Friday, June 5, 2009
Credit growth drops to 15%, signals rate cut by banks
Credit growth drops to 15%, signals rate cut by banks
The Financial Express, June 5, 2009, Section II
fe Bureau, Mumbai
Indicating the continuation of slowdown in the economy, bank loans after remaining stagnant in the recent past have dropped Rs 16,306 crore for the two weeks ended May 22, 2009, thereby taking outstanding advances to Rs 27,35,750 crore.
According to the data released by the Reserve Bank of India (RBI) on Thursday, bank credit has further dropped to 15.86%, or Rs 3, 74,544 crore on year-on-year basis through 22 May. At the same time, deposits have stayed almost flat at 22.57%, or Rs 7, 30,565 crore, in the same period to Rs 39, 67,995 crore. The credit growth is way below the central bank’s projection of 18-20% for 2009-10.
During the previous fortnight, which ended May 8, 2009, bank loans showed a rise of Rs 5,882 crore taking outstanding advances to Rs 27,52,056 crore.
Credit dropped to 17.20%, or Rs 4,03,956 crore on year-on-year basis through 8 May, while deposits stayed almost flat at 22.62%, or Rs 7,28,999 crore, in the same period to Rs 39,52,264 crore.
While credit growth during the fortnight has shown a massive drop by almost 200 basis points, analysts still remain optimistic on the credit activity and expect the kick off to happen during the second half of 2009.
According to economists, Sailesh Jha and Rahul Bajoria from Barclays Capital Research, credit growth will accelerate in the next two to three quarters and will stimulate investment spending.
“We are projecting non-food credit growth of around 18% on year-on-year basis in financial year 2009-10 as against 17.5% during financial year 2008-09. Domestic credit growth data releases from early May have already shown signs of a recovery, while anecdotal evidence suggests that banks’ willingness to lend to large corporates is increasing and demand for credit is also high. Our econometric model results suggest that the key drivers of credit growth are industrial production, stock market performance, time deposits, and lagged credit growth. All of these variables are likely to increase during the second half of 2009,” they said in a report.
However, the report has said that the Reserve Bank of India may start raising interest rates in the fourth quarter as excess money in the banking system begins to stoke inflation.
The Reserve Bank of India may increase its reverse repurchase rate by a half-point to 3.75% as “concerns on excess liquidity feeding into inflation start rising,” said Jha. The central bank may also raise its repurchase rate and cash reserve ratio in the first quarter of 2010, he said.
Last week, CARE ratings projected a deposit growth of 18-20% in both 2009-10 and 2010-11.
“The growth in credit would be fuelled by growth in lending to the infrastructure sector where the share of infrastructure in total bank credit will increase from 9% in 2007-08 to 12% in 2010-11, while retail credit will show a moderate growth” said DR Dogra, deputy managing director with CARE Ratings.
The Financial Express, June 5, 2009, Section II
fe Bureau, Mumbai
Indicating the continuation of slowdown in the economy, bank loans after remaining stagnant in the recent past have dropped Rs 16,306 crore for the two weeks ended May 22, 2009, thereby taking outstanding advances to Rs 27,35,750 crore.
According to the data released by the Reserve Bank of India (RBI) on Thursday, bank credit has further dropped to 15.86%, or Rs 3, 74,544 crore on year-on-year basis through 22 May. At the same time, deposits have stayed almost flat at 22.57%, or Rs 7, 30,565 crore, in the same period to Rs 39, 67,995 crore. The credit growth is way below the central bank’s projection of 18-20% for 2009-10.
During the previous fortnight, which ended May 8, 2009, bank loans showed a rise of Rs 5,882 crore taking outstanding advances to Rs 27,52,056 crore.
Credit dropped to 17.20%, or Rs 4,03,956 crore on year-on-year basis through 8 May, while deposits stayed almost flat at 22.62%, or Rs 7,28,999 crore, in the same period to Rs 39,52,264 crore.
While credit growth during the fortnight has shown a massive drop by almost 200 basis points, analysts still remain optimistic on the credit activity and expect the kick off to happen during the second half of 2009.
According to economists, Sailesh Jha and Rahul Bajoria from Barclays Capital Research, credit growth will accelerate in the next two to three quarters and will stimulate investment spending.
“We are projecting non-food credit growth of around 18% on year-on-year basis in financial year 2009-10 as against 17.5% during financial year 2008-09. Domestic credit growth data releases from early May have already shown signs of a recovery, while anecdotal evidence suggests that banks’ willingness to lend to large corporates is increasing and demand for credit is also high. Our econometric model results suggest that the key drivers of credit growth are industrial production, stock market performance, time deposits, and lagged credit growth. All of these variables are likely to increase during the second half of 2009,” they said in a report.
However, the report has said that the Reserve Bank of India may start raising interest rates in the fourth quarter as excess money in the banking system begins to stoke inflation.
