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DEMONETISATION AFFECTS CAR SALES

CHENNAI: The withdrawal of old 500 and 1,000 rupee notes affected automobile sales in north and west India but the sales in southern region were not, said a Kotak Institutional Equities report.

In a report released on Monday, Kotak Institutional Equities said that as per its analysis of third-quarter automobile sales of the current fiscal, southern India was not impacted by demonetisation while north and west India were the most impacted.

According to the report, passenger vehicle demand was less impacted than that of two-wheelers and commercial vehicles. Within the two-wheeler segment, scooterisation trend slowed down due to demonetisation.

Renault India gained market share across states in the passenger car segment while Honda and TVS Motors gained market share from Hero Motocorp in the two-wheeler space.

The report said Renault India’s market share gains were at the expense of Honda Car India while Maruti Suzuki maintained its market share but gained in high-income states such as Maharashtra, Delhi and Karnataka.

SUGAR PRODUCTION ON DECLINE

Mumbai, Domestic sugar prices are likely to remain firm in the near term on account of the expectations of a decline in production and deficit situation in the domestic and global markets, rating agency ICRA said.

ICRA expects the domestic sugar prices to remain firm in the near term, given the deficit situation in the domestic and international markets. This, coupled with moderate cane price increase seen for the current sugar year across most states, augurs well for profitability in the near-term, ICRA said.

“With recent government estimates pegging a more than a 15 per cent decline in the sugar production for SY17 (sugar year beginning from October) compared to last year, prices are likely to remain firm over the next 2-3 quarters,” ICRA Head, Corporate Ratings, Sabyasachi Majumdar said.

Further, with the crushing season drawing to a close in both Maharashtra and Karnataka and both mills reporting a lower-than-expected output, the possibility of the actual production for SY17 falling even below the government’s estimates cannot be ruled out, Majumdar said.

While the sugar production in SY17 is expected to significantly fall short of what was anticipated earlier, an opening stock of 7.6 million tonnes is likely to result in the overall sugar availability between 28-29.5 million tonnes.

This is likely to be adequate to fulfil the domestic consumption of around 24.3 million tonnes (marginally revised from the earlier estimate of around 25.0 million tonne owing to short-term demonetisation impact).

This will leave closing stocks of around 4.6 million tonnes in SY17, which would be sufficient to meet the requirement for over two months of domestic consumption.

It said sugar prices have been driven mainly by the expectations of a decline in output, which has increased from around Rs 31,500 per tonnes in March 2016, to Rs 36,000 per tonnes in October 2016.

The prices showed a marginal dip following the demonetisation exercise to around Rs 35,000-35,500 per tonnes in November and December 2016, it added.

“Continued healthy realisations and healthy recovery rates are likely to result in healthy contribution margins for UP-based mills, while the mills in Maharashtra and Karnataka may see an adverse impact on volume sales arising out of lower production, partly offsetting the benefit from rising sugar prices and the relatively stable cane costs,” Majumdar said.

Overall, ICRA expects efficient and forward-integrated sugar mills to report healthy profitability trends across most key producing states over the next two to three quarters. “However, an overhang of the past losses, which were largely funded by debt, will continue to weigh on net margins, capitalisation and coverage indicators of sugar mills, especially the weaker ones,” he added.

MERCEDES LAUNCHES LUXURY CAR

New Delhi, Feb 28 () German luxury car maker Mercedes-Benz today launched the long wheelbase version of its E-Class sedan priced up to Rs 69.47 lakh (ex-showroom Mumbai).

The new long wheelbase (LWB) E-Class is longer from its standard version by 140 millimetres in both the wheelbase (3,079 millimetres) and length (5,063 millimetres), the company said in a statement.

The LWB E-Class will be available in both petrol and diesel fuel options. The petrol option, E200 is powered by a 1,991 cc engine and is priced at Rs 56.15 lakh, while the diesel variant E 350d has a 2,987 cc engine and is tagged at 69.47 lakh (all prices ex-showroom, Mumbai).

Commenting on the launch, Mercedes-Benz India MD & CEO Roland Folger said: “Majority of our E-Class customers in India are chauffeur driven, and hence it was a natural decision for us to introduce the long wheelbase new E-Class in India.” India becomes the only country in the world to offer the right hand drive long wheelbase version of the new E-Class and and it took almost 48 months to develop the car from scratch, he said in a statement.

From its launch, the sedan will be ‘Made in India, for India’ and will be rolled out from the company’s Pune plant, it said, adding 13 million units of E-Class has sold globally.

BANKING SECTOR

Mumbai: India’s banking sector is likely to recover very marginally over next few quarters due to low capacity utilisation in corporate segment and wait and watch approach of borrowers in some sectors, says a report.

“We expect the country’s banking industry’s growth and profitability to gradually improve in financial year 2017-18, from the low base of the financial year 2016-17,” S&P Global Ratings’s credit analyst Amit Pandey said in a note today.

“However, the improvement will be sluggish at best, given low capacity utilisation in the corporate segment and the wait-and-watch approach of borrowers in some retail segments post demonetisation,” he said.

The rating agency said the pace of new non-performing loan creation is likely to abate somewhat over next 12 months.

“But banks with sizable corporate exposures will remain vulnerable, given their low provision coverage and inadequate resolution of stressed assets,” Pandey said.

According to the agency, weak profitability and rising capital demands from basel III implementation will continue to put pressure on the capitalisation of some public sector banks in the country.

