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Economic Census – 11Non-Agricultural Enterprises By Economic Activities – Manufacturing* 1. Introduction
Manufacturing
has been the second important
economic activity among
non-agricultural enterprises with
about 21-35 per cent of the
non-agricultural enterprises engaged
in it as per different Economic
Censuses. Sixty one per cent of
own-account non-agricultural
enterprises and thirty nine per cent
of establishment with at least one
hired worker have been engaged in
these activities. These are in terms
of the number of enterprises but in
terms of output and other volume
parameters the manufacturing sector
should be dominant economic activity
amongst non-agricultural
enterprises. This note, the eleventh in the series of notes dealing in different aspects of data collected through Economic Censuses, mainly deals with desegregation of enterprises grouped under manufacturing activities. 2.
Limitations 1. Different EC have followed different NIC systems prevalent at the time of each EC for grouping different economic activities. Thus, there can be some differences in the method used for grouping different economic activities of enterprises. However, these differences do not make any difference at the major group level. 2.
Each
Economic Census has to be conducted
in all states and UTs, but due to
some unavoidable circumstances, EC
1980 did not cover 3.
Manufacturing Activities: Coverage
of Items All
the information gathered under
different economic activities
identified as belonging to
manufacturing activities has been
grouped under the said group. A
broad list of economic activities
that have been grouped under
manufacturing is presented in Table
1.
4 Manufacturing Enterprises: The Growth in Number
It
is found that over a longer period,
the share of manufacturing
enterprises in total non-farm
enterprises was declining but it was
arrested during the latest period
1998-2005. Secondly, the share of
manufacturing enterprises in rural
areas has continuously fallen with
corresponding increases in urban
areas. The number of enterprises
engaged in manufacturing activities
increased by 2.3 million from 6.0
million in 1980 to 8.3 million in
2005 with an annual growth (CAGR) of
1.3 per cent during the 25-year
period. Actually the decadal growth
has been uneven; there was a
negative annual growth of 1.1
% between EC-1980 and EC-1990 and
the growth rate between EC-1990 and
EC-1998 was niggardly at 0.4%. But
there was a smart pick up between
EC-1998 and EC-2005 when the annual
growth was perked up to 6.0%. As a
result, the share of manufacturing
enterprises in all non-agricultural
enterprises picked up to 23.3%
according to EC-2005, thus arresting
the declining trend earlier, from
35.3% in 1980 to 20.6% in 1998.
During 1998-2005, the number
of enterprises in urban areas
increased faster with an annual
growth of 6.6% and in rural areas
the growth was sizeable at 5.6%. The
share of rural manufacturing
enterprises in total manufacturing
enterprises fell from 64.2 % in 1980
to 62.0% and that in urban areas
witnessed a corresponding increase.
5.
Distribution of Manufacturing
Own-Account Enterprises and
Manufacturing Establishments with at
least one Hired Worker
Among
all manufacturing enterprises, the
share of own-account enterprises has
witnessed continuous decline over
different economic censuses with
corresponding increases in the share
of establishments. Thus their share
of OAEs has came down from 6.Trend
in the Number of Own-Account
Manufacturing Enterprises
An addition of 0.5 million own-account manufacturing enterprises has been witnessed during the 25-year period to reach 5.1 million in 2005. While own-account manufacturing enterprises in rural areas has risen by 0.30 million, that in urban areas has increased by 0.15 million during the 25-year period. The share of own-account manufacturing enterprises conducting their business from both rural and urban areas is more or less the same in 1980 and 2005. The annual growth rate (CAGR) had been miniscule at 0.4 % all along the 25-year period with the period between 1980 and 1990 witnessing a negative growth rate both among rural and urban own-account manufacturing enterprises; even between 1990 and 1998 also the annual growth rate was meager, but the period 1998 to 2005 witnessed an appreciable growth among both rural and urban manufacturing OAEs resulting in the overall annual growth rising to a positive growth of 0.4 per cent. The share of manufacturing OAEs in all own-account non-agricultural enterprises witnessed a decline over the years though there has been a minor pick up between 1998 and 2005. However, its share in all non-agricultural enterprises in rural areas witnessed a continuous decline while that in urban areas there has been a small edging up from 8.6 % in 1998 to 9.5% in 2005. 7.Trend
in Manufacturing Establishment with
Hired Workers
Manufacturing
establishments with hired workers
have witnessed a 2.4-fold increase
from 1.3 million in 1980 to 3.2
million in 2005; while in rural
areas, 1.0 million manufacturing
establishments were added, in urban
areas 0.9 million establishments has
been added during the 25-year
period. The share of rural manufacturing establishments rose from 41.3% in 1980 to 49.0% in 2005 while that of urban areas fell from 58.6 % in 1980 to 51.0% in 2005. The fastest growth rate (CAGR) of 9.5% between 1998 and 2005 in manufacturing establishments pushed up the over all growth rate to 3.6% between 1980 and 2005. Growth rate in rural areas during 1998-2005 at 11.1% has been the fastest and sharpest between any two different censuses, and that in urban areas at 8.1% has also been substantial, that is, more than the growth rates during 1980-90 and 1990-98. The share of manufacturing establishments in total non-agricultural establishments with hired workers, after witnessing declines from 27.9 % in 1980 to 22.1% in 1990 and then to 19.9% in 1998, picked up to 23.2 % in 2005. The same trend had been witnessed when one considers the share of manufacturing establishments in all non-agricultural enterprises.
