Education solutions provider Educomp Solutions said on Friday, 16 August, it has cut 3,500 jobs in the last three months and has also initiated measures to spur growth."Educomp has announced a slew of measures aimed at putting the company back on a growth trajectory at a time when market sentiment is adversely impacting bottom lines across industry and has pushed the education sector into negative growth territory," it said in a release.The plan entails modifications in structure, systems and sales strategies to return the firm to profitability in the current and following fiscal. Within this transformational plan, a series of tactical steps have been identified to fast-track the correction, it added.Redundancies are being calibrated in a progressive manner and employee strength is being rationalised. Contracts of unproductive staff are being terminated, while enhancing responsibilities among existing staff to control costs without impacting performance, it said."Over the last 3 months, the company has let go over 3,500 employees. This alone has the potential of significant savings for the company," Educomp added.Collections are being prioritised and a zero-tolerance regime for recoveries has been initiated and around 750 schools which have delayed payments have been sent notices, it said."While Smartclass has always enjoyed a loyal customer base, 750 non-compliant schools which represent less than 5 per cent of the installed base have been asked to show cause for their repeated delays," Educomp Smartclass COO Divya Lal said.Recently, the Gurgaon-based firm outsourced its service and maintenance logistics to HCL Infosystems in a bid to exploit efficiencies of scale as well as provide specialist services to existing and new customers.The company is targeting a reduction in operational costs of close to 20 per cent over the last fiscal due to these measures.(PTI)
Read More
Seeking to calm rattled investors, the government and RBI on 16 August' 2013 said there was no reverting to capital control regime -- the fear of which spooked stock market, sent rupee to its lowest level and pushed gold prices up by a record Rs 1,300 per 10 gm. On a day when Sensex fell nearly 770 points or 4 per cent and rupee breached 62 to a dollar on concerns among large investor of capital curbs, the government and RBI went into fire-fighting mode assuring there was no move to check repatriation of funds by FIIs. "They are saying that a capital control is coming in... There is no question of us putting any restriction on outflows which are commercial in nature, which means whether it is FII sell...," Economic Affairs Secretary Arvind Mayaram told reporters here. He further said: "there is no control of outflows of dividends, profits, royalties, or on any kind of commercial outflows which happen in the normal course". Top sources in Reserve Bank blamed "unwarranted rumours" about controls on FII money to the nearly 770 point drop in the benchmark Sensex and rupee dipping to record low of 62.03 intra-day. India, RBI sources said, had no record of keeping controls on FII money and the capital outflow measures announced on Wednesday were no way bringing back the control regime. To restrict the outflow of foreign currency, the RBI had on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians. The central bank reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent. Higher levels of ODI would now need prior approval from RBI. The measures taken by the RBI cannot be called capital control measures and they had more to do with reducing stress on the balance sheets of corporates, a finance ministry official said. A Finance Ministry official said if the government is taking measures to increase capital inflows, it is part of the package to take measures to discourage outflows. "With rising NPAs, corporates are getting more and more into difficulties... So looking into their balance sheet before they are allowed to invest abroad is all that has been proposed. Hence, it is not capital control," he added. Steps by RBI and government since July to tighten cash supply, restrict currency derivatives and curb gold imports have failed to arrest the rupee's slump to record lows. The situation has been compounded as the nation struggles to attract capital to fund a record high current account deficit. The rupee has weakened 28 per cent in the past two years, the biggest tumble since the government pledged gold reserves in exchange for loans from the International Monetary Fund in 1991. Mayaram said the stock markets in India seem to be operating on sentiments and government is fully cognizant of the situation. "Whenever required, policy initiatives will be taken with a view only to create stable environment for rupee. We will see when it is required, we will take appropriate measures." He said: "We will take all measures to create stable environment for the rupee. We will try and prevent volatility in the rupee. It does not mean we have any intention of defending the rupee at any particular point," he said. Sources said throughout the history of Indian reforms, not once was it contemplated to control or restrict FIIs taking out their principal or dividend. Under FEMA Act, it will be illegal to stop any such repatriation, they said.(PTI)
Read More
