Analysts say the robust growth in steel, cement sales as well as in manufacturing recently showed the worst maybe over. New Delhi : -->
India's economy, which has been hit harder than expected by the global recession, may be on the path to recovery, some recent data suggests.
Asia's third-largest economy is expected to have grown less than 7 percent in 2008/09, sharply lower than the expansion of 9 percent or in each of the previous three fiscal years, and is poised to expand at the same pace in the fiscal year ending March 2010.
Some analysts say the robust growth in steel and cement sales as well as in manufacturing in recent months showed the worst maybe over for the economy.
The following looks at the growth outlook for the South Asian economy and the pace of its economic recovery.
WHAT EVIDENCE IS THERE THAT WORST MAY BE OVER FOR THE INDIAN ECONOMY?
A slew of data in recent weeks has shown that a tentative recovery is taking shape. The ABN AMRO Bank purchasing managers' index (PMI) based on a survey of 500 companies, rose to 53.3 in April from March's 49.5, climbing above the threshold of 50 that separates expansion from contraction.
This was the first expansion in factory output in five months and showed demand in the economy is returning.
Data also signalled that demand in India's hinterland is firm and is supporting a vast expanse of the economy. Cement sales have grown at near double-digit rates since November, consumer goods sales have seen strong support from rural markets, while auto demand has firmed after a disastrous December quarter.
Wholesale price inflation shows demand has not fallen as anticipated and prices were holding firm.
Industrial output, which accounts for nearly a quarter of India's gross domestic product, has shown signs of revival after a dismal March quarter. January's initially reported fall was revised to a rise of 0.4 percent.
Economists said stimulus packages announced by the government since late last year, along with aggressive policy easing by the central bank, look to be making an impact given improved car sales and uptrend in cement and steel demand.
They also say robust performance of consumer goods and capital goods, a key barometer of activity, in the February industrial output report showed that there is demand.
Analyst say savings and investment rates, which have reached close to 40 percent due to the structural changes in the economy, would enable it to sustain an investment rate of 35 percent despite lower capital inflows.
The main stock index has rebounded more than half from its 2009 trough in early March. Foreigners bought $1.5 billion worth of shares in April and another $296 million on Monday, after heavy outflows in January and February.
WHAT IS THE OUTLOOK FOR GDP GROWTH IN 2009/10?
Domestic ratings agency ICRA says the economy is likely to grow 6.5 to 7.5 percent in 2009/10 if the global economy comes out of the slump later this year and as government stimulus starts feeding into the broader economy.
The central bank has forecast 6 percent expansion in Asia's third-largest economy but private analysts have pegged growth lower than that. Any growth below 6 percent would increase unemployment.
WHAT ARE ANALYSTS SAYING ABOUT ECONOMIC RECOVERY?
Rajeev Malik, economist with Macquarie Securities says the largely domestically driven economy will begin to recover palpably from mid-year onwards. "The double-cyclinder fiscal and monetary response has been aggressive and already paying dividends."
Investment bank UBS said in a research note that its lead economic indicator had climbed for three months in a row which signalled a strong likelihood of an upturn in industrial activity by June.
Robert Prior-Wandesforde, economist at HSBC, wrote in a research report that there were a number of reasons to be positive about India's growth prospects.
"Individually, none of them are hugely powerful, but collectively they should drive a recovery later this year which is likely to gain momentum in 2010."
IS THERE DATA STILL SUGGESTING FURTHER DETERIORATION?
There is still some data which shows that the global slowdown has taken a heavy toll. Exports declined by a third in March to $11.5 billion, its sixth straight monthly fall and economists say the global economic slump would further dent Indian firms' foreign sales in the months ahead.
Consumer prices still remain elevated and the Reserve Bank of India said inflation based on various consumer price indices continues to be near double digits, reflecting a firm trend in food prices.
WHAT ARE THE RISKS AHEAD THAT MAY HURT GROWTH?
Political uncertainty remains a short-term risk.
Emergence of a weak coalition could lead to policy limbo, which in turn may hurt the economy.
The high fiscal deficit of central and state governments, which according to some observers has reached nearly 10 percent of gross domestic product, could prove to be an obstacle to growth and undermine the Reserve Bank's aggressive rate cuts.
Genpact says worst is over
New Delhi: Genpact Ltd, a business process outsourcing firm, said it expects the IT budget decisions that were delayed in the previous quarters to pick up speed in the coming months as several of its clients have a clearer picture of their businesses.
Pramod Bhasin, the chief executive of Genpact, told DNA, "I think people know that they have hit bottom. I don't know when recovery will happen. However, we are seeing many of our customers hit bottom and bottom out, which allows decision-making to take place."
