The slug-fest for fresh telecom licenses is on. The success stories of existing operators are far too well documented to be ignored by anyone who is in a position to attempt for a slice of the pie. And when there are so many suitors, there are fireworks too. And what fireworks! So it is normal also to see GSM v CDMA v TRAI v TDSAT v Potential Operators v DoT skirmishes. They only vary depending on what the issue is. Sometimes A fights B and sometimes they come together to stave off C. The intensity of the skirmishes is currently very high though, for at stake is the all important spectrum. The reason is simple. The future of telecom is not wireline, but wireless. And like wireline needs cable capacity to carry data/voice/video, wirelsss needs airwaves, commonly known as spectrum. And these airwaves are not infinite, hence operators want to garner as much as possible, by paying as little as possible. And more spectrum you have control over, the better off you are. However, while we can debate the future and big ticket stuff like spectrum, it is surprising that the authorities have shied away from addressing irritants that have dogged the sector for years. The multiplicity of operators and the lack of interconnectivity among them, for example, have wreaked havoc with subscribers and the stupendous growth figures bandied about cannot hide the fact that the interconnect problem has only gotten worse. As early as 2005, it was mooted that a way out of the imbroglio could be to set up ‘interconnect exchanges’. The idea was simple. All it required was an exchange in each circle or district perhaps, where all operators would necessarily have to drop a link, so that all other operators, and their subscribers, are connected seamlessly, and also as soon as a new operator goes live. Sometimes in the middle of 2006, the government even accepted that the idea was great and there were reports promising that exchanges on similar lines would be set up by March 2007. A DoT officer was quoted as saying then that “this will reduce the cost of interconnection” and manage the inter carrier traffic in simple manner and that it will also be “in the security interest of the country.” That was the last one heard of that. Why? Because some powerful operators want to control, at any cost, and pliable, weak and inept authorities lived upto their spineless billing. Then there is Number Portability, that would allow users to switch from one operator to the other without surrendering the number s/he uses. It is a feature that is increasingly mandated by the authorities all over the world so that a dissatisfied subscriber can change the operator while retaining his number. It was only earlier this week, after years of dithering, that the communications minister decided to bite the bullet and say yes, the operators must make this feature available. But vested interests are still at work, and whether it finally happens remains to be seen. Tariff is another issue over which a lot is heard and the recent episode where three dominant operators apparently cartelised to hike the rates had the telecom tribunal too a bit upset. While that mater is still in the courts, it seems odd that the regulator, that has primacy as far as tariff is concerned, refuses to entertain any cap by hiding behind the curtain of forbearance. And who made the policy of forbearance? The regulator itself! While these smaller, relatively speaking, games go on, they continue to be overshadowed by the big daddy of all – spectrum. Everybody is talking about who should and should not get additional spectrum. But some questions remain unanswered here too. Each operator had been given some spectrum as per the contract, but all of them have now usurped a lot more, for a pittance.
The justification is ingenious. Its paucity, while the subscriber base grows, hampers service quality and affects India’s veritable Holy Cow, the common man, is an argument used to put pressure on the government. Sure, but why not talk about utilising it more efficiently? And why cant we dedicate spectrum for in-building coverage, as is being increasingly done all over the world, to ensure better utilisation? In any case, let us get the facts right first. What is being thrown about as subscribers number is not really that, but the SIM card numbers, and the authorities are well aware of it but choose to remain silent. Raise these issues and there is an immediate counter attack. Why has excess spectrum been made available to MTNL and BSNL? Fair enough. But these PSUs happily provide services in rural areas where the private operators were supposed to, as per their original contract, but didn’t. Ironically enough, these defaulting operators would now get USO funds to do so. But let us come back to the basics. Imagine the improvement in subscribers’ satisfaction levels if there weren’t any interconnect issues and subscribers could change their service provider without worrying about forfeiting their number, which is almost their identity. Imagine if there were genuine competition among operators and not a charade of a competition where biggies work together to the detriment of all. Telecom is a potent driver of economy, and to be fair, it has brought about a complete transformation to this country, and private operators need to be complemented for the job well done. But should we sit on these laurels and not strive for betterment? All the pluses in telecom are there due to its intrinsic nature. If the economy and our lives could improve so much with so many flaws in the system, imagine the benefits if the anomalies were taken care of. It is not very difficult. It just requires the will of the authorities.
