Tuesday, 16 April 2019

Wholesale Price Index for ‘All Commodities’ for the month of March, 2019

Based on monthly  WPI, the annual rate of inflation, stood at 3.18%  (provisional) for the month of March 2019(over March 2018)  as compared to 2.93%  (provisional) for the month of February 2019  and 2.74%  during  March 2018 previous year.  The buildup inflation rate in the financial year so far was 3.18%as compared to a buildup rate of 2.74%in the corresponding period of the previous year.

Primary articles: The  index  for ‘Food  Articles group rose  by  0.9  percent  to  145.1  (provisional)  from  143.8  (provisional)  for  the  previous month  due  to  higher  price  of  peas/Chawla  (7%),  fruits  &  vegetables  (6%),  maize and jowar  (3%each),  bajra  (2%)and Masur  (1%). However, three was a decline in the price of fish-marine (6%),  egg  (5%),  gram  (3%),  mutton,  urad and condiments  & spices (2%each)and rajma, ragi, wheat, arhar and poultry chicken  (1%each).

The  index  for ‘Non-Food  Articles group declined  by  2.6  percent  to  123.5  (provisional)  from  126.8  (provisional)  for  the previous  month  due  to  lower  price of  industrial  wood  (16%),  raw  silk  (7%),  sunflower  (4%),  rape  &  mustard  seed  (3%), gingelly  seed and safflower  (kardi  seed)  (2%each)and soyabean,  floriculture,  copra  (coconut) and coir  fibre  (1%each). However, there was appreciation in the price of niger seed (15%), raw rubber and raw cotton (4%each), raw wool (2%)and groundnut seed, fodder, castor seed, mesta, raw jute, linseed and hides (raw) (1%each).

Minerals: The index declined  by  1.9 percent to 136.7  (provisional)  from  139.3  (provisional)  for the previous month due to lower price of manganese ore and iron ore (8%each), sillimanite (7%), limestone and chromite (2%each)and lead concentrate and zinc concentrate (1%each). However, the price of garnet (12%)and copper concentrate (1%) increased.

Crude  Petroleum  &  Natural  Gas: The index rose by 3.3 percent to 87.6 (provisional) from 84.8 (provisional) for the previous month due to higher price of crude petroleum (6%).  However, the price of natural gas (2%) declined. The index rose by 2.3percent  to  103.3(provisional)  from 101.0(provisional) for the previous month. 

Mineral  Oils: The index rose  by  4.1  percent  to  95.0(provisional)  from  91.3  (provisional)  for  the  previous month  due  to  higher  price  of ATF,  naphtha and furnace  oil (9%each), LPG(6%), kerosene (5%), petrol (4%), petroleum coke (3%), HSD(2%)and bitumen (1%). The rose by 0.2 percent to 118.3  (provisional)  from 118.1 (provisional) for the previous month.

Manufacture of  Food  Products: The  index declined  by  0.2  percent  to  128.5  (provisional)  from  128.7 (provisional)  for  the  previous  month  due  to  lower  price  of  manufacture  of  macaroni,  noodles,  couscous &similar farinaceous products (5%), copra oil  (4%), processing &preserving of fish,crustaceans &molluscs&products thereof and rice  bran  oil  (3%each),  processing &preserving  of  fruit &vegetables and palm  oil  (2%each)and cottonseed  oil,  sooji (rawa),  soyabean  oil,  gram  powder  (besan),  buffalo  meat [fresh/frozen],  spices  (including  mixed  spices),  salt,  vanaspati, mustard  oil,  sunflower  oil,  manufacture  of  cocoa,  chocolate &sugar  confectionery,  ghee and maida  (1%each). However, there were certain items which moved up as the  price  of  molasses  (13%),  groundnut oil (10%), honey (4%), processed tea, condensed milk and manufacture of starches and  starch  products  (3%each),  coffee  powder  with  chicory,  castor  oil, instant coffee, chicken/duck [dressed-fresh/frozen]and manufacture of health supplements (2%each)and manufacture of prepared animal feeds, bagasse, gur, manufacture of processed ready to eat food, manufacture of bakery products and wheat bran (1%each).

The rate of inflation based on  WPI  Food Index consisting of ‘Food  Articles’ from  Primary  Articles group and ‘Food Product’ from Manufactured Products group increased from 3.29% in February, 2019as compared to 3.89% in March 2019.

