Thursday, June 4, 2009
Indian economy better placed than China’s, says Roach
Indian economy better placed than China’s, says Roach
The Financial Express, Corporates & Markets, June 4, 2009, Section II, PVIII
fe Bureau, Mumbai
Stephen S Roach, chairman of Morgan Stanley Asia, expressed his optimism on the prospects for the Indian economy over that of China, saying that India has made a lot of improvement in recent years on the macro developments, especially with an increase in foreign direct investments, higher savings and improvement in infrastructure in the share of India in GDP.
“These improvements reinforce the long-standing accomplishments of India on the micro front—large collection of world-class competitive companies, well educated IT competent workforce, extraordinary entrepreneurs and innovators, well developed capital market, solid financial institutions, rule of law and democracy,” said Roach in a press conference, adding that what has been missing in this interplay between the micro and now the improved macro has been the political impetus to reforms, something it has hobbled your government in the last five years.
“India is a more balanced economy than the rest of export-led Asia,” Roach told reporters in Mumbai on Wednesday. In fact, for the first time, Roach is now more optimistic about prospects for India than China. “China faces major challenges for the first time in 30 years,” Roach said. “It pushed its export-led model too far, leaving it too dependent on the external climate.”
Roach noted that the recent election changes the prospects for reforms going forward and hopes that the new Congress-led government will be more effective in pushing the reforms forward on a number of fronts and will be much less hobbled by the politics of coalition management.
Talking about the growth forecast for the Indian economy, Roach said the growth would remain between 5.5-6.5% for now. Incidentally, Morgan Stanley on May 28 raised India’s growth forecast to 5.8% in the fiscal year to March 31, 2010, from an earlier estimate of 4.4%. The economic growth in the $1.2 trillion economy may turn out to be the real surprise in Asia, Roach said.
“The growth in the Indian economy cannot go beyond 8% in another 2-3 years time,” he said. Roach also noted that disinvestment is important for India to reduce its fiscal deficit.The fiscal deficit of India widened to a seven-year high of 6.2% in the fiscal to March 31 as government borrowed more to fund fiscal stimulus packages.
Economists raise growth forecasts after elections
Economists raise growth forecasts after elections
Business Standard, June 4, 2009, Page 1
John Samuel Raja D & Swapnil Mayekar / New Delhi/ Mumbai
Prospects of a stable government at the Centre have prompted at least six economic forecasters to raise their growth estimates for the current fiscal, citing lower-than-expected political risk after the recent general elections.
With the Congress-led United Progressive Alliance (UPA) coming to power with less than half the number of allies than it had before and the four Left parties out of the picture, the average economists’ forecast for GDP growth in 2009-10 has increased over half a percentage point to 6.35 per cent after the election results were announced. Before the elections, growth was projected at 5.61 per cent, according to data collected from eight economic forecasters. Two forecasts were not revised.
“The political risk has been mitigated with a stable government at the Centre,” said Subir Gokarn, chief economist with Standard & Poor’s (S&P), a rating agency. “A stable government will speed up certain investment decisions so people would be more positive about the future.”
Although S&P — which downgraded India’s sovereign rating outlook on account of the rising fiscal deficit in January 2009 — has not revised its growth estimate, others like Morgan Stanley, Nomura and Kotak Mahindra had all done so.
The prospect of higher political risk from a widely expected hung Parliament had prompted GDP projections for 2009-10 to be revised downwards.
“The election results will have a positive impact,” said Saumitra Chaudhuri, an economist with rating agency ICRA Ltd and member of the Prime Minister’s Economic Advisory Council. He said the negative bias to growth will go out his earlier prediction of 7 per cent, with a range of half a percentage point.
These upward revisions are expected to have an impact on corporate investments, which were the main driver when the Indian economy grew at 9 per cent and above for three years till March 2008, contributing nearly 50 per cent of the expansion in output.
