduce their carbon footprint.

lExplore oppor tunities in

“greening of products”.

lExplore emerging “green

technologies” with oppor tunities

to build local and global

leadership.

Special Incentives for Green

Technologies and Manufacturing for

units in NMIZs

lLow-interest loans for

manufacturing to invest in new

plans to produce clean /green

technology or invest in new

plants to produce green

products;

lCreation of a central fund for

suppor ting research in the area

of green manufacturing;

lMandatory to get a cer tain

percentage of its electricity mix

from renewables;

lProvides grants for workers

training that will lead to an

expanded energy ef ficiency

and renewable energy industry

workforce;

lPreference to green units/ green

products during procurement by

state/ central government; and

l‘Best Green Unit’ awards to

encourage, recognize and raise

greater awareness.

lIf the SPV in a par ticular NMIZ

decides to have an IPP based

on renewable green technology,

an investment subsidy to cover

the additional interest cost per

mega watt may be considered.

4. Incentives and Benefits for

units in NMIZs

The NMIZs would be a combination

of production units, public utilities,

logistics, environmental protection

mechanisms, residential areas

and administrative services. It

would have a processing area,

where the manufacturing facilities,

along with associated logistics

and other services and required

infrastructure will be located,

and a non- processing area, to

include residential, commercial

and other social and institutional

infrastructure. The processing area

may include one or more Special

Economic Zones, Industrial Parks

& Warehousing Zones, Expor t

Oriented Units, DTA units duly

notified under the relevant Central

or State legislation or policy. All the

benefits available under the relevant

legislation or policy will continue to

remain available to the said Zones.

General Incentives for units in

the NMIZs

lIn order to encourage industrial

22

SPOTLIGHT

units in taking on training/

retraining of the workers, such

expenditure be treated at par

with R&D expenditure.

lTax exemption on expenditure

incurred in taking national

international process/product

cer tification/approvals like

ISO 9000, BIS 14000, BEE, IS,

CSA, UL, VDE, etc.

l50% of the expenditure incurred

in filing international patents to

be shared by the Government.

lSubvention of interest on working

capital by 4% to create parity

with international counterpar ts.

lIn government purchases

preference be given to units

located in the NMIZs.

lIn order to encourage supply

chain development, Income Tax

exemption to suppliers in

propor tion to the supplies made

within the NMIZ.

lSpecial incentives for cer tain

crucial industries where import

dependence is very high.

State levies

The State Government may also

notify a package of incentives

for the development of the NMIZ,

including moratorium on all

municipal and other local taxes for

10 years, for the NMIZ developers as

well as the units which are located

in the Zone.

5. Simplified Clearances &

Approvals for Setting up units

in NMIZs

Wherever exemptions are possible

under the Act, the same should

be granted in NMIZ subject to SPV

having a self regulated alternative

mechanism to achieve the objective

of the Act.

Where exemption is not possible,

the authority under the Act should

be vested in the SPV or in a single

designated agency.

6. Skill development programme

to cater to the needs of

Manufacturing Sector

The SPV for the NMIZ will

continuously review the requirement

of skilled manpower and take

necessary steps to meet the

demand for skills at three broad

levels — a very large pool of

minimally educated human resource,

a large pool of skilled persons,

and a small yet significant pool of

personnel with highly specialized

skills. A training centre for the zone

would be set up as a Public-Private

Par tnership initiative with courses

being tailored to the demand of

specific industries in the zone.

Trained personnel would then

be placed suitably in these units.

Appropriate technical assistance

tie-ups for the centre with agencies

abroad would be facilitated for state

of the ar t training infrastructure and

curricula.

Full text of the discussion paper can

be had from

dipp.nic.in/nmp_discussionpaper

23

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SPOTLIGHT

Macro global forces such as

globalization, emergence of

knowledge economy, the narrowing

divide between developed and

developing economies, and

demographic changes are ushering

manufacturing transformation.

