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Consumer goods company Unilever has warned that a slowdown in its emerging markets accelerated in the third quarter and it now expects underlying sales growth of just 3 to 3.5 per cent in the period. That compares with a weaker-than-expected 5 per cent rise in sales the Anglo-Dutch maker of Ben & Jerry's ice cream and Dove skincare products reported in July for the second quarter. Developed markets remained flat to down in the third quarter, it said, and overall Unilever said it was on track to meet its 2013 priorities. It attributed the emerging markets slowdown to a significant currency weakening. "We continue to grow ahead of our markets and expect underlying sales growth to improve in quarter four," Chief Executive Paul Polman said. Unilever generates about 57 per cent of its 51 billion euros of annual sales from developing and emerging markets, a fact that has weighed on its share price as currency routs crimp demand and weigh on profits in several markets including India. Unilever's shares have fallen 7 per cent in the last 3 months. (Reuters)
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Oil Corp (IOC), the country's biggest refiner, said on Monday, 30 September, it would cut petrol prices by 4.8 per cent following an appreciation of the rupee and softening global gasoline prices during the second half of September.IOC, however, will raise diesel prices by 1.1 per cent to reduce its revenue losses as refiners sell the fuel at state-set low prices. The changes will be made from Tuesday (1 October).India deregulated gasoline prices in June 2010.In January, India allowed fuel retailers to raise the price of subsidised diesel in small amounts every month and asked bulk buyers to pay market rates.Three state-run fuel retailers - IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp - tend to move their prices together.Following are prices as charged by IOC in Delhi. Gasoline, diesel and kerosene prices are in rupees per litre, while liquefied petroleum gas (LPG) prices are per 14.2 kg cylinder.(Reuters)
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Factory activity in India shrank for a second month in September, albeit not as sharply as in August, on a dearth of new orders which pushed firms to cut staff, a survey showed on Tuesday, 1 October. Another grim Purchasing Managers' Index (PMI) comes as Asia's third-largest economy grapples with its worst slowdown in a decade and policymakers struggle to put a floor under the battered currency. The HSBC Manufacturing PMI, compiled by Markit, rose to 49.6 in September from 48.5 in August, but remaining below the watershed 50 mark that separates growth from contraction. The index, which gauges business activity in Indian factories but not utilities, has hovered near that 50 mark from May but falling orders dragged it under in August for the first time in more than four years. Eight Core Sectors Grow By 3.7% In August "Manufacturing activity continued to shrink in September. Order flows remain weak, especially export orders, and employment fell," said Leif Eskesen, chief economist for India at survey sponsor HSBC. While orders from abroad shrank at a quicker pace on a capricious global economy, overall new orders contracted at a slower rate, offering hopes that softness in domestic demand may be leveling off. While the new orders sub-index rose to 49.6 last month from 47.5 in August, it spent its fourth month below 50, prompting firms to cut staff for the first time since February 2012. A slew of surveys and data over the past months have stoked fears the economy grew at an even weaker pace in the current quarter than the 4.4 per cent seen in April-June, its slowest quarterly growth rate since early 2009. Compounding policymakers' problems, a yawning current account deficit has driven funds out of the country and further hammered the Indian rupee. The currency lost over 20 per cent of its value between January and late-August, when it sank to a record low of 68.85 to the dollar, but it has since recovered around 10 per cent on central bank measures to attract more capital. Data released on Monday showed India's current account deficit widened to 4.9 per cent of gross domestic product (GDP) in the June quarter from 3.6 per cent in the previous three months, although the gap grew less than expected. The weaker currency has pushed up prices of imported goods and coupled with higher food costs drove wholesale inflation to a six-month high in August. The latest PMI survey showed input costs grew at their fastest pace since June 2012. "Despite the weak growth readings, the build-up in underlying inflation pressures suggests that the RBI has to keep its inflation guards up," Eskesen said. New Reserve Bank of India chief Raghuram Rajan surprised financial markets by raising the key repo rate by 25 basis points to 7.50 per cent last month to ward off rising inflation, but scaled back some of the emergency measures put in place to support the ailing rupee. Economists in a Reuters poll taken last week were split over whether he will hike rates again at the RBI's next policy review on October 29. (Reuters)