“Given that the UPA no longer needs outside support of the Left, it would now be able to continue with the reform process unhindered,” wrote Citigroup analysts in a recent research note.
The four Left parties had voted with the government in the Lok Sabha the last time and had been instrumental in blocking a significant amount of economic reform.
“While trends in consumption are likely to sustain, given that the government had already implemented fiscal stimulus measures over the past year, the UPA’s clear majority would now spur investment growth as well,” the Citigroup analysis added.
There is now a heavy weight of expectation that the government, free of Left, will push economic reforms in areas like banking, insurance and capital markets that will enable greater capital flow into the economy.
Steel producers to follow global cues; to hike prices to rise
Steel producers to follow global cues; to hike prices to rise
Business Standard, Section II, Page 4, June 4, 2009
Ishita Ayan Dutt / Kolkata
Taking a cue from the trend of price rises in global steel market, domestic producers are likely to hike prices from July.
Jatinder Mehra, chief executive officer, Essar Steel said, “I believe, in July there will be some push in the market. In the Indian market, revival has already begun. Auto, fabrication, capital goods and white goods are doing very well.”
In the flat products segment, hot rolled coil (HRC) prices have not seen a hike since September last year. Last month, long product, cold rolled and galvanised prices were raised.
Sajjan Jindal, vice chairman and managing director, JSW Steel, yesterday hinted at a price increase in July. Jayant Acharya, director (sales and marketing), JSW Steel said, the company was yet to take a call on the zinc-based products for this month. Zinc prices had increased, he pointed out.
Domestic steel prices are presently higher than the international prices. While global HRC prices were at $360-$380 a tonne, domestic prices are at $450 a tonne.
Globally, the market was on an uptrend. The first signs of a recovery in the global steel market were visible with the South African unit of the world’s largest steelmaker, ArcelorMittal, and US-based A K Steel announcing price hikes from July.
ArcelorMittal South Africa has announced a 5-6 per cent increase in flat steel prices, used mostly by the auto and consumer durables sector, and a 5-6 per cent increase in long steel, used by the construction sector. The move from the steel major is the first since September 2008 and reflects the recent global trends.
US-based AK Steel would be increasing sheet prices by $20 a tonne from July 1, an initiative which would lift sentiments among other steel mills in the country where hot rolled coil (HRC) prices are presently hovering about $360-$380 a tonne, down from peak levels of $1,100 a tonne last year.
The price hikes appear to be stemming from the production cut initiated across the world. In South East Asia HRC export prices are higher by $20-$30 a tonne. The increase is not across products and is more selective. For instance, in northern Europe, prices have moved up $85 a tonne in the last six weeks.
Business Standard, Section II, Page 4, June 4, 2009
Ishita Ayan Dutt / Kolkata
Taking a cue from the trend of price rises in global steel market, domestic producers are likely to hike prices from July.
Jatinder Mehra, chief executive officer, Essar Steel said, “I believe, in July there will be some push in the market. In the Indian market, revival has already begun. Auto, fabrication, capital goods and white goods are doing very well.”
In the flat products segment, hot rolled coil (HRC) prices have not seen a hike since September last year. Last month, long product, cold rolled and galvanised prices were raised.
Sajjan Jindal, vice chairman and managing director, JSW Steel, yesterday hinted at a price increase in July. Jayant Acharya, director (sales and marketing), JSW Steel said, the company was yet to take a call on the zinc-based products for this month. Zinc prices had increased, he pointed out.
Domestic steel prices are presently higher than the international prices. While global HRC prices were at $360-$380 a tonne, domestic prices are at $450 a tonne.
Globally, the market was on an uptrend. The first signs of a recovery in the global steel market were visible with the South African unit of the world’s largest steelmaker, ArcelorMittal, and US-based A K Steel announcing price hikes from July.
ArcelorMittal South Africa has announced a 5-6 per cent increase in flat steel prices, used mostly by the auto and consumer durables sector, and a 5-6 per cent increase in long steel, used by the construction sector. The move from the steel major is the first since September 2008 and reflects the recent global trends.
