Highlights of  Current Economic Scene

Agriculture  

According to the latest official data by agricultural ministry, Indian farmers have planted wheat in around 26.97 million hectares till January 2, 2008, 0.4 million hectares higher from 26.57 million hectares sown during the same period last year. The area under pulses rose to 13.35 million hectares during the same period, as against 12.56 million hectares sown during the same period last year. Acreage under Oilseeds also mounted to 8.98 million hectares, up from 8.15 million hectares during the corresponding period a year ago. Sowings of coarse cereals have increased to 65.77 lakh hectares as against 59.66 lakh hectares covered during the same period previous year. Favourable weather conditions and sufficient soil moisture are the factors responsible for higher acreage under major rabi crops.

The central government has made it mandatory for basmati rice exporters to register their contract with the Agricultural and Processed Food Products Export Development Authority (Apeda) for making any shipment of basmati rice.

As per the data compiled by Solvent Extractor’s Association (SEA), imports of edible oil surged by 80% to 2.02 lakh tonnes during the October-December 2008 compared to 11.25 lakh tonnes during the same period last year, due to sharp drop in international prices and imposition of import duty by the government. Imports of non-edible oil dropped by 45% to 102,944 tonnes during the December quarter as against 150,034 tonnes a year ago. Contrary to it, vegetable oil imports rose by 67% at 2,127,753 tonnes from 1,275,172 tonnes in December 2007. It is expected that imports of edible oil would decline by February 2009 due to increase in domestic production.

Sugar mills in Karnataka have opposed the state government’s proposal to convert the payment of purchase tax into interest free loan for a period of three years.Imports of raw sugar are anticipated to go up to 3 million tonnes in 2008-09 season due to expected fall in sugar production. It is projected that similar quantity of sugar would be imported next season too.

State government of Uttar Pradesh is planning to privatise or completely sell-off 33 state-owned sugar mills in an effort to reduce the burden of the loss-making units. This attempt would help increase financial restructuring of the mills. Once the sale or privatisation process is completed the new owners would also get the reserve area or the cane growing area surrounding the mills. The losses by the end of 2007-08 were about Rs 20 billion, but they decreased after the state government decided to convert loans into equity and waive off interest part.

Supply shortage of cashew in the international market has helped exports of Indian cashew to rise in value terms by 36% during the first three quarters of the current fiscal year 2008-09 as against the same period last fiscal (2007-08), even though exports have declined in terms of volume by 4%. According to figures of the Cashew Export Promotion Council, about 82,921 tonnes of cashew valued at Rs 2,283.83 crore have been exported during the first nine months of the current fiscal as against 86,312 tonnes valued at Rs 1,671.95 crore during April-December in 2007-08.

According to Cotton Advisory Board, farmers sold 20% less cotton during the current crop season that began on October1, 2008 because of a lower harvest and decline in prices of the crop. Market arrivals slipped to 140 lakh bales as on January 10, 2008 as compared to 174 lakh bales during the corresponding period a year ago. The highest decline is recorded in Gujarat and Maharashtra . Arrivals in Gujarat declined to 31 lakh bales from 57 lakh bales a year earlier, while in Maharashtra only 30.89 lakh bales were brought into the markets as against 38 lakh bales brought last year. Cotton output is expected to climb by 2.2 % to 322 lakh bales in the year ending September from a year earlier.

International Coffee Organisation has reiterated that exports of global coffee declined slightly by 1% to 141.4 lakh bags in the first two months of the crop year 2008-09 because of fall in shipments from Indonesia . Contrary to it India ’s shipment rose by 9.6% to 3 lakh bags. India exported 2.27 lakh bags of robusta variety of coffee and 81,581 lakh bags of mild coffee during the current coffee year (October – November).                                                                                                                                                                                                                                                                                                                                                                                                                                

Industry

The General Index of IIP stands at 267.2, which is 2.4% higher as compared to the level in the month of November 2007. The cumulative growth for the period April-November 2008-09 stands at 3.9% over the corresponding period of the pervious year.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of November 2008 stand at 175.0, 285.7, and 217.5 respectively, with the corresponding growth rates of 0.5%, 2.4% and 3.1% as compared to November 2007. The cumulative growth during April-November, 2008-09 over the corresponding period of 2007-08 in the three sectors have been 3.4%, 4.0% and 2.9% respectively, which moved the overall growth in the General Index to 3.9%.

