Current Economic Statistics and Review For the
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Theme
of the week: All-India Debt and Investment Survey
(AIDIS)
Households Reporting Cash Loans from Different Credit Agencies and by Asset Holding Classes - As on 30-06-2002 I
Introduction
All-India Debt and Investment Survey conducted by National Sample Survey Organisation duringin 2003 (January-December) along with some other surveys, viz., Situation Assesment Survey of Farmers (SAS), Land and Livestock Holdings Survey (LHS), etc., in their 59th round, is the sixth decennial nation-wide enquiry providing data on household assets, indebtedness and capital expenditure. This note is the seventh in a series of notes prepared from the result of the above 59th round survey. To recapitulate, the first four notes mainly dealt with characteristics of households, value of assets, aggregate amount of debt and debt-asset ratio for occupation categories and asset holding classes for all states and also region-wise. The fifth and sixth note made an attempt to deal with household incidence of indebtedness and cash loans outstanding as on 30-6-2002 to different credit agencies for all states and by regions. In the present note and the next one, it is intended to extend further the series to get an idea as to how different credit agencies cater to the credit needs of households with varying degrees of asset holdings, asset measured in rupee value in nominal terms. Information’s about different credit agencies which extend loans to households in rural and urban India are given in Part A –Section-5 of these serial notes. Recalling, briefly, credit agencies are of two types. They are official or institutional agencies and private or non-institutional agencies. As per the 59th survey, there are eight types of institutional agencies. The institutional framework for the supply of credit comprises (i) government, (ii) co-op societies/bank, (iii) commercial banks including Regional Rural Banks, (iv) Insurance, (v) provident fund,(vi) Financial corporation/institution and (vii) financial company and other institutional agencies. As against these, there are seven traditional private or non-institutional credit agencies viz., (i) landlord, (ii) agriculturist moneylenders, (iii) professional moneylenders, (iv) traders, (v) relatives and friends,(vi) doctors, lawyers and other professionals, and (vii) others. An analysis of households reporting cash loans outstanding as on June 30, 2002 according to different credit agencies providing them, would indicate the dependence of households on institutional vis-à-vis non-institutional sources, i.e., incidence of indebtedness to different credit agencies. 2 Incidence
of Indebtedness (IOI in per cent) – All-India
According
to the NSSO 59th Round Survey (January-December 2003), there
are 203.4 million households in Out
of the 49.1 million indebted households, 39.2 million households or 80 per
cent of the total indebted households lives in rural area and the
remaining 9.9 million or 20 per cent of the total reside in urban
Statement 2 shows the percentage of indebted households by asset holding classes (AHC) for all credit agencies, institutional as well non-institutional. It is seen that IOI increased marginally over the various AHCs, when these classes are arranged in an ascending order of magnitude though there are some marginal drop in a couple of AHCs. The Incidence of Indebtedness (IOI) for all credit agencies seems to range from 13.1 per cent in case of the poorest households to 27.8 per cent for the richer classes, i.e., household with asset equal to or above Rs. 8 lakhs. Obviously, the incidence of financial exclusion, i.e., households which are omitted from the purview of any credit agency for whatever the reason, have ranged from 86.9 per cent in case of the poorest households and that for the rich households it is 75.9 per cent. Institutional agencies virtually neglected the poorer classes of households for whom institutional finances are more important than the richer classes. Financial exclusion by institutional agencies has worked out to be 97.4 per cent for the poorer classes (Statement 2). However, non-institutional agencies, viz, money lenders, etc., extended cash loans to more households and households incidence of indebtedness to non-institutional agencies at 10.9 per cent to the households with assets worth less than Rs.15,000 are better than 2.6 per cent for institutional agencies.
