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Hindustan Unilever Ltd, India's largest consumer goods firm, said price cuts for key products including soaps and detergents dragged down its profit in the second quarter, missing market estimates despite improved sales. Grappling with weaker demand in rural India, the Indian unit of the Anglo-Dutch consumer group Unilever Plc had slashed prices for items like its Lux soap — part of a segment which accounts for nearly half its revenue. That helped drive sales volumes up 7 per cent and revenues up 5 per cent, but hit the bottom line, the company said. "We don't see a substantial step up in rural growth compared with what we have had in the past," PB Balaji, the company's chief financial officer told reporters on Wednesday (14 October). HUL, seen as a barometer of Indian consumer sentiment, has been under pressure in recent quarters. Demand from India's villages contributes about 35 percent to its total sales, but a weak monsoon and rising food prices have squeezed households. Balaji said he expects future growth to be driven by volume, as raw materials have become cheaper in recent months. The maker of Lipton Tea and Dove shampoos posted a quarterly net profit of Rs 962 crore ($147.9 million), down from Rs 988 crore a year earlier. Net sales climbed to Rs 7,820 crore. Analysts on average were expecting a profit of Rs 1,043 crore, according to Thomson Reuters data. Analysing the company's results, Emkay Research said: Company reported subpar revenue growth impacted by price de-growth and fiscal impact, however volume growth was healthy. Gross margin gains were offset by higher other expenditure thus impacting EBITDA margin vs expectation. Hereon, growth in urban categories (personal products) and volume uptick is essential to improve earnings growth to double digits. We currently have Hold rating on the stock with target price of Rs 830. We shall review the numbers post conference call. According to Ritwik Rai, Analyst, Kotak Securities: “HUL’s 2QFY16 revenues were in line with our estimates, with volume growth slightly ahead of our estimates. Gross margin expansion lagged estimates on (higher than expected) price deflation, and advertising and promotion spends (up 24% y/y) came in higher than estimates – resulting in 6.5% miss at the EBITDA level. PAT before exceptional items has come in 3% below estimates. Personal products profit growth continues to be healthy; however, the decline in profits of soaps and detergents has been a negative surprise. Weak growth in the soaps and detergents segment, along with margin declines, is likely to persist over the coming quarters. We expect to revise our earnings estimates downward by 3%-5%. Current trends in the sector indicate that recovery (in volume growth) may be delayed by another 2-3 quarters – as such, we think that current valuation of the stock (34X-35X FY17 earnings) may have scope for correction. We would look for better entry points in the stock.”
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Tata Consultancy Services Ltd, India's largest software services exporter, on Tuesday (13 October) reported a 14.5 per cent rise in quarterly net profit, meeting estimates, helped by a rise in new deals and a push towards digitisation. TCS reported a net profit of Rs 6,055 crore ($928.93 million) for the second quarter ended September. Analysts, on average, had expected it to report a profit of Rs 6,049 crore. “We have delivered accelerated growth in constant currency terms for Q2. Driven by great execution on the ground, our broad-based performance has been led by strong sequential growth in BFS, Retail and Life Sciences verticals with UK and North America leading the markets," said N Chandrasekaran, CEO and managing director of Tata Consultancy Services . Infosys, India’s second-biggest software exporter, on Tuesday reported a 9.8 per cent rise in September quarter consolidated net profit, but gave a lower dollar revenue guidance for the current fiscal.
