ECONOMIC

DIARY

By Shruti Nair
TT – IT
0809513048

Economic news for the

Week- 23rd Aug’10-30th Aug’10
Toyota to start trial production of Etios in Sept
NEW DELHI: The world's largest car-maker Toyota today said it will start trial production of
its much anticipated small car 'Etios' for the Indian market from next month, three months
ahead of its proposed launch.

The Japanese car major, which is present in India through a joint venture with the Kirloskar
Group, is investing Rs 3,200 crore to set up its second manufacturing facility in Bangalore to
roll out its first small car in India by December.
"Before starting the commercial production in December, we will have two rounds of trial
productions. While one will start in September, the next one will be in October," Toyota
Kirloskar Motor (TKM) Deputy Managing Director (Commercial) Shekar Viswanathan
told PTI.

He, however, declined to comment on how many units the company are planning to produce
during the round two of trial productions.

"These cars are not for sales. We will run it on test tracks for quality and all other checks. We
may also later dismantle these cars," Viswanathan said.

Over 2,000 engineers from Toyota's Indian and Japanese operations have been working on
developing the model for the last four years.

Earlier in January, TKM had unveiled the concept Etios, which is being specifically developed
for the Indian market.

The company will launch both hatchback and sedan under the Etios series with 1.2 litre and
1.5 litre petrol engines respectively. However, the firm later said that it would look into
opportunities of introducing a diesel variant also.

Last week, Toyota had said that it would study the Indian market to launch a hybrid version of
Etios.

"We are looking at every possible alternative to launch Etios. Apart from diesel and petrol
variants, we will study the market and demand for launching the car in other fuel options
( LPG and CNG) and hybrid mode," Toyota Motor Asia Pacific President Mitsuhiro
Sonoda had said.

TKM had reported over seven per cent growth in its sales in India last year at 55,497 units and
is expecting a jump of 15-20 per cent in 2010.

The company is expecting to sell about 65,000 units of the 'Etios' next year out of a target of
1.5 lakh units across all models in India. The company sells sedans Corolla Altis and Camry,
SUVs Fortuner and Prado, and utility vehicle Innova in India.

Govt may slash size of SBI's rights issue

NEW DELHI: The government may cut the size of rights issue sought by country's largest
lender SBIfor raising Rs 20,000 crore to fund its business growth as there are huge demands
from social sector on its resources.

The Finance Ministry is looking into the request of SBI for rights issue and would take a view
on the quantum after going through all the details, sources said.

There are various possibilities, sources said, adding the government may cut down the size
depending on availability of resources.
The government has recently got approval for spending an additional Rs 54,588.63 crore this
fiscal to meet the requirements arising from the Commonwealth Games, anti-Naxal
operations and compensating the oil marketing firms.

As far as government holding in SBI is concerned, it holds a 59.41 per cent stake in the bank,
after acquiring RBI's stake in in 2007.

Earlier this month, SBI Chairman O P Bhatt had said, "We have sent a letter to government
(for Rs 20,000 crore rights issue) so let's see what happens,"

"It is up to them (government) to decide to participate (in rights issue) or not," he had said.

If a rights issue does not happen, the bank has the option to go for a preferential issue or
follow-on offer, he had said.

A rights issue will normally not lead to a dilution of government equity in SBI. The
government's equity will only be reduced if it decides not to participate in the rights issue or
does not fully subscribe to its quota.

At the same time, SBI have to put in money for subscribing rights issue of its associate bank
State Bank of Mysore.

State Bank of Mysore intends to raise Rs 583.2 crore through a rights issue and SBI owns
92.33 per cent stake in the associate bank.

Thus, SBI would have to shell out about Rs 540 crore for subscribing rights issue to the extent
of its holding. Besides, SBI has also agreed to pick up any unsubscribed portion of the retail
shareholding.

The existing shareholders would get three equity for every 10 shares held as on the record date
which is September 4, 2010.

The shareholders would have to pay a premium of Rs 530 on the face value of Rs 10 a share.
-----------------------------------------------------------
Biyani eyes Rs 10,000 cr revenue from
foods biz in 4 yrs
MUMBAI: The Kishore Biyani-run Future Group is eyeing around Rs 10,000 crore revenue
from its food business over the next 3-4 years and a 40 per cent growth this fiscal.

"We expect around Rs 10,000 crore from our food business in the next 3-4 years -- we see this
segment as a huge growth driver going forward," Future Group's Founder and Chief Executive
OfficerKishore Biyani told PTI here.

The group's strategy will be to drive growth through vegetarian foods, a high-growth segment,
he said.
"People have become more selective in their tastes. Our vegetarian foods are doing very well,"
he said.

The Group has around 210 Big Bazaar and Food Bazaar stores in the country.

Another growth-driver going forward will be its fashion business, which Biyani said, was
"surprisingly" unaffected even during the economic slowdown.

"We maintained our prices even as competition raised theirs by 20-30 per cent," he said.