In terms of industries, as many as ten (10) out of the seventeen (17) industry groups (as per 2-digit NIC-1987) have shown positive growth during the month of November 2008 as compared to the corresponding month of the previous year. The industry group ‘Rubber, Plastic, Petroleum and Coal Products’ have shown the highest growth of 30.7%, followed by 14.5% in ‘Beverages, Tobacco and Related Products’ and 8.7% in ‘Wood and Wood Products; Furniture and Fixtures’.  On the other hand, the industry group ‘Other Manufacturing Industries’ have shown a negative growth of 16.9% followed by 13.1% in ‘Leather and Leather & Fur Products’ and 11.4% in ‘Wool, Silk and Man-made Fibre Textiles ’.

As per Use-based classification, the Sect oral growth rates in November 2008 over November 2007 are 2.3% in Basic goods, (-) 2.3% in Capital goods and 2.6% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 4.2% and 7.3% respectively, with the overall growth in Consumer goods being 4.4%.

Infrastructure

The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 registered a growth of 2.2% in November 2008 as against a growth of 5.1% in November 2007.  During April-November 2008-09, six core-infrastructure industries registered a growth of 3.6% as against 6.4% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a growth of 0.5% in November 2008 compared to a growth rate of 0.3% in November 2007 and that during April-November 2008 has been negative (-) 0.6% compared to 0.6% during the same period of 2007-08.

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of (-) 1.1% in November 2008 compared to growth of 5.2% in November 2007. The Petroleum refinery production registered a growth of 3.8% during April-November 2008-09 compared to 8.3% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 9.6% in November 2008 compared to growth rate of 7.7% in November 2007. Coal production grew by 8.6% during April-November 2008-09 compared to an increase of 4.3% during the same period of 2007-08. 

Electricity generation (weight of 10.17% in the IIP) registered a growth of 2.6% in November 2008 compared to a growth rate of 5.8% in November 2007. Electricity generation grew by 2.8% during April-November 2008-09 compared to 7.0% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 8.7% in November 2008 compared to 5.2% in November 2007. Cement Production grew by 6.4% during April-November 2008-09 compared to an increase of 8.1% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 1.4% in November 2008 compared to 4.8% (estimated) in November 2007. Finished (carbon) Steel production grew by 3.3% during April-November 2008-09 compared to an increase of 7.0% during the same period of 2007-08.

Inflation

The annual rate of inflation, calculated on point-to-point basis, stood at 5.24 percent (Provisional) for the week ended 03/01/2009 (over 05/01/2008) as compared to 5.91 percent (Provisional) for the previous week (ended 27-12-2008) and 4.26 percent during the corresponding week (ended 05-01-2008) of the previous year.  

The index for primary articles major group declined by 0.5 percent to 246.3 (Provisional) from 247.5 (Provisional) for the previous week mainly due to decline in the price index of fruits & vegetables, grams, barley, condiments & spices, groundnut, linseed, raw cotton, castor seed ,copra.,

A decline of 0.2 per cent has witnessed in the price index of fuel, power, light and lubricants major group mainly due to lower prices of bitumen, avaiation turbine fuel and light diesel oil.

 The index for manufactured product major group declined by 0.13 percent. Coconut oil, groundnut oil, newsprint, acids all kinds synthetic rubber, resins, bop films, soda ash, brass sheets, Ferro silicon, lead ingots etc.

For the week ended 08/11/2008, the final wholesale price index for ‘All Commodities’ (Base: 1993-94=100) stood at 234.6 as compared to 235.0  (Provisional) and annual rate of inflation based on final index, calculated on point to point basis, stood at 8.71 percent as compared to 8.90 percent.

Financial Market Developments

Capital Markets

Primary Market

Primary Market

Tinplate Company of India Limited (TCIL) has decided to raise funds over Rs 200 crore through a rights issue to part finance its ongoing expansion plans to raise capacity from 1,80,000 to 3,80,000 tonnes per annum.