The company said banking, financial services and insurance (BFSI), healthcare and horizontals such as supply chain, finance and accounting are helping it tide over the slowdown. "We are starting to see traction in our end-to-end projects with five new projects commencing this quarter and over 70 projects at various stages of discussions," Bhasin said in an analyst call.
Meanwhile, the Gurgaon based company said it still expects some decline in discretionary spend by clients, higher deletions in some business processes due to client volume contractions, price drops and slower ramp-ups.
Clients continue to delay decision-making on projects as they focus on redefining their business and operating models, the company added. "What is happening is that companies are going through a tough time and this has pressure on pricing. The automobile vertical is still growing. (But) It is not a big enough vertical for us. It contributes about 5% to our topline," Bhasin said.
Genpact said it is also helping clients on transition costs and is billing them over the period of the contract and not upfront.
On Tuesday, the company reported a sales growth of 13% at $266 million in the first quarter ended March 31. Its adjusted income from operations stood at $42 million, growing 48% due to cost cutting measures that helped improve margins.
Genpact's capital expenditure in the quarter was $14 million or 5% of quarterly revenues, which it is expected to sustain in the coming quarters of 2009.
Pramod Bhasin, the chief executive of Genpact, told DNA, "I think people know that they have hit bottom. I don't know when recovery will happen. However, we are seeing many of our customers hit bottom and bottom out, which allows decision-making to take place."
The company said banking, financial services and insurance (BFSI), healthcare and horizontals such as supply chain, finance and accounting are helping it tide over the slowdown. "We are starting to see traction in our end-to-end projects with five new projects commencing this quarter and over 70 projects at various stages of discussions," Bhasin said in an analyst call.
Meanwhile, the Gurgaon based company said it still expects some decline in discretionary spend by clients, higher deletions in some business processes due to client volume contractions, price drops and slower ramp-ups.
Clients continue to delay decision-making on projects as they focus on redefining their business and operating models, the company added. "What is happening is that companies are going through a tough time and this has pressure on pricing. The automobile vertical is still growing. (But) It is not a big enough vertical for us. It contributes about 5% to our topline," Bhasin said.
Genpact said it is also helping clients on transition costs and is billing them over the period of the contract and not upfront.
On Tuesday, the company reported a sales growth of 13% at $266 million in the first quarter ended March 31. Its adjusted income from operations stood at $42 million, growing 48% due to cost cutting measures that helped improve margins.
Genpact's capital expenditure in the quarter was $14 million or 5% of quarterly revenues, which it is expected to sustain in the coming quarters of 2009.
Inflation Ticks up, RBI May pause on rates
RBI has forecasted wholesale inflation to be around 4.0 percent by the end of the 2009/10 fiscal year next March.New Delhi : -->
A third straight rise in India's annual inflation rate as some price pressures emerge may see the Reserve Bank pause in its rate-cutting cycle, although analysts still expected a negative reading in coming weeks.
The wholesale price index , India's most widely watched inflation measure, rose 0.70 percent in the 12 months to April 25, led by food and manufactured product prices,
It was above the previous week's annual rise of 0.57 percent, and a touch above market forecasts for a 0.65 percent rise.
"Inflation will still go into negative territory, maybe as early as end May," said Sujan Hazra, chief economist at Anand Rathi Securities in Mumbai.
"But week-on-week prices are hardening and this is likely to continue for the next 2-3 months, making it harder for the RBI to cut interest rates in the near term."
The Reserve Bank of India has said the annual inflation rate could turn negative because of the rapid acceleration in prices this time last year, but has discounted the threat of deflation because consumer prices are still strong.
It has forecast wholesale inflation to be around 4.0 percent by the end of the 2009/10 fiscal year next March.
"It is not a real concern for monetary policy at this stage as inflation expectations have softened considerably," said Han-Sia Yeo, currency and rates strategist for ANZ Bank in Singapore.
Financial markets were largely cool to the data with the 10-year bond yield edging up one basis point to 6.31 percent and the rupee largely unchanged at 49.25/26 per dollar.
The wholesale price based-inflation rate has fallen sharply since peaking at just under 13 percent in August, but annual consumer price inflation in February was 9.63 percent, as prices of food products remain firm.
Last month, the Reserve Bank of India cut its key rates and again urged commercial banks to follow suit to shore up growth, which has been hit harder than expected by the global downturn.
The Reserve Bank of India expects the economy to expand by about 6 percent in 2009/10, down from 9 percent in the past few years as the global recession impacts key sectors.
A member of India's Planning Commission, which charts five-year growth plans for the economy, said on Friday he expected growth of 7-7.5 percent in 2009/10.
