Financial Express ND 02-Feb-12 P-3
British PE fund picks up 16% stake in IIM-A's 13E Trust
Rajat Guha& Klrtika Suncja

UK based private equity fund BP Global Investments is picking up 16% stake in 13E Trust, a special purpose vehicle floated by IIM, Ahmedabad. Profit-I making is not barred for "the SPY with its focus on sustainable energy development and commerce.
Not-for-profit statuses of educational institutions have been a dampener for foreign investors ever since the sector was opened up for FDI a decade ago, but ' that seems to change.

Despite its rather small size (Rs12 crore), the deal is expected to set a precedent and help the higher education sector, starved of FDI, to attract foreign ; funds by carving out entities for specific business purposes. The investment will be used in low carbon and renewable energy generation, energy efficiency and conservation ' and energy distribution, ; among others.

13E Trust was incorporated as a Sebi-registered venture capital fund set up by the Centre for Innovation Incubation and Entrepreneurship (CIIE). BP Global provides advisory and manpower resource support services to BP.

With India’s rules mandating that core education cannot be a commercial enterprise, FDI has flown only into companies involved in businesses related to education. But this is first time an institution of the repute of IIM-A has got FDI.

Though FDI is allowed in higher education, there are road blocks like the absence of enabling legislation. Parliament is yet to clear the Foreign Educational Institutions Bill, which would allow overseas universities to set up campuses here. Almost two years after the ministry of human resource development drafted the Bill, Parliament’s standing committee has not given its nod.

A ministry official said: “Foreign investment peaked in 2008-09 and has been falling since. The main reason is the sector’s not-for-profit status. There is no enabling legislation either. How can a foreign university wishing to set up a campus here get approvals without the legislation in place?”

Ficci’s education committee director Shobha Mishra Ghosh said, “The regulatory environment is uncertain. Most of the investment will come only into a campus set-up. So far, the investment has been in training and technology, but both have not been explored completely. Besides, investments are minimal due to lack of clarity.”

Financial Express ND 02-Feb-2012 P-1
IIMs aim to raise own resources, hike staff pay
Kirtika Suneja

THE Indian Institutes of Management (IIMs) have requested the Centre that they be allowed to raise funds from alumni networks and corporate to supplement budgetary support. The additional funds will help fiancés existing operations and new initiatives at the country's premier business schools.

The director of an IIM told FE that the government's financial burden will come down if the institutes are allowed to leverage their own resources for expansion and infrastructure programmes. "We discussed this proposal with the human resources ministry at a recent workshop as the government cannot finance the requirements of all public institutions in future. The ministry is keen on giving us this autonomy," said an IIM director.

The Planning Commission's approach paper to the 12th Five Year Plan had recommended that IIMs should be encouraged to raise money through various legitimate means.

According to the director of a new IIM, old institutes have the advantage of vast alumni bases while new ones can benefit from corporate philanthropy

Each IIM is a society formed under Societies Registration Acts, having a memorandum of association (MoA) outlining its objects and rules.

The board of governors is responsible for the general superintendence, direction and control of the at fairs of the society and its income and property The IIMs depend on government support for most of their finances. Recently, the HRD ministry amended the MoAs, empowering IIM boards to independently set up search-and-selection committees to shortlist three candidates for the post of director. In the new regime, four of the five old IIMs (except IIM-Calcutta)

British PE fund picks up 16% stake in IIM-A SPV

THE not-for-profit status of educational institutions has kept foreign investors away since the sector was opened up for FDI a decade ago, but that seems to be changing. In a first, UK-based PE fund BP Global Investments is picking up a 16% stake in 13E Trust, a special-purpose vehicle floated by IIM, Ahmedabad. The SPV, focusing on sustainable energy development and commerce, is not barred from making a profit though valued at only f 12-crore; the deal will set a precedent and help the sector attract foreign funds by carving out entities for specific business purposes at Ahmedabad, Bangalore, Indore, Lucknow and Kozhikode are free to set up campuses, raise funds and dispose property except those purchased with public money.

