Indian IPOs Sizzle, but for How Long?

By M H Ahssan

Big foreign investors are snapping up issues—but overpricing is spooking small investors

Is India in the grips of IPO fever? The symptoms are certainly there. As many as 40 Indian companies plan to list their shares on the Bombay stock exchange in the next few months, hoping to ride the coattails of a post-election rally that has propelled the benchmark Sensex index up more than 30% since mid-May. And there’s no shortage of demand for the new paper. When state-run National Hydro Power (NHP), one of India’s largest electric utilities, decided to offer the public a measly 14% of its shares, the issue was more than 20 times oversubscribed. The Aug. 31 IPO raised $2.1 billion, making it one of the biggest on record for India. “Things are looking up, there’s a relatively stable government in place, and there’s an appetite for this sort of thing,” says Ashok Kumar, who runs theIPOguru.com, a Web site that tracks new Indian listings.

But investor beware. This gold rush is looking different from the one in 2007, when 100 IPOs mopped up an average of $100 million apiece. Companies priced their shares then on the low side, which gave investors a gratifying pop on the first trading day. This time sellers seem to be doing the opposite. Shares of NHP seesawed the first day but closed just 3% higher. Much the same happened with the July 28 IPO for Adani Power. Again the issue was oversubscribed, with foreign investors, including Credit Suisse Group (CS) and T. Rowe Price International, having put in for three times as many shares as the company was allowed to sell under market rules, a director at the company said. Yet the stock closed flat on the first day and is now trading at just 1.2% above its initial offering price.

The trend has spooked Indian retail investors, many of whom were burned by the Reliance Power IPO in January 2008. While the placement raised a record $3 billion, shares of Reliance Power plunged 21% in the first day of trading. That disastrous debut pricked the Indian IPO bubble, prompting the cancellation of more than $1.7 billion in planned new offerings. “It’s the Reliance Power factor,” says R. Venkatraman, a 28-year-old software engineer who quit investing in IPOs in 2008. “Now, IPOs just don’t list that well.”

These days it is foreign institutional investors that are doing much of the buying. Desperate to diversify in a market dominated by fewer than 50 Indian blue chips, they are eagerly gobbling up the institutional tranches set aside for them under current stock exchange rules. “It’s a large market made up by a small number of companies,” says a representative of a U.S. private equity firm, who asked not to be identified because he’s involved in an Indian IPO himself. “So you wait for a decent new company and load up as much as you can.”

That’s music to the ears of the Indian government, which is embarking on a divestment program that could yield some $20 billion in IPOs in the next 12 months. And if a proposal that would force all listed Indian companies to have at least 25% of their shares in public hands is adopted, a further $40 billion in share sales could flood the market over the next five years, HNN analysis shows. How-ever, a few lackluster offerings could ruin the party for everyone. Says Kumar: “If you have two or three more IPOs like Adani and NHPC that are overpriced and tank on their issue, it could kill off the entire market.”

Blowing the whistle on fake drugs

By Shabina Akhter

The government has decided to reward those who provide information on manufacturers and dealers of spurious drugs.

Have you encountered a drug that does not work, leading you to believe that it is fake? Or do you know of anyone who is engaged in the manufacture of spurious drugs? The Union health minister, Ghulam Nabi Azad, recently announced a “whistle blower policy”, aimed at encouraging the common man to provide information about the manufacture of fake drugs. The health ministry plans to give cash rewards to both the informer and the officer who seizes adulterated, spurious or misbranded drugs and cosmetics.

At present, based on the information gathered by the Central Drugs Standard Control Organisation, the office of the Drug Controller General of India raids places suspected of manufacturing or selling such drugs. The tip-off often comes from a member of the general public. The government hopes that a cash reward will lead to more people coming forward with such information.

The Indian Drug Manufacturers Association (IDMA) in Mumbai, which represents the interests of Indian (as opposed to foreign) drug manufacturers, is all praise for the whistle blower policy. “This policy is a timely one. The fact that it seeks to reward people for giving information on the manufacture and sale of spurious drugs is why the chances of it being successful are so high. If implemented properly, this policy will make it difficult for spurious drug makers to operate,” says Daara B. Patel, secretary-general of the IDMA.

According to the Drugs and Cosmetics Act, any drug that has been manufactured by compromising on its quality, or has been stored in such a way that it has lost its properties or has been tampered with or misbranded, is termed spurious. And according to the ministry of health, about five per cent of the drugs sold in the country is counterfeit and 0.3 per cent is spurious. Of course, it is not easy to tell a fake drug from a genuine one. “It’s very difficult to identify a spurious drug,” says T.R. Gopalakrishnan, advisor to the IDMA. “Only a series of chemical analysis can reveal a drug’s spurious nature. However, a case of misbranding can be easily identified,” he says.

One reason for the proliferation of spurious drugs in our country is that there are not enough drug inspectors who can keep a check on quality. “The acute shortage of drug inspectors makes it easier for dealers and manufacturers of spurious drugs to operate with impunity,” says Harinder Sikka, director of corporate affairs, Piramal Healthcare, the pharmaceutical company. “There’s just about one inspector for every 500 chemists in cities like Delhi. What’s more, only seven of the two dozen testing labs across India are functional. The rest of them, according to the Mashelkar Committee (which was set up to look into the drug patent laws in the country) report, are either shut or non operational,” he adds.

Besides, we do not even have an effective adverse drug reaction report system to monitor where and when patients are experiencing an adverse reaction to drugs. In some countries, it is mandatory for hospitals to report to a nodal agency if a patient has adverse reactions after taking a prescribed medicine. But that is not the case in India.

In such a scenario, offering rewards for tip-offs on spurious drugs may go some way in bringing the guilty to book. But experts point out that merely announcing a policy will not be enough. Says Sikka, “One of the major drawbacks of this policy is that people might try to make money out of it by making fictitious claims. Besides, the ministry is yet to decide on vital issues like how to implement the policy, who needs to be alerted and how it would go about protecting the identity of the whistle blower. It is only when the government takes strong measures to implement the policy that the consumer will benefit.”