In the past few weeks a slew of data has pointed to a nascent recovery as stimulus measures and the central bank's previous rate cuts feed into the broader economy.
A third straight rise in India's annual inflation rate as some price pressures emerge may see the Reserve Bank pause in its rate-cutting cycle, although analysts still expected a negative reading in coming weeks.
The wholesale price index , India's most widely watched inflation measure, rose 0.70 percent in the 12 months to April 25, led by food and manufactured product prices,
It was above the previous week's annual rise of 0.57 percent, and a touch above market forecasts for a 0.65 percent rise.
"Inflation will still go into negative territory, maybe as early as end May," said Sujan Hazra, chief economist at Anand Rathi Securities in Mumbai.
"But week-on-week prices are hardening and this is likely to continue for the next 2-3 months, making it harder for the RBI to cut interest rates in the near term."
The Reserve Bank of India has said the annual inflation rate could turn negative because of the rapid acceleration in prices this time last year, but has discounted the threat of deflation because consumer prices are still strong.
It has forecast wholesale inflation to be around 4.0 percent by the end of the 2009/10 fiscal year next March.
"It is not a real concern for monetary policy at this stage as inflation expectations have softened considerably," said Han-Sia Yeo, currency and rates strategist for ANZ Bank in Singapore.
Financial markets were largely cool to the data with the 10-year bond yield edging up one basis point to 6.31 percent and the rupee largely unchanged at 49.25/26 per dollar.
The wholesale price based-inflation rate has fallen sharply since peaking at just under 13 percent in August, but annual consumer price inflation in February was 9.63 percent, as prices of food products remain firm.
Last month, the Reserve Bank of India cut its key rates and again urged commercial banks to follow suit to shore up growth, which has been hit harder than expected by the global downturn.
The Reserve Bank of India expects the economy to expand by about 6 percent in 2009/10, down from 9 percent in the past few years as the global recession impacts key sectors.
A member of India's Planning Commission, which charts five-year growth plans for the economy, said on Friday he expected growth of 7-7.5 percent in 2009/10.
In the past few weeks a slew of data has pointed to a nascent recovery as stimulus measures and the central bank's previous rate cuts feed into the broader economy.
Yash birla group plans to acquire a Diesel manaufacturing company
The company is eyeing an acquisition in the range of Rs 500 crore to be funded through debt and equity.New Delhi : -->
Yash Birla Group owned generator manufacturer, Birla Power Solutions (BPSL), is planning to acquire a diesel engine manufacturing company, reports Business Standard. The company is eyeing an acquisition in the range of Rs 500 crore, the report adds, quoting a senioe executive of the company. The size of the acquisition would, however, depend on the horse power of the engines manufactured by the company.
BSPL is looking at acquiring a company manufacturing diesel engines of capacities ranging between 25 horse power and 200 horse power. The acquisitions will be funded through a mix of debt and equity, where, equity will contribute to about 20% of the total funds required.
The report also says that BSPL is looking at acquiring companies in the domestic market that have foreign stakes or those that have good products but do not have adequate marketing expertise. It aims to provide better marketing and sales operations to such companies.
Besides this, the company also plans to enter the diesel generator, petrol, LPG and kerosene segments. The company is also exploring a green-field venture in the renewable energy space.
The company plans to increase the number of its Birla Power Shoppe outlets in India from the current 60 to about 250 by March, next year. It is also planning to expand its presence across 40 cities in the country by 2010. BSPL is targeting to sell 100,000 generators in two years. It will also aim at achieving a turnover of Rs 500 crore by 2011-2012 by increasing its production capacity.
BSPL was set up in 1984 in collaboration with Yamaha Motor. Yamaha Motor’s stake in BSPL was bought by the company in 2002. It is currently a Rs 2,500-crore company and reported a turnover of Rs 223 crore for the financial year 2008-09.
Yash Birla Group owned generator manufacturer, Birla Power Solutions (BPSL), is planning to acquire a diesel engine manufacturing company, reports Business Standard. The company is eyeing an acquisition in the range of Rs 500 crore, the report adds, quoting a senioe executive of the company. The size of the acquisition would, however, depend on the horse power of the engines manufactured by the company.
BSPL is looking at acquiring a company manufacturing diesel engines of capacities ranging between 25 horse power and 200 horse power. The acquisitions will be funded through a mix of debt and equity, where, equity will contribute to about 20% of the total funds required.
The report also says that BSPL is looking at acquiring companies in the domestic market that have foreign stakes or those that have good products but do not have adequate marketing expertise. It aims to provide better marketing and sales operations to such companies.
