June 9-June 15, 2015 WEEKLY ECONOMIC BULLETINindiainbusiness.nic.in/newdesign/upload/Publications/Weekly/June... · exploration major Cairn India with the natural resources arm Vedanta

NEWS FEATUREPM calls for creating more ponds, augmenting irrigation networkIn a year when the monsoon is expected to be below average, Prime Minister Narendra Modi on June 8called for creating more farm ponds across the country.

India’s factory output jumps, retail inflation also up In a development that should please India Inc, official data on factory output for April showed a 4.1 percentgrowth, against 2.1 percent for the month before but retail inflation also inched up to 5.01 percent in Maydue to higher food prices.

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Malaysia keen to invest in road projectsMalaysia has shown keen interest to invest in India’s highways projects, which are being developed underpublic-private-partnership (PPP) mode.


Amazon opens India’s largest warehouse near HyderabadGlobal e-commerce major Amazon on June 10 opened its biggest ‘fulfilment centre’ (FC) or warehousein India, at Kothur in Telangana.

OVERSEAS INVESTMENTS

ITP Division Ministry of

External Affairs Government of India

Issue No 627 I June 9-June 15, 2015

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TRADE NEWS150 Indian exporters to participate in China expoAbout 150 Indian firms from diverse sectors are all set to participate in the 3rd China-South Asia expo thatbegins this Friday (June 12) in China’s Yunnan province.


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SECTORAL NEWSCairn India to merge with Vedanta Industrialist Anil Agarwal on June 14 announced the merger of two of his group companies -- the oil and gasexploration major Cairn India with the natural resources arm Vedanta Ltd. Cairn shareholders will get one eq-uity and one redeemable preference share of Vedanta.


NEWS ROUND-UPIndia leads emerging economies in growth chart: World BankIndia, with a 7.5 per cent projected growth, may officially surpass China as it is for the first time leading majoremerging economies in growth chart, according to latest World Bank figures.


WEEKLYECONOMIC BULLETIN

WEEKLYECONOMIC BULLETIN 2

Issue no 627 I June 9-June 15, 2015

>> NEWS FEATURE

PM calls for creating more ponds, augmenting irrigation networkIn a year when the monsoon is expected to be below average, Prime Minister Narendra Modi on June 8 called for creatingmore farm ponds across the country.

An official statement said Modi called for quick adop-tion of a multi-pronged strategy to augment the coun-try’s irrigation network, asking officials to treat thechallenge of below-normal rainfall as an opportunityand seeking an intensive short-term effort to boost cre-ation of ponds across the country.

“The prime minister noted that falling ground-waterlevels in some states made it essential to bring aboutan urgent shift in cropping-patterns. He called for focuson maize, and initiatives in value addition in maize, tomake it more attractive for farmers,” the statementsaid.

Chairing a meeting of top officials from the agricul-ture, water resources, rural development and financeministries, besides NITI Aayog and the PMO, Modisought a relook at the administrative mechanisms, fi-nancial arrangements and technology applications in theirrigation sector for a shorter, more comprehensive decision-making process which could deliver quick results for thefarmers, the statement said.

The prime minister, while reviewing the preparations for the Pradhan Mantri Krishi Sinchai Yojana, said expansion of ir-rigation has to be linked with a comprehensive evaluation of cropping patterns across states, as well as a judicious mix ofmodern and micro irrigation systems such as drip and sprinkler irrigation.

He also said a thorough study should be made of various traditional irrigation methods across the country.Modi said young researchers from universities should be involved in irrigation-policy planning and irrigation plans need

to be worked out at the district level, which young civil services officers should be asked to devise.The meeting was also attended by Water Resources Minister Uma Bharati, Rural Development Minister Chaudhary

Birender Singh and Minister of State for Agriculture Sanjeev Balyan.Source: Indo-Asian News Service

WEEKLYECONOMIC BULLETIN >> NEWS FEATURE3


India’s factory output jumps, retail inflation also up In a development that should please India Inc, official data on factory output for April showed a 4.1 percent growth,against 2.1 percent for the month before but retail inflation also inched up to 5.01 percent in May due to higher foodprices. The retail, or the consumer price indexed(CPI) inflation, in the corresponding month of2014 was at 8.33 percent, the Central StatisticsOffice (CSO) data showed.

The CPI-urban for May stood at 4.41 percentand rural at 5.52 percent. May’s food inflationstood at 4.8 percent from the previous month’srate of 5.11 percent. In this connection, the Re-serve Bank of India, last week, reduced its reporate, that is the rate at which it lends to commer-cial banks, from 7.5 percent to 7.25 percent.

