Business leaders pin hopes on India

The buzz was unmistakable at the Taj Palace Hotel in South Delhi: While the world economy crumbles, India still holds out hope, top business leaders prophesied. Local demand will drive high single-digit growth and companies will expand and create jobs.
"India is still shining. Given the current situation, I am sure at least 150 finance ministers from all over the world will give their left hand and left leg to get that growth," said Bajaj Auto vice-chairman Madhur Bajaj.

Confederation of Indian Industry President and ICICI Bank managing director KV Kamath said India will grow 7 per cent this year and 6 per cent next year. Deloitte Global CEO James H Quigley said 6 per cent growth would be good for India. "This confidence is well placed because India is still growing," he said.
British Telecom chief technology officer Matt Bross talked of how the telecom major "is going steady here," even as the company is learnt to have planned massive job cuts in its global operations. Larsen & Toubro chairman & managing director AM Naik said his company would add 10,000 jobs here.
Amidst the pall of economic gloom all over the world, almost 800 business leaders from 35 countries today started to gather here for the three-day India Economic Summit, the 24th edition of the annual show hosted by the World Economic Forum and the Confederation of Indian Industry. The message and the body language were clear: Everything is going right for India, the tight money market conditions and recent production cutdowns notwithstanding.
In the last few weeks, the US and German economies have contracted and China has reported a sharp drop in industrial output during October. Banks as well as manufacturing and service sector companies have announced steep job cuts. Top US automakers too are on oxygen. All this while, India's economic managers have said they are still hopeful of clocking annual growth of around seven per cent.
In this scenario, the biggest challenge before the country is to keep its confidence high, Kamath said and added this could be done by lowering interest rates further. Both industry and the government need to ensure that the growth momentum is not lost. "The need is to have a new financial architecture and avoid arbitrage across sectors," he said.
"In the current situation, the operative word would be protectionism but it is going to be competitiveness," said Ramalinga Raju, founder and chairman of Satyam Computer Services . He added that the world today has two special assets to leverage on to come out of the turmoil - knowledge and technology.
Keeping in view the current global situation, the summit is focusing on four areas - global shifts, managing risks, inclusive growth and future competitiveness.

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4 steps to a great business plan

A business plan serves two purposes:
It provides a road map for your business.
It helps you obtain outside financing.
If you're going into business for yourself, you must have a business plan - period. Numerous studies have shown that one of the major reasons new businesses fail is poor planning.

The good news is that developing a business plan is not as hard as it seems. In order to develop a solid business plan, you need to have a thorough understanding of the business you're entering. Next, you need to determine how you'll use the plan and who your target audience is. Finally, you should create a complete a business plan that is comprehensive and concisely written. We'll explore each of these steps in detail.

Step 1: Know your business

In order to prepare a business plan, you must know the business you are entering inside and out. This means lots of research. Research comes in two forms: reading everything you can about the industry and talking to those who are already in it. Learn everything you can about your business and industry.

Step 2: Determine your purposes for the plan

A business plan serves to crystallize your business vision and guide you in fulfilling that vision; it is also frequently used to entice potential investors.
If you are self-financing your business, you design the plan mostly for your benefit, but if you're seeking outside investors, you'll need to target them. As such, before you create your plan, determine whether you will solicit outside investors.

Step 3: Determine your audience

If you plan to recruit investors, you need to build a plan to suit them. Outside investors, who range from friends and family members to banks and venture capitalists, will invest through either loaning you the money, buying shares in your company or some combination of the two. Determine their level of sophistication and what they are looking for in a potential business investment. Remember that regardless of their level of sophistication, they are all looking for four things:
Trust in you - You build trust by demonstrating ethics and integrity, so your business plan should demonstrate those qualities.

Understanding of the business - It is your job to clearly articulate your mission statement, your product offerings and how you will make money. Your may have to tailor your plan to suit your audience: less-sophisticated investors may be scared off by industry jargon, while investment professionals will probably expect it.
Financial confidence - Clearly articulate the risks of investing in your business. Also, show investors how they can recoup their money - whether your venture succeeds or fails.
A good return on investment - Over the period of 1928-2007, the geometric (exponential) return for stocks was 9.8 per cent, while for 10-year Treasury bonds, it was 5 per cent. Historical private-equity returns are more difficult to measure, but, in general, investors will expect a premium of anywhere from 2-5 per cent over public-equity market returns. The return on equity for your new business must be in the private-equity range.Typically, investors will look to beat a certain internal rate of return. Your job is to make sure your projected returns are in line with those of similar industries.

