Tuesday, June 2, 2009
Roll back FBT or levy it as a credit against income tax: India Inc to FM
Roll back FBT or levy it as a credit against income tax: India Inc to FM
The Financial Express, June 2, 2009, Page 1
fe Bureau, New Delhi
India Inc on Monday urged the finance minister, Pranab Mukherjee to abolish fringe benefit tax (FBT) or alternatively allow it as a credit against income tax.
The three industry chambers of commerce and industry, which met the FM as part of the pre-Budget meeting, also urged for widening the tax base.
Briefing reporters, CII president, Venu Srinivasan said that the finance minister listened to their suggestions patiently and said that the customary reaction from the government would be reflected in the Budget.
According to the charter of demands from CII, special focus should be paid on corporate taxation. It also said that for industry make some headway through difficult times an investment allowance package needs to be introduced, which would mean considerable cost savings for businesses.
CII also suggested that the depreciation rates for plant and machinery should be raised from 15% to 25%.
For individual taxation, CII recommended that the threshold limit of exemption of all individual assesses should be further increased by Rs 50,000, which would have positive impact on savings and consumption.
On its part, Harsh Pati Singhania, president, Ficci urged the finance minister to script a four-pronged strategy to push investment-led growth, stimulate demand through fiscal measures, launch a second green revolution and give a fillip to social sector reforms. Such a braod-based strategy, he said, would pave the way for bringing back the growth trajectory to 9% and lead to financial and social inclusion.
Singhania suggested that there is a need to re-introduce investment allowance, restore the depreciation rate to 25%, provide 100% depreciation for investments made through energy service companies. The chamber also said that there is a need of lowering the corporate tax rate from 30% by a few percentage points. The government should also extend tax holiday benefit for power projects beyond 2010. There should be a raise in maximum tax bracket for personal income tax.
Swati Piramal, senior vice-president, Assocham said that there is an urgent neeed to stimulate demand by reducing personal income tax rates by five percentage points and increasing the threshold limit of Rs 2 lakh. She also said that there there is an urgent need for upgrading India’s infrastructure to improve efficiency and susutain economic growth. Pirmal said that more jobs need to be created in agriculture and small scale sector.
VN Dhoot, chairman, Videocon group said that there is a need to have low tax regime and widening tax base with better compliance. Dhoot also asked the government to ask banks to reduce interest rates by 200 basis points as fast as possible.
The Financial Express, June 2, 2009, Page 1
fe Bureau, New Delhi
India Inc on Monday urged the finance minister, Pranab Mukherjee to abolish fringe benefit tax (FBT) or alternatively allow it as a credit against income tax.
The three industry chambers of commerce and industry, which met the FM as part of the pre-Budget meeting, also urged for widening the tax base.
Briefing reporters, CII president, Venu Srinivasan said that the finance minister listened to their suggestions patiently and said that the customary reaction from the government would be reflected in the Budget.
According to the charter of demands from CII, special focus should be paid on corporate taxation. It also said that for industry make some headway through difficult times an investment allowance package needs to be introduced, which would mean considerable cost savings for businesses.
CII also suggested that the depreciation rates for plant and machinery should be raised from 15% to 25%.
For individual taxation, CII recommended that the threshold limit of exemption of all individual assesses should be further increased by Rs 50,000, which would have positive impact on savings and consumption.
On its part, Harsh Pati Singhania, president, Ficci urged the finance minister to script a four-pronged strategy to push investment-led growth, stimulate demand through fiscal measures, launch a second green revolution and give a fillip to social sector reforms. Such a braod-based strategy, he said, would pave the way for bringing back the growth trajectory to 9% and lead to financial and social inclusion.
Singhania suggested that there is a need to re-introduce investment allowance, restore the depreciation rate to 25%, provide 100% depreciation for investments made through energy service companies. The chamber also said that there is a need of lowering the corporate tax rate from 30% by a few percentage points. The government should also extend tax holiday benefit for power projects beyond 2010. There should be a raise in maximum tax bracket for personal income tax.
Swati Piramal, senior vice-president, Assocham said that there is an urgent neeed to stimulate demand by reducing personal income tax rates by five percentage points and increasing the threshold limit of Rs 2 lakh. She also said that there there is an urgent need for upgrading India’s infrastructure to improve efficiency and susutain economic growth. Pirmal said that more jobs need to be created in agriculture and small scale sector.
VN Dhoot, chairman, Videocon group said that there is a need to have low tax regime and widening tax base with better compliance. Dhoot also asked the government to ask banks to reduce interest rates by 200 basis points as fast as possible.
