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Industry slowdown deepening in wake of continuing issues: CII
Drug patents: Showdown for pharma companies in Supreme Court
Impact of a junk-rated India? Not as bad as it looks
FII inflows to continue on policy reform initiatives, say experts
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Black money: Export, import firms under intelligence agencies’ scanner
EPFO considering minimum
Rs 1k monthly pension plan
GM to recall 2.5L midsize SUVs for fire hazard
J&K to have first video telephony service
India’s diesel price dilemma — making the rich pay more
Barley output in Punjab set to get a boost
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Industry slowdown deepening in wake of continuing issues: CII
New Delhi, August 20 The survey, comparing the expected growth of 103 industrial sectors of the economy for July-September 2012 over July-September 2011 reveals that companies expecting growth has shrunk considerably, while those expecting weak growth has gone up considerably, implying a weakening of market sentiment. The proportion of companies expecting excellent performance of more than 20 per cent has shrunk considerably (from 23.8% to 3.8%) and number of sectors that are expecting low growth of 0-10 per cent (from 44.7% to 51.4%) and negative growth (from 10.6% to 15.5%) have expanded significantly for July-September quarter of current year compared to the same period of last year. The low growth outlook for the current quarter comes on the heels of a dismal growth performance recorded by industrial sector during the previous quarter (April-June) on a year-on-year basis. Expressing concern over the continuous deterioration in the performance of the industrial sector, CII director general Chandrajit Banerjee said immediate policy actions were needed both by the government and the Reserve Bank of India to arrest further decline in industrial output. “The urgency that is required to announce confidence building measures at once, along with reduction in policy rates by the Reserve Bank cannot be overemphasized”, he added. “Further, to avoid a downward spiral in industrial output, fiscal measures such as acceleration of deprecation rate to promote fresh investments must be announced. There’s also the imperative of getting projects moving on the ground, which would lift sentiments and boost investments. This doesn’t entail major political decision or negative impact on revenues of the government”, Banerjee said. The sectors reported to be expecting low or negative growth performance during the current quarter encompass all segments of industry, with far reaching implications on the economy in terms of employment and livelihoods, CII said. The sectors expecting low or negative growth outlook include capital goods sectors like earth moving & construction equipment, electric motors, transformers, textile machinery, and tractors which will have great bearing on the growth of related sectors, ranging from agriculture, real estate to electricity. Consumer goods sectors like sunflower oil, mustard oil, soybeans, airconditioners, TV sets and passenger cars are expected to record low growth performance during the current quarter, indicating weakening of consumer demand too. |
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Drug patents: Showdown for pharma companies in Supreme Court
Mumbai/London, August 20 The Supreme Court hearing pits Swiss drugmaker Novartis AG against India's patent office, which has refused to grant a patent on the company's cancer drug Glivec on the grounds that it is not a new medicine but an amended version of a known compound. A patent would give Novartis exclusive marketing rights and stop cheaper versions being produced by India's generic drugmakers, who supply medicine to the country's 1.2 billion people and to poorer nations across the world. The case has rekindled tensions between Big Pharma and India, following a decision by the patent office in March to strip Germany's Bayer AG of its exclusive right to sell another costly cancer drug, Nexavar, because most Indians cannot afford it. The hearing involving Novartis starts on Wednesday. It is expected to last several weeks, with a verdict a month or two later. Western firms see huge potential in India's rapidly growing economy but are wary of lax protection for intellectual property. They argue India is failing to recognize valuable medical innovation. Their critics — who include international aid groups and Indian generic drug manufacturers — say a win for Novartis would jeopardize the supply of cheap medicine to hundreds of millions of people in India and around the world, since India is the world's biggest exporter of cheap generic drugs. "The stakes are very high on both sides," said Leena Menghaney, a manager in New Delhi for Medecins Sans Frontieres (MSF), which relies on Indian-made generic drugs to treat AIDS and other diseases in Africa and many poor countries. Novartis' drug