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Key policy rates unchanged
Govt likely to ease norms for FDI in multi-brand retail
Maruti gears up to tap rural market
Govt exploring ways to reduce CAD: Rajan
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Gold imports halt as new rules cause uncertainty
NTPC clocks Rs 2,527-cr profit in Q1
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Key policy rates unchanged
Mumbai, July 30 RBI Governor D Subbarao, whose tenure ends in September, in his last quarterly policy left the repo and reverse repo rates unchanged. In his policy statement, Subbarao said the repo, the rate at which banks borrow overnight money from the RBI, remained unchanged at 7.25 per cent. Similarly, the reverse repo or the rate at which banks park their surplus money with the central bank too remains at 6.25 per cent. The cash reserve ratio (CRR) or the portion of deposits banks keep with the RBI will also remain at 4 per cent. It, however, lowered the GDP growth projection for the current fiscal to 5.5 per cent from 5.7 per cent. RBI said the external sector is the "biggest threat" to economic stability and asked the government to take urgent steps to rein in the high current account deficit. The central bank added that the Marginal Standing Facility, a mechanism under which banks are allowed to borrow from the RBI after exhausting the repo option, too, remained at 10.25 per cent, which is 300 bps above the policy rate. However, the Governor's comments following the policy statement hinted at a softer money policy going forward should conditions permit. "The current situation - moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth would have provided a reasonable case for continuing on the easing stance," Subbarao said. However, he added, there were risks to the economy on account of the Current Account Deficit. ".....risks on account of the CAD could warrant a swift reversal of the policy stance," he noted. He warned of the dangers of the US winding down its Quantitative Easing. There was a danger of financial markets reacting to every future announcement of tapering, he said. "India, with its large CAD and dependence on external flows for financing it, will remain vulnerable to the confidence and sentiment in the global financial markets," the Governor said. Sounding a note of caution, Subbarao also warned that some risks of inflation have surfaced in the month of June. "The stronger-than-expected monsoon has not yet softened food inflation as much as it should have," he warned. He said low and stable inflation and well-anchored inflation expectations were necessary to sustain growth in the medium term. Weakening rupee biggest threat
Speaking to reporters after unveiling the quarterly policy review, Subbarao said a weakening rupee posed the biggest threat to inflation. “The rapid fall in rupee has put us in vicious spiral. The weakening of the rupee is the biggest risk to inflation,” Subbarao said. Rejecting the suggestion for a sovereign bond, Subbarao warned that the cost of such an instrument outweighs its benefit at present. He also said the central bank was looking to roll back recently introduced measures to tighten liquidity which were aimed to control volatility in the foreign exchange market. Rupee plunges 106 paise to 60.47
RBI's growth concerns, month-end dollar demand from importers and outward remittance from corporates dragged down the rupee by a whopping 106 paise to three-week low of 60.47, wiping out all the gains notched up on central bank's recent liquidity tightening steps. At the Forex market, the local unit opened lower at 59.62 a dollar from previous close of 59.41. It tried to recover to a high of 59.52 only to fall back to a low of 60.55 after the RBI policy trickled in. Rupee later closed at 60.47, showing a fall of 106 paise - the biggest fall in last one month - or 1.78 per cent. India Inc disappointed
New Delhi: Expressing disappointment over the RBI's move for not cutting the key policy rates, India Inc today asked the government to take immediate actions to revive growth and boost investments. "We are disappointed. The RBI has also cut down the GDP forecast for FY'14 to 5.5 per cent, which is clearly reflecting the reality," CII Director-General Chandrajeet Banerjee said. He said economic growth needs to pick up and for that "moderation of interest rates is very important". Similarly, Rajiv Kumar, a senior economist, said the GDP forecast would come down further. Highlights
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Govt likely to ease norms for FDI in multi-brand retail
