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India is close to striking a political deal to end a major component of a long-running crisis over coal imports that has crippled the country’s power sector and undermined overall economic growth, prominent industrialist Gautam Adani has said.

A string of major Indian power companies, including Tata Power and Adani Power, a division of the self-made billionaire’s ports-to-energy Adani Group, have seen their finances badly hit over the past year by increases in coal import prices.

Indian regulations require power producers to strike pre-sale agreements over the price at which they will supply power to state electricity boards, deals which have traditionally been binding, even if a power producer’s fuel costs rise.

However, last month regulators ruled in favour of both Tata and Adani, the country’s two largest private power generators by installed capacity, saying both companies ought to be able to pass on some portion of their increased costs to consumers.

“The government is quite serious on this,” Mr Adani told the Financial Times, referring to a new committee established to strike a deal between various state electricity boards and power producers.

“I think in the next one month this committee will give their view in a report, and with that basically I think most of the difficulties facing the power sector will be removed,” he said.

India’s inability to provide reliable and inexpensive power has been a major contributing factor to the country’s slowing economic growth over the past year, while also damaging the competitiveness of a range of energy-intensive industries, from car making to cement.

In spite of extensive domestic reserves, India’s inefficient state-dominated mining sector is unable to produce sufficient coal to meet domestic demand, leading companies such as Tata and Adani to build large coastal power stations designed to be fuelled by coal imported from other countries including Indonesia and Australia.

Mr Adani’s group also operates India’s largest private sector port and the country’s largest coal import business, and has seen overall group revenues increase 16-fold over the past decade, to Rs399bn ($7.3bn) in 2012.

Adani’s expansion abroad has been especially ambitious, including the purchase of coal assets and a major port in Australia in a series of deals worth about $5bn since 2010, as part of a mining, rail and port development largely designed to provide fuel to the company’s Indian power operations.

This fast expansion abroad has severely stretched the group’s finances, however, with net debt at Adani Enterprises, the group’s holding company, reaching Rs695bn in 2012, according to Credit Suisse.

Mr Adani, one of India’s most prominent first-generation industrialists, said his company would issue new foreign debt in the coming month to repay existing lenders and allow further capital expenditure on the Australian project, while the group as a whole would contemplate equity sales to raise funds and reduce total debt.

“We are coming out with a $1.5bn bond issue in the next 15 or 20 days, at the end of this month or the beginning of next month,” he said.

When Audi’s new A3 compact rolled off a production line in southern Germany last year, it became the first of as many as 40 new models that will be built using Volkswagen’s new modular architecture.

As it strives to become the world’s biggest carmaker by sales, VW is lowering production costs and boosting commonality across a growing portfolio of diverse brands, while trying to avoid the pitfall that its cars end up looking the same.

It has alighted on the use of common, interchangeable modules – such as the crankshaft, bonnet or infotainment system – that can be assembled in a bewildering number of combinations.

In contrast to the rigid car platforms of the past, VW’s modular system maintains only a few design parameters; for example, the mounting position of the engine. VW is also spending billions of euros redesigning the tooling, processes and layout of its car plants. “With the modular production toolbox we will in the future be able to build different models and different brands on the same production line,” VW says.

Pioneered by Swedish truckmaker Scania several decades ago, modularity is now spreading beyond the automotive sector to fields as diverse as capital goods, energy, consumer electronics and white goods, as manufacturers seek to get to grips with the complexity of producing for global markets.

By piecing together a product from common building blocks or subsystems linked together by standardised interfaces, modularity allows manufacturers to preserve flexibility and build differentiated mass-produced products.

Alex von Yxkull, chief executive of Modular Management, a consultancy, says: “Scania understood the need to reduce complexity but still meet the requirements of the market.”

Scania’s high profits have long been the envy of the industry and producers of cars, trucks, and consumer goods are keen to learn the source of that success.

Siemens, the German engineering company, is following Scania’s lead by piecing together its wind turbines from modules: the blades, a hub, a generator, a nacelle, a tower and a power unit.

Each of the modules can then be divided up into identifiable submodules which are individually testable before installation and can be installed independently.

