Tuesday, August 7, 2012

Birth rights of sperms & eggs

The debate on abortion has moved away from the empowerment of women to cutting religious propaganda

Of course, all this is not happening for the first time. Since time immemorial, a woman’s body has been the theoretical and unembellished territory for societal and political war. From the theoretical, scientific and religious end, there are numerous logical stages that define the starting point where ‘human life’ begins. Many schools of thoughts believe that sperms & eggs have life; and put them at par with humans, thus considering them as preconceived life. Many don’t! But almost all blocks ranging from political to religious are in some or the other form discussing the issue of abortion – or as the critics call it, immoral killing of a life. And that is where the whole debate on abortion starts, with opposing philosophies promoted by two schools of thought: Pro-choice campaigners (who demand a mother be allowed to choose whichever of the three options she might wish to undertake), as opposed by pro-life campaigners (who generally argue in terms of foetal rights rather than reproductive rights). The concepts of pro-life versus pro-choice are in general visible across the world, leading to starkly distanced abortion laws across the world – for example, if in Canada abortion is available ‘on demand’, then in a country like Nicaragua, abortions are illegal.

Since the last few decades, as per reports published by Guttmacher Institute, most of the decline in abortion rates occurred in countries where abortion had long been legal. Contemporarily, the highest rates of abortion have shifted to developing countries, which often have restrictive abortion laws. In countries like Thailand and Iran, after abortion restrictions were eased around 1997, unsafe abortions have slipped from 15 to 14 per 1,000 women, a big drop when seen demographically, given the fact that around 70,000 women die each year from unsafe abortions.

In the US, almost half of all pregnancies are unintended and thus four in ten of these end in abortions. The Bush administration had placed a ban on federal funding for international family planning programs that provide abortion information to clients. Obama, within a week of being sworn in, lifted the Bush administration’s ban. Obama further passed an executive order officially scrapping the Mexico City Policy (that ‘protected’ – or rather, restricted – taxpayers from involvement in overseas abortions for eight years).


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Sunday, August 5, 2012

MATHURA REFINERY NAGAR

Though it has been over 25 years since the mathura Refinery nagar came into existence, the township doesn’t seem to have moved a Bit with time. No wonder the people are now opting to move out, finds Vareen Ray
 
The Mathura Refinery Nagar over the years might have grown in size but it lacks a lot of aspirational value. While a little away in the main city, the residential boom has spawned mall culture, the refinery township has a dilapidated small shopping cluster comprising of stores that cater to just the daily needs. A shopkeeper selling stationery tells me, “The shop was allotted to me by the co-operative when the township was created. However, even I stay in the city.” The houses look like they have not been painted for ages; there is a jungle-like feel if you go for a walk within the gated community of Mathura refinery. The IOC township stands no chance when compared to what’s on offer outside – group-housing schemes and proper residential complexes that promises beautiful landscaping and recreational facilities in the form of a Club House. The community centre in the township is nothing compared to the club houses that these developers are creating. Yes, education has a positive side within the Mathura Refinery Nagar – it has a Delhi Public School along with the Kendriya Vidyalaya, where the children of the people working at the refinery easily get quality education. But if work at the refinery gets affected, then sending students to the posh DPS would perhaps no longer be an option, a worry that resonates within the families there.

When Nehru had envisaged that the navratnas of India would help develop townships that would be akin to temples of modern India, he had not thought that for some few of these townships, time could well stop once they were made. It is surprising that for a company as gargantuan and process driven as IOC, a township’s structured development could have been ignored for so long. I returned with a view quite depressing, if not forlorn altogether, that a Nehru’s temple, this surely wasn’t.


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Saturday, August 4, 2012

A glorious history that’s now set to repeat itself

First impressions of the bhel bhopal township are anything but encouraging. but as Manish K. Pandey delves into the details, he finds that bhel could well be on its way to bringing back the good old days

It was a cold winter morning in the capital, foggy like any other. Though I somehow managed to reach the New Delhi Railway Station on time, it took me a while to board my train to Bhopal, as I had to cross several platforms on the way. And by the time I could settle down in the train, it was the onset of dawn. The sun was rising and so was a brisk wind that every now and then blew its way through the still dark station. However, I was quite warm inside the train, as it grudgingly commenced its journey towards the city of mosques and lakes … and of course, home to one of the most well known Navratna PSUs – the mother plant of Bharat Heavy Electricals Limited (BHEL), the largest engineering and manufacturing enterprise in India in the energy-related and infrastructure sector.