Fearing spurt in attempts to smuggle gold into the country, financial intelligence agencies and customs department are keeping extra vigil and minutely scanning suspected passengers and commercial consignments. Officials of the Directorate General of Revenue Intelligence (DRI), mandated to check smuggling and evasion of customs duty, are coordinating with other agencies' staff posted at major transit points, including airports and international borders, to check gold smuggling and have alerted their field formations to remain more vigilant. Sources said the customs department is scanning credentials of suspected cargo coming from Gulf countries and other nations like Malaysia to foil any bid to smuggle precious metal inside the country. Officers of the Customs Overseas Intelligence Network posted abroad have also been asked to keep a hawk eye on any suspected consignment originating from there, they said. "There have been some frequent incidents of gold smuggling this year. All officials posted at airports, cargo stations and land borders are keeping extra vigil to check any such incidents," a DRI official said. Officials said the recent hike of 10 per cent in customs duty for gold by Finance Ministry may see increased attempts of smuggling of the yellow metal. The duty ongoldand platinum was raised from 8 per cent to 10 per cent, while the levy onsilverwas hiked by 4 per cent this week, according to a Finance Ministry notification. Ten gram gold is being sold at about Rs 29,825 in Delhi's bullion market. Owing to huge domestic demands, the import ofgoldhad gone up by a huge 87 per cent from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period this year. In value terms, the increase was 68 per cent - from Rs 56,488 crore to Rs 95,092 crore. Gold Consumption At 310 Tonnes In Q2, Highest In 10 YrsIndia's consumption of gold rose to 310 tonnes in the second quarter ended June, highest in the last 10 years, despite government curbs to restrict imports to rein in burgeoning current account deficit, a World Gold Council (WGC) report said Thursday. Much of the demand was met by stocks that had been built up to healthy levels following the April price drop. Imports more than doubled to 338 tonnes in April-June of this calendar year, it said. Gold consumption stood at 181.1 tonnes in the same quarter last year. "Consumers in India showed continued strong appetite for gold, with recent government measures to curb demand having had little impact on the quarters figures. Consumer demand was 310 tonnes, up 71 per cent on last year," the WGC said in its latest report. According to WGC India Managing Director Somasundaram PR, "Gold demand in Q2 was best in the last ten years." The fall in the gold price last April resulted in an increase in jewellery demand by more than 50 per cent to 188 tonnes in Q2 this year from 124 tonnes in the year-ago period, while bar and coin consumption reached a record high at 122 tonnes from 56.5 tonnes in the review period, he said. The introduction of restrictions on payment terms for gold imports in May and an increased import duty in early June to 8 per cent created uncertainty in the market but had a "limited impact on end-user demand," he added. India, the world's biggest buyer of gold, has been trying to curb imports of the yellow metal, which is the second biggest imported item after crude oil. On 13 August, the government raised import duty on gold for a third time in eight months to 10 per cent from 8 per cent. (PTI)
Read More
Potash buyers India and China are seeking aggressive price cuts of 25 per cent or more as they press their advantage over producers after the collapse of a major cartel. Russia's Uralkali rocked the global potash market late last month when it quit one of the world's two big cartels and forecast prices of the crop nutrient could fall to $300 a tonne. India is aiming for an 11 per cent discount off already agreed deals for the rest of 2013 -- saving $90 million-plus -- citing a weaker rupee and a trade-off between price and future sales growth. China wants to pay less than $300 a tonne for new contracts for the second half of 2103 and 2014, down sharply from $400 a tonne in the first half and $470 last year, pointing to its high stocks of the fertiliser and rising domestic output. "Prices above $300 will not be accepted by Chinese buyers, who are now facing high inventories at home and sluggish sales," Wei Chengguang, chairman of China Potassium Salts Industrial Association, told Reuters. "Chinese importers have been losing money in the first half and last year from high import prices," he added. China and India are two of the world's biggest users of the crop nutrient. China imports about half of the 10-11 million tonnes it uses each year. Potash use in India, which relies on imports, has slumped from about 6 million tonnes to 3.5 million tonnes due to rising prices. Cartel CollapseUralkali's decision to abandon Belarussian partner Belaruskali in the BPC cartel and boost its sales has encouraged buyers to expect increased production and greater competition. "Uralkali will ignore pricing parameters and will try to maximize production and sales volumes, trying to raise its share in the markets where the company has competitive pricing advantage - India, China, Brazil," chief executive Vladislav Baumgertner said at the time. The BPC and North American Canpotex cartels accounted for nearly 70 percent of global potash sales. Spot prices have slipped up to $50 in Brazil to $390 a tonne, while Uralkali has cut its potash price to China by $20 a tonne, Scotiabank analyst Ben Isaacson said in a research note. India, which agreed in February to buy nearly 4 million tonnes of potash in 2013 at $427 per tonne on a cost and freight (CFR) basis, is seeking a discount for the more than half of the contracted nutrient which has yet to be landed at ports. "We had asked for reduction to compensate 11 percent weakening of rupee," P.S. Gahlaut, managing director at top potash