Dark Age: 60 crore hit as power snaps in 19 states Life comes to standstill in half of India following northern and north-eastern grid failure

NEW DELHI The power crisis that hit northern India on Monday turned into a larger blackout a daylatertoaffectasmanyas19 states not just in the north but also in the east and northeast, paralysing essential services such as rail and metro operations,besidescausingmassive trafficsnarls. 

    "Gridincidentoccurredat1 pm, affecting the northern, eastern and northeastern grids. The system is under restoration," said the official website of the eastern grid, among such systems managed by the state-run Power System OperationCorpLtd. 
    The states affected on Tuesday were Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, West Bengal, Odisha, Jharkhand, Sikkim, Assam, Meghalaya, Tripura, Nagaland, Manipur, Mizoram and Arunachal Pradesh. 
    These states account for half of India's 1.2 billion population. 
    Power Minister Sushil Kumar Shinde, who had constituted a committee to probe the failure on Monday, attributed the collapse on the second straight day to overdrawing of power by some states and said efforts were on to fetch electricityfromotherregions. 
    "Alternative arrangements have been made. I have put all my men at work. We are getting power from western grid. Wewilltrytorestoreservicesof the Metro and the railways first,"Shindetoldreporters. 
    There was, however, little respite for some 300,000 rail passengers, who were stuck in over 300 trains across eight states, after the power failure crippled such operations across six railway zones in the country. 
    The Delhi Metro suspended services on all the six lines as power tripped for the second straight day. It normally operates over 2,700 trips a day, coveringatotalsome70,000km,to carry around 1.8 million passengersonaweekday. 
    In the national capital, and inmostothercities,trafficwas also severely affected as traffic signals tripped and caused major snarls at intersections. Some 4,000 traffic police personnel in Delhi were immediately deployed to bring some semblanceoforder. 
    Flights operations remainednormal. 
    Speaking to reporters in the evening, chairman and managing director of Power Grid Corp of India R N. Nayak, said close to 50 per cent of power had been restored in the northeastern region and 20 per cent inthenorth. 
    Nayak also said excess powerdrawnbyonestatehadacascading effect on the three grids. He, however, did not name which state had overdrawn power. The officials said every effort was being madetorestoresuppliesfully. 
    AGENCIES

300 TRAINS AFFECTED 
At least 300 trains came to a grinding halt at various places in north and north-eastern regions due to the power failure, movement on the busy Delhi-Howrah route almost paralysed. 
    The affected trains included scores of long distance trains, Rajdhani and Shatabdi expresses, as well as suburban trains in Delhi and Kolkata, causing inconvenience to lakhs of passengers.

SIGNALS GO BLANK 
Traffic was thrown out of gear in the capital this afternoon when signals went blank following power failure across north India. 
    Huge traffic jams were reported from various parts of the capital, including Connaught Place, Ashoka Road and India Gate. "The city is without electricity in most of the areas. Traffic signals are not functioning due to power failure, said a top traffic officer.

HOLIDAY IN BENGAL 
Following the crisis, West Bengal CM Mamata Banerjee ordered all government offices to declare a holiday for the day and urged the private sector to the same to enable the people to go home and appealed to people to maintain calm.

300 coal miners trapped for hours 
KOLKATA Hundreds of coal miners were stranded on Tuesday in various coal mines across Assam and West Bengal after the blackout paralyzed elevators in the underground pits. 
    While 100 workers got stuck several feet below ground level in Assam, nearly 200 workers from government-owned Eastern Coalfields Limited were waiting to be rescued from mines in Bengal's Burdwan district . 
    Nildari Roy, a senior official at Eastern Coalfields Limited said they were waiting for the restoration of power. "There is no threat to the lives of the miners. There is no reason to panic," Roy said. 
    JAYATRI NAG

Commuters at a Metro station in Delhi on Tuesday after services were disrupted

Aug 31 new deadline for e-filing returns

New Delhi: While extending the due date of filing of returns of income for the assessment year 2012-13 from July 31 to August 31, the Income Tax department on Tuesday relaxed norms for e-filing of returns for NRIs and trusts whose income exceeds Rs 10 lakh annually. 

    The decision to extend the due date for filing of returns has been taken "on consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and Hindu Undivided Family (HUF) has been made mandatory," a press note from the Central Board of Direct Taxes (CBDT) said. 
    Relaxing norms for NRIs and trusts, the CBDT said it will not be mandatory for "private discretionary trusts" and NRIs, if his or its total income exceeds Rs 10 lakh, to electronically furnish the return of income for assessment year 2012-13.

POWERLESS & CLUELESS Over Half Of India’s Population Reels Under World’s Biggest-Ever Blackout, Minister Gets Promotion North, East & North-East Grids All Trip