was approved in 2001 in the United States, where it is sold under the trade name Gleevec and can cost $70,000 a year. Discount programmes mean it is available for a lot less in poor countries and in India more than 95% of patients receive it free of charge under a company donation scheme, according to Novartis. Indian generic versions, meanwhile, cost about $2,500 a year. Indian generic companies can produce drugs at a fraction of the cost of originator firms like Novartis or Bayer because their costs are lower and they do not need to plough money back into future research. PATENTS VS PATIENTS: Menghaney fears a decision by India's top court to make it easier for drugmakers to win patents by giving way to Novartis would undermine India's position as "pharmacy to the developing world". Novartis says such fears are unfounded. — Reuters Wockhardt gets US nod for Parkinson's generic
Indian drugmaker Wockhardt Ltd (WCKH.NS) said on Monday it has received approval from the U.S. Food and Drug Administration to sell Entacapone tablets, which are used in treatment of Parkinson's disease. Entacapone, which will be launched on September 30 with a 180-day exclusive period, is the generic name for the brand Comtan, owned by Orion Corp, Wockhardt said in a statement on its website. |
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Impact of a junk-rated India? Not as bad as it looks
Mumbai, August 20 Overseas portfolio investors have also been conditioned to low expectations for a government that has long disappointed on fiscal reforms - the key factor in whether or not India averts a ratings downgrade. Given its sizeable foreign exchange reserves and low overseas debt, a ratings downgrade would not trigger financial turmoil. Still, it would be humbling for a country with big aspirations to sit at the top table of emerging economies. "I’m not going to sell my positions, as India is going to get downgraded. I do not treat or regard India as an investment-grade country," said Kenneth Akintewe, who helps manage around $7 billion in Asian fixed-income assets at Aberdeen Asset Management. "The rating agencies have tended to move behind the markets, and markets have priced in that eventuality long before the rating agencies do anything," he said. Standard & Poor's was the first credit agency to cut India's sovereign outlook to negative in April, followed by Fitch Ratings in June. Both have India at BBB-minus, the lowest investment-grade rating. Citing a fickle government that lacks the strength to push through fiscal reform, S&P put the odds of a downgrade within two years at one-in-three. Fitch said the risk of a ratings cut was greater than 50 percent in 12 months to 24 months. The key concern is the fiscal deficit, which overshot a target of 4.6% of GDP by 1.2 percentage points in FY12 and is expected to swell to 6% of GDP in the current year to March 2013. A drought due to a disappointing monsoon season will push the government to spend more on relief for farmers. Rural demand for cheap fuel to drive irrigation pumps and tractors is further delaying a promised increase in subsidized diesel prices, which the government concedes is vital to fixing the deficit. S&P's warning caught government officials and domestic investors flat-footed, although CDS markets were already pricing India at junk levels. The cost of protection against default for State Bank of India, widely considered a proxy for the sovereign because the country has never sold overseas debt, was already trading above 300 basis points when S&P issued its warning. The S&P warning sent SBI's five-year CDS above 380 basis points by late May. It later came down, in what could be a preview of the reaction to expect if India gets downgraded. At around 320 bps, SBI's five-year CDS is factoring in a much greater risk premium than junk-rated countries such as the Philippines and Vietnam, though that also partly reflects concerns about bad debt on SBI's balance sheet. — Reuters |
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FII inflows to continue on policy reform initiatives, say experts
New Delhi, August 20 According to market analysts, despite a slow economic growth, high interest rate regime and weak monsoon, overseas investors are showcasing confidence in the Indian stock markets amid expectations of the government's fresh initiatives on policy reforms. "I think FII inflows will continue in the domestic equity markets given the fact that last year was bad for stocks. Also, weakness in the rupee is also favouring overseas investment. But, the biggest trigger is that FIIs are pinning hopes on the government's fresh initiatives on reforms. However, if there are no policy reforms, we might not see the FII flows being sustained at the current levels," Rajesh Jain, executive vice president of Retail Research Religare Securities, said. Echoing similar views, Geojit BNP Paribas research head Alex Matthews said: "FII inflows are likely to continue as hopes of policy reforms announcement are still alive. But if there are no reform announcements, there might be a slowdown in inflows or there could be a pause as well." — PTI |
