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
Investeurs Consulting P. Limited
S-16, U.G.F, Green Park Ext. New Delhi-110016, www.investeurs.com

2. Starbucks is finally Infrastructure, Leasing & Inflation shot up to
coming to India. The Financial Services (IL&FS) 8.43 per cent in
world's largest will be the new promoter December, from 7.48
premium coffee retail of Maytas Properties, the per cent in the
chain today announced cash-strapped company previous month, as
that it has entered into owned by family prices of certain food
an agreement with Tata members of disgraced and non-food items
Coffee for a strategic Satyam founder continued to show an
alliance. Under a non- Ramalinga Raju. The upward trend. and
binding MoU, Starbucks Company Law Board vegetable, like onion,
will explore setting up (CLB) today approved a and other protein-
stores in the Tata Maytas proposal to allow based items became
group's retail outlets IL&FS to infuse Rs 20 lakh expensive. With the
and hotels, besides as equity into the inflation showing no
sourcing and roasting company and become an signs of moderation, it
coffee beans at Tata 80 per cent shareholder. is widely expected that
Coffee's Kodagu The Raju family will hold RBI will raise the key
facility. the remaining 20 per policy rates during its
cent. quarterly monetary
policy review on
More… January 25.
More… Mor
US-based iGate has In the single largest Industrial growth has
acquired nearly 63 per aircraft deal in global plummeted to an 18-
cent stake in country's aviation history , no- month low of 2.7 per
sixth largest IT firm frill carrier IndiGo will cent in November. The
Patni Computer acquire 180 A-320s lower year-on-year rise
Current Chronicles
Systems for $1. 22 worth an estimated in the official Index of
billion.iGate will buy $15.6 bn from Industrial Production
45.6 per cent of the European plane (IIP) in November —
shares of the three manufacturer compared with 11.3 per
founders of Patni -- Airbus. Of these cent for the same
Narendra Patni, planes, 150 would month of last fiscal —
Gajendra Patni and belong to the eco- poses a major dilemma
Ashok Patni-- along efficient 'neo' series, for policymakers,
with the 17.4 per cent which are yet to be already under siege
stake of private equity produced, and the from rising prices. Any
firm General Atlantic. remaining 30 are the further monetary
The deal is expected to standard tightening measures
be completed in the A-320s. They are aimed at inflation
first half of 2011, after expected to be control now also run the
acquiring all the delivered between risk of derailing growth.
regulatory approvals. 2016 and 2025.
More…
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 that,
transactions and disk IO and others. CPU and memory usage are virtualization security is something that most enterprises are just starting
misleading most of the time in virtual environments. The only real to grasp but don’t fully understand. Many IT people still believe that the
measurement is how long your transactions are taking and how much hypervisor and virtual machines are safe. Recent presentations from
latency there are. According to a recently published report: Blackhat have demonstrated that we shouldn’t sleep so tight at night. As IT
Amazon found every 100ms of latency cost them 1% in sales. Google found shops get more educated on the virtualization security issues, it will
an extra .5 seconds in search page generation time dropped traffic by 20%. become one of the factors they will consider when they move into the
A broker could lose $4 million in revenues per millisecond if their electronic cloud. Access control and monitoring of the virtual infrastructure will be
trading platform is 5 milliseconds behind the competition. So who’s on top of their mind.
tackling this problem? Hypernic’s CloudStatus is one of the first to There are quite a few startups like Reflex, Blue Lane and Catbird that are
recognize this issue and developed a solution for it. They started with creating privileged VAs that claim to protect the VAs running on VMware’s
monitoring of Amazon’s web services, then recently added monitoring for ESX servers.
Google App Engine. In addition, RightScale’s solution can also provide
monitoring for the virtual machines under their management. Despite all the risk and challenges, Cloud computing is still growing and many
government bodies and organizations already use this type of network for
• Reliability and Availability: I won’t beat the dead “Gmail down, EC2
their businesses. This type of computing allows them to focus on what
down, etc down” horse here. But the truth of the matter is enterprises
matters and not to worry about technology side of things. The most attractive
today cannot reasonably rely on the cloud infrastructures/platforms to
feature of this new technology deployment is the prospect of converting large,
run their business. There’s almost no SLAs (Service Level Agreements)
upfront capital investments in IT infrastructure into smaller, manageable 'pay-
provided by the cloud providers today. Even Jeff Barr from Amazon said
per-use' annuity payments. This feature has sparked a high degree of interest
that AWS only provides SLA for their S3 service. Can you imagine
and debate amongst technology vendors, users and channel partners alike.
enterprises signing up cloud computing contracts without SLAs clearly
Thus, Cloud computing is here to stay. It will be the next big wave and will be
defined? It’s like going to host their business critical infrastructure in a
adopted by enterprises. However, the industry as a whole needs to answer
data center that doesn’t have clearly defined SLA. As such no one is
some of these challenges and eases the 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 expanded its
share in global generics market by about 8%. India tops the world in
exporting generic medicines worth $11 billion and account for 20% of the
The Indian companies, like Sun Pharma, Aurobindo Pharma, Glenmark, Cadila
worldwide generics production.
Healthcare, Wockhardt, Ranbaxy command a 33.17 percent share or 142 of
428 ANDA approvals in 2009.
What accounts for such meteoric rise of Indian companies in generics arena
is their expertise in contract manufacturing. This means low manufacturing, Generics industry is projected to gain further momentum by spurt in demand
& R&D costs, but not at the expense of quality of the end product. from inclusion of generics in treatment as being vouched by several
Manufacturing costs are almost half to that in the European markets, while Medicare, & insurance companies around the world.
R&D costs are one seventh of the EU. With such cost advantages in its side,
BIOSIMILAR
Indian companies are projected to make most of the external opportunities.
Another highly lucrative, yet untapped avenue is of biosimilars. They are
While, the key markets for generics are the EU nations, USA and several Latinderived from living organisms such as bacteria or mammal cells engineered
American countries, almost all of which remain under-penetrated., the mostto produce specific proteins the body needs. Though, cut price biosimilars
prominent, & promising market of them, for Indian companies is the UScould bring about a substantial cut in healthcare costs in the developed
Generics market. It commands half of the global share in generics. Aroundcountries, yet, the western regulators shy away from them, & prescribe far
$70 billion worth of drugs are expected to go off patent in the US over the more elaborate tests for them compared to the chemical generics. Another
next three years, and India is capable of manufacturing a substantial share ofhurdle is complicated manufacturing. For instance, Cresp took five long years
the product to support the resulting generics opportunities. from the lab to market. Still another challenge is tinkering with the process
to improve yields — the amount of protein — without compromising on its
quality. The smallest change can have an effect on the end-product.

