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Indian trader bamboozles Australian stock markets- Global Markets-Markets-The Economic Times

MELBOURNE: 'Lightning fast buck', 'the fastest gun in the market' and 'high tech trader' are some of the phrases being used by the Australian media to describe the mercurial rise of a derivatives trading whiz-kid, Dinesh 'Danny' Bhandari.

The Indian-origin chief executive of Sydney-based Tibra Capital has caught media attention recently as he debuted on BRW Young Rich List with a "conservatively-estimated" personal fortune of 40 million Australian dollars ($36.7 million).

Dinesh, 32, has been ranked 40th on the list of 100 young (under 40 years) Australian entrepreneurs that was published a few weeks ago.

What has impressed market pundits even more is the fact that the mercurial rise of the South Australia-born trader has come amidst gloom which engulfed the world economy for most of the year.

The rise and rise of Tibra and its chief executive are based on a high-speed, high-powered derivatives trading software his company executives have developed. The new generation of stock market traders are reported to be using lightning-fast computer programmes which are based on "secret" algorithms.

The ingenuity of Dinesh and his colleagues has enabled Tibra Capital to return a very impressive annual profit of 57.4 million Australian dollars in 2008. The net profit has, according to the firm's annual report lodged with Australian Securities and Investment Commission on Oct 30, gone up to 77.5 million Australian dollars in 2009.

The net profit looks even more impressive as Tibra Capital was established only three years ago after Dinesh was sacked by The Netherlands- based trading company Optiver. The 32-year-old was so incensed over the departure from Optiver that he reportedly initially called his company FTD or F... the Dutch.

The animosity between his former employer and the Sydney-based trader did not cease with his departure as Optiver has filed a number law suits against Dinesh and his colleagues in Tibra. The BRW Young Rich debutant and his Tibra team were accused of stealing Optiver secrets.

The law suits have failed to dampen Dinesh's appetite for success and the moolah linked with high speed derivatives trading.

The company Dinesh started with just two million Australian dollars has catapulted him among Australia's most admired young entrepreneurs.

According to media reports, Dinesh is a typical sport-loving Australian.

"For me personally, I enjoy a lot of sports, motor sports, cricket and football, all the great Aussie sports, and travel. My wife and I have been to many dozens of fantastic places together so that's something we really enjoy doing," he was quoted as saying by Sydney Morning Herald newspaper recently.

"It's nothing glamorous; we just like getting the job done, and the rewards aren't necessarily obvious to everybody but they're certainly obvious to us," the Tibra chief added.

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Economy shows signs of recovery

The Indian economy is passing through a crucial phase and developments in the second half of the current financial year will decide the Finance Ministry’s ability to improve things significantly next year. Luckily industry has reported encouraging growth in April-August. The average rise in industrial production has been 5.8 per cent in these five months against 4.76 per cent a year ago. What is noteworthy is the performance of the manufacturing sector, which could raise output by 10.40 per cent in August against 1.69 per cent in the same month last year.






The uptrend is expected to be sustained in the coming months as the core sector too has done well. As exports also are expected to recover in October-March, growth in industrial output for the whole year may be 9 per cent against 3.4 per cent in 2008-09. Last year, the recession in the U.S. and elsewhere had hit the industrial and external sectors.
In October-March, industrial output had declined consistently except in November, mainly due to the dismal performance of export industries. The performance so far this year has been heartening as latest reports suggest a strong revival in domestic demand for various consumer products. The services sector also is expected to aid GDP growth with a contribution of around 9 per cent.
Setback in agriculture

The agriculture and allied industries sector, however, has fallen back. The output of food and cash crops in the 2009-10 season will be much lower than in 2008-09 when there was a record output of foodgrains. The estimates for the current season of the Agriculture Ministry and the National Economic Advisory Council (NEAC) are based on different perceptions.
The NEAC places foodgrain production at 233 million tonnes against the Agriculture Ministry’s 221 million tonnes. It is also felt that the yield of oilseeds and sugarcane will be much lower than the NEAC’s assumption. In any case, there will be a negative contribution of 1.5 per cent by the sector to GDP growth. However, the overall progress of the economy will be satisfactory in 2009-10 in the context of a projected contraction of the global economy.
The performance would have been more impressive but for the sharp setback on the trade front since October last year. However, it is significant that exports only dropped by 13.8 per cent in September this year against 34.2 per cent in April. A positive growth is likely in October-December though it remains to be seen whether this will fully make up for the setback of earlier months.
In view of the favourable expectations from the industrial and external sectors and hopes of a rebound in agricultural output in 2010-11 season, the GDP growth in 2010-11 is placed even higher at 8 per cent. The decline in export earnings has, of course, not seriously upset the balance of payments position. The larger current account and trade deficits of past year could be fully met with available foreign exchange assets. This of course declined by over $57 billion in 2008-09 without making allowance for revaluation adjustments. On the other hand, since April this year, reserves have risen by roughly $ 25.34 billion up to October 30.
Gold purchases