New Delhi: It was a Terrible Tuesday that 680 million Indians are not going to forget in a hurry. In the world's biggest blackout that affected onetenth of the global population, 21 states and Union Territories went on the blink after three arterial power lines collapsed at 1pm.      The northern, eastern and north-eastern regions suffered the outage when their  respective grids collapsed in quick succession with devastating effect.      The blackout disrupted normal life, rail and air services as well as industrial production across sectors.      Even as the country was reeling under the outage, power minister Sushil Kumar Shinde was moved out to the home ministry, and Veerappa Moily given the additional charge of power—a move that hardly indicated seriousness on the government's part in dealing with the crisis.      Some 300 miners were trapped in coal mines. Two hundred miners were evacuated from mines in Bengal. Till the time of reporting, efforts were on to rescue 65 others stuck in Jharkhand mines.      More than 300 trains were affected. Many others are likely to be cancelled. Airports, hospitals and BPOs functioned with their back-up generators. In Delhi, commuters again had a harrowing time, with the day being a scary one for those who were stuck in the Metro Rail trains that stopped in their tracks several feet above the street or deep inside tunnels. Roads were gridlocked as traffic lights stopped working.      In Kolkata, the Metro was not hit by the outage as the city largely remained isolated since power is supplied by a private firm. But West Bengal chief minister Mamata Banerjee asked all government offices to shut early and urged the private sector and schools to do the same to protect against commuter chaos in the evening.      Tuesday's grid collapse, like Monday's, was triggered at Agra, a major interconnect between the northern, western and eastern grids.      On Monday, the Agra relay station had tripped to trigger a blackout. This time too, the station kicked off a domino effect after suspected overdrawal by some of the states in the eastern grid.  You can e-file I-T returns by Aug 31 D ue to the difficulties caused by the power failure, the I-T department has decided to extend the deadline for e-filing of returns to August 31. P 19 5 WAYS TO FIX THE MESS 1 Price power properly so that state utilities have money to buy power 2 Check theft and account for every unit of electricity produced. Cut out free power 3 Get regulators with teeth. Currently, most are ineffective retired IAS officers 4Invest in building new power plants, give them remunerative tariff, revamp existing plants 5 Plan for the future – for 10-20 years, not for 5 years TIMES VIEW Moving Sushilkumar Shinde out of the power ministry now is like changing the captain of the Titanic when it's reeling after hitting a giant iceberg. The country is in the midst of an unprecedented power crisis. For two days in a row, the grid has collapsed. This doesn't cover Shinde with any glory. Yet he's promoted as home minister. Even if that's ignored, what's pertinent at this point of time is that Shinde is likely to have some clue aboutthe power problem; a new minister – who will be holding additional charge of the portfolio – will possibly have none. So, what does the change indicate? The irrelevance of ministers? Never mind who's in charge, the net result is the same? PowerGrid hints at overdraw W ithin a fraction of a second of the Agra station tripping, the northern, eastern and the north-eastern grids went down. At the time, the three grids together were carrying some 66,000 MW, 12 times Delhi's demand. The tripping immediately shut down some 14,000 MW of generation capacity of state-run utility NTPC.      Who triggered the collapse? Fingers were pointed at Uttar Pradesh, Haryana and Punjab for overdrawing power. All three states stoutly denied the charge. PowerGrid chairman A M Nayak could not give a reason for Tuesday's grid collapse. "I am a technical person and it will be unfair on my part to suggest a reason without fully understanding and analysing the sequence of events that led to the problem," he said.      Nayak said the complex grid network and the increasing interconnectivity increase the vulnerability of the system. "It is difficult to point a finger at something quickly in a complex grid. Things happen in milliseconds. We have data from some 100 critical sub-stations. Only after a proper analysis will we be able to identify the reason."      Some 5,000 MW in the northern grid was restored by 4pm, or three hours after the outage. The grid was carrying 32,400 MW when it tripped. Similarly, 2,000 MW was restored in the eastern grid (12,000 MW) and 500 MW in the north-eastern grid (1,100 MW). The northern grid was carrying 22,000 mw, or 80% of its load by 7.30 pm. The eastern grid carried a load of 4,400 MW, or 40% of its usual load of 12,000 mw. The northeastern grid was operating at near-full capacity of 1,200 mw.      Nayak indirectly pointed that overdraw could be causing the collapse. "Some sections (of the grid, an indirect reference to states) are creating problem by overdrawing. The grid system is dynamic and not static. There are several parameters...voltage, frequency etc. These keep changing. Small over or under-drawal will be here and there. I can't say it will stop."      But Nayak's words did not cut much ice with UP, Punjab and Haryana, the states that had been blamed for tripping the northern grid by overdrawing power on Monday. All three denied the allegation. LIGHT AT END OF DARK HOLE: An RTO officer in Chandigarh keeps the files moving on Tuesday despite a blackout

Hundreds of millions without power in India

Trains ground to a halt across the country, leaving passengers stranded at railway stations

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• India's energy crisis threatens growth
• In pictures: India's power crisis deepens
• Monday's power disruption

Hundreds of millions of people have been left without electricity in northern and eastern India after a massive power breakdown.

More than half the country has been left without power after three grids collapsed - one for a second day.

Hundreds of trains have come to a standstill and hospitals are running on backup generators.

The country's power minister has blamed the crisis on states drawing too much power from the national grid.

The breakdowns in the northern, eastern, and north-eastern grids mean around 600m people have been affected in 20 of India's states.

Traffic jams

In a statement on national TV on Tuesday evening, Power Minister Sushil Kumar Shinde said he had appealed to states to stop trying to take more than their quota of power.

Continue reading the main story

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India has one of the lowest per capita rates of consumption of power in the world ... this is nothing compared to say, Canada"

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Soutik Biswas India correspondent

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• Read more from Soutik

"I have also instructed my officials to penalise the states which overdraw from the grid," he said.

Media reports in India have suggested that Uttar Pradesh is among the states that government officials have been blaming for the grid collapse.

But officials in the state denied this, saying there was "no reason to believe that any power operations in Uttar Pradesh triggered it".

Anil K Gupta, the chairman of the state's power company, called for "further investigation to ascertain the real cause".

Also on Tuesday it was announced that Mr Shinde had been promoted to the post of home minister, in a widely anticipated cabinet reshuffle.

'Complete mess'

By late on Tuesday, officials said the north-eastern grid was fully up and running. The northern grid was running at 75% capacity and the eastern at 40%.

Businesses had to use generators or candles to keep working once it got dark

In Delhi, Metro services were halted and staff evacuated trains. Many traffic lights in the city failed, leading to massive traffic jams.

Much of the country's railway network has started moving again, although a full service is not expected for many hours and there is a huge backlog to clear.

The failure on the northern grid on Monday also caused severe disruption and travel chaos across northern India.

One shopworker in Delhi, Anu Chopra, 21, said: "I can understand this happening once in a while but how can one allow such a thing to happen two days in a row?