People do have the option of going to the consumer courts in case they feel that they’ve been duped by fake drugs. “We do get a few consumer cases related to spurious drugs. At the moment we are fighting a case for a client who had bought an ayurvedic product that caused an allergy. Chemical analysis revealed that it had a high content of lead and mercury. The case will now be forwarded to the local food and drugs administration,” says Dr M.S. Kamath, medico-legal consultant and honorary secretary of Mumbai’s Consumer Guidance Society of India.

Since most of us will not be able to distinguish between real and fake drugs, experts advise that some basic rules be followed while buying drugs.

“Make sure that the seal, prints and hologram are genuine. If the prints are a bit blurred or fuzzy, refuse the medicine. But in case you want to lodge a complaint, buy a strip or a bottle of medicine and submit it to the office of the Drug Controller General of India or its zonal offices,” says Dr Kamath.

Under the Drugs and Cosmetics Act, the punishment for selling spurious drugs could be life imprisonment as well as a fine of Rs 10 lakh or three times the value of the confiscated goods, whichever is more.

If you are in doubt about the quality of the medicine you have purchased, “it’s best to go back to the doctor and show the medicines,” advises Dr Kamath.

However, sometimes doctors too are at a loss to know if a particular drug is fake or genuine. As Dr Chandra Kumar Behany, consultant gastro enterologist, Kothari Medical Centre, Calcutta, points out, “Many a time even doctors fail to distinguish between the two. At times both the packaging and printing of spurious drugs are impeccable.”

On the whole, the best bet for consumers would be to buy medicines from reputed shops and insist on a receipt, says Mumbai-based consumer activist Jehangir Gia.

And if you do catch on that you’ve been sold spurious drugs, you can always blow the whistle on the dealer and bring the culprit to book.

Pragmatism: A Mid-life Choice?

By M H Ahssan

Principal Robert Thangaiah stopped briefly outside room 63. It was 6 am and the boys should be heading for the shower. The exams were to begin at 8 am. Ninth grader Manas Mehta was leaning against his window, his room unlit and quiet. Thangaiah knocked on the open door and stepped in just as Manas turned to look, his eyes red and tearful.

Thangaiah sat him on the chair just as Namdev Tripathi, a senior board member of the Green Foundation School, also arrived. Both had read the morning papers. Vaibhav Mehta, chairman of Gimm India, had been arrested in the middle of the night for financial laundering. And there was a picture of Mehta being led away… Manas had mercifully not seen the papers, but he had logged on early morning to do some online math tutorials and saw the Aaj Tak breaking news ticker. In panic and shock, he had run down to the warden’s room to call home, and his uncle confirmed the news. Manas had broken down and the warden had called the Principal and Tripathi.

Thangaiah searched his heart for words that would make sense. There was a script for loss of a near one, for failure in exams, for a broken heart, for losing a match. But what would you tell a student whose father had been arrested?

Sobbing now on seeing his favourite teacher, Manas said to Thangaiah, “Sir, my father is not like that.” In the same breath he said, “Sir, is it true that with age one crumbles and yields to corruption? If so, then I want to die young…”

Thangaiah’s heart lurched in fright, even as he felt the stab of pain that only a son can feel for his father, when Tripathi spoke: “You should not take such a pessimistic view of life. Business is like that. Often it ensnares and traps you, but your father will be OK; the system that he belongs to will provide a way forward.”

Thangaiah looked Manas in the eye and said, “This moment is going to expect great strength from you. It can diminish you a lot, but it will also come with lessons. Just think of Karna when he learnt of his mother’s identity. Some truths liberate us, some truths strengthen us, and some truths prepare us for greater tests. There have been times I felt like dying, much as you do now. But, out of this dying is the higher living. Speak to your mother and give her strength. If she needs you back home, we can work on that. For now, son, gather yourself and continue the day. Take time off to pray.”

Thangaiah was sad. Such pain and at 14! All he wanted was that his students should have strength of character to be able to withstand all kinds of moral pressure. All those people out there, who manage industries, money markets and banks, have passed through the portal of schools and have been shaped by teachers. Oh God, why does it not sustain!

Later in his room, Manas’s words assailed him. “Is it true that with age one crumbles and yields to corruption?” How does a school teacher look at a student in later life — on the wrong side of right? I know life holds many a temptation, but is not 12 years under a teacher strong enough to hold the soul together? Do I pray for my students to be protected or do I pray for the world to be safe? Who am I to look at how far my teaching goes?

Thangaiah wandered to his colour-coded post-it board. The number of pinks denoting ‘thoughts to think’, far outweighed the yellow ‘things to do’. The greens were ‘hope’, which were thoughts experienced by his students. Asked Shantum Tigunait, class IX: “Sir, is punishment meted out to alleviate the anger of the law or to bring about reform? Bernie Madoff has been sentenced to 150 years; what does that accomplish apart from expressing the intensity of the law’s ire? Would the world be better off or if his able body was left to rot in jail or if his remaining years are applied to community service? People like Ramalinga Raju, Madoff, the Andersen partners, the Enron people should these intellects not be applied to community work? Is not that a better route to reform? Should punishment necessarily humiliate and diminish? Sir, what are jails for?” Voices from the green post-its spoke all at the same time. Principal Thangaiah could not ignore that the world of business was encroaching upon the young far earlier these days.

At 14, Shantum’s vision of correction and punishment was healthy, but an ideal given the world outside. This was also Thangaiah’s world where he had to contend with various approaches to education. The key bug was an attitude, called pragmatism. Thangaiah shuddered every time he encountered it… which was everyday.

Like this morning’s sparring with the basketball coach Gabriel over suspending Shibi Kar of the ‘A’ team for willful head-butting and then refusing to shake hands with the winners. Gabriel said, “Sir, young boys need to express to get in touch with their feelings. It’s natural!” In Gabriel’s response, Thangaiah sensed a dissent with correction itself, than with the methods. Whereas the teacher for business studies felt that expression must also be tactical. And in a most ungainly manner he told Thangaiah, “The students need to see the world as it is and know that there needs to be a middle path as well.”