Feb 20, 2008
Jan 17, 2008
Jan 4, 2008
Appreciating the pros and cons of Rupee Appreciation
The recent weeks have seen the rupee rising against the dollar amidst squeals of protest by exporters of textiles and other manufactured goods, besides services. Software services have, particularly, seen their competitiveness suffer. Importers of goods and services may have benefited because of the decline in the rupee value of goods and services imported. But this can lead to protests by competing Indian manufacturers located in India. The Government has responded somewh at reluctantly by offering a package of tax incentive and interest reductions to exporters. While these steps are, no doubt, welcome, they are not as easy to effect competitiveness as exchange rate intervention resulting in a devalued rupee. Not for nothing is China resisting the US pressures for revaluation of its currency.
The RBI is caught on the horns of a dilemma. It stopped aggressive intervention in the currency market because of the adverse effects noticed as a result of its injection of liquidity by sale of rupees in exchange for forex. The supply of excess domestic currency leads to inflationary pressures unless offset by sterilisation, which means the central bank would have to sell debt paper of Government to the banks to suck out the additional rupees. Unfortunately, sterilisation has its costs. It increases the supply of debt paper leading to a fall in their price, which is the inverse of interest rate.
The net result of successful intervention and sterilisation is rise of interest rates, which, in turn, leads to further capital inflows — a vicious cycle. So, Indian banks return the compliment by countering the effects of sterilisation by investing further in government debt, unlike their Chinese counterparts that cooperate with their central bank in achieving the desired effects of sterilisation. All in all, a messy situation! To counter the inflationary effects of capital flows, the central bank sterilises the flows, which only leads to further capital inflows.
Impact Unclear
The debate between the advocates and opponents of intervention has been long on argumentation, but weak in conclusions.
The latest RBI Report On Currency and Finance devotes considerable space to analyses of research papers on the subject of effectiveness of sterilised intervention. While the technical details are, no doubt, interesting to academics, the policy implications of the debate are not clear. It is not definite whether sterilised intervention does at least succeed in reducing the volatility of the exchange rate, although it has resulted in reducing the monetary impact of the liquidity surge.
While the debate goes on, the adverse effects on manufacturing industries as well as services are, indeed, grave. The sops offered by the Government and the banks are, no doubt, well-motivated. But the market has already discounted their effects. What is material in the export market is the offered price of the products. This remains higher than that of competition’s.
The RBI and the Government will have to have a look at whether their policy options are limited to either intervention or non-intervention. Can the RBI not think of imposing a cap on capital inflows of a particular hot-funds type — a la the response of some Latin American countries? Of course, bourses and businesses may react adversely.
To the extent we depend on capital flows for meeting our current account gap, our position will become more vulnerable. But there has to be a way out of the problem other than that which inevitably results in curtailing our export competitiveness.
Self-Defeating measure
It is, of course, desirable to liberalise capital outflows by Indian residents, but beyond a point, the measure can be self-defeating. The outflows can become a flood. I feel the RBI has its task already well cut out to manage the large capital inflows. If to this we add the problem of capital outflows on an unregulated basis, the RBI’s task will be nightmarish.
Voices have been heard comparing the manner in which Japan faced its problem of appreciation of the yen in the 1990s from nearly 230 yen to a dollar to around 130. Japan did so by improving its productivity and introducing product innovations. This is, of course, a challenge which Indian industry has to wake up to. But that requires a host of other enabling factors. Infrastructure, for instance, is an important bottleneck. But the solution to that problem is difficult and of long gestation, even given the attention at the Prime Minister’s level itself. Apart from this, there is the emerging issue of lack of adequate skilled manpower. This calls for provision of more education and training facilities. The problem of a dearer rupee can be solved only by a multifaceted attack on many fronts. This, of course, requires Government to take action on many aspects.
Ultimately, the RBI can only work with the tools at its disposal within a given global framework and a political environment not of its own choice. To control capital flows — in both directions — is against the current sentiment in favour of capital convertibility. At the same time, allowing capital inflows or outflows unregulated threatens the sustainability of the fiscal stability. The solution may lie in a combination of intervention with fiscal action to support or manage the price of essential commodities and at the same time encourage exports by tax sops. Obviously, this is precisely the blend the authorities have served up now.