Latin Manharlal Group
Image Courtesy: Google

Thursday, 14 February 2019

India now 6th Largest Economy in the World with High Growth

India under the leadership of the Prime Minister,  Narendra Modi, has witnessed its best phase of macro-economic stability, becoming the sixth largest economy in the world from being the 11th in the World in 2013-14. Presenting the Interim Budget for the year 2019-20 in Parliament, the Union Minister for Finance, Corporate Affairs, Railways & Coal, Piyush Goyal said “India is the fastest growing major economy in the world” with an average GDP growth  of 7.3% per annum, the highest ever achieved by any Government since economic reforms began in 1991.

New India would celebrate its 75th Independence year in 2022 when every family would have a house with access to water, electricity and toilets; farmers income would have doubled; and the country would be free from terrorism, communalism, corruption and nepotism,Goyal added.

Goyal said the fiscal deficit has been brought down to 3.4% in 2018-19 Revised Estimates from the high of 5.8% in 2011-12 and 4.9 % in 2012-13,outlining the broad picture of the State of the Economy. The average inflation has been brought down to 4.6% from the high of 10.1% during 2000-2014. The inflation was only 2.19% in December 2018.  The Current Account Deficit (CAD) is likely to be only 2.5% of GDP this year, against a high of 5.6% six years ago.

Due to strong fundamentals and stable regulatory regime,  the country  attracted $239 billion as Foreign Direct Investment (FDI) during the last five years.  Goods and Services Tax (GST) as a path breaking next generation structural tax reform undertaken by the Government.

Goyal said the Insolvency and Bankruptcy Code has institutionalised a resolution-friendly mechanism and  nearly Rs. 3 lakh crores  has been recovered by Banks and creditorswhile highlighting the Banking Reforms. He said high stressed non-performing assets (NPAs) amounted to Rs. 5.4 lakh crore in 2014.  Since 2015, numerous Asset Quality Reviews and inspections were carried out, and the 4Rs approach of recognition, resolution, re-capitalisation and reforms has been followed.  Highlighting the restoration of the health of the Public Sector Banks, the Finance Minister said that recapitalisation has been done with an investment of Rs. 2.6 lakh crore.

The Finance Minister mentioned about The Real Estate (Regulation and Development) Act, 2016 (RERA) and Benami Transaction (Prohibition) Act. He said the Fugitive Economic Offenders Act, 2018 is helping to confiscate and dispose off the assets of economic offenders, who escape the jurisdiction of the country.  The Government conducted transparent auction of natural resources including coal and spectrum.

Swachhata Mission launched by the present government led by Narendra Modi, the country achieved nearly 98% rural sanitation coverage with  as many as 5.45 lakh villages being declared open defecation freesaid Goyal.

To ensure 10% reservation in educational institutions and Government jobs for economically weaker sections, the Government will provide for 25% extra seats i.e. around 2 lacs, while maintaining the existing reservation for SC/ST/Other Backward Classes.

The Finance Minister said about Rs 1,70,000 crore was spent in 2018-19. Rs 60,000 crore has been allocated for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in the Budget Estimate of 2019-20 to provide food grains at affordable prices to the poor and middle classes.

Latin Manharlal Group

Tuesday, 15 January 2019

India poised to become Third-Largest Consumer Market

India is poised to become the third-largest consumer market behind only the US and China. The consumer spending in India is expected to grow from USD 1.5 trillion at present to nearly USD 6 trillion by 2030, a report of World Economic Forum said.

As per the WEP, with an annual Gross Domestic Product (GDP) growth rate of 7.5 per cent, India is currently the world's sixth-largest economy. Domestic private consumption, which accounts for 60 per cent of the country's GDP, is expected to develop into a USD 6-trillion growth opportunity by 2030.

The report further added, "If realised, this would make India's consumer market the third-largest in the world, behind the US and China."

Zara Ingilizian, Head of Consumer Industries and Member of Executive Committee, WEF, said "as India continues its path as one of the world's most dynamic consumption environments, private and public-sector leaders will have to take shared accountability to ensure such consumption is inclusive and responsible. Notwithstanding the significant growth in consumption, critical societal challenges will need to be addressed, including skills development and employment of the future workforce, socio-economic inclusion of rural India, and creating a healthy and sustainable future for its citizens.”