With likely reserves of around $300 billion by March next year and a weakening dollar against other major currencies, the Finance Ministry as well as the RBI have thought it desirable to reduce dollar holdings. The gold content is thus being increased by 200 tonnes to 557.8 tonnes by taking advantage of the opportunity to buy from the IMF.
These purchases involved using $6.7 billion out of reserves even though the purchase price is only slightly below the current market quotation in rupee terms. While it is not clear how much will be the rise in gold prices from the current levels, the RBI will still have the benefit of lower average prices in respect of earlier holdings. These, of course, have been revalued and the holdings of 357.8 tonnes had a value of $10.80 billion as on October 30. This will go up substantially after the recent purchase.
Cautious credit policy

The external sector will not in any case witness a repetition of the happenings of 2008-09. The monetary authorities have nevertheless been cautious in their recent mid-year review of credit policy as there was anxiety not to disrupt the recovery process.
The inflation rate is expected to rise to 6.5 per cent plus by March next while efforts are under way to present more realistic price indices. Changes in this rate will be on a monthly basis henceforth with a new base year. The effective CRR will be higher than 5 per cent as its coverage will be over a larger area and there will be a net increase in the funds immobilised because of the inclusion of certain provisions left out earlier.
Apart from the increase in the provision against advances to the commercial realty sector an indirect effort has been made to curtail money supply by discontinuing with immediate effect the special refinance facility for banks and special term repo facility for banks (for providing funds for mutual funds), non-banking financial companies, and housing finance companies).
The cut in statutory liquidity ratio has also been restored to 25 per cent. This will not have any immediate adverse impact as the actual SLR was higher than the new stipulation. Also, the investment-deposit ratio of banks was 33.11 per cent, according to the latest statement.
The implied reversal of the RBI’s retreat from dearer money should not however result in a hike in key interest rates as well as CRR during the next quarterly review. This is because borrowing by the Central and State governments will still be sizable in the coming months especially as the State governments have to mobilise large resources.
Net market borrowing by the Centre may also exceed the target because of a slowdown in tax revenues and increased subsidies.
Since industry will have to borrow more from banks for working capital and raise loans for expediting expansion and new schemes and export credit also may go up, a liberal approach should be adopted by the RBI in spite of the looming threat of inflation rate rising to 6.5 per cent and above against the earlier RBI projection of 5 per cent.
The Finance Ministry for its part has given the assurance that the stimulus package will not be withdrawn until it becomes clear that the economy has overcome all its troubles.
The Finance Minister will of course have a challenging task in cutting the fiscal deficit to 5.5 per cent from 6.8 per cent in 2009-10; it may even rise to 7 per cent if the efforts to reduce non-Plan expenditure do not yield tangible results.

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‘Beetle’ to hit Indian roads in December

Europe’s largest carmaker Volkswagen will roll out the Beetle - fondly called the people’s car - on Indian roads by beginning of next month.
A senior company official said on the sidelines of the India Economic Summit that Volkswagen would import the car from its Mexican plant for sale in Indian markets.
He, however, declined to divulge the possible price of the car.
Beetle is one of the most successful models that the German carmaker has ever produced.
Volkswagen, which currently sells luxury sedans Passat and Jetta in Indian market, is planning to launch its small car Polo by early next year.
The group has two facilities in India at Aurangabad and Chakan, which assembles cars of its three brands - Skoda, Audi and Volkswagen.
VW is looking at full-capacity production at this plant by 2012 and in order to strengthen its workforce, it is planning to more than double the India headcount with addition of 1,500 employees at Chakan alone in Maharashtra.
The group had earlier announced a target of 8-10 per cent share of the Indian passenger car market in the next 6 years.
It will also consider integrating after-sales service of its three brands in India for better synergy.
It sold about 19,000 units of Skoda, Audi and Volkswagen brands last year in the over 1.5 million-unit Indian passenger vehicle market.

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Bell Labs looks to move into services segment

Bangalore: Vishwanath Poosala, the local head of Bell Labs, the research arm of Alcatel-Lucent, displays a black, modem-like box with a picture of a mango in his north Bangalore office.
Lest one mistakes it for a mere routing and encoding device, he explains that the box is a small computer, offering end-to-end content delivery solutions that would allow “mobile audio video on the go” or “Mango”.