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If change is the only constant, what better can one ask for when Kolkata's longest flyover was officially named Ma on auspicious Mahalaya that marks the beginning of Durga Puja. As of now, nobody knows for sure whether Ma Durga, Parama, Mamata or Ma-Mati-Manush dictated the choice of nomenclature. The Calcutta Metropolitan Development Authority (CMDA), custodian of the flyover inaugurated last Friday, published an advertisement in some newspapers on Tuesday to announce the christening. Political commentators say Trinamool Congress boss and Chief Minister Mamata Banerjee has the last word when it comes to naming or renaming any landmark, be it Metro stations long known by other names, roads or parks. The moot question is: Why ma? Some say Ma is an invocation to Durga with barely a week to go for the festival to celebrate the arrival of the Mother Goddess. There is another school of thought that says that Mamata's slogan Ma-Mati-Manush inspired the choice of name. Arguably, roads and flyovers are a city's arteries, and when they are given new names, the old lose their connect, and with it a part of history is lost. Calcutta, nay, Kolkata, the first seat of British administration, the renaming mania is often without rhyme or reason. Normally a new liberation or change of political colour is the declared or silent cause. History is sometimes invoked to justify or oppose. Kolkata, in all its political hues in the last several decades, has also confused its citizens quite often by (comically) annoying attempts at redrawing the maps of history and memory. The grandeur with which this is done are usually inversely proportional to the amount of time spent thinking about, and implementing, concrete improvements in the condition and appearance of the city. Quite a few columnists and media commentators are of the view that it does not make any difference in the life of a commoner whether a road or a flyover will be called X or Y. But it's strange how political parties manage to do politics around even such things. According to several reports, officials in the CMDA were either tight-lipped or non-committal about who proposed and finalised the official name of the Parama-Park Circus flyover. However, some officials said the order to publish newspaper advertisements announcing the name Ma came from urban development minister Firhad Hakim. Others said Hakim had only conveyed Mamata's decision. As railway minister, Didi had gone on a renaming blitz that saw Tollygunge Metro station becoming Mahanayak Uttam Kumar. Other famous names were randomly tagged to Metro halts like Garia Bazar (Kavi Nazrul), Bansdroni (Masterda Surya Sen), Naktala (Gitanjali) and Kudghat (Netaji). In April, the mercurial leader renamed six townships in the state. Among them, Siliguri will be known as Teesta - a major river in North Bengal - and Bolpur as Gitabitan, a popular compilation of songs of Rabindranath Tagore. The twin industrial towns of Asansol-Durgapur will be known as 'Agnibina', a collection of poems by poet Kazi Najrul Islam. Gajaldoba in Malda district has been rechristened as 'Mukta Tirtha' while Garia near Kolkata will become 'Uttam City', after the late matinee idol Uttam Kumar. In a nutshell, cities, streets and other landmarks are the most convenient victims of politicians' rechristening zeal. Their names are changed from time to time, depending on the whims and fancies of the party in power and who it is trying to please. Are these same politicians and authorities responsible for turning cities 'smart'?
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Certainly, online shopping is getting bigger than ever before in India with a whole new generation of internet-savvy consumers with deep pockets. But as the thrill of click-and-shop and daily heavy discounts overwhelm buyers, traditional shops and malls - the brick-and-mortar stores — are left fuming. Snapdeal, the second-largest online retailer, is holding an electronics sale on Monday (12 October), offering discounts on smartphones, laptops, other electronics and home appliances. India's largest online retailer Flipkart will go head-to-head with Amazon India this week for online sales of smartphones, tablets, clothes and other products. Flipkart is looking to sell goods worth $500 million, or Rs 3,250 crore, during the five-day 'Big Billion Days' sale, sources privy to the e-tailer's plans told the Times of India. Most analysts pointed out that Diwali sales would be key for the market to determine which one among Flipkart, Amazon and Snapdeal is likely to take the pole position. "It's a very important period for e-tailers and a lot would depend on how Indian consumers behave this year after the not-so-great experience they had last year," Harish H V, partner at Grant Thornton told the newspaper. However, the last year success of festival sale by e-commerce companies had generated a huge controversy with retailers blaming them of "predatory pricing". For e-commerce giants such as Amazon, Flipkart, Snapdeal, Jabong and ShopClues, which are involved in cut-throat competition to grab market share, Dussehra and Diwali are something they can't ignore. Be it the thrill of snagging a Dell laptop worth Rs 33,000 for just Rs 24,490 or an iPhone 5S worth Rs 45,000 for just Rs 28,500, marketers are calling this online shopping madness a tipping point for the retail industry. As online shopping grows, experts believe the discount culture will only increase. Analysts say India is not a pioneer in discounted sales. In the US, heavy discounting and the coupon system have been in practice for decades and even today families queue up to get even the smallest of discounts. This basic philosophy applies to India too. Big Indian retail players like Reliance, Tata and Future group are working on