The train was still in the outskirts of Delhi and the middle-aged, smartly dressed gentleman sitting beside me had already introduced himself. His name was Shyam Bora. Call it my sheer luck or a plain coincidence, he turned out to be a supplier of raw materials (for the last 30 odd years) to BHEL!

“The condition of the township has deteriorated over the last few years. Roads, streetlights, houses, et al, happen to be in bad shape. However, the BHEL management seems to be doing nothing about it,” he told me. This really surprised me, as according to several observers, the township (that spreads over an area of around 20 sq km) was well known for its greenery and for providing facilities like parks, community halls, library, shopping centres, schools and banks to its residents. “While old employees are retiring at a fast pace, new recruitments still take a backseat...” added Bora. But that was where the bad news ended, in Bora’s opinion. On the professional front, he was more than happy supplying to BHEL. Apart from BHEL, he had been supplying raw materials to other corporate houses as well. But the bond that he shares with BHEL Bhopal is perhaps special. “Despite the fact that they have a credit period of 90 days, which is far greater than other companies, it has always been a growing relationship with them,” said Bora.

By the time I reached Bhopal, I was naturally more impatient than ever to get to my destination. But the 11 hour long journey had compelled me to call it a day. So I had to wait for a whole night before I could get to the bottom of things.

The next day, I started early for the township as it was 7 km. away from the hotel where I was staying. And this time, my guide was Aslam, an auto-rickshaw driver who have been faring passengers from the Bhopal city to the BHEL township for the last 20 years. He affirmed Bora’s observations as we entered the township. I could clearly see houses of employees, who had retired over the last few years, left abandoned or being demolished; particularly in areas like Kalibari, Govindpura, Security Line, Vijay Nagar, et al. Even in other parts of the township, the management doesn’t seems to be paying heed to the regular repair and maintenance work – whether it’s the roads or the employee quarters. Aslam told me that quite a few employees had made their own houses outside. Satellite colonies like Indrapuri, Bharat Nagar, Sonagiri and Saket were mushrooming around the township over the last few years (earlier, there were about 22,000 employees staying in 12,500 quarters inside this township, today the number has drastically reduced by almost 25-30%). “Everyone wants to own a house when he or she retires. And with easy availability of loan along with HRA facility from the company, if we are getting that chance, then what’s the harm,” reasoned an employee of BHEL Bhopal who had just moved into his own house at Sonagiri, a satellite colony near the township.

A senior employee, who had been with BHEL Bhopal for the last 34 years, cleared the air. “TRT quarters, as we call them, are being demolished because BHEL, in association with Nuclear Power Corporation of India (NPCIL) and Alstom (the global leader in equipment and services for power generation), is contemplating another plant at its Bhopal unit, which will fabricate nuclear turbines.” The plan is to manufacture high rating (starting from 660 MW to 1,000 MW) turbine-generator sets. In fact, the unit has already received its first ever order for providing steam generators for 700 MW nuclear sets. The company has also tied-up with GE-Hitachi for making nuclear reactors and is said to be in talks with other foreign players such as Westinghouse, Areva and Toshiba for supply.


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Thursday, August 2, 2012

Dressing up for the marathon ahead

Indian psus have followed an optimistic trajectory post-liberalisation and have seen some vital successes through well-timed and executed strategic realignment. Virat Bahri of B&E brings out the lessons from these successes and also on how these psus can keep the growth story intact going forward and fulfil india’s economic objectives with their private counterparts

If it’s about state-owned enterprises versus private companies, the debate is not new. It only gets reignited from time to time, as it did in the aftermath of the recent global recession. There was a clear case against capitalism and its potential perils that emerged as a result. Government spending is a must for objectives like social welfare and equitable growth, but those of us who have lived through the not-so-exciting ‘80s also know how excess public sector intervention in an economy can rob a nation of its dynamism and growth potential. A general consensus theory that comes up is that relatively high loss making sectors/sectors with high gestation periods, and especially where social welfare is the larger objective, the public sector should have a considerable say (areas like hospitals, mass transportation, et al). On the other hand public sector should ideally also have a huge role in extremely high profit making sectors like oil & gas (which has the other indisputable logic of national interest), mining, banking et al, so that too much money does not get concentrated in the hands of a few individuals. And the private sector must ideally play a greater role between these two extremes.