Henrik Stiesdal, chief technology officer at Siemens’ wind division, explains: “These [modules] need to be genuinely independent and interchangeable – the planes of separation needs to be uniform. You can use different blades but the mating surface needs to be the same.”

Proponents say a big reason to implement a modular strategy is that standardised, homogenised products do not satisfy diverse and demanding global customers; one size does not fit all.

US consumers demand larger refrigerators than their European peers, and their trucks look totally different because of local regulations on length. Meanwhile, China’s emerging elite favour “stretched” saloon cars, for example.

Encompassing Mercedes-Benz in Europe, Freightliner and Western Star in North America, Fuso in southeast Asia and BharatBenz in India, Daimler’s portfolio of trucks brands must satisfy regional driver and fleet operator needs as well as varying emissions and size regulations. Daimler is therefore implementing a modular strategy to help it preserve those varied characteristics whilst maximising economies of scale.

“Commonality is not an end in itself. You have to balance specific regional and customer needs with commonality and scale effects from platform-sharing,” says Frank Reintjes, head of global power train, procurement and manufacturing engineering at Daimler Trucks.

Daimler chose to focus initially on the power train, the mechanism by which power is transmitted from an engine to an axle, as this accounts for more than half of the value added in a truck. Its heavy duty engine platform has already been launched across the North America, Europe and Asian truck brands. In a second step it is now working on standardising transmissions. A decade ago Freightliner trucks used a variety of heavy duty engines provided by external suppliers – now more than 80 per cent are supplied by Daimler.

If done correctly, the consumer should remain unaware that underneath the surface, products contain a lot of common components.

Electrolux, whose household appliances range from dishwashers, to refrigerators and cookers, started a modular approach in 2009. This is designed to increase the number of common components used across its various brands and products but not at the cost of homogenisation or enforcing rigid product dimensions.

In the white goods industry, common cabinets, as well as technology and electronics such as fluid flow, heat exchange, electric motors and compressors, can be used across a range of products such as air conditioning units, ovens and fridges.

Electrolux aims to cut the time from innovation to product launch by 30 per cent by 2015.

“Our strength is being able to deliver differentiated products for various regions and brands that are geared towards consumer preferences,” says Jan Brockmann, chief technology officer at Electrolux.

Modularisation also has big implications for the supply chain. In the motor industry, suppliers must scale up to serve global car platforms.

At Siemens, which produces about 1,500 wind turbines a year, Mr Stiesdal says the system makes it easier for Siemens to decide what it needs to make and what can be outsourced.

Suppliers are invited to bid for particular submodules and are given freedom so long as they fit the basic requirements.

Siemens’ factories may no longer need to produce entire wind turbines – the various modules could in theory be assembled on the field where it is being installed.

“It is very likely that a complete wind turbine will in the future be delivered in three pieces from three different factories in the world and they will work perfectly together when put together at the site,” says Mr Stiesdal.

©Bloomberg

Tony Hayward’s job at Glencore Xstrata is to supervise the search for a successor to Sir John Bond

A round up of some of the week’s most significant corporate events and news stories.

Corporate person in the news: Tony Hayward

Tony Hayward and Ivan Glasenberg have many things in common. They were born in 1957. They share a love of sport. They are both high achievers with a no-nonsense approach to business, writes Guy Chazan.

Now their fates are even more closely entwined. Mr Hayward, the former chief executive of BP, this week became interim chairman of Glencore Xstrata, the natural resources group that Mr Glasenberg runs.

He is not expected to stay long in the post. His job is to supervise the search for a successor to Sir John Bond, the previous chairman, who was ousted in a shareholder rebellion of unprecedented scale on Thursday.

But that is easier said than done. Mr Glasenberg is renowned for his forceful personality and take-no-prisoners style. Some industry observers wonder if there is anyone capable of reining him in.

His friends say Mr Hayward, 55, who will stay on as Glencore’s senior independent director after a new chairman is found, will have a big interest in finding an effective counterweight to Mr Glasenberg.

“Tony’s not going to want to be part of a board that doesn’t exert the appropriate level of governance,” says Julian Metherell, a former Goldman Sachs banker who is the finance chief of Mr Hayward’s post-BP vehicle, Genel Energy.

