B U S I N E S S

Industrial production grows to 19-month high of 4.7% in May
New Delhi, July 11
Though industrial production hit a 19-month high of 4.7% in May, analysts have cautioned on the sustainability of the trend given the low base effect and poor monsoons. Industrial growth was better due to improved performance of manufacturing, mining and power sectors and higher output of capital goods.

Fiscal targets tough to achieve: Rating agencies
New Delhi, July 11
While the Union Budget has taken steps to revive growth and investments, analysts say the fiscal deficit target and divestment target appear to be ambitious. India Ratings says the Budget attempts to revive economic growth under prevailing macroeconomic constraints. The government has given a fillip to household savings by raising tax exemption limits. It has also announced a slew of measures to push investments.

Infosys’ Q1 profit rises 21.6%; attrition rate hits record high
Bangalore, July 11
SD Shibulal, Infosys CEO-cum-managing director, who will bid goodbye to the company on July 31, today said he was leaving Infosys in a healthy state. “Infosys is today stronger than before. A strong foundation has been laid for it to climb greater heights”, he said. Shibulal, who is among the co-founders of Infosys, was talking to media on the sidelines of announcement of company’s results for the first quarter of 2014-15.

Sensex logs worst weekly drop since Dec 2011
Mumbai, July 11
The benchmark Sensex today frittered away early gains and tanked 348 points to log its worst weekly drop since December 2011 on disappointment over Narendra Modi government’s maiden Budget and debt concerns in Portugal.

Boeing, Emirates finalise $56-bn deal for 150 planes
Dubai, July 11
Boeing and Emirates Airline have finalised an order for 150 777Xs airplanes for $56 billion at list prices. The order — a combination of 115 777-9Xs and 35 777-8Xs — also includes purchase rights for an additional 50 airplanes that, if exercised, could increase the deal value to approximately $75 billion at list prices.

Jack Yang (R), president of HTC South Asia, and Chia-Lin Chang, president of global sales display HTC Desire 616 dual-sim smartphone at its launch in New Delhi on Friday. It is priced at Rs 17,200. Tribune photo: Manas Ranjan Bhui

Air India joins Star Alliance
New Delhi, July 11
National carrier Air India today formally became the 27th member of Star Alliance, opening up its domestic network in the fifth largest aviation market to the global airlines grouping’s passengers the world over. Air India would add about 400 daily flights and over 40 new destinations in India to the 27-member Alliance network of over 18,500 daily flights to 1,316 airports in 195 countries. — PTI

SpiceJet adds new flight to Kathmandu
Mumbai, July 11
SpiceJet today said it will launch a flight service from Kolkata to Kathmandu, connecting West Bengal’s tourist hotspot Bagdogra, from next month. The low-cost airline has offered an introductory promotional fare of Rs 99, excluding taxes for Bagdogra-Kathmandu segment of the journey, for the new flight which is scheduled to commence operations from August 13, SpiceJet said. — PTI

Industrial production grows to 19-month high of
4.7% in May
Sanjeev Sharma
Tribune News Service

New Delhi, July 11
Though industrial production hit a 19-month high of 4.7% in May, analysts have cautioned on the sustainability of the trend given the low base effect and poor monsoons. Industrial growth was better due to improved performance of manufacturing, mining and power sectors and higher output of capital goods.

The output, as measured by the Index of Industrial Production (IIP), had contracted by 2.5% in the same month of last year. The IIP's previous high was recorded in October 2012 at 8.4%. For April-May, the output has grown by 9.3%, compared to the contraction of 2.1% in the first two months of 2013-14.

Aditi Nayar, senior economist, ICRA, said the improved merchandise trade contributed to the encouraging pickup in the growth of the IIP to a 19-month high 4.7% in May 2014. However, some caution is warranted with regards to the sustainability of this uptick, which came on the back of a benign base effect with a 2.5% contraction in industrial output in May 2013.

Nayar said although sentiments have improved substantially post the strong verdict in the Parliamentary elections, the unfavourable monsoon rainfall so far may cast a cloud on consumer confidence, through channels such as low agricultural output and income growth in rural areas and high food inflation in urban areas.

Sidharth Birla, president, FICCI, said while it is reassuring to see some pick-up in the growth of manufacturing in May but it needs to be seen in the context of negative base.

"The encouraging sign is the broad-based growth as 16 out of 22 sectors have shown positive growth in manufacturing", said Birla.

As the growth is subdued in intermediate sector and capital goods growth also comes on a negative base, the manufacturing sector may take some more time to recover, he said.

Commenting on the IIP figures released for May, Chandrajit Banerjee, director-general, CII, said the rise in industrial production for the second month in a row provides a glimmer of hope that the economy could be bottomed out and recovery could be on the anvil.