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Banks to be hit by RBI move on group exposure: Moody’s
New Delhi, August 20 According to Moody's, the proposed rules would hurt companies that depend on parent banks for capital and brand support, particularly those with large international operations, or those that operate insurance, securities or asset management businesses that need capital and liquidity support to meet their business needs. "If the RBI adopts them, the new guidelines would be credit positive for India's banks, but credit negative for group companies that rely on parent banks for capital and brand support," Moody's Investors Service said in a report. It said the "affected banks" include ICICI Bank, State Bank of India, Bank of India, Bank of Baroda and Kotak Mahindra Bank. "The guidelines would lead these banks to re-examine the financial support they provide to group businesses as anything exceeding the stipulated limits would be detrimental to their standalone capital calculations and thus their business growth," Moody's said. The rules, it said, would benefit India's banks because they would reduce their concentration and contagion risks from group activities. The guidelines, if implemented, would limit to 5% of paid-up capital and reserves a bank's exposure to a single group nonfinancial entity, while the maximum exposure to regulated financial services companies would be 10%. However, Moody's said for the time being, these draft guidelines do not help the banks in any way cope with their immediate asset quality challenges owing to the difficult environment. — PTI Move regulators on misconduct by professionals: FinMin to banks The finance ministry has asked state-owned banks and insurance companies to take up the issue of misconduct by professionals like lawyers and chartered accountants with their regulating bodies like ICAI. The ministry has issued the directive to heads of public sector banks, financial institutes and insurance firms on an observation made by the Central Vigilance Commission, which had said sometimes professionals present misleading reports which lead to distress assets and misleading claims. "Banks and insurance companies should approach the professional bodies with complaints of professional misconduct ...for suitable action," the ministry said. The professional bodies mentioned in the communication include, Bar Council of India, ICAI, ICWA and Institute of Engineers.
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Black money: Export, import firms under intelligence agencies’ scanner
New Delhi, August 20 Sources said the Central Economic Intelligence Bureau and the directorate of revenue intelligence officials have found details of suspicious trade transactions by some of the firms, based in major industrial hubs of the country including Mumbai, Delhi, Surat and Ludhiana, which were manipulating import and export invoices thereby generating “black” (unaccounted for) money. According to preliminary probe based on assessment of past two year trade transactions, a number of 'fly by night' exporters and importers (who only export or import goods once and then vanish) have been found in routing of black money and the officials are trying to ascertain their whereabouts, they said. "We have come to know over 100 such suspected trade dealings in the Middle East, the United States and the UK among others. Most of these transactions seem to be dubious and the address of the recipients and booking agents here have been found to be incorrect," a source said. The source added the details of these exports will also be shared with the concerned authorities in those countries. In addition, economic intelligence agency officials have found certain dubious consignments sent to India, most of which are lying unattended at various air and sea cargo stations, and examining them to know their background. Last month, the directorate of revenue intelligence had claimed to have busted over Rs 1,000 crore hawala racket in Punjab involving certain international syndicates and Delhi-based businessmen. The officials claimed they had exposed the racket while probing a scam by an exporter who fraudulently used inflated bills to misuse a duty drawback scheme run by the finance ministry and gained incentives worth Rs 60 crore. "There has been spurt in activity related to trade based money laundering. All field officials have been told to cross check export and import consignments in case of any suspicion," the official said. Trade based money laundering is the process of transferring or moving money through trade transactions. In practice, this can be achieved through misrepresentation of price, quantity or quality of imports or exports. According to a recent finance ministry report on black money, the international trade system is subject to a wide range of risks and vulnerabilities, which provide unscrupulous entities the opportunity to launder money. — PTI |
