Fw: Cygnus Daily Business Update 28 Apr,10
G.V.Sandeep
Headlines
200-yr-old 'Barter Market' still lures
Tatas in firefighting mode on Nano; forms team for solution
Milk, foodgrain imports skyrocket
Nokia to roll out mobile banking in many Indian cities soon
Check out the latest bank deposit rates
Banks likely to raise realty loan rates on real estate projects
Haier to start making AC, washing machines in India
Oil marketing cos to get dues of about Rs 18,000 crores next month
Two major Indian apparel brands go organic
More Details
Indian Economy
200-yr-old 'Barter Market' still lures
Far from the glitz and glamour of high flying supermarkets and malls battling it out to woo customers in major cities is 'Matta Chanda', the annual market here in North Parur, which began when the barter system prevailed and continues even now. This is perhaps the only market in India which is continuing since it started. There are no records to show how old it is. It is believed to be at least 200 years old and began when there were no coins and people used to exchange home grown vegetables, coir and dried fish in the market. Chendamangalam panchayat in Kerala's Ernakulam district provides all facilities for those who want to sell their products in the two-day Matta Chanda, which commences two days before 'Vishu', the new year on the first day of Malayalam month of 'Medam'.
Automobile
Tatas in firefighting mode on Nano; forms team for solution
Tata Motors has finally initiated some firefighting to drive Nano out of trouble before its image gets gutted after two new Nanos fire in less than a month. The company has formed a core team of its best engineers and technicians to identify the root cause for the fire and find a solution by the end of this month. The Rs 1 lakh car, which drew huge global attention as the world’s cheapest car, took a hit on its brand image after two Nanos caught fire in separate incidents in March and April, attracting local and international media attention with headlines screaming ‘smoking Nano’ and `Nano catches fire’. The company has yet to make any public statement on the incidents to reassure its customers. The management feels that it has to find the root cause of the problem before venturing into any kind of marketing campaigns. Once they are clear about the issue, they will do a campaign to reassure the customer. The core team is closely studying every part of the car to find the exact cause.
Agri Commodities
Milk, foodgrain imports skyrocket
Imports of milk and dairy products shot up nearly 600 per cent while foodgrains by 90 per cent between April and December in the previous fiscal in the wake of high food inflation. Imports of other items like edible oil and tea and coffee also surged by 71.6 per cent and 68.2 per cent, respectively. Import of such items, considered sensitive for domestic producers, went up by 42.6 per cent to Rs 48,531 crore during the first nine months of 2009-10 from Rs Rs 34,031 crore in the same period a year-ago year. Edible oils, milk, dairy products, coffee and tea among other items fall in the sensitive items category and their imports are monitored by the government to see if there is any adverse impact on the domestic industry.
Banking
Nokia to roll out mobile banking in many Indian cities soon
Finnish telephone supplier Nokia is planning to roll out its mobile banking service, Nokia Money, in many Indian cities soon. A pilot of this service launched in Pune in February with YES Bank had received "extremely encouraging" response. The company is now looking to have similar tie-ups with other banks to roll out the service in other parts of the country. A decision will be taken after the six-month test period. The process involves getting approvals from Reserve Bank of India," said the official, who did not want to be named. Nokia Money is like a wallet on phone as it lets people transfer money through the mobile phone. Subscribers also can pay utility bills and top up SIM cards. There will also be the facility to pay for goods and services. "By using this facility a person living in one place can transfer the money to another person not having bank account and the latter can receive the money from Nokia dealer in his area," said the official, explaining the working of the scheme. Nokia has 200,000 retailers in India who could serve as mobile money services agents. India today is the world's fastest growing cell phone market. There are 500 million mobile phones in the country and this is expected to cross 900 million by the end of 2013. At the same time, an estimated 41 per cent of Indians and 46 per cent of mobile subscribers do not have bank accounts.
Check out the latest bank deposit rates
Anticipating pressure on liquidity in the coming days as well as in view of the hardening interest rate regime, banks have again started revising their fixed deposit rates. Several banks have already revised their rates, while many others are planning to do so. It is not long ago that banks were seen slashing the deposit rates, attributing this trend to surplus liquidity in the system as well as lower credit offtake. However, with the rising credit offtake putting pressure on liquidity and interest rates, banks are forced to revise the deposit rates again, which is good news for people seeking safe investment havens.
