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Health insurance and attending to minor accidents

Health issues and accidents are part of work. Co-operation of the staff and a good health policy helped tackle these issues. The 27th part of a series describing the unknown triumphs and travails of doing international business


As a matter of government policy in the Gulf, medical benefit was free to all people in the country.  In fact, even if a transit passenger in the airport fell sick, all medical facilities were extended to him/her by the government. We were living in an ideal society.

It was after a long time, the ministry of health made a nominal charge when a person went to get medical attention; the medicines were always supplied free.

It did not matter if X-rays had to be taken, surgeries done or the patient had to be hospitalized.  All these were taken care by the government.

However, in order to ensure all the legal residents were getting this benefit, the government introduced an ID card system and an annual payment, of something like $70; an entrance or admission fee for each registration was imposed, and other medical benefits were given free, as a result. This was introduced so as to apprehend the “illegals”, who had somehow managed to enter the country. Some of these illegal immigrants were caught in this process, but they were given the medical attention that was required and deported once the recovery took place.

Prior to this, during the time of Gulf Industries, a few months earlier, we had our own company doctor visiting the plant and taking care of the sick. But, a few months later, after we began our operations at Finetex, the ministry through the Free Zone gave a special ID to all employees for a fee of Dh100 ($30) with all other conditions remaining the same. They opened a clinical facility in the Jebel Ali area itself, which was about 10 minutes drive from our plant. Of course, in case the patient required special attention or surgery, etc, they had to be taken to Dubai city, some 50 km away.

Fortunately, we did not face any such major trouble, except one day, just as I had come into the office and was on my inspection round the plant, I heard a huge cry of pain and commotion. I rushed to the spot, only to realize that the girl doing the snap pins for the denim coats we were making, had the tack pin in her fingers and there was blood all over the place!

In less than a minute we had her carried to my car with a couple of girls, including a supervisor, and we rushed to the main gate, where we had to stop for inspection of our car boot. All of them knew me and without literally stopping (we had speed breakers there), I slowed down, gave them a shout “emergency run for hospital” and rushed through, and without waiting I picked up my speed. As I passed a cruising police vehicle on the opposite lane, I shouted ‘mustashfa’ (meaning hospital), and had no difficulty in reaching the main hospital in about 30-35 minutes.  Perera had already given them a call that an injured girl was on the way!

An hour later, after getting the medical attention, required stitches, etc, I took them for lunch in Karamah before returning back to the hospital a little after 2 pm. The girl took rest in the canteen, which had resting facilities for sick girls (our sick bay), and later on went to the camp. She was back to work couple of days later and was assigned a lighter job, for the time being.

On another occasion, in Muscat I had a different rescue mission to perform in course of my duty. It was a Sunday and some of the girls who wanted to go to the church were getting ready and our van would make a couple of trips for this purpose. I was relaxing in my study, from where I could hear the driver honking, presumably to rush up the balance of the girls to hurry up. They would be back after about an hour and half in two or three lots.

I think it was Kumari or Chandra, who came running down and knocked my door to say, “We have an accident in the floor”. When I ran after her, we found a girl unconscious. She had got up from her bunker bed and had been hit by the fan on her head; there was blood tricking down her face! Francisca was already holding the girl.

We carried her on to my car and drove through the city to the emergency section of the main hospital, which was about 9-10 km from our plant. Nanayakara, the supervisor in charge of production had already called the hospital and explained to them about the head injury.

I think we had to stay for about two hours; there was a gash, not a deep wound, and I believe they had to stitch her up and cut her hair up. After the treatment when we returned back I realized that this was one fan that somehow had escaped the attention of the electrical contractors.  

Fortunately in our group, except for the above two instances, we did not have any other incidents affecting the health of our staff. They took care of themselves, worked long hours and kept themselves active throughout their stay. Most of them renewed their contracts; a few of them got married, took couple of months off, but returned back on duty. 

There was only major problem we faced in our plant. Our supplies of heavy duty jackets for winter use in Canada had been well received and we had received large contract from a leading importer named Monarch. While this was under production, we had an outbreak of mumps and chickenpox in the area, and a large number of' our staff were under heavy weather, When we reported this matter to them. It was in good spirit they extended the L/C, saying “We are used to snow storms and floods, but your chicken beat us this time...” In spite of this situation, we managed to ship the goods, practically on the last date of the original L/C.