A more sophisticated approach is, however, not beyond the capacity of the whiz kids of Mint Street and North Block to evolve. The price may be higher in terms of fiscal deficit, but one cannot obviously have exchange rate stability, low inflation and fiscal responsibility at the same time. This is the classic trilemma of monetary fiscal management in another form.
Too Complex?
In this context, I recall a reference to the exchange rate of the rupee in Oscar Wilde’s Importance of Being Ernest. In the play, the elderly governess advises her ward to lay aside the chapter on the Indian rupee as it is too complex. That discussion obviously referred to a time when the richer classes of Great Britain were worried about the value of their Indian stocks, which was denominated in rupees. Their fear at the time was of the rupee depreciating against the sterling. Now, the tables are turned; the rupee is appreciating. An Oscar Wilde of today will be well-justified in repeating the warning that the rupee’s gyrations are, indeed, too complex to understand, but in a different direction.
The RBI Governor and the Finance Minister have to fight with the harsh reality of economic and political life. “The unpleasant consequences of a bulge in the resources flow on the capital account are easily appreciated;” the disease is easy to diagnose.
The appreciation of the causes of appreciation of the rupee is good so far as the diagnosis goes. The problem is how to cure the disease — of abundance of riches — without hurting the patient — the Indian industry and the economy. Both North Block and Mint Street have to work together to solve this trilemma.
Accept Rupee Appreciation Gracefully
Accept rupee appreciation gracefully
K. Abraham Varkey
| While the rupee's rise has helped some exporters to rein in costs and increase their competitiveness in the global market, in general, profit margins have eroded. Indian importers, borrowers of foreign currency and the consumer have, however, all gained. The clamour for government intervention to depreciate the rupee thus seems overdone, says K. Abraham Varkey. |
While appreciation is a fine art, knowing how to accept appreciation gracefully is an even greater art. The angst voiced at the rupee's appreciation in newspaper columns and seminars conducted by industry and exporter bodies seem to fly in the face of the time honoured cultural habit of accepting appreciation gracefully.
Normally, currencies appreciate when the economies are doing well and the rise in their values is a cause for celebration. The high value of the deutsche mark when Germany was the trendsetter for the world economy in the 1960s and the 1970s, the high value of the yen in the 1980s when Japan Inc seemed set to take over the world and the dollar's high value in the later 1990s when the US new economy brooked no competition were sources of immense pride for their respective countries.
An appreciating currency is the natural corollary of a booming economy with rising exports and is normally looked on favourably. The high-decibel lamentation over the rupee's appreciation, therefore, needs closer examination.
Has the rupee really appreciated? Taken over a three-year frame, from June 2000 to September 2003, the conclusion is a firm no. The rupee depreciated by 1.69 per cent against the dollar, by 24.13 per cent against the euro, by 12.19 per cent against the pound, and appreciated by 1.79 per cent against the yen during the period.
Narrowing the period to May 2002, when the rupee hit its low against the dollar, to mid-October, 2003 the result is mixed, with the rupee appreciating by 7.30 per cent against the dollar, and depreciating by 18 per cent against the euro, by 6.12 per cent against the pound and by 7.28 per cent against the yen.
In both periods the rupee appreciated only against one of the major international currencies in which India's foreign trade is mainly denominated. The rupee is now seen to be fairly valued on trade weighted REER terms.
The causes for rupee's appreciation after years of continuous depreciation are readily apparent. The current account surplus for the first time in years (it has since reversed), due to increased merchandise exports and invisibles, has resulted in supplies of foreign currency going up sharply.
The huge FII inflows into financial asset markets (over $3.9 billion net inflows in the first 10 months of this fiscal), and increasing reliance on low cost foreign loans (the RBI has approved ECB borrowings to the tune of $1.7 billion in the April June quarter alone) add to the supply glut, and help power the rupee higher.
The rupee's appreciation is a result of forces of demand and supply operating in the forex markets and involves no cost to the exchequer.
The heartburn on the rupee's appreciation against the dollar is due to the fact that most of India's external trade is invoiced in dollars and any change in the dollar's rupee value has a disproportionate effect on the various stakeholders in the rupee's external value such as importers, exporters, borrowers, lenders and consumers of imported goods.
The differing impact of the changes in the rupee's value on various stakeholders explains the sudden outcry against appreciation. Importers and borrowers in foreign currency are delighted with the rupee's appreciation to the dollar as most imports and external borrowings are denominated in dollars.