"Till now, these proposals used to come to the HRD ministry but after the amendments, the institutes can take their own decisions," said a ministry official.

"The amendments will help us raise and manage funds, recruit and compensate the faculty and set up campuses in India and abroad,"' said Debates Chatterjee, director, IIM-Kozhikode.

"With the changed MoA, making faculty pay more flexible is on the institute's agenda and it is discussing the matter with the board. We are looking at excellent faculty and ways of retaining them by topping up their salaries," said Debashis Chatterjee, director, IIM-K. The institute is also looking at launching new programmers for working executives at its new campus in Kochi.

A review committee set up by the government under RC Bhargava, chairman, Maruti Suzuki had suggested that remuneration of all IIM employees be determined by the board, considering market conditions to attract and retain high quality talent, ability to pay, and the need to provide motivation for performance.

Financial Express ND 02-Feb-12 P-6
A number of colleges likely to shut shop: Crisil

A number of colleges in India are likely to shut shop or get taken over, according to rating and research agency Crisil. "Low occupancy rates are making it difficult for many lower-rung   -colleges to sustain operations. As a result, we expect a number of colleges to face closure or change in ownership over the next few years," said Ajay Srinivasan, head, industry research at Crisil Research. Crisil says the average occupancy rate declined in 2011-12 to around 67% for engineering colleges and to about 65% for business schools. "There is an urgent need for education institutes to re-establish their quality paradigm with the corporate sector," said Akash Deep Jyoti, head, Crisil Ratings.

Business Line 01/02/2012 P-19
Working group proposes strategy to boost MSMEs
Our Bureau

To boost micro, small and medium enterprises, the Working Group on MSMEs Growth during the 12th Plan has identified thrust areas. It has recommended six umbrella schemes – Credit and Finance, Technology and Innovation, Infrastructure, Marketing, Skill and Entrepreneurship Development, Institutional Structure.

The schemes/proposals mentioned under each would be treated as components of the Umbrella Scheme, an official release said.
On advantages of such a scheme, the release said there would be flexibility of fund utilisation under each Umbrella Scheme. Funds can be transferred to components that are doing well from those experiencing tardy implementation.
Implementation of different components would be cost-effective and time saving since the inter-linkages between different components can be addressed simultaneously, it added.

On finance, the Group has recommended operationalisation of SME exchanges for easy access to equity finance. As regards technology, it suggested a scheme for acquisition and upgradation of technology.

For infrastructure, the Group proposed developing clusters of excellence and setting up 100 tool rooms and product-cum-process development centres.
It also suggested a procurement policy for goods/services by Government Departments and Central Public Sector Undertakings to market MSME products.

Business Standard, ND 02-Feb-2012 P-3
Naveen Jindal retains top position in India Inc's salary sweepstakes
Beats Marans second year in a row with remuneration of Rs 67.21 crore in 2011, though the latter also received 14% share of net profit or Rs 53.54 crore each as ex-gratia or bonus
B G Shirsat & Ashok Divase

That Debnarayan “Debu” Bhattacharya is passionate about metals is quite obvious. What else do you expect the managing director of Hindalco and vice-chairman of Novelis Inc, the world’s largest aluminium rolling company, to be? But only those who know him well are aware that he habitually spends the first half of Sunday at office before taking his family out for a lunch or movie.

His colleagues are aware of his meticulous focus on details that is almost professional. Across India Inc, Bhattacharya and his team are known for massive projects and the now legendary turnaround of Novelis.

For many, it’s hardly surprising that Bhattacharya is the highest paid professional CEO across corporate boardrooms in India, having an annual compensation of Rs 17.31 crore in 2011.

But let’s put that in context: The 12 names ahead of him are all promoters of companies and conglomerates from seven of the Indian blue chips.

Sun TV Network chairman and managing director Kalanithi Maran and joint managing director Kavery Kalanithi, also the promoters of the biggest entertainment channel in south India, failed to defend their title of highest paid promoter CEOs, despite receiving an annual compensation of Rs 64.40 crore each, a rise of 73 per cent over 2010.

