1. May 2011, Volume: 18
Sensex 18518.81 Nifty 5551.45 Dollar 44.79 Gold 21685 Silver 57700 Crude Oil ($) 108.42
Investeurs Chronicles
INSIDE
 Cover Story –Talent
Retention~ Talk of Town
 Open Forum -Learn to Live
with New Normal
 Outlook –Japanese Yen
 News Chronicles
 In Focus – Osama Bin
Laden
Investeurs Consulting P. Limited
S‐16, U.G.F, Green Park Ext. New Delhi‐110016, www.investeurs.com

2.
“The loss of a good empl
ployee can poten
entially cost a c
company four to five
t
times his o her salary, be
or because the cost of hiring a rep
t placement cand
didate
will inclu
ude substantia investment on training, p
al particularly sin a
ince
person on starts delive
nly ering after at le a year in th company. And if
east the A
it's a top-l
level executive the cost may be much more Senior people who
e, e. le
are the fac of the comp
ce pany have a lot of intangible v
t values attached and
d,
their sudd exit can imp a company market capi
den mpact ny's pitalization, inv
vestor,
employee and even client confidence.”
nt
As per the recent survey c
conducted by D
Deloitte, two out of three emplo
t oyees’
at large com
mpanies are loo
oking for the Ex Sign. The pro
xit oblem of attritio has
on
become m
more acute with top IT compan
nies like Infosy reporting rat
ys tes as
high as 13.4% in 2009-10 and 17% in 2010-11. Tata Cons
sultancy Service last
es
reported it attrition rate as 14.4%. The I sector has al seen conside
ts IT lso erable
churn with a slew of k
h key people qu
uitting, includin former Min
ng ndTree
chairman A
Ashok Soota, fo
ormer Wipro join CEOs Suresh Vaswani and Girish
nt h
Paranjape, and now Pai - Infosys.
At present we are living in a world wher each generat
t, re tion in the work
kforce
has vastly different goal expectations and desires. Reflecting con
y ls, s, ncerns
about talen crunch, senio executives ac
nt or cross many Asia countries fee that
an el
companies will be focusin more on ret
s ng taining people this year. Empl
loyers
need to ta
ailor and target their strategies to satisfy each employee group
t
from baby boomers to mil
llennial.

3. Cover Story Talent Retention- Talk of the Town
Is talent shortage a sudden occurrence or was it very much there but we didn’t notice?
I guess it was always there but yes not prominent. Today, we see companies going above and beyond to spot the precious future brainpower, lure
them with all the goodies and reel in the catch – but what happens later? After the first days of sweet honeymoon with ‘new hire orientations’,
fancy status symbols and back-patting, the shiny brochures start wilting, the warm words of welcoming encouragement fade and reality kicks in –
and sometimes hard. It’s not enough to bring in the ‘top talent’ when you can’t get the most out of your staff effectively and consistently long-
term. To drive innovation and game-changing business models to their full potential, we cannot relinquish the expertise and insight of people
familiar with the company or flourish on ideas from newly hired staff alone.
When true ‘on-boarding’ fails the wedding is short-lived. Good people are easy to move again to find their next job somewhere else and leaving the
company behind with an unproductive vacant position. New employees may also soon pick up on limiting or meager career prospects that they
soon will share with their not-so-new-anymore co-workers that were not granted the opportunity to develop and ‘grow’ into the open position.
Then, the costly investment in the new hire went down the drain while the company still needs to fill the vacant position with another candidate to
be snatched from the competition at a cost…
On the other hand, what is the effect on the more seasoned employees that ever hiring new staff has over the transfer and development seasoned
staff? They see the influx of fresh blood affecting (and sometimes disrupting) the established company’s culture as well as limiting their own
career opportunities. When will the veteran staff feel they are no longer valued and find it is time to make a move and be courted by a new
employer that values their talent more?

4. Cover Story Talent Retention- Talk of the Town
Should HR perspective change from talent acquisition to talent retention?