8.
Directory and Non-Directory
Establishments Among
3.2 million manufacturing
establishments with hired workers in
2005, there were 2.7 million (84%)
non-directory establishments and 0.6
million
directory establishments. The
share of manufacturing enterprises (OAE+Estt)
in non-agricultural activity, though
picked up somewhat between EC- 1998
and EC-2005, has shown the long term
trend of a steep fall from 35.3% in
1980 to 23.2% in 2005; in fact,
between 1980 and 1998, the fall was
persistent and steeper still, from
35.2 % to 20.6%. Within
manufacturing establishments, both
own-account enterprises and
establishments with hired workers
have observed the same long-term
trend. But, between 1998 and 2005, a
period in which the share of
manufacturing establishments has
improved, the improvement has only
been under non-directory
establishments with directory
establishments loosing out in their
share. These provide clear evidence
that in the recent period, it is the
number of small manufacturing
enterprises that have grown faster
in number; especially its CAGR in
rural areas during the period
1998-05 was the steepest at 14.1%.
9.
Selected Characteristics of
Own-Account Manufacturing
Enterprises
As per EC-2005, out of the 0.93 million seasonal non-agricultural enterprises in 2005, 0.25 million forming about 37.4 per cent were own-account manufacturing enterprises. However, such seasonal enterprises had declined from 0.40 million in 1998 to 0.35 million in 2005. Contrary to this trend perennial own-account manufacturing enterprises have risen from 3.4 million in 1990 to 4.7 million in 2005. At this level the share of perennial manufacturing OAEs in total manufacturing OAEs works out to be 93.2 per cent and it was 90.3 per cent in 1990. There were 4.8 million non-agricultural own-account enterprises which were operating without premises in 2005, out of which 0.61 million own account enterprises were engage in manufacturing activities and they form about 12.6 per cent of the total own account non-agricultural enterprises. In spite of a fall in such enterprises over the years, among all own-account manufacturing enterprises 11.9% enterprises were operating without premises in 2005. As many as 3.6 million own account manufacturing enterprises has been operating without using power or fuel in 2005, an increase of 1.1 million own account manufacturing enterprises from 2.5 million such enterprises in 1990. 10.