Brief
Review of IOI by AHC – Regionwise/State
Region-wise picture of incidence of indebtedness has been depicted in Statement 3 along with Table 1.. A perusal of these reveals that all credit agencies cater to 18 million households out of 53 million total households in the southern region. The incidence of indebtedness thus works out to be 33.6 per cent in the region. However, like the trend in all-India, the trend of extending credit to households of different asset holding classes are the lowest in case of households with assets worth less than Rs. 15,000 (IOI – 19.2 per cent) as against an IOI of 38.6 per cent in case of the highest asset holding class, i.e., Rs. 8 lakh or above. In southern region, the poorest households of Andhra Pradesh, Tamil Nadu and Kerala have IOI more than all-India ranging from 16 to 24 per cent, but Karnataka has low IOI of 8.5 per cent in the lowest asset holding clss as compared to all-India level of 13.1 per cent. (Table 1). Similarly,
in the eastern region, the poorest households i.e. the households with
less than Rs. 15,000 worth assets had
a better IOI at 14.0 per cent than that of 13.1 per cent for
all-India. In this region, the poorest households of Rajasthan coming under the northern region is another state whose IOI for the poorest classes at 16.2 per cent better than that of all-India.
Tables
1 to 4 gives a detailed illustration of incidence of indebtedness,
financial exclusion, by institutional and non-institutional agencies on an
all-India basis 3 Incidence of Indebtedness (IOI in per cent) - Rural-IndiaIncidence of indebtedness (IOI) among different asset holding classes in rural areas of by different credit agencies, state/region-wise, has been presented in Tables 5 to 12. Out of the 147.9 million households in rural areas, 39.2 million or 26.5 per cent are indebted to some credit agency or the other as on 30-06-2002. The poorest households (asset holding less than Rs. 15,000) numbering 11.3 million or 7.6 per cent of the total rural households as against 9.9 million or 6.7 per cent of the rich ( asset holding worth Rs. 8 lakh or more) households are so indebted to one agency or the other. While all the credit agencies together cater only 1.68 million households or 15.0 per cent of all the households in the lower strata , they extent credit to 3.24 million households or 32.9 per cent of all the households in the richer strata (Table 5). The percentage of households indebted to institutional agencies increases with the increase in asset holding, thus asserting once more that the top asset holding class had a decidedly higher access to institutional loans than the poor. Institutional agencies’ performance in catering to the credit needs of the number of rich household at 26.7 per cent is 7.4 times to that of the poorest household at 3.6 per cent (Table 6). Two of the important institutional agencies are co-operative societies and commercial banks. Though the performance of co-operative societies is comparatively better than that of commercial banks in catering the credit needs of the rural households, their performance in serving the credit needs of poor households , who needs their help more is worse ( Tables 7 & 8). The IOI of households in the low strata to co-operative societies and commercial banks works out to be 0.9 per cent and 1.7 per cent respectively. Non-institutional
agencies advanced as on 30-6-2002 cash loans to 22.9 million households or
15.5 per cent of total rural household as against 19.81 million or 13.4
per cent in respect of institutional agencies (Table 9). If one moves
along the asset holding classes in ascending order from lower to higher
strata of households, there is not much difference amongst the middle
strata of households. Similarly, there is not much difference in the
number of households serviced by these agencies in the lowest (12.0 per
cent) and the highest (10.3 per cent) strata of households. Amongst
different agencies, agricultural moneylenders advanced cash loans to 4.8
million households or 3.3 per cent of total rural households, out of which
0.4 million or 3.2 per cent total households with an asset holding less
than Rs. 15,000 ( Table 10). More than ten million households or 6.9 per
cent of total rural households were financed by professional moneylenders
as on 30-6-2002. The households with asset worth less than
Rs. 15,000 numbering 0.6 million were assisted by the professional
moneylenders (Table 11). Many a time relatives and friends assist the
households. The NSSO 59th round classified a person if he or
she gave credit to any household free of interest as ‘relatives and
friends’. Such credit agency category assisted 5.5 million households or
3.7 per cent of households in rural areas (Table 12). 4 Incidence of Indebtedness (IOI in per cent) - Urban-IndiaTable 13 to 15 presents the performance of all credit agencies and institutional and non-institutional credit agencies in financing the number of urban households*. As on 30-6-2002 all credit agencies together assisted 9.9 million or 17.8 per cent urban households out of 55.5 million urban households. However, their assistance to households with asset less than Rs. 15,000 at 10.7 per cent of total low strata households of 9.2 million is almost half to that of 21.4 per cent or 7.8 million high strata households financed by all the credit agencies (Table 13). There is not much difference among the performance of institutional agencies and non-institutional agencies when one considers all urban households. Nevertheless, there are wide differences when they come to help the poorer household which fall in the low strata of holding asset worth less than Rs. 15,000; with institutional agencies catering only 1.4 per cent of such households as against 9.5 per cent financed by non-institutional agencies. · In household’s surveys, the urban sector gets under represented because the surveys do not caver unincorporated enterprises.
