Manufacturing growth slackens in December
India's manufacturing sector grew at its slowest pace in five months in December on the back of the central bank's series of monetary tightening measures, according to a private purchasing managers' survey. The seasonally adjusted Purchasing Managers' Index (PMI) fell to 56.6 in December from 58.9 in November as the strong momentum of previous months eased off due to slower domestic and external demand. The PMI is compiled by UK-based NTC and sponsored by ABN AMRO Bank. PMI reading above 50 signals an improvement in business conditions while anything below 50 means contraction in manufacturing activity.
In October, the index showed that manufacturing expanded at its fastest pace since the survey was introduced in April 2005. The export order index fell to 54.1 in December from 58.4 in the previous month, while backlogs of work rose at their weakest pace since April. According to the survey, the input price inflation softened. The seasonally adjusted input price index fell to 55.1 in December from 58.9 in the previous month. The output price index fell to 51.9 in December from 52.1, signalling that inflation at the manufacturers level is moderating.
States agree to end CST: FM
The Government and the states agreed to phase out the Central Sales Tax (CST) starting April this year, Finance Minister P. Chidambaram said. The tax, levied at 4% by the Government on a variety of goods, is passed on to states. The schedule of phasing out the sales tax will be decided later. The CST will be phased out over three years - from 4% to 3% in FY08, to 2% in FY09 and finally to 1% in FY10. The tax will be completely phased out in 2010-11. States will be fully compensated for any revenue loss that may occur due to the phase-out. This will be done through a package of measures, which includes transfer of 77 services to states, on which they will be able to levy and collect taxes. If required, the Centre will also provide budgetary support to states.
Govt to lift ban on sugar exports completely
The Government will completely lift a ban on sugar exports within the next 20 days, Agriculture Minister Sharad Pawar said. The Centre formally approved the partial lifting of the ban on sugar exports as domestic prices have eased and supply have increased. Only those sugar mills which had imported raw sugar with an obligation to re-export the refined product can export the sweetener, according to the notification by the Director General of Foreign Trade (DGFT). The Cabinet on Dec. 18 had eased a total ban on exports imposed in July. This would apply to advance license holders who could not meet export obligations before July 4, 2006 when the Government imposed the ban on sugar exports in view of the soaring local prices and depleting supply.
Deals keep rolling in
The rush to garner a piece of the fast-growing organised retail sector continues in 2007. In what is it's first major investment in the high-profile retail space, the Aditya Birla Group acquired the Hyderabad-based supermarket chain Trinethra Super Retail for an undisclosed sum. The acquisition was done through the unlisted retail outfit of the group, Aditya Birla Retail and includes Trinethra's rapidly growing Internet-based shopping arm, Fabmall. The Trinethra Group had annual revenues of Rs2.5bn and more than 172 retail outlets spread across Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. It has an employee base of 2,500. i-flex Solutions Ltd. announced that its Singapore headquartered subsidiary, i-flex Solutions Pte Ltd, had acquired the Singapore subsidiary of Capco - The Capital Markets Company Pte Ltd. This acquisition will strengthen i-flex Consulting’s ability to provide high end consulting to banks in the Asia Pacific region. The expertise and service offerings of Capco Singapore’s consulting business align well with those of i-flex Consulting. Nicholas Piramal India Ltd. announced that its pathology labs subsidiary, Wellspring had acquired Jankharia Imaging, the most successful radiology and imaging centre in Mumbai. The new entity would be renamed as Wellspring-Jankharia Imaging. Following the acquisition, Wellspring would be the first corporate diagnostic provider to enter into high-end health imaging services.
IPO...DLF files revised prospectus
After aborting an attempt to tap the capital market early last year, real estate giant DLF filed a revised Draft Red Herring Prospectus (DRHP) with the market regulator SEBI. The size of the much-anticipated IPO is likely to be around Rs105bn. DLF is scheduled to issue 175mn shares, comprising 10.2% of its equity capital. In August, it scrapped an IPO of as many as 219mn shares. The size of the offering is smaller than planned earlier because DLF Chairman KP Singh and his family are not selling shares held by them and no stock will be sold before the sale. DLF has hired Merrill Lynch and Kotak Mahindra Capital to manage the share sale. Citigroup, ICICI Securities, Lehman Brothers Securities, UBS, Deutsche Equities India and SBI Capital Markets will help with the sale. Last month, DLF resolved differences with minority shareholders regarding allotment of debentures. That paved the way for the revival of the IPO for the Delhi-based company. Minority shareholders had filed a complaint with SEBI alleging that they did not receive the letter of offer of the debenture issued in December 2005.