In India, there is often a tendency to relate PSUs to the word ‘public’ more than anything else. ONGC, besides being the most profitable PSU in India, is representative of the dichotomous viewpoints that we generally carry about PSUs in India. On one end, it is the view that they are family silver, and must be selectively milked. Indeed, ONGC is also on the divestment wish list of the central government, which recently delayed ONGC’s Rs.120 billion FPO to divest 5% of its stake in the PSU, a critical part of its overall divestment plan. On the other hand, companies like ONGC are also expected to shoulder huge strategic responsibility for the country in a sector where geo-political equations are getting more and more daunting by the minute. An instance of this is the current impasse over South China Sea waters, where ONGC Videsh is planning to go ahead with offshore exploration much to the chagrin of China. Analysts caution that while diversification should be pursued for PSUs, the end sought must be strategic rather than politically opportunistic.

The story of PSUs in India carries a legacy of its own. Just like the family owned enterprises of their day and age, these PSUs have travelled an arduous journey to be able to stay competitive post-liberalisation. Some of them stayed stuck in the quicksand of their own legacies to the end, some moved on with laudatory success and some are still struggling. From FY 2000-01 to FY 2009-10, the number of operating Central Public Sector Enterprises (CPSEs) has come down from 234 to 217. However, the aggregate turnover has increased to Rs.12.35 trillion in FY 2009-10, a CAGR of 11.64% over a nine year period (Public Enterprises Survey). Total profit of profitable CPSEs was Rs.1.08 trillion in the same year (CAGR of 16% over the same period). Loss making CPSEs had seen loss increase by a CAGR of 2.36% during the period to Rs.158.42 billion in FY 2009-10. The growing financial clout of enterprises at the top has been recognised through the creation of the Maharatna category of PSUs, which has five members currently – ONGC, Indian Oil, SAIL, NTPC and CIL. They can now decide on investments upto Rs.50 billion without government permission as compared to Navratnas whose upper limit is Rs.10 billion.

Being on the other extreme, these names wouldn’t ring a bell, but they indicate that the government’s ongoing efforts to rescue PSUs at the ‘bottom of the pyramid’ seem to be working in part. In FY 2008-09 itself, 11 Indian PSUs registered a turnaround (profitable for 3 years in a row) including Heavy Engineering Corporation (HEC), BBJ Construction Company, Bharat Pumps and Compressors, Braithwaite and Company & Cement Corporation of India. The Board for Reconstruction of Public Sector Enterprises (BRPSE) set up in 2004 has received 67 cases since it started. The board recommended 59 companies for revival, out of which 45 would be revived through a restructuring package, 9 would be revived via takeover by government/JV with state PSEs and 5 cases for merger/takeover with a total cash and non-cash assistance of Rs.348.61 billion. The overarching theme of the revival has been stricter adherence to balance sheet discipline, as per the board.


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Poverty and death amidst diamonds – the story of Western exploitation of Africa and its links with 9/11

The 10th anniversary of 9/11 was different for the Americans. The decade-long wait is over and even the perpetrator of 9/11 is dead. This 9/11 was also the first anniversary when Americans felt contented by the very fact that their revenge is over and they have again proved their supremacy over the world. But then, this very celebration amidst sorrow is far from complete. Perhaps the chief operative of 9/11 is dead, but the modus operandi is still active and running. Neutralizing Osama is just half the task done, but the very system that allowed Osama to execute the entire 9/11 episode, still thrives. Amidst the entire hullabaloo, what got swept under was the manner in which the entire operation was funded. It is a lesser known fact that the funding for 9/11 had its roots in Africa, and it was all possible because millions of Westerners bought stones that had been (since the last four decades or so) hyped up as the most precious gifts for women. Yes, I’m here talking about diamonds, or rather conflict diamonds – to be more precise, those that with time have earned the title of being ‘blood diamonds’. Several investigative reports post 9/11, including UN war crime reports, have revealed that the Al Qaeda joined Liberian President Charles Taylor in the African diamond trade, which was used for terrorist activities. The terrorists used illicit diamonds as currency for funding their operations, as the demand for illicit diamonds remains high, while tracking the movement of the same is extremely tedious.

