New Delhi, September 10
Car sales in India declined by 18.56% in August this year, the biggest drop in 10 months, prompting industry body SIAM to seek cut in excise duty from the government.

With exports also posting the highest decline in more than 11 years, falling 26.83% during the month, the Society of Indian Automobile Manufacturers (SIAM) also sought a stimulus package similar to the one given during the 2008-09 downturn, stating the industry is "now entering a desperate situation".

The overall vehicle sales in the country also registered a drop of 3.9% to 1,354,436 units in August this year, the biggest decline in more than three and half years.

According to the latest SIAM figures, domestic cars sales in August stood at 118,142 units compared to 145,066 units in the same month last year, down 18.56%. The rate of decline is the highest since October 2011, when sales declined by 23.74% to 139,095 units.

"This is the time when wholesale numbers should be picking up as dealers stock up to meet festive season demand, but this hasn’t happened. We’re entering a desperate situation. We need help from the government," SIAM senior director Sugato Sen told reporters here. He said excise duty on automobiles, which was raised in this year's budget, needs to be reduced, particularly for the commercial vehicles segment.

"The stimulus package, which was provided during the 2008-09 downturn, needs to be provided. If something is not done by the government, we are going to suffer," Sen added.

Car exports during the month stood at 36,104 units, down 26.83%. The previous lowest decline in exports was recorded in March 2001, when overseas shipments dropped by 48.37 per cent to just 2,221 units.

"The decline in exports has also affected the overall production of the companies here in India," he said.

In this year's budget, excise duty on small cars was hiked to 12% from 10%. For petrol cars with engines under 1,200 cc and diesel cars with capacity under 1,500 cc, but the length exceeding four metres were hiked to 24% from 22% and a fixed duty of Rs 15,000.

Petrol and diesel driven vehicles having length exceeding 4 metres and engine capacity of over 1,200 cc and 1,500 cc, respectively, were charged with 27% ad valorem duty instead of the earlier 22% and a Rs 15,000 fixed duty. — PTI

Mumbai/New Delhi, Sept 10
Gold continued its gaining streak to hit another peak on Monday, its seventh since the start of the month, with importers refraining from getting stuck with high priced stocks during the festive season.

Gold prices touched new all-time high of Rs 32,500 per 10 grams in the bullion market here today on seasonal demand amid strong global trend. Gold, which has been on a record setting spree for the past three weeks, rose by Rs 50 to Rs 32,500 per 10 grams.

Gold imports into India are estimated to fall by as much as 26% or by 200-250 tonnes in 2012.

Meanwhile, gold prices crossed Rs 33,000-level for the first time in futures trade as speculators engaged in creating huge positions amid strong cued from the global markets.

In New York, the yellow metal surged by US $34 to $1,734.30 an ounce in the previous session.

A firm trend in the spot market on increased buying ahead of the festive season also pushed gold to fresh high in the futures trade here, traders said.

At the Multi Commodity Exchange, gold for delivery in April next year shot up by Rs 136, or 0.18%, to trade at an all-time high of Rs 33,170 per 10 grams, with a turnover of 19 lots.

Traders said sentiment in gold remained bullish as the metal rose to near six-month high in global markets on speculations that central banks from the US and China would bring in more stimulus measures to revive economic growth, raising demand outlook for the precious metal. Also, sustained buying by stockists to meet the wedding season demand further fulled the uptrend.

On the domestic front, gold of 99.9 and 99.5 per cent purity advanced by Rs 50 each to Rs 32,500 and Rs 32,300 per 10 grams, respectively. Sovereign shot up by Rs 200 to Rs 25,500 per piece of 8 grams.

Silver prices, however, remained flat. Silver ready held steady at Rs 61,800 per kg on restricted buying by industrial units and coin makers, while weekly-based delivery rose by Rs 235 to Rs 64,230 per kg on speculators' support. — Reuters/PTI

New Delhi, September 10
Global ratings agency, Standard & Poor’s today said that the Indian government's recent proposal to restructure debt of state-owned power distribution companies will provide them only a temporary reprieve from weakening finances.

The proposed debt restructuring package for India's struggling power distributors will not impact the country's sovereign ratings and instead could be positive in the medium-to-long term, S&P said, adds Reuters. Banks have a total exposure to the overall power sector of Rs 3.3 trillion , which equals 7.2% of all their loans.

The proposal is in itself unlikely to adequately speed up growth in India's power capacity to meet snowballing demand, according to a S&P report .

"We believe a sustained improvement in the credit quality of distribution firms and greater private sector participation can provide a long-term solution to India’s power sector woes," said S&P credit analyst Rajiv Vishwanathan.

According to the government proposal, a portion of loans to the power distribution companies will be restructured. About half of these loans will be transferred to the respective state governments. This could be through guarantees on bonds that the distribution companies will issue.

The report analyzes the impact of the proposal on distribution companies, the sovereign, and on financial institutions that have lent to power companies. It also examines the effect of the recent power blackout on India's industries and growth prospects.