The report 'Future of Consumption in Fast-Growth Consumer Market India' mentioned that growth of the middle class will lift nearly 25 million households out of poverty.

According to the report, growth in income will transform India from a "bottom of the pyramid economy" to a middle class-led one.

As expected the future consumption growth will mainly come from rich and densely populated cities and the thousands of developed rural towns.

WEF said that, "India's top 40 cities will form a USD 1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate. In parallel, there will be an opportunity to unlock nearly USD 1.2 trillion of spends in developed rural areas by improving infrastructure and providing access to organised and online retail."

The report was produced in collaboration with Bain & Company builds on consumer surveys conducted across 5,100 households in 30 cities and towns in India, and draws from more than 40 interviews with private and public-sector leaders.

Nikhil Prasad Ojha, Partner and Leader of the Strategy practice at Bain India said, "It's an exciting future for firms that wish to unlock the consumption opportunity in India."

The report identified three critical societal challenges that need to be addressed to unlock the potential of these opportunities and to ensure equitable growth - skills development and employment for the future workforce, socio-economic inclusion of rural India and healthy and sustainable future.

Image Courtesy: Google
Latin Manharlal Group

Sunday, 6 January 2019

Purchasing Managers’ Index signals a Sparkling Continuous Expansion

Purchasing Managers’ Index is an indicator of business activity both in the manufacturing and services sectors. PMI in October 2018 stood at 53.1 as against 50.3 in October 2017. October 2018 is the 15th consecutive month of PMI>50, indicating growth in the manufacturing sector.

The Start-up India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of start-up businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower start-ups to grow through innovation and design.

DIPP recognized start-ups number touched 14,545 in November 18 as compared to 4610 on October 2017 generating total employment for 130,424 persons.

Number of programmes have been undertaken since the launch of the initiative on 16th of January 2016 by Prime Minister, to transform India into a country of job creators instead of job seekers.

 The 19-Point Start-up India Action Plan envisages several incubation centres, easier patent filing, tax exemptions, ease of setting-up of business, a Rs. 10,000 crore corpus fund and a faster exit mechanism.

The achievements of the Start-up India action plan can be stated as: simplification and hand holding for compliance regime based on self-certification, rolling out of mobile app and portal, setting up of Start-up India hub, legal support and fast-tracking patent examination at lower costs, relaxed norms of public procurement for start-ups and faster exit for start-ups,  providing funding support through fund of funds with a corpus of Rs. 10,000 crore, tax exemption on capital gains, tax exemption to start-ups for 3 years, removal of angel tax, promoting industry-academia partnership and incubation through launch of Atal Innovation Mission, harnessing private sector expertise for incubator setup, building 11 Technology Business Incubators, setting up of 7 new research parks modelled on the research park setup at IIT Madras, promoting start-ups in the biotechnology sectors and launching of innovation focused programmes for students.

Image Courtesy: Google
Latin Manharlal Group

Wednesday, 2 January 2019

India Improves Ranking in Ease of Doing Business

India jumped 23 ranks in the World Bank’s Ease of Doing Business Ranking this year to be ranked at 77. Upward move of 53 ranks in the last two years is the highest improvement in 2 years by any large country since 2011. India now ranks number one in Ease of Doing Business Report among South Asian countries compared to 6th in 2014.

So far, India has improved its rank in 6 out of 10 indicators and has moved closer to international best practices (Distance to Frontier score) on 7 out of the 10 indicators. The most dramatic improvements have been registered in the indicators related to construction permits and trading across borders. India's rank improved from 181 in 2017 to 52 in 2018, in grant of construction permits, an improvement of 129 ranks in a single year. When comes to trading across borders, India's rank has improved by 66 positions, moving from 146 in 2017 to 80 in 2018.

The Department of Industrial Policy and Promotion ,Ministry of Commerce and Industry, in collaboration with the World Bank conducts an annual reform exercise for all States and Union Territories under the Business Reform Action Plan (BRAP) to improve delivery of various Central Government regulatory functions and services in an efficient, effective and transparent manner. States and UTs have conducted reforms to ease their regulations and systems in areas like labour, environmental clearances, construction permits, contract enforcement, registering property and inspections. The States have also enacted Public Service Delivery Guarantee Acts to enforce the timelines on registrations and approvals.

