Dont't run away from India, Kamal Nath tells investors

NEW DELHI: Union Commerce Minister Kamal Nath today said that world would benefit tremendously from a stable, large and growing consumer market provided by India and added that this is not the time for foreign investors to give up on India.

"Foreign investors who withdraw equity investments or shelve FDI plans in India will find themselves behind the curve as our economy picks up its 9-10% pace once again," he said addressing the Plenary Session on “Securing Opportunities for Inclusive Growth in India” at the India Economic Summit here.

Kamal Nath pointed out that India’s reform process has allowed millions of poor people to cross the poverty threshold and added that there is still a lot of room for further reforms in key areas such as public private partnerships, financial sector, and taxation, among others. He said that much action remains on the agenda table for integrating further with the global economy and becoming a vital link in the international supply chain of goods and services, funds and capital, and resources and talent.

The 3-day (16-18 November) Summit is being jointly organized by the Confederation of Indian Industry (CII) and World Economic Forum.

Kamal Nath emphasised that inclusive growth ultimately depends on the productivity of the overall workforce, which in turn is dependent on its education, skill development, technical and professional education, and talent resource levels. India’s workforce numbers around 500 million people and is expected to expand by about 20 million each year for the next ten years. “But 600 million people continue to depend on agriculture as a source of livelihood. While agriculture has been expanding at close to 3% annually, there is need to move people off the land in order to enhance their productivity and increase their incomes”, he added.

Speaking about India’s engagement with the world, he said that India’s total exports in 2004-05 was at $ 83.5 billion, whereas in 2007-08, it exceeded the targets and achieved a doubling of trade to $163 billion and this year, for the period April to September export growth was 31% over the same period last year. At the same time, we continue to be a solid market for overseas goods, he underlined and added that India’s imports have gone up from $ 112 billion in 2004-05 to $ 251 billion in 2007-08 and non-oil imports increased at a rapid clip of 43%. “When we include export and import of services, our external engagement can be placed at over $ 525 billion for the past year, which adds up to more than half of GDP. This is unprecedented in India’s modern economic history”, he said

Battle for Zandu: Investor Group backs Emami entry

A group of investors from Zandu Pharmaceutical have questioned the propriety of Zandu management in declining management partnership to Emami Limited which has bought over about 24% in the former.

The investors, under the umbrella of All Gujarat Investor Protection Trust have wholeheartedly supported the Emami claim to the management partnership in Zandu.

In a communiqué to shareholders, Mr. Hemantsingh Jhala, Chairman of All Gujarat Investor Protection Trust, said the entry of Emami into the management would definitely bring the much needed fillip to Zandu and create value for the Zandu shareholders. Just the interest evinced by Emami, has more than doubled the prices of the Zandu stock thereby benefitting all the stakeholder as well as protecting the interests of the minority shareholders.

The communique explaining the stagnancy of the Zandu brand read.

The brand Zandu is more than 100 years old, but because of various reasons has not been able to sustain the growth that is required. The growth has not been outstanding by any standards, despite tremendous opportunities. In fact, Zandu’s is a typical case of missed opportunities.The financials of both the companies speak for themselves:

· Its stand alone sales of Zandu at Rs 136.98 crs for the year ended march 2008 have grown from Rs 108.67 crs in the last nine years at a CAGR of 2.61 %.
· Its EBIDTA has grown from Rs 15.10 crs to Rs 27.33 crs at a CAGR of 6.81%, while its net profit has grown from Rs 6.04 to Rs 16.41 crs at a CAGR of 11.75 %.
· The company has not launched any new product of significant value in the last 5 years.

Emami has been growing consistently at a CAGR of 20.62% over the last nine year from Rs 108 crs to Rs 583.71 crs, EBIDTA has grown at a CAGR of 25.68% from 12.61 crs to Rs 98.68 crs, which PAT has grown at a CAGR of 28.19% from Rs 9.92 crs to Rs 92.75 crs.

Zandu clearly needs a strong tonic to grow and Emami can represent that tonic.