Ranbaxy, Aurobindo & Lupin win USFDA approvals
Ipca Laboratories Ltd. said that the strategic alliance between the company and Ranbaxy Pharmaceuticals Inc had received the approval from US Food and Drugs Administration (USFDA) to manufacture and market Atenolol Tablets USP 25mg, 50mg and 100mg. This was the second such product approval received under the alliance with Ranbaxy from the US FDA. In September 2006, it had received the clerance for selling Furosemide tablets in the US. Aurobindo Pharma Ltd. announced that it had received two more approvals from the USFDA for Bisoprolol 5 mg, 10 mg and Amoxicillin Oral Suspension 200 mg\5ml, and 400mg\5ml. Amoxicillin is a Betalactam antibiotic used often in treating respiratory infections. GlaxoSmithKline (GSK) is the inventor of this antibiotic and is marketed under the brand name Amoxil. Lupin Ltd. said that the USFDA had granted a tentative approval to it's ANDA for Sertraline Hydrochloride Tablets, 25mg, 50mg and 100mg. Sertraline is indicated for the treatment of major depressive disorder. Lupin's Sertraline tablets are generic equivalent of Pfizer's Zoloft tablets. Annual product sales in the US were about US$3.1bn for the 12-month ended July 2006, based on IMS data. The company intends to launch the generic version of Zoloft on final approval from the USFDA, which is expected upon expiration of the marketing exclusivity for the product in February.
L&T, Praj & ABG Shipyard win orders
Larsen & Toubro Ltd. (L&T) announced that it had secured an order worth Rs4.18bn (US$94.33mn) from the Abu Dhabi Water & Electricity Authority for the construction of six major electrical substations in the Al Ain sector of Abu Dhabi. The project, which includes design and construction of civil building and over 120 km of 33kV cabling, will be completed within 18 months. Praj Industries Ltd. said that in the last quarter of 2006 (Oct-Dec) the company received the second phase orders from Cilion for its Imperial County project, besides another order from Missouri Valley Energy for its Meckling, South Dakota project. Praj also received an order for USA’s first sugarcane based ethanol project. The total value of these orders is in excess of Rs1.7bn. ABG Shipyard Ltd. said that it had bagged a repeat order from Gujarat Ambuja Cements Ltd. The company received an order for the construction of a Self Loading and Unloading vessel of 4,000 DWT bulk cement carrier worth US$9.9mn or about Rs450mn. With this new order, the company has an Order Book of about Rs24.45bn.
DaimlerChrysler signs MoU for new plant
DaimlerChrysler India's proposed new factory in Pune will have an initial installed capacity to produce 5,000 vehicles annually, DaimlerChrysler India CEO Wilfried Aulbur said. However, he declined to divulge the size of the investment. The company presently makes about 2,000 cars annually in a facility leased from Tata Motors Ltd. in Pune. The Indian unit of the German luxury carmaker signed an agreement with the Maharashtra Government to set up a greenfield plant in the Chakan MIDC area. The plant will produce the Mercedes-Benz S-Class, E-Class and C-Class models for the Indian market. Aulbur said that the first cars from the plant would roll out in January 2009.
Nissan to build new plant in India
Nissan Motor Co., Japan's second-largest car maker, will set up a greenfield plant in India, a local Japanese newspaper reported on Jan. 1. The new factory will have an initial capacity to produce 200,000 units per year, the Nikkei said. To support the Japanese auto maker's production, about 10 auto parts suppliers from Japan will also start local operations, bringing the group's total investment to around 100 billion yen, said the Japanese business daily. The plant will begin commercial operations in 2009. The Japanese major plans to make a new small car with an engine displacement of around 1000cc. About a third of the total production will be sold in India, while the rest will be exported to Europe and other countries.
Tanla Solutions, Pyramid Saimira jump on debut
Shares of Tanla Solutions Ltd. surged on Friday in their stock market debut. The scrip opened at Rs379.80 as against the issue price of Rs265. The stock was frozen at the 2% upper circuit as Rs379.80 was the base price fixed by the exchanges based on the scrip's closing on the Hyderabad Stock Exchange on Jan. 4. Traded volume on the counter surged to 3.26mn shares. Tanla Solutions entered the capital market with a public issue of 1,58,85,000 equity shares of Rs2 each in the price band of Rs230 to Rs265. The issue was subscribed 38.65 times. The company proposes to part finance its expansion plan.
Shares of Pyramid Saimira Theatre Ltd. jumped 35% on their maiden trading day on Friday. The stock opened at Rs135 compared to the issue price of Rs100. It reached a peak of Rs163.85 before and a low of Rs125 before closing at Rs158.20. Traded volume on the counter stood at 16.97mn shares. The Chennai-based digital theatre chain entered the capital market with an IPO of 84.44 lakh shares of Rs10 each. The issue was subscribed 16.26 times.
