New Delhi, October 15
Rising fuel prices boosted inflation in September to 7.8 per cent, its highest level since November, undermining the government's case for an interest rate cut by the RBI this month to boost the sluggish economy.

The rise in the wholesale price index - India's main inflation gauge - was more than expected.

The Reserve Bank of India (RBI) has held its policy rate at 8 per cent since April, even though economic growth is at its weakest in three years, saying stubbornly high inflation prevents it from cutting borrowing costs. Inflation is well above the central bank's comfort level of 4-5 per cent.

"Today's inflation number significantly reduces the chance of a repo rate cut in the next policy (review)," said Jyotinder Kaur, economist at HDFC Bank in New Delhi. "But we see the RBI reciprocating to the government's recent reform measures by yet again cutting bank's cash reserve ratio."

Financial markets were muted in their response to the data. However, the 5-year and 1-year swap rates both rose 2 basis points, suggesting traders believe the prospects of a rate cut have receded slightly.

Faced with a big hole in the budget and the prospect of losing its investment grade credit rating, the Indian government increased the price of heavily subsidised diesel on September 13.

Monday's data showed that fuel prices in September rose 11.9 % from a year earlier, a sharp pick-up compared with a rise of 8.32% in August.

"The inflation number is very ugly," said Rupa Rege Nitsure, the chief economist of Bank of Baroda in Mumbai. "Overall the inflation situation is going to worsen until end-December."

Nitsure said she expected the central bank to keep rates on hold until the fourth quarter of the fiscal year to next March. However, given weak growth, she expected the central bank to ease the amount it requires banks to hold as reserves - which frees up more cash for lending - at its policy meeting on October 30.

The RBI cut the cash reserve ratio in September by 25 basis points to 4.5% in a move to inject about Rs 170 billion into the banking system.

Analysts expect inflation to quicken more in the coming months because fuel and food make up more than a third of the wholesale price index, but one of the government's top economic policy advisers played down such concerns.

A few economists think WPI inflation will fall, arguing that weak demand will offset fuel price pressures.

Mumbai, October 15
Reliance Industries posted its fourth consecutive drop in quarterly profit but met market estimates as refining margins rebounded and treasury gains from its huge cash pile bolstered profits.

Reliance, controlled by billionaire Mukesh Ambani, Asia's second-richest man, said its quarterly profit fell to Rs 53.76 billion, down 5.7 per cent from a year earlier.

The results come with the company facing a slump in investor interest, shrinking profits amid a slowdown in its core energy business and as recent forays into consumer-focused segments, such as telecom and retail, are yet to garner profits.

Reliance said net sales for the September quarter rose 15 per cent to Rs 903.35 billion.

The net profit of Rs 5,3.76 billion was more or less in line with the street expectations, but a large support from other income means the company's operations are under pressure, which would impact its market performance tomorrow.

The petrochemical was the worst sufferer as margins dropped to historic low levels of just 7.9% while the segment's profits at Rs 1740 crore were the lowest in last three years.

On the other hand, the other income shot past Rs 21.12 billion representing 31% of its pre-tax profits for the quarter. This was mainly due to rising cash balance with the company.

The company, which operates the world's biggest refining complex, reported gross refining margins of $9.5 a barrel for the July-September quarter, compared with $10.1 a barrel a year earlier. The company reported refining margins of $7.6 a barrel in the June quarter.

Refining margins have risen over the past quarter helped by higher demand and unplanned refinery shutdowns in Asia. Analysts had expected Reliance to report margins of around $9/barrel.

Other income of Rs 21.12 billion, most of it through treasury gains, accounted for 31 per cent of the company's pre-tax profit for the quarter.

Commenting on the results, RIL chairman and managing director Mukesh D Ambani said business and financial performance for the first half of FY 2012-13 has been satisfactory despite weakness in global economies and the resultant margin environment.

"RIL's facilities continued to deliver operating excellence and this is a true testimony of the quality of our manufacturing assets and human talent," he said. "On a sequential quarter basis, net profit for the quarter was up 20 per cent at USD 1 billion. Despite current weakness in global economies, we continue to invest in our long-term growth projects to deliver sustainable value to all our stakeholders," he added.—Agencies

New Delhi, October 15
Axis Bank today said it has recorded 22% increase in net profit at Rs 1,123.54 crore for the second quarter ended September 30 on the back of lower expenses.

The bank had a net profit of Rs 920.32 crore in the corresponding quarter last fiscal, Axis Bank said in a statement.

The total income of the lender increased by 27% to Rs 8,280.29 crore during the July-September quarter, from Rs 6,510.89 crore over the same period last year.

The bank continues to show strong performance in terms of growth of net interest income (NII), fee income and operating revenue. With slower growth of operating expenses compared to revenue, the bank's operating profit and net profit have also shown healthy growth, Axis Bank said in a statement.

NII for the second quarter was Rs 2,327 crore against Rs 2,007 crore in the same period a year ago. At the same time operating expenses grew by 18.76 %.—PTI

All over the world, the airlines like to take adequate measures to promote cargo services, export and import. But India has been wary of doing anything positive for promoting cargo, focusing on pharmaceuticals, which provide a huge quantum of revenue. Statistics show that the expenses on cargo operations are one-fifth of the expenditure incurred on movement of passenger traffic.

According to the latest official analysis, foreign airlines transport 83% of the total air cargo from India. Air cargo market is projected to grow annually 10-12 per cent over the next five years, although in 2011-12 a slowdown was witnissed in the cargo trade. The figures for the 2009-10, 2010-11 and 2011-12 were: 83.1 per cent, 83.7 per cent and 82.5 per cent, respectively. The competition from Indian carriers had been very feeble.

As the Indian government and airlines are not alive to this situation, the foreign carriers are taking special measures to further promote cargo capacity. Cathay Pacific is planning to launch a direct flight between Hong Kong and Hyerabad, which is a hub of pharmaceutical products. Some European airlines are working overtime to market research so that they can launch similar kinds of operations. Many renowned airlines are of the view that the profits made from cargo can easily balance out the losses incurred on passenger traffic.

Recently, Singapore's Prime Minister Lee Hsien Loong called on Prime Minister Manmohan Singh to push forward air services between two countries with an emphasis on cargo movements. The 10-member group ASEAN (Association of South East Asian Nations) is also having similar opinion. There is an active proposal that India should open up skies for the ASEAN carriers. It will provide ample opportunities to them to expand their operations to neglected areas. 

New Delhi, October 15
India, which is likely to produce a sugar surplus for its third year in a row, has decided to allow exports for another year, Food Minster K V Thomas said, reflecting confidence about domestic supplies in the world’s top consumer of the sweetener.

Mills and traders will have to wait for a formal order to export sugar in the new season that began on October 1, however. India, also the world's top producer after Brazil, has been exporting for the past two years.

But the country has not been able to sign fresh export deals in the recent past due to rising domestic prices and lower global rates.

The decision to continue with unrestricted exports indicates ample availability, especially during the current festival season when demand peaks, said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association.

Output would not fall below 23 million to 23.5 million tonnes in the 2012-13 season, Thomas said.

"In terms of availability for the domestic market, I do not see any problem, as we have carryover stocks of 6 million tonnes from the previous season and production will not be less than 23 million to 23.5 million tonnes against our consumption of about 22 million tonnes," Thomas said.