The growth in fashion would be driven by customers who have become "very selective" in what
they wear everyday.

Revealing the secret behind the group's increasing success in the fashion business, Biyani said
this was because the group was always attempted to provide the best products to its
customers.

"They (customers) accept both indigenous and modernity. But sometimes it becomes difficult
to say what they need. Therefore, we always try to provide them the best," the Future Group
Chief said.

The group's future appeared bright, he said, adding it was eyeing a 40 per cent growth this
fiscal.

"We have learnt the lessons of survival during the economic downturn. It was an opportunity
to take some bold decisions and focus on our existing businesses," he said, describing the
meltdown period as "a big challenge for the retail industry."

Cost-control was one of the key focus areas for the group then while another major challenge
involved taking the call on whether to increase the prices of its products.

"We created a cost-control committee and focused on our existing businesses without
changing the prices of our products," he said.

Admitting to some jitters during the period, India's leading retailer said that business was
indeed impacted in places like Bangalore where the recession hit its major industry, IT, with
many employees fearing job losses.

"It was a big challenge not to close down our Bangalore outlets at that time," he said. In sharp
contrast, Kolkata remained unaffected by the slowdown, he said.

Biyani's group, which operates large retail chains--Big Bazaar, Pantaloon and Food Bazaar --is
wiser after the recession and once more on the high-growth path with a 40 per cent growth
target this fiscal.

Besides, the group also has an increasing presence in the financial services sector through its
two companies -- Future Generali Life Insurance and Future Generali India Insurance (its
general insurance company).

Upbeat about the future, Biyani described the recession as "the best time to have learnt how to
run the business."

Gold prices set to touch Rs 20,000 per 10 grams by

Diwali
MUMBAI: Gold prices are all set to touch Rs 19,500-20,000 per 10 grams by Diwali due to
rising investor interest, a top industry official said.

"We expect gold prices to cross Rs 19,500-Rs 20,000 per 10 grams by Diwali this year after
some correction in prices," Bombay Bullion Associations (BBA) president Suresh Hundia said.

Standard gold (99.5 purity) closed at Rs 18,910 and pure gold (99.9 purity) at Rs 19,000 per
10 grams in the Mumbai bullion market last week.

In New York, gold for December delivery is hovering at USD 1,237.90 an ounce on
the Comex division of the NYMEX.

Gold may reach at least USD 1,350 an ounce this year as investors seek a shield against
financial turmoil, weak currencies and inflation, analysts said.

Indian households are the largest gold consumers in the world. India's bullion demand almost
doubled in the first-half of the year, even as prices touched a record high in June.

The forthcoming festive season of Ganesh Chaturthi, Dusshera and Diwali may further fuel
gold jewellery demand.

"Gold demand is expected to increase due to forthcoming festival seasons and wedding
season," Hundia said.

Indra Nooyi rules herself out of race

to succeed Ratan Tata
NEW DELHI: PepsiCo chairman and chief executive officer, Indra Nooyi, who has been
speculated to be among the possible candidates to succeed Ratan Tataas chairman of the Tata
Group, has ruled herself out of the race saying she "loves" her present job.

"Ratan is an unbelievable person. He has got an incredible stable of people who can succeed
him. I am running one of the greatest companies in the world, PepsiCo. I love my job," Nooyi
said when asked about the speculation linking her to the top job at the USD 71 billion Indian
salt-to- software conglomerate.
The Chennai-born chief of the world's leading company in convenient snacks, foods and
beverages, with revenues of more than USD 60 billion and over 285,000 employees, however,
was all praise for the Tata Group.

"Tata is an unbelievable company. It is a nation-building enterprise, a phenomenal enterprise,

the face of India," Nooyi said.

While Ratan Tata's 52-year-old half brother Noel Tata has been speculated to be the front-
runner, Nooyi and another global business leader, Carlos Ghosn, the chairman and chief
executive officer of Renault- Nissan Alliance, have been mentioned as suitable candidates.

Earlier this month, the Tata Group had announced that a successor to the charismatic Ratan
Tata would be in place by February-March next year.

It formed a five-member search panel that includes Tata Sons vice-chairman NA Soonawala,
senior group directors R K Krishnakumar and Cyrus Mistry, group adviser and lawyer Shirin
Bharucha and influential British businessman Lord Bhattacharya.

Set to retire by end-2012, when he turns 75, Tata is responsible for turning the group global
after he took over as chairman of the USD 71 billion conglomerate in 1991 from J R D Tata.

Although the group is more than a century-old -- founded by Jamsetji Tata in 1868 when he
set up a private trading firm -- it was only in 2006 that it earned major global recognition
when Ratan Tata spearheaded the buyout of Anglo-Dutch steel maker Corus for about USD 12
billion.

Tata followed this up with another big ticket purchase of iconic British luxury car
marque JaguarLand Rover from Ford in 2008 for USD 2.3 billion.