"It just shows our infrastructure is in a complete mess. There is no transparency and no accountability whatsoever."

In eastern India, around 200 miners were trapped underground as lifts failed, but officials later said they had all been rescued.

Ageing grid

Addressing a news conference earlier on Tuesday, the chairman of the Power Grid Corporation of India said the exact cause of the power cut was unclear, he said, but that it appeared to be due to the "interconnection of grids".

Continue reading the main story

"Start Quote

This is also the season of no rain when humidity is high, the heat is sweltering and people get taken ill"

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Narayan Bareth BBC News, Jodphur

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• BBC reporters: India's power failure

"We have to see why there was a sudden increase in load... we will make sure that such a situation is not repeated," he said.

"Our message to people is that they are in safe hands, we have been in the job for years."

After Monday's cut, engineers managed to restore electricity to the northern grid by the evening, but at 13:05 (07:35 GMT) on Tuesday, it collapsed again.

The eastern grid failed around the same time, officials said, followed by the north-eastern grid.

Areas affected include Delhi, Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Rajasthan in the north, and West Bengal, Bihar, Orissa and Jharkhand in the east.

Smriti Mehra, who works at the Bank Of India in Delhi, said it had to turn customers away.

"There is no internet, nothing is working. It is a total breakdown of everything in our office," she told AFP.

The failure of traffic lights has led to huge traffic jams in Delhi

Across West Bengal, power went at 13:00 and all suburban railway trains on the eastern railways ground to a halt from Howrah and Seladah stations, the BBC's Rahul Tandon reports from Calcutta.

However, the city is not badly affected as it is served by a private electricity board, our correspondent adds.

Power cuts are common in Indian cities because of a fundamental shortage of power and an ageing grid - the chaos caused by such cuts has led to protests and unrest on the streets in the past.

But the collapse of an entire grid is rare - the last time the northern grid failed was in 2001.

India's demand for electricity has soared in recent years as its economy has grown but its power infrastructure has been unable to meet the growing needs.

Correspondents say unless there is a huge investment in the power sector, the country will see many more power failures.

Are you in the affected regions? Send us your comments and experiences using the form below.

Indian Passion for Gold Gets American Glitter

US & Co set to become biggest suppliers as mining the metal gets difficult in other big producers

 India's lust for gold is legendary. Indian households hold over $950 billion of the yellow metal, revealed a recent study by Macquarie Research. India imports most of its requirements: a quarter of all the gold sold globally is imported by us. 

But in recent times, another country has matched India's hunger for gold. China, the largest producer of the precious metal, became a net importer in 2011, as domestic demand soared. Sometime this year, China is expected to overtake India as the largest gold consumer. China, which is among the top producers of gold globally, has high entry barriers for private miners and also uses its production for building up national reserves. 
Entry barriers for entrepreneurs are high in Russia as well. South Africa and Australia, both big producers of the yellow metal, are becoming unpopular due to high taxation and high production costs, respectively. 
Some European gold reserves — for example, the Rosia Montana in Romania, the largest untapped reserves in Europe — are facing problems due to environmental regulations. That begets the question: where will India get its gold from? The US, and other countries in the Americas. 
North America has always been significant in the global gold stakes. Globally, there have been 99 significant gold discoveries (defined as a deposit containing at least 2 million oz of the metal) during 1997-2011. The Americas hold the greatest share in these discoveries—not surprising given that the Americas have accounted for more than half the industry's discovery-oriented gold exploration spending during the period. In 2010, the gold exploration budget rose to $5.4 billion, which was 59% more than in 2009. In 2011, mines in the US produced gold worth about $12 billion. 
Gold mining companies are again flocking to the Americas. In Canada, miners are making huge new discoveries as well as re-starting old mines that were deserted due to lack of funds. In 2011, production rose 21% year-on-year to Canada's highest output in five years. Mexico's large mineral belts have been equally attractive for gold miners. North America Accounts for Lion's Share of Production 
With 2011 production coming in at an estimated 85 mt, Mexico has seen a 254% increase in output. 
In all, North America was responsible for 16% of mine production in 2011. And with a year-on-year production growth of 9%, well above the global average, along with a bevy of ongoing junior exploration, North America will be pumping out gold from a lot of new mines. Mining companies without proven reserves—the so-called juniors—are equally enraptured by North America. More than 70% of them own a project in North America, with over half owning a project in Canada, 17% in the US and 11% in Mexico, according to research by Zeal, a consultancy. 
What does this mean for India? It is clear that in the short term the physical market will not be flooded by freshly mined gold despite the high prices. Scrap sales and offloading of bullion by central banks will remain critical for ensuring adequate supply in the market to meet our demand. 
The silver, or perhaps golden, lining is that mines of the future will be developed in nations that believe in free trade. Unlike China, which is using mines for building domestic reserves, countries such as the US and Canada will allow gold to flow into the international market.