Ease of Doing Business ranking improved, and it has been possible because of the transformative measures taken by the Government of India which includes legislative and regulatory reforms. To support start-ups and lower tax rates for MSMEs quicker environmental clearances from 600 days to 140 days has been implemented, abolition of inter-state check post after implementation of GST has been done, enhanced input tax credit and electronic GST network has been put in place and the creation of commercial courts to fast track enforcement of contracts and faster security clearances has lent support to the start-ups in the country.

Among BRICS countries, India has improved its rank from 5th in 2010 to 3rd in 2018. Various measures were undertaken to ensure this improved ranking is issuance of construction permits where India’s rank is 52, in getting electricity connection India’s rank is 24 and in Trading Across Borders India now ranks at 84. In paying taxes India’s ranking is 121 and in resolving insolvency India’s ranking stands at 108.

For ease of doing business for start-ups Twenty-One regulatory changes have been made. For optimization of resource utilisation and enhance the efficiency of the manufacturing sector, DIPP launched the Industrial Information System, a GIS-enabled database of industrial areas and clusters across the country in May 2017. This portal serves as a one-stop solution to the free and easy accessibility of all industrial information including availability of raw material – agriculture, horticulture, minerals, natural resources, distance from key logistic nodes, layers of terrain and urban infrastructure.

IPRS is proposed to be translated into an annual exercise covering all the parks across India. The coverage would be widened and updated to bring in deeper qualitative assessment feedback, bring in technological intervention and develop it as a tool that helps effectively for demand driven and need based interventions both by policy makers and investors.

Image Courtesy: Google
Latin Manharlal Group

Monday, 24 December 2018

The Nuts & Bolts of the ABB Hitachi Deal

Hitachi’s ABB Deal Isn’t Just an Escape Hatch

Whenever a Japanese company acquires an overseas asset, the rationale is typically that it’s finding a way to survive the country's aging demographics and shrinking returns.

But Hitachi Ltd.'s 800 billion yen ($7.06 billion) purchase of ABB Ltd.'s power-grid business is bigger than that. The deal, while on the expensive side, is high-margin for the Japanese industrial conglomerate, and could catapult it into the big leagues of power equipment globally. 

Hitachi is nearing an agreement to buy 80.1% of Swiss engineering giant ABB Ltd.’s power-grid unit, in a deal that values the entire business at $11 billion. ABB has an option to sell its 19.9% stake three years after the current deal — Hitachi's largest-ever purchase — is completed. ABB noted that Hitachi would help provide access to new markets as well as financing.

Combined with the Japanese conglomerate’s other industrial-equipment business, ABB’s power grids will allow Hitachi to compete neck-and-neck with General Electric Co. and Siemens AG. With ABB’s power grids under its belt, Hitachi also could avoid the fate of so many other global industrial companies, which have struggled to turn their businesses around. As Japanese conglomerates increasingly talk about reforming to extract more value and shed the Japan discount, Hitachi has been ahead of the pack — selling units that no longer fit its strategy and putting more cash to work.

Buying ABB brings Hitachi closer to its consolidated operating margin target of more than 10% by 2022, compared with 8% for the group and 6.5% for the power business currently. Other targets loom, too: The Japanese company is looking to almost double the sales in its power segment to more than 800 billion yen by March 2022 from around 450 billion yen.

Hitachi has almost 800 businesses spanning everything from construction machinery to nuclear power plants and healthcare. It’s now cutting its subsidiaries by 40% to 500 companies, as the Nikkei reported earlier this year, and aims to focus on four core areas, of which power and energy is one.

ABB Management Commentary - “Power Grids will strengthen Hitachi as global leader in energy infrastructure and Hitachi will strengthen Power Grids’ position as a global leader in power grids. With this transaction, we are realizing the value we have built through the transformation of Power Grids over the last four years. Our shareholders will directly benefit through the return of the proceeds of the divestment. Building on our existing partnership announced in 2014, the initial joint venture will provide continuity for customers and our global team’’

ABB investors have long been underwhelmed by the power-grid business, which is low-margin compared with the Zurich-based firm’s robotics and factory automation operations.
Announcing the deal, ABB spelt out a road map that would chart a new course in industrial automation, electrification, robotics and automation. Analysts said that in mature markets, the power transmission and distribution (T&D) business has limited incremental growth opportunities both in terms of orders and profits. From a technology-driven solutions business earlier, it is now a converter of raw material into finished goods, where there’s hardly any upside in margins.