Banks likely to raise realty loan rates on real estate projects
The Reserve Bank of India (RBI) may make borrowing more expensive for builders by asking banks to set aside more capital for loans to commercial real estate projects. A higher capital requirement will force banks to raise interest rate on such loans. Senior bankers feel that RBI may either raise standard provisioning or risk weight on bank loans to real estate companies in the forthcoming policy on April 20. This will be aimed at protecting banks’ exposure to properties amid spiralling prices. Risk weight is the capital that is set aside to calculate capital adequacy ratio, which is 9% for all banks. Banks have to set aside less capital for borrowers with higher credit rating. For a triple A clients, the risk weight is 20%, which means banks have set aside Rs 1.80 of its own capital for every Rs 100 loan to such borrowers. But risk weight for real estate companies is 100%, irrespective of the rating; this means banks have to keep aside Rs 9 for every Rs 100 loan to builders. Chances are the regulator may raise this risk weight to 125% or even 150% in the forthcoming policy. To help builders and banks cope with the crises, RBI had lowered it to 100% from 150% during the downturn. But while doing this, RBI had indicated that these were counter-cyclical measures. Unlike personal loans, which grew only 0.7% as banks slowed down when customers began to default, they continued lending to builders. It was financing a high-risk sector and was not justified this resulted in real estate prices not dropping to the extent that they could have more so, given the over supply in the market.
Consumer durables
Haier to start making AC, washing machines in India
Chinese consumer durables player Haier will start manufacturing air conditioners and washing machines in India as it looks to expand product basket and clock a turnover of about Rs 3,000 crore by 2012. The company's Indian subsidiary, Haier India, is in the process of investing Rs 100 crore to set up a new line at its Pune facility to start producing air conditioners and washing machines by the year-end. It will also provide additional capacity to produce refrigerators at the plant. In the initial phase the company plans to produce around 1.2 lakh units of washing machines and 1.4 lakh refrigerators. Currently, Haier assembles air conditioners and washing machines in the plant. The company's expansion is part of its plan to push its overall sales in India and touch Rs 3,000 crore by 2012. The company clocked a revenue of Rs 350 crore in 2009, and said over the last few months it has been focusing on enhancing its distribution channels as well as on bringing out new product lines. Haier today launched 25 new models across all the product categories, including refrigerators, LCD/LED TVs and air conditioners.
Oil & Gas
Oil marketing cos to get dues of about Rs 18,000 crores next month
State-run oil marketing companies are said to receive the remaining dues of roughly Rs 18,000 crore from the government next month to compensate them for selling cooking gas and kerosene below market prices. IOC, BPCL and HPCL will receive the outstanding dues from the government next month. Unlike in the past, when the OMCs received compensation from the finance ministry in the form of oil bonds, they will now be compensated for the under-recoveries in cash, the government has decided. The OMCs suffered a cumulative loss of around Rs 45,000 crore in FY10 by selling petrol, diesel, cooking gas and kerosene below cost. Of this, the upstream oil companies, ONGC, OIL and GAIL, have paid around Rs 15,000 crore to the OMCs towards under-recoveries on petrol and diesel. The government has so far paid Rs 12,000 crore, leaving an outstanding amount of Rs 17,000-18,000 crore. Meanwhile, as the oil price keeps rising on the back of improved demand, especially from emerging market economies, the OMCs face the prospect of higher under-recoveries in the current fiscal (FY11).
Textiles
Two major Indian apparel brands go organic
When it comes to going green, two major Indian apparel brands have taken the lead. Van Heusen and Arrow have come up with 100 percent organic lines made of cotton, linen and natural dyes, doing their bit for the environment and also spreading awareness among consumers. Limited resources and increasing productivity have put the natural environment around us under tremendous pressure. Reason enough for us (Van Heusen) to get serious about starting down the eco-friendly path. It's a conscious attempt to make all of us understand the importance of being earth-friendly. Even something as small as weed removal for cotton crops has been done physically without reliance on chemical killers. About Arrow, the way the world is heading, they feel it is critical for them to create awareness among themselves so that they can contribute towards saving nature and eco-system.
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