Monday, July 30, 2012

Policy-ILLEGAL MINING IN KARNATAKA: LOKAYAUKTA REPORT

The Furore over The Report on Illegal mining in Karnataka, compiled by Lokayukta Santosh Hegde has already compelled Chief Minister B. S. Yeddyurappa to step down from his post; there is more to come.

No option but to act

B&E: You have been under threat for doing your job sincerely. The SC ban will further irk miners. Do you see it as a threat?
U. V. Singh (UVS): Why is there a threat to me? I have not done anything wrong. Even if there is a threat, I take it as a part and parcel of my life. The baseline is that if there is something wrong that you wish to rectify, there will be hundreds of troubles and hurdles in the way. You have to learn to be strong enough to cross all these hurdles.

B&E: The Lokayukta report has exposed the rot that runs deep into the system. What immediate steps would you recommend?
UVS: SC has intervened and mining is suspended for the time being in Bellary. We do hope that the new scheme of things will be in the form of reform. I am also part of the Central Empowerment Committee. Even after the CEC gets out of the scene, there should be some sort of independent monitoring committee. There should be some independent body with an eagle’s sight, so that all this does not repeat.

B&E: With the kind of effort that has gone into the compilation with this report, do you think it could trigger the impact the beginning of a more regulated environment for mining in the state ?
UVS: Definitely. There will certainly be more regulation now. There are more things that will emerge. Whosoever is there, will definitely take up the issue because things have now reached up to the SC. There is no option but to act.


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Saturday, July 28, 2012

Stratagem-FIAT INDIA: PROBLEMS IN TATA–FIAT JV

Losses are Accumulating and Troubles are Increasing with every passing day... But still Fiat has to give more than 100% to save its JV with Tata Motors. Because its failure may just end Fiat’s journey on The Indian Soil. 

But then, to some extent, Fiat also needs to blame itself for the disaster. After the initial engine problems faced by the Linea at the onset of its India journey, the model now stands no where in the segment it operates in. While the model sold 350 units in June 2011, its competitors like Hyundai Verna sold as many as 4,102 units. Similar has been the fate of its hatchback – Grande Punto. While many consumers were impressed by the design and features of the car, its relatively smaller engine and cheap plastic quality resulted in lowering the unit sales of the product. As a result, players like Volkswagen, which entered India much later, now have a stronger hold in the Indian market. Against Fiat’s 1% market share, Volkswagen already has captured 2.6% of the Indian market.

In the mean time, going one step ahead, Ratan Tata has already made it public that the JV has not delivered results as initially expected and his personal rapport with Sergio Marchionne has not translated at the professional level. Moreover, citing Fiat’s faults for the failure of the JV, in an interview with market research firm J. D. Power, Tata had said, “I think that Fiat has to launch more models in the market to keep the dealers interested. It also has to look at its cost structure in terms of parts and components.” But considering that the JV is still of utmost importance to both the companies, the question remains, is there a comeback in sight?

Well, the first spark was seen in 2008-09 season when Fiat introduced products like Fiat 500 followed by Linea and Punto. The launch of 500 was to showcase the power of Italian engineering to the Indian consumer while the Linea was to establish its presence in the sedan segment and Punto was supposed to bring gigantic volumes at the door of the company. Undeniably, 500 did its job efficiently, but the other two simply failed, creating the mess. However, in the current season, the Italian major again seems determined to stage a comeback. And it’s not only the new positioning strategy which attracts customers by saying ‘Diesel on the price of petrol’, it has also announced a major reshuffle in its board. For the less informed, two of its key India members Giovanni Bartoli (third most powerful executive in Fiat SpA and one of the senior-most board members of Fiat India) and Harald Jakob Wester have already stepped down from the company’s board. And to replace them the company has nominated Ezio Barra, Giovanni Sella and Silvia V. Blina – all senior officials at the company’s Turin headquarters. In fact, Gianni Coda, Alessandro G. Baldi and Alfredo Altavilla, who are currently serving on the board, have been given additional responsibilities. In addition, to boost operations, the company invested Rs.1.5 billion in April this year.


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Friday, July 27, 2012

Towards a More Global Vision

The Car Maker has now set its Sights on Global Markets for its Nano and Luxury Brands.

The last fiscal was particularly memorable for Tata Motors, which crossed another milestone by clocking sales of one million units globally. After CEO Carl Peter Forster took over in April last year, Tata Group’s automotive business has been going from strength to strength. Profits surged by over 196.3% and PAT climbed to Rs.104.37 billion. Sales of Tata Motors small car Nano climbed to 6,515 units for May 2011 as compared to 3,550 units for May 2010. While domestic sales remain buoyant, Tata Motors has been looking beyond Indian shores to sell its wares and is actively seeking to expand its global footprint. The company’s small car Nano is already being exported to neighbouring countries like Sri Lanka and Nepal. Plans are also afoot to tap the South American, African and South East Asian markets very soon. In Europe, the Indica Vista has already been introduced in Poland and Italy, and it is now being planned for launch in Spain. At the Geneva Motor Show this year, Tata Motors unveiled the all new Tata Pixel, a car which it would design and develop to cater exclusively for the European markets. While sales of its other models may have flagged in the past three months owing to a spike in the fuel price and car loan rates, but the company remains bullish about its future sales figure. To offset the impact of rising inputs and commodity costs on the competitive pricing of its cars, Tata Motors is focusing on paring down costs. “We are focusing on cost efficiency inside the company to neutralise the impact of the increasing raw material cost to the maximum extent possible.” says Debasis Ray, Head- Communications, Tata Motors.