While this transformation is taking

place, consumers are increasingly

demanding value for their money

and instant gratification. While

the influence of these forces may

vary from industry to industry and

company to company, at the macro

level almost all companies are

subject to time-to-market and cost

pressures and other associated

challenges. Although the overall

growth of the world economy

continues to spur manufacturing,

only companies which continually

discover ways to reduce costs and

tightly couple all activities along

the value chain have a chance to

succeed in the fiercely competitive

world. Manufacturers are squarely

addressing these challenges

by thinking out-of-the-box to

optimize manufacturing processes

and identify afresh controllable

cost centers. Global companies

extensively leverage automation to

ensure productivity, improve plant

availability, product consistency and

quality, and such others, and they

look upon automation as a business

enabler and not as a technology

enabler. It is necessary for Indian

manufacturing companies also to

leverage automation for achieving

overall business goals, and they

cannot ignore the imperatives of

leveraging enabling technologies.

Manufacturing Transformation

From a historical perspective,

manufacturing, which essentially is

a series of operations that transform

inputs, such as raw materials/

components by deploying human

and financial resources through

processes, sprung up close to

demand or raw material centres,

dictated largely by the value-

addition criterion. As the global

economy expanded resulting in

demand spur t, manufacturing

responded by transforming itself.

Whether it is process, hybrid,

or discrete, manufacturing

transformation is a continuous

saga of change. Manufacturing

companies are moving away from

ver tically integrated structure to

horizontally linked network models.

Spanning countries and continents,

companies are becoming an

extensive network of enterprises,

with networks extending beyond

manufacturing supply chain to

include design and engineering.

Companies are seeking design,

operate, and maintain (DOM) inter

operability. The DOM inter operability

ensures continuous iterations to

reduce costs by continuous review

and evaluation mechanisms

relating to products or processes,

operational and maintenance

strategies.

Design-Operate-Maintain Model

In the present day world, business

is done at the speed of thought,

and therefore it is necessary for

manufacturing companies to be

agile both in spotting oppor tunities

and in competitively responding to

them. While oppor tunities are global,

in many manufacturing segments,

the world is awash with excess

capacity, and in that scenario, what

is important for manufacturing

companies is in achieving

‘availability-to-promise’.

Role of Automation

The success of a manufacturing

company will be determined by

their ability to become globally

competitive and successfully

integrate with the emerging globally

extended enterprises. Companies

wanting to become agile,

competitive, and globally networked

must extensively deploy automation.

INDIAN MANUFACTURING MUST LEVERAGE AUTOMATIONBy Raja Bahadur V Arcot,

Vice President & General Manager, ARC Advisory Group

24

SPOTLIGHT

While the automation at the plant-

level deals with real-time decisions

that impact shop-floor operations,

automation at the enterprise-level

relate to business decisions that

are mostly transaction based. Since

today’s business is done at the

speed of thought, the enterprise-

level suppor t decisions have a direct

bearing on the production and

scheduling decisions that cascade

down to the shop floor operations.

Actionable Information and Real-

time Per formance Management

Therefore, manufacturing companies

have to invest in automation to

become more agile, gain visibility

across the extended supply chain,

and synchronize their production

and business decisions. They

require synchronized actionable

information which comes by

deploying collaborative production

management systems including

manufacturing execution systems

(MES) that link plant floor systems

to enterprise solutions. With

actionable information at its

command, the company can seek

Operational Excellence (OpX) or

Continuous Improvements (CI).

OpX is an on-going journey, and

companies have to constantly work

at it, year af ter year. Real-time

Per formance Management (RPM)

is the key to achieve continuous

improvement or OpX. Real-time

Per formance Management (RPM)

is taking decisions based on

Actionable Information provided

by Collaborative Production

Management (CPM) Systems.

Automation helps a manufacturing

company to ef ficiently deploy

its resources — men, material,

and finances. Automation brings

within the company’s sphere of

influence the factors that af fect

the deployment of these resources.

For achieving this, synchronized

actionable information

is the key.