This new age economy, with its attendant paradigm shifts in relation to the
human capital, in terms of its acquisition, utilization, development and
retention, has placed a heavy demand on today’s HR professionals. Today
HR is expected to identify potential talent and also comprehend,
conceptualize and implement relevant strategies to contribute effectively to
achieve organizational objectives. Hence, a serious concern of every HR
manager in order to survive this ‘War for Talent’ is to fight against a limited
and diminishing pool of human resources.
With retention becoming a big challenge, even MNCs are re-looking at this in
their India offices. Global paint and specialty chemicals company AkzoNobel
is planning to move its top 20% of Indian talent at the mid- and senior levels,
to other group companies and global positions for six months to three years.
It has also drawn up a deferred bonus component linked to their stay in the
company for top performers. "The challenge is more now since people are
constantly looking for change, not just in compensation but also growth and
roles," says AkzoNobel India HR head Sangeeta Pandey.
An organization is hurt the most when talent quits at the levels of director, finance, marketing or HR head; president, VP, business and even regional
heads. The best way to tackle attrition at these levels is to give them autonomy, leadership roles and, if possible, split the organization into various
divisions so that each one of them is managing big profit centres.
Amidst predictions of critical talent shortages globally and knowledge-driven industry, clear and actionable strategies can be implemented to deliver
leading talent programs and keep talent committed to their jobs, excited about their career prospects, and confident in their corporate leadership. New
age employers should focus on delegating responsibilities at early stages of career and provide variety of exposure and diverse experiences.

5.
Indian economy watchers (including this paper) have advised Reserve The risk is that if domestic demand conditions remain somewhat
Bank of India (RBI) Governor D Subbarao to do some straight talking. robust, manufacturers will try and pass these on to consumers as
Instead of obsessing about the need to return to the “old normal” of a 5 higher final product prices in a bid to protect their margins. Thus, the
per cent inflation rate, he has been counseled to prepare markets for a prospect of an inflationary spiral that feeds off rising input costs and
“new normal” in which the inflation rate will remain considerably higher then nourishes output prices looms large. The only policy action that
than 5 per cent owing to a bunch of local and global factors. That, could work at this stage is to try to stifle demand and curb pricing
however, does not imply that the RBI can afford to wash its hands off power.
inflation. Even if the new normal were to prevail, the RBI needs to give its While these forces and factors will play out in the domestic economy,
best shot to lower inflation from the double-digit level to which it their roots lie in international markets and economy. For one,
threatens to climb by the middle of the year to a more “reasonable” level commodity prices are riding on a combination of supply disruption (or
of 7 or 8 per cent. In short, greater monetary tightening is warranted. The fears of supply disruption) and surplus liquidity created by western
corollary, going by simple economic principles, should be lower growth. central banks which continue to grapple with the aftermath of the
Thus, an integral part of the new normal is the acceptance of a lower rate financial crisis of 2008. While the supply dynamic of these
of growth perhaps for a couple of years. commodities are difficult to understand and predict (who knows, for
The risks and challenges for the RBI on the domestic front are now well instance, how things in West Asia will pan out), the liquidity cycle is a
known. High crude prices have meant that under-recoveries on diesel and little more predictable.
petrol now stand at roughly Rs 16 and Rs 7 a litre, respectively, and a In fact, a major change in the global liquidity regime is due in June
fairly hefty increase in their prices seems overdue. Given the political when the US Fed finishes with the last tranche of its quantitative easing
economy of how these things work in India, one could safely assume that programme (QE2). For the uninitiated, under this programme, the
these increases will be announced after the state election results are central bank was to buy back $600 billion of bonds from the markets
announced in mid May. That is likely to add quite a few basis points to between November 2010 and June 2011, releasing cheap dollars in the
headline inflation. A whole bunch of other commodities is putting process. The question then is: Will the end of this massive liquidity
pressure on inflation. Input price inflation (going by some estimates) was infusion lead to a reversal in commodity prices and make life easier for
a whopping 11.5 per cent in March while output price inflation was a the RBI and other emerging market central banks that are battling
relatively meagre 5 per cent. inflation somewhat unsuccessfully?
