COVER STORY

Indian Realty : The New Realities -- N Janardhan Rao

The Indian real estate sector has never had it so good. Indeed, the sector grew by leaps and bounds in the last few years. Billions of dollars worth of investments were pumped into the sector as investors, local as well as foreigners, chased the `Build India' story. However, of late the odds are only adding up against the sector. The mortgage crisis in the US and the subsequent global liquidity crunch, and now the growing inflationary pressure on account of the soaring food and oil prices that have pushed inflation to its highest level in a decade, combined with hardening interest rates, threaten to make the going tough for the domestic real estate sector in the days to come. Amongst the positives are the facts that India needs more cities, more power plants, bridges, flyovers, and roads, i.e., in essence, a lot of infrastructure. What is the ground reality for Indian realty?

© 2008 The Icfai University Press. All Rights Reserved

COVER STORY

Indian Real Estate : The Changing Face -- Lakshmi Narayanan

While India's property sector has undoubtedly witnessed a renaissance, a lot needs to be done still. Without waiting for the government to initiate changes, the industry players themselves should introduce reforms.

© 2008 The Icfai University Press. All Rights Reserved

COVER STORY

Indian Real Estate : Realty Bites -- Pradeep B Ranka, Santdas Chawla, Nick Mandalaywala and K Ravinder Reddy

In recent times, no other sector has generated the kind and amount of interest, nationally as well as internationally, as the booming realty sector in India has. A surge in demand for residential as well as commercial properties has seen the domestic realty sector record a `super' growth of over 30% during the past couple of years—a rate, hardly any other sector could rival. It is expected to grow 45% during the current fiscal. The boom has come riding on the back of a strong economy that has grown at a robust rate of over 8% during the last two years, continued growth of IT and ITES industry, a happening retail sector, thrust on infrastructure development and Special Economic Zones (SEZs), rising disposable incomes, a change in the mindset of traditional Indian middle-class towards owning a house, and last, but not the least, a slew of reform measures that include 100% FDI in construction and serviced land development. No doubt, they all have played a vital role in the revival of what was once almost a moribund sector. Against this backdrop, The Analyst invited experts to share their perspectives on the sector and related issues.

© 2008 The Icfai University Press. All Rights Reserved

ROUNDTABLE

Subprime Spillover : Hitting Indian Banks Too! -- Kavita Mendonca, Manoranjan Sharma,Robin Roy

The subprime crisis ripples have started to touch Indian banks too. The country's second largest bank, ICICI has recently announced a Mark-to-Market (MTM) loss of $263 mn in its loans and investment exposure. The loss to ICICI Bank can be attributed to its exposure to Credit Default Swaps (CDS) as well as to erosion in the value of investments made by its subsidiaries in the UK and Canada. Three public sector banks, viz., State Bank of India, Bank of Baroda and Bank of India have also fallen prey to the subprime fallout.

© 2008 The Icfai University Press. All Rights Reserved

FINANCIAL SERVICES

Natural Resources Funds : Betting High -- Y Bala Bharathi and Sanjoy De

In the wake of the unprecedented commodity boom, leading fund houses in India are making a beeline to launch nature-oriented funds.

© 2008 The Icfai University Press. All Rights Reserved

FINANCIAL SERVICES

Private Equity : Will It Regain Glory? -- N Janardhan Rao and PS Sarath Chandra

While the venture capitalists benefitted from the Internet frenzy in the late 1990s, now it is the turn of buyout firms, particularly the big ones, to benefit from the preponderance of cheap debt. However, the industry is entering an era of distressed markets, and whether PE can regain its past glory and strike mega-deals again remains to be seen.

© 2008 The Icfai University Press. All Rights Reserved

APOLITICAL

Soaring Inflation : What Its Control Calls For -- grk

As year 2008 started, the fairy tale of global economy came to an end. Suddenly, inflation has become a worldwide problem. The soaring oil and food prices that were once perceived as a mere blip in the growth cycle have suddenly become the spoilsport of the central banks, challenging their wits to keep them under check.