Selected Characteristics of
Manufacturing Establishments with
Hired Workers
According to EC-2005, out of 483,000 seasonal non-agricultural establishments, manufacturing seasonal establishments with hired workers at 221,000 forms about 45.8%. The number of seasonal manufacturing establishments with hired workers has increased from 166,000 in 1980 to 221,000 in 2005 registering a one-half decadal increase of 33.1 per cent. However, the proportion of seasonally operated manufacturing establishments to total manufacturing establishments have dwindled from 58.7 % in 1990 to 45.8 % in 2005. As against this number of manufacturing establishments with hried workers operating through out the year has witnessed an addition of 1.6 million establishments during the period. However, their share in total manufacturing establishments witnessed a long-term up-trend (Table 8). While the proportion of manufacturing establishments with hired workers operating without premises to total non-agricultural establishments with hired workers steadily decline from 26.8 % in 1990 to 20.7% in 1998 and then to 17.9% in 2005; their absolute number steadily rose from 0.9 lakh in 1990 to 1.57 lakh in 1998 and then to 2.5 lakh in 2005. More than three-fold increase has been witnessed in the number of manufacturing establishments operating without power from 5.17 lakhs in 1990 to 16.57 lakhs in 2005. In 2005, about 51 per cent of total manufacturing establishments with hired workers and 17.9% of total non-agricultural establishments with hired workers were conducting their activities without using power. 11. Social Group Ownership of Own-Account Manufacturing Enterprises
As
per EC-2005, there were 2.75 lakh
ST-owned own-account manufacturing
enterprises which forms about 33.0 %
of total ST-owned non-agricultural
own-account enterprises. Among 5.1 million own-account manufacturing enterprises ST-owned manufacturing enterprises forSms only 5.4%. Such enterprises have however increased from 1.95 lakh in 1990 to 2.75 lakh in 2005.In 2005, there were 2,309 SC-owned own account non-agricultural enterprises. Out of which 6.25 lakh forming about 27.1 per cent were conducting manufacturing activities. Such enterprises forms about 12.3 per cent of the total own account manufacturing enterprises in 2005.There has been an addition of 7.3 lakh OBC-owned own-account manufacturing enterprises between 1998 and 2005.
12.
Social Group Ownership of
Manufacturing Establishments with
Hired Workers
There has been 83,000 manufacturing establishments with hired workers owned by ST in 2005 forming about 2.6% of total manufacturing establishments with hired workers and 27.4% of total non-agricultural ST-owned establishments. Such manufacturing establishment rose from 19,000 in 1990 to 83,000 in 2005 i.e., an addition of 64,000 during the 15-year period. Scheduled caste owned manufacturing establishments with hired workers has multiplied 3.5 times between 1990 and 2005 to reach 2.44 lakh in 2005. At this level such establishment forms 7.6% of total manufacturing establishments with hired workers. However, manufacturing establishments with hired workers owned by Scheduled Caste as proportion of total non-agricultural establishments with hired workers has registered a long-term decline, though there has been a pick up between 1998 and 2005 from 27.9% to 31.7%. OBC-owned manufacturing establishments with hired workers have more than doubled between 1998 and 2005. The number of manufacturing establishments with hired workers has risen from 6.0 lakh in 1998 to 13.6 lakh in 2005. The share of manufacturing establishment owned by OBC in total manufacturing establishments with hired workers rose from 35.1% in 1998 to 42.2% in 2005. Their proportion in total OBC-owned non-agricultural establishments with hired workers increased from 29.8% in 1998 to 32.7% in 2005. 13.
Institutional Ownership of
Enterprises All
enterprises are divided into
own-account enterprises and
establishments with hired workers.
Own-account enterprises are usually
household owned and are private
owned. Private sector enterprises
include not only family-owned
enterprises but also establishments
owned by private non-profit
institutions, private unincorporated
proprietorships, private
unincorporated partnerships and
private others. Public sector
includes government and public
sector units. This discussion is
confined only to establishments with
hired workers, as all own-account
enterprises are privately owned by
definition.
Out of the total 3.2 million establishments with hired workers engaged in manufacturing in 2005 , 97.5 % of the establishments were privately owned and the remaining were in public sector. It can be seen from Table 11 that the share of manufacturing establishment with hired workers though in absolute number doubled from 1.5 million in 1990 to 3.2 million establishments in 2005, their share ino total non-agricultural establishment in private sector diminished from 28.6% to 24.2% in 1998 and then went up to 26.8% in 2005. On the other hand, public sector manufacturing establishments with hired workers decreased from 19,000 in 1990 declined to 14,000 by 1998 but then registered a smart pick-up to 79,000 establishments by 2005, resulting in their share in public sector non-agricultural establishments going up from 1.1% in 1990 to 3.6% in 2005.