US-based AK Steel would be increasing sheet prices by $20 a tonne from July 1, an initiative which would lift sentiments among other steel mills in the country where hot rolled coil (HRC) prices are presently hovering about $360-$380 a tonne, down from peak levels of $1,100 a tonne last year.
The price hikes appear to be stemming from the production cut initiated across the world. In South East Asia HRC export prices are higher by $20-$30 a tonne. The increase is not across products and is more selective. For instance, in northern Europe, prices have moved up $85 a tonne in the last six weeks.
Modern India exits realty arm
Modern India exits realty arm
The Hindu Business Line, June 4, 2009, Page 2
PTI, Mumbai
Modern India, engaged in real estate and textiles business, today said it has disinvested its entire holding Modern India Realty & Infrastructure Ltd. The company has disinvested its entire stake in the Modern India Realty & Infrastructure Ltd. and thus it is no more a wholly-owned subsidiary, Modern India said in a filing to the BSE.
No major hike in steel prices likely: Naveen Jindal
No major hike in steel prices likely: Naveen Jindal
The Hindu Business Line, June 4, 2009, Page 15
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“Domestic steel demand and consumption is growing at a faster pace than anticipated and since input costs are gradually coming down steel makers should apply a break on hike of steel prices.”
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Our Bureau, New Delhi
Mr Naveen Jindal, Member of Parliament and the Vice-Chairman and Managing Director of Jindal Steel and Power Ltd (JSPL), said on Wednesday that although the industry is not insulated from international steel prices, no major hike within the country was expected in the near future.
Mr Jindal was speaking on the sidelines of a ‘Young Parliamentarians’ meet organised by the Associated Chambers of Commerce and Industry (Assocham).
“I see good demand for steel because bridges, roads, etc. A lot of things have to be built. Domestic steel demand and consumption is growing at a faster pace than anticipated and since input costs are gradually coming down steel makers should apply a break on hike of steel prices,” said Mr Jindal.
Infrastructure needs
He added that the massive infrastructure needs of the country, such as the building of ports and a comprehensive road network, was an important aspect that the upcoming Budget will have to address. “If given a chance, I shall debate on these topics in Parliament and make sure that these concerns are addressed,” he said.
The Lok Sabha MP from Kurukshetra, Harayana, said that power is another sector where the country needs investment. New plants are needed, while alternative sources of power need to be developed, he said.
Dr Swati Piramal, Senior Vice-President, Assocham, said with the support of young MPs, a new Drug Policy should be announced to enable the pharmaceutical industry to manufacture medicines at affordable prices, especially for people below the poverty line. The meeting was attended by MPs Mr Rajagopal Lagadapatti, Mr Kirti Azad, Mr Manish Tewari, Mr Deepender Hooda, among others.
Rising steel prices
However, the Federation of Industries of India (FII) has expressed concern over the rising steel prices, particularly of Hot Rolled (HR) steel, while worldwide prices are falling. According to a statement issued by FII, on May 10, the prices of HR coil were raised by Rs 600 a tonne by Steel Authority of India Ltd and again on June 1 by Rs 750/tonne. The domestic price for the same, as charged by SAIL, is between Rs 28,500 and Rs 29,300 a tonne. The international price, however, is Rs 18,600-Rs 20,800/tonne. “The entire steel consuming industries are astonished at the unreasonable price hike by SAIL,” said the FII statement.
“There is an acute shortage of HR coil in the country which is being created artificially through an informal pricing and distribution cartel of the steel producers for HR products,” said the FII statement.
The Hindu Business Line, June 4, 2009, Page 15
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“Domestic steel demand and consumption is growing at a faster pace than anticipated and since input costs are gradually coming down steel makers should apply a break on hike of steel prices.”
