Tuesday, March 3, 2009
Dow drops below 7,000
Dow drops below 7,000
Business Standard, March 3, 2009, page 1
Business Standard, March 3, 2009, page 1
The Dow Jones Industrial average was trading below 7,000 points for the first time since 1997 as investors feared that the financial crisis was deepening after AIGs $61.7 billion Q4 loss.
AIG announces US record in quarterly loss, gets more aid
AIG announces US record in quarterly loss, gets more aid
HT Business, March 3, 2009, Page 23
Chariotte, North Carolina: America can International Group Inc (AIG), once the world’s largest insurer, said on Monday that it lost $61.7 billion in the Oct-Dec quarter; the biggest quarterly loss in US corporate history, amid continued financial market turmoil. The results come as the US government announced a restructuring of a bailout plan for the troubled insurer, extending $30 billion in additional aid to the company. New York-based AIG lost $5.3 billion in the quarter a year ago.
HT Business, March 3, 2009, Page 23
Chariotte, North Carolina: America can International Group Inc (AIG), once the world’s largest insurer, said on Monday that it lost $61.7 billion in the Oct-Dec quarter; the biggest quarterly loss in US corporate history, amid continued financial market turmoil. The results come as the US government announced a restructuring of a bailout plan for the troubled insurer, extending $30 billion in additional aid to the company. New York-based AIG lost $5.3 billion in the quarter a year ago.
Realty developers delay projects as vacancy levels breach 10%
Realty developers delay projects as vacancy levels breach 10%
Business Standard, March 3, 2009, Page 6
BS Reporter / Mumbai
Property developers like DLF, Omaxe, Indiabulls and a few others delayed their office projects in Delhi and Mumbai — the two key office markets in the country — as companies, IT firms and financial institutions slowed their expansion due to the economic slowdown.
Vacancy levels in the office space have gone up five times in Delhi and Mumbai markets and crossed 10 per cent levels in cities like Hyderabad in the past one year due to the slowing economic growth, according to a report released by property consultancy firm Jones Lang LaSalle Meghraj (JLLM).
According to JLLM estimates, of the total 1.5 million sq ft of space estimated to be completed in the main business hub of Delhi in 2008, work on only 0.5 million sq ft was completed. Mumbai, which was expected to add 10 million sq ft in 2008, could complete only on 4.5 million sq ft, JLLM said.
VACANCY LEVELS SHOOT UP
City (prime biz areas) Q4 '07 Q4 '08
Delhi 2.2 % 5.3%
Mumbai 1.1% 5.0%
Bangalore 0.5% 1.5%
Hyderabad 5.00% 10.6%
“Companies are under tremendous pressure to cut costs and operate in the most efficient way. Occupiers are currently implementing all means of cost cutting, like reducing headcount, consolidating the number of branches/offices and moving out from high-cost locations to low-cost ones. All these efforts, aimed at cost-effective operations, are resulting in restrained demand for office space,” JLLM said.
Vacancy levels in the office hub of Delhi went up to 5.3 per cent in December quarter of 2008, against 2.2 per cent in the corresponding quarter last year. Mumbai, on the other hand, has seen vacancy levels of 5 per cent in fourth quarter of 2008, against 1.1 per cent in Q4 of 2007. Bangalore saw vacancy levels of 1.5 per cent during the period against 0.5 per cent in the corresponding period the previous year.
DLF has halted construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction. In the office space category, the developer has stalled construction on nearly 12 million sq ft of the 36 million sq ft planned, the company said recently.
The fact that companies, information technology and financial services firms are booking less office space is evident from the number of net absorption against the total completion. Mumbai saw a net absorption of 3.9 million sq ft of space, against the completion of 4.4 million sq ft in 2008, which means the 11 per cent of completed space was vacant. The net absorption in Delhi was nil.
JLLM expects projects to be delayed due to massive supply and less demand from companies. “Considering the massive supply in the pipeline and decreasing demand from occupiers, developers will face a tough time in closing pre-commitment deals in under-construction projects. This demand-supply mismatch will lead to delay in the completion of many projects, it said.
About 7 million sq ft of space is expected to be completed in 2009 in Mumbai.
Business Standard, March 3, 2009, Page 6
BS Reporter / Mumbai
Property developers like DLF, Omaxe, Indiabulls and a few others delayed their office projects in Delhi and Mumbai — the two key office markets in the country — as companies, IT firms and financial institutions slowed their expansion due to the economic slowdown.