Private equity investments in listed firms have lost nearly $1 billion so far this year largely due to the ongoing downturn in the capital market. An analysis of private investment in public equity (PIPE) in 2008 shows that these deals in the country have lost funds to the tune of $0.89 billion till January 12 this year. The PIPEs of 2008 have lost about 53.29% from their investment of $1.67 billion to current mark to market value of $0.78 billion, representing an absolute loss of $0.89 billion, Nexgen Capitals, the merchant-banking arm of brokerage firm SMC Global Securities, said in its latest report. There were as many as 30 PIPE deals in the year 2008. Out of those 30 deals, 93% or as many as 28 were in losses while only two deals amounting to 7% of the total deal volume registered gains. The two deals that recorded gains were from the oil & gas and the media sectors.

Secondary Market

A string of bad news on the global front and sustained selling by FIIs forced the markets to close in the red. FIIs sold equities worth Rs 1,380 crore during the week (until January 15). Citigroup and Bank of America reported Q4 losses to the tune of $8.3 billion and $2.4 billion respectively, aggravating investor concerns about problems that lie ahead. North America 's biggest telecom equipment vendor, Nortel Network's bankruptcy, too, had some impact on sentiments. IT stocks hogged the limelight with Infosys and TCS announcing Q3 results. Some solace came in the form of positive IIP numbers (up by 2.4% in November) and declining inflation rate (to 5.24%). The BSE Sensex fell 82 points (or 0.9%) in the week to close at 9,323, while the NSE Nifty fell 44 points (or 1.6%) to end at 2,828.

Among the sectoral indices of BSE, Reality, Bankex and Metals have been the worst performers during the week. Banking and Reality stocks were under pressure after reports that the RBI may not cut rates at its month end policy meeting. Good results by the IT-bellwether Infosys led to a 2.5% surge in the IT index.

Investors have lost Rs 3.03 lakh crore in stocks listed on the BSE during the past eight trading sessions in January. Riding on the back of the global economic downturn and the Satyam fraud, bears seized control of the market. The BSE Sensex declined by 832.1 points (8.4%) to 9,071.36 points on 13 January from the 1 January level of 9,903.5 points. The decline from the 8 January 2008 level, when the BSE Sensex reached an all-time high, is 56.6%; the BSE Sensex had closed at 20,873.33 points then, and has shed 11,802 points in the interim period. Investors of the 98 companies that are audited by PriceWaterhouse have lost Rs 24,342 crore since 1 January 2009. Significant among them are Lanco Infratech (-32.3%), NDTV (-28.3%) and Glenmark Pharma (-25.1%), apart from Satyam Computer (-82.8%). Among key industry segments, construction, telecommunication, media, food-processing, trading, paper, steel, electronics, entertainments, retailing witnessed significant decrease. NBFC, IT, automobiles, cement and products, chemicals and tea slipped marginally. The aggregate market cap on the BSE Sensex declined by a whopping Rs 3.03 lakh crore, or 9.5%, in eight trading days; it was Rs 31.94 lakh crore as on 1 January and dropped to Rs 28.91 lakh crore on 13 January.

The unexpected Satyam scam has further dampened the market sentiments. The bearish sentiment likely to deter the Mutual Fund houses from filing applications with the Securities and Exchange Board of India (SEBI) for offering equity-linked new fund offerings (NFOs) for the retail investors. According to Sebi, out of 35 fund houses, only two have filed applications for offering equity-linked NFOs in the last one month. The ICICI Prudential Mutual Fund has filed two applications with the regulator to offer ICICI Prudential Recovery Fund, an open-ended equity fund, and ICICI Prudential Target Return Fund, an open ended diversified fund. Similarly, Tata Mutual Fund has filed an application for Tata Value Opportunities Fund, an open ended equity scheme.

Foreign institutional investors (FIIs) reduced their stake in public sector banks, but increased their holdings in private banks during the quarter ended December 2008. The shareholding pattern data for the quarter ended December 2008 indicate that the FIIs have reduced holding in 21 banks and increased it in six banks. Their shareholding in four banks remained unchanged. The maximum sale took place in mid- and small-cap banks.