Last week, pragmatism paid them a covert visit. The day boarders of class XI were camping at school. At dinner, discussion veered towards the four, who were to attend the Model UN in Istanbul. One of the students had a passport that was expiring in a month, so would not get a visa. Now came the father’s text message, “It is fixed! PP being organised in a week. A small gift to agent took care!” The students argued: “The system makes it imperative that you bribe! If he did not ask, I would not have to give… I don’t want to, but sometimes I am forced to.” Another student Vaishnav, contested this: “I feel both are equally responsible”. Goswami, the history teacher, offered balanced words: “Don’t be extreme, be practical and sensible. It is not necessary to always be idealistic. Ask your parents… You will tie your hands if you take such a position. Gobhi’s father did that so he can go to Istanbul… think!”

The heady wine of pragmatism was offered to students as a moderate, balanced voice of sanity, observed Thangaiah in his diary. The challenge is immense: should I drop colleagues and stick to my position? Or should I too drink the heady wine? It reminds me of the death certificate when my father died… the corporation office worker wanted money. Baba’s body there, me here, the goblet of pragmatism in between, without takers…

Thangaiah remembered the desperation with which parents offered him air conditioners, home theatre systems and other expensive products in exchange for an admission. Here stands a little soul of four years clutching his father’s hand, and the father speaks the language of pragmatism to me, “We will equip your computer lab…” How does the little soul grow? Would you see your son or daughter grow up unbending to temptations or negotiating at every stage?

Now pressing down the green post-its he wondered, are we, as teachers, supposed to teach pragmatism or right conduct? My own teacher said, “Don’t be corrupt. Don’t live if that is what it means. What is wrong with being poor?” Is there room for us to dilute this? And what is my script for Goswami? Should I not be invoking leadership here? Was Manas’s father a victim of pragmatism? Can education teach pragmatism? Cost-benefit analysis, give some take some, trade offs, leverage, is there hope?

Thangaiah glanced at the yellow post-its, hoping for relief from ethical debates. “Laxman Jhula Annexe, plead with officials.” This annexe was being planned for an elaborate art and music school. The simple roadblock: the power allotment. The chief accountant, Bhrigu Hedda, had applied but the application went into freeze. Acquiring 40 acres, registering the land, getting permissions, etc. was no mean feat. Bhrigu spoke to administrative officers, block development officers, tehsildars, but no luck. Bhrigu would not ‘pay’: “Art and music cannot be born on the lap of speed money,” he reasoned. But the board was impatient: “Anyone who launches a large project has to do all these things. After all, we are doing it for the school!” Bhrigu stood his ground. He was never superior, but also never servile. He did not blame the officials either. Instead he asked, “What is the procedure? What do I need to do?”

The board was uneasy with the delay, as various big names had donated money to have the different music halls named after their family. But now the matter had hung. Col. Roy had called him and said, “Sometimes we have to set aside our views for the sake of progress. I had to pay for registering my house. The man wanted Rs 2 lakh, but I managed with Rs 40,000. What to do? I have a family. Please go and make him an offer. He will settle for less… Once in a while, we have to compromise.”

Was Manas’s father a victim of the once-in-a-while? What was the difference between Mehta and what was being proposed? Just scale, thought Thangaiah. At lunch, he asked the mathematics teacher Babu Joseph what he thought about this. Joseph said: “No, no, no! This is not about ethics. This is simpler; far simpler. You get to honesty when you are faced with dishonesty, you see. This is different. This is the bypass. So far your brain had a binary quality, 0 or 1. Now a 0.5 is introduced; you are given a menu to shift on that axis and saunter around 0.4, 0.7… such as a cow tied to a pole; it can wander around the pole limited by the radius the rope proffers. Here, the radius is pragmatism. ‘Adjust’, ‘accomplish’, ‘manage’… These performance parameters are for the mind’s continued delusion. Not for your higher intellect.”

Principal Thangaiah had a tough job. He was of the view that emotional intelligence is what schools need to work with, the rest will fall in place. But since the mid-90s, he had been unable to shepherd his students or his teachers. The former because many of the latter were more oriented to the middle path — believing that living is an art, and the art is about negotiating.

As for the management, it had become bottom line-driven, and hence top line too. This meant admissions were sometimes given in exchange for corpus fat. Thangaiah, in fact, had no viewpoint on donations. He only had a viewpoint on integrity, and even that he had become wary of expressing to his management, saving it for his students. As Bhirju would observe acerbically, “You don’t give tonic to a dying man, but to the growing!”

There were points where student management met operations. An eminent businessman’s grandchildren needed admission in the middle school. He sent his emissary offering to pay Rs 2 crore for four halls in the Laxman Jhula Art School. Thangaiah had sent back the application with sincere regrets to the board, “Class VI and VIII are full; 19 students in the waiting list.” The Board called him, “You need people who will support you. And people who support you should not have to wait in queues and lists. Do you want the art and music school or not?”

How does one retain purity? We are not in business but in education! The rush to be in the top 20 list, the rush to have better exam results, the rush to have a Hall of Fame with names of students who made it to Yale and IIT… Thangaiah considered this unnecessary. “What am I bringing up the kids for? To be victorious in the IIM-IIT race? That cannot be a school’s expectation. May be the parents’ expectations. Certainly not my vocational intent. (This is like the heart surgeon who wanted Rs 5 lakh under the table for baba’s bypass surgery! Is there not a difference between a calling and commerce?)” But Thangaiah couldn’t blame the board either, after all the businessman had asked them, “How many of your kids make it to Ivy League colleges?” Bhrigu, who was present, had said, “We don’t keep track of that, but for sure, none of our ex-students have been accused of breaking the law, for fraud, for swindling the tax department, for disrespect to women or the country, for drugs, not even for traffic violations.”

And there was Vaishnav’s verdict, “According to me, both are equally responsible.” Thangaiah had asked them how they would feel if their parents had paid money to get admission into the school. They were sure, they would feel bad. And how proud would they feel about their school if they heard that the school took money for some admissions… They would feel ashamed.