Giving reasons for the monetary policy stance,RBI Governor Raghuram Rajan said plans for lowerfood output needed to be in place, global financial markets were volatile, factory output was recovering unevenly, servicessector was emitting mixed signals, fuel inflation was up, exports were down and liquidity had improved. Even as retail infla-tion came in line with the equities markets and the industry’s expectations, it was the factory output that surprised many. Anuptick in manufacturing pushed up India’s factory output to 4.1 percent in April, against 2.1 percent in the month before.

Further, among the six sectoral indices, capital goods expanded by 11.1 percent.The factory output had grown at a slower pace of 2.1 percent in March from 5 percent in February. The factory output

had stood at 3.7 percent in April, 2014. According to the CSO data on the Index of Industrial Production (IIP), the healthygrowth in the factory output for April was attributed to an uptick in the manufacturing sector.

The manufacturing sector, which has the maximum weightage in the IIP, grew by 5.1 percent in the month under re-view from 2.2 percent in March. For the other two major sub-indices of the IIP, the CSO data showed that the index forthe mining sector inched up by 0.6 percent against 0.9 percent in March, while that for electricity segment was down 0.5percent in April, against a growth of 2 percent in the month before.

The three sub-indices of the IIP namely manufacturing, mining and electricity, had registered a growth of 3 percent,1.7 percent and 11.9 percent in April, 2014 respectively.

Friday’s data also showed that among the six use-based classifications of the index, the output of capital goods ex-panded by 11.1 percent. The capital goods segment is a key indicator of economic activity.

Consumer non-durables, intermediate goods, consumer goods and basic goods also posted a healthy performance.These sectors grew by 4.4 percent, 3.3 percent, 3.1 percent and 2.8 percent respectively.

The consumer durables segment expanded by just 1.3 percent in April.Even though both the macro economic data were released after the close of equities markets, still it had an affect on

investor sentiment which turned anxious leading to subdued trading.The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), closed a volatile session up only 54

points or 0.21 percent on June 12. The anxiety over inflation and factory output data, had dented investor sentimentseven on Thursday and led the Sensex to plunge nearly 470 points.

Terming the April 2015 figures encouraging, industry body Assocham said it is pleased to finally see the green shootsof economic activity getting converted into growth figures for industry.

“IIP numbers seem to be healthy and encouraging and seem to provide stem to the underlying growth momentum as



The wholesale price index-based deflation continued for the seventh month in a row, at 2.36 per cent in May, though the rateof decline in prices moderated from 2.65 per cent in April, official data showed on June 15.

However, pulses continued to see surging inflation as therate of price rise rose to 22.84 per cent against 15.38 per centover this period. It should be noted that earlier data hadshown that retail price inflation increased to 5.01 per cent inMay from 4.87 per cent in April. There also, inflation in pulsesrose to 16.62 per cent from 12.52 per cent.

Pulses have been a matter of worry and the Cabinet hadrecently allowed imports to tame their prices.

Otherwise, the wholesale price index-based food inflationhas been on the downward swing. It fell to 3.80 per cent inMay from 5.73 per cent in April. This was the fourth month towitness a decline in food inflation.

Inflation in onions also remained elevated, though it moder-ated from 29.97 per cent in April to 20.41 per cent in May.

This was the fourth month to witness over 20 per cent inflation in onions, with the rate of price rise at its highest at 36.49per cent in March in these months.

Elsewhere, there was either subdued inflation or deflation among food items. Non-food articles also continued to see deflation at 2.24 per cent in May, with all the broad categories--fibres, oil seeds,

minerals--witnessing the rate of decline in prices. The same was the case of fuel and power. Here also deflation stood at 10.51 per cent in May, slightly lower than 13.81 per

cent in April. All the major categories--petrol, diesel, cooking gas-- witnessed decline in prices. Manufactured products also saw deflation for the third month in a row, at 0.64 per cent in May, from 0.52 per cent in April.

This reflects low domestic demand as well as low prices of import items. In case of processed food items, deflation persisted for the second consecutive month at 0.64 per cent in May against 1.05

per cent in April. Sugar, which is facing glut, saw deflation rising to 9.06 per cent from 8.86 per cent in this period.Last week, the Cabinet had cleared Rs 6,000 crore soft loan to the industry to clear part of their 21,000 crore dues to

farmers. However, the industry was not pleased as the problem of over-supply and depressed prices was not taken care of.Source: Business Standard

WPI deflation persists for 7th consecutivemonth in May

the industrial activity is showing signs of revival as indicated by the 4.1 percent growth seen in April 2015 over the corre-sponding month of 2014,” said Rana Kapoor, president of The Associated Chambers of Commerce and Industry of India.

