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Pressure on cos’ profitability,
credit ratings set to rise
Reliance pips HDFC MF as most profitable fund house
Moody’s downgrades SBI over poor tier-I capital ratio, NPAs
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India aims to ink free trade pact with EU
by yearend
Air traffic rises 20% in India, slows globally
Re down by 29 paise vs dollar
India set to be among top 10 global e-commerce hubs by 2015
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Pressure on cos’ profitability,
credit ratings set to rise
New Delhi, October 4 Pressures on profitability have clearly been visible and are expected to continue. CRISIL believes the slowdown in demand across a wide range of industrial sectors in the second half of fiscal 2011-12 could increase downgrades. The contraction in margins is expected to continue because of high interest rates, wage and input costs. CRISIL expects further downward pressure on ratings, primarily driven by demand moderation, signs of which are visible. Ten of the top 20 industries (in terms of loans outstanding in the Indian banking system) are showing clear signs of slowdown in growth. Consumption-linked industries such as automobiles, real estate, textiles, and retail have seen a significant impact on demand. CRISIL has cut its growth estimates for passenger vehicles close to decadal lows of 2-4 per cent. Investment demand linked industries such as cement, capital goods, and construction have also witnessed decline in sales growth. While exports are buoyant so far, the economic slowdown in the United States and the uncertain environment in Europe are expected to result in a moderation in export growth. If the demand moderation leads to a lower revenue growth of 15 per cent in 2011-12, it will lead to a clear weakening of credit quality of the Indian corporate sector. Other increased risk factors include greater vulnerability to unhedged foreign exchange exposures, given the sharp movement in foreign currency rates recently. Also, access to global funding may be adversely affected by increased risk aversion by global investors due to the uncertain global economy. |
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Reliance pips HDFC MF as most profitable fund house
New Delhi, October 4 On year-on-year basis, Reliance Asset Management company's PAT rose by nearly 34% in 2011 fiscal, whereas HDFC MF's profit increased by 16.34%, according to the Association of Mutual Funds in India's data. While UTI MF's figures were not available for the latest fiscal, Franklin Templeton is currently ranked the third most profitable with a PAT of Rs 97 crore (for fiscal ended September 2010). — PTI
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Moody’s downgrades SBI over poor tier-I capital ratio, NPAs
New Delhi, October 4 According Moody's, a 'D' rating suggest "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength". Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade. "The rating action considers SBI's capital situation and deteriorating asset quality. Our expectations that NPAs are likely to continue rising in the near term -- due to higher interest rates and a slower economy -- have caused us to adopt a negative view on SBI's creditworthiness," Moody's vice-president and senior credit officer Beatrice Woo said. The standalone rating for SBI's private sector competitors, like ICICI Bank, HDFC Bank and Axis Bank, stands at 'C-'. "The revised rating maps to a baseline credit assessment (BCA) of Baa3. As a result of the lower BCA, the hybrid debt rating was downgraded to Ba3(hyb) from Ba2(hyb). The revised BFSR carries a stable outlook and the hybrid rating a negative outlook," Moody's said, adding other credit ratings of the bank are unaffected. The ratings downgrade puts pressure on the government to infuse capital in the country's largest lender as soon as possible. "Notwithstanding our expectations that SBI's capital ratios will soon be restored through a capital infusion by the government, SBI's efforts to secure this capital for the better part of the year demonstrates the bank's limited ability to manage its capital," Woo said. SBI had reported a Tier-I capital ratio of 7.60 per cent as of June 30, 2011, as against the suggested level of 8 per cent termed as desirable by the government for public sector banks. "The level pushes the bank into a lower rating band. In addition, it was below the 8 per cent Tier-I ratio that the government of India has committed to maintaining in public sector banks and substantially lower than those of other C- rated Indian banks," the ratings agency said. It said such a low Tier-I capital ratio provides an insufficient cushion to support growth and to absorb potentially higher credit costs arising from deteriorating asset quality. — PTI
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India aims to ink free trade pact with EU
by yearend
Jakarta, October 4 Indian commerce & industry minister Anand Sharma, who is here on a three-day visit, said: "I'm not looking at next year, I might rather look at this year...I remain optimistic. We'll be able to conclude it (the negotiations) this year". India is in talks with the EU, its biggest trading partner, since June 2007 for liberalizing trade in goods, services and investment through a Broad-based Trade and Investment Agreement (BTIA). Already 13 rounds of talks have taken place. When asked about the resolution of contentious issues like child labour and environment, Sharma said, "I don't think there is any room for extraneous issues. Our position has been appreciated and accepted, this is my impression." Although the European Union wants inclusion of intellectual property rights (IPRs) and social issues like environment and labour standards in the proposed BTIA, India has been opposing it. According to India, there are other international fora to deal with non-trade matters. The free trade pact would involve slashing of duties on over 90 per cent of the trade and opening up of the mutual markets for services and investment. The two-way commerce stood at US $75 billion in FY2009-10. India has already implemented comprehensive free trade agreements with countries like Japan, Malaysia and South Korea.— PTI |
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‘India, Asian economies will drive global growth’