New Delhi, July 30 The ambitious reform measure to open India’s large retail sector to foreign supermarkets such as Walmart, Tesco and Carrefour has not seen a single proposal come through due to reservations of the foreign chains on certain norms and the opposition to the policy by several political parties. The government is going in for easing of norms in this week’s Cabinet meeting to spur investment in the sector and get the much-needed FDI into the country given the high current account deficit and depreciation of the rupee. It is learnt that the issue while not on the agenda was to be cleared in last week’s Cabinet meeting which got deferred. Foreign chains have been discussing the policy with the government and seeking certain changes. The government had tweaked the norms on single brand retail for Swedish furniture chain, Ikea. Among the changes that will come in the policy include the definition of small and medium enterprises (SMEs) for the purpose of mandatory sourcing. Currently, the mandatory sourcing requirement is 30 per cent from SMEs which will stay but the stipulation of Rs 10 lakh or 1 million turnover to be considered as SME will be hiked to 2 million. This is likely to ease the sourcing requirement for foreign players. Another change that will be introduced is that agriculture cooperatives will be considered as SMEs for the sourcing stipulation. The states that agree to go with the FDI in retail rollout will also get more flexibility in which cities they choose to allow this activity. Currently, the stipulation is cities with population of more than 1 million and for the smaller states who do not have such large cities have been given the discretion to choose the cities. Also, for the purpose of mandatory sourcing as has been done for single brand retail, the calculation of 30 per cent sourcing from SMEs will not be made from the first day but will be given the flexibility of calculating it over a 3 or 5-year period. On the anvil
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Maruti gears up to tap rural market
From targeting the rural market to having a focused marketing strategy for different segments of consumers and organising car exchange programmes, Maruti is going all out to jack up its sales. The new strategies have been formed to ensure that the negative growth of 6.8 per cent registered in Q1 is reversed and the company registers an impressive growth by the end of this fiscal. Talking to The Tribune here today, Mayank Parekh, COO, MSI, said: “The only way to grow in these tough economic times is to bring innovation in marketing. Since rural market is one of the biggest growth drivers for us, fetching 30 per cent of our sales, we are expanding our operations there. We have introduced a Resident Dealers Sales Executive scheme, where one of the local persons is appointed as a sales executive for the company. We now have 7,300 executives spread over 92 per cent of tehsils across the country, which will help us grow better in the rural areas.” Parekh said the company was continuously conducting market research and surveys and had a data base of 81 million people. “Our surveys have proved that just as 33 per cent of the customers are first-time buyers and 33 per cent are adding a new car, the remaining 33 per cent are willing to exchange cars. So we are targeting this 33 per cent of customers, looking for exchanging cars by organising exchange melas. In a recent such exchange festival, we managed to sell 5,000 cars in two days. This will thus be another strategy to grow,” he said. He said the third strategy was to have a segment approach, where different segments were being targeted with a focused marketing strategy. The company would also venture into light commercial vehicle segment in the next two years. Parekh said even in the export market, they were exploring the emerging markets. “We are targeting Latin America, Israel and other emerging markets after our sales in Europe declined. We are hopeful of exporting 1.20 lakh units this year, almost similar to what we exported in the last fiscal,” he said. Earmarks
Rs 3,500-cr investment in FY 14
New Delhi: Maruti Suzuki India will make a capital investment of about Rs 3,500 crore this fiscal. The company, which accounts for nearly 40 per cent of volumes of parent Suzuki Motor Corp, said it will now be responsible for the export markets of Africa, the Middle-East and neighbouring countries of the group and would consider setting up plant overseas. "The capital investment proposed this year is approximately Rs 3,500 crore. And this will only increase as we go ahead," Maruti Suzuki India chairman RC Bhargava said. Addressing shareholders in the company's annual report for 2012-13, he said, the company was continuing with all its planned investments to increase production capacity and introduce new products from time to time. "Work on the Gujarat site has commenced and we expect to start production by the end of 2015-16,” he said. — PTI |
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Govt exploring ways to reduce CAD: Rajan
New Delhi, July. 30 Raghuram Rajan, Chief Economic Adviser, Finance Ministry, said while the RBI is working on stabilising the rupee, the government is working towards reducing the CAD. Rajan said the RBI and the government were on the same page and working together to achieve stability and growth. He said the government welcomes the RBI policy statement and added that the government and the RBI are firmly convinced of the need to do what it takes to stabilise the rupee, and we see this as being friendly to growth over the medium term. “No one should doubt our resolve in this matter”, he added. Rajan said even as the RBI does what it needs to do, the government is exploring ways to reduce the Current Account Deficit (CAD), including measures to reduce imports and measures to incentivise or expand exports. “Consequently, we believe the CAD will be brought down significantly this fiscal year regardless of the growth of the outside world,” he said.