* This note has been prepared by R.Krishnaswamy
Highlights of Current Economic Scene
Agriculture Sugar
millers fulfilling export
obligations under the advance
licence (AL) scheme may have to
seek the ‘release orders’ (RO)
from the Directorate of Sugar
issued against their monthly
‘free sale’ quotas for
shipping out any consignment. The
proposal, under consideration,
would practically restrict all
sugar exports, subjecting them
completely to the Centre’s
discretion. Though the RO
dispensation covers all domestic
sales, exports had been exempted
through a notification dated July
31, 2007. However, with effect
from January 01, exports under
open general licence (OGL) have
been brought back under the RO
mechanism. The Centre is also
planning to extend the RO
dispensation to cover re-export
commitments under the Spices exports during April-December 2008 have increased by 15 per cent in terms of rupee value and 3 per cent in terms of quantity from that of the corresponding period in 2007. Total shipments in the first nine months of the current fiscal year are estimated at 3,34,150 tonnes valued at Rs 3,810.95 crore ($860.40 million) as against 3,25,320 tonnes valued Rs 3,320.00 crore ($821.45 million) in the same period of the last financial year. While exports of pepper and chilli have declined both in terms of quantity and value compared to last year, exports of ginger and mint products have fallen in terms of quantity only. Contrary to it, export of value-added products such as curry powder and spice oils and oleoresins have also shown substantial increase both in terms of quantity and value compared to last year. Against the export target of 4,25,000 tonnes valued at Rs 4,350.00 crore ($1,025 million) for the current fiscal, the achievement of 3,34,150 tonnes valued at Rs 3,810.95 crore ($860.40 million) up to December 2008 is 79 per cent in quantity, 88 per cent in rupee value and 84 per cent in dollar terms of value. The export of spices such as cumin, fenugreek, nutmeg and mace, vanilla and other seeds have already achieved the respective targets fixed for the year 2008-09. Members of the Tamil Nadu Sugarcane Growers’ Association have been prevented from off-loading of sugarcane at the National Cooperative Sugar Mills at Alanganallur, demanding payment of Rs 2,000 per tonne as procurement price for sugarcane. According to Mr N. Raju Veeranan Thevar, President of Usilampatti Taluk unit of the association, the rate offered (of Rs 1,050 per tonne) was lower compared to that from private sugar mills at Rs 1,270 per tonne. The current payment hardly left the growers with Rs 100 after meeting all costs. The
central government is about to
finalise the biggest-ever di-ammonium
phosphate (DAP) import deal
involving a quantity of 10 lakh
tonnes. The imported material,
sourced from As
per the latest estimates of the
Coir Board, coir exports from 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 5.60 percent (Provisional) for the week ended 10/01/2009 (over 05/01/2008) as compared to 5.24 percent (Provisional) for the previous week (ended 27-12-2008) and 4.36 percent during the corresponding week (ended 05-01-2008) of the previous year. The index for primary articles major group rose by 1.2% mainly due to higher prices of fruits and vegetables, wheat, barley, condiments and spices, milk, ragi, and rice. The price index of fuel, power, light and lubricants major group remained unchanged at its previous week level. Marginal rise of 0.2 % in the price index of manufactured product major group was mainly due toincrease in the prices of fish, oil cakes, imported edible oils, coconut oil, rice bran oil and gingelly oil, gur etc. For the week ended 15/11/2008, the final wholesale price index for ‘All Commodities’ (Base: 1993-94=100) stood at 234.7 as compared to 235.1 (Provisional) and annual rate of inflation based on final index, calculated on point to point basis, stood at 8.66 percent as compared to 8.84 percent. Financial
Market Developments Capital Markets Primary Market According
to a Thomson Reuters study, India
Inc is eyeing to raise as much as
Rs 77,500 cr through public
issues. This is in sharp contrast
to 2008, when initial public
offerings (IPOs) garnered only
about Rs 22,000 crore. Even in
terms of number of offerings, a
growth of 20% is expected in 2009.
While only 36 public issues were
seen in action in 2008, the number
is expected to reach 44 this year.