Derivatives        

Volumes stayed low in a derivatives market with lower than expected volatility. Carryover into February has started, but the trend is not very pronounced yet. There are some bearish signals. The ‘snakes and ladders’ game continued in the bourses last week as well, with the Nifty future recovering a good part of its early losses. The market found some sort of support on the weekend after sliding through most of the week. After dipping to a low of 2697 points during the week, Nifty futures closed the week on a better note at about 2815, though still 1.66% short of its previous week’s close. The sharp recovery on Friday also helped narrow down the gap between the Nifty future and spot prices. From trading at about 20 points discount to the spot last week, the Nifty future now trails by only 13 points. While there was a marginal improvement in open interest positions on a weekly basis, there has been also heavy unwinding of positions in Nifty futures intra-week. Hedge ratios have risen with index futures and options accounting for almost 75% of total volumes. That is a sign of caution. The FIIs, who have continued to be heavy sellers, are low in futures and options (F&O) exposures, holding 35% of outstanding open interest (OI). In the index futures market, apart from the Nifty itself, there has been activity in the BankNifty and some activity in the CNXIT. About 6% of Nifty futures OI is in February or beyond. The January Nifty (2,815) is at a discount to the underlying (2,828) and the February Nifty (2,816) is at a small premium to January. The carryover trend makes calendar bear-spreads tempting. The January BankNifty future (4,584) is trading at a small premium to the underlying (4,581) though there is no carryover. The Banking sector is interestingly poised with most bank stocks at key supports after a week-on-week decline of over 6%. A recovery in banking stocks on Friday appeared to be driven by short-covering on extremely low volumes. The perspective is still negative. An example is HDFC Bank, which delivered decent results and got hammered anyhow. The put-call ratios (PCR) in the overall market have dropped to 0.8 and that is bearish. The PCRs in terms of OI for Nifty options is at 0.93, which is also clearly bearish and deteriorating. About 34% of option OI has moved to February and beyond. There is a lack of quotes above 3,350, so the market expects a cap at 3,300-plus. The 2,850 level has proved to be a pivot point in the past three months. The market generally moves about 300-points in either direction from that zone. In the absence of any obvious trigger, assume that pattern will continue.

India VIX or Volatility Index, which had bounced back last week, lost some of its steam this week. It ended on Friday at 44.3 (47.82) after closing above the psychological 50-point mark on Wednesday. This indicates that traders may not be sure of the market direction.

The cumulative FII positions (as a percentage of the total gross market position on the derivative segment) as on January15 improved to 34.94% against the previous week’s close of 31.94%. Foreign institutional investors, however, were predominantly net sellers during most part of last week. They now hold index futures worth about Rs 9,553 crore (Rs 7,276 crore) and stock future worth about Rs 11,092 crore (Rs 10,384 crore). Their index options holding have now improved to about Rs 11,263 crore (Rs 9,96.74 crore).

Government Securities Market

Primary Market

Three state governments auctioned 10-year loans maturing in 2019 for the notified amount of Rs 5,594.78 crore on 13 January 2009, with the cut off yield ranging from 6.65-6.73% being highest for Maharashtra and lowest for Tamil Nadu.

On 15 January 2009, Reserve Bank of India (RBI) re-purchased MSS dated securities of 6.57% 2011 for the notified amounts of Rs 3,000 crore with the cut off yield at 4.29%.

The RBI auctioned 91 Day T-Bills and 364 day T- Bills for the notified amounts of Rs 8,000 croe and 1,000 crore, respectively. The cut-off yield for the 91 day T-Bills has been set at 4.58% and for 364 day T- Bills has been set at 4.51%.

RBI auctioned 30-years government stock maturing in 2039 for the notified amounts of Rs 3,000 crore with cut-off yield of 6.83% on 16 January 2009.

On 16 January 2009, RBI re-issued 7.56%2014 and 8.24%2018 for the notified amounts of Rs 4,000 crore and 3,000 crore, respectively with the cut-off yield at 5.50% and 5.45%.

Eight state governments announced the auction of state development loans maturing in one year for Rs 6,551.16 crore on 22 January 2009 through yield-based auction using multiple price method.

Secondary Market 

The inter bank call money rates remained in the 4.10-4.50% range indicating ample cash throughout the week. A jump in rates to 6.20% mid-week seemed just a blip, as rates realigned to their original levels soon. The prevailing demand for funds by banks ahead of scheduled bond auctions and reporting Friday was offset by the availability of surplus cash in the system. At the LAF, the RBI lent Rs 6,985 crore through the repo window toward the end of the week while also absorbing an average of Rs 28,488 crore through the regular reverse repo window.