Step 4: Create your business plan

First, develop an outline of your business plan. Consider every aspect of your business and how it will affect your business plan. Remember, this business plan is a road map. It must guide you. It must also communicate to investors what you're doing and why they should invest with you.The order in which your plan is presented should be something like the following:
Mission Statement
Executive Summary
Product or Service Offerings
Target Market
Marketing Plan
Industry and Competitive Analysis
Pro-Forma Financials
Resumes of the Company Principals
Your Offering (what type of financing you're seeking)
Appendix (any other pertinent information)
You'll probably also want to note any personal seed capital you're investing in the venture. Financiers want (and often require) entrepreneurs to put their own funds in the venture, and the greater the portion you invest relative to your net worth, the better. Now let's review each section of the business plan in detail.

Mission statement

The mission statement is a concise, one- to three-paragraph description of your business objectives, or your business's guiding principles. In this section, you should state your unique selling point, or what separates your company from all the others in the industry that are otherwise just like it.

Executive summary

This is a one- to two-page summary of your business. Potential investors will read this to decide whether they want to look at the rest of your plan.

Product or service offering

Create a section describing your product or service offerings in detail, as well as how much you'll charge for what you're selling.

Target market

Present your primary and secondary target markets, along with any research that demonstrates how your target market will benefit from and consequently purchase what you're offering.

Marketing plan

Present your marketing plan, which should show in detail how you'll reach your target market. This part of the plan will include advertising and promotional strategies.Industry and competitive analysisInclude a complete and thorough industry and competitive analysis that includes all stakeholders in your business. Don't forget to include governmental and regulatory agencies.

Financial statements

These must be complete, accurate and thorough. Each number on your spreadsheets must mean something. Don't estimate payroll, for instance; determine what it will actually be. Your income statement must reconcile to your cash flow statement, which reconciles to your balance sheet. Your balance sheet must balance at the end of every period. You must have supporting schedules (e.g., depreciation and amortisation schedules) to back up your projections.If you are having trouble building your pro-forma financial models, which should project out for at least five years, seek outside help from a qualified professional.Use realistic projections. In estimating the growth of your business, you will make certain assumptions, which should be based on thorough industry research combined with a strategy for how you'll compete. Also, analyze how quickly you'll achieve positive cash flow. Investors vary in their standards, but most like to see positive cash flow within the first year of operation, particularly if this if your first venture. In order for your projections to be accurate, you must know your business. If you've built an accurate and realistic model, but still project negative cash flow for more than 12 months, rethink your business model.

Resumes of company principals

Include the bios and professional backgrounds of all significant employees of your business. You will want to emphasize how their backgrounds have prepared them to take on the challenge of running your new startup. Also, if an employee's business background is in a significantly different industry, you might want to emphasize how this can be an advantage instead of a detriment.
Your offering

Present what level of investment you're seeking and for what purposes you will use the funds. If you're selling business units, state the individual price per unit. Once you've put together all of this key information, make sure to present your plan professionally. It should be typed, margin aligned and neatly bound. Use color graphics and pictures where possible. Do not handwrite changes or corrections. The inside of your business plan should be near book or magazine quality.After you've finished your plan, have a professional you trust, such as a Certified Public Accountant or attorney, look it over. This person may catch details, errors or omissions you've made. They also will be able to give you a more objective opinion of the viability of your business.

Building your business plan is just the first step

Once you've completed your plan, you'll submit it to potential investors, who may ultimately commit to financing. Once you receive those commitments, you'll negotiate terms and then, finally, open your doors for business, which is where theory ends and the real work begins.