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The world’s biggest banks have to boost their capital by €115 billion to comply with tougher rules, and 61 per cent of that shortfall is at European Union (EU) banks, where lenders have been the slowest to comply. The Basel Committee of global regulators said the capital shortfall fell by €83 billion during the second half of last year as banks retained more of their profits and raised capital, although the pace of improvement in Europe was not as quick as it was elsewhere. The shortfall at EU banks was cut by €29 billion in the second half of 2012. Banks have been under pressure to comply with the global Basel III accord to dispel doubts about their ability to thrive and encourage investors to buy their bonds and shares. The most affected are HSBC, JP Morgan, Citigroup and Deutsche Bank.Growth TidingsBusiness activity in the euro zone grew faster than expected in September as new orders came in at their fastest pace in over two years, recent surveys showed, adding to signs that the economy was healing. The surveys suggest the region’s economic recovery was becoming more broad-based, with growth in both Germany and France, the bloc’s two largest economies. Markit’s Flash Composite Purchasing Managers’ Index jumped to 52.1 from August’s 51.5, its highest since June 2011, beating expectations of 51.9. A reading above 50 indicates growth.Buying TimeItaly’s third biggest lender Monte dei Paschi di Siena has delayed approval of a restructuring plan in the hope that the European Commission will give it more time to raise a planned €2.5 billion, according to sources. The issue is crucial in determining the bank’s future because the commission has said that if the bank cannot raise the funds on the market, the government will have to convert its loans to the bank into equity, effectively nationalising it. Monte dei Paschi was brought close to collapse by the euro zone debt crisis and most analysts say it could struggle to lure private investors to its planned cash call. At €2.5 billion, the capital injection requested by Brussels is more than twice the amount originally pencilled in by the bank and roughly equal to the bank’s current stock market value. The fundraising will have to be carried out within 12 months of the plan’s approval by the European Union. Barack ObamaExtra CoverAmericans will pay an average premium of $328 a month for a mid-tier health insurance plan once the Obamacare health exchanges open for enrolment on 1 October, and most will qualify for government subsidies to lower that price, according to the Obama administration. The figure, based on data for approved insurance plans in 48 states, represents the broadest national estimate for how much Americans will pay for health coverage under US President Barack Obama’s healthcare reform law next year. The prices of the new plans are at the heart of a political debate over whether they will be affordable enough to attract millions of uninsured Americans. Prices were lower in states with more competition among insurers and higher in states with fewer players, said a report from the US Department of Health and Human Services.Game OnGrand Theft Auto V (GTA) has crossed the $1-billion sales mark within three days of its launch in stores, a rate faster than any other video game, film or other entertainment product has ever managed, its creator Take Two Interactive Inc. said. The latest instalment of GTA, a cultural phenomenon that has sparked debate on adult content and violence, received strong reviews and racked up a record $800 million in first-day sales alone.Big RapUS and British authorities recently fined ICAP, the world’s biggest interdealer broker, $87 million and slapped criminal charges against three former employees for their role in the London Interbank Offered Rate (Libor) benchmark rate rigging scandal. The scandal, which has laid bare the failings of regulators and bank bosses, has already seen three banks fined $2.6 billion, four individuals charged, scores of institutions and traders grilled and a spate of lawsuits launched.Flying OrientAirbus has landed deals with Chinese companies for almost 70 aircraft worth around $6 billion, as it increases its footprint in what it expects will become the largest domestic aviation market. The