--------------------------------------------------------------------------------
Our Bureau, New Delhi
Mr Naveen Jindal, Member of Parliament and the Vice-Chairman and Managing Director of Jindal Steel and Power Ltd (JSPL), said on Wednesday that although the industry is not insulated from international steel prices, no major hike within the country was expected in the near future.
Mr Jindal was speaking on the sidelines of a ‘Young Parliamentarians’ meet organised by the Associated Chambers of Commerce and Industry (Assocham).
“I see good demand for steel because bridges, roads, etc. A lot of things have to be built. Domestic steel demand and consumption is growing at a faster pace than anticipated and since input costs are gradually coming down steel makers should apply a break on hike of steel prices,” said Mr Jindal.
Infrastructure needs
He added that the massive infrastructure needs of the country, such as the building of ports and a comprehensive road network, was an important aspect that the upcoming Budget will have to address. “If given a chance, I shall debate on these topics in Parliament and make sure that these concerns are addressed,” he said.
The Lok Sabha MP from Kurukshetra, Harayana, said that power is another sector where the country needs investment. New plants are needed, while alternative sources of power need to be developed, he said.
Dr Swati Piramal, Senior Vice-President, Assocham, said with the support of young MPs, a new Drug Policy should be announced to enable the pharmaceutical industry to manufacture medicines at affordable prices, especially for people below the poverty line. The meeting was attended by MPs Mr Rajagopal Lagadapatti, Mr Kirti Azad, Mr Manish Tewari, Mr Deepender Hooda, among others.
Rising steel prices
However, the Federation of Industries of India (FII) has expressed concern over the rising steel prices, particularly of Hot Rolled (HR) steel, while worldwide prices are falling. According to a statement issued by FII, on May 10, the prices of HR coil were raised by Rs 600 a tonne by Steel Authority of India Ltd and again on June 1 by Rs 750/tonne. The domestic price for the same, as charged by SAIL, is between Rs 28,500 and Rs 29,300 a tonne. The international price, however, is Rs 18,600-Rs 20,800/tonne. “The entire steel consuming industries are astonished at the unreasonable price hike by SAIL,” said the FII statement.
“There is an acute shortage of HR coil in the country which is being created artificially through an informal pricing and distribution cartel of the steel producers for HR products,” said the FII statement.
Wednesday, June 3, 2009
SPRING IN THE STEP
SPRING IN THE STEP
The Economic Times, June 3, 2009, Page 1
Core’s best show in 10 months
Our Bureau NEW DELHI
APRIL is no longer the cruellest month. In the first month of the current fiscal year, the six core industries together clocked the fastest growth rate in 10 months, emboldening the prime minister’s key economic advisor to hint at the possibility of an upward revision in the economic growth forecast for the year.
Power, crude oil, refi
nery products, coal, cement and finished steel grew 4.3% year-onyear, recovering from a low of 1.1% in December 2008, according to data released by the ministry of commerce and industry on Tuesday.
The April figures have raised hopes of a brighter industrial output as these six industries have a combined weight of 26.7% in the Index of Industrial Production.
“The growth in core sectors is on expected lines. The upside risk for economic growth projections made by EAC is emerging with a stable government coming to power and business confidence slowly returning,” said Suresh Tendulkar, chairman of the Economic Advisory Council to the prime minister.
The EAC had earlier projected a growth rate of 7%—plus or minus 0.5%—for 2009-10.
April’s figures are the highest since last July when the global financial meltdown pushed the Indian economy into rough waters. Consequently, the growth rate dipped to 2.7% in fiscal 2008-09 against 5.9% in 2007-08. Coal, followed by cement, clocked the highest growth while the annual growth rate in steel production moved into positive territory after a month’s gap.
Economists that ET spoke to forecast that the revival in cement and steel production on the back of higher public spending will pick up further post-April. Data on cement despatch for May from major manufacturers, including Ambuja Cement, Grasim Industries and its subsidiary UltraTech Cement, showed robust growth. However, the regular lull in construction activity during monsoon is likely to dampen this momentum thereafter.