India Inc asks for investment-led Budget
India Inc asks for investment-led Budget
Business Standard, June 2, 2009, Page 2
BS Reporters / New Delhi
Industry chambers, in a pre-Budget meeting with the Finance Minister Pranab Mukherjee, sought fiscal sops to boost corporate investments.
In their respective memorandums, the Federation of Indian Chambers of Commerce (Ficci) and the Confederation of Indian Industry (CII) asked for re-introduction of investment allowance, restoring the depreciation rate to 25 per cent and an increase in plan public expenditures, primarily in infrastructure, which would boost private investments.
“We need an investment-led Budget. Investments are needed in infrastructure. This money could be raised through disinvestment, targeted reduction of subsidies and implementation of the Administrative Reforms Commission recommendations. By these measures, we should be able to bring fiscal deficit down, so that there is money available for infrastructure,” said CII President Venu Srinivasan after the meeting.
Industry leaders who attended the meeting included L&T Chairman and MD A M Naik, Bharti Enterprises Chairman Sunil Mittal and Videocon Chairman and CEO Venugopal Dhoot.
“I suggested measures to boost infrastructure, as well as exports,” Naik said after the meeting.
Various other fiscal measures were suggested, which included reduction of corporate tax, increasing tax exemption limit for personal tax and abolishing fringe benefit tax (FBT).
“We have to increase demand in India for the normal consumer. We have to put money into the hands of ordinary citizens. Only way you can do that is by reducing personal income tax burden,” said Assocham Senior Vice President Swati Piramal.
CII did not recommend a reduction in actual corporate tax rate, but suggested removal of surcharge and cess. Ficci suggested bringing down corporate tax by a few percentage points, though it did not come up with an exact figure.
Both chambers stressed on the need to increase exemption limit for personal tax .CII suggested an increase by Rs 50,000, which would have positive impacts on savings and consumption.
CII suggested no major change in indirect taxes, apart from a percentage point decrease in central sales tax (CST) to 1 per cent.
Even as India Inc lobbied for fiscal sops in the forthcoming Budget, representatives from India’s farm sector, which accounts for 16 per cent of Gross Domestic Product, demanded pro-reform policy to boost agricultural production.
They wanted to remove restrictions on foreign direct investment for farm sector as well as commodities trading.
“Yes, some of us suggested that FDI should be allowed in agriculture. We need investment in technology and machinery to ensure that agriculture becomes internationally competitive and you cannot do it with things like bullock carts which are 2,000 years old. Indian industrialists and consumers have come of age. Today no one can exploit anyone,” P Chengal Reddy, secretary general, Consortium of Indian Farmers Association, told reporters after meeting the finance minister.
Saying market freedom both in terms of imports and exports are essential for farmers to get better prices, Sharad Joshi, a farmer leader from Maharashtra and a Rajya Sabha member, said “If we have futures market farmers will get same benefit as the industry got from stock market. This will also cure problem regarding investment in agriculture.”
Another area which the representatives focused was on investments. “If we need 4 per cent growth in agri-sector, substantial investment has to be made in areas like water management, research and development and watershed development. Otherwise, 4 per cent agricultural growth will remain a dream. Agriculture should not be just looked at in terms of farming. It has to be linked to food processing and retailing,” said Ashok Gulati, Director (Asia), International Food Policy Research Institute, a Washington-based think tank seeking working on world wide hunger elimination.
Business Standard, June 2, 2009, Page 2
BS Reporters / New Delhi
Industry chambers, in a pre-Budget meeting with the Finance Minister Pranab Mukherjee, sought fiscal sops to boost corporate investments.
In their respective memorandums, the Federation of Indian Chambers of Commerce (Ficci) and the Confederation of Indian Industry (CII) asked for re-introduction of investment allowance, restoring the depreciation rate to 25 per cent and an increase in plan public expenditures, primarily in infrastructure, which would boost private investments.
“We need an investment-led Budget. Investments are needed in infrastructure. This money could be raised through disinvestment, targeted reduction of subsidies and implementation of the Administrative Reforms Commission recommendations. By these measures, we should be able to bring fiscal deficit down, so that there is money available for infrastructure,” said CII President Venu Srinivasan after the meeting.
Industry leaders who attended the meeting included L&T Chairman and MD A M Naik, Bharti Enterprises Chairman Sunil Mittal and Videocon Chairman and CEO Venugopal Dhoot.
“I suggested measures to boost infrastructure, as well as exports,” Naik said after the meeting.