The Indian consumer is a big beneficiary too, as costs of a host of imported goods — from petro products to electronic, electrical and consumer items — would be higher but for the rupee's appreciation. The rupee's appreciation is one of the reasons for the current low inflation rate.
The effect of the rupee's appreciation is not marginal as according to the World Bank, imports account for about 16 per cent of India's GDP. Importers, borrowers in foreign currency and the average Indian consumer are the unambiguous gainers from the rupee's appreciation.
Since Indian lenders in foreign currency normally hedge their exposures, the brunt of the negative effects of the rupee's appreciation falls on exporters, giving rise to calls for government action to depreciate the rupee. However, the effect on exporters too is not all negative.
With increasing global integration an ever-increasing proportion of exports consists of imported raw materials and components. This is particularly true of the diamond, high-end textile and engineering industries that use a high proportion of imported goods in their exports.
The rupee's rise has helped these exporters to rein in their costs and increased their competitiveness in the global market place. However, exporters, in general, have seen their profit margins erode as a result of the rupee's unexpected appreciation.
Though exporters have seen their profit margins shrink, exports on the whole do not seem to have been affected seriously the rupee's appreciation. The slowdown in exports in the past few years has been more due to global economic conditions than due to the rupee's rise.
Exports in dollar terms grew by an impressive17.2 per cent in 1999-2000 when the rupee depreciated by 2.90 per cent. For the period 2000-01, when the rupee depreciated by 7.07 per cent, exports grew by a slow 1.7 per cent. In 2001-02, when the rupee depreciated by 4.78 per cent, exports crawled up 1.74 per cent.
The trend continued in 2002-03. Contrary to expectations, however, exports registered their highest growth of 11.06 per cent in the April-June 2003 quarter when the rupee appreciated by a high 2.11 per cent. For the period April-August 2003, for which provisional figures are available, exports grew 8.99 per cent in dollar terms. Available data do not support the claim that the appreciating rupee has affected Indian exports.
Another claim being loudly bruited is that exports have suffered because the currencies of our main Asian competitors have depreciated and but for the rupee's rise exports would have been much higher. This claim too does not hold water.
Since the rupee hit its low in May 2002, it has appreciated by 7.30 per cent, while the Pakistani rupee has appreciated by 3.97 per cent, the Korean won by 8.56 per cent, the Indonesian rupiah by 8.93 per cent and the Thai baht by 7.07 per cent. Only the pegged currencies — the Chinese yuan and the Malaysian ringitt — have remained steady. Against the yuan and the ringitt too it cannot be said that the Indian exports have suffered due to the rupee's appreciation because in the post-Asian crisis period from 1998 to May 2002 these currencies remained steady while the rupee depreciated by about 25 per cent to the dollar.
In this period, when Indian exports should have gained a competitive advantage of 25 per cent compared to Chinese and Malaysian exports, both Chinese exports (by a large margin) and Malaysian exports (by a narrow margin) outperformed India.
Data again do not support the claim that Indian exports would have been much higher had the rupee not appreciated.
Statistics seem to prove that Indian exports have not been affected seriously by the rupee's rise, and Indian importers, borrowers of foreign currency and the Indian consumer have all gained.
The clamour for government intervention to depreciate the rupee seems overdone.
However, as the rupee continues to rise, the demands for intervention are likely to become shriller. An artificially managed depreciation would result in higher cost to Indian importers and to the consumer in exchange for a probable boost to exports.
Much needed public money would go to transferring cash flows from importers and consumers to exporters leading to a misallocation of resources.
Market forces if left unhindered will soon correct the imbalance arising out of the rupees current rise. The inward flow of foreign currency will not continue indefinitely. Loans will have to be repaid and FII investments can reverse.
A dearer rupee will make imports more attractive leading to increased demand for foreign currencies and eventually a fall in the value of the rupee. The start of such a process is already evident. Imports grew by a rapid 22.14 per cent in April-August 2003.
Non-oil imports, made attractive by the rupee's current levels and fuelled by an expanding economy, grew by a high 28.35 per cent in the same period. The markets have already begun the work of correcting the imbalances and given time will settle at a new equilibrium.
Intervening to artificially depreciate the rupee will involve outlay of public funds which can be better used elsewhere. And as data show, this may not result in any appreciable rise in exports as the past slowdown in export growth was determined by global economic conditions and not only by the rupee's value. The rupee's value seems to have but a marginal effect on export performance.