"The power outage in early August affected 20 of India's 28 states, but had little impact on industry," said Vishwanathan. He added one key reason is that several Indian firms have broken away from state-supplied electricity, and now depend on their own captive power plants. “However, such a practice reduces the competitiveness of Indian businesses and deters investments by overseas companies”, he said.

Standard & Poor's said an increase in investments to the sector is possible only with transparent tariff regulations and reliable fuel supply. A reliable fuel supply, in turn, hinges on availability of timely clearances and a transparent framework for producing fuel, and the presence of adequate infrastructure for transporting fuel.

Mumbai, September 10
The RBI has proposed allowing standalone primary dealers to act as market makers in corporate bond trading as part of a slew of proposals intended to relax guidelines and increase liquidity in this debt segment.

The RBI is also proposing allowing standalone primary dealers to invest up to 50 percent of funds borrowed from call money markets into corporate debt, according to a draft communique seen by Reuters and confirmed by several market sources.

The proposal, if approved, could benefit Indian units of foreign banks such as Deutsche Bank, Goldman Sachs, Morgan Stanley, and Nomura Holdings, which have standalone seven primary dealer licenses in India.

Although they participate in corporate bond markets as buyers and sellers on behalf of clients, or as underwriters, their market-making activity has been restricted.

"The biggest benefit is that PDs can borrow from call money to fund the corporate bond investments which was not allowed earlier. This will help PDs to access cheaper funds and increase margin," said a senior fixed income trader at a bank.

The RBI will also allow these primary dealers to invest up to 50% of their capital funds, or net owned funds, in bonds issued by single entities and up to 75% for group issuers, such as companies with multiple units. — Reuters

Chandigarh, September 10
The Bollywood blockbuster Khosla ka Ghosla was a funny take on how a builder can easily cheat a gullible consumer. Although the reality is quite different from reel life several builders in the region have duped hundreds of people of their savings by selling them plots or flats in their upcoming projects and then vanishing without delivering the "dream home".

As the economic slowdown in the real estate sector hits India, many buyers are finding it difficult to get their dream homes in developing colonies. Ask Harbans Singh, who had booked a plot almost six years ago in a township being developed by a Delhi-based developer on the Kharar-Landran Road in Mohali.

"Earlier, the real estate sector was booming and these developers were promising the moon to investors- open spaces, organized plotting, round-the-clock security, and delivery of the flat within two years. But six years down the line and after having paid the full payment, I discovered the developer had fooled people by showing them plots on the land that didn’t belong to him. In some cases, instead of plotting the land, the developer built independent floor apartments. And now he is not even ready to meet us," he said.

Like him, many consumers have put in their savings of a lifetime to get a plot from these unscrupulous developers. And once cheated, they are ready to spend leftover savings to wage a legal war against them.

In 2006, Ashok Gupta of Panchkula had booked three flats in a society being developed by a private builder in the city by depositing Rs 60 lakh. But, as time passed, he found the builder had sold off flats and then used the money to repay his bank loans taken to buy and consolidate the land.

"He was in no mood to construct the flats and was perpetually looking at prospective buyers to sell the entire or a major stake in this project. As he failed to begin construction for many years, I sought a refund, which was denied. After a long struggle to recover the dues, I finally managed to get my money back last week with the help of the police," he said.

With the real estate sector flourishing in the regions around Chandigarh, Mohali, Ludhiana, Jalandhar and Amritsar, scores of consumers have been cheated of their savings, as many developers, who unable to cope up with the high interest rates, escalating prices of cement, steel and sand; and near zero sales, have abandoned their projects and left the investors in the lurch.

Anil Chopra, a Jalandhar-based real estate developer, who heads the Punjab chapter of the Confederation of Real Estate Developers' Associations of India (CREDAI), said it was only the small time developers who were abandoning their projects and running away. "The abnormally high external development charges (ranging from Rs 10 lakh per acre to Rs 28 lakh per acre in different cities), rising interest rates, poor availability of finance to realtors and sky rocketing prices of construction material, have forced the small time developers to abandon their projects. The actual user isn’t investing in the projects — only investors are buying and selling property," he said.

Also, the developers have been diverting funds raised for one project into buying land elsewhere. A leading realtor coming up with various phases of a housing project in Zirakpur ran into trouble when he failed to deliver the first phase of his project on time, as he had diverted the customers' money to purchase more land and then launch the second phase of his project.

CREDAI president Kulwant Singh, said banks were not extending loans to builders and those who did take out loans were now unable to pay the high interest. In the past one year, the interest rates have shot up by almost 5%, and are available at a rate of 12- 13 %. 

BRIEFLY

MCX to start trading in Nov
MCX Stock Exchange aims to formally start stocks trading around the Diwali festival in mid-November, CEO Joseph Massey said Monday, in its quest to become India’s third major equities market.

ISI mark must for steel items
Steelmakers will now have to produce Bureau of Indian Standards (BIS) certified steel items as the government has made the certification mandatory from Sept 12. All manufacturers, foreign and domestic, cannot produce, import, store for sale or distribute steel/steel products that do not conform to the standards and which do not bear the ISI mark on obtaining certification marks licence.