Today's Biz Bit

• The Sterlite-Morgan Stanley consortium, the highest bidder for the 26% stake in IFCI, may be formally named as the financial institution’s strategic partner today. There is speculation that IFCI has introduced other conditions into the sale process, because of which Sterlite was planning to negotiate a lower price. (ET)

• Local pharmacists who share 97% of the total retail business are getting organised to take on the challenge of major pharma retailers. Pharma retailers of Ahmedabad, who came together and opened a retail chain called ‘Healthcare Pharmacy’, have charted expansion plans to face the stiff competition. Similarly, Planet Health, a pharmacy retail arm of Ahmedabad-based Sagar Drugs, will roll out national plans in 2009. (ET)

• ICICI Venture Funds and Citigroup Venture Capital are likely to pull out of Dr Reddy’s drug research co, Perlecan Pharma, on concerns over the commercial viability of its experimental drugs. The two investors have begun talks with DRL to sell their stake for $26 million (their initial investment) plus interest. (ET)

• Some details of the Tata small car have emerged. The car, priced at Rs 1 lakh, is an eco-car with 25 km-per-litre mileage on petrol and meets every international standard and specification, including Euro-IV norms. (ET)

• The govt. is planning to let white-collar crooks renegotiate penalties for co-operating with regulators. The idea is to let suspected corporate offenders – those who are in responsible position in a co and privy to others’ misdeeds – help the govt. crack violations. The proposed new company law will have provisions to allow courts to impose a lower penalty if “officers-in-default” co-operate with the authorities in investigations. (ET)

• Sony Corp of the US, which owns majority stake in Sony Entertainment Television (SET), has offered to buy out 33% stake held by the four Indian investors at a huge discount to their asking rate. Sources said the parent company is not willing to commit any exit route for investors, rendering the proposed sale process initiated by the four — actor Jackie Shroff, Shemaroo Films MD, World Media group director Sudesh Iyer and MobiApps Holding’s Jayesh Parekh — immobile. Three foreign bidders — Blackstone, Warburg Pincus and Standard Chartered Private Equity (SCPE) — have submitted conditional offers to buy the 33% stake. The investors had appointed Standard Chartered Bank to scout for buyers. Sources said Sony Corp had initiated direct dialogue with the sellers and potential buyers. (ET)

• Russian telecom major Sistema, which recently got the FIPB approval to acquire a 51% stake in Shyam Telelink, plans to invest $1 billion in India. Shyam currently offers CDMA-based telecom services in Rajasthan, but has applied for pan-India GSM licence. Shyam Telelink is amongst the 22 companies set to be awarded letters of intent (LoIs) for launching telecom services in the country. Sistema plans to invest $500 million for a pan-India licence and another $500 million for cellular networks across the country. (ET)

• The IRDA, which has decided to remove all controls on pricing of general insurance products from Jan. 1, has said that the revision in rates shall be given effect to on the renewal date of the insurance. The insured, however, has the right to seek cancellation of his insurance, in which case premium at short period scale, as applicable, will be charged. Starting January 1, insurers will be free to price general insurance covers — fire, engineering, motor own damage and workmen’s compensation business. Insurers will be free to quote rates of premium according to rate schedules and rating guidelines filed with IRDA. The premium rates for motor third party risks will continue to be regulated by IRDA. (ET)

• The govt is contemplating measures to discourage diesel-run private vehicles. The steps under consideration include a higher tax on diesel cars, a ban on its use in specified cities or a gradual removal of the price difference between petrol and diesel. This follows concerns voiced over increasing air pollution in cities in the 11th Plan document and representations from NGOs. (ET)

• Figures collected by the commerce ministry over a period of 21 months between Feb. 2006 and Nov. 2007 show that SEZs are attracting huge investments and are creating jobs throughout the country. SEZs have attracted investments worth $13 billion and created 1 lakh new jobs since the SEZ rules were notified in Feb. 2006. According to the ministry, the number of new jobs and investment figures will treble by the end of next year. (ET)

• The DoT’s Wireless Planning and Coordination (WPC) arm has moved a note to issue start-up spectrum of 4.4 MHz to 4 leading service providers offering GSM technology, whose applications have been pending from December 2006. These players are Vodafone-Essar, Idea Cellular, Bharti-Airtel and Dishnet Wireless (a part of Aircel) in various circles. WPC’s decision ends the virtual ban on issuing fresh spectrum that the government had voluntarily imposed last month. (BS)

• The govt has decided to do away with the 24% equity cap in the small scale sector. Announcing the development, Commerce Minister Kamal Nath said: “This will lead to technology infusion in the sector as more and more foreign players and large companies set up their own SSI units.” The govt notification, when issued, will enable big industrial houses, both from the country and abroad, to set up SSI units in the sector, which has been restricted because of a limit of 24% equity participation by other companies. (BS)

• The govt may treat mortgage guarantee companies as NBFCs. This would enable foreign firms to set up wholly owned subsidiaries in India as there is no FDI cap for NBFCs. The rules governing this are expected to be announced soon, according to sources. The MoF is apparently in favour of including mortgage guarantee companies in the relatively relaxed NBFC norms rather than the stricter insurance sector guidelines. (FE)

• In a significant move, the govt and the regulators have agreed to partially open the ECB window for NBFCs. NBFCs would soon be allowed to raise external loans for on-lending to infrastructure projects and cos. In a meeting held last week, the MoF and the RBI agreed to permit NBFCs to raise long-term finance from overseas markets for the infrastructure sector. (FE)

• The Indian Patent Office has been recognised as the International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) by the World Intellectual Property Organisation (WIPO) consisting of more than 170 member countries. This would enable Indian cos to apply for global patents by filing their applications in India only. As an ISA, major functions of the Indian Patent Office will be to approve or establish the title and conduct international searches. The patents granted would be applicable in all the WIPO member countries. (BL)

China, India have less purchasing power than previously thought

The economies of China and India are much smaller than previously thought when measured by buying power in U.S. dollars, according to data released on Monday. The preliminary International Comparison Program report on purchasing power parity - or PPP - was coordinated by the World Bank and based on price data on goods and services in 146 countries, adjusted to reflect local cost and affordability, and converted to dollars. The report has no bearing on the actual size of those economies, but rather looks at them with a different measuring tool -- one that many emerging economies argue is a more accurate representation of their growing global influence since it takes their hefty buying power into account. The report takes data collected by the World Bank, Eurostat and the Organization for Economic Cooperation and Development to calculate each country's PPP for 2005. China's share of the global economy in terms of PPP fell to 9.7% from an estimated 14%. This was the first time that China participated in the survey, so the prior figure was calculated last year by extrapolating from old data, using a model that has since proved to be faulty. India's share of the world economy based on PPP dropped to 4.3% from a previous estimate of 6%. This was the first time India had participated in the survey since 1985.Overall, the results show that the size of the world economy measured in PPP terms is smaller than previously estimated. Asia's economies are one-third smaller than previously thought, largely because of the downgrades to China and India, while Africa's are one-fourth smaller. The report shows that 12 countries account for more than two-thirds of the world's output, including 5 emerging economies: China, India, Russia, Brazil and Mexico. When measured by market exchange rates instead of PPP, China's share of world GDP is just 5%, and India's is less than 2% -- about half of their size using PPP.