New Delhi, January 12
There was more good news for the economy as food inflation was in negative territory for the second consecutive week and industrial growth showed a surprise rebound from last month. A relieved finance minister indicated policy steps will be taken to boost industrial growth and investments but the good news also means that the expected the RBI’s rate easing cycle may still take more time.

Industrial growth rebounded to 5.9% in November 2011 as compared to a contraction of 4.7% (revised) in the previous month. The Index of Industrial Production has been very volatile in the last few months and the Reserve Bank of India has pointed out the data may not be very reliable for policy action. Food inflation continued to be negative for the second week in a row at (-)2.90%.

High inflation has been a big worry for the government for the last year and finally some signs of easing are being seen now just before the assembly elections in five states. Finance Minister Pranab Mukherjee said moderation in inflation would continue in the coming months, though softening in the prices of manufactured goods may be more gradual.

He said the IIP has shown strong recovery over last month, when it had contracted because of the performance of the consumer durables and nondurables sectors. “There’s a need to build on this recovery through a stronger performance of capital goods and investments and policy steps will be initiated”, he added.

With inflation seemingly low for the moment and industrial growth reviving, there will be less pressure on the RBI to immediately begin cutting interest rates. A bad IIP number for the second month running would have accelerated the process and led industry to aggressively demand rate cuts.

Apex chamber Assocham said the industrial output showing growth in November in wake of the prevailing global economic scenario together with a tightened monetary policy shows resilience of the industry.

FICCI, however, was cautious in its reaction and said the rebound needed to be seen with caution as some of the fundamental trends remained weak. It pointed out the numbers could not be seen as buoyant consumer demand coming on the back of a low base last year.

CII said industrial output was not sliding and the new figures had provided relief to industry. “The growth recovery has been driven entirely by the consumer goods sector with both durables and nondurables showing strong growth”, it said.

Enthused by the rise in industrial output and declining inflation, Finance Minister Pranab Mukherjee on Thursday indicated the government would take proactive steps to sustain the growth momentum. “If this trend in the numbers continues, perhaps we can expect to have a better performance (during December-March)”, he added.

Overall, vegetables became 49.03 per cent cheaper during the week ended December 31.— PTI

Bangalore, January 12
Propelled by a weakening rupee against the US dollar, India’s second largest IT bellwether, Infosys Ltd, on Thursday posted robust revenue and profit growth in the third quarter (Oct-Dec 2011). It beat market forecasts with a 33% rise in quarterly profit as a weak rupee boosted margins, but it cut its full-year revenue outlook because of the debt crisis in Europe, its second-biggest market.

Infosys, which is also listed in New York, said consolidated net profit rose to Rs 23.72 billion ($457 million) in the third quarter ended Dec. 31 from Rs 17.8 billion a year earlier, helped by an 8% fall in the rupee.

Revenue rose 30.8% to Rs 92.98 billion, as the company, whose customers include BP, Procter & Gamble and Volkswagen, added 49 clients.

Bangalore-based Infosys, India's second-largest software services exporter, forecast dollar revenue growth of 16.4% for the fiscal year to March 31, down from 17.1% to 19.1% projected in October.

“It’s an uncertain environment. There’s currency volatility and regulatory volatility. The confidence of clients has been affected, so we remain cautious”. Infosys CEO SD Shibulal told reporters.

“Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions, which will accelerate innovation, enhance returns for our clients and deliver higher business value,” he added.

Shares of Infosys are likely to remain subdued in the short term after the company cut its FY12 dollar revenue growth guidance to 16.4% from 17.1-19.1% and said it expects Q4 revenue to be flat versus Q3.

"FY12 EPS for Rs 148-150 was baked in the price and anything short of this will not be acceptable by the street," said an institutional sales person with a foreign research house.

"This would have a negative rub off on the sentiment for other IT stocks as well," said another analyst tracking the company.

India's export-driven software services companies are bracing for a slower pace of outsourcing contracts due to the lingering debt crisis in Europe.

Meanwhile, Infosys board member & CFO V. Balakrishnan told reporters the firm was having a “big focus on India”. He said Infosys earned revenues of “US $10 to $15 million” from its Indian operations in Oct-Dec 2011.

Detroit, Michigan, January 12
Tata Technologies unveiled the prototype for a US $20,000 electric car that can carry up to four passengers in Detroit, Michigan as it set out to challenge more costly rivals.