The Reserve Bank of India may increase its reverse repurchase rate by a half-point to 3.75% as “concerns on excess liquidity feeding into inflation start rising,” said Jha. The central bank may also raise its repurchase rate and cash reserve ratio in the first quarter of 2010, he said.
Last week, CARE ratings projected a deposit growth of 18-20% in both 2009-10 and 2010-11.
“The growth in credit would be fuelled by growth in lending to the infrastructure sector where the share of infrastructure in total bank credit will increase from 9% in 2007-08 to 12% in 2010-11, while retail credit will show a moderate growth” said DR Dogra, deputy managing director with CARE Ratings.
Inflation at 0.48%, may go negative
Inflation at 0.48%, may go negative
The Financial Express, June 5, 2009, Page 2
fe Bureau, New Delhi
The rate of inflation has come down to 0.48% for the week ended May 23 from 8.9% in the corresponding week a year ago. This was the twelfth week in a row when inflation remained below 1%, making room for the government and Reserve Bank of India (RBI) to focus more on growth and cut interest rates. Inflation was 0.61% in the previous week.
The data released by the government on Thursday showed that inflation rose mainly because the prices of primary food articles increased, and analysts said that this segment needs special attention. However, they expected inflation to turn negative in the next few weeks.
“By the middle of June, we should see negative inflation and that should continue until October. Inflation rate is low enough for the RBI to comfortably cut rates,” HDFC Bank chief economist Abheek Barua said. RBI has the tolerance level of 4-5% for inflation during 2009-10.
In the second half of the current financial year, inflationary pressures would once against build up with a projected increase in prices of crude oil and other commodities in the global market, analysts said.
“Going ahead, inflationary risks would grow as global fuel prices have started rising and firmer economic recovery in the second half would also put upward pressure on domestic prices,” Bank of Baroda chief economist Rupa Rege Nitsure said. Price of crude oil came down from $147 a barrel in the middle of last fiscal to around $40 later in the year. Once again, it is looking up and has reached $64 a barrel.
In 2008-09, the government widened fiscal deficit to 6% of gross domestic product through three stimulus packages, containing a slew of fiscal measures, to boost the falling demand, while RBI reduced key rates a number of times to ease interest rates.
At the time of announcing the annual monetary policy in late April, RBI cut repo and reverse repo rates by 25 basis points to 4.75% and 3.25%, respectively, and banks followed the cues. Finance minister Pranab Mukherjee will meet chairmen and managing directors of public sector banks on June 10 and is likely to stress on further reduction in prime lending rates.
“Going forward with the fiscal stimulus package coming to full effect, we expect the aggregate demand in the economy to surge significantly. This will be reflected in rising prices of capital as well as consumer goods. However, a high base will counteract the upward pressure in inflation rate,” CARE Ratings chief economist Soumendra K Dash said.
ICICI Bank cuts lending rates, SBI says scope for 25 bps reduction
ICICI Bank cuts lending rates, SBI says scope for 25 bps reduction
Business Standard, June 5, 2009, Page 1
BS Reporter / Mumbai
ICICI Bank, the country’s second largest lender, today announced a 50 basis point reduction in its benchmark lending rates, while State Bank of India's Chairman O P Bhatt said there was scope to lower lending and deposit rates 25 basis points, though he did not provide not a timeframe.
In a statement, ICICI Bank said that following the latest round of cuts, effective from tomorrow, its floating reference rate, applicable to floating rate retail loans, would drop to 12.75 per cent, while the benchmark advance rate (I-Bar) would fall to 15.75 per cent. The bank has, however, left deposit rates unchanged for the moment.
While new borrowers can avail of cheaper loans, the move will also benefit the bank’s existing retail loan customers who have availed of loans at floating rates.
ICICI Bank said the reduction was possible because of a decrease in the cost of funds, and margins would not come under pressure.
The cost of funds for the private sector bank — which has been seeking to reduce its dependence on high-cost bulk deposits and was focusing on current account and savings bank account (Casa) balances — had dropped 50 basis points to around 7 per cent at the end of the last financial year. In addition, its net interest margin (NIM) increased from 2.2 per cent at the end of March 2008 to 2.4 per cent at the end of March 2009.
In contrast, SBI, which has seen a build-up in high cost fixed deposits, has seen its NIM drop from 3.07 per cent at the end of March 2008 to 2.93 per cent at the end of March this year.
This was despite a 23 per cent growth in Casa during the last financial year. SBI has refrained from a reduction in its benchmark prime lending rate (BPLR), and has instead focused on cutting rates for certain segments, to ensure that NIM stayed above 3 per cent.
Over the next few weeks, some of the public sector banks are expected to reduce rates following more persuasion by the government. “We will look at the cost of funds as well as the net interest margin before we decide on fresh reduction in lending rates,” said a public sector bank chief.