online initiatives which could change the rules of the game, and with that, the advantage consumers have been enjoying. According to a Deloitte report, digital currently influences 21 per cent, or Rs 60,000 crore, of the over Rs 2.8 trillion of in-store organised retail sales in India. The mobile influence factor is as high as 18 per cent, with smartphones being the devices of choice for accessing information while on the go or in-store. Harminder Sahni, founder, Wazir Advisors, a management consulting firm specialising in consumer and retail segments, feels that in India, companies have always enjoyed the lack of transparency in the supply chain management to charge unrealistic margins. That is what is being challenged by online players today who offer deep discounts, and the 40-50 per cent of the retail price that was going into the supply chain is now being eliminated, according to a report in Outlook magazine. Discounting during sales is not a new phenomenon and it helps sellers attract a larger customer base from time to time and grow their business. Of late, online retailers are following the new trend of loss leader pricing where they sell a small quantity of a product at a deep discount to attract customers and when that runs out, they expect customers to buy other products at less or no discount. According to a report in The Economic Times, marketplaces are courting sellers through multiple schemes and incentives to reach their targets for on-boarding sellers by the year-end, and prepare them for possible hiccups while processing such large volumes of orders. Online marketplaces are also trying to ensure that this Diwali is a happy one for merchants by giving up on commissions and reducing the pay cycle for sellers. For the consumers, the good times are here to stay. Even the Competition Commission of India has said that as long as the consumer benefits, nothing needs to be done on the discounts. According to reports by Google India, Technopak Advisors and E-tailing India, the country's online retail market is expected to be worth $75 billion by 2020 from about $5 billion now.
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Mumbai, India’s financial capital, will get additional railway network to serve its teeming millions who take trains to work. Prime Minister Narendra Modi on Sunday (11 October) inaugurated beginning of construction work for two additional elevated metro railway networks.``Metro network is necessary for growing urban areas,’’ said Modi at a ceremony held in Mumbai. ``While many may look at urban growth as a problem, I look at it as an opportunity.’’More than half of Mumbai’s 15 million people use the railway network to commute down and up the triangular Manhattan-shaped island. So far, most of the commuters had to use the almost century old suburban trains, which have been served by creaky coaches overcrowded three to four times their normal capacity.The suburban railway network also witnesses 10-20 people losing their lives every day while crossing tracks due to lack of overhead foot over-bridges or because of falling off overcrowded trains.The modern Metro rail network promises to be safer, cleaner and faster. While most of it is elevated in the city that’s short of land, some parts of the new metro that’s being built, will also have some underground sections. Modi also laid foundation stone today to commemorate Babasaheb Ambedkar, who headed the constituent assembly that framed India’s constitution. Of the two Metro corridors one will run from Dahisar in north Mumbai to D N Nagar in northwest Mumbai and the other from Dahisar (East) to Andheri (East).The Mumbai Metropolitan Region Development Authority (MMRDA) will implement two Metro corridor projects. The 18.5-km Dahisar to D.N.Nagar elevated Metro corridor will have 17 stations and its estimated cost is Rs 4,994 crores and the 16.5-km Dahisar (East) to Andheri (East) elevated Metro corridor which will have 16 stations will cost Rs 4,737 crores.Modi also laid the foundation stone for a memorial for Ambedkar in central Mumbai. MMRDA is the special planning authority for the memorial of Ambedkar on 12 acres of Indu Mill Land. The land will also include various facilities such as assembly hall, auditorium, museum, library, landscape gardens, public square, souvenir shops, eateries, administrative offices, staff quarters, and parking area.
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Reflecting a growth in the economic activity and in line with its budget projections, the indirect tax collection for the first half of financial year 2015-16 (April-September 2015) stood at Rs 3.24 lakh crore compared to Rs 2.38 lakh crore collected in the year ago same period. This translates into a 35.8 per cent jump in the Indirect Tax collections in the first six months of 2015-16 over comparable period in 2014-15.This is significant because the growth rate in collection is virtually double the budget projections of 18.8 per cent for the full fiscal. The government has budgeted to collect over Rs 6.47 lakh crore from indirect taxes in 2015-16 of which half has already been collected, the data shows. The higher tax collection also captures the hike in excise duty on diesel and petrol, withdrawal of tax exemptions for motor vehicles, increase in clean energy cess and hike in service tax rate in June.Bulk of the growth in the indirect taxes has been contributed by excise duty collection which grew 69.6 per cent during the period. Excise collection during April-September 2015-16 was over Rs 1.25 lakh crore, as against Rs 74,019 crore in the same period last fiscal. Collections from Customs duty also registered a growth of 17.5 per cent to over Rs 1.03 lakh crore during the six months period ended September 30, 2015. The service tax revenue grew 24.3 per cent to Rs 95,493 crore in this period.
