1. January 2011, Volume: 10
Sensex 18860.44 Nifty 5654.55 Dollar 45.37 Gold 20265 Silver 44200 Crude Oil ($) 90.31
Investeurs Chronicles
INSIDE
• Current Chronicles
• Cover Story – Cloud
Computing
• Open Forum – Indian
Pharma Industry
• Emerging Markets
• Outlook -Indian Rupee
• Financial Q
• In Focus – Indian Premier
League
Investeurs Consulting P. Limited
S-16, U.G.F, Green Park Ext. New Delhi-110016, www.investeurs.com

2. Current Chronicles
US-based iGate has acquired nearly 63 per cent stake in Starbucks is finally coming to India. The world's largest
country's sixth largest IT firm Patni Computer Systems for premium coffee retail chain today announced that it has
$1. 22 billion.iGate will buy 45.6 per cent of the shares of entered into an agreement with Tata Coffee for a strategic
the three founders of Patni -- Narendra Patni, Gajendra alliance. Under a non-binding MoU, Starbucks will explore
Patni and Ashok Patni-- along with the 17.4 per cent stake setting up stores in the Tata group's retail outlets and
of private equity firm General Atlantic. The deal is hotels, besides sourcing and roasting coffee beans at Tata
expected to be completed in the first half of 2011, after Coffee's Kodagu facility.
acquiring all the regulatory approvals. More…
More…..
Infrastructure, Leasing & Financial Services (IL&FS) will be
In the single largest aircraft deal in global aviation history
the new promoter of Maytas Properties, the cash-strapped
, no-frill carrier IndiGo will acquire 180 A-320s worth an
company owned by family members of disgraced Satyam
estimated $15.6 bn from European plane manufacturer
founder Ramalinga Raju. The Company Law Board (CLB)
Airbus. Of these planes, 150 would belong to the eco-
today approved a Maytas proposal to allow IL&FS to infuse
efficient 'neo' series, which are yet to be produced, and the
Rs 20 lakh as equity into the company and become an 80
remaining 30 are the standard A-320s. They are expected
per cent shareholder. The Raju family will hold the
to be delivered between 2016 and 2025.
remaining 20 per cent.
More…….
More…
Industrial growth has plummeted to an 18-month low of
Inflation shot up to 8.43 per cent in December, from 7.48
2.7 per cent in November. The lower year-on-year rise in
per cent in the previous month, as prices of certain food
the official Index of Industrial Production (IIP) in
and non-food items continued to show an upward trend.
November — compared with 11.3 per cent for the same
and vegetable, like onion, and other protein-based items
month of last fiscal — poses a major dilemma for
became expensive. With the inflation showing no signs of
policymakers, already under siege from rising prices. Any
moderation, it is widely expected that RBI will raise the key
further monetary tightening measures aimed at inflation
policy rates during its quarterly monetary policy review on
control now also run the risk of derailing growth.
January 25.
More…
More

3. Cover Story Cloud Computing:
Silver Lining or storm ahead?
Cloud Computing has become a buzzword today. Is it a significant technology trend ready for noticeable deployment in near future reshaping IT
processes & IT market places or a storm ready to devastate the organizations globally, is what we seek to examine closely in this article.
To start with, let’s first understand what Cloud Computing as all about.
Cloud computing is a metaphor for giving Internet users a growing collection of computer system resources and associated software architectures
to provide application services. The applications include processing and application integration, storage, and communications services. Often,
what the user sees is an application instead of a particular computer. Thus, the fundamental concept of cloud computing is that the computing is
"in the cloud" i.e. that the processing (and the related data) is not in a specified, known or static place(s). This is in opposition to where the
processing takes place in one or more specific servers that are known.
Benefits of Shifting Towards Cloud Computing
• ON-DEMAND SELF-SERVICE: A consumer can unilaterally provision computing capabilities, such as server time and network storage, as
needed without requiring human interaction with each service’s provider.
• UBIQUITOUS NETWORK ACCESS: Capabilities are available over the network and accessed through standard mechanisms that promote use by
heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs).
• LOCATION INDEPENDENT RESOURCE POOLING: The provider’s computing resources are pooled to serve all consumers using a multi-tenant
model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. The customer
generally has no control or knowledge over the exact location of the provided resources. Examples of resources include storage, processing,
memory, network bandwidth, and virtual machines.

