The Tribune, Chandigarh, India

India growth story on bumpy terrain
Economy struggling as inflation management sacrifices demand growth; Q4 figures disappoint
Sanjeev Sharma
Tribune News Service

New Delhi, May 31
The Indian economy is slowing down as it grew at 7.8 per cent in the fourth quarter of financial year 2011 from 9.4 per cent in the corresponding period last fiscal.

Economists have warned that growth could slip even further this year as the investment cycle is sluggish, manufacturing is not robust and agriculture may not be able to replicate its good show, which boosted GDP numbers for the full year.

For the full year, the economy grew 8.5 per cent in 2010-11 from 8 per cent in 2009-10 due to better farm output and construction and financial services performance.

Agriculture powered GDP growth for the year by registering 6.6 per cent growth in 2010-11 against 0.4 per cent in the previous fiscal. This was helped by a record food grain production of 235.88 million tonnes.

Services saw a marginal dip in growth, while manufacturing performance was not strong indicating softness in industrial activity.

Reacting to GDP numbers, Finance Minister Pranab Mukherjee said that high inflation could moderate the pace of growth in the current fiscal.

Given the difficult macro-economic scenario, analysts expect growth to slip even further, with some suggesting it might drop to sub-8 per cent, while the government forecasts are higher.

The economy is struggling as inflation has been stubbornly high and to control that there have been a series of interest rate hikes which in turn slow down demand and growth is sacrificed.

Global commodity prices especially oil are skyrocketing putting more pressure on the fiscal situation. New investments in manufacturing are not very robust, a sign of weak corporate confidence, uncertain policy environment and delays in project clearances. Even the stock markets are languishing.

All these factors have combined to put the brakes on
the India growth story.

CII has predicted growth for the current fiscal at around 8 per cent. It has identified inflation and resulting interest rate increase and high input costs as causes of the slow down.

The chamber said it is important to fast-track large projects to keep the investment cycle running. FICCI said that tight monetary policy is leaving an impact on industrial growth.

Rajat Rajgarhia, director, research, Motilal Oswal Securities said GDP growth estimates are expected to be sub-8% this fiscal.

He said further variation will be dependent on industrial activity as agricultural growth would be difficult to replicate even with an expected good monsoon.

Ashutosh Datar, an economist with IIFL, said growth may decelerate further this year as agriculture growth reverts to its long-term trend (assuming a normal monsoon) and non-agriculture growth decelerates due to sustained high inflation and rising interest rates.

Growth for FY12 may slow to 7.7 per cent from 8.5 per cent in 2010-11.

He said the sluggish investment cycle is also a major worry and unless investment cycle recovers, India’s medium-term growth trajectory of 8-9% would also be increasingly under pressure

Maruti Suzuki plans to set up new plant in Gujarat

Gandhinagar, May 31
Top decision makers of the country’s largest car maker Maruti Suzuki in a meeting held with the Gujarat Chief Minister Narendra Modi today expressed their intention of setting up a manufacturing plant in the state.

The attitude of the chief minister and the Government of Gujarat has been very very positive. The state is a very strong probability for our expansion project
— RC Bhargava
Maruti Suzuki Chairman

The plant could have a production capacity of 10 lakh units per annum, expandable up to 20 lakh.

Managing Director of Maruti Suzuki Shinzo Nakanishi and Chairman R C Bhargava during their meeting with the Chief Minister Narendra Modi said that Gujarat would be their first preference for the expansion project, a statement released by the state government said.

They hoped that the location of the site and other formalities for the phase-I of the project would get completed in three months and the plant could go on stream in five years, it said adding the plant would generate employment for nearly 1.50 lakh people.

Official sources close to the development said the company has zeroed in on a location near Sanand where Tata Motors' plant to make Nano is also situated.

The Gujarat government and the company top brass have expressed satisfaction over today's meeting.

“The attitude of the chief minister and the government of Gujarat has been very very positive,” R C Bhargava, told reporters after meeting Modi.

"For that reason, Gujarat certainly is a very strong probability for our expansion project," he said.

If the decision to set up the plant in Gujarat is finalised, it will be the first major investment by Maruti outside Haryana, where it has been present since its inception in 1983.

The car maker has expressed desire to set up a skill development centre and vendor's park too, the official statement said.