India’s largest automobile company is also the owner of global marquee car brands like Jaguar and Land Rover, which it has now launched in India as well. The first showroom of the iconic British luxury brand Jaguar LandRover was recently inaugurated by Ratan Tata in Mumbai. True to their pedigree, both Jaguar and Land Rover have become coruscating jewels in Tata Motors’ crowning achievements. For the record, JLR posted 481.9% growth in profits for the year FY11.

To keep its portfolio refreshed, the company has been launching new models and more desirable variants at regular intervals. Its recent launches include the new Tata Manza sedan, a newer model of its legendary Tata 407 Pick-up, the Tata Super ACE and its new truck Tata Prima. “I think they have taken all the right steps to become a global OEM. The short term challenges always remain but in long term they will to succeed,” says Abdul Majeed, Leader, Automotive Practice, PwC India. So far, Tata Motors has played its cards well, both in the domestic market and in scanning the overseas horizons.


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Thursday, July 26, 2012

Solar VS Nuclear What Should India bet its Money On?

Proponents of Nuclear Energy are Blatantly and Deliberately disregarding The Solar Energy Option, many with Their own Ulterior Agendas B&E Analyses why India needs to Urgently look Beyond Nuclear Energy towards The Solar Option for a Sustainable, Safe and Secure Energy future

Twenty Five years post the chernobyl disaster, The Fukushima Daiichi Nuclear Disaster in Japan has once again reignited the global focus on The Mammoth Dangers surrounding Nuclear Power Generation. While The World is actively considering shifting to The Solar Energy option, Nuclear Energy Proponents in India are claiming that investment in Solar Energy is a lost cause. B&E exposes the perfidy in pro-nuclear arguments and analyses how India can align profitably over the coming years to solar energy

“Foolish romance!” If you were the Executive Director of the Nuclear Power Corporation of India Ltd (NPCIL), and if you were to provide your views on the viability of solar energy, would you give that answer? Unbelievably, Nalinish Nagaich, Executive Director of NPCIL, did just that in an unsolicited communication to us, while attempting to discredit solar energy. As per Nalinish, “Solar power is nothing more than a foolish romance as far as large scale deployment or energy-intensive applications are concerned.”

That, sadly, is the unlettered and opinionated perfidy that is the hallmark of individuals whom B&E calls pro-nuclear-extremists. In a post-Fukushima world, where nations like Germany have decided to shut all their nuclear power plants in the next 11 years to shift to renewable sources like solar, where the Swiss Cabinet has called for the decommissioning of Switzerland’s five nuclear power reactors to replace them with alternate sources, where the Chinese government is considering doubling of its solar photovoltaic (PV) power generation target by 2015 to 10 gigawatts (GW) from the current 5 GW, India has people like Nalinish Nagaich at key positions in our top government organisations refusing to accept the phenomenal danger that nuclear energy generation options present, and also refusing to accept solar energy as a viable alternative.

While the motives behind such a polarized and illogical anti-solar view seem unclear at the outset, the moment one realizes the fact that India has practically zero usable uranium reserves (the government confirms our uranium reserves are at around 115,000 tonnes; and almost all of this is of low quality and not usable), and that India therefore has to necessarily import high quality uranium from the western nations, that one starts seeing the unsaid monetary connection of the billions of dollars that the Indian nuclear industry holds for foreign firms and domestic pro-nuclear lobbyists. The Indian nuclear industry is estimated to be worth a smashing $100-250 billion.

This ironically amusing stand – of groups in India lobbying for an energy source for which India has no raw material – is pitiable. In November 2010, for example, India celebrated its 20th nuclear power plant, a 220 MW plant set up in Kaiga (called ‘Unit 4’) becoming active. In the celebrations that followed the plant going operational, was forgotten the fact that the Kaiga Unit 4 plant was actually built a few years back; but due to the non-availability of uranium fuel, India just couldn’t make it active. In fact, between 2006 to 2008, nuclear power generation in India fell by 12.68%; from 2009-10 to 2010-11, the same rose by 40.94%, proving how erratic is its behaviour.