They had then veered to the kitchen where they would all wash the dishes and dry them and stack them away. The rota was an essential part of GFS’s schooling. This helped team building, goal setting and sharing simple tasks. It broke squeamishness about essential things including gender conditioning. Karsan Divakar said, “We have a dishwasher at home, and I have wondered about why some of us have life easier than others.” Soon they were all talking about privileges, and as they got into a line for their dessert, Thangaiah asked them if they would stand in queue or take the quick shortcuts. Amrita said it would be most tempting to take the shortcut. Particularly, if it harmed no one. “What is wrong with that, sir?” Thangaiah had said the answer will come, let us wait.

The answer came four days later when they put heads together to examine the Right to Information Act. Names like Arvind Kejriwal and Aruna Roy, Nikhil Dey, Shankar Singh came up. Studying the bio-data of these people, the students went silent. “Why would someone turn away from a life of privilege?” they asked. What made them turn away from a life of privilege and comfort to lead difficult lives? Thangaiah connected with privileges and paid admissions, and said, “If I have the privilege of jumping a queue, then it means that others are less than equal. And if I have to wait, irrespective of money or power, then I surrender privilege for all-round dignity and respect. Walking like everyone, eating the same quality of rice, washing dishes like everyone… just that some people have the courage to surrender privileges and some people fear the loss of privileges. We come back to making choices.”

Tripathi called. “The board met to discuss the budget deficit. It has been agreed that it makes ‘pragmatic’ sense that we increase our class size to 35 from the next session.”

Thangaiah stepped out of the dining room to the verandah, and argued helplessly, “Green Foundation was always meant to be a small school and our key to quality education is the class size.” Tripathi continued, “Next, Manas Mehta and also what you said at the PTA last week. Parents came back annoyed asking, “Is GFS not performance oriented?” Our students have to leave school one day and take on the world. We need to build achievers. And to top it your stance on promoting Manas to class 10 despite him having missed his exams is worrying me.”

At the PTA, Thangaiah had said, “What marks children get is no concern of mine. We do good academics, but we also have diverse children. I would like to see that no child contemplates suicide, no child feels he or she is useless and also that no child should leave school feeling the world is poor in possibilities. And if the school delivers this, I would have done my job for your children.”

(This was the same PTA where Ashutosh Kailash, an ex-student and now operations head of an MNC, had said, “Many who have been students here are in an unwitting time warp. We are incapable of viewing our principal as another manager trying to shine the brand equities of 1,000 students or grappling with management issues, money issues! We continue to think of him as a teacher who got annoyed with spelling errors or manners!)

Thangaiah had seen that the board was distanced from the daily decision-making and deciding on issues regarding students, hence unable to relate to students’ contexts. So, he said to Tripathi, “We see the child, his context, his inner potential, his drive and his intelligence. And translating all this to a good looking table of marks is often difficult. In Manas’s case, even unfair, given his circumstances. Yes, I am aware that his term exams were not top drawer, but his subject scores in the sciences are very good. Besides, I teach him ethics and knowledge, I know his mental construct. The lad is very good. And please recall Ashit Shenoy, who barely passed his languages through high school, topper in chemistry and biology always… Isn’t he one of India’s leading surgeons?”

Tripathi: Robert, these are boys who need to go out and face the world that demands performance and performance only. Mollycoddling will make them soft and unfit for society. He needed to have taken his exams!

Thangaiah: What is the purpose of schooling, sir? Is it to shape the students to fit into society? No. It is to help them realise their potential, their intelligence and then apply it to living.

Tripathi: If you are doing exams to evaluate, you have to produce results. If results don’t matter, you should get out of this business.

Thangaiah faced the night as he had many times before. The tension between their two positions was eternal. Life produced humans; as a teacher he scrubbed them and let them see their individuality. Performance and results were the concern of parents and businessmen, he thought. He wondered now if the abolishing of class X board exams would appease or fuel these tensions.

‘T’ Factor: Why Women Go For Risky Finance

By M H Ahssan

A new study has found that women with higher levels of testosterone are more likely to take financial risks

Women with high testosterone levels are likelier to have a special appetite for risk that may drive them towards high-risk financial careers, new research suggests.

The study by US scientists links testosterone to gender differences in aversion to financial risks, and adds fresh evidence for the idea that differences in testosterone can influence career choices.

The researchers from the University of Chicago and Northwestern University say their findings also explain a long-standing observation by management schools — more male MBA students opt for high-risk finance careers such as investment banking than female MBA students. The study’s findings appeared in the Proceedings of the National Academy of Sciences on Monday.

Previous studies have shown that testosterone is associated with high-risk behaviour, such as gambling and antisocial activity, among men. The hormone appears to increase motivation for competition and to reduce fear.

“This is the first study to show that gender differences in financial risk aversion can be explained on the basis of this hormone,” said Dario Maestripieri, a team member and professor of comparative human development at the University of Chicago.

The researchers said at their institutions, 57 per cent of male MBA students pursue a risky career in finance while only 36 per cent of female MBA students do so.

The study examined salivary testosterone levels in 381 male MBA students and 169 female MBA students who were asked to play a computer game designed to evaluate risk aversion — they had to choose between a lottery with a high payout amount or a guaranteed monetary award. In men and women with similar levels of testosterone, there were no differences in risk aversion.

Students with high testosterone levels chose riskier finance careers. “There could be other factors that also influence career choices — but testosterone in both men and women appears to increase risk-taking,” Maestripieri told The Telegraph.

The researchers caution that while the study bolsters the connection between testosterone and risk aversion, it is possible the hormone levels are not exclusively determined by biology. “Testosterone levels in an individual may be determined by both biology and the environment,” said Luigi Zingales, professor at the University of Chicago Booth School of Business.

The study, for instance, found that married men and women had lower levels of testosterone than unmarried men and women. This appears consistent with the idea that married persons are more risk averse than unmarried persons.