Highlights of Current Economic Scene AGRICULTURE After
announcing a mission on pulses, the central government has plans to
introduce a new hybrid seed for pulses in the coming kharif season, which
is expected to increase the yield by more than 25 per cent adding about 2
tonnes per hectare of pulses and help meet its growing demand. The pulses
production in the country has almost stagnated in the last 15 years. The
government would make the seeds commercially available during the coming
kharif season. The government is also contemplating over to raise the area
under pulses cultivation by 2.4 million hectares in the short term through
inter-cropping and by 2 million hectares in three years utilising rice
fallows to increase production of pulses that are currently being
imported. As
per the estimates of the US Department of Agriculture (USDA), global
production of major oilseeds is likely to stand at 399 million tonnes for
2007-08; 3.8 million tonnes lower compared to previous year and lowest
ever since 1995-96. It has also predicted that the world wheat reserves
would decline to 113.3 million tonnes till May 31, 2008, the lowest level
in last 26 years, registering a fall of 5.8 per cent from estimated 120.4
million tonnes by the end of May 2007. According
to research report made by NCDEX, rabi maize crop in the country is
estimated at 28.5 lakh tonnes for the 2006-07 season, higher by 14 per
cent over last season due to an increase in acreage. However, total kharif
crop for season 2006-07 is likely to be lower by 6 per cent at 138.5 lakh
tonnes. As per the USDA report, as of 2005-06, The
central government has discarded the possibility of immediate lifting of
the ban on milk powder exports imposed since February 2007. The ban is
effective till September 30, 2007. With global skimmed milk powder prices
(SMP) crossing an all-time-high of $5,000 per tonne, the domestic dairy
industry has been putting pressure on lifting the ban on exports. Export
of coir and coir products has touched a record Rs 605.2 crore during the
fiscal year 2006-07 surpassing the target of Rs 572 crore ($130 million)
by six per cent. The total shipments also recorded an all-time high level
of 1.68 lakh tonnes as against 1.36 lakh tonnes valued at Rs 508.4 crore a
year ago. The ministry of textile during the current financial year
2007-08 has set a target of Rs 665 crore ($165 million) for coir exports.
A total of 97 countries have imported coir and coir products from As
per the Spices Board, exports of spices have increased by 36 per cent in
terms of value to touch Rs 3,575.75 crore and 7 per cent in volume at
3,73,750 tonnes in financial year 2006-07. The export target, for 2006-07,
was 3,06,000 tonnes valued at Rs 2,500 crore and this had exceeded by 22
per cent in terms of volume and 43 per cent in terms of value. Pepper,
chilli and cumin are the significant contributors, which almost doubled
its performance during 2006-07 compared to last year. Export of
value-added spices has also risen by 38 per cent in terms of value to Rs
2,093 crore. Among these, curry powder, spice oils and oleoresins and mint
products had together shown an increase of 5 per cent in quantity and 20
per cent in value compared to last year. Total
import of edible oil in As
per the industry experts, import of natural rubber in the country is
likely to augment by 67 per cent on account of huge demand for the raw
material on sustained economic growth. The country would import a net
75,000 tonnes, compared with 45,000 tonnes a year ago. The Indian economy,
the world's fifth-largest rubber user, has expanded at an average 8.6 per
cent since 2003, boosting demand for tyres and gloves. Infrastructure Railways The
Indian railways has tampered with the passenger fare system. Though this
year it has not resulted in any hike in fares, like last year, it has
prevented a possible reduction in passenger fares — varying from Re 1 to
Rs 100. The lack of transparency has been criticised by the parliamentary
standing committee on railways in its report on demands for grants. The
committee has stated in its latest report that it "does not agree
with such an arrangement". The railways had recently decided to
subsume the safety surcharge in the ticket fares and route it to fund the