Expanding innovation: Vishwanath Poosala says the idea is to create a parallel architecture that would reduce the load on the network. Hemant Mishra / Mint

The Mango box—the content access point—connects to networks over broadband and to mobile phones over bluetooth or wi-fi. And it could soon catapult the 84-year-old research organization into services.

Bell Labs, rechristened from AT&T Bell Laboratories to Alcatel-Lucent Bell Labs, has developed technologies that have changed the world, be it the transistor, laser, or digital signal processor. Just five years into India, the communication research and development behemoth is right into the services melting pot that India epitomises.
In emerging markets, users are interested in high bandwidth entertainment and personal content which they like to store and share with others but have no means to do so, says Poosala.
Existing content delivery mechanisms such as cellular data networks (GPRS/EDGE) and the services running on top of them are either slow or expensive for most users. “Moreover, their capacity may not scale for the millions of mobile users who seek high bandwidth content,” says Poosala.
Mango, he claims, will address these issues while allowing content delivery on mobile phones.
Currently testing it in its building, Bell Labs is talking to one of the largest out-of-home media companies, LiveMedia, and telecom valued added service provider Phoneytunes.com to take it to the masses.
“We are optimistic about Mango; the idea is to have a new distribution channel for digital content,” says Rajan Mehta, founder and chief executive of LiveMedia.
He thinks Mango will make the content interactive in the captive audience network of 5,000 liquid crystal display screens that his company runs, reaching around 50 million people every month. The back-end work in the Mango-led initiative will be provided by Phoneytunes.
The actual rolling out of Mango may take anywhere between six and 12 months, but Mehta looks to it as an open application programming interface (API) that would nudge developers to build applications around it. “You have the Internet now, think of it (Mango-led distribution) as the Outernet,” he adds.
The basic idea, says Poosala, is to create a parallel architecture that would reduce the load on the network. “Even the CTOs (chief technology officers) of telcos in the developed world are looking at such solutions to ease the network burden.”
While Bell Labs has been engaged in “managed services” for long, such as maintaining networks for telcos such as Reliance Communications Ltd and Bharti Airtel Ltd, with Mango it will enter value-added services as never before.
“There is lot more money today in services as compared to in equipment...equipment becomes commodity,” says Ashok Jhunjhunwala, who leads the telecommunications and computer networks group at the Indian Institute of Technology-Madras.
Only a few equipment companies in the West have survived, he adds. “Vacuum is being felt by the Chinese companies, and may be by the Indian companies in future. The companies in the West are looking at services as a way going forward.”
Services have become so central that the traditional technology research organization, for the first time ever, has begun studying it. The India centre is driving the effort across Bell Labs to see “if there’s science behind managing services”, says Poosala.
The market today is in emerging nations; services is where the money lies, says Taron Mohan, chief executive of Phoneytunes, who, though keyed up at Mango’s possibilities, is also cautious about how Bell Labs will pull it off in the public domain. “We need to see how the central box controls other (Mango) boxes,” he says.
As far as the business goes, Jhunjhunwala says the price points at which emerging markets operate are quite different from those in the West, where the markets have become saturated. “These labs may not succeed in breaking open the market easily.”
The game plan for Bell Labs appears to be in entering services via different technologies. The lab has developed a low-cost wireless-mesh architecture that extends from a town over multiple hops to bring a broadband pipe to rural areas. The lab says it has managed to extend the wi-fi range by using “directional” antenna, commoditized wi-fi radios and novel software that minimizes interference and maximizes system performance.
Calling it VillageNet, the lab is close to signing a memorandum of understanding with a Union government agency to start rolling it in rural areas, says Poosala. He is not willing to disclose the name of the agency.
It isn’t as if these innovations are restricted to the Indian market. A low-cost traffic monitoring solution, where sensors track bluetooth-based phones carried by people moving in cars and with the help of algorithms analyse the data, suggests the best route of travel up to an hour in advance.
Demonstrated at the World Congress on Intelligent Transport Systems in Stockholm, Sweden, recently, Teleport has been tested in Bangalore and Mumbai. “We are receiving a lot of interest from European city administrations for this technology,” says Poosala.
So even as fundamental communication problems, such as how much energy it actually takes to run a network, occupy Bell Labs’ attention at one level, at another, it is emulating conglomerates like General Electric Co., which is using India as a laboratory to cost-effectively innovate products for the rest of the world—whether they be new-age aircraft engines or low-cost medical imaging devices, or even baby warmers.