The study has also shown that the relationship between testosterone and risk aversion is stronger in women than in men. Zingales said this could be the result of two possibilities — either testosterone affects the male and female brains in different ways or its effect is non-linear.

Restricted Entry Only for Jobseekers

By Rashmi Duggal

Jobseekers will have to wait; fresh jobs are not being created in good numbers just yet

Don’t uncork the bubbly yet. Celebrations will have to wait, as all the mood-lifting talk of a turnaround in hiring activity is just that — talk. Those desperate to clutch at any feeble ray of hope may do so at their own peril. With the monsoon playing truant and over 300 districts being declared drought-affected, the clouds hovering over India’s economy, as over the world, have not diminished just yet.

Traders of curriculum vitae (CV) have already declared a spurt in hiring activity in the country. However, the fact is most of the companies are only filling up vacancies of those who had left earlier (replacement hiring in HR parlance). Moreover, the activity is so minuscule that it is as good or as bad as negligible. Managing Director of the India arm of global body Society for Human Resource Management (SHRM) G. Ravindran says, “The sentiment in India Inc. is positive, but not bullish.”

Things are not as bad as they were this time last year, but they are not good either. As Ravindran says, “Global cues have stopped being very bad and it should be possible to finish the year with 6.9 per cent GDP growth, as predicted by the Planning Commission. But monsoon could still play the villain.”

The Invisible Reality
Considering that, what is the truth behind the findings of job portals such as Naukri and TimesJobs — an 8 and 10 per cent increase in hiring in July? The answer is these portals collate figures based on job listings on their website. Therefore, against a peak of 1,000 job listings in July 2008, which is the base for the Naukri JobSpeak index, if the figure was 745 in May and 818 in June, then the 9.7 per cent increase shows a rise in job listings, not necessarily in hiring.

Naukri’s chief operating officer, Hitesh Oberoi, makes it clear: “The activity is based on job listings on the site.” Quiz them on the actual hiring scenario and the Naukri representatives are quick to add, “We do not go into whether hiring is happening or not, ours is a listing site.”

As for the TimesJobs.com survey, it reflects the mood, not a trend. “Employers plan to increase hiring in the next quarter,” is what the survey says, and then goes on to give the breakup — 42 per cent in Delhi, 44 per cent in Mumbai and 24 per cent employers in Bangalore have “intentions” of upping the intake of employees in the next three months. Vice-President Vivek Madhukar refutes any effort at painting a rosy picture, and says, “Till six months ago, even replacement hiring was not taking place. People are now also going for growth hiring.”

However, there is no evidence of that yet. “Frontline hiring has not picked up and should not pick up because even after cuts there is overcapacity in the system,” says Manish Sabharwal, co-founder and chairman of temporary staffing company TeamLease Services.

The Thaw Sets In
What has really happened is that India Inc., which had been holding its breath for the past two quarters for fear of disturbing the very air around itself, has finally exhaled. It is breathing normally once again. Says Sunil Goel, professional leader at global executive search firm GlobalHunt: “Even though not all Indian companies were affected by the downturn, they all had frozen plans and stopped hiring. They were on wait and watch.”

Now, these companies are not willing to play wait and watch any longer. They have started taking small, tentative steps towards regaining normalcy. That includes some bit of filling up of positions lying vacant for the past year or so. Local consumption has in any case not slowed down. Lohit Bhatia, centre head with management consultants Lauren & Benon, says, “Earlier, the hiring activity was rampant. Now, there is cherry picking for key positions. But freshers are still not being hired.”

Agrees E. Balaji, director and chief operating officer of Ma Foi Management Consultants: “The recovery is very mild at this point of time. Many organisations had not filled up vacancies in the past year, some had also cut headcount. All that is happening now is that some of these positions are being filled up now.”

Salary hikes and remuneration packages are also selective and not across the board. A recent survey by human resources consultancy Hewitt Associates had shown that most companies have postponed their salary revision cycle from April to September-October, and nowhere are incentives coming en masse. The hikes range from 5-11 per cent, but are linked to performance. Further, bonuses seem to have been replaced with variable pay. While the number of very good performers has come down, they are being given bonuses twice that of average performers.

The reasons behind the tentative change in mood are not far to seek. The economy is showing definite signs of recovery. The first quarter estimates of GDP, for April-June 2009, show 6.1 per cent growth over the same quarter last year. The index for industrial production was also up 7.8 per cent in June this year, over June 2008. Vehicle sales have reported significant increase in August, compared to the same month in 2008, even though some of it can be discounted by the fact that growth was minuscule in 2008. Maruti’s sales increased by 41 per cent, while that of Hyundai Motors India rose by 12.9 per cent.

Despite such favourable tidings, corporates are careful enough not to throw caution to the winds as nobody is sure whether the recovery is here to stay. As Balaji of Ma Foi says, “There are various shapes being talked about — W, V, M. Who knows what it may look like, or when things may go back to square one.”

Caution In The Air
Here, the behaviour of companies differ across sectors. And this is reflected in what they are doing now. Companies in sectors such as media, real estate, retail and financial services, which were hit worst by the downturn, are trying to find their feet again. Media companies have eased curbs on salary freeze and are filling up select positions. Says Gitanjali Pandit, corporate head, talent management, of the Indian Express Group, “Today, the whole HR paradigm has changed. The industry will, and should, never go back to its former ways of hiring. But at the same time, solutions will have to be devised so that critical talent is retained and rewarded.” If this does not happen, she says, the same problems will come back again.

Real estate firms are taking up new projects, but are still not recruiting on a large scale because the activity is not enough to warrant that. Anshul Jain, India CEO of global real estate advisory firm DTZ, says, “Hiring has not picked up. Companies already have enough manpower for the projects they are taking up now.”

Adarsh Matta, managing director of executive search firm Executive Track Associates, says, “Some sectors such as telecom and healthcare were not affected by the downturn at all. Hence, they have maintained hiring levels. For instance, telecom has seen a 10 per cent increase in hiring.”