Various other fiscal measures were suggested, which included reduction of corporate tax, increasing tax exemption limit for personal tax and abolishing fringe benefit tax (FBT).
“We have to increase demand in India for the normal consumer. We have to put money into the hands of ordinary citizens. Only way you can do that is by reducing personal income tax burden,” said Assocham Senior Vice President Swati Piramal.
CII did not recommend a reduction in actual corporate tax rate, but suggested removal of surcharge and cess. Ficci suggested bringing down corporate tax by a few percentage points, though it did not come up with an exact figure.
Both chambers stressed on the need to increase exemption limit for personal tax .CII suggested an increase by Rs 50,000, which would have positive impacts on savings and consumption.
CII suggested no major change in indirect taxes, apart from a percentage point decrease in central sales tax (CST) to 1 per cent.
Even as India Inc lobbied for fiscal sops in the forthcoming Budget, representatives from India’s farm sector, which accounts for 16 per cent of Gross Domestic Product, demanded pro-reform policy to boost agricultural production.
They wanted to remove restrictions on foreign direct investment for farm sector as well as commodities trading.
“Yes, some of us suggested that FDI should be allowed in agriculture. We need investment in technology and machinery to ensure that agriculture becomes internationally competitive and you cannot do it with things like bullock carts which are 2,000 years old. Indian industrialists and consumers have come of age. Today no one can exploit anyone,” P Chengal Reddy, secretary general, Consortium of Indian Farmers Association, told reporters after meeting the finance minister.
Saying market freedom both in terms of imports and exports are essential for farmers to get better prices, Sharad Joshi, a farmer leader from Maharashtra and a Rajya Sabha member, said “If we have futures market farmers will get same benefit as the industry got from stock market. This will also cure problem regarding investment in agriculture.”
Another area which the representatives focused was on investments. “If we need 4 per cent growth in agri-sector, substantial investment has to be made in areas like water management, research and development and watershed development. Otherwise, 4 per cent agricultural growth will remain a dream. Agriculture should not be just looked at in terms of farming. It has to be linked to food processing and retailing,” said Ashok Gulati, Director (Asia), International Food Policy Research Institute, a Washington-based think tank seeking working on world wide hunger elimination.
Huda plans ombudsmen to speed up housing projects
Huda plans ombudsmen to speed up housing projects
Business Standard, June 2, 2009, Page 10
Charanjit Ahuja, Chandigarh
While everyone is anticipating sops for affordable housing in the next Budget of the UPA government, the Haryana Urban Development Authority (Huda) has initiated a number of steps to cut on delays in the approval of residential building plans. The new guidelines would come in force from June 1, 2009.
There is also a proposal to appoint an ombudsman in each urban estate to oversee the proposed system of award and penalty and to settle any dispute.
The zonal administrators have been asked to suggest a panel of two from each urban estate who are persons of repute and high integrity and are willing to voluntary work for this cause without any monetary remuneration. The zonal administrators were also directed to hold a training session at the zonal level for all the officers and officials involved in the process so as to implement the new guidelines from June 1.
Under the new guidelines, the time schedule has been fixed for taking an appropriate decision either for approval or rejection of building plans. The time schedule for hyper and high potential zones like urban estates of Gurgaon I and II, Faridabad, Sonipat, Panipat and Panchkula has been fixed as 21 working days; for medium potential like urban estates of Bahadurgarh, Hisar, Rewari and Dharuhera, 15 working days and for low potential areas including all remaining urban estates in the state 10 working days.
Officials at the estate office and XEN office who are to process and handle the building plans have been made designated officials. They would also require processing the building plans in a time bound manner. A maximum period of three days has been given to them to process the building plans in the hyper and high potential zones and a maximum of two days to each designated officer for medium potential and low potential areas.
An innovative system of reward and penalty is being worked out. Rewards would be given to the Huda officials for deciding building plans in the prescribed time limit and penalty would be paid to allottees wherever the time schedule is breached by Huda.
Henceforth, the building plan approval committee would consist of the estate officer as chairman and concerned executive engineer as its sole technical member. In those urban estates where no executive engineer is posted, the formalities would be completed by the sub-divisional engineer of the concerned urban estate.
The technical scrutiny of the building plans of residential plots would be carried out in-house. A comprehensive format has been devised that would cover all the provisions of the Huda (erection of buildings) regulations as well as the zoning plan approved for a particular area.
To cut the delay in sanctioning of the building plan, the number of signatories had been reduced in the formats.
Business Standard, June 2, 2009, Page 10
Charanjit Ahuja, Chandigarh
While everyone is anticipating sops for affordable housing in the next Budget of the UPA government, the Haryana Urban Development Authority (Huda) has initiated a number of steps to cut on delays in the approval of residential building plans. The new guidelines would come in force from June 1, 2009.