Besides this, the company also plans to enter the diesel generator, petrol, LPG and kerosene segments. The company is also exploring a green-field venture in the renewable energy space.
The company plans to increase the number of its Birla Power Shoppe outlets in India from the current 60 to about 250 by March, next year. It is also planning to expand its presence across 40 cities in the country by 2010. BSPL is targeting to sell 100,000 generators in two years. It will also aim at achieving a turnover of Rs 500 crore by 2011-2012 by increasing its production capacity.
BSPL was set up in 1984 in collaboration with Yamaha Motor. Yamaha Motor’s stake in BSPL was bought by the company in 2002. It is currently a Rs 2,500-crore company and reported a turnover of Rs 223 crore for the financial year 2008-09.
Inflation ticks up, RBI may pause on rates
NEW DELHI (Reuters) - A third straight rise in India's annual inflation rate as some price pressures emerge may see the Reserve Bank pause in its rate-cutting cycle, although analysts still expected a negative reading in coming weeks.
The wholesale price index , India's most widely watched inflation measure, rose 0.70 percent in the 12 months to April 25, led by food and manufactured product prices,
It was above the previous week's annual rise of 0.57 percent, and a touch above market forecasts for a 0.65 percent rise.
"Inflation will still go into negative territory, maybe as early as end May," said Sujan Hazra, chief economist at Anand Rathi Securities in Mumbai.
"But week-on-week prices are hardening and this is likely to continue for the next 2-3 months, making it harder for the RBI to cut interest rates in the near term."
The Reserve Bank of India has said the annual inflation rate could turn negative because of the rapid acceleration in prices this time last year, but has discounted the threat of deflation because consumer prices are still strong.
It has forecast wholesale inflation to be around 4.0 percent by the end of the 2009/10 fiscal year next March.
"It is not a real concern for monetary policy at this stage as inflation expectations have softened considerably," said Han-Sia Yeo, currency and rates strategist for ANZ Bank in Singapore.
Financial markets were largely cool to the data with the 10-year bond yield edging up one basis point to 6.31 percent and the rupee largely unchanged at 49.25/26 per dollar.
The wholesale price based-inflation rate has fallen sharply since peaking at just under 13 percent in August, but annual consumer price inflation in February was 9.63 percent, as prices of food products remain firm.
Last month, the Reserve Bank of India cut its key rates and again urged commercial banks to follow suit to shore up growth, which has been hit harder than expected by the global downturn.
The Reserve Bank of India expects the economy to expand by about 6 percent in 2009/10, down from 9 percent in the past few years as the global recession impacts key sectors.
A member of India's Planning Commission, which charts five-year growth plans for the economy, said on Friday he expected growth of 7-7.5 percent in 2009/10.
In the past few weeks a slew of data has pointed to a nascent recovery as stimulus measures and the central bank's previous rate cuts feed into the broader economy.
The wholesale price index , India's most widely watched inflation measure, rose 0.70 percent in the 12 months to April 25, led by food and manufactured product prices,
It was above the previous week's annual rise of 0.57 percent, and a touch above market forecasts for a 0.65 percent rise.
"Inflation will still go into negative territory, maybe as early as end May," said Sujan Hazra, chief economist at Anand Rathi Securities in Mumbai.
"But week-on-week prices are hardening and this is likely to continue for the next 2-3 months, making it harder for the RBI to cut interest rates in the near term."
The Reserve Bank of India has said the annual inflation rate could turn negative because of the rapid acceleration in prices this time last year, but has discounted the threat of deflation because consumer prices are still strong.
It has forecast wholesale inflation to be around 4.0 percent by the end of the 2009/10 fiscal year next March.
"It is not a real concern for monetary policy at this stage as inflation expectations have softened considerably," said Han-Sia Yeo, currency and rates strategist for ANZ Bank in Singapore.
Financial markets were largely cool to the data with the 10-year bond yield edging up one basis point to 6.31 percent and the rupee largely unchanged at 49.25/26 per dollar.
The wholesale price based-inflation rate has fallen sharply since peaking at just under 13 percent in August, but annual consumer price inflation in February was 9.63 percent, as prices of food products remain firm.
Last month, the Reserve Bank of India cut its key rates and again urged commercial banks to follow suit to shore up growth, which has been hit harder than expected by the global downturn.
The Reserve Bank of India expects the economy to expand by about 6 percent in 2009/10, down from 9 percent in the past few years as the global recession impacts key sectors.
A member of India's Planning Commission, which charts five-year growth plans for the economy, said on Friday he expected growth of 7-7.5 percent in 2009/10.
In the past few weeks a slew of data has pointed to a nascent recovery as stimulus measures and the central bank's previous rate cuts feed into the broader economy.