4. Cover Story Cloud Computing: Silver Lining or Storm Ahead?
• PAY PER USE: Capabilities are charged using a metered, fee-for-service, or advertising based billing model to promote optimization of resource use.
Examples are measuring the storage, bandwidth, and computing resources consumed and charging for the number of active user accounts per
month.
Risk & Concerns
Though the benefits accrued from Cloud Computing are many we cannot ignore the security risk and challenges of this next big thing. Enterprises have a
ton of sensitive data that requires access monitoring and protection. Data is the life blood of many enterprises and the loss of control will not be
acceptable. By moving the data into the cloud, enterprise will lose some capabilities to govern their own data set. They would have to rely on the service
providers to guarantee the safety of their data. The question is how many service providers are ready to commit to safeguard the precious data; probably
not many at the nascent stage. There are many such concerns that are worrying IT professionals across the globe. Let’s look at some of these:
• MANAGEABILITY: There are some great IaaS/PaaS out there, including Amazon’s web services (S3, EC2, EBS, etc), Google’s App Engine,
Salesforce’s Force.com, Joyent, etc. However, most of these are raw infrastructures and platforms that do not have great management capabilities.
However, throughout computing history, raw capabilities have generally appeared on the market first, and then management of these raw
capabilities became a differentiator when competition started building up. We believe Cloud Computing will be no different. In fact, many startups
have recognized the need for management early on and have built management capabilities on top of the existing cloud infrastructure/platforms.
RightScale is one of the early pioneers in this space. Their solution solves many of the management issues such as auto-scaling and load balancing.

5. Cover Story Cloud Computing: Silver Lining or Storm Ahead?
• Monitoring: Monitoring, whether is for performance or availability, is • Virtualization Security: Security is a huge area that encompasses many
critical to any IT shop. We are not talking about just how much CPU or different things, including the standard enterprise security policies on
memory the machines are using. We are talking about performance of access control, activity monitoring, patch management, etc. On top of
transactions and disk IO and others. CPU and memory usage are that, virtualization security is something that most enterprises are just
misleading most of the time in virtual environments. The only real starting to grasp but don’t fully understand. Many IT people still believe
measurement is how long your transactions are taking and how much that the hypervisor and virtual machines are safe. Recent presentations
latency there are. According to a recently published report: from Blackhat have demonstrated that we shouldn’t sleep so tight at
Amazon found every 100ms of latency cost them 1% in sales. Google night. As IT shops get more educated on the virtualization security
found an extra .5 seconds in search page generation time dropped issues, it will become one of the factors they will consider when they
traffic by 20%. A broker could lose $4 million in revenues per move into the cloud. Access control and monitoring of the virtual
millisecond if their electronic trading platform is 5 milliseconds behind infrastructure will be on top of their mind.
the competition. So who’s tackling this problem? Hypernic’s CloudStatus There are quite a few startups like Reflex, Blue Lane and Catbird that are
is one of the first to recognize this issue and developed a solution for it. creating privileged VAs that claim to protect the VAs running on
They started with monitoring of Amazon’s web services, then recently VMware’s ESX servers.
added monitoring for Google App Engine. In addition, RightScale’s
solution can also provide monitoring for the virtual machines under Despite all the risk and challenges, Cloud computing is still growing and
their management. many government bodies and organizations already use this type of
network for their businesses. This type of computing allows them to focus
• Reliability and Availability: I won’t beat the dead “Gmail down, EC2
on what matters and not to worry about technology side of things. The
down, etc down” horse here. But the truth of the matter is enterprises
most attractive feature of this new technology deployment is the prospect
today cannot reasonably rely on the cloud infrastructures/platforms to
of converting large, upfront capital investments in IT infrastructure into
run their business. There’s almost no SLAs (Service Level Agreements)
smaller, manageable 'pay-per-use' annuity payments. This feature has
provided by the cloud providers today. Even Jeff Barr from Amazon
sparked a high degree of interest and debate amongst technology vendors,
said that AWS only provides SLA for their S3 service. Can you imagine
users and channel partners alike. Thus, Cloud computing is here to stay. It
enterprises signing up cloud computing contracts without SLAs clearly
will be the next big wave and will be adopted by enterprises. However, the
defined? It’s like going to host their business critical infrastructure in a
industry as a whole needs to answer some of these challenges and eases the
data center that doesn’t have clearly defined SLA. As such no one is
enterprises’ concerns.
tackling this problem as far as I know. Maybe some startup will come
up with clever idea to provide SLA as a third party vendor Or maybe
the cloud providers will grow/wake up and actually do something to
encourage the enterprise adoption.