Auto sales...Maruti, Bajaj, Tata Motors shine
Maruti reported a 23.7% jump in its total sales for December 2006. The company sold 56,985 units in the last month of the year 2006 as against 46,079 units in the same month a year earlier. Sales in the domestic market were up 26.3% at 54,640 units while exports fell by 17.1% to 2,345 units. Tata Motors said its vehicle sales rose 37% in December to 48,792 units from 35,598 units a year earlier. Exports were up 7% at 4,098 units. Sales of the company's commercial vehicles climbed 50% to 28,179 units from 18,730 units, while sales of passenger vehicles rose 27% to 16,515 units. M&M said its total vehicle sales (excluding tractors) rose by 38% to 15,132 units last month from 10,953 units a year earlier. M&M sold 6,759 tractors in December, up 21% from 5,597 units a year earlier. Ashok Leyland Ltd. said its sales in December rose 29.6% to 5,890 vehicles.
Hero Honda Motors said that it sold 252,462 units in December, up 3% from 245,104 sold a year earlier. Domestic sales grew by mere 2.6% to 245,141 units and exports were up 16.5% at 7,321 units. Bajaj Auto Ltd. posted a 26% rise in its motorcycle sales in December at 187,063 units while the overall two-wheeler sales were up 21% at 187,179 units. Sales of three-wheelers grew by 50% to 27,749 units. Exports more than doubled to 39,385 from 18,534 units a year ago. Total sales climbed 24% to 214,928 units from a year ago. TVS Motor Co. Ltd. said that it sales fell by nearly 4% to 103,188 units in December. It was the first fall in monthly sales since February 2005. The Chennai-based company's motorcycle sales were down 14.5% at 58,756 units, while sales of scooterettes rose to 16,616 from 16,051 units. The company said that exports rose 17% to 7,088 units.
Cement sales weaken
ACC Ltd. said it's cement dispatches in December rose by 3.13% to 1.65mn tons from 1.6mn tons in the same month last year. Cement output in the month was up 3.8% at 1.63mn tons as against 1.57mn tons in December 2005. For the year 2006, ACC's cement shipment grew by 6.6% to 18.62mn tons from 17.46mn tons in the previous year. Cement production in 2006 was up 7% at 18.64mn tons versus 17.42mn tons in the year 2005. Gujarat Ambuja Cements Ltd. said its cement shipment grew by 11.3% in 2006 to 16.33mn tons from 14.67mn tons in the previous year. Cement production in the year stood at 16.34mn tons as against 14.63mn tons in the year 2005. Aditya Birla Group, which includes the No.2 and No.3 cement companies, said that its shipments in December fell 3.2% to 2.5mn tons. Cement production, including those of UltraTech Cement Ltd. and Grasim Industries Ltd., in December was down 2% to 2.51mn tons.
Steel sales perk up
Tata Steel Ltd. said its sales grew by 11.7% in the first nine months of the current fiscal year to 3.53mn tons. Domestic sales of long products increased by 30%. Hot-metal production rose to 4.1mn tons, while crude steel output reached 3.7mn tons. Saleable steel production rose 11% to 3.66mn tons. Steel Authority of India Ltd. (SAIL) said its sales during the quarter ended Dec. 31 rose 8% to 3mn tons and production climbed 6% to 3.3mn tons. Sales reached a record 8.4mn tons in the nine months ended December and output rose to 9.33mn tons, the New Delhi-based company said in a statement.
Fed still worried about inflation
The Federal Reserve is still concerned about inflation, the minutes of last month's policy meeting shows even as the US central bankers pondered over the slowdown in the world's largest economy. Members of the FOMC agreed unanimously in December that inflation remained the primary risk to the US economy, although they acknowledged that the economy may have been a touch softer than they had previously believed, according to minutes of the Dec. 12 meeting. The cautiously worded message from Ben Bernanke & Co. surprised Wall Street. The US markets have been anticipating that the Fed will slash interest rates soon to stem the slide in economic growth following the series of interest rate increases since June 2004. Some investors fear that the US economy is in a worse shape than previously thought. Some economists say that Wall Street may be worried that the Fed won't cut interest rates as soon as it expects it to. The Fed's next meeting is at the end of this month. The Fed has held a key short-term rate steady for the past four meetings after raising it 17 straight times. The fed funds rate now stands at 5.25%. That is the highest that interest rates have been since Jan. 2001, though they are still relatively low by historical standards. A reduction in the Fed's target rate is likely by the end of August, based on the price of futures on the Chicago Board of Trade. Five weeks ago, the contracts reflected a cut by the end of March.