The Marans were pipped by Naveen Jindal, chairman and managing director of Jindal Steel, who retained his top position for two years now, with a remuneration of Rs 67.21 crore, though the former received 14 per cent share of the net profit, or Rs 53.54 crore each, as ex-gratia or bonus.

But moving beyond the individual to the collective, the number of executive directors earning annual remuneration of more than Rs 1 crore swelled to 674 in 2011, from 583 in 2010. In the last five years, the number has gone up sharply from 393 in 2007. The sample is based on listed companies part of the Bombay Stock Exchange and National Stock Exchange 500 Index, but excludes public sector undertakings.

Together, these crorepati CEOs took home Rs 2,500 crore, accounting for 1.53 per cent of the net profit earned in 2011. These CEOs received 39 per cent of their annual compensation as salary, 41 per cent via commission or share in profit, nine per cent in the form of perquisite and 11 per cent performance bonus and others.

The 318 promoter-CEOs in the list shared Rs 1,510 crore, while the 364 best-paid executives collectively received Rs 1,000 crore. Interestingly, the number of CEOs or executive directors getting annual remuneration of more than Rs 10 crore each, swelled to 41, from 34 in 2010, and more than doubled, compared to 18 in 2007.

While the number of CEOs getting an annual compensation of over Rs 50 crore each increased to three from one, the number of executives or promoters getting pay packet between Rs 5 crore and Rs 9.99 crore went up to 79, from 68 in 2010 and 40 in 2007. Despite this, the aggregate remuneration increased by 10.41 per cent in 2011, a slower pace compared to a 19.4 per cent rise in net profit.

The group impact was beneficial too, as having many profit-making companies within a conglomerate proved to be a boon for many promoters. For example, Aditya Birla Group chairman Kumar Mangalam Birla received Rs 38.11 crore worth compensation as share in profit from four listed companies. Similarly, Ratan Tata was compensated Rs 6.95 crore for holding chairman’s position in three group companies — Tata Motors, Tata Steel and Tata Consultancy Services.

Reliance Industries chairman Mukesh Ambani, who ranked 15 in the list, has not increased his compensation in the last three years. He took home Rs 15 crore in each of the last three years. Similarly, his brother, Anil Ambani, took home Rs 11.11 crore in each of the last three years.

Economic Times ND 02/02/2012 p-12
Universities as Growth Engines
T T Ram Mohan

How America boosted applied research without compromising the quality of theoretical work

Universities are seen as producers of theoretical knowledge that others can use to create prosperity. None have traditionally exemplified this role better than the intellectual powerhouses represented by American universities.

A recent book argues that, since the eighties, American universities have transformed their roles considerably: they have embraced the practical application of knowledge in a much bigger way than before (Creating the market university, Elizabeth Popp Berman, Princeton). In the process, Berman claims, they have become engines of growth, producing research that drives new industries and products.

Berman argues that American universities' move towards the market was driven neither by ideology nor by the necessity to find new sources of funding. Rather, it came about because all the parties concerned- the government, the universities and industry- came to appreciate the overriding importance of innovation in the economy They came to believe that universities must not just provide the intellectual basis for innovation but be in the forefront of innovation themselves.

Universities moved closer to the market in three ways: faculty entrepreneurship hi the biosciences; the patenting of university inventions; and creation of university-industry research centres (UIRCs). Earlier, these activities used to be initiated by individual academics or administrators. Now, they came to be espoused by the leaders of universities.

The universities' drive towards the market got a big boost from the development of biotechnology since this was an industry that had close links with academia from the very beginning. Many biotechnology firms were co-founded by academics, had academics on their advisory boards or used academics as consultants. Initially the biotech firms focused on Pharmaceuticals and drew on academic expertise in molecular biology and biochemistry. The spread of biotechnology to fields such as agriculture, mining, chemicals and environment drew other parts of the university into collaboration with industry