The risk is that if domestic demand conditions remain somewhat robust, My sense is that it might be somewhat naïve to depend on this
manufacturers will try and pass these on to consumers as higher final excessively to cure commodity price inflation. For one, as Fed
product prices in a bid to protect their margins. Thus, the prospect of an Chairman Ben Bernanke emphasized in a recent press conference, the
inflationary spiral that feeds off rising input costs and then nourishes event is well anticipated. Markets tend to “price in” the impact of an

6. expected event well ahead of its actual occurrence. The fact that
commodity prices haven’t cracked yet suggests that prices will not fall off
The global odds seem to be stacked against the RBI and a sharp sell-off in
a cliff in July. It is useful to remember that the actual commencement of
commodities doesn’t seem quite likely. There are two things that could tilt
the QE2 was a bit of a damp squib. Its effects were priced a good couple of
the balance. One would be a comprehensive resolution of the crisis in West
months before the actual event and the prices of an array of so-called
Asia and North Africa. The other, and the more long-winded, process
risky assets – commodities, emerging market stocks and bonds, and so on
through which commodity prices could correct is when high prices (and
– ramped up in anticipation. When the bond buy-backs physically started
the resultant high interest rates) themselves set off a palpable slowdown
in November, these asset prices hardly moved. One could expect a similar
in emerging economies like India and China which constitute the bulk of
phenomenon when the scheme winds down.
global demand for energy and materials. Until then, the RBI will have to
Besides, the US economy is not quite out of the woods yet. Growth rate for
continue to raise rates.
the first quarter slumped to 1.8 per cent and both labor and housing
Source: Business Standard
markets remain sluggish. The Fed seems to be going out of its way to
assure the markets that though QE2 will technically end, the easy money
regime will continue. One way to ensure this is for the Fed to keep
reinvesting the maturing debt proceeds to keep the size of its balance
sheet constant. The central bank is also likely to keep policy rates on hold
at least until the first quarter of 2012. To cut a long story short, the
impact of the end of QE2 on financial markets could be extremely muted.
The other event that could put the brakes on commodity prices would be a
sovereign crisis in Europe. This would increase risk aversion and could
trigger a sell-off in so-called risky assets. Again, the probability of that
happening is low. Two things have been happening on this front. First,
markets have learned to digest periodic news of fiscal or banking system
stress in the smaller economies on the eurozone periphery like Portugal or
Greece. Second, the risk of a large economy like Spain defaulting on its
debt seems to have abated with major reserve-holders like China splurging
on Spanish government bonds.

7. Outlook on Japanese Yen
Based on every measure, the Japanese Yen was the world’s best performing major
Outlook
currency in 2010. It notched up gains against each of its 16 major counterparts, and was
the only G4 currency to appreciate on a trade weighted basis. Against the US Dollar, it
Call Rates as on 6th May 2011  3.50% - 7.25%
rose 10%, and touched a 15-year high in the process in 2010.
Commodities
The Japanese Yen continued its rally against US$ in 2011, with the exchange rate
slipping to a fresh monthly low of 81.08 during end of April, but the near-term rally in Aluminum (1 kgs) 122.70
the low-yielding currency is widely speculated to taper off now as talks about currency Copper (1 Kg) 406.40
intervention resurface. Zinc (1 kg) 98.65
Another dimension to expectations to slip in the currency is the real economy facing a Steel L(1000kg) 30700
strong downward pressures following the slew of natural and nuclear power disasters. As on 6 th May 2011
Hence, Bank of Japan had to resort to stimulus package of JPY 1 trillion in one-year
loans bearing a 0.1 percent interest rate in an effort to aid the rebuilding process. Forex
After holding rates steady, the central bank has further pledged to take additional steps Forward Rates against INR as on 6th May, 2011
Spot Rate 1 mth 3 mth 6 mth
to shore up the economy if conditions warrant a further expansion in monetary policy,
US 44.85 45.14 45.66 46.45
but with inflation increased to 0.7% in 2011, compared with the 0.3% projection from Euro 64.14 65.5 66.14 67.06
Sterling 73.63 74.07 74.86 76.04
earlier this year, appropriate measures are warranted to tackle this risk as well.
