Cement firms press alarm bell as topline melts

The 204 million tonne per annum cement industry in India is going through difficult times, as it faces double trouble with topline and operating margins both reeling under pressure.

Cement majors including ACC, UltraTech, Ambuja Cements and Binani Cement, among others, foresee tough times ahead. Significant raw material pressure and government control on cement prices have resulted in a negative growth in the bottomline and topline for these companies.

ACC Ltd, while declaring its Q3 results for the current year said, “We foresee challenging times ahead, in respect of markets, investments and input costs. While GDP growth targets for the country are being moderated to around 6.5% to 7%, ACC is of the view that growth of cement consumption in the coming months, particularly in the housing sector,may decline.”

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Flocking Together

AD times can make strange bedfellows of those who cannot see eye to eye otherwise. The Kingfisher-Jet alliance struck recently is an apt example. As the aviation industry in India bleeds and is estimated to close this financial year with cumulative losses of about Rs 8,000-9,000 crore (close to $2 billion) double the amount last year, alliances of this kind have become a necessity today.

“It (airline alliance) is nothing uncommon abroad,” says M Thiagarajan, managing director of Paramount Airways, a regional carrier that operates flights mainly in the south of India. “Alliances have been around for some time in the international market.”

Star Alliance, One world and SkyTeam, for instance, have been competing with each other globally over the last decade or so. The objective of these alliances is to provide a common pool of services to their members such as the use of common passenger terminals at airports, linking frequent flyer programmes and providing flights across member carriers.

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Wireless bolsters Verizon profit despite economy

Verizon Communications Inc reported a higher quarterly profit thanks to strong wireless sales, despite worries that a slower US economy would hurt spending by consumers and business customers.

The company, whose shares rose 3 percent in premarket trading, said on Monday third-quarter profit rose to $1.67 billion, or 59 cents a share, from $1.27 billion, or 44 cents a share in the same quarter a year earlier, the No. 2 U.S. phone company said on Monday.

Earnings per share before items rose to 66 cents from 63 cents, exceeding the average analyst estimate of 65 cents, according to Reuters Estimates.

Revenue rose 4 percent to $24.75 billion.

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Fear factor blessing in disguise for e-marts

The fear that has crept into the minds of the consumers post the terror attacks couple of weeks back is expected to spell boom for online shopping business during this festive season. According to industry estimates, online purchases is expected to go up by over 100% from Rs 700-800 crore last year to Rs 1,300-1,400 crore this fiscal and a huge part of it will happen during festive times, starting from Durga Puja and going up till Christmas and New Year.

“The terror fear is still looming large among Indians and people are scared of getting into crowded places, be it malls or central markets across different parts of the country and hence there will be a good jump in online purchases this time vis-à-vis last year,” says an industry expert. According to him, the phenomenon would be more pronounced in metros and mini metros as these have been the target cities. More over, since the Internet penetration is higher in these places vis-à-vis semi urban areas, they will contribute over 70% of the total e-sales this time.

“The number of people accessing the Internet has gone up 10-fold from 2.5-3.0 million in 2000 to around 35 million now. Even the income levels have gone up substantially in the recent past but at the same time people are so tied up with their day-to-day activities that they hardly get time to go shopping and hence most of them prefer to send gifts online,” adds K Vaitheeswaran, COO, Indiaplaza.in.

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Gold crashes ahead of festivals

Spot gold prices hit a one year low and slipped below Rs 12,000 per 10 gram in Mumbai while spot gold in London hit a 13-month low of $703.45 an ounce on a wave of long liquidations in the international markets exacerbated by below expected gold sales ahead of Diwali in India, the world’s largest consumer of the metal.

Local gold spot prices fell by 2-3% on Thursday in line with the trends in world markets.Experts said a rising dollar vis-à-vis euro & pound and flight of cashs trapped investors looking to liquidate their position in all commodities pulled down gold.

The euro fell to the lowest in almost two years against the dollar, while the pound traded near its lowest in more than five years. Spot gold traded at Rs 11,640 per 10 gm in Mumbai on Thursday, down by nearly Rs 300 and Rs 11,541 per 10 gm in Ahmedabad,down by Rs 600 per 10 gram over the previous day. On the MCX platform, gold December futures also fell to the day’s low of Rs 11,601 per 10 gram,down by nearly Rs 900 over the previous day.

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Marketts end 2 day rally, Sensex dips 513 points

Key equity indices snapped their two-day gains and ended in the negative terrain on Wednesday. Intense selling pressure, coupled with weak global cues and sustained selling by foreign funds, forced the market to remain under pressure throughout the day.

The 30-share Sensex of the Bombay Stock Exchange (BSE) plunged by 513.49 points, or 4.81%, and closed the day at 10,169.90 points.