Indian Manufacturing Landscape

The booming Indian economy

with a surging domestic demand

and global growth oppor tunities

are spurring India’s manufacturing

companies to expand. Let us take a

look at some of the manufacturing

ver ticals, where Indian companies

are moving beyond targeting the

domestic market. These companies

are going beyond exploiting factorial

advantages and are seeking

sustainable competitiveness. And in

these endeavours, automation has

an important role to play.

Some companies in India, having

made a successful transition from

operating in a sellers market,

have emerged as global-sized

world class companies capable

of competing in a free market.

Examples, such as the recent

take-over of Corus by Tata Steel

and the bid by India’s aluminium

major Hindalco for Novelis, show

how some of these companies are

aggressively pursuing global growth

oppor tunities through mergers and

acquisitions. The pharmaceutical

industry has witnessed many M

& A deals. These trends clearly

indicate that Indian manufacturing

companies are plugging themselves

into global networks. Their success

will be largely determined by their

ability to achieve convergence

among people, processes, and

technology; and this convergence

is achieved through collaborative

automation.

The automobile industry in India

is going at full throttle. Spurred by

domestic demand, India, the third

largest manufacturer of compact

passenger cars and the fif th largest

commercial vehicle manufacturer

in the world, is emerging as a

major automotive market. The

automotive industry in India, with

its industry hardened homegrown

vehicle manufacturers, the large

number of quality conscious auto

component suppliers, abundant

supply of knowledge workers, and

management talent, facilitates the

growth of automotive companies.

India is emerging as a global

manufacturing hub for compact

cars and auto components. The

success of the automotive and auto

component industry will largely

depend on companies’ ability to

competitively design, engineer,

make, and supply them on time.

Automation plays a crucial role in

the success of automotive industry

living up to the promise.

25

SPOTLIGHT

Globally Extended Enterprises

The Indian steel industry, the ninth

largest globally and producing

around 38 million tons of steel

per annum, is on the upswing.

Additionally with rich bauxite

ores, the country is also a leading

producer of aluminium. Indian

companies in the metals segment

realize that the way forward for

them would be to segregate

value chain into primary metal and

finished products. The demand for

high-value added finished products

is beginning to expand in Asia,

while the production facilities for

the same already exist in NA and

Europe. Their strategy is to integrate

their facilities in India with the

already existing finished products

production facilities in the mature

markets where the demand still

exists for finished products. While

this strategy helps them to meet

the growing demand for finished

products in India and Asian

countries by maximizing the return

on existing assets by integrating

them ver tically, their ultimate

success depends on integrated and

synchronized automation across all

geographically dispersed plants.

The companies in the oil and

gas segment have challenges

which include sourcing crude,

its transpor tation, refining it and

distributing the refined products.

They have to squeeze their margins

by ef ficiently scheduling their crude

supplies and by optimizing the

refining processes among others.

With some of the companies in

the refining segment emerging

as significant expor ters of refined

products, these companies have to

adopt automation in a major way

to manage their assets to maximize

profits.

India’s pharmaceutical industry,

presently ranking four th globally in

terms of volume and thir teenth in

terms of value, is growing. Domestic

pharmaceutical companies, keeping

abreast with global developments

and adopting new technologies

with relative ease, have created

good manufacturing practice (GMP)

compliant facilities to produce and

formulate drugs. Although some

of them have taken strides along

the drug discovery path, their main

for te continues to be generic drug

market. With generics pipeline

worth around $30-40 billion

remaining full, India’s pharmaceutical

companies have ample growth

oppor tunities. Wanting to seize

growth oppor tunities, some of the

pharmaceutical companies in India

have taken the route of growing

through mergers and acquisitions.

While Indian manufacturing have

done well in adding production

capacities and building economies

of scale, it is time for them to

evaluate how well they are

leveraging automation technologies.

While they are extending their reach

beyond the Indian shores with

expor t earnings growing robustly,

it is time for them to evaluate how

well they are leveraging automation

technologies to achieve agility,

supply chain ef ficiencies, and

productivity improvements across

globally extended and networked

enterprises.