“The manufacturing sector seems to have recorded a better growth rate of 5.1 percent as compared to the 3.0 percentseen in April 2014, he added.

Jyotsna Suri, president of industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) said:“The manufacturing growth seems to be gaining momentum now as is evident from the healthy growth of key sectorslike capital goods and also from the fact that growth is more diversified.”

“Government has taken several steps in the last few months to improve the business environment and enhance the in-vestor confidence which is now going to yield results,” she added.

Source: Indo-Asian News Service



Finance Minister Arun Jaitley to embark on10-day US visit from June 16Union Finance Minister Arun Jaitley will leave here on June 16 on a 10-day US visit during which he will meet US Secre-tary of Treasury Jacob Lew, foreign institutional investors (FIIs) and US industry leaders.

An official source here told IANS that Jaitley’s USitinerary during the visit, ending on June 25, embracesNew York, Washington and San Francisco cities.

In the US capital Washinton, the finance minister isslated to meet the US treasury secretary and in SanFrancisco he will hold a round-table with the US-IndiaBusiness Council.

While in New York, Jaitley will interact with the offi-cials of the New York Stock Exchange, meet FIIs and ad-dress students of two institutes, the source said.

India has received $1.82 billion in foreign direct in-vestment from the US in 2014-15.

Having opened up several sectors to foreign invest-ment, India has been projecting itself as a favourabledestination for attracting foreign funds.

The government has relaxed FDI norms in various sectors, including insurance, railways and medical devices.In various public fora periodically, Jaitley has been assuring investors of a non-adversarial tax regime, saying the gov-

ernment has no intention of taxing firms retrospectively and will make it easier to do business in India.The most recent promising news in this regard came on Friday when official data showed that the country’s factory

output for April showed sharp rise of 4.1 percent, from 2.1 percent reported for the previous month.Source: Indo-Asian News Service

WEEKLYECONOMIC BULLETIN >> OVERSEAS INVESTMENT6


Global e-commerce major Amazon on June 10 opened its biggest ‘fulfilment centre’ (FC) or warehouse in India, at Kothurin Telangana.

Spread over 280,000 square feet, the fa-cility has come up in Mahabubnagar district,about 60 km from Hyderabad.

This has taken to 11 Amazon’s FCs ineight states, covering one million squarefeet of space with a storage capacity of over2.5 million cubic metres, the company said.

The new facility, which has come up withthe largest investment by Amazon in anystate, will help small and medium busi-nesses (SMBs) in Telangana and the nearbyregion to gain access to and service cus-tomers across the country at low operatingcosts.

Amazon India’s director for operations Akhil Saxena said the FC will also enable faster and quicker delivery of productsto amazon.in customers in the region.

Amazon has already signed a memorandum of understanding (MoU) with Telangana to train thousands of sellers acrossthe state in e-commerce and take advantage of the digital economy.

Amazon India will offer trainings to SMEs through seminars, workshops, video aids and ready reckoners on how to listand manage inventory for an ecommerce business.

Telangana’s Information Technology Minister K. Tarakarama Rao, who inaugurated the FC, said Amazon will build a 2.5million square feet campus in Hyderabad, which will be its biggest campus outside the United States.

Saxena said work on the project would begin soon.The state government has allotted 10 acres of land for the campus in the IT corridor of Gachibowli. He declined to share

the quantum of investment.An official in the state’s IT department said Amazon will be investing about Rs.1,800 crore in the facility.The minister, who visited the US last month, said he requested Amazon to set up a data centre in Hyderabad and bring

Amazon Web Services (AWS), a collection of remote computing services, to Telangana.He expects a delegation from the US to visit Hyderabad soon to study the proposal.


Amazon opens India’s largest warehousenear Hyderabad


Malaysia has shown keen interest to invest in India’s highways projects, which are being developed under public-private-partnership (PPP) mode.

A big delegation of government representa-tives from Malaysia, Construction Industry De-velopment Board (CIDB), which is a statutorybody under Minister Works, developers and topbankers held meetings with officials at the roadministry and also interacted with the highwayminister Nitin Gadkari on June 8.

The interests from overseas players havecome at a time when private players are comingback in the highway sector with six projectsbeing bagged by them under PPP mode re-cently. In four cases, developers have promisedpremium, an upfront annual payment to NHAI.

“Their banks and other financing agencies are ready to provide debt to their companies if they bag projects. The recentdecision to allow a developer to divest his equity from a project two years after completion has boosted their faith in oursystem. We want more and more overseas player to take up works here,” said road secretary Vijay Chhibber.