Ex-colleagues insist he is one of the few people with sufficient stature to stand up to Mr Glasenberg – and is sure to get his way. “He’ll keep Ivan on his toes,” says a former BP executive. “He won’t be intimidated by him.”

For Mr Hayward, the elevation to chairman of one of the largest FTSE 100 companies is the latest stage in a remarkable comeback.

When he resigned as CEO of BP in 2010 in the wake of the Deepwater Horizon disaster, some said his career was finished. But he rebounded quickly, teaming up with financier Nat Rothschild in 2011 to launch Vallares, a cash shell that raised £1.35bn in its London flotation before morphing into Genel, now the largest oil producer in Iraqi Kurdistan.

That IPO showed the City had kept the faith with Mr Hayward, even if the US media and political elite hadn’t. “It was Tony’s credibility with investors in the US and Europe that allowed us to raise a record amount for a blind shell,” says Mr Metherell.

Mr Hayward, a competitive sailor who does triathlons in his spare time, earned a doctorate in geology at Edinburgh University and joined BP in 1982. Starting off as a rig geologist, he worked his way up the organisation, succeeding Lord John Browne as CEO in 2007.

His management style differed markedly from that of his predecessor. “Browne was a visionary leader and a great diplomat,” says one former BP executive. “Hayward was a bean-counter – everything was about the bottom line.”

He says the CEO’s lack of “people skills” and inability to nurture relationships with stakeholders set him up for a fall in 2010 when the Deepwater Horizon rig blew up, killing 11 men and triggering a massive oil spill.

His cause was not helped by media gaffes – such as telling a US TV crew he wanted his “life back”.

Though nothing could compare with leading BP’s response to the spill, his latest challenge – finding a chairman for Glencore – could be one of the toughest he has faced. Rodney Chase, an old colleague who is chairman of Genel, says he will relish the task.

“Tony chose an area of expertise in the oil industry – exploration – that makes him very comfortable about taking risks,” says Mr Chase. “He likes to put himself on the edge.”

Tata Steel $1.6bn writedown further stokes UK concerns

This week’s move by Tata Steel to write down the value of its struggling European division by $1.6bn further stoked concerns about the future of the steelmaker’s operations in the UK, writes Mark Wembridge.

The steel division of Tata conglomerate blamed torrid European macroeconomic conditions for the decision to take one of the largest writedowns by an Indian company.

More than half of the 33,000 employees in Tata Steel’s European division are based in the UK, and the $1.6bn writedown fuelled previous speculation that the Indian group would sell part or all of the lossmaking business.

Tata Steel has steadfastly refused to confirm or deny the rumours – a move that in turn has further stoked apprehension among the company’s 18,500-strong UK workforce.

Tata acquired its European steelmaking division as part of its £6.2bn purchase of Anglo-Dutch steelmaker Corus in 2008, but has since endured a period of weak demand and falling prices.

Last November, Tata Steel axed almost 600 out of 4,500 positions at its Port Talbot operations in south Wales, but such measures have failed to stem losses from the European division that reached $884m last year on revenues of $16.2bn.

The writedown is the largest for a company with Indian operations since Vodafone of the UK took a £2.3bn impairment charge on its unit in the country in 2010.

Loeb stakebuilding puts pressure on Sony

Sony faced pressure to implement more radical restructuring steps as Daniel Loeb, the activist US hedge fund manager, revealed he had built a $1.1bn stake in the Japanese group and urged a partial spin-off of its film and music businesses, writes Jonathan Soble.

In a letter to Sony’s chief executive, Kazuo Hirai, Mr Loeb said the company should sell between 15 and 20 per cent of its profitable Sony Entertainment division. The money it raised, he said, could be used to restructure its money-losing consumer electronics operations.

Sony said the entertainment business, home to the James Bond movie franchise and pop stars such as Adele, was “not for sale”.

There is precedent for a partial sale, however. Sony listed its Japanese banking and insurance business in 2007, and today controls 60 per cent of the semi-independent operation. Finance was still its highest-earning business last fiscal year, bringing in a profit of Y146bn.

Film, television shows and music earned the company Y85bn last year, almost exactly offsetting losses in consumer electronics. Sony and other Japanese manufacturers have lost competitiveness in flatscreen TV production, in particular: Sharp and Panasonic, which lack Sony’s non-technology assets, together lost $13bn, largely because of the cost of scaling back TV-making operations.