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EPFO considering minimum
Rs 1k monthly pension plan
New Delhi, August 20 "The labour ministry has recently sent a proposal to the finance ministry to fix minimum pension to the EPFO subscribers at Rs 1000, no matter what their contribution is towards the scheme," a source privy to the development said. On the recommendations of the fund body EPFO, the labour ministry has proposed to the finance ministry to either withdraw the two year bonus given to subscribers on completion of 20 years of service or bear additional burden of Rs 539 crore every year for fixing minimum pension of Rs 1,000. At present every subscribers who completes 20 years of service is given benefit of additional two year bonus while tabulating his or her pension. According to the Employees Provident Fund Organization, if this two year bonus is withdrawn, the exercise of fixing minimum pension at Rs 1,000 would be a revenue neutral exercise besides pensioners getting about 5 per cent relief. However, if the finance ministry does not go for this alternative, the government would have to shell out Rs 539 crore every year in addition to its existing payout of Rs 994 crore annually for contributing 1.16 per cent of basic pay and dearness allowance to the pension fund. According to data, as on March 31, 2010, there were 35 lakh EPFO pensioners of which 14 lakh get a monthly pension of less than Rs 500. The number of EPFO pensioners getting a monthly pension of Rs 1,000 is 7 lakh. The data reveals that there are cases where pensioners are
even getting a monthly pension as low as Rs 12 and Rs 38.— PTI |
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GM to recall 2.5L midsize SUVs for fire hazard
Detroit, Mich., August 20 A possible electrical short could affect power windows and door locks, and in some cases could cause a fire, GM said in its August 17 letter to the NHTSA that was posted on the agency's website. The recall involves vehicles sold or currently registered mainly in the Northeast and Midwest states, including Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, West Virginia, Wisconsin and the district of Columbia. "Fluid may enter the driver's door module, causing corrosion that could result in a short in the circuit board which cause the door lock and power window switches to function intermittently or become inoperative.," the NHTSA said. General Motors dealers will replace the driver's master power window switch on Chevrolet, GMC and Buick models. — Reuters |
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J&K to have first video telephony service
Rajouri, J&K, August 20 The service will be inaugurated by minister of state for communications & information technology Sachin Pilot on August 21 in Rajouri. It is a first of its kind of service for the state of Jammu and Kashmir after successful launch of it in 10 other states of the country. The launch of this service will be a value addition to the BSNL landline service and is aimed at the enterprise segment and international callers. "We are also targeting the other customer segments in the state," an official of BSNL said. A Sai Infosystems India (SIS) team of officials will provide the service, including technical support, to BSNL for the successful launch of the service in Rajouri. RD Parmar, BSNL head for Rajouri-Poonch, said, "We are all set to launch video telephony service from Rajouri. Besides this, we are also launching WIMEX service from Poonch on the same day for high speed internet connectivity." The service will be launched from Baba Ghulam Shah Badshah University, Rajouri, which is connected with Islamic University, Awantipora under the tagline 'nurturing a garden of dialogue'. The minister will inaugurate a National Knowledge System (NKS) to connect Baba Ghulam Shah Badshah University with e-services, an official PRO, Ashfaq Zari, said. Students of Badshah University as well as those of Islamic University will participate in an interactive session with Pilot through a video conferencing. On this visit the minister will also launch e-services at the Rajouri post office. |
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India’s diesel price dilemma — making the rich pay more