Recommendations

lGlobal companies extensively

leverage automation and they

look upon automation as

a business enabler and not

as a technology enabler. Indian

manufacturing companies have

to leverage automation for

achieving overall business goals,

and they cannot ignore the

benefits of leveraging enabling

technologies.

lThe success of a manufacturing

company will be determined

by their ability to become

globally competitive and

successfully integrate with

the emerging globally extended

enterprises. Companies wanting

to become agile, competitive,

and globally networked must

extensively deploy automation.

lManufacturing companies have

to invest in automation to

become more agile, gain visibility

across the extended supply

chain, and synchronize their

production and business

decisions.

26

POLICY WATCH

NEW MEMBERS

The Chamber extends a warm

welcome to the following

new members:

Origin Foods Ltd., Chennai

Business: Fruit pulp, concentrates,

juices, processed foods and

canned fruits

Fiducial Insurance Brokers

India Pvt.Ltd.

Business: Insurance Broking

Maveric Systems Ltd.

Business: Sof tware testing

iData Systemtech and

Consulting Pvt.Ltd.

Business: IT Consultants

DEPB Scheme extended for

three months

The DEPB scheme has been in

existence for the last 14 years

and has been the most popular

schemes especially engineering

including automobile sector. The

objective of the DEPB scheme has

been to neutralise incidence of

customs duty on import content of

expor t product. Neutralisation has

been provided by way of grant of

duty credit against expor t product.

According to repor ts, DEPB scheme

has been covering nearly 52 percent

of expor ts. This scheme was due to

end on 30th June 2011. Government

has recently extended the scheme

for limited period of three months

upto 30th September 2011.

The implication of this amendment

is that no DEPB shall be issued on

expor t af ter 30th September 2011.

There is no change in the validity of

DEPB as indicated therein, meaning

the validity as stated in DEPB shall

remain operative till its expiry.

Foreign investors can invest

up to $10B in MFs

The ceiling is subject to review

depending on the response.

The Central Government has

announced that it was making a

move to allow foreign investors,

other than foreign institutional

investors (FIIs) to invest up to $10

billion in domestic mutual funds.

This class of investors, called

qualified foreign investors (QFIs) but

not FIIs will be able to invest money

in domestic mutual funds through

unit confirmation receipts or through

the depository par ticipant route.

QFIs could be individuals and

bodies including pension funds and

cumulatively they could invest up to

$10 billion (about Rs 45,000 crore).

EPFO-like body for small

sector on the anvil

Seeking to address the concerns

of the small scale sector, the

Department of Policy and Promotion

(DIPP) is planning to come out with

a strategy paper to evolve a

framework for privately-run body on

the lines of the Employees’ Provident

Fund Organisation for managing

retirement funds and insurance.

India-New Zealand FTA likely

by 2012

Visiting New Zealand Prime Minister

who arrived on a three day visit to

India recently said that India and

New Zealand were likely to sign the

Free Trade Agreement (FTA) by early

next year.

The negotiations for a New

Comprehensive Economic

Cooperation Agreement or popularly

known as FTA star ted last year. The

Commerce and Industry Minister

Mr Anand Sharma who visited

Auckland in May had said that

the two countries could cooperate

in several segments including

agriculture, pharmaceuticals,

dairy products, research and

development, tourism and films.

27

TRADE FAIRS & EXHIBITIONS

The India Chamber of Commerce, USA invites businesses, of ficials and educational institutions to attend

its Global Trade Summit, August 25th - 26th 2011 at the River Centre, Saint Paul, Minnesota, USA. This is an

oppor tunity to reach the US markets, to meet with potential par tners and distributors and to explore markets in

Mexico, Brazil, Canada and other countries. For more information please visit the summit’s website -

http://www.indiachamber.org/GlobalTradeSummit/index.php

28

Trade Fair Accenta, Ghent

(Belgium)

September 10th - 18th 2011

The India Trade Promotion

Organisation is organising India’s

national level par ticipation in the

above Trade Fair.