Indian Cos’ Q1 net falls 12% since last qtr

Mumbai: More signs of a slowdown in the economy emerged in the second week of the first quarter results season. An analysis by Crisil Research of the April-June numbers announced by 208 large- and medium-sized companies shows that their revenues grew by 15.3% on a yearly basis while the net profit rose 8.4%.      The companies do not include banks and non-banking finance companies.      The picture looks even more alarming if one compares the results on quarterly basis. These 208 companies together have reported a 4.6% drop in revenues while their net profit slid by nearly 12% when compared to the fourth quarter of the last fiscal, the analysis showed. "Overall, sales growth remains weak on the back of slowing economy and decline in investment cycle. Poor monsoon and resultant higher inflation can further hurt growth, unless investments pick up," said Mukesh Agarwal, president, Crisil Research. "Higher interest costs — up 35% y-o-y — are also hurting the bottomline growth, which we expect to remain in single digit in the near term," he said.      The 15% yearly growth in revenues came on the back of a strong 30% revenue growth posted by IT and pharma companies. If one excludes the strong showing by these two sectors, the overall revenue growth falters to just 12.9%. A combination of lower revenues and higher expenses continues to impact EBITDA (gross profit) margins which are under severe pressure and have declined by close to 201 basis points (100 basis points = 1 percentage point) on a yearly basis and 132 basis points on a quarterly basis, the Crisil analysis showed.      Margins pressures are more pronounced in sectors like construction, auto components, commercial vehicles, steel and paper. FMCG companies have bucked the trend as their EBITDA margins have expanded by close to 130 basis points y-o-y, led by decline in input costs and price increases in both cigarettes and soaps &detergent segments.      In the banking segment, bad loans of the public sector banks have been on the rise and remain a matter of concern. Gross NPAs of these banks have increased to 2.7% from 2.4% in the previous quarter, with sectors like power, airlines and textiles showing more stress compared to others. Although the net profit growth of public sectors banks has been close to 22%, this is largely because of lower provisioning, the analysis showed. Compared to the state-run banks, some of the private sectors banks which have announced their results have shown improvement in their asset quality.

State to fine bldrs 31cr for duping Mhada

Mumbai: The going is set to get tough for 33 builders who have not yet surrendered surplus built-up area worth over Rs 200 crore to Maharashtra Housing and Area Development Authority (Mhada). The state housing department has proposed to slap fines collectively worth Rs 31.47 crore on thesebuilders. 

    The fines will be over and abovethelandthatthebuilders have to surrender to Mhada, a senior officialsaid. 
    The 33 builders owe Mhada 1.22 lakh sq ft of land, which is roughly equivalent to 407 small-sized(300sq ft)flats. 
    Under the development control regulations, builders redeveloping dilapidated cessed properties in the island city have to surrender a portion of the built-up space to Mhada. The builder receives a floor-space-index of 3 for such redevelopment. The available built-up spaceisfirstusedto rehabilitate tenants. The builder gets to retain proportionate area asincentivefor hissalecomponent. The surplus built-up area has to be divided in the ratio of 2:1 between Mhada and the builder. The 33 builders breached the rules and some even sold off Mhada's share of surplus area.In somecases,the surplus area has not been surrenderedfor over twodecades. 
    Mhada had planned to use thesurplusbuilt-up area for its various redevelopment and rehabilitation projects. 
    The redevelopment projects involving these lands are situatedin areaslikeMazgaon, Tardeo, Prabhadevi and Parsi Colony, among others, where real estate rates vary from Rs 1.5 lakh per sq m to Rs 2.5 lakh per sq m. 
    Last year, the economic offences wing registered cases against these builders on Mhada's complaint. The proposal hasbeen putup for approvalbefore minister of state(housing) Sachin Ahir,following whichit will be submitted to CM PrithvirajChavan. 
HOMING IN ON THE DEFAULTERS 
Land Ahoy Of the 1.22 lakh sq ft land due to Mhada from 33 projects, about 76,828 sq ft (10 projects) is in the Mazgaon-Byculla belt. Nineteen projects are in the Dadar-Mahim-Parel-Sewri belt. Mhada's share in these works out to 24,363 sq ft. The remaining four projects are in Tardeo and parts of south Mumbai, where Mhada's share is 21,131 sq ft 
Money Matters At current market rates, Mhada's share is valued at over 200 crore. About 407 small-sized flats can be built on the area 
Rise From The Ashes The file on fine proposal was charred in the Mantralaya fire. It was reconstructed and put up for approval 
Fine Move The housing department has used state norms on fines for overstay in government tenements to charge builders

City got fraction of 26/7 rain this time Colaba Faces A Deficit of 632mm, Santa Cruz 346mm

July 26 this year was a complete contrast to that fateful day seven years ago when incessant rains and the consequent floods left a nightmarish memory in every Mumbaikar's mind.      On July 26, 2005, the city received 944mm rainfall in 24 hours. This Thursday, Colaba got just 1.8mm and Santa Cruz, 0.9mm between 8.30am and 5.30pm.      The current rainfall situation appears grim for Mumbai. As of Thursday, the total rainfall for Colaba and Santa Cruz was 541mm and 887.6 mm, respectively. According to the meteorological department, Colaba faces a deficit of 632mm and Santa Cruz, 346mm.      "The offshore trough over the Konkan-to-Kerala coast has become very feeble, because of which rainfall activity over the Konkan coast has weakened," said V K Rajeev, director of weather forecast at the Indian Meteorological Department (IMD), Mumbai. "Rainfall activity has, however, picked up in Madhya Maharashtra and Marathwada since the past three to four days because a cyclonic system is active over these areas. But Mumbai, which falls in the north Konkan region, has not been receiving much rainfall."      In the 2005 deluge, more than 500 people were killed in the worst-ever floods to hit Mumbai, Konkan, Thane and Navi Mumbai. Most deaths —273—were reported from Mumbai alone. Infrastructure losses were estimated at Rs 1,000 crore, livestock at Rs 100 crore, housing at Rs 300 crore and crops at Rs 600 crore after the deluge.      Varsha Tawde, a social worker who had conducted several mental health camps post floods, said the fear of disaster persisted for long. "For the next twothree years after the 26/7 deluge, every time it rained heavily, it reminded people of the floods. In slum areas, which had lost the most number of lives, people were scared and depressed for months thereafter. The biggest problem later was the loss of important documents," she said.      Psychiatrist Dr Harish Shetty recalls having to counsel parents whose children had died in cars. "I had met three set of parents who had lost their children after being locked in cars. It took several sessions for the parents to come to terms with such a death," he said.      The situation, as of now, does not seem to be encouraging for the city, which may face major water cuts if monsoon does not buck up soon. "If a low pressure area forms over the Konkan area soon, the wind speed will start increasing, and that would bring good rainfall over the city. But, as of now, Mumbai is only likely to receive passing showers for the next two days," said Rajeev.