US manufacturing rebounds in December
The US manufacturing sector surprisingly bounced back in December after a contraction in November, the Institute for Supply Management (ISM) reported. The ISM manufacturing index rose to 51.4 in December from 49.5 in November, when activity contracted for the first time in more than three years. A reading over 50% indicates expansion while anything under 50 means contraction. It was the first increase in the index since July. Economists had expected the manufacturing index to rise to 50. For the second month running, more factories reported a shrinking labor force, the ISM survey indicates. The group's employment index was 49.7, up from 49.2 in November. New orders and production rose, while inflationary pressures eased. The new orders index rose to 52.1 from 48.7. The production index rose to 51.8 from 48.5. The prices-paid index fell to 47.5 from 53.5. The ISM supplier deliveries index, which covers how long it takes companies to receive goods, rose to 53.4 last month from 52.8. The measure of orders in backlog declined to 45 from 46.5 in November. The inventory index fell to 48.4 in December from 49.7.
Toyota is now No.3 in US auto mart
Toyota broke into the Big Three club of US automakers in 2006, leaving behind DaimlerChrysler as Japanese auto companies continued to make inroads into the lucrative North American market. Toyota's December sales rose more than 16% when adjusted for an extra selling day a year earlier. Its December figures brought the full-year sales to 2.54mn, topping DaimlerChrysler's 2.39mn sales mark. Toyota secured a 15.4% share of the US market. It trails only General Motors (GM), with a 24.6% share, and Ford, with a 17.5% share. Toyota is expected to overtake GM as the world's largest automaker in 2007 and take second place in the US. The adjusted sales of GM and Ford fell about 10% each last month. DaimlerChrysler AG's Chrysler unit was the lone US automaker to post gains with adjusted sales rising 4%. Toyota and Honda led growing sales by Asian automakers last year. Asian automakers accounted for a record 39.4% of 2006 US sales, up 2.7% from 2005. Honda said US December sales rose 3% and Nissan North America Co. said sales were up 4.4%. Industry-wide sales stood at an annualized 16.8mn vehicles for December, in line with average estimates and down from 17.1mn a year earlier.
Bulgaria, Romania Join EU
The European Union (EU) gained two more member states on January 1, 2007 with the accession of Bulgaria and Romania, making a historic New Year for the two nations. The EU now has 27 member states and over half a billion people, stretching from the Atlantic Ocean to the Black Sea. Bulgaria and Romania applied for EU membership in 1995 and began formal accession talks in February 2000. They missed out on the big expansion of 2004, however, after being told they were not ready. Compared with EU standards, the two countries are still relatively poor, with a GDP at 33% of the EU average. Salaries are also low, with an average monthly income of €180 in Bulgaria and around €300 in Romania. Nevertheless, economic prospects are good as Bulgaria looks back on a growth rate of 5.5% of GDP in 2006 - Romania’s growth in 2006 amounted to 7% of GDP. Fears of a new wave of labour immigration spread in some parts of the EU, such as the UK, which has put restrictions in place. Other countries, such as Sweden and Finland, decided not to restrict the free movement of labour. Bulgarian and Romanian officials claim that the largest part of labour migration has already taken place.
Singapore's economy picks up pace
Singapore's economic growth unexpectedly accelerated to the fastest pace in a year in the fourth quarter, spurred by sharp rise in tourist arrivals and increased consumer spending even as electronics exports slowed. Southeast Asia's fourth-largest economy grew at an annualized pace of 7.6% after expanding at a revised rate of 5.6% in the third quarter. Economists had expected a 4.1% gain. From a year earlier, Singapore's economy expanded by 5.9% in the fourth quarter after growing at a revised pace of 7% in the previous three months, the government said. The economy grew 7.7% last year. Manufacturing, which accounts for a quarter of Singapore's economy, grew by 7.3% in the fourth quarter from a year earlier, following a revised 9.5% gain in the previous three months. That was the slowest pace in six quarters. Services expanded by 6% and construction gained 2.4%, the report said. The report was based largely on data for October and November. The figures will be revised in February.
Russia, Belarus cross swords over energy trade
Belarus imposed export duty on Russian oil crossing its territory as President Alexander Lukashenko hit back at Moscow in an energy row. Belarus Prime Minister Sergei Sidorsky said his government was imposing a duty of US$45 per ton on Russian oil that transits his country en route to customers in Europe. About one million barrels of Russian crude a day - over a fifth of Russia's total exports - are shipped via the Druzhba pipeline that passes through Belarus. Most of it goes to customers in Germany and Poland. Russian oil pipeline monopoly Transeft said that Belarus had no right to impose the duty. The dispute erupted when Russia imposed duties on oil sales to Belarus, forcing the latter to pay double for gas imports. Moscow also banned imports of sugar refined in Belarus. But, despite the trading row, both sides said that there would be no disruptions to the two-fifths of Russia's total crude exports that are shipped through Belarus.