dedicated rail freight corridor. This has not been announced in the
railway budget this year. The level of the surcharge varied on a per
ticket basis and could range from Re 1 to Rs 100, depending on distance
and class of travel. The safety-surcharge had been levied for a tenor of
six years, which was to end on March 31, 2007. The railways had aimed to
raise Rs 5,000 crore over the six years from this surcharge and the
special railway safety fund (SRSF) had meant to help wipe out arrears in
renewal of over-aged assets, such as bridges, tracks, signaling equipment
and rolling stock. If the railways had decided to discontinue the
surcharge instead of routing it to part-finance the freight corridor by
subsuming the amount, there could have been a reduction in fares. Power Supply
of the much-needed gas to Dabhol has been delayed again due to shortage of
pipes required to build the Dahej-Uran pipeline that will feed the gas to
the plant. The 2,140-Mw power plant at Dabhol is currently running at a
third of its capacity, on expensive naphtha. The company laying the
pipeline has said that its machinery has been lying idle due to lack of
pipes because of which it is paying $30,000 a day. Thus the profitability
from the pipeline construction is very low. The lack of pipes is just one
of the reason that has been delaying the 576 km-long pipeline project
beyond the original deadline of March 31 this year. Earlier, the Gujarat
government had not allowed construction of a 12-km stretch of the pipeline
in Petroleum The
government has ruled out any immediate hike in retail selling prices of
petrol and diesel. However, with the increasing international crude oil
prices, the under-realisation suffered by state-owned oil marketing
companies on sale of petroleum products has been on an upswing. The union
petroleum minister, Mr. Murli Deora has said that to compensate the public
sector oil companies for the under-realisation incurred, the previous
year's formula of sharing the revenue losses between upstream companies,
government (oil bonds) and refining firms would be implemented. Currently
oil companies are incurring a loss of Rs 5.24 per litre of petrol, Rs 4.40
on diesel, Rs 14.67 on kerosene and Rs 167 per cylinder of LPG. Inflation The
annual point-to-point inflation rate based on wholesale price index (WPI)
stood at 5.44 percent for the week ended May 05,2007 as compared to 5.66
per cent for the previous week or at a lower rate of 4.37 per cent during
the corresponding week last year. During
the week under review, the WPI rose by 0.2 per cent to 211.4 from 210.9
(Base: 1993-94=100). The index of ‘primary articles’ group, (weight
22.02 per cent), gained by 0.4 per cent to 219.6 from its previous
week’s level of 218.8 mainly due to decline in the prices of food
articles. The index of ‘fuel, power, light and lubricants’ group
(weight 14.23 per cent) increased by 0.4 per cent to 321.8 from 320.5. The
price index of ‘manufactured products’ group gone up marginally by 0.1
pr cent to 183.9 from 183.7 for
the previous week due to rise in prices of chemicals and chemical
products. The
latest final index of WPI for the week ended March 10,2007 has been
revised upward from 209.3 to 209.4. Annual WPI inflation gone up to 6.51
per cent as compared to 6.46 per cent (provisional). Banking The
RBI has decided to further liberalise and simplify procedures to enable
Navaratna public sector units to invest in ‘unincorporated’ oil sector
entities, under the automatic route. Accordingly, banks may allow
remittances of navaratna PSUs made towards such oil sector investments for
the purpose of exploration and drilling for oil, natural gas, etc. but
only after ensuring that the appropriate competent authority has approved
the proposal. The investments would be subject to the usual reporting
requirements but require no prior RBI approval. Revising
its earlier norms on purchase and sale of non-performing assets (NPAs),
the RBI has decided that instead of 5 per cent at least 10 per cent of the
estimated cash flows should be realized in the first year and at least 5
per cent in each half year thereafter, subject to full recovery within 3
years. The revised guidelines come into force immediately. Public
Finance The
net direct tax collection of the government has seen a robust growth of