Source: The Times of India

Malaysia keen to invest in road projects

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>> OVERSEAS INVESTMENT



Ford India’s popular compact sport utility vehicle EcoSport may be shipped to the US for sale starting October 2017, multi-ple people familiar with the process said.

Ford has already begun work on developing a face-lifted version of the SUV for the North American markets. It has alsokicked off a preliminary tendering process to source components.

The request for quotation put out by Ford is foras many as 90,000 units a year, which is more thanthe number of vehicles it sells in India.

No US car maker has ever exported cars made inIndia back to its home market.

If Ford gets the green signal, it will mark a his-toric first not only for the American car maker butalso for India, which has built a robust manufactur-ing base for car exports thanks to investments byHyundai, Maruti, Ford and other auto giants over theyears.

Made-in-India cars have been exported to manymarkets, including those in Europe.

India is already a key export base for Ford Motor— it ships India-made compact vehicles to Europe.Mahindra & Mahindra had plans to take a pickupversion of the Scorpio to the US, but that hasn’t happened.

Motorcycles made by Royal Enfield and KTM, and Mahindra’s tractors are sold in the US. A Ford India spokesperson saidthe company “would not like to comment on speculation around future product and manufacturing plans”.

In a recent interview with ET, Ford Motor Chief Executive Mark Fields said he wouldn’t rule out the possibility of export-ing from India to the US. “In business, you never rule out from the beginning certain opportunities. But it all comes down tomaking sure first and foremost that wherever the product is manufactured, you want to make sure that it is high qualityand meets the expectations of consumers,” he had said.

But the biggest threat to India’s chances come from Ford Thailand, which too is competing for the order to supply theSUV for the US and Canadian markets. “The plan for exports to the US from Asia was there right from the start. As thecompany was globally restructuring operations, the clarity on whether India or Thailand was being studied,” said one of thepeople. “It seemed that the project will go to Thailand in 2014, but now the company has begun discussions with Indianvendors to source additional US volumes from India.”

Ford entered India two decades ago and has so far invested more than $2 billion (Rs 12,800 crore at current exchangerate), but is still struggling to turn profitable — it is currently sitting on accumulated losses of more than Rs 1,000 crore.

As local demand didn’t match expectations, it decided to export vehicles from India, starting with the Figo hatchback in2010. Its plan was to ship 30-40% of total production, but in the past two years it exported more than half the local output.

In the fiscal year ended March 31, 2015, Ford India exported 78,814 of the 1.53 lakh vehicles produced in India. TheEcoSport accounted for almost 70% of the shipments. Higher utilisation of the manufacturing facility to cater to exportshelped Ford India reduce its production cost per car and the company is operationally profitable now, people in the know said.

Thanks to demand from some of the overseas markets, the unit operated the Chennai factory 24X7 for the first time inthe second half of last year.

Ford working on plans to ship India-madeEcoSport to US



China’s Dalian Wanda to set up industrialtownships in IndiaThe $100-billion Dalian Wanda Group of China is planning to develop industrial townships in India with built-in facilitiessuch as schools, hospitals, shopping malls and recreational centres, a top official of the company has said.

Wang Jianlin, chairman of the group, expressed his company’s interest while interacting with the Indian business com-munity convened by the Confederation of Indian Industry (CII) here, according to a statement from the chamber.

Wang said that he was impressed with the foreign investment norms of the government and said this was his follow-upvisit to India after meeting with Prime Minister Narendra Modi during his China visit in May.

He said that he would closely work with the local state governments to attract Chinese investments in the industrialtownships set up by the Dalian Wanda Group.

Amitabh Kant, secretary, Department of Industrial Policy and Promotion, told the session that areas such as media andentertainment, tourism and culture should also be promoted bilaterally to create people to people awareness.

In his opening remarks, Chandrajit Banerjee, director general, CII, said that the centre piece of recent India - China en-gagement has been their cooperation in the economic sphere and the widening footprint of Chinese businesses in India andvice versa.

The $100-billion dollar Chinese company founded in 1988 operates in the areas of commercial property, luxury hotels,culture and tourism and department stores.

As many as 40 senior industry members from infrastructure, construction, tourism, hospitality, media and entertain-ment participated in the interactive session.


Once the US volume kicks in, the plant is likely to transform into an EcoSport production base, with a small assemblybase for the new Endeavour SUV and Fiesta sedan, the people said.

Rakesh Batra, partner and national leader for the auto sector at consultancy firm EY, said if the plan fructifies, it will bean important milestone for India’s automotive industry.