These banks, so far, have been able to meet minimum regulatory requirements largely because of the government’s capital infusions, their issuance of additional tier 1 capital, and lower growth in risk-weighted assets.

“Barring further large capital infusions from the government, credit profiles of some of the public sector banks we rate in the country will remain vulnerable,” Pandey said. The rating agency said past few years have been tough for the banking industry with anaemic nominal GDP growth and a down cycle in the infrastructure and metal sectors.

AVIATION REGULATOR EXAMINES ENGINES OF AIRBUS PLANES

New Delhi: Aviation regulator DGCA has started detailed examination of 21 Airbus 320 neo planes of IndiGo and GoAir that are powered by Pratt & Whitney engines, which have been frequently facing technical snags.

Taking serious note of recent incidents where some IndiGo and GoAir flights had to make emergency landings due to problems with aircraft engine, the watchdog has started the examination and is also in discussions with Pratt & Whitney (P&W).

A senior DGCA official today said “boroscopic examination” of the A320 neo aircraft — which are using P&W engines — in the fleet of IndiGo and GoAir has been initiated.

As many as 21 A320 neo planes will be examined and the exercise is expected to be completed in the next two weeks. Only those neo aircraft which have flown at least 1,000 hours are being examined for possible engine issues, he added.

Out of the 21 such planes that are being inspected by the DGCA, 16 are with IndiGo and the rest are with GoAir. After carrying out preliminary probes into incidents involving P&W engine-powered neo planes, the official said a frequent issue has been with one of the bearings in the engine apart from those related to combustion system.

 

ASIA NEEDS $1.7 TRILLION INVESTMENT PER YEAR TILL 2030

New Delhi, Feb 28 () The developing Asia needs around USD 1.7 trillion of investment per year till 2030 to keep its growth momentum going that will help the region reduce poverty and fight climate change effectively, Asian Development Bank (ADB) said.

“Developing Asia will need to invest USD 26 trillion from 2016 to 2030, or USD 1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change (climate-adjusted estimate),” the Manila-headquartered multilateral funding agency said.

The investment needs without adjusting climate change and adaptation costs will be a little less at USD 22.6 trillion, or USD 1.5 trillion per year, through 2030.

The USD 1.7 trillion annual climate-adjusted estimate is more than double the USD 750 billion that ADB estimated in 2009.

In its flagship report ‘Meeting Asia’s Infrastructure Needs’, ADB said regulatory and institutional reforms are needed to make infrastructure more attractive to private investors and generate a pipeline of bankable projects for public-private partnerships (PPPs).

“Countries should implement PPP-related reforms such as enacting PPP laws, streamlining PPP procurement and bidding processes, introducing dispute resolution mechanisms and establishing independent PPP government units,” said the report.

Deepening of capital markets is also needed to help channel the region’s substantial savings into productive infrastructure investment, ADB said.

The report focuses on region’s power, transport, water, telecommunication and sanitation infrastructure.

“The demand for infrastructure across Asia and the Pacific far outstrips current supply,” said ADB President Takehiko Nakao.

“Asia needs new and upgraded infrastructure that will set the standard for quality, encourage economic growth, and respond to the pressing global challenge that is climate change,” he added.

As per the ADB report, the region currently invests about USD 881 billion in infrastructure (for 25 economies with adequate data, comprising 96 per cent of the region’s population).

CUT IN CORPORATE TAX RECOMMENDED

New Delhi, Feb 28 () India should bring down corporate tax rate to 25 per cent, introduce inheritance tax and provide certainty in rules, global think-tank OECD said today, taking the line that demonetization will benefit the economy in the long run.

In its Economic Survey of India, the OECD said comprehensive tax reforms, especially the goods and services tax, “would lift all boats” and raise revenue helping the government effectively deal with high poverty rate.

Observing that poverty is still high despite growing prosperity, the survey suggested that living conditions across the states could be improved by focusing on farm output, urban infrastructure, liberalized product and labour market.

“A comprehensive reform of property, personal income and corporate taxes is needed to complement the GST reform. It should aim at raising more revenue to fund social and physical infrastructure in a way that support economic growth, promote social justice and empower sub-national governments to better respond to local needs,” the survey said.

It recommended “gradual reduction in the corporate income tax from 30 per cent to 25 per cent while broadening the tax base and providing certainty regarding tax rules and their implementation”.

AIRTEL SCRAPS ROAMING CHARGES

New Delhi: Roaming on your mobile network may soon happen at no extra cost as telecom companies are scrapping the additional charges on incoming and outgoing calls, spurred by zero roaming charges offered by Reliance Jio and state-owned BSNL.

Airtel, the country’s biggest telecom company, on Monday announced the ‘Death of National Roaming’ as it unveiled plans to do away with roaming charges from April 1. “Starting April 1, Airtel customers roaming within India will enjoy free incoming calls/SMS and there will be no premium on outgoing calls allowing them to speak freely wherever they are within the country. Also, there will be no additional data charges on national roaming,” the company said. “Home data packs for customers will apply even while they roam across India.”

Vodafone and Idea Cellular, which offer some benefits partially or through specially-designed ‘roaming-free packs’, are expected to follow suit in the coming days.

Roaming charges – billed when a customer travels outside his/her home circle – were viewed as impractical with increasing competition in the telecom industry and Jio and BSNL abolishing them. “This marks the death of national roaming and the whole country will now be like a local network for our customers, who will not have to think twice before making or receiving calls or using data while traveling outside their home base,” said Gopal Vittal, MD & CEO (India & South Asia) for Bharti Airtel.

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