The Reserve Bank of India has also said that banks have room to lower lending rates owing to the steep reduction in policy rates since October last year.
ICICI bank has reduced its lending rates 150 basis points over the last six months.
The reduction was implemented in three tranches, with the last round on April 21 when lending rates were pared 50 basis points and deposit rates lowered 25 to 50 basis points. With effect from May 11, ICICI Bank had pruned deposit rates 25 to 50 basis points.
With the latest round of lending rate reductions, ICICI Bank is now in line with public sector banks, some of which, like SBI — the country’s largest bank, have lowered the benchmark lending rates 150 basis points.
Over the last six months, Punjab National Bank has gone for the steepest reduction in lending rates, with its benchmark prime lending rate (BPLR) at 11 per cent.
New land acquisition policy to be introduced
New land acquisition policy to be introduced
Business Standard, June 5, 2009, Page 6
BS Reporter / New Delhi
President Pratibha Patil today said the government would reintroduce the Amendment Bill to the Land Acquisition Act and the Rehabilitation and Resettlement Bill in the forthcoming budget session of Parliament.
If the Bills are enacted, it will not only help in better implementation of infrastructure and industrial projects, but also safeguard the interests of farmers. That is because both the Bills contain clear guidelines to be followed while acquiring land, like compensation package and the quantum of land to be acquired.
“It will be our endeavor to have these Bills reintroduced and enacted in the budget session of Parliament,” Patil said in her speech to joint session of the Parliament.
Both the Bills were mooted in the backdrop of violent protests across the country in 2007 against acquisition of land by state governments for industrial projects in West Bengal, Haryana, Maharashtra as well as Goa. Many of these projects were related to special economic zones (SEZs).
The Land Acquisition (Amendment) Bill limits the role of the government in land acquisition for private projects. Broadly, this Bill allows government to acquire only 30 per cent of the land for private projects, while the rest will have to be bought by the developer himself. Moreover, land rights will be extended to tenant farmers, artisans and those indirectly drawing sustenance from the land in question. Also, compensation could be in the form of jobs and equity shares in the company that has bought the land.
The Resettlement and Rehabilitation (R&R) Bill lays down guidelines on how the people affected by projects will have to be rehabilitated and the contours of compensation packages. In addition, this Bill also seeks to set up a National Rehabilitation Commission.
Experts point out that delay in enacting both these bills has impacted government projects, especially in infrastructure sector.
A recent assessment by the government had revealed that about 60 projects related to the Indian Railways, 20 power plants and 40 road projects were help up due to land related problems.
Prez chants good governance, innovation mantra
Prez chants good governance, innovation mantra
The Economic Times, June 5, 2009, Page 1
PR Ramesh NEW DELHI
PRESIDENT Pratibha Patil on Thursday indicated the government’s determination to bring the curtains down on the “chalta hai” approach that has characterised governance all these years. Addressing the joint session of the two houses of Parliament, Ms Patil reiterated the new government’s resolve to dump old ways and encode a new governance principle for those in charge of the levers of power, both political and bureaucratic.
The new regime’s plans for radical changes in governance constitute a big shift in outlook. If the President’s address is anyth
ing to go by, the new government does not believe that merely throwing money at problems or offering fantasy panacea across the board from poverty to healthcare to education will stand it in good stead. It has rightly acknowledged the need for institutional changes in governance.
The address to Parliament talked at length on the government’s pro-poor policies, and moves to strengthen welfare schemes and boost the economy. The consolidation of flagship programmes was only expected as they had paid rich electoral dividends to the Congress in the just-concluded elections. There were promises to enlarge the scope of NREGA, which has proved to be an effective social protection measure; introduce a new right to food Act; address the challenges in the health sector such as infant mortality, nutrition and pre-emptive cure; make quality education a right through the enactment of a new law; set up a national literacy mission for women; raise the target of rural housing for the next five years to one lakh twenty crore units; introduce a major housing scheme for the urban poor; and take up initiatives for skill development.
In line with the promises, the coming budget is set to earmark Rs 50,000 crore for the proposed right-to-food scheme.
That the government was anxious to adopt a new governance matrix was evident when it said it would focus on the delivery of public services, need for a model public services law, public data policy, and ombudsman for schemes such as NREGS.
The youth could find the new government’s agenda more attractive as it has vowed to reform regulatory institutions in the education sector. For long, regulators in the sector such as UGC and MCI have become licence-dispensing machines. “We will set up a National Council for Higher Education as recommended by the Yashpal Committee and National Knowledge Commission for reforming the regulatory institutions,” the President said.
That there would be concentrated efforts for another important voting block—women—was clear when the government put the women’s quota bill on the top of the legislative heap. It has also promised to initiate steps to reserve 50% seats in panchayats and urban bodies for women in the next 100 days. The latter was an initiative of Bihar chief minister Nitish Kumar that paid handsome dividends to the NDA government in the state.