Source:rediff.com

Sensex seen retracing to 6000, oil $50, gold $550

The Reserve Bank of India has moved swiftly to “maintain the domestic macroeconomic and financial stability in the context of the global financial crisis”. First, by slashing the cash reserve ratio by 150 basis points to 6.50 per cent on Oct 11 and today, by reducing the repo rate by 100 bps to 8 per cent.
The move comes just three days ahead of half-yearly monetary policy review on Oct 24.
The Indian central bank has already taken a number of measures over the last one month to augment domestic and forex liquidity.
However, the global financial situation continues to be uncertain, and India too is experiencing the indirect impact as reflected by some signs of strain in our credit markets in recent weeks, the RBI said.
On Sunday, the South Korean government announced a rescue package for its financial system by assuring $100 billion of lenders' foreign-currency debts and providing $30 billion in US dollars to banks.
Markets are reacting positively as and when authorities announce financial relief packages, but the positive effect is always short-lived.
Economists and analysts expect global market volatility to continue in the weeks and perhaps months ahead, because of the tremendous weakness in the world economy.
Investors are taking every opportunity to stay liquid on concerns the credit expansion will fail to stem the crisis and may not avert a recession. Traders, on the other hand, are profiting from the increased volatility.
However, the outlook is important to long-term investors who adopt a buy and hold strategy in the stock market. They are likely to suffer an extended period of low or zero growth.
CLSA has reduced India's GDP growth outlook to 6.5 per cent in view of considerable decline in the IIP for last couple of months.
India's Index of Industrial Production for August slipped to a 10-year low at 1.3 per cent compared to 10.9 per cent in the year-ago period.

source:indiatimes.com

eBay to slash global workforce by 1,000

The world's largest online marketplace, eBay, will be slashing its global workforce to improve the cost structure of the company. This will include jobs in India.
eBay plans to reduce its global workforce by nearly 10 per cent, affecting about 1,000 permanent employees, in addition to several hundred temporary workers and the reduction of open positions, the company said in a statement. The online marketplace has about 16,000 permanent staff worldwide.
"The global reduction is intended to simplify and streamline eBay's organisation, improve the company's cost structure and strengthen the overall competitiveness of the company's existing businesses," eBay said in a statement on October 6.
According to an official of eBay India, the Indian arm of the American company, the firm would be bringing down its employee strength to 80 as part of its organisational plans toward improving its "long term financial architecture." At present, eBay India has 110 employees.
"We have taken the decision to outsource our customer service and payment operations to another BPO firm VCustomer. As part of the process, 30 employees of eBay India will be transitioning to VCustomer," eBay India's Senior Manager (Corporate Communications) Deepa Thomas told PTI. The transition of 30 employees to VCustomer is expected to be completed in three months, Thomas added.
According to the statement, the workforce reduction is expected to result in pretax restructuring charges of about 70 million dollars to 80 million dollars, with the charges predominantly recorded in the fourth quarter of 2008.
Commenting on the move to cut down its workforce, eBay's President and Chief Executive John Donahoe said, "While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth."
Meanwhile, eBay has also announced the acquisition of three firms. This includes the US-based online payments business Bill Me Later and two Danish sites � the online classifieds site dba.dk and vehicles site bilbasen.dk. The buyouts would help in strengthening eBay's position in online payments and classifieds.
Bill Me Later would be acquired for about $ 820 million in cash and another $ 125 million in outstanding options. eBay would buyout dba.dk and bilbasen.dk for nearly $ 390 million cash.

Rediff.com

Approach 3rd party, warring Ambanis told

The Bombay high court on Monday suggested that the warring Ambani brothers could approach an independent body to resolve their dispute relating to supply of natural gas from the Krishna-Godavari basin.
"The MoU is not able to resolve the issue and we would suggest both the parties to approach an independent body for the same," observed justice J N Patel.
The case relates to supply of gas from Reliance's KG basin to a proposed power project by Reliance Natural Resources , controlled by younger brother Anil Ambani.
This is not the first time that the court has asked the warring companies to approach a third party for a settlement. The division bench comprising Justices J N Patel and K K Tated, had on August 21 suggested that the two brothers should seek the help of their mother Kokilaben to resolve the issue.
Pointing out that direct communication between the two companies have not yielded much result, justice Patel said, "Most of the correspondence between both the parties have been allegations against each other."
RIL [Get Quote] and RNRL have submitted copies of e-mail correspondence between both the companies.
Replying to Justice Patel, Harish Salve, senior counsel of RIL, said that it is a legal matter and can only be resolved through the court's intervention and not by any third party.
"The issue of gas pricing has to be resolved as it has not been reached through an arm's length formula. We cannot keep the gas in the ground. We are under tremendous pressure from the government regarding the gas supply," argued Salve.
However, Salve said that RIL is ready to supply gas to RNRL at the government-approved price of $4.20 per million British thermal unit.
According to the Gas Sale Master Agreement between the companies, RNRL is entitled to 28 million cubic metres of gas per day from the KG basin at $2.34 per mBtu for 17 years. RIL has refused to supply gas at that price for that period. "The tenure can only be as long as I have the gas," Salve argued.
As per the GSMA, RNRL would also be allotted another 12 million cubic metres of gas if an earlier agreement between RIL and power major NTPC falls through.
Besides, the ADA Group will have the first right of over 40 per cent of all future gas discoveries made by RIL.
The case will come up for hearing on October 7.