SURESH TENDULKAR
CHAIRMAN, ECONOMIC ADVISORY COUNCIL TO PM
The growth in core sectors is on expected lines. Upside risk for growth projections made by EAC is emerging with a stable govt coming to power and business confidence slowly returning
ADI GODREJ
GROUP CHAIRMAN, GODREJ
Both urban & rural growth numbers are upbeat and we are recording strongest growth in recent years. Political stability and expected fiscal stimuli have lifted consumer confidence
SANJEEV CHADHA
CHAIRMAN & CEO, PEPSICO INDIA
The beverages arm has been clocking unit case volumes growth of 30%, with both carbonated and non-carbonated drinks posting healthy growth
The Economic Times, June 3, 2009, Page 1
Core’s best show in 10 months
Our Bureau NEW DELHI
APRIL is no longer the cruellest month. In the first month of the current fiscal year, the six core industries together clocked the fastest growth rate in 10 months, emboldening the prime minister’s key economic advisor to hint at the possibility of an upward revision in the economic growth forecast for the year.
Power, crude oil, refi
nery products, coal, cement and finished steel grew 4.3% year-onyear, recovering from a low of 1.1% in December 2008, according to data released by the ministry of commerce and industry on Tuesday.The April figures have raised hopes of a brighter industrial output as these six industries have a combined weight of 26.7% in the Index of Industrial Production.
“The growth in core sectors is on expected lines. The upside risk for economic growth projections made by EAC is emerging with a stable government coming to power and business confidence slowly returning,” said Suresh Tendulkar, chairman of the Economic Advisory Council to the prime minister.
The EAC had earlier projected a growth rate of 7%—plus or minus 0.5%—for 2009-10.
April’s figures are the highest since last July when the global financial meltdown pushed the Indian economy into rough waters. Consequently, the growth rate dipped to 2.7% in fiscal 2008-09 against 5.9% in 2007-08. Coal, followed by cement, clocked the highest growth while the annual growth rate in steel production moved into positive territory after a month’s gap.
Economists that ET spoke to forecast that the revival in cement and steel production on the back of higher public spending will pick up further post-April. Data on cement despatch for May from major manufacturers, including Ambuja Cement, Grasim Industries and its subsidiary UltraTech Cement, showed robust growth. However, the regular lull in construction activity during monsoon is likely to dampen this momentum thereafter.
SURESH TENDULKAR
CHAIRMAN, ECONOMIC ADVISORY COUNCIL TO PM
The growth in core sectors is on expected lines. Upside risk for growth projections made by EAC is emerging with a stable govt coming to power and business confidence slowly returning
ADI GODREJ
GROUP CHAIRMAN, GODREJ
Both urban & rural growth numbers are upbeat and we are recording strongest growth in recent years. Political stability and expected fiscal stimuli have lifted consumer confidence
SANJEEV CHADHA
CHAIRMAN & CEO, PEPSICO INDIA
The beverages arm has been clocking unit case volumes growth of 30%, with both carbonated and non-carbonated drinks posting healthy growth
Infrastructure sector rebounds in April
Infrastructure sector rebounds in April
Business Standard, June 3, 2009, Page 1
BS Reporter / New Delhi
Index of six core industries up 4.3%, highest since July 2008.
Hopes of an economic recovery grew, with data for the output in six core infrastructure sectors rebounding in April, showing a 4.3 per cent increase — the most since July 2008 — on a better-than-expected performance in coal, electricity and cement.
These sectors collectively account for 27 per cent of the Index of Industrial Production.
The output in the sector during April is more than the 2.7 per cent increase seen in the previous month, and about double of what was seen in the year-ago month. April's jump would have been higher, but for the substantial dip in production of crude oil and petroleum products (see table). IIP had dipped 2.7 per cent in March 2009, the most since inception of the updated index in 1994.