importer Indian Potash Ltd (IPL), told Reuters in a text message. "So far no confirmation (from sellers), but we are hopeful," said Gahlaut, who has been leading negotiations with potash suppliers on behalf of Indian buyers. The Indian rupee has fallen more than 10 percent against the U.S. dollar since companies signed potash imports deals in February and is trading around record lows. An official with a leading Indian co-operative fertiliser company said he expected most sellers would offer a discount to India in order to win new contracts. "There is competition among sellers. India is asking to dispatch at $380 per tonne, but the way inventory is building up at the seller's end, I don't think they will have any problem in accepting this price," the official said. Volume Trade-off?Uralkali and Potash Corp of Saskatchewan <POT.TO> declined to comment on possible negotiations with India, but an industry source at a producer outside Canpotex and the former BPC cartel discounted talk of price cuts. "I can't see India getting any reduction in prices on existing contracts," the source said. There had been a lot of "noise" from India on re-negotiating prices and, in one case, a buyer contacted the firm to seek lower prices but did not send in an official request, he said. A Russian industry source said the pricing of a signed potash contract had never been changed in the past. But the source pointed to a possible precedent in the phosphate market, when Phosagro agreed in 2011 to a discount on its contract with India in return for a pledge to purchase higher volumes. India has said its potash consumption, which has been squeezed by higher prices, could return to levels around 6 million tonnes a year last seen in 2008/09 if suppliers made big price cuts. However, Chinese officials said its push for lower prices would not be linked to increased purchases. China's domestic potash output would exceed 6 million tonnes in 2013, up from about 5.4 million tonnes in 2011, while domestic stocks would rise above 5 million tonnes. "Even with the price fall, I don't expect China to increase imports because of large inventories, while domestic production has been expanding. Imports should decrease gradually on a year basis," said the industry association's Wei. (Reuters)
Read More
The Reserve Bank of India said on Wednesday banks can exempt some foreign currency non-resident bank (FCNRB) deposits and non-resident external (NRE) rupee deposits when calculating their cash reserve and statutory liquidity ratios. The RBI said in a statement that starting from the bi-weekly cycle starting on 24 August, incremental three-year foreign FCNRB and NRE deposits with reference base dates of 26 July and above will be exempted from the cash reserve and statutory liquidity ratios. The cash reserve ratio is the proportion of cash deposits banks have to keep with the central bank in cash and the statutory liquidity ratio is the proportion that lenders must buy into government securities. The RBI also said it raised interest rates on longer-term deposits accounts held by non-residents. On foreign currency non-resident bank (FCNRB) accounts with maturities of 3-5 years, the central bank said it raised the interest rate ceiling to LIBOR plus 400 basis points from LIBOR plus 300. The RBI removed the ceiling on interest rates on non-resident external rupee deposits with maturities of three years and above. (Reuters)
Read More
India imposed restrictions on foreign exchange outflows and gold imports on Wednesday, 14 August, in a new attempt to prop up the rupee, as a spike in inflation added pressure on policymakers to curb a crippling external deficit. Finance Minister P. Chidambaram also reiterated his pledge to narrow the current account deficit - the main source of the rupee's weakness - to 3.8 per cent of gross domestic product this fiscal year and said the currency would not be allowed to slide into "free fall". The Reserve Bank of India's latest steps to support the currency, which has plumbed record lows against the dollar, included cutting the amount of overseas direct investments allowed by Indians. Those investments reached $3.2 billion in July, according to central bank data. Separately, the central bank banned imports of gold coins and bars, which constituted about 36 per cent of total billion demand in India last year, and will require domestic buyers to pay cash for the yellow metal, among other measures. "This is obviously an extreme action, but these are extraordinary times and require extraordinary measures," said Sujan Hajra, chief economist of brokerage Anand Rathi in Mumbai. The steps came as data showed the headline inflation rate jumped above the central bank's target range of 4 to 5 per cent in July for the first time since March, making it even harder for the bank to refocus on supporting India's slowing economy. The Indian authorities fear continued falls in the rupee will exacerbate the current account deficit in the short term, deter investment and further curb growth in Asia's third-largest economy. Central bank action to tighten rupee liquidity in mid-July and other steps have failed to halt the slide in the currency, which set new record lows on 6 August. Chidambaram sought to address scepticism in financial markets since he first announced on Monday his target to cut the current account deficit to $70 billion, or 3.8 per cent of GDP, from a record high 4.8 per cent in the year ended in March. Proposals announced on Tuesday to raise duties on gold and silver imports in a bid to curb demand have also failed to convince investors, who believe stronger measures are needed. "I