The world has to learn to live within its means, says Schwab

The world has to learn to live within its means, says Schwab

New Delhi: Striking a cautionary note in the generally bullish atmosphere of the World Economic Forum, founder and executive chairman Klaus Schwab said countries must learn to live within their means and “do more with less".

Schwab sounded the warning as he talked about borrowing to invest, a habit fast going out of fashion in the West, and how to keep India’s economy on its growth trajectory.

Also Read WEF India Economic Summit (Full coverage)

One of the key reasons for the recent economic downturn was too much debt in the West, he said. “Excessive leverage was at the heart of the 2008 downturn—and we are now learning to live with the consequences. We overdid it."

Multiple stimulus packages had turned consumer debt into corporate debt, “which had finally landed up as government debt", he said, urging developing countries to learn from the mistakes of developed economies.

Schwab was speaking at the C.K. Prahalad Memorial Session: The business imperative for inclusion, where delegates discussed the importance of encouraging rural entrepreneurship and education.


KPIT Cummins raises FY10 revenue forecast

New Delhi: KPIT Cummins Infosystems Ltd, a product engineering and information technology (IT) consultancy, expects to outpace its revenue forecast for the current fiscal, thanks to higher technology spending by clients in the automotive and energy sectors.

“This year we should grow at about 30%, which is not bad growth," chairman and group chief executive Ravi Pandit said on the sidelines of the Indian Economic Summit, organized by the World Economic Forum and the Confederation of Indian Industry. The Pune-based company, which is listed on the Bombay Stock Exchange and the National Stock Exchange, had earlier said it expects 25% annual revenue growth. The firm reported 33% growth in revenue to 234.95 crore in the three months ended 30 September against the year-ago period. Net profit increased 12% to 23.79 crore.

“Almost 80% of the work that we do is in the automotive sector and 10% is in energy and defence. In the energy sector, there is a lot of spend happening because of the clean energy requirements, smart grid requirements, etc.," Pandit said.

The software market for the automotive sector is growing rapidly as companies look to increase efficiency, safety and security, he added.

Surabhi Agarwal


HCC subsidiary files prospectus for IPO

New Delhi:Lavasa Corp. Ltd, a subsidiary of Hindustan Constructions Co. Ltd (HCC), has filed a draft red herring prospectus with the markets regulator for a 2,000 crore initial public offering (IPO).

“We will take a call on this once we receive the Sebi (Securities and Exchange Board of India) approval," HCC chairman Ajit Gulabchand told reporters at the World Economic Forum’s India Economic Summit.

Lavasa is a hill station project being developed by HCC along with the LM Thapar Group and Venkateshwara Hatcheries Pvt. Ltd.

HCC holds a 65% stake in Lavasa, while the LM Thapar Group has 15% and Venkateshwara Hatcheries has 12.5%. The rest is held by two local entities.

HCC also said on Sunday it would first try to convert 550 crore of debt taken as foreign currency convertible bonds (FCCBs) into equity. “We are prepared to repay them with sufficient internal accruals and cash available with us," Gulabchand said. “HCC has a portfolio of about 550 crore in FCCBs, which will mature in April 2011."

To access cheap foreign currency debt, many mid-cap companies such as HCC had issued FCCBs in 2005-06, and provided their holders the option to convert the bonds into equity within a pre-determined period and price.

Amrit Raj


Nano rival may not be feasible: Bajaj

New Delhi: Rahul Bajaj, chairman of two-wheeler maker Bajaj Auto Ltd, said the company’s ultra low-cost car project will be a feasible business proposition only if it can sell in large numbers.

“We will sell four million vehicles this year. So why should we focus only to sell 20,000 units of a car? It doesn’t make sense. Unless we can sell about 200,000 units per year, it will not be feasible," Bajaj said.

In 2008, Bajaj Auto had entered an agreement with Renault SA and Nissan Motor Co. to develop a car that would cost around 1.1 lakh, to take on the Nano—the world’s cheapest car—from Tata Motors Ltd. Nano currently costs 1.23-1.72 lakh (ex-showroom Delhi) for three variants.

The Bajaj car was initially scheduled to hit the market this year, but was deferred to 2012.

“A car at a cost of less than Maruti 800 is not going to work. Rajiv (Bajaj, managing director of Bajaj Auto) may not like to sell a car with Ebitda less than 20%," Bajaj said. Ebitda, or earnings before interest, taxes, depreciation and amortization, is a measure of operating profitability.

Annual car sales in the country are expected to reach three million by 2015, according to the Society of Indian Automobile Manufacturers.

Amrit Raj