There is also a proposal to appoint an ombudsman in each urban estate to oversee the proposed system of award and penalty and to settle any dispute.
The zonal administrators have been asked to suggest a panel of two from each urban estate who are persons of repute and high integrity and are willing to voluntary work for this cause without any monetary remuneration. The zonal administrators were also directed to hold a training session at the zonal level for all the officers and officials involved in the process so as to implement the new guidelines from June 1.
Under the new guidelines, the time schedule has been fixed for taking an appropriate decision either for approval or rejection of building plans. The time schedule for hyper and high potential zones like urban estates of Gurgaon I and II, Faridabad, Sonipat, Panipat and Panchkula has been fixed as 21 working days; for medium potential like urban estates of Bahadurgarh, Hisar, Rewari and Dharuhera, 15 working days and for low potential areas including all remaining urban estates in the state 10 working days.
Officials at the estate office and XEN office who are to process and handle the building plans have been made designated officials. They would also require processing the building plans in a time bound manner. A maximum period of three days has been given to them to process the building plans in the hyper and high potential zones and a maximum of two days to each designated officer for medium potential and low potential areas.
An innovative system of reward and penalty is being worked out. Rewards would be given to the Huda officials for deciding building plans in the prescribed time limit and penalty would be paid to allottees wherever the time schedule is breached by Huda.
Henceforth, the building plan approval committee would consist of the estate officer as chairman and concerned executive engineer as its sole technical member. In those urban estates where no executive engineer is posted, the formalities would be completed by the sub-divisional engineer of the concerned urban estate.
The technical scrutiny of the building plans of residential plots would be carried out in-house. A comprehensive format has been devised that would cover all the provisions of the Huda (erection of buildings) regulations as well as the zoning plan approved for a particular area.
To cut the delay in sanctioning of the building plan, the number of signatories had been reduced in the formats.
DLF, Raheja want to surrender SEZs
DLF, Raheja want to surrender SEZs
Times of India, June 2, 2009, Page 22
Board Of Approval Will Deliberate On Denotification Proposals Today
Nauzer Bharucha TNN
Mumbai: Till last year, Special Economic Zones (SEZs) were the flavour of the season. But for some developers, the downturn in the global economy is now forcing them to surrender their SEZs despite having received formal approvals from the Centre. On Tuesday, the Board of Approval of the ministry of commerce and industry in Delhi will deliberate on half a dozen proposals by two developers — construction giant DLF and the Mumbai-based K Raheja Universal — to denotify their SEZs.
Both the developers have cited global slowdown in the IT sector as reasons for scrapping their SEZs. DLF, the country’s largest real estate company, has requested the Board of Approval to denotify four of its approved SEZs — 25 acres in Gujarat, 25 acres at Rai, Sonepat in Haryana, 25 acres in Kolkota and another 25 acres in Bhubaneswar in Orissa. Raheja Universal controlled by Suresh Raheja, the youngest of the Raheja brothers who split about two decades ago, has requested the board to denotify its 50-acre IT/ITES SEZ in Navi Mumbai and also sought part denotification of a portion of its 30 acre SEZ in the same area.
According to sources, Raheja Universal approached the board with a proposal to surrender its SEZ, citing economic recession in the IT industry. The company has been selling of its land bank for the past several months now.
In DLF’s case, the board in its meeting on Tuesday will consider if the realty major had benefitted from the duty free benefits offered to SEZs and whether it should be returned to the government. In Maharashtra, as many as 109 SEZs have received a formal goahead while another 35 have got in-principle approval by the union ministry of commerce and industry so far. Incidentally, Maharashtra has the largest number of SEZs in the country. The SEZs which have received formal approvals by the board of approvals in Delhi are cases where the developers have got complete possession and ownership of the land to be developed.
Six of the approved SEZs are located in Mumbai itself. They are Hiranandani Builders’ 31 acres proposed information technology (IT) zone at Powai, Royal Palms India’s 24 acres (IT) in the heart of Aarey Milk Colony in Goregaon (east) and another 24 acres for a gems and jewellery SEZ in the same region, Chiplun Infrastructure’s 99 acres (location not given) for a warehousing zone, Bombay Industrial Corporation’s IT SEZ on 30 acres in Mahul and Ferrani Hotels Private Ltd/Ozone Developers 69 acres for a IT zone in Malad.