“Certainly, in Ford’s global network, India may have attained the confidence of delivering cost, quality and desired vol-umes, as the logistic cost of shipping vehicles out of India is quite high. A sizeable volume also helps in improving capacityutilisation and thereby cost per unit, plus rupee depreciation also helps in improving competitiveness of vehicles manufac-tured in India,” he said.

If Ford ships its vehicles to the US from India, it will give confidence to other manufacturers too to explore such opportu-nities, he said. Japanese two-wheeler maker Yamaha already exports India-made R15 150cc sports bike to its home market,selling it in the entry-level segment.

Source: The Economic Times

WEEKLYECONOMIC BULLETIN >> OVERSEAS INVESTMENT

The Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA) will invest $200 million in electronic manufac-turing sector in Greater Noida, an Uttar Pradesh government official said on June 10.

A seven-member delegation of the association led by TEEMA president Francis Tsai met Uttar Pradesh chief secretaryAlok Ranjan on Tuesday and expressed their desire to invest in the state.

Other members of the delegation John Ko, John Lin, Dingo Ku, Gary Liu, GJ Lee and Sanjay Sony, representing Tai-wanese giants like D-Link, CTCI Corp, Winston Corp, told state officials they were influenced by the incentives being of-fered by the Uttar Pradesh government and would like to avail of the opportunity.

Assuring his government’s full support in project implementation of Taiwanese firms, Ranjan told the delegation that in-centives were available under the state’s infrastructure and industrial investment policy and electronic manufacturing pol-icy of the state and it shall be extended to them.

He also asked the representatives of TEEMA to make a formal proposal with necessary support required from the stategovernment.

TEEMA presidentp Francis Tsai informed the officials that a group of industries from Taiwan was willing to invest in es-tablishing an electrical and electronics manufacturing cluster in Greater Noida.

Apart from basic facilities like banks, recreation centres, incubation centres and skill development facility will also beset up in the proposed cluster. TEEMA is facilitating the establishment of project.

Francis Tsai said, “This initiative of bringing Taiwanese businesses in electronics segment will give boost to electronicsmanufacturing in Greater Noida and Noida.”

He said TEEMA was looking for major investment by Taiwanese companies in Uttar Pradesh, who would manufactureelectronics parts for major manufacturing firms.


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Taiwanese firms plan to invest $200 mn inGreater Noida

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WEEKLYECONOMIC BULLETIN >> TRADE NEWS


About 150 Indian firms from diverse sectors are all set to participate in the 3rd China-South Asia expo that begins this Fri-day (June 12) in China’s Yunnan province.

“India is the partner country this year in the five-dayexpo comprising trade fair and brain-storming sessionson investment and trade promotion between China andSouth Asia,” Federation of Indian Export Organisa-tions’(FIEO) president S.C. Ralhan said in a statementhere on Wednesday.

The expo, to be held in Kunming city, is also a part ofChina’s Bridgeahead Construction’ strategy to estab-lish the provincial capital city and Yunnan province inthe southwestern region as a gateway between themainland and its neighbours to the south and the west.

The Indian exhibitors, showcasing their products andgoods, will include participants from sectors such asleather handicrafts, jute, garments, gems and jewellery and spices.

As head of the Indian delegation, Ralhan will address the China-South Asia business forum at the expo on acceleratingbusiness through the silk road economic belt.

“The event is a great opportunity for our exporters to showcase their products and establish trade linkages with Chinaand countries in South Asia and South-East Asia to pave the way for greater cooperation in trade and investment,” Ralhanadded.

Bilateral trade between India and China, the two major Asian economies, has risen to $72 billion in last fiscal (2014-15)from $58 billion in 2010-11, with the trade volume with Yunnan being $523 million.


150 Indian exporters to participate inChina expo

WEEKLYECONOMIC BULLETIN >> TRADE NEWS

Essel Group Middle East to invest in projectsin AfricaEssel Group Middle East, has signed an agreement for acquiring 60 per cent participating interest in the portfolio of African oiland gas exploration projects owned by Simba Energy Inc, a Canadian publicly traded oil and gas company.

The Essel Group ME is a wholly-owned subsidiary of Essel Group India. “Essel Group (Middle East) is pursuing growth by securing strategic resource investments across the globe. It is diversifying

into the hydrocarbon sector and this agreement is a significant step towards advancing this strategic initiative,” said a companystatement issued on June 11.

The initial agreement lays the foundation for Essel Group ME to invest in Simba’s portfolio of existing African explorationprojects on a farm-in basis.