© 2008 The Icfai University Press. All Rights Reserved

BUSINESS ENVIRONMENT

Sovereign Wealth Fund : Is India Ready? -- N Janardhan Rao and V Ratna

Policy makers in India have been caught unprepared for the rapid increase in `sovereign wealth'. The inflating pool of capital has also increased the cost of an overly risk-averse investment strategy. This is the reason why Indian Government is mulling over the options to get the best risk-adjusted return on its wealth.

© 2008 The Icfai University Press. All Rights Reserved

BUSINESS ENVIRONMENT

Indian Food Price Crisis : Where Lies the Fault? -- Gursharan Singh Kainth

The root cause of the current food price crisis in India can be traced to the ill-conceived agricultural policies of successive governments, both central and state. Increased investment, improving and expanding the existing productive capacity, increasing the capital formation, and better focus on research and technology could help the nation reverse the trend.

© 2008 The Icfai University Press. All Rights Reserved

BUSINESS ENVIRONMENT

Online Reputation Management : A New Fad or Necessity? -- Y Bala Bharathi and GP Mrudhula

An industry of online fixers has emerged in the recent past to protect its clients against damaging information on the Web.

© 2008 The Icfai University Press. All Rights Reserved

BUSINESS ENVIRONMENT

Rupee's Fall : Relief at Last -- Amit Singh Sisodiya and Siba Prasad Pothal

In little less than a year's time, after touching an all-time high vis-à-vis the US dollar, rupee's fall has not been less dramatic either.

© 2008 The Icfai University Press. All Rights Reserved

BUSINESS ENVIRONMENT

Asian Monetary Fund : The Shape of Things to Come? -- R Venkatesan Iyengar

The news that ASEAN+3 has agreed to set up an Asian Monetary Fund to help member countries overcome financial crises is, undoubtedly, one of the most significant economic and political developments of the century.

© 2008 The Icfai University Press. All Rights Reserved

CORPORATE STRATEGY

HP-EDS : Challenging the Big Blue -- Amit Singh Sisodiya and KS Revathi

With its acquisition of EDS, HP appears potent enough to dislodge IBM as the world's top IT services company. However, the challenge to sew its second biggest deal, after its 2001 buyout of Compaq, will not be any less daunting for the PC-to-printer giant.

© 2008 The Icfai University Press. All Rights Reserved

CORPORATE STRATEGY

AMD : The Sinking Chip! -- Amit Singh Sisodiya and KS Revathi

A string of successive quarterly losses has put a big question mark over the beleaguered chip maker's revival plan.

© 2008 The Icfai University Press. All Rights Reserved

FINANCIAL MARKETS

Euro @ Ten : A Feat or a Defeat? -- Y Bala Bharathi andSanjoy De

Since its inception euro has been a monetary marvel and a symbol of the triumph of European integration. Ten years on, since the decision to launch the euro, it has lent macroeconomic solidity and political clout to the entire region. Euro, as a currency, has also strengthened enormously and challenged the hegemony of dollar. But not all has been hunky-dory for euro as it has not been able to fulfill some important initial expectations. Moreover, as the global environment has drastically changed, the future ahead of the euro could be more challenging.

© 2008 The Icfai University Press. All Rights Reserved

FINANCIAL MARKETS

SME Exchange : A Welcome Move -- Y Bala Bharathi and Sanjoy De

In a much-awaited move, capital market regulator Sebi has set the stage for the launch of a dedicated exchange for SMEs. Given the growing importance of the SMEs and their requirements to raise capital, the move seems to be a noble one, but the success of the proposal, if at all it materializes, will depend upon the sincere efforts of all parties, including the SMEs, investors and the intermediaries.

© 2008 The Icfai University Press. All Rights Reserved

FINANCIAL MARKETS

Cross-Margining : What Lies in Store for BSE -- John F O Bilson

The recent Sebi directive on cross-margining has created a concern relating to the competitive position of the BSE. Since the BSE has not been as successful as its rival, the NSE, in promoting futures and options trading, the concern is that the introduction of cross-margining will provide a further competitive advantage to the NSE. The danger is that the dominance of Indian financial markets by a single exchange may lead to higher transaction costs and less innovation.

© 2008 The Icfai University Press. All Rights Reserved