Times of India, June 2, 2009, Page 22
Board Of Approval Will Deliberate On Denotification Proposals Today
Nauzer Bharucha TNN
Mumbai: Till last year, Special Economic Zones (SEZs) were the flavour of the season. But for some developers, the downturn in the global economy is now forcing them to surrender their SEZs despite having received formal approvals from the Centre. On Tuesday, the Board of Approval of the ministry of commerce and industry in Delhi will deliberate on half a dozen proposals by two developers — construction giant DLF and the Mumbai-based K Raheja Universal — to denotify their SEZs.
Both the developers have cited global slowdown in the IT sector as reasons for scrapping their SEZs. DLF, the country’s largest real estate company, has requested the Board of Approval to denotify four of its approved SEZs — 25 acres in Gujarat, 25 acres at Rai, Sonepat in Haryana, 25 acres in Kolkota and another 25 acres in Bhubaneswar in Orissa. Raheja Universal controlled by Suresh Raheja, the youngest of the Raheja brothers who split about two decades ago, has requested the board to denotify its 50-acre IT/ITES SEZ in Navi Mumbai and also sought part denotification of a portion of its 30 acre SEZ in the same area.
According to sources, Raheja Universal approached the board with a proposal to surrender its SEZ, citing economic recession in the IT industry. The company has been selling of its land bank for the past several months now.
In DLF’s case, the board in its meeting on Tuesday will consider if the realty major had benefitted from the duty free benefits offered to SEZs and whether it should be returned to the government. In Maharashtra, as many as 109 SEZs have received a formal goahead while another 35 have got in-principle approval by the union ministry of commerce and industry so far. Incidentally, Maharashtra has the largest number of SEZs in the country. The SEZs which have received formal approvals by the board of approvals in Delhi are cases where the developers have got complete possession and ownership of the land to be developed.
Six of the approved SEZs are located in Mumbai itself. They are Hiranandani Builders’ 31 acres proposed information technology (IT) zone at Powai, Royal Palms India’s 24 acres (IT) in the heart of Aarey Milk Colony in Goregaon (east) and another 24 acres for a gems and jewellery SEZ in the same region, Chiplun Infrastructure’s 99 acres (location not given) for a warehousing zone, Bombay Industrial Corporation’s IT SEZ on 30 acres in Mahul and Ferrani Hotels Private Ltd/Ozone Developers 69 acres for a IT zone in Malad.
India Inc, FM talk interest rates
India Inc, FM talk interest rates
Times of India, June 2, 2009, Page 22
TIMES NEWS NETWORK
New Delhi: High interest rate on long-term loans and difficulty in accessing credit at affordable price dominated the discussions between top industry honchos and FM Pranab Mukherjee on Monday, ahead of finalisation of the Union Budget for 2009-10.
In a pre-budget meeting with FM, industrialists demanded an investment-led Budget to bring the economy back on 8% growth path. The economy needs significant investments in infrastructure to stimulate growth, said CII president Venu srinivasan. Ficci president Harsh Pati Singhania suggested to withdraw fringe benefit tax, which does not generate much revenue.Mukherjee had invited 22 top industrialists for their views on measures required to stimulate demand in the sagging economy. Both the Ambani brothers, Mukesh and Anil, gave a slip to the meet. Other notable absentees include Ratan Tata and Assocham president Sajjan Jindal.
Those who attended the Budget deliberations included Airtel’s Sunil Bharti Mittal, Gautam Singhania of Raymond, A M Naik of L&T, V N Dhoot of Videocon and Singhania. Deviating from making the customary demands of cutting the excise and customs duties, industry captains on Monday asked the government to make large investments in infrastructure developments, which would generate demands for industrial products and help revive the economy. CII suggested abolition of all surcharges and cess.
Industry bodies suggested that actions should be taken on fiscal prudence, capacity creation, promoting investments and fuelling consumption. As the exports sectors is not performing because of global slowdown, industry captains pointed out that growth has to be achieved through domestic economy only.
CII presideent Venu Srinivasan said that the government should borrow directly from RBI to avoid pre-emption of money from market.
Times of India, June 2, 2009, Page 22
TIMES NEWS NETWORK
New Delhi: High interest rate on long-term loans and difficulty in accessing credit at affordable price dominated the discussions between top industry honchos and FM Pranab Mukherjee on Monday, ahead of finalisation of the Union Budget for 2009-10.
