India Economy – Inflation – Deflation vs. hyperinflation
For the week ending 6 Jun ’09, headline inflation (wholesale price index, WPI) was -1.61%. This is the first time since Dec ’78 that WPI inflation has turned negative. WPI for the week ending 11 Apr ’09 was revised to 0.96% from 0.26%.
Primary articles fell due to a sharp fall in the prices of fruits. Prices of vegetables, cereals, pulses, condiment, spices and non-food articles rose. Fuel deflation now stands at 12.83%, though the fuel index has risen w-o-w due to a rise in non-administered fuel prices.
The y-o-y deflation after three decades is due to the base effect. In sharp contrast, recent price pressures have pushed up annualised m-o-m overall and food inflation to 12% and 25%, respectively. The sharp rise in fuel and other commodity prices last year followed by the equally dramatic fall has created this situation.
India is likely to remain in deflation until Sep ’09. From the current perspective, however, a sharp rebound in inflation rather than prolonged deflation is the real concern. We expect end-FY10 inflation to cross 7%. A substantially sub-normal monsoon can add further woe to this process. These, coupled with continued subdued growth, make the choice of monetary policy ambiguous. While there is little scope or rationale for further cuts in the key policy rate, barring a decisive improvement in growth any rate hike remains unlikely.
Tata Steel increases price of hot-rolled steel – Begins the Regime of Lobby in Congress Government
The country’s leading steel manufacturer, Tata Steel, has increased prices of hot-rolled steel products by Rs 500 to Rs 750 per tonne in few select provinces on monthly contracts with retrospective effect from June 1, 2009.
The move has been triggered by the revived demand for the steel products in the local markets, mainly from major consumers of steel i.e. construction and automobile sectors.
Last month, the steel sector behemoth had increased spot prices of long steel products by Rs 300 to Rs 500 per tonne.
public sector steel producers, Rashtriya Ispat Nigam (RINL) and Steel Authority of India (SAIL) have already resorted to similar kind of moves and other players like JSW Steel and Jindal Steel & Power (JSPL) may also go for upward revision in their steel prices in near future.
When the world is under deep recession, where is the scope to raise prices ? Where is the demand ? Do you think Tata Steel plants are operating at full capacity ? What is the Government doing at the Center ? Don’t we all know what the Congress government has done and not to forget the lousy old man occupying the leader of opposition chair.
Birla Sun Life to launch new term insurance plan
Birla Sun Life Insurance, a private insurance company, is planning to launch a new term insurance plan for people with healthy lifestyles. The term policy offers only life protection cover for a fixed period.
Till date, an insurer used to load the premium if the policyholder was suffering from smoking or drinking addiction, blood pressure, diabetes or obesity. Birla Sun Life will be launching first of it kind of policy that offers rewards to those with good family health history and healthy behaviour, with a discount.
Normally in life insurance, underwriting process involves collecting all bodily fluids and testing them at one end, and asking the prospect to blow on a mirror at the other end. But for the proposed term policy the underwriting process will not involve such procedure. With new mortality tables will be coming up in near future, life insurers are also coming up with innovative polices.
Globally, such kinds of term policies are available where policyholder is offered discounts who go to gymnasiums regularly.
Nokia Siemens will upgrade Idea’s 22 service areas in India
The telecom service provider, Idea Cellular has collaborated with telecom equipment manufacturer Nokia Siemens Networks (NSN) to upgrade former company’s network in 22 service areas in India. In order to upgrade Idea’s existing network, NSN will use GPRS (general packet radio service) technology and its unified charging solution. Due to this Idea will be able to offer innovative mobile services like multimedia messaging, email, web browsing and online music.
The telecom company sees huge potential in service market and will avail these services to subscribers from March 2010.
Nokia Siemens will introduce GPRS capability to 10 Idea telecom service areas, whereas other 12 areas’ GPRS capability will be expanded. Further the company will employ a charging solution that will allow Idea to utilise a single system across these locations for the new services for pre-paid and post-paid subscribers.
Copper gains on speculations of a revival in the US economy
Copper futures rose after the index of US leading economic indicators rose in May, raising hopes that the global recession may be near a bottom. The indicators index for the world’s biggest economy advanced 1.2% in the six months through May, following a 1.1% gain in April, the biggest back-to-back gains since 2001, the New York-based Conference Board reported.
Copper futures for September delivery added 1.25 cents, or 0.6%, to $2.282 a pound on the New York Mercantile Exchange’s Comex division. Copper for delivery in three months surged $10, or 0.2%, to $4,970 a metric tonne on the London Metal Exchange.