128.4 per cent on year-on-year basis to stand at Rs 5,441 crore during the
month of April 2007. However the gross tax collection has witnessed a
significant fall of 20 per cent to Rs 7,935 crore during April 2007 as
against Rs 9,940 crore collected during the corresponding month of the
previous year. The
revenue from central excise and customs duties, during April 2007, has
seen a growth of 19.1 per cent over the corresponding month of the
previous year totalling to Rs 13,862 crore. Excise duties have grown by
11.3 per cent to Rs 6,640 crore during the month under consideration
whereas customs duty collections have recorded a rise of 27.4 per cent to
stand at Rs 7,221 crore, compared with Rs 5,667 crore in April 2006. The
growth in the revenue of customs and excise duties can be attributed to
the booming industrial scenario and economic conditions. Financial
Markets Capital
Markets Primary
Market Time
Technoplast Limited has tapped
the market between May 18 and 23 by issuing equity shares aggregating
Rs.39.21 lakh, share of Rs 10 each in a price band of Rs 290-315 per
share. Nitin
Fire Protection Industries Ltd has
tapped the market between May 15 and 18 by issuing equity shares
aggregating Rs.33.90 lakh, share of Rs 10 each in a price band of Rs
171-190 per share. Secondary
Market The
market surged, last week, tracking firm global markets, and on reports
that there will be early onset of monsoon. Rally in two bank shares State
Bank of India, ICICI Bank and in index heavyweight Reliance Industries (RIL)
aided the rally. The 30-share BSE Sensex 507.25 points or 3.67% to settle
at 14303.41 in the week ended Friday 18 May 2007. The S&P CNX Nifty
rose 137.85 points or 3.3% to 4214.50 in the week. Small-cap
and mid-cap shares which have been rising since early last month extended
gains. BSE Small-Cap index gained 235.90 points or 3.3% to 7220.30 in the
week. BSE Mid-Cap index rose 238.68 points or 4% to 6089.95 in the week. Trading
for the week started on an upbeat note. The market surged on Monday, 14
May 2007, on firm global markets, strong Q4 March 2007 results announced
by the State Bank of India (SBI) on Saturday, 12 May 2007, and on
prospects of political stability in Uttar Pradesh. But the Sensex came off
the higher level after an initial 229.86-point rally that took it above
14,000 to 14,026.02. The
Sensex settled on a weak note on Tuesday, 15 May 2007, tracking negative
cues from global markets. It was highly volatile throughout the day’s
trading session. It lost 36.53 points. A
rally in interest-rate-sensitive banking, auto and real-estate shares,
telecom stocks and index heavyweight Reliance Industries (RIL) boosted the
market in a volatile trading session on Wednesday 16 May 2007. The BSE
30-share Sensex’s surge materialised in the last one hour of trading.
Higher Asian markets supported domestic bourses as Sensex added 198
points. Derivatives
The
Nifty May 2007 futures settled at 4,229.70, which is a premium of 15.20
points compared to the spot closing of 4,214.50
Government
Securities Market Primary
Market Under
the weekly T-Bill auctions, the RBI mopped up Rs.3403 crores (MSS worth
Rs.1500 crores) and Rs.1500 crores (MSS worth Rs.1000 crores) through
91-day T-Bill and 182-day T-Bill. The cut-off yields for the 91-day and
182-day T-Bill were 7.6435% and 7.7487% respectively. RBI conducted the
auction of "7.55% Government Stock 2010" for a notified amount
of Rs.6000 crores under MSS. The cut-off yield of the security was
8.0703%. RBI
conducted the auction of State Development Loan (SDL), 2017 for the states
of Andhra Pradesh and RBI
has announced the sale (re-issue) of "7.38% Government Stock
2015" and "8.35% Government Stock 2022" for Rs.5000 crores
and Rs.3000 crores on May 25, 2007. RBI
has announced that the rate of interest on the Floating Rate Bonds, 2014
(FRB, 2014) applicable for the year (May 20, 2007 to May 19, 2008) shall
be 7.86% per annum. Secondary
Market During
the week, the weighted average call rates during the period ranged between
7.21% and 9.08%, while weighted average repo rates ranged between 5.98%
and 7.91% and the weighted average CBLO rates ranged between 5.34% and
7.80%. The average volumes of Call, Repo and CBLO segments were
Rs.11719.31 crores, Rs.7883.28 crores and Rs.18825.41 crores respectively.