Amid the current trend of extreme volatility, GOI bonds enjoyed one of the best weeks on record. However, even by the end of the week, the outlook over policy or rates was missing, with some statements from ministry officials leaving traders groping for leads. Government bonds registered their best weekly performance in several months, despite failing to hold on to early gains. Bonds rallied as banks, flush with deposits, bought into Government securities. The slowdown in credit offtake was partly on account of corporates deferring their borrowing requirements for some more time, till banks bring down their respective lending rates further. But yields were largely driven by the surge in deposits in the banking system. The10-year benchmark bond has been last traded on Friday at a yield of 5.61%. The report by a news agency quoted the official saying that RBI has been unlikely to cut rates in its January policy review. The benchmark bond ended Thursday at 5.55%. Liquidity has been comfortable with banks parking close to Rs 39,000 crores with RBI.

Bond Market

During the week under review, one NBFC and two central PSUs tapped the bond market through issuance of bonds.

Foreign Exchange Market

Volatile trading in the forex market ended, with the rupee ending slightly weaker at 48.78/$ from 48.28/$. The rupee fell to a low of 49.20/$ on strong dollar demand from corporates. However, it has been this level that has provided strong support to the rupee over the past four weeks. Exporter orders stood ready to prop up the rupee each time it neared this level. Annualised forward premia eased slightly, even as forwards moved in wide ranges along with the spot and NDF quotes. Six-month premium ended lower at 2.31% from 2.42%. Domestic forward premia remained steady on the back of covering by importers and oil companies. One, three, six and 12 month forward premia ended the week at 3.88% (3.65%), 2.83% (2.90%), 2.12% (2.22%) and 1.72% (1.73%) respectively. But the three-day forward premia narrowed in line with the shrinking interest rate differentials between the dollar and the rupee. The three-day forward premia ended last week at 3.9% (4.15%).

Commodities Futures derivatives

Futures and options trading of gold on the global exchanges have increased by 80% in 2008 to a record $5.1 trillion and trading of silver increased by 60% to a record $1.2 trillion. The bulk of trading in gold and silver takes place on the over-the-counter (OTC) market, predominantly in London . Exchange-traded transactions have steadily grown in recent years with Commex in New York , Tocom in Tokyo and more recently Multi Commodity Exchange (MCX) in India generating the bulk of activity. Total turnover of gold including OTC and exchange trading has increased by 58% to a record $20.2 trillion in 2008 from 12.8 trillion in 2007. Silver trading also increased 39% during the year to a record $2.6 trillion from 1.8 trillion in 2007. The growth in turnover was partly due to an increase in prices of precious metals during the year with gold posting an all time high in March of $1,011 per ounce, according to London-based IFSL's Bullion Markets 2009 report.

According to the commodity market regulator Forward Markets Commission (FMC), the turnover of commodity exchanges soared 35.62% to Rs 36,84,795 crore during the 2008-09 December as against Rs 2,716,901 crore in the year-ago period, buoyed by futures trading in bullion. Bullion contributed Rs 20,23,441 crore to the total turnover during the first nine months of the current fiscal. Futures trading in gold, silver and crude oil helped cover up the major fall witnessed in agri-commodities. The turnover from farm commodities declined 31.63% to Rs 4,41,287 crore during the first nine months of the current fiscal as compared to Rs 6,45,453 crore in the same period previous year. According to the statement, which publishes the data fortnightly, the turnover of three national commodity exchanges and 19 regional bourses rose 37.85% to Rs 1,76,026 crore in the second fortnight of December 2008.

The MCX India’s leading commodity exchange, has signed memorandums of understanding (MoUs) with five large trade associations of Rajasthan to spread awareness about benefits of the commodity futures market at the regional level and for broadbasing participation on the electronic platform. The five industry associations with a combined countrywide membership of about 1,500 are — Viswakarma Industries Association, Sitapura Industries Association, Electrical Technology Park of India, UCORI (United Council of Rajasthan Industry) and Dal Mill Association.