Going forward, CII anticipates a further rebound in industrial production as the reform-oriented and forward looking Budget would boost business confidence leading to the turnaround of the investment cycle.

Fiscal targets tough to achieve: Rating agencies
Sanjeev Sharma
Tribune News Service

New Delhi, July 11
While the Union Budget has taken steps to revive growth and investments, analysts say the fiscal deficit target and divestment target appear to be ambitious. India Ratings says the Budget attempts to revive economic growth under prevailing macroeconomic constraints. The government has given a fillip to household savings by raising tax exemption limits. It has also announced a slew of measures to push investments.

The sanctity of 4.1% fiscal deficit hinges on the government achieving targets like revenue mop-up and investment. However, the present conditions point towards a slippage on this front, it said.

Disinvestment targets for financial year 2015 are the highest till now and appear to be optimistic. India Ratings says this is not the right time to undertake disinvestment.

Crisil says the fiscal target is steep and will be hard to achieve. The government is betting on a sharp increase in revenues in a slow growth year, especially in indirect taxes and disinvestment proceeds — Rs 58,400 crore to be raised in the nine months remaining this fiscal — while showing little progress on subsidy reduction.

It adds that measures announced in the Budget to raise agriculture output and productivity, improving irrigation and expanding the food processing industry will help lower persistently high food inflation in the medium term.

It adds that the tax breaks on income tax and increased subvention on home loan interest is expected to support volume growth for consumer sectors such as FMCG, consumer durables, two-wheelers and housing.

Kotak Institutional Equities said the government adopted a safe approach in its first Budget and did not attempt anything bold or dramatic. It laid out a fiscal consolidation path with focus on GST implementation and reduction in subsidies.

It said the Budget had a little bit of everything given resource and time constraints and the government focused on policy reforms in areas such as taxation, implementation of GST, manufacturing with an increase in FDI in defence, railways and additional tax sops and housing (several benefits to affordable housing, in particular).

Infosys’ Q1 profit rises 21.6%; attrition rate hits record high
Shubhadeep Choudhury
Tribune News Service

Bangalore, July 11
SD Shibulal, Infosys CEO-cum-managing director, who will bid goodbye to the company on July 31, today said he was leaving Infosys in a healthy state. “Infosys is today stronger than before. A strong foundation has been laid for it to climb greater heights”, he said. Shibulal, who is among the co-founders of Infosys, was talking to media on the sidelines of announcement of company’s results for the first quarter of 2014-15.

It reported a net profit of Rs 2,866 crore for the quarter, registering 21.6% year-on-year (YoY) and 3.5% sequential growth. At the BSE stock of Infosys, after surging over 4% in morning trade, closed 1% higher at Rs 3,325.80.

Shibulal, who had taken over as the CEO in August, 2011, however, admitted that company’s performance in the recent time “had not been up to our expectations”. He held two sets of problems responsible for the lacklustre performance by the company.

The first set of problems, according to Shibulal, was “Infosys specific”. These included lawsuit filed against Infosys by an employee in the USA, the company not having applied for enough US visas, etc. External problems like the global slowdown had also impacted the growth trajectory of the company, he said.

The outgoing CEO added that “all these challenges” had been left behind by Infosys.

On the high attrition rate in the company — 10,627 out of the total 11,506 employees recruited during the quarter having already left Infosys – Shibulal said the exodus was not linked to salary offered to employees. He said to arrest attrition, steps had been taken to meet the aspiration of the employees.

Citing that 94 per cent of the revenue of Infosys was earned from providing IT services, Shibulal said Infosys would in future diversify more into developing “products and platforms” while not losing the focus on the services business.

Sensex logs worst weekly drop since Dec 2011
Plunges 348 points to close at 25,024 points

Boeing, Emirates finalise $56-bn deal for 150 planes

Dubai, July 11
Boeing and Emirates Airline have finalised an order for 150 777Xs airplanes for $56 billion at list prices. The order — a combination of 115 777-9Xs and 35 777-8Xs — also includes purchase rights for an additional 50 airplanes that, if exercised, could increase the deal value to approximately $75 billion at list prices.

“With the order for 150 777Xs, Emirates now has 208 Boeing 777s pending delivery, creating and securing jobs across the supply chain,” said Emirates president Sir Tim Clark.

Design of the 777X is underway and production is set to begin in 2017, with first delivery targeted for 2020.

“Today Emirates operates more than one in every 10 Boeing 777s aircraft built. We fly 138 of these efficient planes across the globe spanning the USA and Latin America in the West, to New Zealand and Japan in the East,” Clark said. — PTI