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Kraft set to formalize hostile Cadbury bid Monday

Cadbury previously rejected Kraft’s informal offer two months ago, which was orth worth 745p a share, saying it made no strategic or financial sense

Philadelphia: Kraft Foods Inc is expected to formalize on Monday a hostile takeover bid for Britain’s Cadbury Plc valued at rougly £10.2 billion ($16.7 billion), sources familiar with the situation said on Sunday.
Cadbury previously rejected Kraft’s informal offer two months ago, which was worth worth 745p a share, saying it made no strategic or financial sense. Cadbury’s stock closed on Friday at 758p.
Still, Kraft was not expected to materially change its offer, sources familiar with the situation said.
Kraft planned to press ahead and make its offer directly to Cadbury shareholders on Monday, meeting a deadline set by the UK Takeover Panel to formalize its offer or walk away, the sources said.
“Monday will start the official process,” said one source. “It’s just a starting point,” said the source, saying that Kraft could increase its offer down the road.
Kraft’s move to formalize its bid starts a 28-day clock to send the offer documents to Cadbury’s shareholders. When investors receive this information, a standard 60-day offer period kicks in.
Kraft declined to comment.
Cadbury’s board was expected to meet on Monday to weigh Kraft’s offer, according to media reports.
A Cadbury spokeswoman, asked to comment by Reuters on media reports, reiterated the company’s opposition to being bought by Kraft.
“While Kraft might need Cadbury, Cadbury certainly does not need Kraft,” the Cadbury spokeswoman said.
The bid — at the same price or only slightly offer than its previous offer — reflects Kraft’s promise that it would not overpay for the British group best known for its Dairy Milk chocolate.
Kraft, the maker of Velveeta cheese and Oreo cookies, believed from the start that there were no rival bidders who would push the bidding price higher. Although a new suitor could still emerge, Kraft’s tight bid shows it still sees no competition for Cadbury’s hand.
A deal would create the world’s largest confectioner, ahead of privately held Mars Inc. It would put into U.S. hands a company that has been a British icon and corporate symbol of industry and philanthropy, a fourth-generation member of the founding family said. Felicity Loudon said she identified Kraft with “plastic cheese on hamburgers.”

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GE to push low-cost healthcare systems in rural markets

Of the total spending for the healthy imagination initiative, half, or $3 billion, has been earmarked for developing and producing value products for rural areas in India and across the globe

New Delhi: As part of its “healthy imagination global initiative”, General Electric Co., or GE, will roll out stripped-down versions of healthcare systems for the rural Indian market. The project will see GE India spending $6 billion (Rs28,080 crore now) over the next five years.
“We have developed a mobile ECG (electrocardiogram) device for less than $1,000, against the existing cost of $15,000, which means that a patient in rural India can avail of an ECG for less than Rs50 against the several thousand rupees he will need to spend for an ECG in a big city,” says Tejpreet S. Chopra, outgoing president and chief executive officer of GE India, Bangladesh and Sri Lanka.


Healthy imagination: Tejpreet S. Chopra, outgoing president and chief executive officer of GE India, Bangladesh and Sri Lanka. Rajkumar / Mint

The concept, he adds, is akin to the Nano small car from Tata Motors Ltd, where the entire model has to be reworked from scratch rather than going in for a cheaper version of an existing machine. At present, at least 100 such devices are in use across different states. Chopra says the company is looking for such value products across the entire healthcare chain, including maternal and infant care as also X-ray machines.
Of the total spending for the healthy imagination initiative, Chopra discloses that half, or $3 billion, has been earmarked for developing and producing value products for rural areas in India and across the globe. “Another $2 billion will be used for healthcare IT (information technology) and rural financing, while the remaining $1 billion will be utilized to improve healthcare awareness,” he says.
GE, which last year achieved revenue of $2.6 billion from its Indian operations, will soon also see a change of guard at the top, with John Flannery coming in to replace Chopra, who’s likely to head for a posting at GE’s corporate headquarters in Connecticut, US, after he demits office at the end of the current fiscal year. The move is aimed at consolidating the company’s several business interests—which include aviation, lighting, finance and media—into one team with an integrated strategy.