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The maximum number of co-operative banks (Co-op banks) whose claims (deposit) were settled by the Deposit Insurance and Credit Guarantee Corporation (DICGC) in 2014-15 were based in Maharashtra and Gujarat. Of the Rs 321 crore in settled claims by DICGC, 18 were co-op banks were from Maharashtra for a sum of Rs 48 crore; the same for Gujarat was nine and Rs 27 crore. While the reasons for the dismal performance of these banks are not clear (nor does DICGC spell it out), what we can glean is that their health is not good. We have to only look into the Reserve Bank of India's Report on the Trend and Progress of Banking in India 2013-14 (the latest in public domain). It says that at the systemic level, the capital adequacy ratio of these scheduled urban co-operative banks (SUCBs) improved to 12.7 per cent at end-September 2014 from 12.4 per cent at end- March 2014. But at a disaggregated level, seven banks failed to maintain the minimum required capital adequacy ratio of nine per cent. Mint Road carried out a stress test to assess credit risk using the provisional data at end-September 2014. The impact of credit risk shocks on capital adequacy of these banks was observed under four different scenarios. The results showed that except under the extreme scenario, the system level capital adequacy remained above the minimum regulatory level, though individually a large number of banks (28 of the 50 banks under the extreme scenario) would not be able to meet the required level. What we can deduce is that several of these banks are not liquid. A stress test on liquidity risk was carried out using two different scenarios assuming 50 per cent and 100 per cent increase in cash outflows in the one to 28-day time-bucket. It was further assumed that there was no change in cash inflows under both the scenarios. The stress test results indicated these banks will be significantly impacted under stress scenarios.
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Concerned over a continuous decline in exports, the Narendra Modi-led National Democratic Alliance (NDA) government has given an assurance to exporters that it will soon announce incentives, including an extension of the interest subsidy scheme. The Cabinet is likely to take a decision soon on extending the interest subsidy scheme for exporters as the commerce department and finance ministry have resolved their earlier differences. Under the interest subvention scheme, exporters will get loans at affordable rates, which will help them to boost shipments. The interest subvention scheme of 3 per cent ended on March 31, 2014. Commerce secretary Rita Teaotia has said the allocation for export incentive schemes in this fiscal has been increased to Rs 21,000 crore from Rs 18,000 crore earlier. Goods exports, equivalent to about 15 per cent of gross domestic product, contracted 20.7 per cent year-on-year because of continuing weak global demand. Economists say growth could ease to 7 per cent to 7.5 per cent in the current 2015/16 fiscal year ending in March, against a target of 8 per cent to 8.5 per cent, if the slump in global demand continues. Exporters have been lobbying for lower borrowing costs and fiscal incentives to explore untapped markets such as Africa and Latin America. Modi met business tycoons last month and assured them of government support to boost growth. Quite a few commentators and media columnists are of the view that the significant slump in exports has created hindrance for Asia's third-largest economy to generate enough jobs for unemployed youth. Jobs are a critical issue for the NDA government, struggling to revive growth to a rate that will create employment for the millions who join the workforce every year. Exporters said the Centre should immediately take steps to control the decline otherwise it would be difficult to achieve the last year's figure of $310.5 billion and it may also lead to huge job losses. Experts say the slowdown in exports is the mirror image of what is happening in the global economy and it has affected Indian economy badly. Also, the fall in crude prices and the decline in commodity prices have affected India's exports primarily of the value-added products. Exporters complained that banks also had not passed on the benefits of the recent rate cuts announced by the Reserve Bank of India, and credit was available to them at high interest rates of 13-14 per cent. "The immediate re-introduction of interest subvention for all sectors at this stage will help exporters to get credit at a competitive rate to manage their competitiveness which has been eroded because of a steep depreciation in currencies," S C Ralhan, president of the Federation of Indian Export Organisation, told The Telegraph. India aims to take exports of goods and services to $900 billion by 2020 and raise the country's share in world exports to 3.5 per cent from 2 per cent now. Exports during the past four financial years have been hovering at around $300 billion.