For enhancing its operation, the firm is also prepared to invest in other minerals in the near future.“Our strategy of securing a position in the African resources base as instrumental in supporting our future growth plans. Hav-

ing reviewed the available data on Simba’s blocks along with the surrounding exploration and production success by othermajor groups, we see a highly undervalued opportunity with strong potential. We did not want to pass up on this opportunity inwhat is fast becoming a very competitive environment,” said Gagan Goel, Managing Director, Essel Group Middle East.

Additionally, to enhance Essel Group ME’s operation, the firm is prepared to invest in other minerals in the near future.Source: Business Standard

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WEEKLYECONOMIC BULLETIN >> SECTORAL NEWS13


Cairn India to merge with Vedanta Industrialist Anil Agarwal on June 14 announced the merger of two of his group companies -- the oil and gas explorationmajor Cairn India with the natural resources arm Vedanta Ltd. Cairn shareholders will get one equity and one re-deemable preference share of Vedanta.

The transaction is intended to be completed bythe first quarter of 2016, the group said.

“The merger of Cairn India and Vedanta Ltd con-solidates our position as India’s leading diversifiednatural resources champion, uniquely positioned tosupport India’s economic growth,” Vedanta chair-man Agarwal said.

“The independent directors, at both Vedanta andCairn India, unanimously recommend the proposedcombination. This marks a significant step towardsachieving our stated long-term vision of a simplifiedgroup structure with alignment of interests be-tween all shareholders for the creation of long-term sustainable value.”

The group, in a filing with stock exchanges on June 14, said the strategy remains unchanged to continue focus on de-livering attractive growth, sustainable development, long-term value for shareholders and to sustain strong dividend dis-tribution.

“Approximately 752 million each of equity shares and redeemable preference shares will be issued to the minorityshareholders of Cairn India by Vedanta Limited pursuant to the merger,” it said, adding: “No shares will be issued toVedanta Limited or any of its subsidiaries for their shareholding in Cairn India.”

Vedanta Limited itself was created with the merger of Sesa Goa, Sterlite and Vedanta Aluminium.Cairn said on Saturday in a stock exchange filing: “A meeting of Board of Directors of the company will be held on

June 14, 2015, inter alia, to consider and evaluate amalgamation of the company with Vedanta Limited.” Vedanta took majority control of Cairn India for $8.67 billion in 2011 and holds 59.9 percent in the latter through its

various units.Merging Cairn India with itself would provide Vedanta access to the oil explorer’s cash and help reduce its debt bur-

den. At the end of March this year, Vedanta had total liabilities worth over Rs.99,000 crore on a consolidated basis.The Anil Agarwal-led Vedanta earlier this month hiked stake in its oil and gas exploration subsidiary Cairn India by

nearly five percent for $315 million from a wholly-owned subsidiary -- Twinstar Mauritius Holdings (TSMHL).Source: Indo-Asian News Service



Wipro wins best outsourcing though leadership awardIndian IT bellwether Wipro Ltd won the best outsourcing thought leadership award for this year from a US-based leadinginstitute, the global software major said on June 9.

“The Outsourcing Institute, the largest neutral pro-fessional association dedicated to outsourcing, selectedus for our though leadership article showcasing a realworld use case encompassing innovation, creativity andresults,” the city-based company said in a statementhere.

The institute’s eight-member sourcing executivesfrom Fortune 1,000 enterprises were the judging panel.

“The business process leadership awards the WallStreet technology innovation showcases the most inno-vative work from providers’ across the outsourcing in-dustry,” the statement noted.

The company’s seminal piece was recognised for itsinnovative work titled “Semantics and Ontology -- TheFuture of Data Aggregation”.

“Financial institutions are giving more attention to improving quality of data and turning it into a strategic advantage,owing to competitive, regulatory and business pressures,” Wipro’s global head for securities & capital markets RoopSingh said on the occasion.




Passenger car sales up 8 percent in May: SIAMThe domestic passenger car sales grew by 7.73 percent in May and stood at 160,067 units from 148,577 units sold duringthe corresponding month of 2014, industry data showed on June 10.

According to the data furnished by the So-ciety of Indian Automobile Manufacturers(SIAM), the total passenger vehicle sales,which include cars, utility vehicles and vans,went up by 4.67 percent to 217,671 unitsfrom 207,953 units sold in May 2014.

SIAM data showed that sales of utility ve-hicles fell by 2.27 percent at 43,260 units.The off-take of vans declined by 5.06 per-cent and stood at 14,344 units.

The industry data for the last month re-ported a 3.95 percent growth in the overallcommercial vehicles segment sales, whichis a key indicator of economic activity.

The commercial vehicles segment off-take for May stood at 48,841 units from46,986 units sold during the corresponding month of 2014.