The daily average outstanding amounts in the LAF (reverse repo) and LAF (repo)
operations conducted during the period were Rs.19.00 crores and
Rs.21289.00 crores respectively. The weighted average YTM of G.S 2017
8.07% bond was 8.0885% on May 18, 2007 as compared to 8.1048% on May 11,
2007. The 1-10 year YTM spreads increased by 3 bps to 16bps. Bond
Market Dewan
Housing Finance Co has tapped the market to mobilise Rs 38 crore by
issuing bonds and offering 10.50,10.55,10.60 per cent for 5,7,10 years
respectively. IDFC
has tapped the market to mobilise Rs 175 crore with a green shoe option of
Rs 100 crore by issuing bonds and offering 10 per cent for 5 years Foreign
Exchange Market The
rupee-dollar exchange rate appreciated from Rs 40.93 on May 14 to Rs 40.84
on May 17 and depreciated to 41.90 on May 18. The
six-month forward premia closed at 4.51% (annualized) on May 18, 2007 vis-à-vis
4.42% on May 11, 2007. Commodities
Futures derivatives The
combined turnover of commodity exchanges in the country has reached to Rs
3.11 lakh crore during the month of April 2007, up 2% from Rs 3.06 lakh
crore in the April 2006, according to data complied by the Forward Markets
Commission (FMC). The three leading multi commodities exchange - MCX,
NCDEX and NMCE have together accounted for nearly 96% of the total
turnover. The turnover of MCX rose by about 14 % at Rs 2.03 lakh crore in
April 2007 over the same month of last year. The commodities turnover of
NCDEX for April month decreased by 16.9 % at Rs 93,361 crore over the same
month last year. NMCE registered a sharp fall in turnover and recorded at
Rs 3,291 crore. The top traded commodities during the month in all the
major exchanges were copper, gold, silver, black pepper, jeera, chana and
guarseed. Copper on the MCX platform has registered the highest turnover
of about Rs 52,000 crore during the month and surpassed gold. The yellow
metal registered the second highest turnover of Rs 42,500 crore. On the
NCDEX platform, black pepper and jeera registered the highest turnover of
about Rs 20,300 crore and Rs 15,240 crore, respectively. Total turnover of
all commodity exchanges (3 national and 21 regional exchanges) increased
to Rs 36.77 lakh crore for fiscal 2006-07 from previous fiscal’s figure
of Rs 21.55 lakh crore, up by 70.61%. Forward
Markets Commission (FMC), the regulator of the futures market in the
nation, is seeking collaboration with regulators in other countries to
strengthen its regulatory arm. FMC has taken membership of IOSCO, a body
of all international security and commodity market regulators and signed
MOUs with USCFTC and CSRC, commodity futures market regulators of US and The
Safal National Exchange of India (SNX), a 51:49 joint venture between the
Multi Commodity Exchange (MCX)-Financial Technologies (FTIL) combine and
the National Dairy Development Board (NDDB), is likely to start operations
in two months with its headquarters in The
National Multi-Commodity Exchange (NMCE), the country’s third largest
commodity exchange, will launch 52 new futures contracts for different
commodities. The new contracts will be launched for gold, silver,
cardamom, pepper, rubber, gur, guargum, isabgul, cumin seed, cotton seed,
linseed, sesame, mustard/rapeseed, groundnut, soybean, coconut cake, their
oils and cakes, crude palm oil, RBD palmolein, rice bran, moong, masoor
and sugar. The
Union government has extended the term of the Abhijit Sen Committee, to
look into the impact of futures trading on commodity prices, by two months Turmeric
will soon be the first commodity to see its prices displayed on the Bombay
Stock Exchange. The Sangli-based Spices & Oilseeds Exchange, which has
signed a memorandum of understanding (MoU) with the BSE to start online
turmeric futures, will start mock trading in a fortnight. Multi-Commodity
Exchange (MCX) has pitched in for more bank credit against warehouse
receipts (WRs). Taking a cue from MCX’s intention, the initiative has
been taken up by National Bulk Handling Corporation (NBHC), an associate
of MCX, which is entrusted with warehouse management, primarily related to
commodities futures trading on the exchange platform. In doing so, NBHC is