“Government spending in the infrastructure sector could be one of the key reasons for this increase. The IIP is definitely going to be in positive territory in April,” said DK Joshi, principal economist, Crisil.
The data showed a record increase in coal production during the month under consideration. Industry experts attribute this to output from new mines. About 75 per cent of the overall coal production is used to fire power plants, which recorded a reasonable increase in output during April. Economists said additional demand for power as a result of rising industrial activity could be a possible reason for this increase in output during April.
Cement production growth in the month under consideration was the highest since February 2007, pointing towards increased activity in the infrastructure sector. Experts, however, point out that construction activity in the housing sector, a major user of cement, is yet to pick up. The sector is likely to see 50 million tonnes of additional cement capacity in 2009-10.
Steel production also improved in April over the previous months. The sector has been seeing a dip in production since October 2008, barring the first two months of 2009. Domestic producers have been alleging that many steel products like hot rolled coils are being dumped as a result of falling demand elsewhere.
However, petroleum sector production remained lacklustre. Refinery output in April was also the lowest in more than two years. Crude oil production has been dipping continuously since June 2007, November being an exception. There has been no discovery of high-yielding oil fields in the country, while output from existing oil wells is declining.
Real estate deals show signs of revival
Real estate deals show signs of revival
The Financial Express, June 3, 2009, Page 4
Mona Mehta, Mumbai
Signing of new commercial deals in metros is seeing signs of revival in the first quarter of the financial year 2009-10. Taking advantage of the soft-scenario on real estate deals and incoming supply, corporates are finding it of an advantage to do deals in this area.
According to Sanjay Dutt, chief executive officer — business, Jones Lang LaSalle Meghraj (JLLM), “During Q1 FY10, 4 mn sq ft of commercial space being leased out in metros in the first quarter of the financial year 2009-10, of the overall 55 mn sq ft of space available for commercial leasing across the country. By fourth quarter ending December 2009-10, we expect 27 mn sq ft of commercial area space to be leased out.”
Commercial property transaction volumes in H12008 had fallen by 15% to 20% in both purchase and lease agreements in metros and 30% in tier-II cities in August 2008. This is mainly due to inflationary trends, liquidity crunch from the banks apart from hike in interest rates on home loans. As a result, builders majors have deferred they commercial project launches. According to Anshuman Magazine, managing director, CB Richard Ellis, “The leasing commercial property market had witnessed dip in demand by about 10 to 15% in the fourth quarter of 2008. This is because, various multinationals were looking at postponing their expansion plans for office leasing.”
Abhinandan Lodha, managing director, Lodha Group told FE, “We have recently signed new commercial deals on lease rentals with many big corporates including Aditya Birla Group, KPMG, Ernst & Young , among host of other corporates for Lodha Excelus.” When contacted, Aditya Birla Group spokesperson said the Group’s talks with builders has reached advanced stages. KPMG is in the process of occupying close to 1 lakh sq ft office at Rs 110 on lease per month at Lodha Excelus, said the company spokesperson.
Recently, Wipro is understood to have bought 1 lakh sq ft office on lease in Hiranandani Gardens at Powai in Mumbai. Sources from Wipro have confirmed the new commercial deal on condition of anonymity. Niranjan Hiranandani, managing director, Hiranandani Constructions said, “We are talking to many corporates who are scouting for additional office space in locations nearer to expansive business strategies. By June-end, we hope to finalise many corporates for Hiranandani Gardens.” Meanwhile, Unilever, too, has also sold properties in Kolkata spanning 15 to 17 acres at a valuation of Rs 20 crore, a source added.
As per the recent commercial rental market update by Jones Lang LaSalle Meghraj, commercial leasing has picked up by 5% in volume terms in Q1 2009-10 nationally. Driving this growth are corporates who are now seeking to set up additional offices in metros that offer them better space at lower costs. However, this is much lower than 10% to 15% growth that market saw during Q1 of 2008-09.
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