The rupee, with centuries of history behind it, is capable of depreciating with elegance and appreciating with grace. If only we would let it.
Jan 3, 2008
INVESTERS FORECAST $20 BILLION WORTH OF INVESTEMENTS IN 2008
The year 2007 is clearly the year that saw the rise of private equity funds. According to those tracking the industry, $13 billion (which is approximately Rs 55,000 crore) was invested in Indian markets in 2007.
Simply put, a relatively new segment of investors have entered the scene and have pumped in Rs 55,000 crore into Indian companies. Ask any investment banker, and he will call the year 2007 a watershed year as all mandates for fund raising were completed and he is on track to receive a hefty bonus.
Shift in focus
Clearly there was a shift in focus among investors from outsourced based investments to domestic consumption-led investments. As a result, 2007 saw large-scale investment in infrastructure, financial services and to a limited extent internet based companies focusing on Indian markets.
Which is one of the reasons why sectors like infotech, auto components and textiles, which were the centre stage for PE investments in previous years, saw a near neglect this year. The problem for these export-oriented sectors started with the rising Rupee which hit their profit margins.
“During 2007, PE investors focused their attention squarely on companies that benefit from domestic consumer spending and infrastructure investments,” says Arun Natarajan, founder & CEO of Venture Intelligence, a research service focused on private equity and venture capital activity.
C Venkat Subramanyam, founder director of Veda Corporate Advisors, concurs with this view. “Clearly the flavour today is on companies which concentrate on Indian markets. Outsourcing-led investments are very limited,” he adds.
Rising stock prices
The flourishing stock markets have aided this investment boom sweeping the country. “The stock price rise actually enabled funds to raise monies easily. Selling India story outside to raise funds was made easier thanks to the rising sensex,” says a fund manager.
But stock price rise also had its flip side. Deals were getting closed at exorbitantly high valuation. “There was an irrational exuberance in 2007. Deals which should have normally closed at 10 times price earnings got closed at 30 times. Too much money is chasing a single deal. For the first time we saw the entry of auctioning of transactions,” says Nitin Deshmukh, CEO of Kotak VF.
A number of PE investors who invested in prior years made profitable exits. “They either exited through an IPO or a trade sale or through sale to other funds,” adds Venkat Subramanyam.
Rise of infrastructure sector
A major beneficiary of fund flow has been the infrastructure sector. Clearly, the growing necessity for the country for quality power, roads, ports and such saw huge monies flow in. “A chunk of investments were absorbed by this sector, and the beauty is that it needs more and more money,” says K Ramkumar, regional head, south, Religare Securities.
All these success stories revolve around the macro-level feel good factor that is sweeping the country. Even entities which were hitherto slow to react to catch the bus have become nimble footed.
“Take the case of upcoming Bangalore Airport. This place and city centre needs to be connected and the Karnataka government is toying with the idea of a private public partnership (PPP) model and raise funds from PE investors,” says K E C Rajakumar, UTI Venture Fund’s CEO.
Blurring of lines
With increased liquidity in the system, the lines of demarcation between hedge funds and PE investors became very blurred. “With sovereign funds Temasek, Dubai Investment Corporation and the like doing PE deals, the lines of demarcation between hedge and PE funds are getting blurred,” says Subbu Subramanyam, of Barings Private Equity partners.
Hedge funds like DE Shaw, New Vernon and Och Ziff are making private equity investments. “This only goes to show that it is important to have flexible capital, rather than fix it for a specific purpose,” says Tariq Ahmed of Blue River Capital.
Innovation
To attract investments, promoters innovated a great deal. Cellphone companies hived off their tower business to raise funds, pharma companies spun off their research divisions and attracted investors, automobile dealers separated sales and service to get funds.
Retail sector, which is amongst the hottest sectors in the country, too saw innovation where the front, and backend were separated with monies getting raised at the back-end alone, as current laws forbids foreign investments in multi-brand retail totally.
Welcome 2008
Will the forthcoming year spring surprises? A cross-section of the industry does not seem to think so. “The current momentum would continue and would get bettered. We forecast 2008 to see $20 billion worth investment,” Rajakumar says. The consensus is that entrepreneurs in Tier II and Tier III would jump onto the PE bandwagon when they open up their businesses for external investors.