in the process of forging tie-ups with 8-10 banks. The purpose is to
arrange finance to commodity brokers who need to have working capital
loans while stocking commodities in NBHC-accredited warehouses, till their
delivery against futures contracts NCDEX
in association with the Forward Market Commission organised a joint
programme to spread awareness among farmers, traders, processors and
exporters/importers about the benefits of futures trading in commodities. By
organising joint awareness programmes at regular intervals across the
country, the FMC and the exchange are seeking to impress upon all players
in the commodity supply chain the economic benefits that will accrue to
them by hedging on the exchange platform. Insurance Bharti
AXA Life Insurance company is planning to invest Rs 100 crore in the
current calendar year. Currently, the company operates in 11 metro cities
of the country and has 1500 advisors on its fold. However, the company
plans to expand its base to 100 cities of the country and increase its
headcount of advisors to 10,000 by the year-end. Corporate
Sector Tata
Motors, Dr
Reddy’s Laboratories has reported a net profit of Rs 1,176.86 crore for
the financial year ended March 2007 as against Rs 211.13 crore in the
previous fiscal as per the Indian GAAP. After
2 years of deliberations and discussions, the board of Bajaj Auto (BAL)
has approved the planned demerger of the company. The demerger will create
3 different entities – Bajaj Holdings Auto Ltd. (BAL), Bajaj Holdings
and Investment company (BHIL) and Bajaj Finserv Ltd (BFL) with specific
focus and direction carved out for each. The
cabinet is taking up a proposal to allow public sector enterprises (PSEs)
invest their surplus funds in mutual funds. With state-owned companies
sitting on cash surpluses worth a whopping Rs 2 lakh crore, a cabinet
approval to the proposal will lend a big boost to capital markets. Even a
small percentage of this money entering equities indirectly through mutual
funds will pep up the markets. Currently, PSEs are prohibited from parking
excess cash in mutual funds. If the embargo is lifted, it will strengthen
the mutual fund industry too. PSEs surplus cash is expected to have
crossed the Rs 2 lakh crore mark this fiscal since the number of
profit-making enterprises had gone up to 157 by the end of 2006, from 138
in 2004-05. The
government has renamed the ‘Ministry of Company Affairs’ as
‘Ministry of Corporate Affairs’ and said the revised nomenclature
“not merely reflects change in the form but also in the vision and
approach that drives the initiatives of the ministry. The focus of the
ministry’s working is no longer limited to the administration of
companies but has increasingly acquired an all-inclusive role of
addressing a wide sweep of functions – corporate governance reforms and
the emerging legal framework. The revised nomenclature is more
representative of the new role of ministry, captured in the new vision:
“To be a leader and partner in initiatives for corporate reforms, good
governance and enlightened regulation, with a view to promote and
facilitate effective corporate functioning and investor protection”. Vijay
Mallya’s United Spirits Limited (USL) has announced that it had bought
100 per cent stake in Glasgow-bases Scotch giant Whyte & Mackay from
its chairman Vivian Immerman and other investors for $1.18 billion (Rs
4785.94 crore). This is the third acquisition by USL in three years. In
2005, it bought Shaw Wallance for Rs 1,300 crore. Last year, USL bought a
subsidiary of Champagne Taitinger, Bouvet Ladubay, for $15 million. With
this acquisition, USL would have consolidated sales of 75 million cases of
liquor a year, making it the second largest spirits company in the world,
next only to Diageo. Whyte & Mackay will now function as a 100 per
cent subsidiary of the UB Group with the name, United Spirits Great
Britain Ltd. Videcon
Industries, along with 9 other companies, has signed a memorandum of
understanding (MoU) with counterparts in
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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