All this was possible due to the high morale and the teamwork displayed by our staff.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)



Emerging markets and Earnings

There is one problem with all of these earnings expectations and forecasts. Emerging markets are dependent upon other economies; so as one emerging market slows, so do they all

If there is one thing that gets investors, especially American investors, excited it is when CEOs announce with great fanfare that their companies are going international. Most investors view international expansion as the perfect solution for saturated markets in developed countries. They see vast potential in billions of prospective new customers who are equipped with all the amenities of the home market but are not sufficiently served. Without any meaningful competition the company can embark on a voyage of profitable conquest into this brave new world.

Recent examples would include the much hyped move of Netflix into Latin America. The stock hit a new high. There was only one slight little problem. Since most Latin American countries lack the high-speed Internet infrastructure, Netflix streaming technology is useless. Starbucks stock rose after the announcement of plans to expand in Germany and its intent to produce a home coffee machine capable of making espresso. Its main competitor is the giant Nestle which already has a well-established Nespresso machine. These are also established markets and there is not a single Starbucks store in all of Italy.

If CEOs really want to impress analysts and investors these days, all they have to do is to hint of expansion in China and other emerging markets. With dynamic economies, low debt and great demographics these markets are supposed to return consistent growth for the foreseeable future. Certainly this has been true in the recent past and it is certainly true in this earnings season.

For example Kimberly-Clark’s North America sales fell as consumers bought cheaper generic products. In contrast, sales were up by double digits in emerging markets. Chinese revenue increases were the highest at 45% with Latin America and Russia growing strongly at about 25% each. GE, Honeywell, Yum! Brands, McDonald’s and Coca-Cola, all had over double-digit growth in emerging markets and in some cases the growth was over 100% for GE in Russia.

Car companies are falling all over each other to build new capacity in China in hopes of strong growth. Nissan plans to invest over $400 million. Ford is investing $760 million. Volkswagen is building a $270 million plant in the western Chinese city of Urumqi and even Renault has just signed a letter of understanding with Dongfeng Automobile.

But there is one problem with all of these earnings expectations and forecasts. Emerging markets including China are slowing. For example although car sales in China grew by 35% in 2010, they only increased by 5.2% in 2011 and they actually fell by 3.4% in the first quarter of 2012, a real problem since the forecast was for a 8% to 10% growth for the year.

China’s growth while still rapid has fallen steadily from over 10% in 2010 to 8.1% in the most recent forecast. In line with some predictions, China has started to reinflate with increased bank loans. However with demand softening in its major markets in Europe and the US, the extra stimulus has nowhere to go and makes inflation worse.

And China’s slow down is hardly unique among emerging economies. All of them have growing problems. Brazil was once one of the stars of the emerging markets. It recovered rapidly after the crash as growth topped 7.5% by the end of 2010. Its market increased over 90% from the lows in November 2008. However its economy is now stagnating. Its growth rate in 2011 was 2.7% and its economy actually declined in January. The central bank cut Brazil’s Selic interest rate to 9%, the lowest level since April 2010 and only 25 basis points off its 15-year low of 8.75% despite inflation running at 5.5%.

India is also slowing. Its growth rate is still rather strong at 6.1% but this is a marked slowdown from two years ago when it was over 9%. Like Brazil the central bank recently cut interest rates by 50 basis points to 5.5%, but also like Brazil this could help reignite inflation currently running at over 9%. If inflation heats up; both countries could be forced to slow their economies further.

Part of the problem for emerging markets is that many are dependent upon other economies. Exports to China contribute 1% or greater to the GDP (gross domestic product) growth of Russia, Indonesia, Korea and Brazil and about 0.8% to Germany. China also is the export market for over 20% of the exports of Taiwan, Australia, Korea and Japan and 17.3 % of Brazilian exports. So as one emerging market slows, so do they all.

To the extent that we believe earnings forecasts by analysts and companies, record earnings are supposed to continue this year and next. With Europe’s problems far from solved, an anaemic American economy and now rapidly slowing emerging markets, the probability that these forecasts will be anywhere near accurate is zip.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).



Cautious road ahead: Weekly Market Report

Expect a small rally

The market closed lower in the week as global ratings agency Standard and Poor’s (S&P) lowered India’s sovereign ratings outlook to negative. On the last trading day of the week, the IMF lowered the country’s growth forecast for 2012 to 6.9% due to investment slowdown.