Vacancy levels in the office space have gone up five times in Delhi and Mumbai markets and crossed 10 per cent levels in cities like Hyderabad in the past one year due to the slowing economic growth, according to a report released by property consultancy firm Jones Lang LaSalle Meghraj (JLLM).
According to JLLM estimates, of the total 1.5 million sq ft of space estimated to be completed in the main business hub of Delhi in 2008, work on only 0.5 million sq ft was completed. Mumbai, which was expected to add 10 million sq ft in 2008, could complete only on 4.5 million sq ft, JLLM said.
VACANCY LEVELS SHOOT UP
City (prime biz areas) Q4 '07 Q4 '08
Delhi 2.2 % 5.3%
Mumbai 1.1% 5.0%
Bangalore 0.5% 1.5%
Hyderabad 5.00% 10.6%
“Companies are under tremendous pressure to cut costs and operate in the most efficient way. Occupiers are currently implementing all means of cost cutting, like reducing headcount, consolidating the number of branches/offices and moving out from high-cost locations to low-cost ones. All these efforts, aimed at cost-effective operations, are resulting in restrained demand for office space,” JLLM said.
Vacancy levels in the office hub of Delhi went up to 5.3 per cent in December quarter of 2008, against 2.2 per cent in the corresponding quarter last year. Mumbai, on the other hand, has seen vacancy levels of 5 per cent in fourth quarter of 2008, against 1.1 per cent in Q4 of 2007. Bangalore saw vacancy levels of 1.5 per cent during the period against 0.5 per cent in the corresponding period the previous year.
DLF has halted construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction. In the office space category, the developer has stalled construction on nearly 12 million sq ft of the 36 million sq ft planned, the company said recently.
The fact that companies, information technology and financial services firms are booking less office space is evident from the number of net absorption against the total completion. Mumbai saw a net absorption of 3.9 million sq ft of space, against the completion of 4.4 million sq ft in 2008, which means the 11 per cent of completed space was vacant. The net absorption in Delhi was nil.
JLLM expects projects to be delayed due to massive supply and less demand from companies. “Considering the massive supply in the pipeline and decreasing demand from occupiers, developers will face a tough time in closing pre-commitment deals in under-construction projects. This demand-supply mismatch will lead to delay in the completion of many projects, it said.
About 7 million sq ft of space is expected to be completed in 2009 in Mumbai.
Rupee touches a record low of 51.90, could slip further
Rupee touches a record low of 51.90, could slip further
The Financial Express, March 3, 2009, Page 1
fe Bureau, Mumbai
India’s largest bank, State Bank of India, on Monday made it more attractive for non-residents to park their dollars in India as the rupee fell to an all-time low of 51.90/92 against the dollar.
The rupee fell as a slump in key economic data, including a five-year low third quarter growth rate, and an arbitrage with offshore derivatives pressured the currency. The rupee had closed at 51.10/12 on Friday. Dealers said despite the Reserve Bank’s intervention, the rupee saw a massive fall against the dollar.
Foreign institutional investors have sold $1.7 billion of Indian shares in the first two months of the year, after selling more than $13 billion last year when the rupee fell more than 19%. The country’s foreign exchange reserves fell $165 million to $249.5 billion in the week ended Feb 20, RBI said in its weekly statistical statement on Friday. The forex reserves have eroded by over $50 billion in the recent past.
Dealers were divided on how the rupee would move now. “With falling stocks, worsening economic data and heavy arbitrage between the onshore and the offshore market, there has been a heavy depreciation in the rupee. However, we think rupee may bounce back to 49.50 levels, against the dollar,” noted NS Venkatesh, MD&CEO with IDBI Gilts. But Barclays Capital said in a report that economic slowdown and a fiscal deficit would push the Indian currency to 56 against the dollar within the next three months.
The short-term outlook for the rupee is also down. The one-month offshore non-deliverable forward contract was trading at 52.28/38, weaker than the spot rate. This, in turn, created an arbitrage opportunity where banks bought dollars in the domestic market and sold offshore, in a bid to make a profit from the price differential. Commtrendz Research in a report said the fact that one-month offshore non-deliverable forward contracts were quoting weaker than the onshore spot rate indicated further weakness for rupee in the near term.
In addition, with the fall in the equity markets leading to a fall in continuous outflows and the economic data showing a slump, importers are buying dollars.
However, bond prices gained after RBI announced a Rs 6,000-crore buyback of government securities on March 5. This was higher than what the markets expected.
Cement prices hiked by Rs 6 – 10 per bag
Cement prices hiked by Rs 6 – 10 per bag
The Financial Express, March 3, 2009, Page 1
Demand supply forces seem to have nullified the impact of the recent excise cut on cement, as cement prices in the non-trade segment have gone up by Rs 6 – 10 per bag from Monday.