If one goes back in time, the entire episode of conflict diamonds started post World War II, when natives of Sierra Leone, working for the British army, returned home to find that their nation was still being looted by the British. Although diamond mining was not just confined to Sierra Leone, what was unusual particularly in Sierra Leone was that unlike other parts of Africa where diamonds were found in specific zones only, diamonds in Sierra Leone were spread all across its geographic expanse, which made the loot easier and plentiful. Gradually, the natives (early 1950-60s) started mining these diamonds illegally and then selling them in the local market. Since the mining was in open fields (alluvial zones), security and protection became virtually impossible. The British used a police force to deter these natives from mining; but then, eventually, the natives learnt the art of warfare (thanks to the soldiers who returned home) and with time, illegal mining started to flourish. Moreover, Lebanon gave the natives of Sierra Leone the market they needed. Along with trade facilities and a thriving market, Lebanon provided the natives with mining equipments and tools as well. These diamonds also made their way to Liberia, since Liberia was a dollar-based economy and had flexible laws – selling and purchasing these diamonds became easier and in due course, they started getting traded internationally.

Simultaneously, pouncing upon the opportunity and in order to fortify its dominance in the diamonds and precious stones market, De Beers bought diamonds from all possible West African nations viz. Angola and Sierra Leone. The company purchased and stockpiled diamonds to keep the supply low and prices high. Concurrently, this is when De Beers started its campaign, “A diamond is forever.” This fuelled the demand for diamonds all across Africa. So much so that dictators and heads of states in the regions adopted brutal ways of mining diamonds. They killed and tortured the natives to keep them away from alluvial lands where diamonds were aplenty and also forced people (women and children included) into bonded labour for extraction of these stones. It goes without mentioning that these bonded labourers still work under the worst possible conditions. Dictators further sold these diamonds in exchange of weapons and arms. The sale of illegal blood diamonds allowed the diamond industry to thrive and also pumped money into Africa, which bolstered the arms trade. The groups and people involved in civil wars primarily created an atmosphere of instability and threat in order to control the regions, which were endowed with diamonds.

It was under the leadership of the then Prime Minister Siaka Stevens (in the late 1960s) that the diamond trade acquired the tag of illegality. From 1968 to 1990, diamond trade in the region became obscenely violent and a corrupt array of ministers minted millions through the same. In 1991, the Revolutionary United Front (RUF) started their violent protests against the government but gradually drifted away from their goal of eliminating corruption to controlling diamond endowed areas. The scenario became bleaker, as the labourers were tortured and punished severely under the RUF regime. Illegal diamonds worth $125 million were bought by Europe alone in this period – which was used by RUF to further funding their mining ambitions. The RUF killed innumerable people, even cut off the limbs of many, simply to keep them all away from diamond mines. So much so that they forcibly moved out those villagers whose villages had alluvial soil (where diamonds were available) and eventually brought the area under their control. From one village, they moved on to another and then to the next. In the entire process, more than 100,000 innocent people were killed or butchered while another 2 million fled Sierra Leone. The total number of killings over the years is estimated to be a staggering 4 million. Thus, the diamonds from the mines under the control of rebel forces came to be known as conflict diamonds, which later on took the title of blood diamonds. This transition from conflict diamonds to blood diamonds aptly describes the increase in social melancholy that the region went through. Initially, the diamonds were mined in zones that were under conflict – in simple words, in regions where rebels and dictators were both fighting to grab land. But then, with time, the very same people started practicing genocide and mass killing to spread the influence of their power; bloodshed became a common phenomenon, thus metamorphosing into the concept into blood diamonds. According to numbers released in 2001, more than one million Sierra Leoneans are internally displaced. All this has eventually pushed Sierra Leone to the bottom of the UN Human Development Index ranking.