New Delhi, August 20 Faced with the risk that its sovereign credit rating could be cut to junk if it fails to rein in its fiscal deficit, the government is under pressure to cut runaway spending on fuel subsidies. But, already on a backfoot over corruption, slowing economic growth and the caprices of coalition allies, Prime Minister Manmohan Singh has held back. Like LPG cooking gas and kerosene, diesel is seen as a poor man's fuel and so the government fears it would be forced by popular outrage into a u-turn if it cut subsidies, just as it was when petrol prices were raised in May. It should fear less the wrath of the common man, however, than the hostility of big businesses and middle-class voters, who have become big users of diesel because it is so cheap and because regular power supplies are so unreliable. When the north of the country was hit by massive power blackouts on two consecutive days earlier this month, the lights stayed on in offices, five-star hotels and swanky residential areas across New Delhi as thousands of diesel generators purred into action. With petrol costing on average 42% more than diesel, there has been a jump in the share of cars powered by the subsidized fuel, while in the countryside only wealthy farmers who can afford a tractor or water pump benefit from the government's largesse. "The economy is being dieselized," said a senior finance ministry official, who asked not to be named due to the sensitive nature of the matter. "People are using it to run their private generators, telecom towers, cars. It is no longer the poor man's fuel." Diesel subsidies cost New Delhi about Rs 411 billion in 2011-12, or 0.7% of GDP, making the fuel much cheaper than petrol and costing state-run retailers about Rs 11.25 for every litre sold. Government data shows diesel accounts for nearly 44 percent of fuel consumption in Asia's third-largest oil importer compared with 35 percent nine years ago. While trucks and buses still consume the bulk of diesel, analysts estimate that consumption by cars, generating sets, industry and mobile telecom towers has gone up to about 40% from 30% in 2008-09, according to estimates by a government panel. Diesel cars make up about 40% of new sales in India, from less than 20% a few years ago, data from an industry body shows. Almost all large, expensive SUVs and jeeps have diesel engines, as do many of the luxury saloons sold by companies like Audi or BMW. Petrol fuels India's ubiquitous two-wheelers, which tend to be used by the less well-off. For the very poor, it's a bicycle at best. "I'm not really buying the argument that removing the diesel subsidy would disproportionately affect the urban poor. Industrial users, farmers and the middle class would bear the brunt of a price hike," said Jesse Mercer at PFC Energy. DROUGHT PROMPTS DIESEL PRICE CUT: Far from raising diesel prices, the government has just halved them to help farmers with irrigation in areas parched by a delay in the June to September monsoon, which could mean agriculture's share of overall demand will rise above an estimated 18%. "The poor rainfall this monsoon season has added to the government's woes, as farmers need to use diesel-driven electric pumps to pump water for crop irrigation," said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight. But again, it is likely to be the wealthy with large farms who benefit most - in states such as Punjab, in the country's grainbowl, where rural incomes are nearly double the national average. Over half of farms greater than five hectares own their own diesel or electric pump while only 8 percent of farms with less than a quarter hectare do, according to a 2010 report by the India Human Development Survey (IHDS), a joint US-India research body. The IHDS report showed tractors are used on just 4 percent of India's mostly tiny farms, but in Punjab 43 percent of farms own their own tractor. While a diesel price hike would certainly raise road freight rates, with heavy goods vehicles accounting for upwards of a quarter of demand, the feed-through to inflation would be limited, Finance Ministry officials argue. The shift to rail transport from polluting trucks could even be a benefit. Analysts estimate a 5 rupee per litre increase - just under half current losses suffered by state-run retailers - would add 0.5-0.8 percentage points to headline wholesale price inflation, which is currently a little below 7%. — Reuters |
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Barley output in Punjab set to get a boost
Chandigarh, August 20 Axereal, which has a malt business called Boormalt, is looking at setting up a malting unit with the capacity of 30,000-60,000 tonnes in India. Axereal officials said, “Though the area under barley is much higher in Rajasthan, we are particularly looking at Punjab because it produces the high yield and good quality of the crop.” The cooperative proposes to get into barley purchasing by mid-2013. They will either be buying barley from the mandis or go in for contract farming of the crop here. “We could either buy an existing malting unit or could set up a new unit. With most global beer manufacturers like Heineken and Carlsberg venturing in the Indian market, we see a major opportunity in this region for processing barley and supplying it to these beer manufacturers,” said Sudhanshu Jangir, head, India operations at Axereal- Boormalt India Holdings. Axereal is also tying up with major French farm and dairy equipment manufacturers like Kuhn to promote their business interests among farmers in Punjab. |
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