Vodafone Plc’s Indian operations turned cash positive in the last quarter; however the joy was short lived because of the various bad experiences that the company has had in India.

In its ensuing battle against the Income Tax Department, the Bombay High Court verdict was against the company which brings the count to three times, that an Indian court has rules against the company.

An analyst who did not want to be named said “The matter has not been decided in finality as of date. But if Vodafone has to pay this kind of a tax, it will definitely be a huge setback”.

Due to rate pressures and competition in India, Vodafone has had to face bigger setbacks. The Indian operations were written down by the British major by Rs 15,156 crore.

The changes in the business conditions in India are what have prompted the company to decrease its asset value. These changes have been taking pace ever since the company acquired 67 per cent stake in Hutch Essar for $11.2 billion.

Due to the entry of six new telecom operators in India, all the major telecom companies have suffered as the new players have been reducing rates in a bid to get more market share. The rates war has led to margin cut for all telecom operators.

Sanjay Chawla, a research analyst at Anand Rathi has said “So far, it has not been turned out to be a great investment for Vodafone Plc. It seems that Hutch made a very smart move when they sold in the peak and since then valuations and market cap has only gone down”.

Vodafone has also paid Rs11,617 crore to acquire licenses in 9 circles for the 3G spectrum.

This would offer the company an edge over its competitors; however this would also increase interest costs and thus not allow for a quicker turnaround.

As 2G capex investments were low the telecom operators were cash positive, according to analysts however this would not be possible with the 3G investments.

Even though the outflow from the parent company has increased in value the profitability has clearly reduced. Hiking the value of put option by Rs 3,400 crore which is available to Essar. Essar has a 33 per cent stake in the Indian joint venture.

During the time of acquisition the agreement signed with Essar state that if Essar decided to sell its shares to Vodafone, the valuation of the shares would be appraised based on fir market price.

Top industrialists met Prime Minister Dr. Manmohan Singh during the maiden meeting of the recently constituted Council for Trade and Industry to discuss the present economic scenario in the country. Both sides put forth suggestions to improve the current state of affairs.

The meeting was chaired by Prime Minister and was attended by Finance Minister Pranab Mukherjee, Commerce and Industry Minister Anand Sharma and Chairman of PM’s Economic Advisory Council C Rangarajan. The industrialists present were Ratan Tata, Mukesh Ambani, Sunil Mittal, Azim Premji, Kiran Mazumdar Shaw, Chanda Kocchar, Deepak Parekh, Kesab Mahindra and Swati Piramal among others.

One of the main topics believed to have discussed was the possible impact of European crisis on the Indian economy. PM stressed on the need to give a boost to the manufacturing sector to realize the target economic growth of 10% in medium term. PM also exhorted the industry to reach out to rural economy and contribute in the efforts in skill development. He asked industrialists to form subgroups based on their interest in areas such as food security, public-private partnerships, backward area development and corporate social responsibility and give recommendations to the government.

The industry honchos have asked the PM to provide them relief in case of European financial crisis affecting Indian industries. India Inc also favored relaxing of FDI norms for defense sector and opening up of multi-brand retail. The industrialists are also believed to have made known their concern for the sharp fluctuations in the exchange rate affecting exports. Speedy implementation of Goods and Services Tax (GST) is another demand raised by India Inc.

This is the first meeting of the industrialists with government post European crisis. The Council was set up to find ways to improve India’s trade relations with other countries.

With the economy looking up, India Inc is all set to hire in this quarter (April-June). According to TeamLease, a staffing firm, the corporate space would witness a gradual but sure advent of aggressive hiring in the first quarter of FY 2010-11. VP Rajesh AR from TeamLease Services said that, “Industry seems to have turned the corner and intends to hire aggressively. The recovery in sentiment is smart, comprehensive and widespread – the jump in hiring sentiment is shared across geographies and across most sectors.” “The improvement in sentiment has been studied and gradual over the past 4 quarters – giving us sufficient reason to believe that it is here to stay. Although global economy concerns persist, as far as the employment scenario in India is concerned, the cheer has spread and the good times are back.”

The employment outlook index grew 58 index points between April and June 2010. This is an 11 percent increase over the previous quarter. The survey conducted included around 513 companies across the country. The survey mainly focuses on hiring forecasts, employment growth potential and the business outlook with relation to the location and the company profile. Bengaluru and Ahmedabad were leading in the employment outlook index. Bengaluru was leading with the employment outlook by 23 points and business outlook increased by 7 percent. All sectors except Infrastructure and Telecom are witnessing an increase in hiring index. Healthcare/Pharmaceuticals and IT have seen the highest hiring index. Business outlook are also on an increase with FMCG and retail topping the list.

Rural Development Ministry Secretary B K Sinha appealed to India Inc, to invest in the rural development sector to bring sustainable growth in rural areas. He requested corporate to participate in the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) and self-employment program Swarnajayanti Gram Swarojgar Yojna (SGSY). He also suggested creating partnership with the government in its training and skill development programmes. To improve infrastructure in rural areas he also suggested corporate to participate in the Pradhan Mantri Gram Sadak Yojna (PMGSY), which develops road constructions in rural areas. He further said that support could be provided to Panchayati Raj Institutions and all such work can be done under their Corporate Social Responsibility.

Addressing a national summit on rural development organised by the CII, CII Director General Chandrajeet Banerjee said, “CII is committed to this area of work…two decades ago, we felt that industries need to get involved, not for charity but business.” He also said that a large number of corporate was showing interest in the development of rural areas. And by forging partnership with the government there is huge opportunity for development in the rural areas.