Global PE biggies put India story on hold

Number Of Private Equity Cos May Shrink As They Cut Capital Allocated To India Mumbai: "We stay away from places that have impossible governments and impossible tax regimes, which means S ayo n a r ato India," TPG Capital founder-partner David Bonderman said recently, tearing into the country's investment attractiveness. Bonderman, among the most influential private equity (PE) investors, said publicly what his peers quipped behind the scenes: India is possibly the least attractive of the emerging markets for PE, right now.      India's recent regulatory moves on retrospective taxes spooked PE funds, which are long-term risk investors. But it's only a part of the story going awry. Big investors into PE firms like global pension funds, university endowments and family offices — piqued with lower growth, poor corporate governance and bad returns — are cutting back capital allocations for investments in India. This leaves more than 500 PE firms in the country struggling for survival, with the sector bracing for a sudden contraction in the number of funds within 12 to 18 months.      The present count of PE firms is a staggering jump considering India had less than 20 just over a decade ago. PE firms invested $3.98 billion in the first six months of 2012 compared to $5.2 billion in the year-ago period, said a JM Financial note on the industry. The 23% decline by value probably tracked the rupee's drop against the US dollar. But the number of deals remained flat at 185, suggesting the shrinking size of investments.      "Global investor confidence has been shaken badly even as India vies with not China, but Indonesia, Vietnam and South Africa for capital. India's operating business climate always has had challenges, but there was growth. Economic slowdown, which may be lingering for a while, can be unsettling," said Wilfried Aulbur, managing partner, Roland Berger, a global management consulting firm. "Private equity mostly made growth capital investments for minority stakes in Indian companies. They have had little influence on the strong promoter-driven businesses, and hardly managed what they usually do in western markets to improve return on investments," he added.      Few PE firms have made decent profits even though bulge-bracket players like Blackstone Group have a reasonably big portfolio in India. A fund manager who started investing well over a decade ago said most of hisinvestments since 2006 made no profits till date, while a few earlier deals showed returns in 'high teens', or below 20%. Firms like Kohlberg Kravis Roberts & Co (KKR) started NBFCs to extend financing for fixed returns since profits on classic private equity deals are becoming tedious. Incidentally, industry insiders reckon that not more than 200 PE funds are active currently.      "The number of PE firms operating in India shall decline as many would find it tougher to raise a new fund for investments. This would be more in the case of Indiafocused PEs than global firms," said Bhavesh Shah, managing director, JM Financial. Shah said some global firms could realign their emerging markets exposure based on investment attractiveness and portfolio performance. The PE industry is unlikely to see a spate of consolidation moves as M&A in the sector would be need-based and not a trend. "This would mean shutting down of a few firms," he added, while mentioning that India still had fewer funds than China, which is believed to have more than 2000 private equity firms.      Rahul Bhasin of Baring Private Equity Partners said retrospective taxes, combined with bad markets, have distorted investor sentiments about India's PE story. China may have similar woes but investors have seen profits there, he added. Many India-focused PE firms have little cash to deploy, prompting them to hit the market for another fund raise, while in some cases investors behind these funds have put further draw-downs on hold.      "The overwhelming view is that investor performance in India has been sub-optimal at best, raising speculation that many funds may either wind down on-shore operations, or find it increasingly difficult to raise fresh capital. From all our conversations, there is a general belief, and a hope as well, that a contraction of the Indian PE industry is probable and necessary," said Sourabh Chattopadhyay, partner, Wellesley Partners, a pan-Asian placement firm focused on the financial services industry.      Indian PE play peaked with $19 billion investments in 2007 but fell sharply in subsequent years. Private equity investments totalled a little over $10 billion in 2011. The industry, which offers million-dollar jobs to heavy hitters, has over 1,500 people in its fold riding on the lucrative 2:20 (fund managers charge 2% management fees on committed capital and incentive fee of 20% on capital returned) remuneration formula. But, with fresh capital raise getting harder, some are already settling for lower management fees. "There is a growing discussion that the unfolding scenario could see India private equity managers being forced to accept something less favourable than the 2:20 structure," Chattopadhyay added.      "We see fewer funds competing with us for deals in recent days. PEs without a critical mass and no strong engagement with India's long-term story will get out. One can call it shrinking or maturing of the private equity in India," said a managing director at one of the world's largest private equity firms. "And there are people in my firm who think like Bonderman, that we shouldn't be here," he added, while striking a contrarian mood.  LOSING APPEAL äPE firms invested $3.98bn in the first six months of 2012 compared to $5.2bn in the year-ago period  äIndian private equity play peaked with $19bn investments in 2008 but fell sharply in subsequent years  äPE investments totalled $8bn in 2011  äFew PE firms have made decent profits even though bulge-bracket players like Blackstone Group have a reasonably big portfolio in India  äThe number of PE firms investing in India will fall, analysts say ALARM BELLS     We stay away from      places that have impossible governments and impossible tax regimes, which means S a y o n a r a to India  David Bonderman |  FOUNDER, TPG India's operating business climate always has had challenges, but there was growth. Economic slowdown, which may be lingering for a while, can be unsettling  Wilfried Aulbur |  MANAGING PARTNER, ROLAND BERGER

'India's growth will decide future Chinese engagement'

India's role in a future world order in which China is likely to lead from the front depends a lot on what happens on this country's growth front, says Martin Jacques, the best-selling author of "When China Rules the World".

"A lot has been happening to China's economic growth. It does not matter if India is behind China by 1 or 2 per cent; the main thing is India must carry on growing at a reasonably fast rate. India has to find ways to sustain the growth rate. It will open possibilities for India," Jacques told reporter in an interview.

Jacques said the great advantage of China is that "it is a competent state and is endlessly reforming". The Chinese state has "great legitimacy among the Chinese people" as an embodiment of Chinese civilization, the writer said.