Rediff.com

2,500 Lehman India employees' fate uncertain

The fate of 2,500-odd employees working for investment banking giant Lehman Brothers in India remains uncertain following its parent company's decision to file for bankruptcy protection in the United States.
Lehman said in a statement that its New York office intends to file for bankruptcy protection as it owes over $600 billion to lenders.
However, it highlighted that no other Lehman Brothers' US subsidiaries or affiliates, including its broker-dealer and investment management subsidiaries, are included in the filing.
The filing for Chapter 11 bankruptcy protection, which allows a company to restructure while creditor claims are held at bay, was made in the US Bankruptcy Court in the Southern District of New York by the investment bank's holding company, Lehman Brothers Holdings Inc.

The firm's public relations agency said that no official from Lehman would like to talk to the media. An employee said there was no work and a series of meetings were held on Tuesday.
Lehman set up business process outsourcing operations in India in 2005 and according to the fact sheet on the firm, the centre saw the number of employees going up by eight times by the middle of this year and had declared its plans to grow the operations.
In fact, it was recruiting till as recently as couple of months before.
The company has in all about 2,500 people working for it in India, including those in the BPO unit. Recent news reports said the company had asked a section of its BPO staff to quit.
Over 5,000 workers in the United Kingdom have lost their jobs after the collapse of US investment bank Lehman Brothers.
Source:rediff

Lehman bankruptcy will hit IIM placements

With America's fourth largest investment bank Lehman Brothers filing for bankruptcy protection and Merrill Lynch being bought over by the Bank of America, placements at the Indian Institutes of Management will be affected.
These financial giants have so far been the biggest recruiters from the IIMs especially from the institutes at Ahmedabad, Bangalore and Calcutta.These have been among the day zero firms on IIM campuses and have made plum job offers.
"We are sitting on pre-placement offers from these companies, which go invalid after this development. So, the students will have to go through the regular placement process and look at other companies," said professor Sourav Mukherjee, chairperson, placements, IIM-Bangalore.
The institute will write to these banks in the next few weeks to seek clarification on the issue. Last year, IIM Bangalore had received around 20 job offers from the banks.
IIM Calcutta has recorded 54 offers so far from these banking banks. Last year, IIM-C received 90 pre-placement offers. Students have been offered international profiles with BCG, Mckinsey, Bain and AT Kearney in the consulting sector and Merrill Lynch, Morgan Stanley, Lehman Brothers, Barclays, HSBC, Credit Suisse and Citibank in the investment banking sector. The institutes however, are not very enthusiastic of the banking and financial sector doing well on the campus this year.
"Banking giants like Lehman and Merrill have been the leading paymasters on our campus, offering crore-plus salaries. The confidence of students in the banking sector is collapsing with the bad news from the market," said an IIM professor.
The IIMs have decided to host new companies on campus. Many institutes have decided to invite smaller private equity players and wealth management firms. Unlike most years, the banking and financial services sector is not expected to be the best performer on campus this year.
"As of now, we have not heard of any tremors from the consulting sector so we are certainly pinning our hopes on the sector. The FMCG,marketing, manufacturing, trading and services sectors might also take the lead this year," added a placement official from an IIM.
Last year, IIM Ahmedabad placed around 45 per cent of students in the banking and financial sector. Around 37 per cent of students from the institute opted for a job in management consultancy. At IIM Bangalore, while 37 per cent students got placed in consulting jobs, 40 per cent opted for a career in the banking and financial sector.
Students are wary of joining investment banks. Says an IIM-A student: "IIM students are no more upbeat about an investment banking job and are finding these jobs risky. Moreover, there is a possibility of jobcuts in the industry following which offers from these banks are less likely to land up during placements."
As it is, investment banking had been losing status among students for the past year. Thus development will only accelerate the trend, students say.
Gowrish Prabhu, student co ordinator, post graduate programme for executives, IIM-A, says, "Having gained experience in specific areas, the executive programme students will not face any difficulty during placements since very few are interested in taking up jobs in investment banks and financial firms."

source:rediff