In his letter, Mr Loeb avoided the often belligerent tone he has taken with US companies in which he has invested – a nod, analysts said, to a Japanese corporate culture that has punished previous incursions by tough-talking shareholder activists. Still, the sweet talk could turn sour if Sony ignores his call for change.

Google trumpets challenge to Facebook and Apple

The message that Google delivered to Apple and Facebook at its developer conference this week was loud and clear: Watch out.

Richard Waters writes that the annual Google I/O event has become an excuse for the search company to flex its technological muscles in front of a partisan crowd. On Wednesday, 6,000 developers were on hand in San Francisco to witness – and cheer on – a Google in expansive and ambitious mood.

A succession of executives took the stage to outline changes to some of the company’s core services, from maps and social networking to search. Far from being incremental, they claimed, these changes amounted to nothing short of a complete reinvention.

For Apple, the challenges came in voice-activated search for computers – an extension of a mobile service that goes one better than Siri – as well as a sweeping overhaul of the Google Maps interface.

For good measure, Google also launched a new subscription music service in the US, pre-empting Apple’s own attempt to come up with a streaming service of its own.

In its efforts to get a leg up in social networking, meanwhile, Google turned to what it knows best: crunching data on a massive scale.

Additions to photo-sharing include a feature that analyses pictures and selects the best based on things like the sharpness and aesthetics of the images, as well as whether the people in them are smiling or family members.

Clothing industry grapples with factory safety issues

The clothing industry struggled to deal with the fallout from last month’s collapse of a Bangladesh garment factory, which left more than 1,200 people dead. Some retailers signed up to a safety agreement – and those shunning it came under attack, writes Louise Lucas.

Some 30 mainly European retailers, led by Hennes & Mauritz, Inditex and Primark, agreed to sign the legally binding Accord on Fire and Building Safety in Bangladesh, stitched together by labour groups Industriall and the UNI Global Union.

H&M went further. The biggest buyer of clothes from Bangladesh urged the country to allow annual revisions of its minimum wage in an attempt to stem worker unrest. Karl-Johan Persson, chief executive, told the FT the government should revise the minimum wage – the lowest in the world.

That came just days after Dhaka announced at the weekend that it would increase the minimum wage for the first time since 2010.

Most American retailers have been more circumspect. The National Retail Federation, representing many US stores, lambasted the accord, which includes independent safety inspections and a requirement for retailers to pay for factory repairs. It veered “away from commonsense solutions and seeks to advance a narrow agenda driven by special interests,” the federation said.

Walmart, the world’s biggest retailer by sales, objects to the dispute resolution mechanisms in the accord, but said it could change its position if its concerns were addressed. Gap, the US retailer, said it would be ready to sign the accord if changes were made to provisions on dispute resolution.

Severn Trent turns down takeover bid

Severn Trent, the supplier of water and sewerage services to 4.2m households and businesses in the Midlands and mid-Wales, rejected a takeover approach from a multinational consortium on Tuesday thought to value the company at about £5bn, writes Michael Kavanagh.

Though neither side has confirmed the level of the approach, recent deals in the water sector have been consistently pitched at about 30 per cent of water company’s regulated capital value. Analysts calculate that would imply an offer of £21 a share.

Severn Trent, one of only three remaining water companies of scale that remain listed, described the approach as offering “only a modest premium” to its share price ahead of the announcement.

The consortium is led by Canadian pension fund Borealis, and includes the Kuwait Investment Office and the UK’s Universities Superannuation Scheme.

Shares in Severn Trent, which began the week on £18.30, jumped to a high of £21.70 in Tuesday before drifting down to trade at £20.53 on Friday.

The approach comes ahead of an 18-month period of negotiations with industry regulator Ofwat over the spending and price control settlements for the five-year period running from 2015.

Some analysts had predicted that there might be few takeover bids in the coming year because of the uncertainty surrounding the future likely returns on offer to water companies.

However, Ofwat’s chairman Jonson Cox has hinted that the high premia offered by pension and sovereign wealth funds for water companies in recent years suggests that the returns on offer may be too high.