6. Indian Pharma Industry: Capitalizing on the new avenues Open Forum
Post liberalization era saw India tapping on the soaring IT requirements
around the world, & in a period of less than two decades has emerged as
one of the IT capitals of the world. Another Indian industry which has
been showing similar signs of late is the Indian pharmaceutical industry,
currently riding high on generics & projected to continue same streak in
biosimilars.
GENERICS
Generics are reverse-engineered, cheap versions of branded patented
drugs.
Value of the global generics market is around USD 124-billion and is
growing at a CAGR of 11 per cent since the last three years. India has
The Indian companies, like Sun Pharma, Aurobindo Pharma, Glenmark,
expanded its share in global generics market by about 8%. India tops the
Cadila Healthcare, Wockhardt, Ranbaxy command a 33.17 percent share or
world in exporting generic medicines worth $11 billion and account for
142 of 428 ANDA approvals in 2009.
20% of the worldwide generics production.
Generics industry is projected to gain further momentum by spurt in
What accounts for such meteoric rise of Indian companies in generics
demand from inclusion of generics in treatment as being vouched by
arena is their expertise in contract manufacturing. This means low
several Medicare, & insurance companies around the world.
manufacturing, & R&D costs, but not at the expense of quality of the end
product. Manufacturing costs are almost half to that in the European BIOSIMILAR
markets, while R&D costs are one seventh of the EU. With such cost Another highly lucrative, yet untapped avenue is of biosimilars. They are
advantages in its side, Indian companies are projected to make most of derived from living organisms such as bacteria or mammal cells
the external opportunities. engineered to produce specific proteins the body needs. Though, cut price
biosimilars could bring about a substantial cut in healthcare costs in the
While, the key markets for generics are the EU nations, USA and several
developed countries, yet, the western regulators shy away from them, &
Latin American countries, almost all of which remain under-penetrated.,
prescribe far more elaborate tests for them compared to the chemical
the most prominent, & promising market of them, for Indian companies is
generics. Another hurdle is complicated manufacturing. For instance,
the US Generics market. It commands half of the global share in generics.
Cresp took five long years from the lab to market. Still another challenge
Around $70 billion worth of drugs are expected to go off patent in the US
is tinkering with the process to improve yields — the amount of protein —
over the next three years, and India is capable of manufacturing a
without compromising on its quality. The smallest change can have an
substantial share of the product to support the resulting generics
effect on the end-product.
opportunities.

7. Open Forum
These impediments kept a good number of Indian generics firms at bay Outlook
until recently. But with India’s developing biotech industry and cost Road ahead, though promising, is set with certain critical pullbacks.
advantages, Indian companies seem to be all set to foray in to this field. A Biggest bottleneck is abysmal state of infrastructure in the country,
big stride has been taken on this front through the deal struck by Biocon given the importance of energy and transportation for the
with Pfizer which has the potential to go up to $350 million. pharmaceutical sector. Compliance is another issue and as the
market expands regulatory compliance will require attention with
Prominent appeal of biosimilars lie in its lower price erosion compared to
robust programmes, vigilance and improved policing to ensure that
generics. Unlike generics that result in a 90 per cent drug price erosion
patients and India’s reputation are protected.
upon patent expiry of drugs in, biosimilars may herald only a 30-50 per
cent drop. Hence, beginning from 2012 biosimilars market will add an However, India offers some attractive tax benefits for pharma
estimated $10 billion in incremental revenues each year till 2020. companies such as R&D credits and income tax exemptions in
special economic zones (SEZs).
To summarize, bright export prospects are in sight for India. One
on the back of a large number of best-selling drugs going off patent
in the developed countries, in next few years offering a golden
opportunity of $30 billion up for grabs for a generics player like
India. Other factor is the fast developing biotech industry in the
country, which appears adequately capable of tapping the
biosimilars opportunity.
Clinical trial, or the testing of new drugs on human beings, is
another area where India will emerge as a key player. The fact that
India has such a broad spectrum of patients coupled with low costs
makes it an obvious candidate for clinical tests. But evolving
appropriate quality and ethical standards remains a challenge.
Second half of the last decade saw a lot of activity in the pharma
sphere in India. Coming decade is poised to be even more vital for
the shaping of this industry, & its contribution to the Indian growth
story.