The Financial Express, March 3, 2009, Page 1
Demand supply forces seem to have nullified the impact of the recent excise cut on cement, as cement prices in the non-trade segment have gone up by Rs 6 – 10 per bag from Monday.
Excise cut fails to stem increase in cement prices
Excise cut fails to stem increase in cement prices
The Financial Express, March 3, 2009, Page 3
Smita Joshi Saha, Mumbai
The demand-supply forces seem to have nullified the impact of the recent excise cut on cement announced by the government, as cement prices in the non-trade segment have increased from Monday by Rs 6-10 per bag, say cement dealers in the western region.
It is also to be noted that after a price hike of Rs 4-5 per 50 kg bag in the first week of February 2009, there was a second round of price hike of about Rs 3 per bag by cement manufacturers in the retail segment in the third week of February.
Cement dealers whom FE contacted have confirmed the price hike in both trade and non-trade segment. However, cement manufacturers do not seem to agree with this.
Binani Cement MD Vinod Juneja told FE, “We have so far not increased the prices again, but we are considering the price increase after taking into account the market feedback.” Similarly J Datta Gupta, chief commercial officer, ACC Ltd said, “We have not increased our bulk cement price anywhere in India as on date. We have passed on the excise relief of Rs 60 /MT to our bulk consumers in Mumbai where we have the majority of bulk sales. It is not possible to predict the future price movement of cement, as cement is a commodity and subjected to price changes based on the demand-supply mismatch,” he adds.
With the aim to give relief to the industry which is reeling under impact of the slowdown, the government on February 24 announced an excise duty cut on bulk cement from 10% to 8%, after which cement majors like ACC Ltd and Ambuja cement said there is a likely impact of Rs 2 to Rs 3 per bag.
If dealers are to be believed, cement prices have been increased twice in the month of February. “We have been told to increase prices by Rs 3 per bag in the last week by all cement manufacturers. Now they have increased the prices of non-trade segment. However, the shortage in supply still prevails due to non-availability of sufficient railway rakes,” said a Mumbai-based dealer on condition of anonymity.
Meanwhile, cement majors have reported excellent growth in the cement despatches for the month of February 2009 citing good demand from the infrastructure sector. Ambuja Cements’ despatches for February grew 11.26% to 1.64 million tonne from 1.48 million tonne in the corresponding period last year. ACC Ltd also reported a growth of 3.55% in its despatches for February to 1.75 million tonne from 1.69 million tonne in February 2008. Aditya Birla Group’s cement despatches in February 2009 were up by 10.08% at 2.91 million tonne over February 2008.
‘Family-run biz better placed to brave downturn’
‘Family-run biz better placed to brave downturn’
The Financial Express, Corporates & Markets, March 3, 2009, Page I
fe Bureau, New Delhi
Family-run businesses are better geared to withstand the current phase of economic downturn, according to a Barclays Wealth-Economist Intelligence Unit report released on Monday.
Around 90% of the 2,229 respondents from family-run businesses, based within India and overseas in the survey said that they had no plans to either sell or exit their businesses in future, while 67% of the respondents considered ensuring financial security for dependents as an important motivation to create business.
These business families have never thought of selling their business in the past as well. The family business members in Asia Pacific (4%) were least likely to consider selling as compared to 13% in Europe. The intense emotional attachment resulting in focus on long-term survival (contrary to the goal of amassing wealth in short period) and sustenance would keep these families afloat through the present rough patch. “These findings reflect strong family values amongst Asians, specially Indians who perceive their business as an asset to be passed down to the next generation rather than just a source of personal wealth,” said Satya Bansal, chief executive, Barclays India.
Only around 30% of Indian respondents cited enjoyment of money as one of the primary motivation for creating and sustaining businesses as 43% of respondents in Europe and 48% in the USA, added Bansal. While the report estimated that family-owned companies account for 70% to 90% of the global GDP, Bansal said, India is no exception to this general rule. “What we can safely infer is that over 50% of the domestic GDP can be accounted for by family-run businesses,” he estimated although the report didn’t make India specific estimates for the same. The survey studied what family business members deemed the most important advantages of the family business model. A strong support network from family members (48%) was seen as the most important plus point followed by shared values and ethos (39%), ability to think long-term (38%) and the ability to make decisions quickly (37%). Shared values make a particularly high impact on the direction and efficacy of a family business, which in turn influence shared objectives. According to the survey, clear and shared objectives are essential for the family business, and were identified as a key factor that attributed to the success of the family business model by 44% of respondents.