European aircraft maker, which is battling rival Boeing in a market it sees surpassing the US (by passenger numbers) within 20 years, has also unveiled a “regional” jet aimed at China. Domestic travel grew almost 10 per cent last year in China, compared with less than 1 per cent in the US, according to the International Air Transport Association.Like! Comment? Share? A small selection of people in China will finally be able to access banned sites, including Facebook, Twitter and other ‘politically sensitive’ links. Access to Facebook and Twitter has been blocked in China since 2009 following riots in the country. The ban will be lifted by the government in the Shanghai Free Trade Zone (FTZ), the South China Morning Post reported — a move that has been popularly dubbed the “Internet Concession”. The idea of unblocking websites in the FTZ was to make foreigners “feel at home”, the report said. Shinzo AbeMore CutsJapan’s government will reportedly include more than $14.1 billion in corporate tax cuts in an economic stimulus package intended to offset the blow from planned sales tax hikes. The tax breaks, worth 1.4 trillion yen, will be part of a 5 trillion yen economic stimulus, as PM Shinzo Abe gears up to approve an increase in the sales tax needed to pay for welfare spending. The sales tax hike is the biggest effort in years by Japan to contain public debt of over $10 trillion.Growth TrackRussia reopened a 54-km railway link with North Korea, holding out the prospect of increased trade for the reclusive nation with its biggest neighbours after years of international sanctions. North Korea has reached out to Moscow and Beijing for help to fill the gap left by the drying up of South Korean and US economic assistance. The track would be used to export coal and import goods from South Korea and other Asian countries.(This story was published in BW | Businessworld Issue Dated 21-10-2013)
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Congress will not fight the next Lok Sabha elections but will field the CBI instead”— Narendra Modi, at a BJP rally“Chidambaram is practising terrorism with facts”— Yashwant Sinha, former finance minister, in response to P. Chidambaram’s assertion of better growth under the UPA“Wonder why Narendra Modi should stage a fake encounter with facts”— P. Chidambaram, finance minister, in reply to Narendra Modi’s comments on high growth during the NDA’s tenure“I haven’t had a cigarette in probably six years. That’s because I’m scared of my wife”— Barack Obama, President of the US, in an admission captured by an open microphone David Cameron, British Prime Minister (AFP)“We had a bit of a falling out. I think we are getting over that. We interfered in your politics two hundred years ago when we sailed up the river and burnt the White House”— David Cameron, British Prime Minister, in an interview to a US TV channel“The Army transfers money to all the ministers in Jammu and Kashmir...”— V.K. Singh, former Army chief“The biggest fear of bankers is the stupidity of bankers”— John W. Allison, chief executive of Home BancShares“There are a variety of possible alternative images that could be utilised such as a cow, a goat, a flower... an aircraft is an entirely inappropriate flight of the imagination”— Alan Shatter, justice minister of Ireland, on Apple’s iOS 6 Maps incorrectly identifying farmland as an airport(This story was published in BW | Businessworld Issue Dated 21-10-2013)
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India's current account deficit probably widened to as high as 5.4 per cent in the June quarter, but a dramatic slowdown in gold imports and a rebound in merchandise exports are expected to narrow the gap in coming quarters.The data is part of a slew of indicators this week which will offer clues on the health of Asia's third-largest economy, which is struggling to recover from the worst slowdown in a decade and running a wide current account gap that was partly to blame for a recent plunge in the rupee.The rupee has clawed back part of the losses which saw it slump to a record low of 68.85 to the dollar in late August, but few analysts believe Asia's second-worst performing currency is out of the woods just yet.Economists surveyed by Reuters last week expect the deficit to swell to $23-25 billion for the June quarter from $18.1 billion, or 3.6 per cent, in the March quarter.But they expect it will later improve to around $10-12 billion in the September quarter. The Reserve Bank of India will release the data on Monday around 1130 GMT.Also on Monday, India is expected to release data on infrastructure output for August. The sector, which includes coal, crude oil, oil refinery products, natural gas, steel, cement, electricity and fertilisers, had