"The eMO project symbolizes the coming of age of Indian automotive engineering," said Warren Harris, president of Tata Technologies. "It’s a tangible example of the capability of Tata Technologies to engineer a full vehicle — a first for any India-based engineering services company”, he added.

Tata Technologies does extensive consulting work for clients such as Ford and Chrysler, offing the "competitive advantage" of its experience in both developing and mature automotive markets, Harris said.

The prototype is Tata's "business card", said Kevin Fisher, who heads the group's vehicle development team. The objective was to demonstrate it was possible to build an electric vehicle with an attractive price, thought not with the intention of producing an electrified version of Tata Nano, which is built by Tata Motors.

"We researched numerous concepts for an internal engineering study that would highlight both the Tata Technologies dedication to environmental responsibility and sustainability, and showcase our global experience, knowledge, capacity and innovation," Fisher said.

He added Tata Technologies used set a price target of $20,000 and then used a multidimensional approach to develop the vehicle using the company's "intimate understanding" of frugal engineering principles.

The end result was a small, urban oriented four-seat vehicle with a unique electric drive and operating software that weighs only 900 kilograms.

The eMo also has a steel frame capable of meeting existing crash standards.

The eMO architecture emphasizes "right size" personal urban transportation by minimizing its exterior footprint and maximizing interior space, including seating for four adults.

"This next decade will see an ever-increasing demand for more efficient and accelerated product development that also will need to incorporate more new technology than the auto industry has seen in 30 years," Fisher stated. — AFP/PTI

New Delhi, January 12
The Indian government’s decision to remove foreign-ownership limits on part of the retail sector is likely to result in more foreign companies entering the market or expanding their presence. However, the pace of change is likely to be limited by requirements to source 30% of products locally, Fitch Ratings said.

Under the new rules, foreign companies will be allowed full ownership of stores that sell a single brand of goods; an increase from the previous 51% limit, the global credit rating agency added.

It said single-brand stores usually cater for the premium end of the market and we believe that many such foreign retailers have held back from entering the Indian market or have limited their expansion plans because of worries about protecting their brands while sharing a big stake with a local partner. Full ownership would give retailers confidence that they would have complete control of their operations in India, helping encourage foreign direct investment.

“However, lifting their stake above 51% will trigger a requirement for retailers to acquire 30% of goods from India's small-industry sector. We believe this is likely to significantly limit the pace of change as retailers will have to determine whether they can get the same value and quality of goods from local firms and will have to set up new supply chains”, Fitch said.

“The burden of this requirement would also vary greatly between retailers, as some already source many goods from India (especially garments), while other high-end and specialist retailers might find it challenging to source enough of their stock locally. This may necessitate building up relationships with suppliers, which would presumably take time”, it added.

“We believe the new rules do not greatly increase the chances of imminent reform in the ownership of multi-brand retailers, including supermarkets. An attempt to reform those rules last year was swiftly dropped due to pressure on the ruling Congress party from its coalition partners in the UPA government as well as the opposition parties. Any further attempt to reform the multi-brand rules is unlikely before the upcoming state elections and could potentially take significantly longer. — Reuters

Amampur (Patiala), Jan 12
Global farm equipment manufacturer Deere & Co is looking at making India their hub for expanding operations across Asia. With five manufacturing facilities functional in the country, the company is also looking at setting up a new tractor manufacturing facility in Dewas in Madhya Pradesh.

The Indian subsidiary, John Deere India, inaugurated its combine harvester manufacturing facility in Amampur village on Wednesday.

The company’ group chairman & CEO Samuel R. Allen told The Tribune; “This plant for manufacturing self-propelled combine harvesters, set up at a cost of $30 million, will have an optimum capacity of 5,000 units per annum. By adding harvester equipment to our product lineup for Indian customers, we’ll be able to serve the total needs of farmers in India for quality equipment. With this facility, our total investments in our Indian operations are now $300 million”.

Though initially this plant will cater to the needs of the domestic market, the company will also be targeting exports to African countries from here.

Besides this, the company is looking at investing $ 100 million for setting up of the new tractor manufacturing facility at Dewas, and ramping up capacity at its existing plant in Poona by 50%.

John Deere India MD Ranjit Nair said: “Our market share in India is about 8%. South India is the fastest growing market with Punjab the largest for combine harvesters. Globally, the company is setting up six new plants this year. Of these, three will be in China, two in Brazil and one in India”.