On the pharma front too, things never turned really bad. Swati Piramal, director in Nicolas Piramal, says, “Hiring in our sector has not been affected as the sector itself was not affected. The level of recruitments remains the same as last year.”

Auto companies, worst hit by the global slowdown and the slack in domestic demand, have started making appropriate changes in their strategy. The HR head at Maruti Suzuki India, S.Y. Siddiqui, says, “Maruti is looking at an independent R&D capability by 2010. We need 1,000 people for this, and have already hired 745. This will reach 975 by the beginning of next year.” Yash Yadav, HR head at General Motors, says, “About nine months ago, there was a freeze on everything. We were downsizing, and temporary staff was being made to sit on the bench. But we are rolling all that back now.”

Amid such bullish enthusiasm, such as that of Jalandhar-based ancillary firm Ralson India, which has seen the demand for its tyres double from 15,000 last year to 30,000 this year, the overall sentiment is not that of jubilation. Bad monsoon may affect the bottom line of fast moving consumer goods and vehicle companies. Also, the western markets are still shaky. They have to show more stability for export-dependent sectors to regain strength.

But with a number of new projects being commissioned — 363 in the past three months, according to research group Centre for Monitoring Indian Economy, with as many as 31 in the hospitality segment (the largest) — things may change soon. And by early next year, the industry, as well as jobseekers, may find enough reason to uncork the bubbly.

Mumbai Port At The Crossroads

By M H Ahssan

Are the expansion plans of Mumbai port putting a question mark on its coexistence with Mumbai city

The Mumbai Port Trust has just decided to bury a bit of history, and the greens are not happy about it. Two of the port’s oldest docks — the Prince’s and Victoria — will be filled up to make way for a new offshore container terminal. Both the docks, built in 1885 and 1891 to provide access for small ships, are now in disuse. The Rs 1,228-crore terminal will be developed by the Indira Container Terminal Pvt Ltd (ICTPL), a joint venture between construction firm Gammon India and Spain’s leading port group Dragados SPL. The Mumbai Port Trust (MbPT) will cover the cost of dredging and filling up the docks, estimated at Rs 366 crore.

“The process will give the port an additional 40 hectares,” says MbPT’s Chairman Rahul Asthana. “From this reclaimed waterfront, a trestle or a concrete pathway on piles in the sea will connect traffic movement to four new berthing stations.”

With a deep draught of 14.6 metres for the open-sea berths, MbPT hopes to increase its traffic of large vessels. “The filling work has started, but it will gather pace only after the monsoons. We expect the berths to be operational by December 2010,” says Asthana.

The MbPT chairman concedes the issue is contentious. Showing an artist’s image of what Prince’s and Victoria could become — a luscious water sports seafront replete with docked yachts, and the city’s glitterati making their way on their speed boats — Asthana says there had been intense industry lobbying for converting the heritage docks into a waterfront marina. But the Ministry of Surface Transport rejected this idea in favour of enhancing the port’s capacity and revenue-generating operations.

A port trustee and president of the All India Port and Dock Workers Federation, Shanti Patel, hints darkly that the pressure for a stylish marina is coming from the Mukesh Ambani-backed Jai Corp that is seeking to develop the alternative port of Rewas across Mumbai’s harbour. On the other hand, environmentalist Shyam Chainani, whose Bombay Environmental Action Group (BEAG) has consistently opposed increase in port traffic for the past two decades, says the move will heighten congestion in the city. “Nowhere in the world has city heritage been extinguished like this,” he says.

But, ironically, nowhere in the world are port operations, stretching over a 14.5-km arc on the eastern seaboard of the island city, enmeshed so hopelessly into one of the most densely populated cities of the world. The port operations pass through the city’s transport networks. Also, the posh business district of Ballard Estate, which houses several businesses and markets, is located on the port land.

That is why the 1,860 acres of land owned by MbPT becomes a contentious issue. In fact, it is variously seen as a panacea by many — the state government sees it as a remedy to the city’s overcrowding; for planners and environmentalists it is a chance to decongest the city; and for scores of builders, it is a goldmine for development. So, which way will the Mumbai port go?

Expanding Growth
The Mumbai port has grown at a steady clip defying wishful thinking that it is shedding traffic over the years to sister port Jawaharlal Nehru Port Trust (JNPT) across the harbour at Nhava Sheva and other west-coast ports such as Kandla. But it has increased its cargo handling from 26 million tonnes (MT) in 2001-02 to 44 MT in 2005-06, and notched up 57 MT in 2007-08. Its operating surplus has also grown from Rs 47 crore in FY05 to Rs 263 crore in FY08. But in 2009, it slumped with the fall in exports and imports to Rs 123 crore.

However, there are signs that MbPT has turned into a dinosaur. With an employee strength of 18,700 today, it is the biggest employer among the major ports in India, with one-third of the country’s port labour of 57,000. But in cargo handling, it has slipped to fifth position after Kandla, Visakhapatnam, JNPT and Chennai. The highly mechanised JNPT, with a labour force of 1,400 that handles container traffic, notched up 55 MT in FY09 compared to the Mumbai port’s 52 MT. MbPT’s wage bill — Rs 350 crore in FY08 and close to Rs 488 crore in FY2009 — accounts for a whopping 60 per cent of the port’s operating income.

In this context, increasing container traffic and converting the defunct docks to container handling terminals seem to be a sensible business decision. The new terminals with railway connectivity are expected to handle as much as 1.2 million TEUs (container units). “From a paltry 118,000 TEUs in FY08, traffic will rise to 6.7 million TEUs in 2010-11, and touch 15.8 million TEUs in 2016-17. While JNPT is expected to level out at 11.6 million TEUs, we will be handling 36.4 million TEUs by 2025,” says Asthana, citing a KPMG survey.

Going Against The Plan
But this growth trajectory was not the future envisaged for the Mumbai port three decades ago by the then Prime Minister Indira Gandhi. When JNPT was being planned in the 1980s, and faced stiff opposition from environmental lobbies, the port was given the green signal on the ground that it would help decongest overcrowded Mumbai. The idea was to slowly get the Mumbai port to reduce operations and use the surplus land to green the city.