Although Secondary
Market Amid increasing worries about the deterioration in the world economy outlook and subdued Q3 earnings of the domestic companies, equity markets declined for the third consecutive week. Stock market slipped in three out of five trading sessions. Among the key developments, the share prices of Educomp fell to Rs 1,435 on 21 January 2009, due to rumours pertaining to accounting issues. However, the stock recovered to current levels of Rs 1,747 after the management issued a clarification. Despite the fall, the BSE Mid-Cap and Small-Cap indices outperformed the Sensex. The BSE Sensex declined by 655 points with the negative weekly returns of 7% and closed at 8,674 points. The BSE Mid-Cap index fell 176.6 points or 5.8% to 2,850.2 and the BSE Small-Cap index fell 157.2 points or 4.6% to 3,255.5 in the week. The S&P CNX Nifty fell 149.9 points or 5.3% at 2678.6 in the week. The Defty lost 6.1% as the rupee slid lower. Volumes were low and breadth was negative with advances outnumbered by declines. Smaller stocks lost more ground than pivotals with the junior down 7.5% and the BSE 500 down 6.6%. During the week, FIIs and mutual funds have been net sellers of equities to the tune of about Rs 2,285 crore and Rs 401 crore, respectively. Reliance Money, a Reliance Capital subsidiary and a part of the Anil Dhirubhai Ambani Group (ADAG), is planning to float a stock exchange for small and medium enterprises (SMEs) with 26% stake. It is also scouting for partners to start the venture in about a year’s time. The company is mulling to enter the currency futures space through the exchange. Recently, the Securities and Exchange Board of India (SEBI) had issued guidelines for SME exchanges, and had set a minimum net worth criteria of Rs 100 crore for entity willing to start it. In a move that could dent popularity of debt schemes, the SEBI banned funds from suggesting indicative yields on debt plans and cut the maximum maturity of papers liquid funds can invest. The fund houses will have to hold papers in liquid funds that mature within three months; the category of liquid-plus funds will have to be rechristened; and FMPs can no longer declare indicative yields and indicative portfolios, a practice widely followed in the industry to sell FMPs. The SEBI has not formally ordered any investigation into Maytas Infrastructure, a company owned by Satyam Computer Services (SCSL) Promoter Ramalinga Raju’s son. Further, the market regulator has not got any request from the Satyam board asking for an extension to publish the financial results. However, SEBI will consider the request if they receive it, clarified SEBI Chairman C B Bhave. The SEBI board reviewed the progress it has made so far in the investigations in the matter of SCSL in its meeting 21 January. In a move to protect the interest of investors, the SEBI has asked a high-level committee to suggest guidelines for the power of attorney (PoA) that investors issue in favour of their brokers. The agreements that are signed between brokers and investors are also up for review. The committee consists of representatives from stock exchnages, depositories, investors’ associations and SEBI representatives. The regulator has said that there should be a standard PoA and that it will amend the broker-client agreements based on the committee’s recommendations. Derivatives
There was no respite for Nifty futures from the bears as they tumbled by about 5.7% to 2655.3 against its previous week’s close of 2815.4 points. The discount between the futures and the spot price, which was pegged at about 14 points last week, has now widened sharply to over 23 points. The discount for the February month futures however stood a tad lower at 22 points, driven by accumulation of fresh short positions. But what’s notable is trading volumes continued to sag at sub-Rs 40,000 crore despite last week being the penultimate week for the settlement of January contracts. The rollover of open positions, however, stood healthy at 40% for Nifty future and about 25-42% for stock futures. The lead in to the January settlement week was a low volume and bearish affair with week when prices slid down. Volumes and open interest (OI) patterns are depressing. Intraday volatility dropped in the past few sessions but the price trend was negative last week. India VIX or Volatility Index has tumbled to a level that was last seen only on October 6. VIX declined to 34.01 from the previous week close of 44.3. The settlement week is certain to inject a little volatility in terms of wider daily range. Both Indian traders and FIIs have cut back on derivative exposures. Volumes have been low and so is OI. FIIs hold 35% of all OI, which is lower in both absolute and percentage terms than their normal commitments. Index carryover is average. About 40% of Nifty futures OI has moved to February and March. The Bank Nifty has around 30% of OI in February. There was some evidence of short covering on Friday and this could push up levels in individual stocks as well as in Nifty and Bank Nifty futures. However, the hedge ratio of index positions to all positions (stock and index) is high which suggests that there will not be a great deal of stock futures carryover into February. Government
Securities Market
Primary
Market Eight
state governments auctioned
10-year loans maturing in 2019 for
the notified amount of Rs 6,551.16
crore on 22 January 2009, with the
cut-off yield ranging from
7.0-7.13% being highest for Andhra
Pradesh and lowest for Gujrat,
Madhya Pradesh and Tamil Nadu. The
Reserve
Bank of India (RBI) auctioned
91 Day T-Bills and 182 day T-
Bills for the notified amounts of
Rs 8,000 croe and 1,500 crore,
respectively. The cut-off yield
for the 91 day T-Bills has been
set at 4.67% and for 182 day T-
Bills has been set at 4.55%.