In a pre-budget meeting with FM, industrialists demanded an investment-led Budget to bring the economy back on 8% growth path. The economy needs significant investments in infrastructure to stimulate growth, said CII president Venu srinivasan. Ficci president Harsh Pati Singhania suggested to withdraw fringe benefit tax, which does not generate much revenue.Mukherjee had invited 22 top industrialists for their views on measures required to stimulate demand in the sagging economy. Both the Ambani brothers, Mukesh and Anil, gave a slip to the meet. Other notable absentees include Ratan Tata and Assocham president Sajjan Jindal.
Those who attended the Budget deliberations included Airtel’s Sunil Bharti Mittal, Gautam Singhania of Raymond, A M Naik of L&T, V N Dhoot of Videocon and Singhania. Deviating from making the customary demands of cutting the excise and customs duties, industry captains on Monday asked the government to make large investments in infrastructure developments, which would generate demands for industrial products and help revive the economy. CII suggested abolition of all surcharges and cess.
Industry bodies suggested that actions should be taken on fiscal prudence, capacity creation, promoting investments and fuelling consumption. As the exports sectors is not performing because of global slowdown, industry captains pointed out that growth has to be achieved through domestic economy only.
CII presideent Venu Srinivasan said that the government should borrow directly from RBI to avoid pre-emption of money from market.
Banks rule out deep rate cuts for India Inc
Banks rule out deep rate cuts for India Inc
The Economic Times, June 2, 2009, Page 1
Our Bureau MUMBAI
LEADING banks have told corporates that there can be no dramatic reduction in lending rates. While the government is nudging banks to cut interest rates, the latter have told apex industry bodies that rates cannot be lowered to the extent demanded by corporates.
In a meeting last week, the Indian Banks’ Association (IBA), an association of bank managements, spelt out its views to the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci).
“We have told corporates that lending rates can be cut by 50-100 basis points (bps) from the current level in the near to medium term,” said a bank CEO who attended the meeting. Corporates have asked for a 400-500 basis point cut in lending rates in the near future. “We reminded them that most of the loans are given at rates below the prime lending rate (PLR) of banks,” he said. Most PSU banks have pegged their PLR, which serves as the benchmark rate, at 12-12.5% while private banks’ PLR varies from 14-16%.
The meeting followed a directive from the government that industry associations and banks should meet regularly to quicken credit flow to the manufacturing sector. The next such meeting will be held after finance minister Pranab Mukherjee meets bank CEOs on June 10 to review the performance of banks. Bankers feel that the FM may ask them to lower lending rates. Several state-owned banks had cut rates in the first week of April ‘09.
The Economic Times, June 2, 2009, Page 1
Our Bureau MUMBAI
LEADING banks have told corporates that there can be no dramatic reduction in lending rates. While the government is nudging banks to cut interest rates, the latter have told apex industry bodies that rates cannot be lowered to the extent demanded by corporates.
In a meeting last week, the Indian Banks’ Association (IBA), an association of bank managements, spelt out its views to the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci).
“We have told corporates that lending rates can be cut by 50-100 basis points (bps) from the current level in the near to medium term,” said a bank CEO who attended the meeting. Corporates have asked for a 400-500 basis point cut in lending rates in the near future. “We reminded them that most of the loans are given at rates below the prime lending rate (PLR) of banks,” he said. Most PSU banks have pegged their PLR, which serves as the benchmark rate, at 12-12.5% while private banks’ PLR varies from 14-16%.
The meeting followed a directive from the government that industry associations and banks should meet regularly to quicken credit flow to the manufacturing sector. The next such meeting will be held after finance minister Pranab Mukherjee meets bank CEOs on June 10 to review the performance of banks. Bankers feel that the FM may ask them to lower lending rates. Several state-owned banks had cut rates in the first week of April ‘09.
Sensex rises to 9-month high
Sensex rises to 9-month high
The Hindu Business Line, June 2, 2009, Page 1
Our Bureau, Mumbai
The Sensex and the Nifty recorded nine-month closing highs on Monday, their fourth consecutive day of gains.
The Sensex closed at 14,840 and the Nifty at 4,529 both gaining 1.5 per cent.
There is runaway enthusiasm at the new Cabinet composition at the Centre, said a senior official with SBICAPS.
Independent investment analyst Mr. R Balakrishnan said this was the last leg of the current rally which valuations do not support.
He said he had reservations about the nature of funds inflow through the FII route: “nowhere do you see dilution of promoter stake through QIPs (qualified institutional placements) leading to a rise in stock prices.”
FIIs were net buyers of equities for Rs 280 crore and DIIs net sellers for Rs 197 crore.
Trading was highly volatile; the Sensex touched a high of 14,907 soon after market opening but dipped 352 points to an intra-day low of 14,655 in the first one and a half hours of trade.