However, the sales of three-wheelers declined by 9.71 percent in the month under review at 36,500 units from 40,425units sold in May of 2014.

Sales of two-wheelers went marginally down last month by 1.25 percent to 1,380,950 units from 1,398,376 units sold inthe like month of 2014.

Scooter sales in May were up 2.61 percent at 364,073 units, while motorcycle sales declined by 3.04 percent at 953,322units.

Exports for the month under review went up by 3.99 percent at 310,518 units from 298,618 units shipped-out duringMay 2014.

Total automobile sales in May slipped by 0.58 percent at 1,683,962 units from 1,693,740 units sold in the correspondingmonth of 2014.


WEEKLYECONOMIC BULLETIN >> SECTORAL NEWS

Coal India now sixth-largest mining company in world: PwCThe country’s top dry-fuel miner Coal India Limited (CIL) has become the sixth-largest mining company in the world interms of market capital, says a recent PwC report.

Earlier, the company was at the eighth spot among top 40 global mining firms, according to the report.Another state-run company, NMDC, the country’s top iron

ore miner which also figures in the list, has improved its po-sition by coming to the 21st slot from 24th earlier.

The report — ‘Mine 2015’, which analyses the financialperformance of the top 40 mining companies by marketcapitalisation — says though there have been improve-ments in most financial statement metrics across the top40 companies, market values continued to decline.

“The top 40 miners lost $156 billion, or about 16 percent of their combined market value, in 2014,” the reportsaid, adding that the good news is that it is only half of lastyear’s slide.

The market capitalisation for the top 40 was $791 billionat the end of 2014, which is where it sat 10 years ago, itsaid.

“That’s a drop of 16 per cent from $947 billion at the end of 2013. It’s the second consecutive year of decline. Incredibly,the market capitalisation of the top 40 is only about half of its value four years ago,” it added.

The decline in market value in 2014 was driven largely by iron ore miners, in particular the diversified companies withlarge exposure.

“It was a better year financially for the top 40, despite a continued dip in almost all commodity prices, as various cost ini-tiatives, fewer high-dollar impairments, and lower input costs helped to improve the bottomline. Commodity prices re-mained under pressure, as iron ore, coal, and copper took another tumble in 2014,” it said.

Iron ore was the hardest hit in 2014 with prices falling by half due to oversupply and a negative short-term demand out-look.

About coal, it said coal miners in the BRICS countries saw their value increase 19 per cent over the period, recoveringunder half of the value they lost in the prior year.

There was greater diversity in share price performance among the top 40 in 2014, with 15 miners seeing their values ap-preciate, while 25 witnessed a decline.

The average ROCE (return on capital employed) is largely below the minimum hurdle investment rate of 15 per cent to20 per cent set by several companies, the report said.

“Only six of the top 40 exceeded the 15 per cent benchmark. They include Coal India (coal), Norilsk Nickel (nickel), NMDC(iron ore), Randgold (gold), Shandong Gold (gold), and Newcrest (gold),” the report said, adding that further actions areneeded around capital allocation and cost control.

In 2014, the top 40 made no significant new investment commitments, but some moved to significantly increase produc-tion.

Source: Press Trust of India

16


WEEKLYECONOMIC BULLETIN >> SECTORAL NEWS

RINL targets 4.1 mt steel production in2015-16State-owned Rashtriya Ispat Nigam Ltd (RINL) on June 13 said it has targeted production output of 4.1 million tonne (mt)of saleable steel in the ongoing fiscal and would further ramp up the production to 6.5 mt for 2016-17.

“The centre has targeted producing 300 mt of steel each year by 2025. To achieve this, we are gradually ramping upour production capacity and undertakingmodernizsation measures”, the company’schairman and managing director P. Mad-husudan told media persons here.

He was attending an interactive sessionwith members of the MCC Chamber ofCommerce and Industry here.

“By the end of the fiscal year 2017, we’llreach a liquid steel production capacity of7.3 mt and will raise our capacity further,”he said.

The company, popularly known as VizagSteel, will be modernising one of its blastfurnace soon and adding up another two.

Madhusudan said the temporary halt inproduction in one of its furnaces on account of modernisation will not affect production.

“Technology will be a key differentiator in the years to come,” he said.He also said RINL is not in need of any additional capital at present in its efforts to either increase production or mod-

ernise its facilities.The firm’s present debt is Rs.2,500 crore while its capex stands at Rs.12,000 crore.


17


WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP18


India leads emerging economies ingrowth chart: World BankIndia, with a 7.5 per cent projected growth, may officially surpass China as it is for the first time leading major emergingeconomies in growth chart, according to latest World Bank figures.