Trade Fair Accenta is a B 2 C multi

Products Event and ITPO has taken

an area of 468 sqm, in which 30

- 35 booths of 9 sqm each will be

built. Rent for this event is expected

to be around Rs.90000 + tax for a 9

sqm booth.

If you wish to par ticipate in this Fair,

please contact Mr V Narayanan,

Manager, ITPO, Chennai at

Tel: 28524655

email: itpochn@md4.vsnl.net.in

India Show – Toronto-Canada

October 17th - 20th 2011

‘India Show” Canada is an initiative

of the Ministry of Commerce &

Industry, Government of India. The

Show will be organised by EEPC

India with the suppor t of Indian High

Commission at Canada. The main

objective of the “India Show” is to

promote India’s image and provide

a platform for Indian organisations

to showcase their strengths and

capabilities in a developed country

like Canada.

“India Show” in Canada will be

organised in conjunction with the

Canadian Manufacturing Technology

Show (CMTS 2011). CMTS is a

premier engineering exhibition

in Canada and more than 600

companies from various countries

are expected to par ticipate. India

has been declared a “Strategic

Par tner” for the Show.

EEPC India’s endeavour is to

showcase the SMEs of India.

For fur ther details please contact

Mr R Maitra, Executive Director,

EEPC India – Phone: 011-23711124/25

email: ed@eepcindia.net

Lagos International Fair, Lagos

(Nigeria)

November 4th -13th 2011

ITPO is organising India’s national

level par ticipation at Lagos

International Fair to be held at

Lagos (Nigeria) from November 4th

-13th 2011. Lagos is a gateway and

commercial nerve center of Nigeria.

It is also the hub of Nigeria’s

business and economic activity as

well as the main por t of entry.

The fair is likely to attract over 5

lakh visitors within and outside

the country which include

businessmen, investors, consumers,

top government of ficials and

representatives of Nigeria, important

trading houses and those seeking

joint venture par tnerships.

ITPO of fers a package of services

which include fully constructed

stands, wall to wall carpeting,

adequate lighting, furniture, standard

display aids, visa recommendation

and general publicity suppor t. This

event has been approved under

MDA scheme of the Department

of Commerce.

For fur ther details, please contact:

Mr V P Malik, Deputy Manager, ITPO

Mobile: +91 98183 9922

email: vmalik@itpo-online.com

ECONOMIC REVIEW

ECONOMY

Fuel price hike, duty cut to stem the cash losses faced by PSU oil Marketing companies

India, US to expand trade and investment links

India’s core industries output growth up 5.3 percent in May

India’s Expor ts up 56.9% in May, trade deficit too widens to $14.9bn

Food inflation declined sharply to 7.78%

CORPORATE

Vodafone finalises India mobile subsidiary buyout

ECONOMIC REVIEW

Economy

Fuel price hike, duty cut to stem

the cash losses faced by PSU oil

Marketing companies

The government on 24th June

increased the price of diesel (HSD)

by 8% (Rs.3 per litre), kerosene

(LKO) by 16% (Rs.2 per litre) and

domestic liquified petroleum gas

(LPG) by 16% (Rs.50 per cylinder),

excluding State levies such as VAT.

Also, the excise duty on diesel has

been reduced from Rs.4.6 to Rs.2

per litre. Moreover, the prevailing

5% custom duty on crude oil has

been eliminated. The custom duty

on all petro-products has also been

reduced by 5 percentage points to

2.5% only.

The government said that the retail

price hikes should generate Rs.240

billion (US$5.3 bn) in Financial Year

2011-12. On the other hand, the tax

cuts do not generate additional

revenue, but will lead to another

reduction of Rs.250 billion (US$5.5

bn) in FY12 losses, which could still

be of the order of Rs.1.1-1.2 trillion

(US$25bn). Given the nearly 58%

consumption of HSD, LPG and SKO

of the total petroleum products

consumption, the reduction in tax

collections (Rs.490 bn, US$11 bn

per annum) will be higher than the

reduction in losses.