The Congress will have to get closer to the urban poor as the new government has promised to assign property rights to those who live in slums.
The Economic Times, June 5, 2009, Page 1
PR Ramesh NEW DELHI
PRESIDENT Pratibha Patil on Thursday indicated the government’s determination to bring the curtains down on the “chalta hai” approach that has characterised governance all these years. Addressing the joint session of the two houses of Parliament, Ms Patil reiterated the new government’s resolve to dump old ways and encode a new governance principle for those in charge of the levers of power, both political and bureaucratic.
The new regime’s plans for radical changes in governance constitute a big shift in outlook. If the President’s address is anyth
ing to go by, the new government does not believe that merely throwing money at problems or offering fantasy panacea across the board from poverty to healthcare to education will stand it in good stead. It has rightly acknowledged the need for institutional changes in governance.The address to Parliament talked at length on the government’s pro-poor policies, and moves to strengthen welfare schemes and boost the economy. The consolidation of flagship programmes was only expected as they had paid rich electoral dividends to the Congress in the just-concluded elections. There were promises to enlarge the scope of NREGA, which has proved to be an effective social protection measure; introduce a new right to food Act; address the challenges in the health sector such as infant mortality, nutrition and pre-emptive cure; make quality education a right through the enactment of a new law; set up a national literacy mission for women; raise the target of rural housing for the next five years to one lakh twenty crore units; introduce a major housing scheme for the urban poor; and take up initiatives for skill development.
In line with the promises, the coming budget is set to earmark Rs 50,000 crore for the proposed right-to-food scheme.
That the government was anxious to adopt a new governance matrix was evident when it said it would focus on the delivery of public services, need for a model public services law, public data policy, and ombudsman for schemes such as NREGS.
The youth could find the new government’s agenda more attractive as it has vowed to reform regulatory institutions in the education sector. For long, regulators in the sector such as UGC and MCI have become licence-dispensing machines. “We will set up a National Council for Higher Education as recommended by the Yashpal Committee and National Knowledge Commission for reforming the regulatory institutions,” the President said.
That there would be concentrated efforts for another important voting block—women—was clear when the government put the women’s quota bill on the top of the legislative heap. It has also promised to initiate steps to reserve 50% seats in panchayats and urban bodies for women in the next 100 days. The latter was an initiative of Bihar chief minister Nitish Kumar that paid handsome dividends to the NDA government in the state.
The Congress will have to get closer to the urban poor as the new government has promised to assign property rights to those who live in slums.
India may raise rates in Q4: Barclays
India may raise rates in Q4: Barclays
Business Standard, June 5, 2009, Section II, Page 10
Business Standard, June 5, 2009, Section II, Page 10
Jai ho! Sensex on top of 15,000
Jai ho! Sensex on top of 15,000
Times of India, June 5, 2009, Page 27
President’s Assurance On Reforms Sets Pace; Mid, Small-Cap Stocks Surge
TIMES NEWS NETWORK, Mumbai
The BSE sensex shrugged off early bearish sentiment to advance 138 points to 15,009, its best close in nine months. The day's gains came on the back of hopes that the new government will push for faster economic reforms. Such hopes were based on the Presidential address to a joint session of the Parliament, market players said.
Although the sensex gained nearly 1
%, mid and small cap stocks gained more, reflecting participation by those who are still feeling left out in the current three-month old rally that has added 84% to the sensex. On Thursday, BSE's Midcap Index rose 2.3% while the Smallcap Index ended 2.2% up. A section of the market players are advising caution to retail investors saying that although the Indian market is still advancing based on feel good factors that the government will try to revive the economy at a fast clip, the global economy might not be out of the woods yet. Some even fear that while the pace of slide of the US economy has slowed, Europe, with some of its large banks highly leveraged, might start sliding faster and pull the global markets down again.
Among the sectoral stocks, Realty index was the top gainer, ending 3.3% higher while Capital Goods index ended 3.2% up. On the other hand, metals witnessed selling and the sector index ended 2.1% off. The day's gains added about Rs 85,000 crore to investors' wealth with BSE's market capitalisation now at Rs 50.5 lakh crore. BSE's market cap is now near its year high level.
Among the top sensex gainers, Ranbaxy ended 6.1% higher at Rs 283, Sun Pharma gained 4.1% at Rs 1,307 and HUL ended 3.7% higher at Rs 249. Among the losers were Sterlite, down 5.9% at Rs 661 and Hindalco ended 3.5% down Rs 90. Winners outnumbered laggards by a margin of over 3-to-1 with 2,130 advances to 688 declines.