Inventories of copper in Shanghai warehouses rose to the highest since March 2008 last week. Imports of copper into China are likely to slow in the next few months, according to market analysts.
Among other base metals, aluminium rose $20, or 1.2%, to $1,642 a tonne, lead rose 0.8% to $1,675 a tonne and zinc gained 0.7% to $1,563 a tonne. Tin fell 1% to $14,950 a tonne and nickel added 1.1% to $15,010 a tonne.
Future Generali launches Future Anand
Future Generali India Life Insurance, part of Future Group, has launched Future Anand that offers combination benefit endowment cum whole life plan. The policy also offers choice of short term and long-term payment terms ranging between 8 to 20 years. It offers death benefit which means if policy holder dies after premium paying term the company will pay 125% of sum assured, plus terminal bonuses, if any.
The policy also has a special feature called Premium Holiday “Auto Cover” wherein one can choose not to pay premium after three years for up to 2 years while the life cover continues. Future Anand can be availed by persons aged 12-62 years, at a minimum sum assured of Rs 1 lakh per policy.
Future Generali is currently active through 93 branches across 84 cities and over 25000 licensed advisors. Besides this large network of agents & branches, Future Generali will also actively offer their Insurance solutions across 192 Future Group malls. In FY 2008-09, the company earned a premium income of Rs 155 crore.
Max Vijay crosses a sales target of 30,000 policies
One of the leading insurance companies in India, Max New York Liferecently had formed a tie up with its corporate agent PeerlessDevelopers to distribute Max Vijay — a policy for the underserved. MaxVijay has recorded sales figures of over 30,000 policies in such asmall time frame. On an average, daily 1,000 Max Vijay policies aresold.
Max Vijay is an innovative insurance cum saving businessmodel for underserved. This product is been sold through Peerless’ 102offices spread across in 21 states.
With such a overwhelming response, Peerless Developers has set a target of over 5 lakh policies in the first year of its tie up.
Shree Renuka Sugars to expand its existing sugar refining capacity
One of the leading sugar manufacturer, Shree Renuka Sugars will expand its existing sugar refining capacity of its Athani unit located at Karnataka. The company plans to increase from its present capacity of 1,000 tonne per day (tpd) to 2,000 tpd.
The company plans to set up sugar refining capacity of 1000 tpd at its Havalga unit also in Karnataka which is anticipated to be commissioned by December, 2009.
With the commissioning of the above refineries, the company plans to increase its sugar refining capacity to 6,000 tpd, which includes the 2,000 tpd port-based sugar refinery at Haldia, West Bengal and 4,000 tpd refining capacity at three of its integrated sugar mills in Karnataka.
Earlier the company increased its equity stake from 54% to 80.28% KBK Chem-Engineering, located at Pune.
Birla Sun Life aspires to emerge amongst the top 3 life insurance companies
Birla Sun Life Insurance (BSLI) a part of Aditya Birla Group hasexpressed its aspiration to emerge as amongst the top 3 insurancecompanies in India. For this, company plans to launch contemporaryproducts. It also plans to expand its network of branches in India.
InFY 2008-09, company stood at the fifth position having a 9% marketshare (amongst private players) in terms of weighted new receivedpremium (WNRP). The company recorded a rise by 44% in WNRP in FY2008-09, thus to achieve second highest growth rate amongst top tenlife insurance company in India.
Presently, BSLI has network of600 branches. The company has made efforts to strengthen itsinformation technology (IT) platform to support growth.
Rcom in talks with Alcatel-Lucent to manage its fibre optic cables in India
India’s leading mobile service provider, Reliance Communications(Rcom) is in talks with Alcatel-Lucent to manage its 70,000-80,000 kmof fibre optic cables across India. This outsourcing deal is consideredto be worth $500 million. If the deal is struck, Rcom will be becomethe first Indian telecom company to outsource the management of itsoptic fibre cable business. Reliance Communications is choosing theAlcatel-Lucent because its is global leader in optic fibre and thelandline space.
Optic fibre cables carry voice and data andconnect all mobile towers and landlines. This will be given to JVcompany that RCom and the Franco American networks major had formedlast year where the former holds 33% and rest is held by Alcatel-Lucent.
Reliance Communications had given an outsourcing contract to this JV to handleits GSM and CDMA mobile networks in India. Recently Alcatel-Lucentbagged a $500 million 5-year outsourcing deal from Bharti to manage thelatter’s landline and broadband business.