The Empowered Group of Ministers

(EGoM) under the chairmanship of

the Finance Minister considered the

alarming situation arising out of

projected massive under-recoveries

of the Oil Marketing Companies

(OMC) of Rs.1,71,140 crore for the

year 2011-12 in the wake of high

international crude oil prices and

finally passed a slew of measures

to stem the cash losses faced by

PSU oil companies on retail sales.

Despite these large retail price

increases, residual FY12 under-

recoveries are still the largest the

government has ever funded,

and can continue to pressure

government finances. Unless the

States agree to tax cuts, more retail

price hikes cannot be ruled out, if

crude remains high.

However, the reduction in overall

under-recoveries is a positive for all

oil PSU companies. ONGC, OILI and

GAIL should theoretically earn 33%

of the reduction in under-recoveries.

If benefits of only the retail price

increases were passed on, ONGC’s

EPS would benefit by Rs.5 (16%),

OILI’s by Rs.23.7 (18%) and GAIL’s

by Rs.2.9 (9%) (at 33% upstream

subsidy sharing). Also, at least the

four controlled products are currently

priced on a trade parity basis,

which relies on only an 80% parity

to import prices. The 5% reduction

in crude and product duties should

therefore lead to a small expansion

in refining tarif f protection, and

should be a positive for stand alone

29

ECONOMIC REVIEW

refiners that sell into India.

India, US to expand trade and

investment links

India and the United States will

work together to expand trade

and investment links between their

economies and will fur ther develop

and strengthen their financial

systems. They will also work

together in the G-20 on an ef fective

mutual assessment process to

bring about strong, sustained,

and balanced global growth. This

statement was declared in a joint

statement at the Second meeting of

the US-India Economic and Financial

Par tnership in Washington, D.C on

29th June 2011. The joint statement

was signed by both U.S. Secretary

of the Treasury Mr Timothy Geithner

and Indian Finance Minister Shri

Pranab Mukherjee.

The US wants India to become

one of its top 10 trading par tners,

treasury secretary Timothy Geithner

said as the two countries agreed

on improving access to each other’s

markets. India is currently the US’

twelf th largest trading par tner, with

bilateral trade of almost $50bn.

“In the United States, we aren’t

just watching India’s rise as an

economic power, we suppor t it.

We encourage it. And we want to

help advance it,” Mr Geithner said.

“India’s growth is good for us, just

as our growth is good for India,” he

added.

US-India economic relationship

had made significant progress in

recent years. Over the past decade,

trade and investment between

the two countries had expanded

across a variety of industries and

sectors. Between 2000 and 2010,

Indian expor ts to the United States

had grown by nearly 180 percent

and American expor ts to India

had increased over four times.

Meanwhile, the combined bilateral

US-India foreign direct investment

had grown by nearly 165 percent

between 2005 and 2009.

Despite this progress, and especially

given the size of the two respective

economies, the joint statement

recognized that there remained

untapped potential and oppor tunity

to expand trade and investment

linkages to the benefit of both

countries.

“American companies still face

barriers in India in sectors such as

banking, insurance, manufacturing,

multi-brand retail and infrastructure,”

Mr Geithner said. Mr Geithner

added that not only were these

barriers limiting growth, they were

also a hindrance to job creation

in both the countries. However,

Mr Mukherjee said that given the

political situation in India it was not

easy to introduce reforms in key

sectors. “We do not have a simple,

single-par ty majority in legislature

and in parliament,” he said.

Despite the limitations expressed

by the Indian finance minister, the

commitments of both governments

to work hard to expand deepen the

trade and investment relationship

was the most important outcome

of the bilateral meeting. The joint

statement said that the United

States is committed to making the

investments in technology, skills and

infrastructure necessary to maintain

and enhance US competitiveness in

the global economy.