Secondary
Market Inter bank call money rates moved in a comfortable range of 4.09-4.47% during the week. Bonds retreated on profit booking ahead of the RBI’s third quarter Monetary Policy review meeting. Traders opine that some FIIs that had invested in Government securities pulled out. FIIs pulled about $235 million of Government security investments last week. This was prompted by anticipation that yields were likely to rise in the coming weeks, ahead of the RBI action to step up credit offtake. Currently, banks have slowed purchases of government securities because most of them are already well over the prescribed Statutory Liquidity Ratio of 24%. liquidity
adjustment facility (LAF)
auctions. At the weekend LAF
auctions, the recourse to the
reverse repurchase window amounted
to Rs 49,140 crore. During
the week ended 23 January 2009 RBI
absorbed an average amount of
Rs.50,546 crore from the system
through the daily LAF reverse repo
auctions. On the other hand there
has been no borrowing by banks
under the daily LAF repo auctions.
Banks have borrowed an amount of
Rs.90 crore during the week under
the special term repo facility. Bond
Market
During the week under review, one bank, one NBFC and one central PSU have tapped the bond market by issuance of bonds to mobilize Rs 2,950 crore.
The National Highway Authority of India (NHAI) is planning to raise Rs 850 crore through bonds in next three months. It has already raised Rs 1,150 crore in the current fiscal. Bonds will not be tax-free but the money invested in these bonds from sale of properties will not be taxed. According to NHAI chairman Brijeshwar Singh, the authority plans to raise about Rs 4,000 crore in 2009-10. The authority has also borrowed Rs 400 crore from the Asian Development Bank (ADB). Foreign
Exchange Market
The dollar firmed to Rs 49.19 from last weekend’s Rs 48.77. The non-deliverable forward market also followed the spot rupee/dollar exchange rate and ended the week at 49.20. Forward premia remained stable for one, three, six and 12 months and ended the week at 3.81% (3.88%), 3.10% (2.83%), 2.26% (2.12%) and 1.84% (1.72%). Cash to spot forward premia, however, retreated to 3% (3.99%), in view of shrinking interest differentials between call and the Federal funds rates. Commodities
Futures derivatives
The
commodity market regulator Forward
Markets Commission said it has
already set up a committee to
probe the alleged irregularities
in the demutualisation of the
Indore-based regional commodity
bourse NBOT. “A fact-finding
committee has been set up to
assess the complaint filed by the
Indore-based Soya bean Processors
Association of India (SOPA)
against the National Board of
Trade (NBOT) over alleged
irregularities in the
demutualisation process,” FMC
chairman B C Khatua told PTI. The
committee, which is still
assessing the complaint, will come
out with a report soon, he said,
adding that the dispute between
SOPA and the NBOT is going on
since 2003, when the latter
demutualised the exchange. MCX
will launch futures trading in
heating oil from 27 January 2009,
said Joseph Massey, managing
director and chief executive
officer. To begin with, the
exchange is planning to commence
futures trading in February, March
and April contracts. The trading
unit of these contracts would be
4,200 The Forward Markets Commission (FMC) has introduced early delivery system (EDS) in pepper, rubber and mentha oil on experimental basis. FMC has issued a circular in this regard on January 19. As per the provisions of EDS, the near month limit shall be applicable during the last seven trading days of the expiry of a contract. An early delivery period shall be available during the pre 14th day of the expiry date of the contract (E-14) to first day before of the expiry of the contract (E-1). During the period from E-14 to E-8, normal client level position limits will continue to be in force. Hedgers, allowed higher limits by the Exchange, will continue to avail of such limits. If the intentions of the buyers and sellers match, then the respective positions would be closed out by physical deliveries. The near month limits will be in force during the period from E-7 till expiry of the contract. During this period also, if the intentions of the buyers/sellers match, then the respective positions would be closed out by physical deliveries. If there is no intention matching for delivery between sellers and buyers, then such delivery intention will get automatically extinguished at the close of E-1 day. The intentions can be withdrawn during the course of E-14 to E-1 day if they remained