ABB Management Commentary – ‘’Our four newly shaped businesses, each a global leader, will be well aligned to the way our customers operate and focus stronger on emerging technologies such as artificial intelligence. The continued simplification of our business model and structure will be a catalyst for growth and efficiency in our businesses. Our businesses will be further supported through the transfer of experienced resources from today’s country organizations’’

ABB: Shaping a leader focused in digital industries
Fundamental actions to focus, simplify and lead in digital industries for enhanced customer value and shareholder returns

Focus of portfolio on digital industries through divestment of Power Grids
  • Divestment of Power Grids to Hitachi expands existing partnership and strengthens Power Grids as a global infrastructure leader with enhanced access to markets and financing.
  • Enterprise Value of $11 billion for 100% of Power Grids, equivalent to an EV/op. EBITA multiple of 11.2x1.
  • Crystallizing value from the transformation of Power Grids including doubling operational EBITA margin since 2014.
  • ABB initially to retain 19.9% in the equity of carved-out Power Grids to ensure transition; pre-defined exit option on 19.9 percent equity at fair market value with floor price at 90% of agreed Enterprise Value, exercisable by ABB three years after closing.
  •  Closing expected by first half of 20203.
  •  ABB intends to return 100% of the estimated net cash proceeds of $7.6-7.8 billion from the 80.1% sale to shareholders in an expeditious and efficient manner through share buyback or similar mechanism.
Simplification of business model and structure
·         Discontinuation of legacy matrix structure
·         Businesses will run all customer-facing activities as well as business functions and territories, fostering ABB’s entrepreneurial business culture
·         Businesses to be strengthened by transfer of experienced country management resources
·         Existing country and regional structures including regional Executive Committee roles to be discontinued after closing of the transaction
·         Corporate activities to be focused on Group strategy, portfolio and performance management, capital allocation, core technologies and ABB Ability™ platform

Shape four leading businesses aligned with customer patterns

 • All businesses global #1 or #2 in attractive growth markets:

* Electrification 

Industrial Automation

Robotics & Discrete Automation


  •          ABB Ability™ tailored digital solutions will drive customer value in each business whilst capturing synergies through common platform.
  •      Actions position ABB with a leadership role in digital solutions, and evolving technologies such as artificial intelligence.
Latin Manharlal Group

Sunday, 25 November 2018

ICRA pegs India’s Q2 GDP Growth to ease to 7.2%

After registering a robust growth in the first quarter of this financial year, the pace of India’s economic growth is expected to have substantially slowed in the July-September quarter amid higher fuel prices and a weaker rupee.

According to a report by rating agency ICRA, the GDP growth of Indian economy is pegged at 7.2 per cent for the second quarter, dragged down by lacklustre agriculture and industry. The GDP had grown by a higher than expected 8.2 per cent in the first quarter of the fiscal as compared to the year-ago period. 

The report cited higher fuel prices and weakness in rupee as primary factors dragging the industrial growth. Further, the country has been affected by heavy rains in some states leading to massive flooding while the other states are dealing with significantly deficient and drought like situations resulting in to muted agricultural growth.

As per the report, overall, manufacturing GVA (gross value added) growth is expected to ease to 7 per cent in Q2 FY 2019 from the healthy 13.5 per cent expansion in Q1FY2019. The agency said higher commodity prices may support a shallow recovery in GVA growth in mining and quarrying from the marginal 0.1 per cent in Q1 FY 2019 to around 2.5 per cent in Q2 FY 2019, despite a slowdown in volume growth.  

However, services sector growth is expected to rebound to 7.8 per cent in the second quarter from 7.3 per cent in Q1 FY 2019, buoyed by a sharp pickup in the expansion in the Government of India’s non-interest revenue expenditure, a mild rise in growth of bank deposits, air and ports cargo traffic, as well as a moderation in the pace of FII outflows.

Going ahead, the Indian economy is expected to slow down in the second half of the fiscal, partly because of the base effect of higher growth last year. Tighter financial markets, a credit squeeze and the lagged impact of weak currency and high oil prices will continue to weigh on growth.

Latin Manharlal Group