The meeting also discussed the

challenges that both economies

faced in ensuring a strong recovery

and price stability in the shor t term,

as well as the range of policies

necessary to reach growth at their

full potential domestically. Moreover,

both countries agreed to a robust

roadmap for the coming year that

included deeper engagement

in the par tnership areas of

macroeconomic challenges, financial

sector reforms and infrastructure

finance.

India’s core industries output

growth up 5.3 percent in May

The Index of Eight core industries

having a combined weight of 37.90

per cent in the Index of Industrial

Production (IIP) with base 2004-05

registered a growth of 5.3% in May

2011. However, the growth of eight

key infrastructure industries slowed

in May compared to 7.4% during

the same year-ago period. During

the period of first two months

of this financial year (April-May),

growth in the core industries slowed

30

ECONOMIC REVIEW

to 4.3% compared to 7.9% in the

corresponding period of the

previous year.

The key reason for the slowdown is

the fall in output of natural gas and

cement sectors. Cement has posted

a decline for the second month in a

row. In the past, the RBI has raised

interest rates 10 times since March

2010 to tame inflationary pressures.

Consequently, the sharp increase in

borrowing costs has severely hur t

investment plans of the industries.

Also, the high global commodity

prices have acted as a barrier to the

industry‟s faster expansion.

The government has added two

more sectors - natural gas and

fer tilisers to the existing six industry

segments. With the inclusion

of these two sectors, the core

industries now cover the sectors

such as crude oil, petroleum refinery

products, natural gas, fer tilisers,

coal, electricity, cement and steel.

Also, its weightage now account for

37.9 percent in the overall index of

industrial production, as compared

to 26.7 percent earlier.

According to provisional data

released today, production of

cement contracted again by 2.3

percent in May this year, as against

a growth of 8.6 percent in the

same month of 2010. Growth of

finished steel production slowed

down to 6.1 percent during the

month under review, compared to

9 percent expansion in May last

year. Petroleum refinery products

registered a growth of 4.5 percent in

May, as against an increase of 7.7

percent during the same month

last year.

The new entrant, natural gas

production fell 9.6 percent in May

compared with a growth of 34.4

percent in May 2010. On the other

hand, fer tilizer production rose 7.3

percent in May compared to a

negative growth or contraction of

6.7 percent in May 2010.

In addition to fer tilisers, the

remaining three sectors also

repor ted better growth during the

month. Coal output registered

a growth of 1.1 percent in May,

2011, compared to 0.3 percent in

May 2010. The growth in Crude oil

production expanded by 9.7 percent

in May, compared to 5.8 percent

expansion in the corresponding

period of 2010. Also, the electricity

which account for maximum index

weightage of 10.3, showed an

improved output growth of 10.3

percent in May this year, as against

6.4 percent in the same month of

2010.

India’s Expor ts up 56.9% in May

-trade deficit too widens

to $14.9bn

India’s expor ts during May, 2011

grew by an impressive 56.9%

year-on-year to US$25.9 billion

(Rs.75730.31 crore). The rise in

demand from Western markets (the

US and Europe) help maintain the

expor ts growth momentum that

began last fiscal. However, the

imports too went up by 54.1% at

US$40.91 billion during the month,

pushing up the trade deficit to

US$15 billion during May 2011.

The imports grew highest in the last

four years, as the country’s demand

for oil, gold and industrial machinery

soared. This also raised concerns of

widening the trade gap for the fiscal

year despite a strong rebound in

expor ts. According to the provisional

data released by the Commerce

and Industry Ministry, crude oil

impor ts in May rose 18.57 percent

to US$10.1 billion from $8.5 billion in

the same month last year. Non-oil

impor ts also went up by 71 percent

to US$30.7 billion in the month

under review from US$17.9 billion in

the same period last fiscal.