The Hindu Business Line, June 2, 2009, Page 1
Our Bureau, Mumbai
The Sensex and the Nifty recorded nine-month closing highs on Monday, their fourth consecutive day of gains.
The Sensex closed at 14,840 and the Nifty at 4,529 both gaining 1.5 per cent.
There is runaway enthusiasm at the new Cabinet composition at the Centre, said a senior official with SBICAPS.
Independent investment analyst Mr. R Balakrishnan said this was the last leg of the current rally which valuations do not support.
He said he had reservations about the nature of funds inflow through the FII route: “nowhere do you see dilution of promoter stake through QIPs (qualified institutional placements) leading to a rise in stock prices.”
FIIs were net buyers of equities for Rs 280 crore and DIIs net sellers for Rs 197 crore.
Trading was highly volatile; the Sensex touched a high of 14,907 soon after market opening but dipped 352 points to an intra-day low of 14,655 in the first one and a half hours of trade.
GM files for bankruptcy, India ops safe
GM files for bankruptcy, India ops safe
The Economic Times, June 2, 2009, Page 1
Giant To Be Pale Shadow Of Itself
GENERAL Motors, the lumbering, venerable and iconic American carmaker, filed for bankruptcy on Monday after years of struggling with huge labour costs, consumer apathy to fuel-guzzling cars and SUVs, and a determined bid by Toyota and Honda to succeed with better products.
The widely anticipated bankruptcy means that GM, once regarded as a symbol of American might and dynamism, will now be owned by the government. It will spend the next 60-90 days reorganising into a much smaller entity, and close or liquidate 11 factories and idle three plants.
In India, GM’s subsidiary will continue to operate and run its plants. Its president & MD Karl Slym told Nandini Sen Gupta & Abhishek Gupta of ET NOW that the Indian operations will not be affected and that consumers have nothing to fear. Excerpts from an interview:
GM India is saying it is business as usual but sales have been falling on global news. Sales in India were down 11.5% in February, 26% in March and 57% in April. What are you doing about that?
In 2008, while the industry shrank 2%, we grew at 10%. While the economy was falling, we were still able to buck the trend and grow. In the early part of this year, we were for sure affected by some of the news from North America, but we have also seen sales growth month-on-month in India.
There have been some misconceptions about what’s happening with GM in the US. But Monday’s final filing is a great step for us in India because it’s been made very clear that (the bankruptcy filing) is for the US operations only, and it has also been stated that GM India is not a part of the bankruptcy. Chevrolet will likely be one of the brands to survive post restructuring. But how much focus will India get?
As far as Chevrolet is concerned, any kind of concern should disappear today. The Asia-Pacific region is extremely key as far as GM is concerned and will be a part of any serious portfolio of the future. Let’s look at India—$1 billion spent in the last couple of years to put the infrastructure in place to grow not only in the short term but also in the medium and long term. Chevrolet in India is a part of the new re-invented GM and that’s what we have here. This really is the point when all consumers either past, present or future can feel very confident about the situation that’s going to prevail here in India.
What about Opel customers in India now that it has been sold to Magna…will you support them?
As far as Opel is concerned we procure parts and accessories that are not locally made. We still have the ability to do that through the restructured Opel Vauxhall scenario and therefore our Opel customers and dealers (who) service Opel vehicles have nothing to be concerned about.
Also, the new GM is expected to own a piece of Opel and will likely maintain product development ties with it. Either way there is a clear commitment to keep these businesses (Saab, Opel, Saturn, Hummer) as ongoing concerns. So, no one needs to be worried about Opel or question our commitment to support Opel customers in India.
What about stakeholders like vendors, parts suppliers, employees—will they be paid on time? Are their jobs secure?
Yeah absolutely. Of course we have had plenty of time and opportunity to communicate this to the stakeholders. There is no effect on our employees as far as their payments, salaries and job security in India are concerned. The payments to our vendors have always been on time and will continue to be on time. There is no interruption in our business. I am confident that Monday’s announcement is going to reinforce all those commitments that have been given to our stakeholders over the past. GM in India is here to stay.
What about working capital, etc? Will you, like GM Korea, raise your own money locally?
Of course. There are various methods for us to be able to fund additional investments in the future. I think the most important for us is that we already have 2.25 lakh units capacity versus the 65,000-70,000 units we sold in 2008. So we already have capacity in India for near and mediumterm plans. As far as new models are concerned, the other absorber of our capital, this month saw the launch of the LPG version of our Spark mini car and just a couple of months later we will bring the Chevrolet Cruze to India. By the end of the year a new mini car will also be launched. All these investments are complete and we are already producing those trial vehicles in our plants. These will hit the roads very shortly.