New sectors like commodity, mining and corporate farming could be looked into by investors. With valuation in sectors like textile and auto components at near bottom, a strong case for bottom fishing in these sectors is not ruled out. Also, the incidence of buy-out by funds is likely to get accelerated. The segment got a taste of this when Blackstone took over Gokuldas and Intelenet.
Simply put, a relatively new segment of investors have entered the scene and have pumped in Rs 55,000 crore into Indian companies. Ask any investment banker, and he will call the year 2007 a watershed year as all mandates for fund raising were completed and he is on track to receive a hefty bonus.
Shift in focus
Clearly there was a shift in focus among investors from outsourced based investments to domestic consumption-led investments. As a result, 2007 saw large-scale investment in infrastructure, financial services and to a limited extent internet based companies focusing on Indian markets.
Which is one of the reasons why sectors like infotech, auto components and textiles, which were the centre stage for PE investments in previous years, saw a near neglect this year. The problem for these export-oriented sectors started with the rising Rupee which hit their profit margins.
“During 2007, PE investors focused their attention squarely on companies that benefit from domestic consumer spending and infrastructure investments,” says Arun Natarajan, founder & CEO of Venture Intelligence, a research service focused on private equity and venture capital activity.
C Venkat Subramanyam, founder director of Veda Corporate Advisors, concurs with this view. “Clearly the flavour today is on companies which concentrate on Indian markets. Outsourcing-led investments are very limited,” he adds.
Rising stock prices
The flourishing stock markets have aided this investment boom sweeping the country. “The stock price rise actually enabled funds to raise monies easily. Selling India story outside to raise funds was made easier thanks to the rising sensex,” says a fund manager.
But stock price rise also had its flip side. Deals were getting closed at exorbitantly high valuation. “There was an irrational exuberance in 2007. Deals which should have normally closed at 10 times price earnings got closed at 30 times. Too much money is chasing a single deal. For the first time we saw the entry of auctioning of transactions,” says Nitin Deshmukh, CEO of Kotak VF.
A number of PE investors who invested in prior years made profitable exits. “They either exited through an IPO or a trade sale or through sale to other funds,” adds Venkat Subramanyam.
Rise of infrastructure sector
A major beneficiary of fund flow has been the infrastructure sector. Clearly, the growing necessity for the country for quality power, roads, ports and such saw huge monies flow in. “A chunk of investments were absorbed by this sector, and the beauty is that it needs more and more money,” says K Ramkumar, regional head, south, Religare Securities.
All these success stories revolve around the macro-level feel good factor that is sweeping the country. Even entities which were hitherto slow to react to catch the bus have become nimble footed.
“Take the case of upcoming Bangalore Airport. This place and city centre needs to be connected and the Karnataka government is toying with the idea of a private public partnership (PPP) model and raise funds from PE investors,” says K E C Rajakumar, UTI Venture Fund’s CEO.
Blurring of lines
With increased liquidity in the system, the lines of demarcation between hedge funds and PE investors became very blurred. “With sovereign funds Temasek, Dubai Investment Corporation and the like doing PE deals, the lines of demarcation between hedge and PE funds are getting blurred,” says Subbu Subramanyam, of Barings Private Equity partners.
Hedge funds like DE Shaw, New Vernon and Och Ziff are making private equity investments. “This only goes to show that it is important to have flexible capital, rather than fix it for a specific purpose,” says Tariq Ahmed of Blue River Capital.
Innovation
To attract investments, promoters innovated a great deal. Cellphone companies hived off their tower business to raise funds, pharma companies spun off their research divisions and attracted investors, automobile dealers separated sales and service to get funds.
Retail sector, which is amongst the hottest sectors in the country, too saw innovation where the front, and backend were separated with monies getting raised at the back-end alone, as current laws forbids foreign investments in multi-brand retail totally.
Welcome 2008
Will the forthcoming year spring surprises? A cross-section of the industry does not seem to think so. “The current momentum would continue and would get bettered. We forecast 2008 to see $20 billion worth investment,” Rajakumar says. The consensus is that entrepreneurs in Tier II and Tier III would jump onto the PE bandwagon when they open up their businesses for external investors.
New sectors like commodity, mining and corporate farming could be looked into by investors. With valuation in sectors like textile and auto components at near bottom, a strong case for bottom fishing in these sectors is not ruled out. Also, the incidence of buy-out by funds is likely to get accelerated. The segment got a taste of this when Blackstone took over Gokuldas and Intelenet.
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