Expor t growth in May led by

engineering as well as electronic

goods consignments which went up

by 120 percent. Expor t of petroleum

products grew by 75 per cent, while

those of ready-made garments as

well as yarn and fabric, which have

traditionally been strong expor t

sectors for India, rose by about

50 percent.

For the fiscal year so far, the trade

deficit stood at US$23.9 billion.

During the first two months of

2011-12, expor ts increased by

45.3 percent to US$49.8 billion

while imports grew 33.3 percent to

US$73.7 billion. The sectors which

31

ECONOMIC REVIEW

registered healthy growth in the

current fiscal include engineering

(115 percent), electronics (80 percent),

drugs (68 percent), petroleum (64

percent), gems and jewellery (23

percent), readymade garments (31

percent), and chemicals (44 percent).

However few segments like tobacco,

iron ore and fruits and vegetables

recorded negative growth.

Food inflation declined sharply

to 7.78%

India’s food inflation rate based

on the Wholesale Price Index (WPI)

stood at 7.78 per cent (%) for the

week ended June 18, 2011 as

compared to 20.12 per cent during

the corresponding period of the

previous year. Food inflation for

the previous repor ted week was

recorded at 9.13 per cent on a year-

on-year basis.

Among the major groups, the index

for Primary Ar ticles‟ declined by

0.4 percent as compared to the

previous week levels. Annual rate of

inflation for this group was 11.84 per

cent, down from last week’s level of

12.62 per cent. It was 19.58 per cent

for the corresponding week of the

preceding year.

The index for ‘Food Ar ticles’ sub-

group declined by 0.8 per cent,

due to lower prices of poultry

chicken (4%), masur (3%), and tea,

condiments & spices and jowar (2%

each). However, the prices of egg,

gram, urad, ragi and fish-marine (2%

each) have moved up.

The index for Non-Food Ar ticles

sub-group also declined by 0.4

per cent owing to lower prices of

flowers and raw cotton (3% each),

and cotton seed (2%). However, the

prices of gaur seed (9%), sunflower

(7%), copra (3%), and fodder (2%)

have moved up. The index for

‘Minerals’ group also rose by

2.1 percent.

On the other hand, index for another

major category fuel, power, light &

lubricants rose by 0.2 percent on

account of higher prices of aviation

turbine fuel (3%), naphtha (2%)

and furnace oil (1%). However, the

prices of bitumen (2%) declined.

The annual rate of inflation under

this category for the week ended

June, 18 stood at 12.98 percent as

compared to previous week level of

12.84 per cent.

Corporate

Vodafone finalises India mobile

subsidiary buyout

Vodafone has finally agreed terms

for the buy-out of its par tner Essar

from its Indian mobile phone

business. The UK firm will pay

US$5.46bn to its Indian counterpar t

to take Essar out of its 33% stake

in the Indian subsidiary. It will leave

Vodafone owning 74% of the Indian

business, while the other 26% will

be owned by Indian investors, in

compliance with Indian law.

The deal that originally announced

in March, ends a relationship with

Essar that had become increasingly

strained. The two firms had clashed

publicly over plans by Essar to

reorganise its ownership of the

Indian business in a way that

Vodafone claimed would not value

the company correctly.

Essar had accused Vodafone of

trying to force it out of the company,

while local Indian newspapers

repor ted that the Indian par tner

had been trying to get Vodafone

to pay more for its exit. Vodafone

has faced a string of problems

since entering the joint-venture

in 2007 af ter it bought majority

stake of Hutchison. It includes a

£2.3bn write-down, about 25% of

the business’s value due to rising

spectrum costs, and US$2.6bn tax

bill from the Indian authorities.

Commenting on the deal, which

has given over $400 million

dollars extra to Ruias, Essar Group

Chairman Shashi Ruia said, “We

were one of the early entrants in

the telecom space in 1995 and we

are really pleased that Vodafone-

Essar has grown to become one

of the premier telecom companies

in the country with over 140 million

subscribers.” “We have also enjoyed

an extremely successful relationship

with Vodafone and wish them

success in the future.”

Source: Assocham

32