The Sensex ended 240 points (1%) lower at 17,134 and the Nifty closed 100 points (2%) down at 5,191. The market is expected to remain cautious with minor gains in between.

Weak global cues and the fear of the proposed tax implications, which prompted Macquarie to exit from its short positions in the Indian single stock futures, led the market lower on Monday. A rally in IT and technology stocks following better-than-expected results from TCS helped the benchmarks brush aside early hiccups and settle higher on Tuesday. While the news of the S&P downgrade pushed the benchmarks lower in late morning trade, the market clawed back and finished with a minor loss on Wednesday.

Selling pressure in post-noon trade pushed the market lower, but a recovery in late trade helped the indices settle with minor losses on Thursday. Although the market snapped its two-day losing steak, it pared off all the morning’s gains on dismal global cues and finished almost unchanged on the last trading day of the week.

In the sectoral space BSE IT gained 2% while BSE Realty (down 6%) and BSE Capital Goods (down 5%) were the main losers.

Among Sensex stocks, TCS (up 11%), Sun Pharma and Reliance Industries (up 1% each) were the gainers. The stocks which ended lower were GAIL India (down 9%), DLF (down 8%), Bajaj Auto, BHEL (down 7% each) and State Bank of India (down 6%).

The Nifty toppers were TCS (up 11%), Asian Paints (up 5%), Sun Pharma, RIL (up 2% each) and HCL Technologies (up 1%). The losers were led by GAIL India, IDFC (down 9% each), DLF, Punjab National Bank and Reliance Infrastructure (down 8% each).

Global agency S&P on Wednesday lowered India’s rating outlook to negative and warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen. The lowering of outlook from stable (BBB+) to negative (BBB-) is expected to make external commercial borrowings expensive for Indian Inc. It may also have implications for the capital market.

Meanwhile, another ratings agency Moody’s on the same day said that India is growing but below its potential as politics is weighing on the economy and termed the national government as the “single biggest drag” on business activity. India's outlook is still underachieving and poor management has dragged economic growth to below potential, Moody’s Analytics senior economist Glenn Levine said.

Cautioning that governance concerns have weakened business sentiment in the country, the International Monetary Fund (IMF) on Friday lowered India’s growth projection to 6.9% for 2012.  The IMF in January had pegged Indian economic growth to expand 7% for this year.

Apart from some financial reforms and measures to broaden the use of public-private partnerships announced in the 2012-13 Budget, the implementation of reforms related to infrastructure is likely to proceed slowly, the multilateral funding agency noted.

Macquarie’s $1.5 billion Asia hedge fund has exited its short positions in Indian stock futures and instead will use a futures contract linked to India’s 50-share NSE index Nifty on the Singapore Exchange to continue its short exposure to India, reports indicated.

The Macquarie Asian Alpha Fund has taken this step following concerns of foreign investors over new proposed tax rules to retrospectively tax mergers and acquisitions of companies where there is an underlying asset located in India.

In corporate news, TCS posted a healthy 21.9% rise in net profit for 2011-12 at Rs10,638.20 crore and said it is on track to outperform the industry revenue growth of 11%-14% set by industry body Nasscom for 2012-13. The company also became the first Indian IT company to cross the $10 billion milestone posting annual revenues of $10.17 billion in 2011-12.

The Bangalore-headquartered IT major Wipro posted a net profit of Rs1,480.90 crore for January-March quarter, against Rs1,375.40 crore during the same quarter last fiscal. The company’s revenue grew by 18.84% to Rs9,836.30 crore for the quarter under review, from Rs8,276.3 crore in the year-ago period. It forecast a muted revenue growth for April-June period as it sees the business environment to be ‘volatile’.

ICICI Bank reported 31% jump in net profit to Rs1,902 crore ($362.3 million) for the fourth quarter of 2011-12, driven by rise in both interest and non-interest income, and higher dividends from subsidiaries. Non-core income, which includes gains from treasury and fees apart from higher dividends from the subsidiaries, rose nearly 36% to Rs2,230 crore, while the core net interest income grew at 24% to Rs3,105 crore during the quarter, the country’s largest private lender said.

On the global front, US stock closed higher in the week, supported by robust corporate earnings reports, positive consumer sentiment report and despite weak GDP numbers for the first quarter which slowed down to 2.2%.


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