“With an expected growth of 7.5 per cent this year, India is, for the first time, leading the World Bank’s growth chart ofmajor economies,” said Kaushik Basu, World Bank Chief Economist and Senior Vice President after the release of the lat-est Global Economic Prospects (GEP) report on June10.

China is projected to grow at 7.1 per cent. Devel-oping countries are now projected to grow by 4.4 percent this year, with a likely rise to 5.2 per cent in2016, and 5.4 per cent in 2017, the report said.

In China, the carefully managed slowdown contin-ues, with growth likely to moderate to a still robust7.1 per cent this year.

In India, which is an oil importer, reforms havebuoyed confidence and falling oil prices have re-duced vulnerabilities, paving the way for the econ-omy to grow by a robust 7.5 per cent rate in 2015, thereport said.

Basu said slowly but surely the ground beneaththe global economy is shifting. “China has avoided the potholes skillfully for now and is easing to a growth rate of 7.1 percent; Brazil, with its corruption scandal making news, has been less lucky, dipping into negative growth,” he said.

The main shadow over this moving landscape is of the eventual US liftoff, he noted.Growth in South Asia is expected to continue firming to 7.1 per cent this year, led by a cyclical recovery in India and

supported by a gradual strengthening of demand in high-income countries.The decline in global oil prices has been a major benefit for the region, driving improvements in fiscal and current ac-

counts, enabling subsidy reforms in some countries, and the easing of monetary policy, the report said.In India, new reforms are improving business and investor confidence and attracting new capital inflows, and should

help raise growth to 7.5 per cent this year.According to the report, developing nations face a series of tough challenges in 2015, including the looming prospect

of higher borrowing costs as they adapt to a new era of low prices for oil and other key commodities, resulting in a fourthconsecutive year of disappointing economic growth this year.

“Developing countries were an engine of global growth following the financial crisis, but now they face a more difficulteconomic environment,” said World Bank Group President Jim Yong Kim.

Source: Press Trust of India

WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP19


India among top 5 emerging economies withhigher investment commitments: World BankDespite a drop in investment commitments of USD 6.2 billion last year, India has figured in top five emerging economiesfor highest investment commitments in private sector, infrastructure sector, energy, transport and water, according to aWorld Bank report.

“Our update reveals that the top five countries with the highest investment commitments in 2014 are Brazil, Turkey,Peru, Colombia and India,” said Clive Harris, Practice Manager, Public-Private Partnerships, World Bank Group.

“These five countries together attracted USD 78 billion, representing 73 per cent of the investment commitments inthe developing world in 2014,” Harris said.

According to the World Bank, total infrastructure investments in 139 emerging economies – for projects with privateparticipation in the energy, transport and water sectors – rose to USD 107.5 billion in 2014.

This was largely by increasing activity in Brazil, according to an update released to the World Bank Group’s “PrivateParticipation in Infrastructure” database, which also said investment commitments declines in China and India.

Investment commitments in China in 2014 were USD 2.5 billion, its lowest level since 2010.Investment commitments in India also waned in 2014, dropping to USD 6.2 billion.Sub-Saharan Africa saw an especially steep fall from USD 9.3 billion in 2013 to USD 2.6 billion in 2014 because of a

drop in activity in the energy sector.However, 2014’s figure was closer to levels seen before 2012, and the emergence of activities in countries such as

Ghana, Kenya, and Senegal is particularly encouraging, the bank said.The increase in the global investment commitments total is mainly due to increasing activity in the Latin America and the Caribbean (LAC) region, which captured USD 69.1 billion – much of which is attributable to in-

vestment commitments in Brazil, Colombia and Peru, which together accounted for 55 percent of the global total.Brazil’s large stake is a continuation of a recent trend: Brazil captured 24 per cent of global investment in 2013 and 42

percent in 2012.In 2014, Peru saw the completion of 11 deals totaling USD8.1 billion. Eight of the 11 deals were in energy, while the

largest project – the Lima Metro Line 2, at USD 5.3 billion – was in the transport sector.The metro line will stretch 35 kilometres and eventually connect Lima with Callao, including the international airport.According to the Bank, the energy sector had the largest number of new projects, but the sector with the greatest

total of investment commitments was the transport sector, receiving USD 55.3 billion, or 51 per cent of total global in-vestment commitments.

Consistent with the trend in previous years, roads attracted the most investment commitments with USD 28.5 billionin 33 projects, about the same number as in 2013.

Four out of the top five road projects were in Brazil, with the fifth-largest project in Turkey.Source: Press Trust of India

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