7. Open
These impediments kept a good number of Indian generics firms at bay until Outlook Forum
recently. But with India’s developing biotech industry and cost advantages, Road ahead, though promising, is set with certain critical pullbacks.
Indian companies seem to be all set to foray in to this field. A big stride has Biggest bottleneck is abysmal state of infrastructure in the country,
been taken on this front through the deal struck by Biocon with Pfizer which given the importance of energy and transportation for the
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 robust
Prominent appeal of biosimilars lie in its lower price erosion compared to programmes, vigilance and improved policing to ensure that patients
generics. Unlike generics that result in a 90 per cent drug price erosion upon and India’s reputation are protected.
patent expiry of drugs in, biosimilars may herald only a 30-50 per cent drop. However, India offers some attractive tax benefits for pharma
Hence, beginning from 2012 biosimilars market will add an estimated $10 companies such as R&D credits and income tax exemptions in special
billion in incremental revenues each year till 2020. 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 trade
communications networks, or LTE, could be work was up 3.84%. Overall, the index declined by war
announced in the second half of the year, an annualized 0.13%. Brazil has warned that the world is on course for
Communications and Press Minister Igor a trade war because of what it says is currency
Shchyogolev said on 13.1.2011. It depends on Barclays hikes 2011 inflation forecast to 4% for
manipulation by China, the US and others.
whether the big three mobile operators Philippines
Finance minister Guido Mantega said Brazil was
and Rostelecom manage to draw up "a digestible London-based Barclays Capital revised upwards its
preparing moves to prevent further appreciation
scheme" for converting military frequencies, he inflation forecast for the Philippines to four percent
of its currency. He said Brazil's trade with the US
said. this year instead of 3.6 percent on the back of
had slipped from an annual surplus of about
rising energy prices. Barclays Capital economist
$15bn (£9.6bn) to a deficit of $6bn because of US
Brazil Sets Reserve Requirements for Currency Prakriti Sofat said in a research note that
efforts to revive its economy through loose
Positions to Stem Real Rally the investment bank sees a higher inflation this
monetary policy.
Brazil's central bank set reserve requirements on year but this would still fall within the target range
short dollar positions held by local banks in its of three percent to five percent set by the Bangko
third attempt since October to stem a rally in the Sentral ng Pilipinas (BSP). “Looking ahead, we
currency. The real fell as much as 0.8 percent believe the near-term risks to the energy
after the announcement. Starting April 4, component of the CPI are biased to the upside
Brazilian banks will need to deposit in cash at owing to elevated oil and coal prices. For the
the central bank 60 percent of their short Philippines, we are revising up our 2011 average
positions in U.S. dollars above $3 billion or their inflation forecast to four percent from 3.6 percent
capital base, whichever is smaller. The reserves previously,” Sofat added.
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 capital
festive spending, but overall employment was
outflow totaled $22.7 billion, the central bank said
down in December, according to the monthly
on 13.01.2011. In 2008, Russia faced a record high
Adcorp Employment Index released on
net capital outflow of $129.9 billion as the ruble
10.01.2011.
devalued.

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

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.
The 52 Indian players were auctioned off for a total price of nearly $44 million,
9. Which newspaper baron started his career by
followed by Australia, who had 38 players auctioned for close to $15.5 million. South
launching the "Adelaide Herald" when he was just
African and Sri Lankan players were also host buys, while New Zealand, England and
23years old?
West Indies, together, had a total of just 15 players auctioned.
10. What useful and innovative computer accessory did
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