unmatched. In case intention of delivery gets matched, then the process of pay-in and pay-out will be completed on T + 2 basis, where ‘T’ stands for the day on which matching has been done. In respect of delivery defaults after the matching of delivery intentions, penalty provisions as applicable in the case of delivery defaults in compulsory delivery contracts will be applied. On the expiry of the contract, all outstanding positions would be settled by delivery and all the penalty provisions for delivery default applicable in the compulsory delivery contracts shall apply. As per the circular this provisions would be applied to all futures contracts of Pepper, Mentha oil and Rubber expiring in February 2009 and onwards. Life
Insurance Corporation of India (LIC)
has increased its share in
Chennai-based public sector Indian
Overseas Bank to more than 5%. The
company has purchased 2 lakh
shares on January 14, 2009. Banking State
Bank of India (SBI) has reported a
51% rise in consolidated net
profit for the third quarter,
helped by robust growth in loans
and treasury income. Net profit
for the quarter ended December
2008 was Rs 3,608 crore as against
Rs 2,384 crore in the year ago
period. Total income went up by
24% to Rs 30,318 crore. On a
standalone basis, net profit was
up 37% to Rs 2,478 crore even
after making an additional
provision of Rs 750 crore for
pension obligation due to the
steeply falling yields on
government securities. ICICI
Bank has reported a 39.3% rise in
consolidated net profit to Rs
1,560 crore for the quarter ended
December 31, 2008, compared to the
year-ago period. Total income
increased by 8.1% to Rs 16,923
crore in the same period. On a
standalone basis, the bank’s net
profit rose by 3.4% to Rs 1,272
crore, beating analysts’
estimates, on gains from
investments in government bonds
and a drop in operating expenses. Punjab
National Bank is planning to
expand its operation in the HDFC
Bank, the country’s second
largest private sector bank, has
decided to lower interest rates on
retail loans by up to 200 basis
points, while lending rates on
corporate loans will be pared by
100-150 basis points. The sharpest
cut will be seen in loans against
property where the cut will be to
the extent of 200 basis points.
Car and commercial vehicle loans
will be 125 basis points cheaper,
while interest rate on two-wheeler
loans will be reduced by 150 basis
pints. In the case of personal
loans, the bank has decided to
lower rates up to 100 basis points
from the existing level of
17-17.50 per cent. Asset
Reconstruction Company of CorporateNational
Aviation Corporation of India (NACIL),
the entity created following the
merger of state-owned Air The
Company Law Board has directed the
former chairman B Ramalinga Raju
and four senior functionaries
including his brother R Rama Raju
not to sell or mortgage their
shares and assets without its
permission. The
Andhra Pradesh police has arrested
two Price Watershouse auditors, S
Gopalkrishnan and Srinivas Talluri,
under Sections 120B (conspiracy)
and 420 (cheating) in connection
with the Satyam Computer Services
financial fraud case. The two, who
were Satyam’s external auditors,
were picked up for questioning but
have not yet been produced in
court. The
Registrar of Companies (RoC) in Reliance
Industries Ltd (RIL) has reported
a dip in net profit of just 10% to
Rs 3,501 crore for the third
quarter of 2008-09. During the
same quarter last year, its profit
was Rs 3,882 crore. Engineering
major L&T and Canadian
government-owned Atomic Energy of
Canada Limited (AECL) have signed
a memorandum of understanding (MoU)
for setting up Information TechnologyWipro
recorded an 18% year-on-year
growth in net profit for the third
quarter ended December 31 at Rs
1,004 crore, up from the Rs 854
crore reported in the same period
a year earlier. The company’s
total revenues stood at Rs 6,618
crore, up 25%, compared with the
Rs 5,302 crore reported in the
corresponding quarter last fiscal.
Contrary
to the claims of former Satyam
Computer Services Chairman B
Ramalinga Raju that there were
53,000 associates in the company,
only 40,000 exist on the rolls.
The Chairman has made this
confession to the Andhra
government’s Criminal
Investigation Department (CID)
during the four-day police
custody. TelecomReliance
Communications has reported a 2.7%
rise in quarterly profit. The net
profit increased to Rs 1,410 crore
for the third quarter ended
December from Rs 1,373 crore in
the year ago quarter.
*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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