expanded an annual 3.1 percent in July.It accounts for about 38 percent of India's industrial output, which grew for the first time in three months in July. However, a contraction in factory activity last month, reflected in the Purchasing Managers' Index (PMI), does not bode well for industrial output in August.The HSBC Manufacturing PMI, sank to 48.5 in August from 50.1 in July, the lowest reading since March 2009. The reading for September is due on Tuesday at 0500 GMT.A narrowing current account deficit would reduce India's reliance on foreign money to fund the gap, bolstering the outlook for the troubled rupee."We expect the current account deficit to narrow in 2013/14, given our expectation for a continued improvement in the country's export cycle," Credit Suisse said in a Monday note.New Delhi has unveiled a range of measures including fiscal incentives for its exporters to improve the trade deficit. It has also raised import duty on gold shipments to a record 10 percent, and made airline passengers pay duty on imports of flat-screen televisions.The measures helped reduce the trade deficit in August to a five-month low of $10.9 billion.Meanwhile, slowing economic growth has dampened tax revenues, making it tougher for the government to hit its fiscal deficit target of 4.8 percent of GDP for the financial year that ends in March.During the first four months of this fiscal year the deficit had reached almost 63 per cent of the full-year target. Revenues were just about 16 percent of the target, while spending was 31.3 per cent of the target.Fiscal deficit data for April-August is expected on Monday around 1030 GMT.Despite economic weakness, expectations for Indian monetary policy have shifted towards further tightening after the Reserve Bank of India's surprise increase in the policy interest rate on September 20, a Reuters poll showed last week.Economists are now split over whether new RBI chief Raghuram Rajan will hike rates again at the central bank's next policy review on October 29. Many did not anticipate Rajan's focus on curbing inflationary pressures despite growth languishing at a decade-low.(Reuters)
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India's temples are resisting divulging their gold holdings - perhaps nearly half the amount held in Fort Knox - amid mistrust of the motives of authorities who are trying to cut a hefty import bill that is hurting the economy.The Reserve Bank of India (RBI), which has already taken steps that have slowed to a trickle the incoming supplies that have exacerbated India's current account deficit, has sent letters to some of the country's richest temples asking for details of their gold. It says the inquiries are simply data collection, but Hindu groups are up in arms."The gold stored in temples was contributed by devotees over thousands of years and we will not allow anyone to usurp it," said V Mohanan, secretary of the Hindu nationalist Vishwa Hindu Parishad organisation in Kerala, in a statement.Indians buy as much as 2.3 tonnes of gold, on average, every day - the weight of a small elephant - and what they don't give to the gods is mostly hoarded. Jewellery is handed down as heirlooms and stored away with bars and coins as a hedge against inflation or a source of quick funds in an emergency.That is costing the economy dear. Gold imports totalled $54 billion in the year ending 31 March 2013, the biggest non-essential item shipped in from overseas and a major factor in swelling the current account deficit to a record in 2012-13.Guruvayur temple, in Kerala, one of the most sacred in India and boasting a 33.5-metre (110-ft) gold-plated flagstaff, has already told the RBI it won't divulge any details."The gold we have is mostly offered by the devotees. They would not like the details to be shared with anybody," said V M Gopala Menon, commissioner of the temple's administrative board.The World Gold Council estimates there are about 2,000 tonnes of gold locked away in temples - worth about $84 billion at current prices - which Indian devotees have offered in the form of jewellery, bars, coins and even replicas of body parts, in the hope of winning favours from the gods or in thanks for blessings received and health restored.Curbing gold imports and getting the gold squirreled away back into circulation has become a priority for the government and RBI this year. Import duty is at a record 10 per cent and the latest new rule - that 20 per cent of all imports must leave the country as jewellery exports - caused confusion that dried up buying for two months.The head of the main opposition Bharatiya Janata Party (BJP) in Kerala, V Muralidharan, said the RBI wanted to "take possession" of the gold and maybe sell it for dollars.Data