8. Russia - 4G Tenders Planned for This Year
Emerging Markets
Tenders for frequencies for fourth-generation Temporary work increased by 0.07% and agency Brazil Finance Minister Mantega warns of
communications networks, or LTE, could be work was up 3.84%. Overall, the index declined trade war
announced in the second half of the year, by an annualized 0.13%. Brazil has warned that the world is on course
Communications and Press Minister Igor for a trade war because of what it says is
Shchyogolev said on 13.1.2011. It depends on Barclays hikes 2011 inflation forecast to 4% for currency manipulation by China, the US and
whether the big three mobile operators Philippines others. Finance minister Guido Mantega said
and Rostelecom manage to draw up "a London-based Barclays Capital revised upwards Brazil was preparing moves to prevent further
digestible scheme" for converting military its inflation forecast for the Philippines to four appreciation of its currency. He said Brazil's
frequencies, he said. percent this year instead of 3.6 percent on the trade with the US had slipped from an annual
back of rising energy prices. Barclays Capital surplus of about $15bn (£9.6bn) to a deficit of
Brazil Sets Reserve Requirements for economist Prakriti Sofat said in a research note $6bn because of US efforts to revive its
Currency Positions to Stem Real Rally that the investment bank sees a higher inflation economy through loose monetary policy.
Brazil's central bank set reserve requirements this year but this would still fall within the
on short dollar positions held by local banks target range of three percent to five percent set
in its third attempt since October to stem a by the Bangko Sentral ng Pilipinas (BSP).
rally in the currency. The real fell as much as “Looking ahead, we believe the near-term risks
0.8 percent after the announcement. Starting to the energy component of the CPI are biased to
April 4, Brazilian banks will need to deposit in the upside owing to elevated oil and coal prices.
cash at the central bank 60 percent of their For the Philippines, we are revising up our 2011
short positions in U.S. dollars above $3 billion average inflation forecast to four percent from
or their capital base, whichever is smaller. The 3.6 percent previously,” Sofat added.
reserves will not earn interest.
Russia -Capital outflows hit $38.3 bln in 2010
South Africa- Jobs doldrums persist in Russia's private net capital outflow in 2010
December amounted to $38.3 billion compared to $56.9
Jobs in the retail sector received a boost from billion in 2009, while the fourth quarter net
festive spending, but overall employment was capital outflow totaled $22.7 billion, the central
down in December, according to the monthly bank said on 13.01.2011. In 2008, Russia faced a
Adcorp Employment Index released on record high net capital outflow of $129.9 billion
10.01.2011. as the ruble devalued.