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Accenture to hire 8,000 in India
New Delhi: Global technology and consultancy giant Accenture said it is going to add around 8,000 people in India by the end of next year taking its total employee base in the country to 50,000.
"We are 42,000 right now and we imagine we will be about 50,000 by the end of 2010," Accenture Chairman and Chief Executive Officer William D Green said on the sidelines of the India Economic Summit.
Indicating a recovery from the global downturn, Green said the company will continue to focus in India, specially in the areas of analytics.
Accenture's focus in India is going to be the analytics space, which will help the clients convert information into insights for better yields.
Green added, "We believe that analytics is going to be an important trend that our customers are going to demand from us. We think India is going to be a great place for us. We have some core centres of excellence in the analytics space in the country." Accenture, which has annual revenue of USD 21.58 billion for fiscal 2009, will strengthen its focus on clients in pharmaceutical, telecommunications and energy in the country.

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Somdev in Challengers final

Third seed Somdev Devvarman shrugged off a second set hiccup to breeze into the final of the ATP Challenger tournament at Charlotteville in the USA.

Somdev beat Ryan Sweeting 6-4, 4-6, 6-2 in a see-saw semifinal to set up a summit clash with second seeded American Kevin Kim, who downed compatriot Donald Young 6-2, 7-5.
The Indian went up after winning the first set but his American opponent crawled back into the game, winning the second set. The wiry Indian raised his game by a few notches and in the decider proved his superiority to seal the match in his favour.

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IBM sells tech solutions to small business
The world’s second largest computer company, International Business Machines Corp. (IBM), might finally be getting its technology solutions business aimed at small and medium businesses (SMB) here right, and it may have shampoos to thank for it.
Last year, IBM, also known as Big Blue on account of the colour of its official logo and which ended the year with $104 billion (around Rs5 trillion today) in revenue, rolled out Smart Business, an information technology (IT) solutions package aimed specifically at SMBs—firms that hire up to 500 persons.

Illustration: Jayachandran / Mint


Results, however, began to improve after so-called “huddle sessions” pointed the way forward: affordable pricing and reach beyond metro cities through business partners. The firm now has 14 accounts nationwide.
In a way, IBM’s new strategy mirrors that of Indian consumer goods firms in the 1980s which changed the rules of the game with the now-ubiquitous low-priced shampoo sachet that allowed them access to a vast rural market through an elaborate distribution network.
It’s not just a coincidence that Anoop Nambiar, country manager (business partners) at IBM who runs the franchises in tier II and tier III cities, once worked in the consumer goods business, selling soap in Andhra Pradesh.
“Lessons I learnt in selling FMCG (fast-moving consumer goods) products did stay with me. Though we aren’t consciously adopting an FMCG model, my functioning may be informed by my past learnings,” Nambiar said.
IBM’s SMB strategy hinges on affordable pricing—at least 30% cheaper than competition—and a robust distribution network, expanding from two to 22 locations in the past nine months.
“For IBM, small and medium is a big business,” says Ramesh Narasimhan, director, general business for IBM India/South Asia.
New York city-based market research firm Access Markets International Partners Inc. (AMI) estimates IT spending by Indian SMBs engaged in manufacturing, banking, finance or insurance sectors at about $5 billion. IBM estimates that India has about 30,000 such entities.
IBM does not disclose India-specific revenue, but industry researchers estimate it generates about $1 billion in revenue from its India business.
IT magazine Dataquest estimates that IBM had revenue of Rs5,783 crore from domestic business in India for fiscal 2009, up from Rs4,242 crore in fiscal 2008 and Rs3,380 crore in fiscal 2007.
Although IBM follows a calendar year for reporting earnings, Dataquest’s estimates are based on an April-March earnings cycle.
For fiscal 2009, revenue from domestic market increased as a share of total revenue, which includes export revenue as well.
From 42% growth for fiscal 2008, it grew 48% for fiscal 2009, according to data from Dataquest.

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Google ordered to pay $500,000 to F1 racer Barrichelo
SAO PAULO: Internet giant Google has been ordered to pay 500,000 dollars in damages to Formula 1 racer Rubens Barrichelo for hosting fake online profiles of him on its social network Orkut.

The decision by the court in Sao Paulo was published Monday in the Brazilian state's official government gazette.

It said the damages could be raised to 700,000 dollars because of the case was lodged in July 2006, and that GOOGLE risked a daily fine of 590 dollars until the pages referring to Barrichelo were removed.

Orkut, owned by Google, has a big following in Brazil, though it is losing some ground to a new Portuguese-language version of Facebook that has become available.

The 15th district court of Sao Paulo hearing the civil case determined that Google's responsibility was proved because it managed the site and established the rules for its use.

Media said there were more than 300 fake profiles under Barrichelo's name on Orkut.

The US Internet company made no immediate comment on the judgement.

Brazilian specialists said the amount of damages was the biggest yet awarded for false web profiles and online libel.