Yen 55.87 56.24 56.9 57.92
Depressing news continue to pour in for the country. As Standard and Poor’s lowers it Swiss 51.42 51.76 52.37 53.3
Franc
credit outlook for the region to negative, the Bank of Japan may face increased pressures Source: Hindu BusinessLine
to underwrite public debt as Prime Minister Naoto Kan tries to push a JPT 4 trillion Libor Rates as on 6th May, 2011
stimulus package to aid with the relief efforts, and controlling inflation will turn into a Libor % 1 mth 3 mth 6 mth 12 mth
US 0.20 0.26 0.42 0.74
cumbersome task should the central bank embark on government bond purchases. The
Euro 1.20 1.37 1.65 2.11
Group of Seven may take additional steps to aid the ailing economy. The Bank of Japan Sterling 0.62 0.82 1.11 1.58
expects the region to return to moderate growth once the rebuilding efforts get Yen 0.14 0.19 0.34 0.56
Swiss Franc 0.14 0.18 0.26 0.54
underway.
Forward Cover % as on April 8, 2011
Nevertheless, as carry trade interest gathers pace, the Japanese Yen may continue to lose 1 mth 3 mth 6 mth
ground against its major counterparts, but the USD/JPY may buck the trend given the US 7.87% 7.32% 7.23%
bearish sentiment underlying the U.S. dollar. In turn, the dollar-yen may be put to the Euro 25.80% 12.65% 9.23%
Sterling 7.27% 6.77% 6.64%
test especially in the near term, and speculation for a Yen intervention is likely to spark
Yen 8.06% 7.48% 7.44%
increased volatility in the exchange rate as the pair continues to retrace the sharp Swiss Franc 8.04% 7.49% 7.41%
rebound following the coordinated measures taken by the G7. Source: Hindu BusinessLine

8. Exports for FY11 surge to record growth of
News Chronicles
A$ 1.8 billion (Rs 9,000 crore). The port has two Jyothy buys 51% in Henkel India
37.6%
mechanised berths. MPSEZ aims to build another Jyothy Laboratories will pay Rs 162.6 crore to
India's exports surged to record high growth
two in the next five years. The port has a buy out Henkel India from its German parent.
of 37.6% in the fiscal year 2010-11, as demand
In a deal approved by its board, it proposes to
capacity of 50 million tonnes. It is using 20
soared for engineering goods, oil products
million tonnes at present. Adani plans to fund acquire 59.3 million equity shares, or 50.97
and gems manufactured in Asia's third-largest
the deal through debt and sale of some equity in per cent stake, at Rs 20 a piece, aggregating Rs
economy.India's monthly exports have
MPSEZ. 118.7 crore. It will refinance the existing debt
notched double-digit growth for much of the
Coal Min to cancel 15 blocks of PSUs including of Henkel India and buy out the redeemable
past year as demand revived from traditional
NTPC's cumulative preference shares held by Henkel
export destinations -- the United States and
The Coal Ministry today took a decision to AG in the latter. Henkel India owes around Rs
Europe, which had fallen sharply after the
deallocate 14 coal blocks and 1 lignite block 454 crore to its lenders. The acquisition will
financial crisis. Indian exporters have also
awarded to public sector companies like NTPC elevate Jyothy to amongst the top five fast
seen high growth in new markets, especially in
and DVC, besides 3 private firms, over their moving consumer goods (FMCG) players in
Latin America.
failure to develop the same for captive use. To India.
RBI ups rates homes, cars to turn costly
weed out non-serious players, the government South Africa: Investor confidence inches up
Governor of the Reserve Bank of India Duvvuri
had last year issued notices to the firms and The Maxim-ETM Investor Confidence Index
Subbarao surprised investors with a higher-
sought their responses as to why coal blocks rose in the first quarter to 107.3 from a
than-expected interest rate increase that will
allocated to them should not be withdrawn, as moderately upwardly revised 105.7 (105.4) in
make homes, cars and building of factories
they had failed to develop them within the the fourth quarter of 2010. According to
more expensive. After criticism that India was
allotted timeframe. economist from ETM, George Glynos, the
behind the curve in tackling inflation,
Food inflation at 8.53 per cent year-on-year on index level indicates neither particularly
Governor Subbarao raised the reverse repo,
April 23 bullish nor particularly bearish investor
the rate at which RBI lends to banks, by 50
Food price index rose 8.53 per cent and the fuel sentiment. Late 2010 and early 2011 saw
basis points to 7.25%, double of what
price index climbed 13.53 per cent in the year to many large funds increase offshore asset
economists forecast. A new emergency
April 23.In the previous week, annual food and allocation, and this would likely have
funding option for banks, Marginal Standing
fuel inflation stood at 8.76 per cent and 13.53 dampened local equity sentiment.