Collecting?The RBI said there was "no proposal under its consideration to convert idle gold into bullion at this juncture".But its letters, sent to leading temple trusts in Kerala, were prompted by a report looking at "issues related to gold imports" and loans outside the banking system in February, which zeroed in on temples and domestic hoards for fresh supplies.Under the heading "supply-related measures", the report looks at recycling domestic gold and notes: "Temples in India hold large quantities of gold jewellery offered by devotees to the deities."Subha Unnikrishnan, a clothes shop owner worshipping at one of the temples in Kerala's capital Thiruvananthapuram, said whatever had been given to the temple should stay there. "We have given it to the god with a purpose," he said. "Nobody can take them away."Of the three major temple boards in Kerala, which administer more than 2,800 temples, Cochin board has also decided against providing details of its gold, while another has yet to decide and a third says it has not yet received a letter from the RBI.Some of them cite security reasons for their reticence - and the wealthiest temples do have tight controls and metal detectors at gates to keep their assets safe.There has been no inquiry from the RBI yet at the centuries-old Sree Padmanabhaswamy temple, where two years ago treasure then estimated to be worth over $20 billion - more than India's education budget - was discovered in secret subterranean vaults. But its hoard is already being checked by the Supreme Court to make sure it is adequately protected.There are some, for sure, who feel the temples should divulge their centuries of gold offerings."Everything the temple gets should be known to the devotees," said Shankaram Kutty, head of an advertising firm based in Cochin, who goes at least once a year to Guruvayur with an offering. "I feel every temple should declare their assets."Mumbai's Shree Siddhivinayak Ganpati temple, often visited by Bollywood celebrities, had already put 10 kg (22 lbs) of its gold into a bank deposit scheme. It still has 140 kg in its vault."The gold we have is the nation's property, we will be proud if the nation can benefit from it," said Subhash Vitthal Mayekar, chairman of the temple's administrative trust. He has not yet received an inquiry from the RBI.It is not alone. The Tirupati temple in Andhra Pradesh, considered one of India's richest, has lodged 2,250 kg of gold with the State Bank of India, which pays it interest.As the central bank ponders its options, it could take heart that the temples themselves are already doing their bit to circulate the gold."We use some of it for making gold lockets that we sell in our temple counter. For making the lockets, we send some gold to the Mumbai mint through the State Bank of India, which is one of our bankers," said a source at the Guruvayur temple's administration.(Reuters)
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Indian Prime Minister Manmohan Singh and his Pakistani counterpart, Nawaz Sharif, agreed on Sunday, 29 September, that better ties require an effort to restore a cross-border ceasefire after a spate of shootings, a senior Indian official said.Singh and Sharif met for more than an hour on the sidelines of the United Nations General Assembly, amid heightened tension between the nuclear-armed neighbors over Kashmir, sparked by series of fatal clashes on their de facto Himalayan border.They both expressed a desire to improve ties but agreed that "peace and tranquility across the LOC (Line of Control) is a precondition," Indian national security adviser Shivshankar Menon told reporters in New York."We need to address the issues that we face today and then we hope to move it forward," he said.A series of fatal clashes along the so-called Line of Control dividing Kashmir between India and Pakistan have killed at least eight soldiers from both countries in less than two months. The South Asia Terrorism Portal, a website that tracks the violence, says this year's toll is 44 members of the security forces, up from 17 for all of last year.In their speeches to the U.N. General Assembly, both leaders said they wanted to improve relations between their countries, which have fought three wars since becoming independent from Britain in 1947, two of them over Kashmir.But Singh told the assembly on Saturday that neighboring Pakistan is the "epicenter of terrorism in our region," and in talks with Sharif he urged Pakistan to address Indian complaints that Pakistan is the source of cross-border attacks, Menon said.India has long accused Pakistan of supporting the militants fighting Indian rule in an insurgency in its part of Muslim-majority Kashmir since 1989. Pakistan denies this."Both sides wish to see a better India-Pakistan relationship than we have today," said Menon.Asked whether he thought Pakistan can bring calm to the frontier in Kashmir, he said: "The only proof will be in the months to come."The two leaders accepted invitations to visit each other's countries, but no dates were set, Menon added.(Reuters)