HDFC Bank and Yes Bank are joining as equity partners for the Indiabulls Financial Services - MMTC commodity exchange, which will start operations in the first quarter of the next financial year. The exchange, christened as International Multi-Commodity Exchange (IMX), will also have Indian Potash and a small trading firm among the total of six partners promoting the country’s fourth national commodity bourse.

Gold may gain over 23% to achieve a fresh all-time high of $1,000 an oz in the first half of 2009 on surging net investment demand from retail investors, who are motivated to own the yellow metal because of fears following the string of bank failures and stresses in the broader global financial system, forecasts Gold Fields Mineral Services (GFMS), a London-based independent consultancy and research company. The yellow metal, which is currently quoting at $812 an oz, hit the historic high of $1,011 an oz on March 17, 2008 on sustained safe-haven buying support from investors and consumers.

The country’s power regulator, the Central Electricity Regulatory Commission (CERC), has adjourned the hearing of a case regarding the jurisdiction of the Forward Markets Commission (FMC) in granting permission for electricity futures, till February. As the CERC has not passed any stay order in the case, futures trading in electricity will continue on the Multi Commodity Exchange (MCX).

Banking

Reliance Capital, the financial arm of the Anil Dhirubahi Ambani Group (ADAG), announced that the company has received the necessary approval from the National Housing Bank (NHB) for setting up a housing finance company. Earlier, the company had also received the nod from RBI to set up a non-banking finance company (NBFC) to cater on consumer finance business. Reliance Capital will be investing around Rs 1,500 crore in these two business segments.

Corporate

Sajjan Jindal-led JSW Group is not planning to cancel the Rs 100 crore order given to Maytas Infrastructure, run by promoters of fraud-hit Satyam Computers, as the company is satisfied with the progress made by the firm on construction of two township projects.

Since the automobile industry in India is in the recession phase, Hyundai has decided to postpone the launch of Santa Fe in India as the high import duty on CBUs make the vehicle very expensive. Hundai motor India , the country’s second largest passenger car manufacturer, has indefinitely postponed the launch of Santa Fe in the country. However because of the slowdown in the overall demand in the sector, the company is not sure of bringing the vehicle into India , at least in the near feature.

Hindustan Construction Company (HCC) has reported a net profit of Rs 23 crore during the quarter ended December 31, 2008, down by 7.4% compared to Rs 25 crore during the previous year. The marginal drop in the net profit is on account of the foreign exchange loss of 6.8 crore, the company has suffered during the quarter coupled with higher interest cost of Rs 57.3 crore due to the unprecedented liquidity crisis in the industry. However, HCCs order book position registered a growth of 35% during the quarter taking its total order book value to Rs 12,177 crore. The turnover of the company during the period stood at Rs 876 crore showing an increase of 16.3% and its operating profit stood at Rs 106 crore, registering a growth of 9.5%.

MRF, a leading tyre manufacturer has reduced prices of tyres which will be effective from January 13, 2009. Truck-tyre segment comprises large part of the tyre production of the company, which will be available cheaper up to Rs 400 than earlier prices.

India’s second largest two-wheeler manufacturer Bajaj Auto Ltd has posted a 23% drop in its net profit to Rs 164 crore during the quarter ended December 31 as against a net profit of Rs 213 crore recorded during the corresponding quarter of the previous year. Following a sharp decline in sales, the company revenues during the October-December quarter fell to Rs 2,103 crore at 15.9% against a figure of Rs 2,501 crore posted over the same period the previous year. Bajaj Auto sold 4,93,748 vehicles during this period, which is less than 7,13,135 vehicles sold during the third quarter of the last financial year. The two-wheeler sales during the quarter dropped severely to 4,17,111 from 6,38,716 units sold during the October-December quarter in 2007-08. The company however managed to increase its export revenues by 56% to Rs 795 crore during this quarter from Rs 511 crore during the corresponding period last year. The number of units exported during this quarter were 2,15,233 as against 1,52,261 units exported over the same period in the previous year. The drop in sales along with increased expenses on purchased goods and other operational expenditure led to a sharp decline in the net profit.  