Jacques observed that as China was growing rapidly, the country was looking more inward to connect to its history.

Jacques, a senior visiting fellow at the London School of Economics and a columnist for The Guardian and the New Statesman, is in India to promote an expanded edition of the "When China Rules the World (Penguin Books India)".

"It is not possible for India to copy the Chinese state. Instead of India angsting against China, the country must find out how it can strategically engage with China. India can have a much better relationship with China if it sorts out the unresolved border issue. China has sorted out its border with every country (like Russia and Vietnam) except India," Jacques said.

"We must not live in the past; it is time to let go."

Jacques argues in his book that as China's powerful civilisation re-asserts itself, the western domination of the world will end. The impact of an ascendant China will be not only be economic but also cultural. In this context, India needs "much more exchanges with China and study what is happening in China," Jacques said.

"Now the Chinese do not think about India (as a threat), India is not on their map at all. China now thinks with the west. It doesn't think India is a serious player," the writer said, explaining that the onus was now on India to "engage with China".

He said the two countries must have more tourist exchanges and the Chinese must be allowed to "enjoy and appreciate the colours and rich cultures of India" to create better understanding.

Jacques pointed out that India has not played its hand very well in South Asia - especially in countries like Pakistan, Sri Lanka, Bangladesh and Nepal - while China has strong relations with these countries.

"Pakistan hedges with China against India while India has been a big brother to the countries in the South Asian region," Jacques said.

The analyst said in the last 10 years, there has been an extraordinary shift in Southeast Asia with nearly 25 percent of the exports in the region going to China. For countries like Singapore, Malaysia, the Philippines and Thailand, barring Indonesia, China is the largest trading partner, Jacques pointed out.

"East Asia has seen major re-alignment of economic powers in the last decade when China emerged as a more economically powerful country. The country that suffered is Japan. The country (Japan)'s economic growth has declined in the last 10 years with almost zero growth. China has opened its economy with lower tariffs while Japanese economy is closed. Trade with foreigners is much more restricted compared to China," he said.

China's growth is dramatic because it is happening very quickly, Jacques said.

"The country of 1.3 billion people is growing by nearly 10 per cent a year. But it is still a poor country," Jacques said.

He said in keeping with the country's economic disparities, China's foreign policy was still "essentially an extension of Deng Xiaoping's policies of economic growth and poverty reduction - everything was secondary to that".

"However, China now has influence in several regions like East Asia, South Asia, Africa and Latin America," the writer said, adding that China's relationship with the world will take "at least a decade to develop".

Martin Jacques is also the author of "The Rise of the Middle Kingdom" and the "End of the Western World".

Google : ‘We Aim to Bring Another 3 b Online in 10 Yrs’

For internet giants such as Google, emerging markets represent the next billion users 
to get online . Lalitesh Katragadda heads Google's research for emerging markets (EMs), which includes India, Asia, Africa and Latin America. In an interview with Harsimran Julka and N Shivapriya, Katragadda says he ensures barriers such as language do not prevent millions of new users from getting online. 

How is Google Search becoming more social? 
From Search to YouTube to Gmail, all our products are becoming social. Google + is just the face of our social strategy. It is easy to find answers to 80-90% of the world's queries. It's the next 10-20% of queries that make you a game changer. Social search is making web more fun. 
What is the challenge Google has set for itself in India and other EMs? 
The challenge before us is to make the next 3 billion people go online in the next decade. In India, we have a target of getting the next 200 million users go online from the current 100-120 million. India also has about 150 million English speakers. And there is a dogma in India that English and IT are important, if your child has to make it anywhere. India will be able to easily achieve 150 million users but to reach about 300-500 million users is a big task and we won't be able to reach there unless we break the Indic barrier. The next web is going to be mobile, it's going to be Indic. 
Is lack of proper input devices preventing internet penetration? 
Yes. That's why we are pushing Android so hard. When we can make a grandmom use internet without using a keyboard, I think we can make the next leap. In future, people may not type, they may just speak. The problem is that we have good speech recognition engines for English but not for the Indic languages. It is a problem we are trying to solve. 
harsimran.julka@timesgroup.com 

India Likely to See Next LS Election Before ’14, says Modi

Gujarat chief minister Narendra Modi took a dig at the Congress-led central government at the Centre during his trip to Japan, saying that India could see the next general election before 2014.  "Our central government is facing so many internal problems. So I don't known when (election) it will happen. It's difficult to say if election will come in 2013 or in 2014 or by the end of 2012," Modi said, during his visit aimed at inviting investment in his state. Modi also expressed confidence that the coalition led by his party, BJP, will sweep the next Lok Sabha polls.  "I am confident that the BJPled NDA will come to power because the country remembers NDA under the leadership of Atal Behari Vajpayee," Modi said, adding, "Inflation was controlled. The work on infrastructure was moving very fast. We were constructing 11 km road per day; today it has come down to 3 km. The people remember the NDA as a good government. So they will bring it back to power."  The BJP leader, who said he was sure of winning the assembly elections in his state later this year, ducked questions over the possibility of being projected as his party's prime ministerial candidate. "I am committed to Gujarat. I am committed to the 60 million people of Gujarat. They have given me the responsibility. I will have to fulfill that," Modi said, in reply to a question on whether he nurtured the ambition of becoming India's prime minister.  Congress leaders reacted sharply to Modi's comments on foreign soil. "First of all, let him say whether he is confident of coming back to power in Gujarat? Forget about NDA ," said corporate affairs Minister Veerappa Moily.  Modi invited Japanese businessmen to the forthcoming investors' summit in his state to boost commercial and economic relations between the two countries. QUITE HOPEFUL: Modi