What about your vendors who will lose out on the global sourcing business?
Those who supply to our local operations continue as usual. Those who supply to our global and local businesses are facing the impact of the economic downturn. But with the filing, all stakeholders should be more assured as they see the US government backing GM. Now the direction is clear and there’s no confusion.
Lastly, are you guaranteeing full warranty, service and spares support to your customers in India?
Absolutely. It’s business as usual for us.
The Economic Times, June 2, 2009, Page 1
Giant To Be Pale Shadow Of Itself
GENERAL Motors, the lumbering, venerable and iconic American carmaker, filed for bankruptcy on Monday after years of struggling with huge labour costs, consumer apathy to fuel-guzzling cars and SUVs, and a determined bid by Toyota and Honda to succeed with better products.
The widely anticipated bankruptcy means that GM, once regarded as a symbol of American might and dynamism, will now be owned by the government. It will spend the next 60-90 days reorganising into a much smaller entity, and close or liquidate 11 factories and idle three plants.
In India, GM’s subsidiary will continue to operate and run its plants. Its president & MD Karl Slym told Nandini Sen Gupta & Abhishek Gupta of ET NOW that the Indian operations will not be affected and that consumers have nothing to fear. Excerpts from an interview:
GM India is saying it is business as usual but sales have been falling on global news. Sales in India were down 11.5% in February, 26% in March and 57% in April. What are you doing about that?
In 2008, while the industry shrank 2%, we grew at 10%. While the economy was falling, we were still able to buck the trend and grow. In the early part of this year, we were for sure affected by some of the news from North America, but we have also seen sales growth month-on-month in India.
There have been some misconceptions about what’s happening with GM in the US. But Monday’s final filing is a great step for us in India because it’s been made very clear that (the bankruptcy filing) is for the US operations only, and it has also been stated that GM India is not a part of the bankruptcy. Chevrolet will likely be one of the brands to survive post restructuring. But how much focus will India get?
As far as Chevrolet is concerned, any kind of concern should disappear today. The Asia-Pacific region is extremely key as far as GM is concerned and will be a part of any serious portfolio of the future. Let’s look at India—$1 billion spent in the last couple of years to put the infrastructure in place to grow not only in the short term but also in the medium and long term. Chevrolet in India is a part of the new re-invented GM and that’s what we have here. This really is the point when all consumers either past, present or future can feel very confident about the situation that’s going to prevail here in India.
What about Opel customers in India now that it has been sold to Magna…will you support them?
As far as Opel is concerned we procure parts and accessories that are not locally made. We still have the ability to do that through the restructured Opel Vauxhall scenario and therefore our Opel customers and dealers (who) service Opel vehicles have nothing to be concerned about.
Also, the new GM is expected to own a piece of Opel and will likely maintain product development ties with it. Either way there is a clear commitment to keep these businesses (Saab, Opel, Saturn, Hummer) as ongoing concerns. So, no one needs to be worried about Opel or question our commitment to support Opel customers in India.
What about stakeholders like vendors, parts suppliers, employees—will they be paid on time? Are their jobs secure?
Yeah absolutely. Of course we have had plenty of time and opportunity to communicate this to the stakeholders. There is no effect on our employees as far as their payments, salaries and job security in India are concerned. The payments to our vendors have always been on time and will continue to be on time. There is no interruption in our business. I am confident that Monday’s announcement is going to reinforce all those commitments that have been given to our stakeholders over the past. GM in India is here to stay.
What about working capital, etc? Will you, like GM Korea, raise your own money locally?
Of course. There are various methods for us to be able to fund additional investments in the future. I think the most important for us is that we already have 2.25 lakh units capacity versus the 65,000-70,000 units we sold in 2008. So we already have capacity in India for near and mediumterm plans. As far as new models are concerned, the other absorber of our capital, this month saw the launch of the LPG version of our Spark mini car and just a couple of months later we will bring the Chevrolet Cruze to India. By the end of the year a new mini car will also be launched. All these investments are complete and we are already producing those trial vehicles in our plants. These will hit the roads very shortly.
What about your vendors who will lose out on the global sourcing business?
Those who supply to our local operations continue as usual. Those who supply to our global and local businesses are facing the impact of the economic downturn. But with the filing, all stakeholders should be more assured as they see the US government backing GM. Now the direction is clear and there’s no confusion.
Lastly, are you guaranteeing full warranty, service and spares support to your customers in India?
Absolutely. It’s business as usual for us.
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