New Delhi, October 4 "There has been a dramatic change in the world economy. Today everyone is talking about Asia, Asian business and Asian business leaders," said Kamal Nath, minister of urban development, addressing the Asian Business Leadership Forum (ABLF) awards on Monday night. According to Nath, even in adverse economic conditions, Asian businesses have shown resilience, helped by the strong financial systems in the continent. "We have very different financial systems than that of Europe or North America. Over here, the banks are paying the government, lending to business. Over there the governments are paying to banks to keep them alive," Nath said. The minister said that the future challenge for Asian economies would be to sustain the high growth rates, while that for the European economies would be to manage the growth rates. "Our challenge would be to sustain the growth rate, while their challenge would be to manage the growth rate so that it does not go into negative rate." Nath emphasised the need for greater economic integration in the Asian region and said: "The next decade will see much more regional economic integration as it is required. The integration would be similar to the one India has with the GCC (Gulf Cooperation Council) countries." Lauding Asian business leaders, Kamal Nath said that today Asian MNCs (multi-national companies) did not seek top management from abroad but had a base of home-grown leaders, who were also leading other international companies. Communications & Information Technology Minister Kapil Sibal pointed out the challenge of sustaining growth through innovative and effective use of available resources. "We live in an era where there is paucity of resources to realise dreams. We have to innovate and look at new resources which are sustainable and consistent with the laws of nature," he said. Sibal lauded the role of women in leading the growth of Asian business. "When we in this part of the world move on and produce more women leaders, it would not just add three to four percent to GDP but a lot more than that," Sibal said in his address at the awards ceremony. Sibal received a loud applause when he shared his observation that: "Men of this world are good leaders, but females of this world are great leaders. The women leaders of this world know how to take care of the family, how to invest money, how to distribute wealth and how to sustain a family and take it forward." The awards have been instituted by Indian Expressions -- a Dubai-based company -- that seeks to connect the Gulf region with India and the larger South East Asian region, and bring closer their respective business communities, top policy-makers and civil society. — IANS
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Air traffic rises 20% in India, slows globally
New Delhi, October 4 India, which recorded a demand growth of 19.7% in August, was described as "the top performer among domestic markets", latest figures analyzed by the global airlines body, the International Air Transport Association (IATA), showed. India and Brazil, which followed in the domestic growth, together represented 3% of worldwide air travel, it said. In the international segment, passenger demand was up 4.5% over August 2010, but this represented a significant slowing from the 6% recorded in July. Noting that the rate of decline in freight markets accelerated, IATA said the 3.8% contraction in freight markets in August was "more than double the pace of July's 1.8% decline." Comparison of August to July data clearly indicated the slowdown, showing that the total passenger market fell by 1.6% in August compared to July. International markets declined by 1.8%, while already weak domestic markets shrank by 1%. "The industry has shifted gears downward. The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. — Agencies
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Re down by 29 paise vs dollar
Mumbai, October 4 The rupee resumed lower at Rs 49.40/41 per dollar on the interbank foreign exchange, as against its previous close of Rs 49.15/16 per dollar, and dropped further to Rs 49.44 before quoting at Rs 49.28/29 per dollar at 1030 hours. The domestic currency hovered in a range between Rs 49.20 and Rs 49.44 per dollar during the morning deals. Banks and importers were keen to increase their dollar holdings in view of dollar firmness in overseas markets, a forex dealer said. The US dollar climbed to fresh highs in the New York markets on Monday to trade at its strongest level since mid-January.
— PTI |
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India set to be among top 10 global e-commerce hubs by 2015
Bangalore, October 4 Thomas said though India is witnessing many changes in 3G and broadband, there are issues with connectivity. "India is still not as connected as it should be. Connectivity beyond metros needs to be better," said Thomas. However, broadband penetration in countries like the Philippines and Malaysia is good. "Hence there is scope for e-commerce or online transactions," she added. Even so, Bangalore has tremendous potential to become number one e-commerce centre in the country. The city had been in the top five list of e-commerce states until now. "It has jumped to top three. Bangalore has immense potential as it is active on all fronts like e-commerce, imports and exports," said Thomas. She however expressed reservation over Bangalore giving competition to Mumbai and Delhi this year as those cities have larger number of internet users. Sceptical about the growth of online group buying in India, Thomas said the space was already saturated. Bloggers and small e-commerce sites are no threats to companies like eBay, she said. "In fact these small sites wish to occupy space on our site to build credibility in the market ... we actually encourage bloggers to share deals," she said. eBay has been on acquisition spree on regular basis for gaining technical competence and entering a market. One of the biggest acquisitions this year was GSI Commerce which gives platform to set up their own e-commerce sites, she said. "Definitely there are acquisitions that have happened, but there are no acquisitions right now on our radar," Thomas said. — PTI
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