In this time of economic slowdown, the Indian paper industry is not unduly perturbed about maintaining a healthy 7-8% annual growth rate, as it has been managed to achieve in the past one decade. But imports of finished products like books and periodicals from countries like Indonesia and China may spoil the growth story. The domestic paper industry, estimated to be worth Rs 25,000 crore ($5.95 billion), has urged the government to impose anti-dumping duty in compliance with WTO norms, so that growth could be maintained during the next few years.

The $364 billion Indian retail industry is all set to witness modern retailers changing geographical landscapes of their retail stores in Mumbai, Bangalore and Delhi are relooking at their cost structure in the first quarter of 2009.

Information Technology

The World Bank has hired Indian IT major Tata Consultancy Services (TCS) to do much of the work previously being done by Satyam, which has now been debarred by the bank from doing business with it. TCS had bagged much of the Satyam’s project through competitive bidding early last year, thus indicating that the World Bank is not specifically targeting Indian IT companies, as being alleged in certain quarters. Two other Indian companies, Nestor Pharmaceuticals and Gap International (both non-IT entities) and one individual Surendra Singh, too, have been debarred by the global apex monetary institution. The action was initiated against these entities and an individual as they were found to have “violated the fraud and corruption provisions of the Procurement Guidelines or the Consultant Guidelines,” besides offering improper benefits to the Bank staff. In all, the World Bank has debarred as many as 111 companies and individuals from across the world from doing or bidding for its projects.

Infosys Technologies, India 's second largest software services exporter, has reported a better-than-expected third quarter consolidated net profit of Rs 1,641 crore for the quarter ended December 31, 2008 as against Rs 1,231 crore in the corresponding quarter a year ago. The operating profit for the third quarter was up by a healthy 45% at Rs 2,031 crore.

On a stand-alone basis, the company's December quarter net profit grew 34.7% to Rs 1,598 crore when compared with Rs 1,186 crore for the quarter ended December 31, 2007. Total income was up 35.8% at Rs 5,429 crore from Rs 3,999 crore. During the quarter, Infosys and its subsidiaries added 5,997 employees (gross). The net addition during the quarter was 2,772 taking the employee count to 1,03,078.

Infosys banking software Finacle, had been selected for standarising and consolidating the technology platform of Raiffeisen International across Central and Eastern Europe . As part of the agreement, Infosys would implement version 10 of Finacle Universal Banking Solution across multiple countries in parallel, providing solutions for core banking, CRM, e-banking and mobile alerts.

TCS has recorded a net profit (consolidated Indian GAAP) of Rs 1,362 crore for the quarter ended December 31, 2008 – a mere 2.7% rise over the corresponding quarter figures of Rs 1,327 crore in the previous fiscal. Revenues of the company at Rs 7,277 crore were up by 24% over the corresponding quarter figures of Rs 5,923 crore. The TCS management announced that the revenues from the Citi arm (whose acquisition it has completed) will be reflected in its books from the fourth (next) quarter. It added that it’s open to servicing clients of the beleaguered Satyam Computer Services if they approach it.

Lazard Asset Management has sold around 5% stake it had in Satyam Computers in a bulk deal on the National Stock Exchange (NSE) on January 15, 2009, around 2.44 crore shares were sold at the rate of Rs 21.74 per share.

The Bangalore-headquartered company, Sasken Communication Technologies has received a big jolt as the joint venture it had formed with the Tata Group almost two years back has been called off last week. According to high level sources close to the development, the joint venture (JV) between TACO and Sasken Automotive Electronics (TSAE) has been called off and over 100 people working for the JV have been asked to quit. In January 2007, Sasken and Tata AutoComp Systems, a Tata Group company had formed the JV with focus on automotive electronics products in the areas of telematics, infotainment and occupant convenience. However even two years after its formation, the JV could hardly make any progress. Other than TSAE, Sasken has also formed another JV with venture capital IDG Ventures India in the area of machine to machine (M2M) solutions, the JV ConnectM is yet to make substantial progress. The JV was formed with a join investment of $6 million by Sasken and IDG Ventures India in June 2007.

Telecom

Ending the long wait over next generation telecom services, MTNL will be launching its 3G services commercially in Delhi within 10-14 days. While, in Mumbai the 3G services would be launched in the first week of February. However, as of now the company has not entered into any tie-up with content providers.

*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.