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Snapping two-day losing trend, gold prices climbed to nearly three-week high by surging Rs 1,000 per ten grams in the national capital today on brisk buying by stockists, driven by strong global cues. While gold shot up Rs 1,000 to Rs 31,200, a level last seen on September 11, silver jumped up by Rs 1,225 to Rs 49,680 per kg on increased offtake by industrial units and coin makers. Bullion merchants said sentiment bolstered as stockists indulged in enlarging their positions to meet the upcoming festival and marriage season demand next week. Demand is likely to pick up on beginning of 'Navratras,' an auspicious week in Hindu mythology for making fresh purchases. They said a firm global trend on concerns the US Federal Reserve might trim economic stimulus, triggered buying of precious metals as an alternate investment. Gold in New York, which normally set price trend on the domestic front rose by 1.1 per cent to USD 1,339.20 an ounce and silver by 0.3 per cent to USD 21.83 an ounce. On the domestic front, gold of 99.9 and 99.5 per cent purity surged by Rs 1,000 each to Rs 31,200 and Rs 31,000 per ten grams, respectively. The yellow metal had lost Rs 345 in last two trading sessions. Sovereign also rose by Rs 100 to Rs 25,100 per piece of eight gram. Silver ready zoomed up by Rs 1,225 to Rs 49,680 per kg and weekly-based delivery by Rs 1,245 to Rs 49,600 per kg. It had lost Rs 875 in the previous two sessions. Silver coins spurted by Rs 2,000 to Rs 86,000 for buying and Rs 87,000 for selling of 100 pieces. (PTI)
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Brazil's state-led oil company, Petroleo Brasileiro SA, and its Indian partners have made a "beautiful" oil discovery off Brazil's northeast coast and it will produce a minimum 100,000 barrels of petroleum a day starting in 2018, the company's chief executive officer said on Friday. Maria das Graças Foster, the chief executive, declined to say how big the discovery is but said it was an important new oil "province" for Brazil and that its large potential reserves would create a rush of jobs and activity to the area that will need to be managed carefully. On 27 September, Reuters exclusively reported that the discovery, centered on the SEAL-11 offshore exploration block, likely holds more than 1 billion barrels of oil and that the region will soon become Brazil's biggest new oil frontier. The SEAL-11 block is 60 per cent-owned by Petrobras and 40 per cent-owned by IBV Brasil, a 50-50 joint venture between India's Bharat Petroleum Corp (BPCL) and Videocon Industries Ltd. "In 2008 we decided to do a very extensive investigation of the area, and the results we have got have been very good," Foster told reporters at company headquarters in Rio de Janeiro. "This is a beautiful discovery, beautiful discoveries." In addition to light, high-quality crude oil, the region has important quantities of gas, she added. Two prospects in the area, known as Farfan and Muriu, are expected to be developed as a single or integrated unit, with at least one floating production, storage and offloading ship (FPSO) producing oil and gas from the area in 2018, Foster said. Foster said that was the minimum outlook for the area based on spending in the company's $237 billion 2013-2017 investment plan drawn up before the latest drilling and tests in the area. If confirmed, the new find could make the region the country's biggest new oil frontier since the government unveiled the massive subsalt discoveries off the coast of Rio de Janeiro and Sao Paulo states in 2007. Refinery PlansFoster also said that Petrobras is totally reforming its plans to build two low-sulfur diesel refineries in Brazil's northeast. The so-called premium refineries planned for the states of Maranhao and Ceara were showing signs they would not be profitable. The Maranhao refinery is expected to cost about $20 billion to build. Petrobras, however, has reworked the projects with the help of U.S. based consultants, Foster said, and those projects are now looking stronger. The company hopes to start putting the refineries out to tender as early as March, she said. The company is also in talks with a Chinese company to take a stake in the Maranhao project, Foster said. The project could lead to the Chinese partner taking a majority stake, she added.(Reuters)
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