Speaking about the project, Maruti Suzuki India (MSI) Chairman R C Bhargava said that automotive ancillary industry, infrastructure and other employment generation activities are sure to grow around the plant, as has been the case with its factory in Haryana.

In 2010-11, the company's sales soared 24.81 per cent to 12.71 lakh units from 10.18 lakh units in the previous fiscal. Domestic sales increased by 30.08 per cent to 11.32 lakh units from 8.70 lakh units in the previous fiscal. — PTI

Intel unveils laptops with tablet features

Taipei/San Francisco, May 31
Intel has unveiled a new category of laptops that it says will include the best features of tablets as the world's top chipmaker struggles to find its footing in the exploding market for mobile gadgets. Netbook pioneer Asustek showed its first new PC in Intel's "Ultrabook" class, the UX series, on Monday at the Computex computer show in Taipei. Intel said models made by other manufacturers would go on sale by Christmas and cost under $1,000.

Ultrabooks will be svelte and lightweight but still pack high-performance processors. They should account for 40 per cent of laptop sales to consumers by the end of next year, Tom Kilroy, a senior vice president at Intel, told Reuters in an interview in San Francisco.

"We're shooting for ultra responsive. You'll have always-on, always-connected, much more responsive devices, similar to what you would see with a tablet today such as an iPad," he said. In Taipei on Tuesday, Intel's vice president Mooly Eden called the Ultrabook a "different category" from the tablet and notebook, hoping that it would appeal to a different category of consumers.

“There'll be some confusion if you look at the fold factor; when you open it you'll see a PC but if you're on the go, just fold it and suddenly it's a tablet. Is it a PC? Is it a tablet? I think it doesn't matter,” Eden said.

Santa Clara, California-based Intel is eager to make laptops more attractive to consumers who are increasingly captivated by Apple's iPad and other mobile gadgets.

Its processors power 80 per cent of the world’s PCs, but Intel has failed so far to adapt them for smart phones and tablets. Manufacturers like Motorola and Apple favour processors made using energy-efficient technology licensed by Britain's ARM Holdings.

"We're late. Today there are many tablets that don't have Intel inside, but we're putting in a lot of effort in order to catch up. And I believe we have caught up in tablets." This month, Intel took the wraps off next-generation "3D" technology that crams more transistors onto microchips, betting it will eventually become a significant advantage in tablets and smartphones.

Intel also plans to shrink the circuits on its mobile chips by three sizes within three years - a faster pace than normal - to make them much more efficient.

Kilroy declined to comment on recent speculation that PC maker Acer Inc is planning to launch a tablet within months using Intel's brand new Oak Trail chip and Google's Android operating system. — Reuters

Let the best candidate be IMF chief: PM

New Delhi, May 31
As the race for the new IMF chief gained momentum, Prime Minister Manmohan Singh today said India supports the "best" available candidate, regardless of nationality, as its next head.

"India's view is well known...The best available person regardless of his/her nationality should be selected for this very prestigious post,’’ Singh said at a joint press conference with visiting German Chancellor Angela Merkel here when asked whom India would prefer for the post.

The top IMF post is currently vacant after the disgraceful exit of Dominique Strauss-Kahn, who resigned following his arrest on charges of sexually attacking a hotel maid in New York. Planning Commission Deputy Chairman Montek Singh Ahluwalia is also said to be in the fray. Singh added that the issue of next IMF chief did not come up during his talks with the German chancellor. "Quite honestly, we have not had any discussion on that," he said. —TNS

Schneider to buy 74% in Luminous for Rs 1,400 cr

New Delhi, May 31
Schneider Electric today said it will buy a 74 per cent stake in leading inverter-maker Luminous Power Technologies for Rs 1,400 crore, a move that will help the French major strength its access to the retail market for electrical goods.

"The joint venture with Luminous will provide a strong platform for Schneider to reach out to Indian consumers," Schneider MD (India) Olivier Blum told reporters here.

As per the deal, the French entity would acquire a 74 per cent stake in Luminous for Rs 1,400 crore. The remaining 26 per cent shareholding would be with its founders and this stake would be subject to "put and call options".

Luminous had debt of Rs 240 crore at the end of the last fiscal.

So far, Schneider has made eight acquisitions in India, including the Luminous deal. Two transactions — that of APW President and Digilink — were completed earlier this year.