EASIER MONEY TRANSFERS RBI studies cheap & quick remittance mode

Mumbai: Sending money home for millions of migrant labourers may become a lot cheaper and faster if the recommendations of an IIT panel are adopted by RBI and public sector banks. The IIT study has shown how existing infrastructure could be used for instant transfer of small amounts at a reasonable cost.      The reason why the report gains significance is that the earlier recommendations made by the author of the report—on allowing free access to all ATMs and on reducing charges on debit cards— were accepted by RBI. In the latest report: "Including the poor-—need for reforms in remittances," Ashish Das of the department of mathematics at IIT-Bombay, estimates the domestic remittance market to be around $10 billion in 2007-08, 60% being inter-state transfers and 80% directed towards rural households. However, 70% of these remittances are estimated to be channeled through the informal sector even though banks have a robust system for instant and low-cost funds transfer.      According to the report, there is a need to showcase the existing interoperable platform of cash-national electronic funds transfer (Cash-NEFT) which allows even a non-customer to walkin and deposit cash in a bank branch in India for credit of the funds in any other bank's account. NEFT is used extensively by those who practice online banking. However, for those not familiar with electronic channels remitting funds by depositing cash in a bank branch continues to be a huge challenge.      At present, bank charges for depositing cash into a bank account from a nonhome branch counter is more than the charges to do cash-NEFT. "With RBI mandating a low charge of Rs 2.5 or Rs 5 for even Cash-NEFT, it may not be viable for banks to offer this product and they invariably resort to varied tactics to avoid accepting cash under NEFT," the report said.      One of the most innovative suggestions in the report is the possibility of a reverse debit transaction using a card swipe machine. The report suggests that workers should be allowed to hand over cash to a merchant with a point of sale (card swipe machine) with the money being sent to the account of the cardholder. To promote such a system, the report recommends that urban business correspondents of banks should be provided with PoS machines to facilitate such remittances.      The panel has recommended that since most banks have started offering unique account numbers to customers, the need to provide branch codes could be discontinued. Second, the report suggests that since regional rural banks now have access to computer systems of their sponsor banks, there should be a system where a migrant can deposit funds in any branch in a city and have the money sent to the rural branch using Cash-NEFT.

Slow mkt? Firm strikes 21.5k/sq ft deal Marico Buys Office Space In Kalina Bldg For 130cr

Mumbai: At a time when Mumbai's office market is witnessing sluggish demand, FMCG major Marico has purchased approximately 60,000 sq ft of space in Grande Palladium, a ninestorey Grade A building at Kalina. The company, which currently operates from Rang Sharada at Bandra (W), will shift to its new corporate headquarters within a few months.      The Rs 130-crore deal, which translates to approximately Rs 21,500 per sq ft, is slightly higher on per sq ft rate basis than the Rs 400-crore deal (approximately Rs 18,000 a sq ft) struck by Edelweiss in 2010 for 2.5 lakh sq ft space in Lotus Midtown at Kalina. Confirming the deal, Marico said they needed the space to cater to the growing infrastructural needs of the FMCG group.      Nikhil Bhatia, head of the western region of global property consultants CBRE, said, "Unlike in other areas, Kalina is not facing an oversupply of office space. As per our data, approximately 3 lakh sq ft of office space is lying vacant against 1.9 million sq ft space being constructed in Kalina. In that context, the price paid by Marico seems at par with the prevailing rate in that area."      Property consultants say that despite the poor infrastructure facilities in the area, real estate prices in Kalina are on the higher side. "The reason is Kalina's proximity to the banking district of Bandra Kurla Complex (BKC). As a result, many companies who can't afford the high prices of BKC prefer to purchase or rent space nearby," a broker said.      In 2009, Rustomjee sold 1.42 lakh sq ft of office space in Andheri (E) to public sector firm SBI Life insurance for Rs 211 crore, close to Rs 15,000 per sq ft, and Motilal Oswal bought 1 lakh sq ft of commercial space from K Raheja Universal at Prabhadevi for Rs 160 crore.      However, the biggest deal recorded so far was when multinational bank Standard Chartered bought close to 2.5 lakh sq ft of office space in BKC for Rs 750 crore in late 2008. The bank bought the property from developer P D Developers at around Rs 30,000 per sq ft.      In early 2008, the British Council bought commercial property from Naman Developers for around Rs 45,000 per sq ft in BKC.      BIG-TICKET PURCHASE  • Marico, which currently operates from Rang Sharada at Bandra (W), will shift to its new corporate headquarters within a few months  • The Rs 130-crore deal is slightly higher on per sq ft rate basis than the Rs 400-crore deal (approximately Rs 18,000 a sq ft) struck by Edelweiss in 2010 for 2.5 lakh sq ft space in Lotus Midtown at Kalina  • Property consultants say despite poor infrastructure facilities in the area, prices in Kalina are on the higher side due to its proximity to the Bandra Kurla Complex