Fundamentals do not support rally, says I-Sec
Fundamentals do not support rally, says I-Sec
The Hindu Business Line, June 5, 2009, Page 13
R. Yegya Narayanan, Coimbatore
The FIIs have pumped close to $4 billion into the equity markets in the past few months (which had driven the valuation up), but the fundamentals of the economy do not support the current equity valuations, according to a senior executive of ICICI Securities.
The company wants to give a push to offline trading by active traders for which it intends to expand its Active Trader Service (ATS) network.
Speaking to newspersons in Coimbatore where it opened its ATS branch, Mr T.S. Harihar, Senior Vice-President (Customer Strategy & Advisory), ICICI Securities Ltd, Mumbai, said in the last six weeks, FIIs have invested nearly $4 billion in equities that has pushed up the market. But if the rupee weakened beyond Rs 50/dollar (the exchange rate is currently around Rs 47/dollar), there could be reversal in investor sentiment since “nobody wants to keep money in a country where the currency is weak”.
Asked whether the fundamentals of the Indian economy justified the valuation, he said, “they don’t”. He said markets were not always ‘fundamental-driven’. In a bull market, people were willing to pay a higher price whereas in a bear market, the reverse was true. When Tata Steel had hit the bottom around Rs 140, there were few takers for it and now it is quoting around Rs 490. Similarly L&T dipped below Rs 600 only to bounce back to Rs 1,400-plus now.
Rallying around
When pointed out that the during early days of the current rally, analysts described it as ‘bear market rally’ or ‘relief rally’ rather than the beginning of a bull phase, Mr Harihar said these were names and none knew whether it was bear market rally or bull market rally. But historically “bull markets have never shown a ‘V’ shape return” and after falling from a peak, they never go back to the peak at one go but fall again after recovery and drift. Markets do not bottom out in a ‘V’ shape. Even during the 1930s Great Depression in the US when the bear market lasted four years, markets bounced back by 40 per cent ten times. A market correction in India was “entirely” possible but it may not go back to the earlier lows and Nifty could test the 3,500-levels from its current 4,500-level.
Questioned about indications of greater control over the how the capital markets functioned in the US and whether the old “irrational exuberance” would return or there would be more rational growth in valuations, he said “markets have always been irrational”. The market was about sentiments, which could not always be rational.
Investor types
Mr Harihar said there were three types of investors — retail customers who buy in small lots through the internet, high demat customers holding ESOP stocks/huge portfolios that they trade rarely and the active traders. It was the last segment that ICICIdirect proposed to tap.
In Coimbatore itself, there were around 75-80 very active traders and the city accounted for around 4 per cent of the daily derivative volume in 2007.This fell after the market meltdown, but has been picking up in the past two to three months.
Asked about opening a new branch in the city when many securities companies were rationalising manpower/branch network, he said when the market was in a downturn, it provided opportunities for expansion because of reasonable compensation levels and a drastic fall in rental. It was also time to expand as the market may recover in about six months.
He said ICICIdirect.com has about 82-84 per cent share of pure online trading that accounted for about 8-10 per cent of the market value. Only 15-20 per cent of daily trading volume was delivery-based and the rest was contributed by derivative and intra-day trading business. He expected the delivery-based business to remain in this range, but they offered high income because of higher brokerage charged.
Asked whether he expected the brokerage to go up in view of the market upturn, Mr Harihar said the competition was “too tough” and while the fee could be higher for small ticket purchases, for traders “it is very unlikely” that brokerage would go up. The rates, however, would not come down since many brokerages were at break-even level and they could not survive if they further cut rates.
ICICI Securities has opened ATS branches, in the past few months, in cities such as Jaipur, Pune, Kochi, Ludhiana, Indore, Rajkot and Surat and it plans to expand this network.
Morgan Stanley predicts strong market conditions for 2009
Morgan Stanley predicts strong market conditions for 2009
The Hindu Business Line, June 5, 2009, Page 13
‘Next few quarters will be rather challenging for IT cos’.
Our Bureau, Mumbai
If the global markets do not throw in more surprises and if the Indian government does go ahead with reforms, the Sensex could be trading at the 19,000 levels by the end of the current calendar year, said Mr Ridham Desai, Managing Director at Morgan Stanley Equity Research.
Even if there is bad news globally, the market here will not touch the lows it did in October of last year, he said.
Corporate earnings will rise over the next two fiscal years as there would be an increase in domestic demand with more consumers spending and with improved sentiment.
Sectors to watch
According to Mr Desai, the sectors to look out for are the consumer sectors (such as auto), industrial sector(especially the infrastructure sector given that the Government will provide impetus to spending) and financial sector (mainly the banks).
One should stay away from global sectors: “There is no robust recovery seen in sectors such as materials. Defensive sectors such as health care will take a breather now as they have seen quite a bit of a run up recently,” said Mr Desai.
He also added that the next few quarters will be rather challenging for the IT companies, given the current dollar rates: “These companies will suffer from tepid overseas demand. We could see these shares becoming cheaper in the next six months.”