9. Rupee Outlook
The Indian Currency has been stable in past India's current account deficit in the September
Outlook
few years despite rising current account quarter widened to a record high of $15.8
deficits, high inflation, & low interest rates billion as booming domestic consumer demand Call Rates as on 14th January 2011 → 5.50%-
dominating most part of the period. The period sucked in imports and service sector exports 6.40%
Aluminum (1 kgs) 112.15
of March 2007 to April 2008 saw maximum suffered from weak global demand. This Commodities
Copper (1 Kg) 439.20
strengthening of the Indian rupee on the back situation is expected to get further aggravated
of massive foreign portfolio investment of U.S. by developed countries limping back to
$27.4 billion. However, period from April 2008 recovery, resulting in flight of funds from Zinc (1 kg) 109.90
Steel (L) (1000kg) 29300.00
to March 2009 saw a net outflow of portfolio emerging markets to them, rightly so, since,
investment to the tune of U.S. $14.03 billion, & investors are wary of high valuations in stocks
As on 14th January 2011
predictably Indian rupee lost 25% of its value. of emerging markets.
In the current fiscal period, performance of the Forex
Another economic fundamental working against
Indian currency against the dollar at 4 per cent Forward Rates against INR as on January 14th
rupee is high inflation in the country. India's
2011
(to December 23) is much lower than that Spot Rate 1 mth 3 mth 6 mth
food inflation accelerated to a 10-week high in
recorded by its other emerging market peers. US 45.34 45.63 46.13 46.81
mid-December on rising prices of vegetables. Euro 60.64 61.02 61.67 62.54
Infact, Indian Rupee is one of the worst Sterling 71.90 72.36 73.13 74.16
performing Asian currencies against US$ this Nevertheless, all is not negative for rupee Yen 54.76 55.14 55.75 56.60
Swiss 46.89 47.22 47.75 48.48
fiscal, along with South Korean won. Thai Baht prospects. Strong economic growth forecast for Franc
Source: Hindu BusinessLine
and Malaysian Ringitt were the top gainers the Indian economy in next couple of years,
against the greenback with 10.5 and 9.9 per relatively stable banking system along with
Libor Rates as on January 14th 2011
cent gain respectively. Other currencies such as higher interest rate return of rupee will prolong
Libor % 1 mth 3 mth 6 mth 12 mth
South African Rand, Singapore dollar, and currency’s charm for the international investors.
US 0.26 0.30 0.46 0.78
Taiwanese Dollar gained between 6 to 9 per Euro 0.70 0.94 1.19 1.49
Hence, outlook on rupee appears to be mixed Sterling 0.60 0.77 1.07 1.52
cent during this period. Going ahead, journey
for this year, with some expecting a huge Yen 0.12 0.19 0.35 0.57
for the rupee doesn’t seem tranquil either. Swiss Franc 0.14 0.17 0.24 0.52
foreign funds inflows in 2011, & others
Crude prices threatening to rise to $100 is the Forward Cover % as on January 14, 2011
anticipating depreciation due to worsening 1 mth 3 mth 6 mth
imminent threat since India imports over three-
current account deficit, and high inflation. As a US 7.78% 7.07% 6.57%
fourths of its crude oil requirement. Another
result, rupee is expected to remain in the range
Euro 7.22% 6.75% 6.28%
head wind is the widening current account Sterling 7.61% 6.88% 6.34%
of 44.50 to 46.50 in the year 2011.
deficit which threatens to negate the positive Yen 8.22% 7.26% 6.78%
impact of portfolio inflows in to the country. Swiss Franc 8.30% 7.35% 6.83%
Source: Homefinance.nl

10. Financial Q In Focus
1. Who developed the 'Equity Theory' of job Indian Premier League
motivation in the 1960's?
2. What is the name of Ingham and Luft's model and
theory which deals with hidden and open areas of
knowledge about a person?
3. One of the most effective and efficient forms of
marketing is abbreviated to the initials WOM; what
is it?
4. The financial ratio which divides a company's
'liquid assets' by 'current liabilities' is known by
Indian Premier League is already becoming so hot and powerful. During the two-day
what popular term?
long IPL auction in Bangalore, the BCCI announced the draw for the tournament's
5. If you can't beat them, join them. Which Indian
2011 season that begins on April 8.
Clock Company decided to shift base to China so
Season 3 was under the leadership of Lalit Modi , however Season 4 is going to be
that it remains competitive?
under the leadership of Chirayu Amin. IPL Season 4 is going to have 10 teams, 74
6. We all know what bulls and bears do. What would
matches and 45 days of action.
sheep do in the stock market?
The latest development in this season is that The Board of Control for Cricket in
7. The useful thumb rule in Economics, "Bad money
India (BCCI) has decided to give 10% of foreign players’ fee to the respective national
drives out the good" goes by what name?
boards. Total salary cap per team- Rs 45 crore (9 million USD) Franchises can retain 4
8. Lord Raj Kumar Bagri was the first non-Briton
players with a maximum of 3 Indian players. No player can play more than 14
Chairman of what mercantile organization?
matches.
9. Which newspaper baron started his career by
The 52 Indian players were auctioned off for a total price of nearly $44 million,
launching the "Adelaide Herald" when he was just
followed by Australia, who had 38 players auctioned for close to $15.5 million. South
23years old?
African and Sri Lankan players were also host buys, while New Zealand, England and
10. What useful and innovative computer accessory did
West Indies, together, had a total of just 15 players auctioned.
Douglas Engelbert invent in 1968?
(1) N R Narayana Murthy (2) International Monetary Fund (3) Hedging
(4) The Netherlands (5) James Macgregor burns (6) Capitalist Economy
Answer of Quiz: 8 (7)IBM (8) Prudentials (9) Disney Enterprises