And after all this, nuclear power generation still contributes only 2.75% of total power generated – again, providing a grim certification of how lack of a continuous uranium fuel source stymies the option from the scruff of its neck. Comparatively, nuclear energy currently accounts for 15% of electricity generation globally. The US generates 20% of the nation’s electricity from its 104 licensed reactors at 65 plant sites (Barack Obama’s FY2012 budget would nearly triple the loan guarantee ceiling for nuclear power plants from $18.5 bn to $54.5 bn).

No surprises, NPCIL now claims that by 2032, India would be able to generate nuclear power of 63,000 MW by setting up 16 more indigenous pressurised heavy water reactors, of which, ten would be based on reprocessed uranium. There is a mystical silence on how the uranium would turn up in these various plants. Was it a coincidental surprise that in August 2008, the US proposed the lifting of a 35 year old nuclear trade embargo on India? The main motive was clearly business development for western companies like Westinghouse, GE, Areva and many more from America, France, Russia, Spain and other nations.

Fantastically, we’ve not even started talking about the humongous danger the nuclear option poses to human life. The Fukushima Daiichi nuclear plant disaster on March 11, 2011 and the destruction caused thereof have opened up the floodgates on a heated global debate amongst the intelligentsia about whether a nuclear plant can ever be 100% safe. While the world has been berating Japan, a so-called Six Sigma process driven economy, for having not taken enough care to ensure fail-safe measures at the Fukushima Perfecture, on June 8, 2011, the Japanese government – in a report submitted to IAEA – conveniently doubled up its estimates for how much radiation might have leaked into the environment. Yes, we said ‘doubled’ – making the disaster 1/6th as harmful as the Chernobyl blast and proving that there is no fail safe reactor and there is no honest government. That is how uncontrollable a nuclear disaster is, which can maim millions within seconds and can scar millions more for eternity. Researcher Benjamin K. Sovacool has documented in the Journal of Contemporary Asia, in an article titled A Critical Evaluation of Nuclear Power and Renewable Electricity in Asia, that 120 and more “hazardous nuclear accidents” took place in India between the years 1993-95. In 1993, for example, fire broke out in the steam turbines at the Narora Atomic Power Station at Bulandshahar in Uttar Pradesh. The reactor escaped damage. The question is, if by chance the reactor had gotten damaged for whatever reason, what all could have happened? For records, Bulandshahar lies geographically just after Greater Noida, clearly not that far a distance from the national capital of New Delhi.



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Wednesday, July 25, 2012

Scrutiny-SALARIES: IT OFFICIALS AND JUDGES

Salaries of Income Tax Officers and Judges Should be Decided by an Independent Panel and should be made at par with Other Nations

The same goes for judges in India. A recent bill passed by the Parliament had increased the salary of the Chief Justice of India (CJI) from Rs.33,000 to Rs.1 lakh month (equivalent to $2200), while for apex court judges, the salary has been increased to Rs.90,000 (equivalent to $2000) per month. However, a US district judge gets nothing less than $174,000 (as of 2009). The current salary for the Chief Justice in US is $18,625 per month, while the Associate Justices each make $17,825 per month. On an average, an American counterpart earns 8-9 times what an India judge earns!
The same goes for judges in India. A recent bill passed by the Parliament had increased the salary of the Chief Justice of India (CJI) from Rs.33,000 to Rs.1 lakh month (equivalent to $2200), while for apex court judges, the salary has been increased to Rs.90,000 (equivalent to $2000) per month. However, a US district judge gets nothing less than $174,000 (as of 2009). The current salary for the Chief Justice in US is $18,625 per month, while the Associate Justices each make $17,825 per month. On an average, an American counterpart earns 8-9 times what an India judge earns!

In UK, a judge earns £239,845 ($380865). UK spends around €27.4 million ($40.6 million) each year as judges’ salaries. Judges of the Supreme Court earn €257,872 ($382012) each every year. Interestingly, salaries paid to Irish judges are the second highest in the world. A brief glance through High Court judge salaries in France and Germany shows how they earn around $200,000 and $108,000 respectively annually.

India’s judicial pay scale is determined by Pay Commission recommendations, which is done periodically. But the July 2009 National Judicial Pay Commission suggestions were implemented by only Delhi, Maharashtra, and Madhya Pradesh. Similarly, the pay scale revisions of any government employees including income tax officers are based on Pay Commission recommendations approved by the government. In the US, regarding judicial pay adjustment, the pay scale rise is recommended by the Chief Justice. For civilian employees (that includes Internal Revenue Service, IRS, employees) pay scale adjustment, the executive order has to come from the President and it must be ratified by the Congress. A similar pattern is followed in UK and Canada.

In the case of India, where it’s very easy to manipulate laws and dodge the entire system by bribing officials at various cadres, an independent commission to decide the salaries of key government officials in judiciary as well as the IT department is a must. If corruption and high level crimes (by the influential people of society) have to be tackled at the roots, it is imperative that officials in the judiciary and the Income Tax department are at least paid the sky. It’s well said, if you throw peanuts, all you’ll get are...


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