Betting on households
“Households are under invested in the equity markets here. With a long-term view we will see them beginning to invest more. They will look at investing through maybe insurance companies or through mutual funds rather than directly. So we could see domestic institutions playing a larger role.”
Go green: Latest corporate buzzword
Go green: Latest corporate buzzword
Times of India, June 5, 2009, Page 28
Meenakshi Sinha TNN, New Delhi
Going green is the new corporate buzzword. In recent months, several firms have taken steps towards creating a more environment-friendly business model and raising global awareness over ecological concerns. However, green acivists are far from impressed.
As part of a mobile waste management drive, Nokia India has set up over 1,300 recycling bins across Bangalore, Delhi, Gurgaon and Ludhiana since January, 2009. The campaign collected over three tonnes of waste, including 10,000 handsets, within the first 45 days of its launch, says Ambrish Bakaya of Nokia India.
Similarly, Western Digital has designed an eco-friendly GreenPower hard drive. “The drive enables energy-conservative systems like PCs, server and consumer electronics with higher capacities,” says Sharad Srivastava of Western Digital.
Reiterating the message that every small step makes a lot of difference in preserving earth’s resources, a music channel this week released a two-minute video with a public message brought home by popular VJ Cyrus Sahukar. The video ends with Sahukar listing ways of making a difference such as taking shorter showers and planting trees.
Philips Electronics India has called for a phasing-out of the incandescent light bulb as well as the introduction of a green logo on consumer electronic products. “We are constantly taking concrete steps to become a greener company,” says Rajiv Chopra, head of lighting for Philips. Green products form 15% of Philips’ revenue stream.
Patni Computer Systems’ centre in Noida has zero blinds and uses natural light and heat from fin shaped natural light reflectors. “The two upcoming facilities in Hyderabad and Pune will also be developed on green architecture,” says Anirudh Patni.
However, award-winning wildlife filmmaker Mike Pandey says that corporate houses must take the blame for current ecological disorders and bemoans the lack of strong initiatives. “You are taking from earth and plundering its natural resources like oceans and rivers. The illusionary bubble of global economy has collapsed. Our future will come from the food and environment. And that’s where their money should be invested,” he says. P N Vasanthi, director, CMS, asserts that unless corporates clean up their own act, most of their initiatives become notional. “Corporates play a big and direct role on environment-related issues. They need to show concrete results,” she says.
(With inputs from Shonali Ghoshal)
Go green: Latest corporate buzzword
Go green: Latest corporate buzzword
Times of India, June 5, 2009, Page 28
Meenakshi Sinha TNN, New Delhi
Going green is the new corporate buzzword. In recent months, several firms have taken steps towards creating a more environment-friendly business model and raising global awareness over ecological concerns. However, green acivists are far from impressed.
As part of a mobile waste management drive, Nokia India has set up over 1,300 recycling bins across Bangalore, Delhi, Gurgaon and Ludhiana since January, 2009. The campaign collected over three tonnes of waste, including 10,000 handsets, within the first 45 days of its launch, says Ambrish Bakaya of Nokia India.
Similarly, Western Digital has designed an eco-friendly GreenPower hard drive. “The drive enables energy-conservative systems like PCs, server and consumer electronics with higher capacities,” says Sharad Srivastava of Western Digital.
Reiterating the message that every small step makes a lot of difference in preserving earth’s resources, a music channel this week released a two-minute video with a public message brought home by popular VJ Cyrus Sahukar. The video ends with Sahukar listing ways of making a difference such as taking shorter showers and planting trees.
Philips Electronics India has called for a phasing-out of the incandescent light bulb as well as the introduction of a green logo on consumer electronic products. “We are constantly taking concrete steps to become a greener company,” says Rajiv Chopra, head of lighting for Philips. Green products form 15% of Philips’ revenue stream.
Patni Computer Systems’ centre in Noida has zero blinds and uses natural light and heat from fin shaped natural light reflectors. “The two upcoming facilities in Hyderabad and Pune will also be developed on green architecture,” says Anirudh Patni.
However, award-winning wildlife filmmaker Mike Pandey says that corporate houses must take the blame for current ecological disorders and bemoans the lack of strong initiatives. “You are taking from earth and plundering its natural resources like oceans and rivers. The illusionary bubble of global economy has collapsed. Our future will come from the food and environment. And that’s where their money should be invested,” he says. P N Vasanthi, director, CMS, asserts that unless corporates clean up their own act, most of their initiatives become notional. “Corporates play a big and direct role on environment-related issues. They need to show concrete results,” she says.
(With inputs from Shonali Ghoshal)
Costly offices: Mumbai slips to 6th, Delhi 12th
Costly offices: Mumbai slips to 6th, Delhi 12th
Times of India, June 5, 2009, Page 28
TIMES NEWS NETWORK, Mumbai
Mumbai has dropped one spot to the sixth place in the ranking of the world’s most expensive office markets, according to C B Richard Ellis’s biannual Global Office Occupancy Costs survey.