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Wednesday, August 1, 2012

Big Oil’s ‘split’ting headache

The world’s largest publicly-listed oil majors did achieve operational efficiencies by riding the M&A wave that began post the Asian Crisis. But times have changed and with their merged state being questioned today, some are mulling over a new strategy to split upstream and downstream operations. Is this a wise move?

The reason was obvious. On a cold December evening in 2003, ExxonMobil’s (former) CEO, Lee Raymond, made public his decision to extend his occupation of the corner office until mid-2006. Why? Integration at the four year-old, $230 billion-worth merged entity called Exxon Mobil was still incomplete, rendering it unfit in terms of “operational efficiencies” to be handed over to the younger oilman Rex Tillerson. Raymond wanted to give Tillerson more face time with Wall Street. In a little over two years, Tillerson was handed over the reigns. Since then, onlookers have watched Exxon’s share chart rise with their mouths gaping. If Tillerson today seems as though he knows his way around rigs, it is because he has steered handsomely a big ship, for over half-a-decade. [Today, had Exxon been a nation, it would be counted as the fourth-largest oil producing country, with a daily production volume of 4,968,000 barrels of oil-equivalent per day (boepd), only behind Russia, Saudi Arabia and US (source: US Energy Information Administration).] For Tillerson, the “grow big” story has worked. He has toiled hard to make the company the most integrated player in the oil business today, through superior capital allocation plans and a relentless pursuit of technology and operational improvement. It has delivered the highest returns on capital relative to peers since the past five years. But Exxon’s tale only represents the pretty part of the merger mania. Conoco Phillips is on the other end of the see-saw.

There is a new fad in town. That of merged entities trying their hands at spin-offs to improve efficiencies and market value. Even experts and Wall Street bankers – who had previously championed the cause of the inorganic way forward – are today questioning whether these individual companies would have been better off as individual entities, and more valuable in terms of aggregated market capitalisation. Truth is oil companies, over the decades, have increasingly lost control over the price of oil, which fluctuates at the whims and fancies of oil producing nations and the derivatives market. This further means that for big oil, improving on operational efficiencies has become most critical. And to achieve that, the not-so-happy merged oil companies like ConocoPhillips are contemplating a split of their upstream and downstream operations into two independent public entities – one dealing with exploration and production (upstream) while the other with refining and marketing (downstream).

And such contemplation – to undo what the merger wave did a decade back – is coupled with action. Months after Marathon Oil (an oil and gas firm with revenues of $73.6 billion in FY2010) split into two independent entities in January 2011 (Marathon Oil – the upstream arm, and Marathon Petroleum – the downstream arm), ConocoPhillips (COP), the world’s third largest integrated energy company (on July 14, 2011) followed suit. Although it is too early to analyse the outcome of this move, fact is that the popular market reaction has not been too encouraging.

In the case of Marathon, a day before the announcement of the split, its m-cap stood at $31.3 billion. Today, it is down to $30.5 billion. Definitely not a positive sign. If a split unlocks value (as it happened in the case of Motorola Inc., ITT, Daimler Chrysler), it starts showing loudly in the investor crowd almost instantly. In case of Marathon, it didn’t. Our case of analysis to understand why a split for an integrated oil company is a tough pill to swallow (and better not undertaken for operational reasons), is COP. Since the announcement, it has shed value to the tune of $16 billion – down by 15%. Why is it that the investors are not optimistic about the split strategy to work for COP? Given that the company has already closed much of the valuation gap with its industry peers – exceeding it in some cases – any extraordinary appreciation in m-cap over the short term is highly unlikely. Also, there are factors that will make all gains from the split partially ineffective. The first and foremost being its recent walk on the inorganic path, which has increased the job for the taskforce supposed to work on the split. Acquisitions have dominated its growth strategy during the past 4-5 years. The company bought American natural gas assets (Burlington Resources), Russian oil supplies (20% stake in Lukoil), and stranded gas in Australia (Origin Energy). These “expensive” deals culminated in a $34 billion goodwill-impairment charge. With its ill-timed acquisitions and a $11 billion share repurchase plan failing to deliver returns, the investors understand that this split strategy is “only” a survival attempt.


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