A directive issued on 8 August 1980 by the Prime Minister’s Office said when considering plans for JNPT “the feasilbility report should provide for the release of land and dock areas in existing Bombay Port area for parks, etc”. Interpreting this directive, the Ministry of Environment and Forests (MoEF) laid down detailed guidelines when it gave clearance to JNPT in August 1988. “With the operation of Nhava Sheva port as a measure of decongestion of Bombay Port, the traffic in Bombay Port must be gradually reduced by steps to be taken by the Ministry of Surface Transport, Bombay Port Trust and Nhava Sheva Port Trust so that the total general cargo, inclusive of container cargo handled by Bombay Port, comes down within three years to 6.5 MT.”

The MoEF directions further stated: “The Ministry of Surface Transport and Bombay Port Trust must take action to gradually make the land of Bombay Port, which is not required for operational purposes of the port, available for greening and recreation.”

Meanwhile, a look at the global scenario shows that docks within city precincts ultimately give way to more pressing urban demands, and are shifted to independent port towns some distance from the main city. For instance, in the 1800s, Canary Wharf in London was one of the busiest docks in the world. The port industry began to decline by the 1950s, and the docks had to shut down in 1980. Several business groups, led by Credit Suisse First Boston (CSFB), backed an alternative plan for a business district there. Today, Canary Wharf is a bustling financial centre with London’s tallest buildings and wealthiest tenants.

In July 2007, at a land policy meeting, MbPT’s then Deputy Chairman Ashok Bal tried to draw a distinction in respect of the Mumbai port. He said though other ports such as Kandla and JNPT had taken away substantial traffic from Mumbai and reduced the hinterland it served, cargo handling at the port continued to gallop. This showed “the economic development of the Mumbai region demanded continued existence of the Mumbai port”.

But the state government holds a contrarian view. “We opposed the development of the container terminal at the docks knowing it would increase congestion. But it was a fait accompli,” says U.P.S. Madan, convenor of the Maharashtra government’s Mumbai Transformation Support Unit. “The port land needs to be used for greening the city, and the port operations must be shifted out or gradually closed.”

The Demand For Land
Over the past two to three years, there has been an incessant demand from the state government that part of MbPT’s surplus land be used for the city’s development. The state empowered committee that monitors the city’s development, chaired by Chief Secretary D. Shankaran, formally raised the issue with MbPT in November 2006. However, Bal said there was little land to spare. In his tally, the surplus land was a measely 12 acre.

However, a recent land policy presentation of the port trust revealed that more port land was leased out than used for port’s own operations. Of the total 1,860 acre the port owns, 486 acre was used for dock operations, while properties leased out covered about 868 acre or 46 per cent of the total land. MbPT’s tenants include government bodies, public sector units and 2,886 private tenants including the Taj Mahal Hotel, Unilever factory and the Ballard Estate.

Asthana says a substantial part of his administration was devoted to administering these tenanted estates. Port records show leases for 379 properties accounting for 43 per cent of the land had expired and MbPT was not able to wrest the land back. In the process, the port became the second largest litigant, after the municipal corporation, with 1,800 cases pending in courts. Quips Asthana: “We also run a port.”

Finally, wilting under pressure from the public and the state government, MbPT, in August 2006, decided to settle the issue by formulating a land policy for the port. It set up a committee of port trustees that included Bal and two labour representatives, S.R. Kulkarni and Shanti Patel. The minutes of a meeting of the committee (July 2007) show Bal vigorously defending the existence of the Mumbai port, but conceding that in the 1988 talks with MoEF, a master plan of the port had earmarked about 131 acres as “green areas and public amenities”.

Patel has a different take. “MbPT has a lot of land, and it should be used in public interest. The trust should not behave like a private landlord,” Patel told BW. He, however, says MbPT, set up as an autonomous body under the Major Port Trusts Act of 1963, was never allowed to function independently, and was ruled by “guidelines” of the surface transport ministry through the chairman’s office. Not surprisingly, considering these pulls and tugs, three years after it was formed, the committee of trustees is still to release the land policy.

Integrating With The City?
Along with the Rs 1,288-crore container terminal at the Victoria and Prince’s docks, MbPT has two significant projects on its agenda that it hopes will integrate the port with the city’s needs. A Rs 133-crore investment has been planned to develop rail transport through the dock areas to ease the load on the arterial road networks. The plan to develop a dedicated railway line, linking the dockyard hub, Wadala, to the central railway hub, Kurla, will speed up cargo dispersal. Though mooted in 2006, the project has been held up due to delay in rehabilitating the 1,700 slum units that are on the railroad alignment, says Asthana.

The second project, the construction of the Eastern Freeway, a road which starts from south Mumbai and exits at Chembur in the north, has kicked off with a 5-km section running on port trust land on elevated stilts. The Rs 300-crore 27-km freeway, though not a port trust project, is being developed by the Mumbai Metropolitan Region Development Authority (MMRDA) to provide a rapid exit for the city and ease traffic congestion. However, MbPT has given free land for the project and invested Rs 35 crore to develop the Anik-Panjarpur link road connecting the Eastern Freeway. Slated to be completed in December 2007, the freeway is now three years behind schedule.

Though Asthana is not insistent that the port has no land to spare, as was claimed by his predecessor Bal, he says development of the port land must be commercially beneficial to MbPT. “The trust is not against giving land for the development of the city. But we would want to do it ourselves, and on terms that are financially advantageous to us,” Asthana emphasises. “It should be part of a city master plan, and should not hamper port operations.”

Madan, who heads Maharashtra’s Mumbai Planning Cell, says his team is in the process of preparing a concept plan that would include the port trust land in “a single integrated vision” to improve and decongest the city.

To start with, land relinquished by lessees of the port trust could be pressed into city development projects, such as the four acres that the Central Warehousing Corporation returned a month ago. However, until the pundits in the surface transport ministry realise that Mumbai port has to reinvent itself as part of the rapidly changing megalopolis, all we will have is short-term, knee-jerk responses.