Among the most daunting challenges that such business face, the report counts the lack of planning succession before the need arises. “Business families shy away from planning on succession issues for a variety of psychological, social and other factors. More often than not, succession in business families is not by design but is thrust upon. This trend is more accentuated in Indian case studies, where the families running business demonstrate tremendous hesitation in broaching the topic and determining successors before the need arises,” said Bansal. Out of 2,229 respondents surveyed globally, 850 are from Asia-Pacific, out of which 197 are Indians and out of which 155 are Indian based out in India. The projection of success of family-run business through the downturn has been made despite the report factoring in family feuds, nepotism that usually afflict family-run business and slowing down efficiency of such business model.
The Financial Express, Corporates & Markets, March 3, 2009, Page I
fe Bureau, New Delhi
Family-run businesses are better geared to withstand the current phase of economic downturn, according to a Barclays Wealth-Economist Intelligence Unit report released on Monday.
Around 90% of the 2,229 respondents from family-run businesses, based within India and overseas in the survey said that they had no plans to either sell or exit their businesses in future, while 67% of the respondents considered ensuring financial security for dependents as an important motivation to create business.
These business families have never thought of selling their business in the past as well. The family business members in Asia Pacific (4%) were least likely to consider selling as compared to 13% in Europe. The intense emotional attachment resulting in focus on long-term survival (contrary to the goal of amassing wealth in short period) and sustenance would keep these families afloat through the present rough patch. “These findings reflect strong family values amongst Asians, specially Indians who perceive their business as an asset to be passed down to the next generation rather than just a source of personal wealth,” said Satya Bansal, chief executive, Barclays India.
Only around 30% of Indian respondents cited enjoyment of money as one of the primary motivation for creating and sustaining businesses as 43% of respondents in Europe and 48% in the USA, added Bansal. While the report estimated that family-owned companies account for 70% to 90% of the global GDP, Bansal said, India is no exception to this general rule. “What we can safely infer is that over 50% of the domestic GDP can be accounted for by family-run businesses,” he estimated although the report didn’t make India specific estimates for the same. The survey studied what family business members deemed the most important advantages of the family business model. A strong support network from family members (48%) was seen as the most important plus point followed by shared values and ethos (39%), ability to think long-term (38%) and the ability to make decisions quickly (37%). Shared values make a particularly high impact on the direction and efficacy of a family business, which in turn influence shared objectives. According to the survey, clear and shared objectives are essential for the family business, and were identified as a key factor that attributed to the success of the family business model by 44% of respondents.
Among the most daunting challenges that such business face, the report counts the lack of planning succession before the need arises. “Business families shy away from planning on succession issues for a variety of psychological, social and other factors. More often than not, succession in business families is not by design but is thrust upon. This trend is more accentuated in Indian case studies, where the families running business demonstrate tremendous hesitation in broaching the topic and determining successors before the need arises,” said Bansal. Out of 2,229 respondents surveyed globally, 850 are from Asia-Pacific, out of which 197 are Indians and out of which 155 are Indian based out in India. The projection of success of family-run business through the downturn has been made despite the report factoring in family feuds, nepotism that usually afflict family-run business and slowing down efficiency of such business model.
Indian economy to take a year to recover: Moody's
Indian economy to take a year to recover: Moody's
Financial Express, March 3, 2009, Page 2
Press Trust of India / New Delhi
The year 2009 is set to be more difficult for the Indian economy and despite the government's stimulus packages, it would take at least a year before it starts recovering, economists at Moody's has said.
"I don't think the stimulus is sufficient to start a recovery. The most it can do is to minimise the magnitude of a further slowdown... India will most likely start to recover in the March quarter (2010)," Moody's economy.Com economist Sherman Chan told PTI from Sydney.
She added this year will be more difficult than last year. "We probably won't see a solid rebound until early 2010. The US needs to recover first. Then global economic activity will begin to pick up," Chan added.
Financial Express, March 3, 2009, Page 2
Press Trust of India / New Delhi
The year 2009 is set to be more difficult for the Indian economy and despite the government's stimulus packages, it would take at least a year before it starts recovering, economists at Moody's has said.
"I don't think the stimulus is sufficient to start a recovery. The most it can do is to minimise the magnitude of a further slowdown... India will most likely start to recover in the March quarter (2010)," Moody's economy.Com economist Sherman Chan told PTI from Sydney.
She added this year will be more difficult than last year. "We probably won't see a solid rebound until early 2010. The US needs to recover first. Then global economic activity will begin to pick up," Chan added.
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