Tokyo’s Inner Central District has supplanted London’s West End as the world’s most expensive office market. West End is now the second-most expensive office market followed by Moscow, Hong Kong’s Central Business District or CBD and Tokyo’s Outer Central District in the CBRE report, which tracks office occupancy costs in more than 170 cities around the globe.
Said Anshuman Magazine, chairman and MD South Asia, ‘‘This ranking highlights the decrease in rentals we have witnessed in the last six months due to a reduction in demand. However, Mumbai continuing to be in the top 10 and Delhi being at 12th place from 7th reflects the shortage of prime office supply in India. To reduce office occupancy costs further and facilitate more supply of office space we need to urgently improve our infrastructure and amenities. This would bring our world rankings down further and make India more competitive.’’
According to the report, in many cases, major global office markets have seen occupancy costs fall by 20% or more over the last 12 months. Across the 170 cities as a whole, office occupancy costs fell 2.8% over the 12 month period ending March 31, 2009 compared with an increase of 8% in the 12 month period ending September 30, 2008. Singapore had the largest year over year decrease in occupancy costs with a drop of 34%.
‘‘The great global recession has clearly taken its toll on the world’s office markets, particularly those with significant concentrations of financial industry employers,’’ said Raymond Torto, CBRE’s global chief economist.
The most expensive office markets, as measured in dollars, are considerably less expensive than a year ago and occupiers are now in a strong position to procure prime space at attractive costs. For instance, a year ago office space in London’s West end was nearly $300 per sq ft, while today that space goes for $172 per sq. ft.
Shops get cheap
Shops get cheap
ET Realty, June 5, 2009, Page 1
Correction in rentals of retail micro-markets is gaining momentum across the country, with the NCR registering some of the steepest fall
Prabhakar Sinha
Retail real estate across India continues to reel under the current economic pressure, with retailers wary of any expansion plans. Most retail micromarkets, both malls as well as high street, saw a further correction in rental values.
According to a report by global real estate consultancy firm Cushman & Wakefield, Mumbai saw the sharpest decline in rental values for both malls in Goregaon, by 42%, and high streets in Colaba Causeway, by 38%. In the NCR, high street location of Greater Kailash I, M Block, witnessed a 25% decline in rental values while mall rental values in Noida dropped by 17%. Ahmedabad saw a serious downturn in rental values in malls and high street rentals with corrections in the range of 20% to 36% over the last quarter.
As absorption of retail space dwindled, developers have also slowed down the construction of malls. This has resulted in lowering of fresh supply, over initial expectations. The report says a few other developers, who are yet to start construction of previously announced projects, may be reconsidering their retail mall plans. Rajneesh Mahajan, executive director of retail services at Cushman & Wakefield, says, "Mall supply across major cities witnessed a slowdown in response to the slowing retail demand.'' The slowdown in mall construction is expected to temper supply over 2009 and may help in maintaining a healthier supply-to-demand equation going forward, C&W said. The estimated mall supply by end of 2009 is calculated to be 17.66 million sq ft, out of which, approximately 11 million sq ft has been carried forward from 2008.
Expectedly, malls that are nearly ready for possession are facing challenges in attracting retailers. Thus, many developers have now begun to support retailers by reducing the fixed occupancy cost including rentals, as well as offering revenue sharing opportunity with retailers, to promote increase in occupancy, says Mahajan. Most developers are currently refraining from launching new projects and some are resizing their ongoing developments as the vacancy in existing malls is increasing, he adds.
Correction in rentals, however, could attract retailers to expand their businesses, it is believed. Mahajan says even while a correction in rental values is recognized as a potential catalyst for retailers to re-enter, receding enduser demand has severely curtailed uptake of space across most micromarkets. Thus the trend of further correction is likely to continue in short to medium period. Only established retail micro-locations and successful malls are expected to hold steady, largely on account of revenue potential and low vacancy.
In Q1 of 2009, only 1.4 million sq ft of fresh mall supply was added across seven major cities concentrated only in Mumbai and the NCR. NCR witnessed the highest mall supply in the country at 8,00,000 sq ft, with two malls getting operational in this period. However, demand remained under pressure leading to further correction in rental values in malls, in the range of 7-17%, with Noida recording 17%, followed by South Delhi at 11%.
The recent spate of mall development across the NCR coupled with the slowdown in demand has led to this continuous trend of correction in rental values. Increase in malls has impacted the high street rental values, which have seen a downward trend, especially in areas around South Delhi like Greater Kailash's M Block market, which recorded a correction of 25%. Mumbai was the other significant contributor to mall supply with an addition of 3,05,000 sqft in Q1 of 2009. It also recorded the highest mall rental correction, in Goregaon, at 45%.