U.S. economy to turn up later this year: Bernanke
WASHINGTON, May 5 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the economy will begin to rebound later this year but the recovery will probably be slower than usual.
"We continue to expect economic activity to bottom out, then to turn up later this year," said Bernanke in prepared testimony to the Congress' Joint Economic Committee.
He noted that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters.
"Final demand should also be supported by fiscal and monetary stimulus," said Bernanke.
"An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall," he added.
But the Federal Reserve chief also warned that even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while.
"We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly," he said, "In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes."
The U.S. economy shrank at an annual rate of 6.1 percent in the first quarter of 2009, slightly smaller than the 6.3 percent drop in the previous quarter.
The worse-than-expected decline marked the third straight quarter of contraction for the world's biggest economy and signaled little improvement in a deep recession.
Many analysts were predicting the U.S. economy would shrink less in the current April-June period as the government's stimulus begins to take hold.
"We continue to expect economic activity to bottom out, then to turn up later this year," said Bernanke in prepared testimony to the Congress' Joint Economic Committee.
He noted that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters.
"Final demand should also be supported by fiscal and monetary stimulus," said Bernanke.
"An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall," he added.
But the Federal Reserve chief also warned that even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while.
"We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly," he said, "In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes."
The U.S. economy shrank at an annual rate of 6.1 percent in the first quarter of 2009, slightly smaller than the 6.3 percent drop in the previous quarter.
The worse-than-expected decline marked the third straight quarter of contraction for the world's biggest economy and signaled little improvement in a deep recession.
Many analysts were predicting the U.S. economy would shrink less in the current April-June period as the government's stimulus begins to take hold.
Ojas invest in online campus recruitment website
The firm is an online platform which aims to bring college and companies together for campus recruitment.New Delhi : -->
Early stage venture capital firm Ojas Venture Partners has invested an undisclosed amount in Delhi-based CoCubes, a mangement consulting firm. The firm is an online platform which aims to bring college and companies together for campus recruitment. Gautam Balijepalli, Principal at Ojas, confirmed the investment to VCCircle. He refused to comment further on the deal.
The company's business model involves signing up colleges for an annual fee. Then various companies looking to recruit pay CoCubes on a per campus basis. The company is also looking to reach out to colleges tier-2/3 cities. The company has been co-founded by Harpreet Grover, who was with management consultancy firm Inductis and Vibhor Goyal, previously with Microsoft Research Centre.
CoCubes reduces cost of companies and helps them reach out to a larger audience. Some of the companies recruiting through CoCubes are Evaluserve, SRF, Motilal Oswal, Thinklabs, etc.
Balijepalli and Raghu Batta, partner at Ojas, have joined the board of CoCubes. Other investors in the company include Amanjeet Saluja (Vice President - Ocwen Financial Solutions), Nikesh Shah (Business Manager, Europe – Infosys BPO) and Rajiv Raghunandan (Practise Lead - Infosys), as per its website.
Ojas Ventures, a $35 million fund, has till now invested mainly companies serving the mobile & telecommunications segment. It has invested in Tyfone Inc (mobile payment/banking co), Ziva Software (engaged in products and services in the mobile search domain), Telibrahma (mobile digital media company), etc.
Early stage venture capital firm Ojas Venture Partners has invested an undisclosed amount in Delhi-based CoCubes, a mangement consulting firm. The firm is an online platform which aims to bring college and companies together for campus recruitment. Gautam Balijepalli, Principal at Ojas, confirmed the investment to VCCircle. He refused to comment further on the deal.
The company's business model involves signing up colleges for an annual fee. Then various companies looking to recruit pay CoCubes on a per campus basis. The company is also looking to reach out to colleges tier-2/3 cities. The company has been co-founded by Harpreet Grover, who was with management consultancy firm Inductis and Vibhor Goyal, previously with Microsoft Research Centre.
CoCubes reduces cost of companies and helps them reach out to a larger audience. Some of the companies recruiting through CoCubes are Evaluserve, SRF, Motilal Oswal, Thinklabs, etc.
Balijepalli and Raghu Batta, partner at Ojas, have joined the board of CoCubes. Other investors in the company include Amanjeet Saluja (Vice President - Ocwen Financial Solutions), Nikesh Shah (Business Manager, Europe – Infosys BPO) and Rajiv Raghunandan (Practise Lead - Infosys), as per its website.
Ojas Ventures, a $35 million fund, has till now invested mainly companies serving the mobile & telecommunications segment. It has invested in Tyfone Inc (mobile payment/banking co), Ziva Software (engaged in products and services in the mobile search domain), Telibrahma (mobile digital media company), etc.
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