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Gold imports halt as new rules cause uncertainty
Mumbai/Singapore, July 30 In its battle to rein in a record trade deficit, the government has targeted gold, the second-biggest item in country's import bill after crude oil. The government has doubled the import duty to 8 per cent from the 4 per cent where it stood at the beginning of the year, and also requires a fifth of all gold imports to be used for export, usually in the form of jewellery. June imports fell nearly 81 per cent to 31.5 tonnes from a May record of 162 tonnes, although Finance Minister P Chidambaram said on Monday imports had risen again in July, but without giving any details. "There have been no imports since July 22 (the day of the central bank announcement) due to these restrictions," Bachhraj Bamalwa, director of trade body the All India Gems and Jewellery Trade Federation, said. Imports in July could have reached 45 to 55 tonnes, he said, implying that demand remains strong. "Premiums are increasing as there is no gold available," he added. Traders were quoting a premium of up to $45 an ounce over London spot prices on Tuesday, up from $25 to $30 in the previous session. "No one in India is able to import for now, due to the new regulations and a lack of clarity on the operational procedures," a trader in Singapore said. The confusion over the new rules and procedures could cut imports by 60 per cent, according to estimates by the Federation, just ahead of the peak wedding and festival season that usually kicks off around the middle of August. — Reuters
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NTPC clocks Rs 2,527-cr profit in Q1
New Delhi, July 30 NTPC's total income dropped to Rs 15,661.85 crore in the latest June quarter from Rs 16,165.95 crore in the same period a year ago, it said in a regulatory filing. Dr Reddy’s profit up 7% Drug maker Dr Reddy's Laboratories today said its net profit rose by over 7 per cent to Rs 361 crore for the quarter ended June 30, primarily driven by North American revenues. Net income from sales and services stood at Rs 2,845 crore during the quarter under discussion against Rs 2,541 crore, an increase of 12 per cent. RPower Q1 net flat at Rs 240 crore Reliance Power today said its consolidated net profit remained flat at Rs 240 crore in the first quarter ended June 30. The company had reported a profit of Rs 239.5 crore in the corresponding quarter of the previous financial year, Reliance Power said. Total income declined to Rs 1,206 crore in the quarter as against Rs 1,252 crore in the same period last fiscal. RInfra Q1 net flat Reliance Infrastructure today reported a marginal growth in net profit at Rs 415 crore for the quarter ended June 30, 2013. Total income of the company stood at Rs 5,452 crore as against Rs 5,383 crore in the corresponding quarter of previous year, it said. Greaves Cotton profit up Engineering company Greaves Cotton today said its net profit rose marginally to Rs 31.76 crore for the first quarter ended June 30, 2013. The firm's income from operations stood at Rs 412.28 crore for the quarter under review, as compared to Rs 412.06 crore in the year ago period. SJVN net up 8.87% SJVN Ltd has recorded a 8.87% increase in net profit during the first quarter of 2013-14 due to increase in generation in its flagship 1,500 MW Nathpa-Jhakri Hydro Power station. The net profit of the company increased to Rs 343.24 crore from Rs 315.27 crore over the corresponding quarter last fiscal. The total income increased by 7.18% from Rs 557.26 crore to Rs 597.29 crore. — PTI/TNS
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Chandigarh, July 30