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Roundup: Events of the fortnight

     Print Edition: Jan 20, 2013

From Russia with love: As the year came to an end, Prime Minister Manmohan Singh hosted Russian President Vladimir Putin. A spate of deals was signed between the two countries, including defence agreements worth $4 billion and a $2-billion investment pact between Russia's sovereign private equity fund and India's largest lender, SBI.

CORPORATE
In 2012, Indian companies voted Gujarat as one of the best states in terms of investment climate. For example, Maruti Suzuki, after facing labour unrest at its plant in Manesar, Haryana, decided to set up a second plant in the state. Many are crediting Chief Minister Narendra Modi for this. Modi scored a hat-trick with his third win in the state elections. He is also seen as the top contender for the post of prime minister if the BJP-led National Democratic Alliance wins the next Lok Sabha elections, due in 2014.

  • The $100-billion Tata Group was perceived as India's best known global brand within and outside the country, according to an Assocham survey of 78 top chief executive officers and heads of domestic and foreign companies.
  • Private equity deals in India fell to a three-year low in 2012. PE firms made 268 transactions worth $7,595 million, compared with 352 deals worth $11,451 million in 2011 and 303 deals worth $9,196 million in 2010, according to investment tracker VCCEdge. The consumer sector may see more deals in 2013, in the wake of the easing of foreign direct investment norms.
ITC Chairman Y.C. Deveshwar is the seventh best performing CEO in the world, according to a Harvard Business Review survey. It ranked 100 CEOs based on growth in shareholder returns and market capitalisation since 1995. Other Indians on the list are ONGC's former chairman and managing director Subir Raha (rank 13), RIL's Mukesh Ambani (28), A.M. Naik of L&T (32), former BHEL CMD A. K. Puri (38), the Bharti Group's Sunil Bharti Mittal (65), JSPL Chairman Naveen Jindal (87) and former SAIL chairman V.S. Jain (89).

  • Jaguar Land Rover's Chinese subsidiary said it would recall 337 cars with substandard fixings in their brakes and steering boxes. The British luxury marque, which is owned by Tata Motors, has relied on strong demand over the past year from emerging markets such as China, for its luxury SUVs and sleek sedans. This demand has offset sluggish growth in developed markets.
  • Japan has a new prime minister - its seventh in six years. Shinzo Abe takes charge as the nation faces the growing burden of an ageing population, industrial decline and an assertive China. Abe has promised to spur growth by offering 10 trillion yen (about $120 billion), in public works and other emergency stimulus spending.
ECONOMY
The government needs to take more painful decisions - raising diesel prices and cutting LPG cylinder subsidies were just the first steps - to rein in the subsidy bill, Chief Economic Advisor Raghuram Rajan said in a recent interview. The subsidy bill - some Rs 1.8 trillion (a trillion is 100,000 crore) in 2012/13 - is likely to go up sharply due to domestic and global factors.

The government has announced incentives to revive exports growth in an attempt to narrow the trade deficit. As part of the package, it has extended an interest subsidy of two percentage points on rupee-denominated export loans for labour-intensive and small-scale industries by a year, up to the end of March 2014. This is expected to cushion the impact of weak demand in developed economies.

The Indian workforce is bullish about the economy in 2013. According to a survey by Randstad, a human resources (HR) services company, around 72 per cent of respondents in India felt the current economic situation was good. Around 83 per cent believed the situation would improve in 2013. This indicates a high level of optimism compared to the world average of only 41 per cent respondents saying the economic situation was good. The survey covered 30 countries spanning Europe, the Asia Pacific and the Americas. Ninety per cent of Indian respondents felt their organisation was in good financial health, compared with a global average of 72 per cent.

5% The increase in foreign direct investment inflows into the services sector, amounting to $3.6 billion, between April and October 2012. The sector attracted FDI worth $3.4 billion during the same period in 2011.

$1.5 billion The fine that UBS will have to pay for manipulating global interest rates. This is the second largest banking fine ever. The Swiss banking giant also allegedly tampered with Swiss franc interest rates for over a decade.

21% Decline in new job creation in India in 2012 up to December 15, totalling 530,000 jobs, according to Assocham.

MARKETS
Indian stocks found favour with foreign investors in 2012. Total cumulative investment in the country's equity market reached an alltime high of $125 billion. The net inflow of Rs 1.23 trillion in 2012 is the second-highest for a one-year period. It comes in the wake of a net outflow in 2011, and could prepare the ground for even better times in 2013.

Mutual funds are eyeing bank stocks
like never before. Their investment in the sector stood at Rs 42,022 crore at the end of November 2012. This is 20.59 per cent of the mutual fund industry's total equity assets under management of Rs 2.04 trillion, according to the latest data with the Securities and Exchange Board of India.

COMING UP
  • The government is likely to divest a 10 per cent stake in Oil India in January, and a 9.5 per cent stake in NTPC in February. This would help the government achieve its Rs 30,000-crore divestmeent target.
  • Borrowers from nonbanking finance companies have until March 31 to replace outmoded bank cheques with new ones that have added security features for equated monthly instalment payments.
  • The 11th Pravasi Bharatiya Divas - the government's bid to reach out to the Indian diaspora of 30 million - will be held from January 7 to 9 in Cochin.

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