Established Mall locations like Lower Parel, Malad and Andheri remained stable due to lack of supply, while newer locations like Ghakopar (25%), Mulund (6%) and Vashi (23%) have seen significant correction owing to slowdown in demand and also hectic renegotiations from existing occupants resulting in rental corrections and alternative approaches like revenue sharing with retailers. Bangalore witnessed no new supply, while corrections in high street were in the range of 6-28%. Similarly, other markets like Chennai, Hyderabad, Kolkata, Pune and Ahmedabad also witnessed correction in rentals of retail space.
FOCAL POINT
The slowdown in mall construction is expected to temper supply over 2009 and may help in maintaining a healthier supply-todemand equation going forward Increase in malls has impacted the high street rental values, which have seen a downward trend, especially in areas around South Delhi like Greater Kailash's M Block market.
ET Realty, June 5, 2009, Page 1
Correction in rentals of retail micro-markets is gaining momentum across the country, with the NCR registering some of the steepest fall
Prabhakar Sinha
Retail real estate across India continues to reel under the current economic pressure, with retailers wary of any expansion plans. Most retail micromarkets, both malls as well as high street, saw a further correction in rental values.
According to a report by global real estate consultancy firm Cushman & Wakefield, Mumbai saw the sharpest decline in rental values for both malls in Goregaon, by 42%, and high streets in Colaba Causeway, by 38%. In the NCR, high street location of Greater Kailash I, M Block, witnessed a 25% decline in rental values while mall rental values in Noida dropped by 17%. Ahmedabad saw a serious downturn in rental values in malls and high street rentals with corrections in the range of 20% to 36% over the last quarter.
As absorption of retail space dwindled, developers have also slowed down the construction of malls. This has resulted in lowering of fresh supply, over initial expectations. The report says a few other developers, who are yet to start construction of previously announced projects, may be reconsidering their retail mall plans. Rajneesh Mahajan, executive director of retail services at Cushman & Wakefield, says, "Mall supply across major cities witnessed a slowdown in response to the slowing retail demand.'' The slowdown in mall construction is expected to temper supply over 2009 and may help in maintaining a healthier supply-to-demand equation going forward, C&W said. The estimated mall supply by end of 2009 is calculated to be 17.66 million sq ft, out of which, approximately 11 million sq ft has been carried forward from 2008.
Expectedly, malls that are nearly ready for possession are facing challenges in attracting retailers. Thus, many developers have now begun to support retailers by reducing the fixed occupancy cost including rentals, as well as offering revenue sharing opportunity with retailers, to promote increase in occupancy, says Mahajan. Most developers are currently refraining from launching new projects and some are resizing their ongoing developments as the vacancy in existing malls is increasing, he adds.
Correction in rentals, however, could attract retailers to expand their businesses, it is believed. Mahajan says even while a correction in rental values is recognized as a potential catalyst for retailers to re-enter, receding enduser demand has severely curtailed uptake of space across most micromarkets. Thus the trend of further correction is likely to continue in short to medium period. Only established retail micro-locations and successful malls are expected to hold steady, largely on account of revenue potential and low vacancy.
In Q1 of 2009, only 1.4 million sq ft of fresh mall supply was added across seven major cities concentrated only in Mumbai and the NCR. NCR witnessed the highest mall supply in the country at 8,00,000 sq ft, with two malls getting operational in this period. However, demand remained under pressure leading to further correction in rental values in malls, in the range of 7-17%, with Noida recording 17%, followed by South Delhi at 11%.
The recent spate of mall development across the NCR coupled with the slowdown in demand has led to this continuous trend of correction in rental values. Increase in malls has impacted the high street rental values, which have seen a downward trend, especially in areas around South Delhi like Greater Kailash's M Block market, which recorded a correction of 25%. Mumbai was the other significant contributor to mall supply with an addition of 3,05,000 sqft in Q1 of 2009. It also recorded the highest mall rental correction, in Goregaon, at 45%.
Established Mall locations like Lower Parel, Malad and Andheri remained stable due to lack of supply, while newer locations like Ghakopar (25%), Mulund (6%) and Vashi (23%) have seen significant correction owing to slowdown in demand and also hectic renegotiations from existing occupants resulting in rental corrections and alternative approaches like revenue sharing with retailers. Bangalore witnessed no new supply, while corrections in high street were in the range of 6-28%. Similarly, other markets like Chennai, Hyderabad, Kolkata, Pune and Ahmedabad also witnessed correction in rentals of retail space.
FOCAL POINT
The slowdown in mall construction is expected to temper supply over 2009 and may help in maintaining a healthier supply-todemand equation going forward Increase in malls has impacted the high street rental values, which have seen a downward trend, especially in areas around South Delhi like Greater Kailash's M Block market.
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