Luminous, which offers inverters, UPS and power storage systems, among other products, raked in revenues of Rs 1,100 crore for the year ended March 31, 2011. It employs about 3,000 people at eight sites in India and one in China.

"The deal will help us tap Luminous' strong distribution network and access to over 25,000 point of sales. We will also be looking at development of new products in due course," Schneider Electric India's Director (Strategy & Alliances) Manish Pant said.— PTI

RBI not to extend Haryana land lease loan scheme
Ruchika M. Khanna/TNS

Chandigarh, May 31
The failure of by the Haryana State Cooperative Agriculture and Rural Development Bank (HSCARDB) in getting a reasonable response to

“Management of land under lease arrangement in case of default in agriculture loan payment” has led to the RBI to say that it is not in favour of extending this scheme to commercial banks and regional rural banks across Haryana.

Official sources said that representatives of the RBI have expressed their apprehension over implementation of this scheme. It is learnt that most of the banks, too, had objected to the implementation of this scheme because they were not sure if recovery of the loans would be forthcoming through leasing out the mortgaged land to another farmer.

These banks had also expressed concerns that the implementation of the scheme could actually vitiate the loan recovery climate in the state.

Last year, the State Level Bankers Committee (SLBC) for Haryana had proposed that in case a loanee farmer defaults in repaying his loan, the banks should not auction his mortgaged land.

Rather, this land be managed under lease arrangement, with 50 per cent of the income be used to realise the dues of the bank, and remaining 50 per cent be given to the borrower. It was proposed that the land will be restored to the borrower after the amount of loan is fully recovered.

To assess the workability of this scheme, a sub committee of the SLBC was formed with representatives from the revenue and agriculture departments of Haryana, besides representatives of various banks. The committee found that this scheme had been implemented in the Haryana State Cooperative Apex Bank and HSCARDB, and officials of these banks reportedly said that the scheme had failed to pick up.

The representative of NABARD too raised its concerns, saying that recovery of advances under the proposed arrangements will be adversely affected. They said in case the recovery slips below the benchmark fixed for different bank branches, the managers of these bank branches will no longer be authorised to sanction fresh loans.

RCom gets offers for stake sale in tower biz

Mumbai, May 31
Anil Ambani Group firm Reliance Communications today said it has received various offers from several interested parties for acquiring a stake in its subsidiary, Reliance Infratel Ltd, which will help the company bring down its huge debt burden.

Reliance Infratel Ltd is a subsidiary of Reliance Communications and is engaged in the business of building and operating communications towers, optical fibre cables and other related assets at designated sites.

On March 31, 2010, RCom held a 89.71 per cent stake in Reliance Infratel. “The board of directors of RCom was informed of the receipt of formal indicative offers from several interested parties for the acquisition of RCom's controlling interest in Reliance Infratel," RCom said in a disclosure to the BSE. — PTI

CORPORATE RESULTS
OIL net up 30%

New Delhi, May 31
State-owned Oil India Ltd (OIL) today reported 30.5 per cent jump in net profit for the fourth quarter ended March 31 even after more than doubling of its fuel subsidy burden.

OIL, the nation's second biggest state explorer, reported a net profit of Rs 562.61 crore in the January-March quarter, compared to Rs 430.99 crore in the year-ago period, company Chairman and Managing Director N M Borah told reporters here.

"Our fuel subsidy outgo doubling in FY 2010-11 to Rs 3,293.08 crore," he said.

Punj Lloyd net at Rs 18 cr

Infrastructure major Punj Lloyd today reported a consolidated net profit of Rs 18 crore for the quarter ended March 31, 2011, on higher income.

The company had reported a net loss of Rs 302 crore in the corresponding quarter last fiscal, it said in a statement.

Greenply Industries net up 40%

Greenply Industries Ltd, has reported reported net sales of Rs 348.76 crores for the quarter ended March 31, 2011, a jump of 35.26% as against Rs 257.84 crores posted in the same period of the last fiscal. Net Profit for the fourth quarter stood at Rs 5.92 crores, as compared to Rs 13.28 crores in the corresponding quarter of last fiscal.

Poly Medicure Ltd PAT up 32%

Poly Medicure Ltd, a manufacturer of medical devices & disposables, has said that net turnover for Q4 was up 25%, PAT rose 32%. Poly Medicure is the only listed medical devices company in India.