Facility, is introduced at 8.25%.
per cent, respectively. The wholesale price index- Russia: $5.5Bln in Gas Taxes Envisioned
Adani arm buys Australian port for Rs 9,000
based inflation, the most widely watched gauge The Finance Ministry is looking to collect
crore
of prices in India, rose 8.98 per cent in March additional billions of dollars by raising taxes
The Adani group’s Mundra Port and Special
from a year earlier, higher than February's 8.31 on the natural gas industry, Finance Minister
Economic Zone (MPSEZ) announced the
per cent rise. Alexei Kudrin said on 6th May.
acquisition of Abbot Point Port in Australia for

9. The pros
spect of a hig
gher tax burd
den came as a Gazprom-led
d
In Foc
cus
internatio
onal consortium completed lay
m ying the Nord Stream pipeline.
. Osama-Bin
O n-Laden
The pipe sections on th bottom of the Baltic Sea will be finally
he y Osama bin Mohammed bin Awad bin Laden (March 10, 1957 – Ma 2,
n h ay
ogether this com
welded to ming summer. 2011) was the founder o al-Qaeda, the organization responsible for the
of e r
Underlyin Inflation in Brazil's Thrivin Economy Sca
ng B ng aring Investors
s Septembe 11 attacks o the United S
er on States and num
merous other mass-
m
Yet again, it is inflation that is scaring in
t nvestors away f
from Brazil, one
e casualty a
attacks against civilian and military targets. H was a member of
He
orld’s biggest ec
of the wo conomies which saw 7.5% grow in 2010. Its
h wth s the wealth Saudi bin Lad family.
hy den
currency, however, has risen 40% against the US dol
llar in just two
o
On May 2 2011, bin Lad
2, den was shot a
and killed insid a secured private
de
years alon with 6.4% inf
ng flation. The currency is currently sitting close
e
residentia compound in Abbottabad, P
al n Pakistan, by U.S. Navy SEALs in a
to a three
e-year high, with Goldman Sach claiming tha it is arguably
h hs at y
covert op
peration orches
strated and aut
thorized by U.S President Ba
S. arack
the world most overv
d’s valued currency This is worr
y. rying for those
e
Obama. A
Al-Qaeda confirm
med the death o bin Laden on militants' web
of n bsites
exporting out of Brazil as buyers (payin in dollars) ar scared off by
g a ng re y
on May 6, 2011.
,
higher pri
ices.
This is just one man, but can we kill idea or ideology………
t
Indonesia Economic Growth Slows, G
a’s G Giving Central Bank Room to
o
Hold Rate
es
Indonesia economic growth slowed last quarter a government
a’s g as t
spending eased, boostin scope to ex
ng xtend a pause in interest-rate
e Is
s war aga
ainst Terr
rorism ov
ver?
increases after inflation cooled. Gross domestic pro
n s oduct rose 6.5
percent in the three mo
n onths through M
March from a y
year earlier, the
e
Central B
Bureau of Statis
stics said. “The data increases the risk that
e t
they may delay more tightening, especially give
e en the recent
t
moderatio in inflation and as an app
on preciating rupia is having an
ah n
anti-inflat
tionary effect.
BSP: Econ
nomy can absor interest rate hikes
rb
The Bangko Sentral ng Pilipinas said on 6th May that the two interest
P n t
rate incre
eases so far this year were not expected to cause a drag on
t n
the econo
omy, and added that growth targets remained attainable. The
d e
move of t
the BSP to raise interest rates by 25 basis p
e s, points in March
h
and by an
nother 25 basis points was me
s eant to only sip
phon off excess
s
liquidity i the economy to avoid an acc
in celeration of pric increases.
ce