Pranab is lucky 13th Sweeps Prez Poll With 69% Of Valid Votes

New Delhi: Congress leader Pranab Mukherjee's big win in the presidential election—which makes him the 13th occupant of Rashtrapati Bhavan—marks the return of an active politician at Raisina Hill after three successive occupants who were either past their prime in politics or did not have a political background at all.      Since July 1997, when K R Narayanan became president, the high office has been held by missile man A P J Abdul Kalam and Pratibha Patil whose careers had peaked, while Mukherjee was a hands-on politician playing a crucial role in UPA affairs.      Unlike his predecessors who were picked as safe choices by the  ruling establishment of the day, Mukherjee sought the job and even bent his party to his will, aided by some ill-timed pressure tactics by Congress ally Mamata Banerjee that yielded unexpected results.      Interestingly, Mukherjee will move to Rashtrapati Bhavan from 13, Talkatora Road, a fact that may interest the numerologically inclined. Those who know Mukherjee say his sense of the Constitution, politics and grasp of governance make him his own man who cannot be taken for granted as President. Mukherjee made the point, saying he would try and fulfill expectations to "defend, preserve and protect" the Constitution.      Mukherjee polled a vote value of 7,13,763 or about 69.3% of the valid votes in the electoral college (or 65% of all votes) — aided by cross-voting from BJP legislators in Karnataka. Opposition nominee, former Speaker P A Sangma, secured a vote value of 3,15,987, handing Mukherjee a handsome margin.      After the result was finally out on Sunday evening, Congress chief Sonia Gandhi, accompanied by son Rahul, called on Mukherjee to congratulate him. The presence of Rahul was noted, particularly in the context of his announcement that he was accepting a more active role in Congress affairs.      Soon after, PM Manmohan Singh reached Mukherjee's residence where celebrations were underway since the afternoon when his tally crossed the halfway mark.      Cross-voting by BJP MLAs in Karnataka, where the party is in majority, saw Mukherjee gaining a lead of 117 votes to Sangma's 103. BIGGER MARGIN THAN EXPECTED  UPA candidate Pranab Mukherjee polled 7.14 lakh votes, or nearly 69% of valid electoral college votes, thrashing P A Sangma who got 3.16 lakh Pranab got  more than 7.11 lakh committed votes of UPA and parties like JD(U) & Shiv Sena  Sangma's committed support was around 3.10 lakh votes. He gained from additional votes in states like W Bengal As many as 15 votes cast by MPs were invalid, including nine for Pranab UPA had  expected 535  votes of MPs, got 527. One Oppn MP cross-voted. In all, 81 votes termed invalid In BJP-ruled  Karnataka, Pranab got 117 votes to Sangma's 103. In Jharkhand, vote again showed up divide in NDA Cong sees major success in win      The break in NDA was also evident in Jharkhand where Jharkhand Mukti Morcha supported the UPA candidate on expected lines although two independents voted for Sangma. There were as many as 15 invalid votes cast by MPs, with nine favouring Mukherjee. These would entail a loss of a significant 6,372 votes for the UPA camp. Overall, there were 81 invalid votes and although Sangma suffered due to crossvoting, his tally exceeded the committed opposition vote value by around 5,000.      Congress leaders sought to rub in cross-voting in the opposition ranks while BJP spokesperson Ravishankar Prasad admitted that the Karnataka vote did not reflect the party strength. But he added that the opposition tally was a record with the BJP joining forces with parties such as Naveen Patnaik's BJD and J Jayalalithaa's AIADMK.      The successful election is, however, a major success for Congress that has been grappling with rough weather over a slowing economy and trouble from allies, particularly the Trinamool Congress and the Nationalist Congress Party. After the result, Mukherjee spoke to Mamata Banerjee who agreed to come to Delhi for the swearing-in. In an effort to mend fences, he is understood to have insisted on Banerjee's presence, saying the ceremony would be incomplete without her.      The conclusion of the presidential election and the expected smooth sailing in Vice-President Hamid Ansari's reelection is set to clear the way for some energetic action on the governance front with the PM focusing on some much-needed reform measures. ONE FOR THE ALBUM: (Left to right) The PM's wife Gursharan Kaur, PM Manmohan Singh, LS Speaker Meira Kumar, Mukherjee's wife Suvra, Pranab Mukherjee, Sonia and Rahul Gandhi

RIL Q1 net dips 21% to 4,473cr

Mumbai: Mukesh Ambaniled Reliance Industries on Friday reported its third consecutive drop in its quarterly profits. The profits for April-June period fell 21% to Rs 4,473 crore due to poor performance of its core businesses of refining, petrochemicals and oil & gas. RIL's shares closed down 0.7% to Rs 723 on Friday ahead of the results, which are largely in line with market expectations as analysts predicted 18-28% drop in net profits.      The drop in profits were in spite of a 13.4% growth in its top line to Rs 94,926 crore and contribution of Rs 1,904 crore from other income as treasury gains from its huge cash pile accounted for 35% of the profit before tax.      In its core business of refining, which accounts for over 77% of revenues, the gross refining margins (GRMs) for the quarter fell to $7.6 per barrel against GRMs of $10.2 in the year-ago period, pulling down its EBIT by over 32% to Rs 2,151 crore. The EBIT for the petrochemicals business, which accounts for 20% of revenues, fell by over 20% to Rs 1,756, lower from what the RIL made from treasury operations.      RILs oil and gas business, which is facing regulatory hurdles reported 34% drop in EDIT to Rs 972 crore as its oil and gas production from its showcase KG-D6 block fell by 37% and 33% to 0.9 million barrels of crude oil and 104 billion cubic feet of natural gas respectively.      "RIL has improved its earnings profile as profits from operations were higher on a sequential basis on the back of volume growth in the refining business," said RIL chairman Mukesh Ambani, adding that the company has commenced its next phase of capital investments in the refining and petrochemical segments to enhance earnings and value of energy businesses.      Ambani kept his promise of making RIL a debt-free (net of cash) company but briefly as the RIL debts increased almost by $1 billion during the quarter to Rs 1,320 crore against cash of $12.7 billion.      Declining earnings have cost RIL its position as India's biggest company by market value. However, Ambani has set a target of doubling RIL's profits in the next five years with $12 billion investments in the refining and petrochemicals segment. Overall the company will be investing Rs 1,00,000 crore across its businesses of energy, telecommunications, retail.      However, the company is not in favourites list of analysts as it has eight sell ratings by analysts, 18 holds and 26 buys, according to a Bloomberg data, which says that the number of buy recommendations has dropped to 50% of the total, the lowest since December 2010.      "I see a clear disconnect in the refinery profits. How can the EBIT increase by Rs 400 crore when the GRMs stood same at $7.2 per barrel in the last two quarters and crude processing increased by just one million tones," investment advisor S P Tulsian told TOI, adding that the results were disappointing as the EBIT from its bread-and-butter petrochemicals business has fallen in last three quarters. Mukesh Ambani