Re climb not all bad news; loans get profitable

The rupee may be the devil for IT companies, but a pleasant surprise for many others.

For much of India Inc that has dollar and yen loans, first quarter results may actually show a sharply higher 'other income', as Indian companies are spinning profits out of loans in their Q1 results.

Large amounts of ECBs, 16 billion in FY07 and 6.6 billion in the Jan-March quarter.

Much of these are yen loans taken when the  dollar was at Rs 44 and at 118 yen.

From March 31 to June 30, the dollar has slipped from Rs 43.45 to Rs 40.60,  a fall of 7%.

While the yen has slipped from 117.75 to 122.40, that's a drop of 4%. For Indian companies, this means their yen loans in rupee terms, will get smaller by 12%, QoQ. And if these loans are unhedged, the fall in the rupee value of the loan will show up in the loan revaluation account in their Q1 results.

It will be included in the net forex gain and get added to other income. The list of companies that took loans in the Jan-March quarter include marquee names like Rel Comm, Reliance Industries, Bharti Telesystems, JP Associates, HDFC, Jet Airways, HPCL, Rajesh Exports, Bajaj Hindustan, GMR and NTPC.

While strictly, these gains can acrrue to anyone who has taken a foreign loan last year, it is likely that loans taken in 2006 were hedged. But companies, that took their forex loans in the Jan-March quarter are unlikely to have hedged and may hence report gains to the extent of 12% of their loans in their forex account.

India's forex reserves at $214.835 bn

The forex reserves as on July 6 are up by USD 51.57 billion on year, and stand at USD 214.83 billion, Network-18 reports.

The WMA to the government has been Rs 31,949 crore as on July 6, up by Rs 16,790 crore on week basis, the report added.

BSNL switches focus to CDMA mobile

With its GSM cellular project stuck in controversy, Bharat Sanchar Nigam Ltd is pushing its CDMA-based mobile services. It has launched a pre-paid SIM-card based service on the CDMA platform for Rs 200 a month.

Over 80% of BSNL's cellular user base is on the pre-paid platform. However with the company running out of capacity on its GSM network, BSNL is hoping to get a significant part of the new subscribers on its CDMA platform. The tariff plans for the CDMA pre-paid card is similar to BSNL's GSM tariff schemes.

The capacity crunch in the GSM segment has resulted in BSNL losing significant market share over the last two months with just about 3 lakh new wireless subscribers being added every month compared to a million new users earlier. BSNL has about 27 million GSM subscribers and 3.5 million CDMA users. Since the company has so far been focusing on the GSM space, it has some unused capacity on its CDMA network. BSNL had ordered a network for 2 million CDMA subscribers in 2006 while the last GSM equipment order was done in 2005. According to industry sources, BSNL is finalising plans to issue a fresh tender for procuring CDMA equipment.

BSNL has also decided to launch data services on CDMA 2000 IX which will provide Internet surfing at 44 kbps. The company is also deploying EVDO technology, which is a third generation wireless platform. Until now, BSNL has been primarily using CDMA technology to connect last mile in rural and remote areas through wireless in local loop platform. According to sources the company may now expand the service to make it a full-fledged mobile service as it does not cost much to upgrade the network.

Will voting Taj among 7 wonders help tourism?

The Taj might get voted in as one of the New Seven Wonders of the World. CNBC-TV18 finds out what it will mean for the travel and tourism industry.

Even though it is the most photographed tourist attraction in India, the Taj Mahal attracts only 2.4 million of the 5 million foreign travellers who visit India.

If the Taj Mahal becomes one of the new wonders of the world, it could help boost the number of visitors the monument receives. But if the government wants capitalise on the opportunity, it will have to make more efforts to improve road and air links to the city that hosts it - Agra.

Mercury Travels' CEO Aashutosh Akshikar says, "Again, we get back to the basic - it is a combination of doing things right outside and on the ground in terms of infrastructure, which will help get the numbers up. There are no two ways about it."

While the Taj Mahal is the 50th most visited tourist site in the world, it fares badly when compared to other candidates for the New Seven Wonders list.

Last year, the Great Wall of China had over ten million visitors, while the Eiffel Tower and the Statue of Liberty got over six million tourists each.

India's travel and tourism industry is expected to generate USD 6.1 billion this year and is likely to account for 5.4% of India's GDP. And, being one of the new seven wonders of the world can always help these numbers go up.

Cadbury India launches Bubbaloo bubble gum

The Rs 10,000 crore chocolate company, Cadbury India, is taking another shot at the confectionary space.

 

After withdrawing its mass-market gum brand, Bilkul, the company has launched a new bubble gum - Bubbaloo from its global portfolio. The competition is stiff and the company aims to capture 5% of the gum market in the next two years.

Rate war of telecom cos moves to handsets

The rate war of telecom companies has moved now to handsets. Contract manufacturing in bulk, by countries like China, has a big role to play. CNBC-TV18 finds out if this could be a threat to the branded mobile manufacturers.

 

Vodafone is expected to enter the Indian market with a Rs 666 handset or at least that is the buzz in the market. But  a handset for Rs 777 and Rs 888 is a reality. Contract manufacturing of handsets, in countries like China, Taiwan and Korea, are helping telecom companies to offer these price points.

 

Reliance managed to sell over a million handsets in a month - business that would have otherwise gone to the big guys like Nokia or Motorola, whose USP is usually great design. But that would cost Reliance at least 25% more for the brand, as the Abhishek Bachchan ads do not come cheap.

 

So, it makes sense for operators to keenly look at contract manufacturers, especially for large orders of low-end handsets. The big guys are not particularly worried. They are convinced that their innovation will continue to draw buyers.

 

"We also sell branded aspiration. We do not entirely want to give up that. People buy Motorola for the design,etc. and we would not compromise on that," said Lloyd Mathais, Marketing Director, Motorola.

 

Experts said that currently of the over 50 million handsets sold in India in a year, unbranded phones account for just about 5% of the market. This could go up to 15% if more telecom players can offer dirt-cheap, feature-heavy phones.

 

But they added that the bulk of the market will continue to be with the branded guys since the look, feel and the cool-factor of a phone are increasingly becoming important for the Indian consumer.