make a commitment on the current account deficit on behalf of the government. We will leave no stone unturned to contain the current account deficit at about $70 billion," Chidambaram told lawmakers on Wednesday. "We cannot allow the rupee to go into a free fall." The partially convertible rupee slipped to 61.45 per dollar on Wednesday. It is down 2.5 per cent since the RBI launched its major support effort on July 15, which included raising short-term interest rates. However, the RBI on Wednesday also sought to ease some of the liquidity constraints at banks by exempting some requirements on the types of cash and government securities lenders must keep with the central bank. Chidambaram also said that the central bank's mandate must include growth and employment, while Arvind Mayaram, economic affairs secretary, told reporters that any measures put in place would not be permanent. "As and when we believe that the speculative pressure on the rupee is easing and the rupee is finding its stable environment, then the Reserve Bank of India and the government of India will revisit these restrictions and take an appropriate decision," Mayaram said. Traders had previously criticised mixed signals from government and central bank officials, saying it raised doubt about their resolve and contributed to the rupee's weakness. Ugly InflationIndia's headline inflation rate, measured by the wholesale price index, accelerated to 5.79 per cent annually in July from 4.86 per cent in June, data showed on Wednesday. With fears growing that India is headed into a phase of slowing growth and high inflation, 10-year bond yields surged to as high as 8.55 per cent, their highest in more than a year. Analysts said the bad news on inflation, particularly on prices for imported oil prices, was due in part to the rupee losing 12 per cent against the dollar since the start of May and higher food prices. "The July print for headline inflation is very ugly," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai. "Despite an acute slowdown in domestic demand, the manufacturing prices have remained elevated due to rising input costs on account of massive depreciation of rupee." The need to bolster confidence has become more pressing. Foreign investors have sold a net $11.6 billion in debt and equities since late May, a bad omen given markets could weaken more when the US Federal Reserve rolls back its monetary stimulus. Ultimately, analysts say Prime Minister Manmohan Singh's minority government will need to implement bolder reforms to restore the economy, notably by improving the investment climate and expediting infrastructure projects. Whether they can do so remains in doubt, given the government faces political gridlock ahead of general elections due to be held by May 2014. (Reuters)
Read More
Gold edged between gains and losses on Wednesday as investors fretted over the timing of the US Federal Reserve's stimulus tapering. The choppy trade followed a 1 per cent fall on Tuesday, 13 August, which ended a four-day winning streak. The drop was caused by strong US economic data and further import curbs in top buyer India.Uncertainty over when the Fed would begin scaling back its massive bond purchases has pushed gold down more than 20 per cent this year after 12 annual gains."What would be extremely welcome is some clarity," said analyst Dominic Schnider of UBS Wealth Management in Singapore. "And I think September would be the ideal time to provide clarity. Some market expectations are shifting towards a December tapering."The US economic performance remains too mixed for Fed policymakers to lay out a detailed path for reducing and eventually halting their asset-purchasing next month, Atlanta Fed President Dennis Lockhart said on Tuesday.But he appeared open to at least a modest pullback in monetary stimulus from its current pace of $85 billion per month."Once the taper is out, it will hit gold once more," said Schnider, though likely not to the same extent as drops earlier this year.Spot gold inched up 0.06 per cent to $1,321.42 an ounce by 0304 GMT.The next Fed meeting is scheduled for September 17-18. Until then, markets will scrutinise data to gauge the strength of economic recovery.US retail sales rose in July, data showed on Tuesday, pointing to an acceleration in consumer spending that could bolster the case for a Fed tapering.India CurbsIndia hiked the import duty on gold yet again on Tuesday to a record 10 per cent and also raised excise duty on the metal, after imports jumped in July despite attempts to strangle supply and curb demand as the government tries to rein in dollar spending.Gold prices in India are likely to rise this week, extending gains past their highest level in four months, due to the import duty hike and dollar weakness.Read Also: Import Duty Hiked On Gold, Silver To 10 Per Cent"Despite the expectations that gold imports may fall, India's appetite for bullion is anticipated to pick-up later in the year due to seasonal demand," HSBC analysts wrote in a note.Analysts say this could increase further illegal gold supply into India.(Reuters)
Read More