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Growth in earnings of top companies in India is expected to grow by a muted 1.6 per cent in the three months ended Sept 30 compared with the same period a year earlier, according to a study by Crisil Ltd. This will be the fifth consecutive quarter of single digit growth for companies. Crisil examined a sample of 600 companies, excluding oil and financial companies, which account for 70 percent of the market capitalization. "Fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices will more than offset the healthy top line growth expected in the export-oriented sectors,’’ the rating agency said today. "Ebidta – or earnings before interest, taxes, depreciation, and amortisation – growth is expected to be just 2 per cent.’’ Yet, Crisil has held out hope. It expects earnings to improve in the second half of the financial year as increased government spending, consumption is expected to improve as also getting the benefit of low base effect. In spite of the improvement, growth in earnings for the full year will remain in single digits, it said. "Export-linked sectors will be the only bright spot in terms of top-line,’’ said Prasad Koparkar, senior director, Crisil Research. ``Though merchandise exports have been declining for several months now, listed exporters -- mainly in IT services and pharmaceuticals sectors -- are expected to grow at 13 per cent in the September quarter, helped partly by the 7 per cent depreciation in the rupee.’’ Domestic consumption-driven sectors with high dependence on rural consumption will be impacted by poor growth in rural income, below-normal monsoon and poor pricing power, it said. FMCG companies are likely to post 6-7 per cent revenue growth, down from 12 per cent in the last fiscal. Sectors more focused on urban consumers such as multiplexes, retail, and telecom are projected to post healthy double-digit top-line growth. Aggregate revenues of commodity-linked sectors such as steel, petrochemicals, and manmade fibres are expected to decline by 14 percent. While public investments have started to gain traction, this is yet to reflect in the performance of investment linked sectors because of overcapacity and weak demand in end-use sectors such as real estate, Crisil said. Cement and construction companies are projected to post 2-3 percent top-line growth, while capital goods manufacturers are likely to see a decline of about 7 percent. Power off-take, too, remains subdued due to poor financial health of state discoms and weak economic activity, which will curb top-line growth for generation companies. Companies in the FMCG, automobiles, airline, tyre, and power generation sectors are likely to see an expansion because of lower raw material costs. However, despite support from a weaker rupee, we expect Ebidta margin of IT services and pharmaceutical companies to decline by 70 basis points and 130 basis points, respectively, because pressure on their realisations has intensified. Yet, a surge in data revenue and control over marketing costs will boost the Ebidta margin of telecom companies by almost 250 basis points, Crisil said.
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Volkswagen India — the German auto major — on Wednesday (07 October) directed its dealers not to sell any Polo, its popular hatchback model in the market with immediate effect. In a letter addressed to its dealers, the car maker has directed them not to "physically deliver" any Polo vehicle. "We request, not to physically deliver any Polo vehicle (all variants) with immediate effect till further notice from VW," the dealers were told. The letter was signed by two Senior Volkswagen officials — Ashish Gupta, Head of After Sales — Operations and Pankaj Sharma, Head of Sales Operations, to their dealer partners. "Volkswagen India has confirmed a temporary hold on deliveries of its carline Polo due to a technical reason which is currently under evaluation," a Volkswagen Passenger Cars India spokesperson said in a statement. On whether the matter is related to the emission scandal, the spokesperson said: "Volkswagen would like to clarify that the temporary hold on deliveries is not related to the ongoing EA 189 diesel engine topic." The German firm, which entered India’s mass car market with its Polo and Vento models in 2010, overtook Toyota Motor Corp. as the world’s largest automaker last month, hasn’t been able to garner much volume and market share in India owing to its high cost structures, high level of imported content and tough competition from the local arms of Suzuki Motor Corp. and Hyundai Motor Co.In the first four months of the current fiscal year between April and July, Volkswagen sold a mere 15,807 units, lower than 12,178 units a year ago. Globally, Volkswagen is embroiled in a scandal where it has admitted to cheating emission tests in more than 11 million vehicles in the US alone. Europe's largest carmaker is under huge pressure to find those responsible for installing software in diesel engines to rig emissions tests, to say how affected vehicles will be fixed and to what extent it may also have cheated in Europe. The biggest business crisis in Volkswagen's 78-year history has wiped more than a third off its share price, forced out its long-time chief executive and sent shockwaves through both the global car industry and the German establishment.
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