Tying The Loose Ends

By M H Ahssan

Pharma companies in India gear up as swine flu spreads

Aloe vera is known for many things, but not exactly for preventing the spread of new influenza virus strains. But that is exactly what Chennai-based healthcare solutions firm Phyto Specialities is claiming: its capsule blend of herbs tinosporia cordifolia and aloe vera can protect you from swine flu, nothing less.

While the capsule and the claim can be taken with gallons of water — after all, aloe vera boosts immunity, much like Vitamin C — Phyto is the farthest link in a chain of healthcare companies, small and big, who are awaiting the several hundred crore swine flu opportunity.

The pandemic spread by the H1N1 virus has so far taken 63 lives and infected about 3,000 people across the country, according to the health ministry. The pandemic could also take a heavy toll on India’s economy — a study by the World Bank suggests that a mild pandemic would cost India 0.6 per cent of its GDP — even as the country is slowly recovering from the impacts of the global financial meltdown.

The only winner may be the healthcare industry, which has already gained from the paranoia by peddling swine flu kits. In August alone, Delhi-based healthcare firm Religare Wellness sold 60,000 masks and 5,000 disposable gloves, including bulk orders from companies, according to a company spokesperson. A windfall is just around the corner, with the government readying up new orders for generic Tamiflu capsules and swine flu vaccines, and private diagnostic laboratories set to start testing suspected H1N1 patients.

The Virus Money
The government has invited drug manufacturers to submit a new tender for the supply of 20 million capsules of generic Tamiflu, as its stock runs out. Of the 10 million capsules the government had bought earlier, 750,000 have already been distributed to various state health agencies, according to health ministry officials.

An estimated Rs 300 per dose (10 capsules), the drug could fetch pharma companies an order worth Rs 60 crore. Companies such as Hetero Drugs, Cipla, Ranbaxy, Strides Arcolab, Natco Pharma and Swiss pharma major Roche are believed to be in the race.

Further, media reports suggest that the government could also permit retail sales of the drug within a few weeks, which could mean another windfall for pharma companies. “We will launch the drug in the retail market as soon as we can,” says Cipla’s CEO Amar Lulla.

Meanwhile, Panacea Biotec, Bharat Biotech and Serum Institute of India, which have received the virus seed from the US public health agency Centres for Disease Control and Prevention, have started work on a vaccine. But the government and the three companies are yet to finalise an advance purchase agreement for the vaccine, according to Vineet Chawdhry, joint secretary for health in the ministry, who, nevertheless, is confident that a vaccine will be available within five to seven months.

However, there is still no clarity as to when private labs will be able to start testing patients for H1N1 and what approval process they need to follow. “The (Union) government has not issued any orders that prevent private labs from testing. Approvals, if any, would be given by state governments,” says Chawdhry. Last week, the Delhi government allowed four private pathological laboratories in the city — Dr. Lal Pathlabs, Dr. Naveen Dang’s Lab, Auroprobe Lab and Super Religare Laboratories (SRL) — to test samples for the swine flu virus. “The National Institute of Communicable Diseases has inspected our reference lab in Okhla (in Delhi),” says Dr Arvind Lal, chairman and managing director of Delhi-based Dr Lal Pathlabs.

Quest Diagnostic India, another diagnostic firm, also hopes to start testing within five to 15 days. “We will start testing as soon as the government accredits the laboratory and the systems are in place,” says Paul Rust, vice-president and general manager of the company.

The Private Role
While private laboratories may initially test only those samples sent by the government — to support the 18 government labs that are currently conducting the tests — they could also test patients coming directly to their collection centres as well. Sanjeev Chaudhry, CEO of SRL, claims the company could test as many as 1,000 samples a day. At Rs 4,500 per sample, this would translate into monthly revenues of Rs 15.5 crore. SRL also plans to run 10 mobile collection units for door-to-door testing in Delhi.

However, labs will first need to buy swine flu testing kits before they can go ahead with their plans. So far, only California-based Applied Biosystems’s swine flu kit has been approved by the US Food and Drug Administration (FDA) for emergency use. R. Trivedi, head of India operations, Applied Biosystems, says the company is yet to start selling the kit in the country: “We are not importing it, and we have not received any queries on this from Indian companies.”

While Chaudhry of SRL says the firm will opt for Biosystems’s kit, Dr Lal Pathlabs has approached Roche Diagnostics. Roche’s drugs, though, have not yet been approved by the FDA. “It is, however, recommended by several authorities including the WHO,” clarifies Bhuwnesh Agrawal, chairman and managing director of Roche Diagnostics India and South Asia, who declined to disclose the price of the assay.

The state-owned Indian Council of Medical Research is also working on developing a swine flu kit that would cost less than the imported ones. Eventually, the impact of the pandemic on the health of the people, and the country’s economy will depend on how efficiently the government addresses the crisis. Drug making companies and private labs may have a role to play too, but the government needs to ensure that private companies remain part of the solution, rather than contribute to creating more panic.

THE ECONOMIC IMPACT
A pandemic outbreak can cause more damage in developing countries than elsewhere, as these countries have higher population densities. According to a study conducted in 2008 by the World Bank, a mild pandemic could cost a South Asian country such as India 0.6 per cent of its GDP in the first year of the outbreak. A moderate one will cost 2.1 per cent of GDP, while a severe one can claim 4.1 per cent of it.

The hospitality and retail sectors could be hit the hardest. Though hotels in India have not seen a major fall in business so far, restaurants have witnessed a 20 per cent dip in revenues, says Deepak Sharma of the Federation of Hotel and Restaurant Associations of India.

Companies such as Pantaloon Retail have also seen a decline in sales in Maharashtra, where the virus has already claimed 27 lives. The company’s sales are down by 20 per cent and 6 per cent in Pune and Mumbai respectively. “We have seen a marginal decrease in footfall at our Mumbai mall,” admits Dharmesh Jain, group chairman of Nirmal Lifestyle, which develops malls and realty projects.