Stepped up efforts by Indian Finance Ministry to check revenue leakage have resulted in a detection of evasion of over Rs 2,158 crore in direct and indirect taxes in the last quarter of 2012-13.The detection came through a unique initiative of online monitoring system of suspicious transactions, named 'Virtual Office', which was set up by the ministry earlier this year for real-time coordination among revenue intelligence agencies and dissemination of various inputs pertaining to movement of illegal funds.The Central Board of Direct Taxes (CBDT) has detected unaccounted income and assets of Rs 1,408 crore using this platform.The Directorate General of Central Excise Intelligence (DGCEI) and Directorate General of Revenue Intelligence (DGRI)--two leading agencies under the Central Board of Excise and Custom (CBEC)--have together detected indirect tax evasion of at least Rs 750 crore, according to an official document.These agencies, which are part of the Virtual Office programme, detected the evasion after following up the leads in form of Suspicious Transaction Reports (STRs) passed on to them by Financial Intelligence Unit (FIU)--an agency tasked with analysing and disseminating information relating to dubious financial exchanges.Both DGCEI and DGRI have also effected a recovery of Rs 46.71 crore, on the basis of the STRs generated by the FIU, through Virtual Office. The CBDT has seized assets worth Rs 21 crore, the document said.An STR is a transaction of Rs 10 lakh and above believed to be proceeds of crimes including drug trafficking and black money.The Virtual Office was set up in January to monitor the feedback on the STRs disseminated by FIU-Ind, which is also providing administrative support to it.(PTI)
Read More
The rupee gained modestly on Monday, 12 August after another salvo from the Reserve Bank of India (RBI) to support it by tightening the money supply, but it is seen stuck near record lows unless there are genuine efforts to cut the current account deficit. The RBI will auction Rs 11,000 crore in cash management bills on Monday, part of its new plan to auction a total of Rs 22,000 crore of bills every week to drain funds from money markets. The idea is if the supply of rupees tightens it will create demand for the currency, which fell to a record low of 61.80 per dollar last week. That would also buy some time for the government to try to address some long-term pressures. Expectations are high that Finance Minister P. Chidambaram will announce measures to draw in foreign inflows as early as Monday, geared towards narrowing a record current account deficit that is the key source of pressure on the rupee. The steps could include raising money from Indians abroad, easing overseas borrowing rules for companies, or spurring state-run companies and lenders to raise money overseas. "It takes two to tango," said Jyotheesh Kumar, an executive vice president at HDFC Securities in a note to clients. "Both the Reserve Bank of India and the government of India are likely to act in tandem this week to shore up the ailing rupee," he added. Trade, industrial output and consumer prices data are due on 12 August as well, and are expected to reinforce concerns about growth running at its weakest in a decade at a time of high inflation. Bond Yields RiseThe partially convertible rupee rose to as much as 60.45 per dollar on Monday, 12 August compared to its close of 60.88/89 on Thursday, although it was last trading at 60.72. Financial markets were closed on Friday, 9 August for a holiday. The modest gains follow the RBI's announcement of the sales of cash management bills after the market close on Thursday (8 August) -- its third set of measures over the past month which have also included raising short-term interest rates. But investors want India to tackle longer-term fiscal and economic reforms, such as raising fuel prices, and are yet to be convinced that the central bank's strategy is sustainable, raising the prospect of higher borrowing costs in the near term. The benchmark 10-year bond yield was up 8 basis points to 8.20 per cent on Monday, and is up about 70 basis points since the RBI's first round of action on 15 July. Bringing in foreign flows will be key to stabilising market confidence in the near term, analysts said. India has traditionally restricted foreign-currency borrowings to prevent a build-up in foreign-exchange liabilities, and a more relaxed approach may trigger a dramatic spike in overseas bond offerings. (Reuters)
Read More
An inter-ministerial panel has suggested higher taxes for non-essential imports with a view to curbing inward shipments and containing the current account deficit (CAD).The Committee has also suggested a list of non-essential items the import of which could be compressed, with a view to bridge the trade gap.These suggestions form part of the recommendations made by the Committee set up by Finance Minister P Chidambaram under the chairmanship of Rajat Bhargava, Joint Secretary (Budget Division) to suggest steps to contain the rising CAD, which had touched a record high of 4.8 per cent of GDP in the last fiscal.The committee has already submitted its report to Chidambaram and according to sources some steps are likely to be announced soon."The panel has suggested higher taxes on those non- essential items which do not add to inflationary pressures," sources said.Chidambaram had earlier said that government would be looking at "some compression in non-oil and non-gold imports, especially of non-essential goods", citing the example of coal and electronic hardware.For the April-June period this fiscal, exports were down by 1.41 per cent at $72.45 billion over the same period last year. However, imports during the period were up by 5.99 per cent at $122.6 billion.Trade gap in the first quarter stood at over $50 billion.India's exports during 2012-13 was at $300.3 billion, while imports aggregated $491.9 billion. Trade deficit stood at $191.6 billion during the period.Current Account Deficit (CAD) occurs when total imports of goods, services and transfers are higher than exports, reflecting outgo of foreign exchange.(Reuters)
Read More