Earlier in the day, the Sensex opened with a negative gap and touched an intra-day high of 10,484.45 points and fell to a low of 10,128.22 points. The broader Nifty of the National Stock Exchange (NSE) also lost 169.75 points or 5.25%, ending at 3,065.15 points.

Amitabh Chakraborty, president-equity at Religare Securities Ltd, said, “Japanese and Korean markets were down significantly. This spooked the sentiment further. The dollar has strengthened against all major currencies but the euro is down sharply.” Intense selling was witnessed in metals, realty and banking sector stocks, which were the worst hit among the BSE sectoral indices.

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Hero Honda net rises 50% in festive mood

Riding high demand, the country’s largest two-wheeler manufacturer—it has over 55% market share—Hero Honda Motor Ltd (HHML), registered 49.9% growth in its net profit at Rs 306.30 crore for the second quarter ended September 30, compared with Rs 204.33 crore during the same period last year.

The company’s turnover for the July-September quarter went up by 35.6% at Rs 3,202 crore, against Rs 2,361 crore in the corresponding quarter last year. Its Ebidta margin stood at 13.5% vis-à-vis 12.2% in the first quarter. “The company’s topline as well as bottomline have seen a healthy growth mainly on account of growth in volume and the cost discipline within the company during this fiscal, besides our focus on customer's need and expansion of our dealer network,”said Pawan Munjal,managing director& CEO,HHML.

Hero Honda’s cumulative sales for the second quarter went up by 28.5% at 9,72,095 units compared with 7,56,494 units in the July-September quarter last year. While the company has set a target of selling 6 lakh units in the current festive season, compared with 5.3 lakh units sold during the corresponding period last year, it feels demand will slow down after the season unless liquidity flows into the system and at lower interest rates.

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Lakme, Wills in pitched battle to reign over the ramp

After fighting a pitched battle for a market share in the FMCG space, Hindustan Unilever Ltd (HUL) and ITC are now vying for a major share in the Rs 10,000-crore fashion industry through their brands Lakme and Wills Lifestyle.

As ITC’s Wills Lifestyle Fashion Week came to an end in Delhi on Sunday, Lakme Lever kickstarted its fashion extravaganza ‘Lakme Fashion Week’ in Mumbai from Monday.

Last week, ITC Lifestyle had tied up with 10 leading fashion designers including Ashish Soni as part of its marketing strategy, said Atul Chand, divisional chief executive, Lifestyle Retailing Business, ITC Ltd.

“In the last six months, we have grown by 25%. In fact, 15% of our sales have come from these designer wears. We are now selling the special collections created by India’s leading designers at our retail outlets across the country,” said Chand. During the previous WFW, ITC tied up with Anamika Khanna, Rajesh Pratap Singh, among others.

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Firing up Tech Factories

For a while, India has been the preferred offshoring destination for software and services and Chi na the manufacturing king. This neat division is beginning to blur now. Leading telcos like Nokia, Motorola, LG, Samsung and Ericsson have set up manufacturing plants in the last couple of years. Many of them have attracted their component suppliers to set up facilities here. Seven out of the top 10 worldwide electronics manufacturing services (EMS) players including Foxconn, Flextronics and Jabil Circuits have set up their manufacturing facilities. PC bigwigs like HP, Lenovo, Dell, Acer, HCL, Wipro and Zenith already have their assembly lines here.

Take Nokia facility in Chennai, for instance. It showcases Indian IT and electronic hardware manufacturing prowess. Nokia’s factory in Chennai is among the largest, employing 40,000 people and houses close to 10 component vendors for mobile handsets in the same park.

Nokia exports about 70% of its production, according to industry estimates. The factory has a total production base of 5 lakh cellphones per day. Story at other telecom bigwigs like Motorola, LG, Samsung and Ericsson is not very different.

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McCain, Obama battle over economic prescriptions

Republican presidential nominee John McCain used his final debate with Democrat Barack Obama to attack his rival over taxes,spending and past associations, while Obama countered by stressing his approach to the economic and health- care issues that dominate voters'concerns.

McCain, 72, trailing in most polls, took the offensive almost from the first moments of the debate at Hofstra University in Hempstead, New York, last night.

He portrayed Obama as a tax and-spend Democrat whose policies would damage small businessmen -- including would be Ohio entrepreneur Joe Wurzelbacher. McCain repeatedly invoked him, calling him “Joe the plumber,'' triggering a debate within a debate over which candidate was on Joe's side.

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Andhra starts work on country’s first aerospace engineering SEZ

Following the government of India’s approval, the country’s first aerospace and precision engineering SEZ is taking shape in Andhra Pradesh at Adibhatla, near the Hyderabad international airport. The foundation stone for the SEZ was laid today by the Andhra Pradesh chief minister Y S Rajasekara Reddy during the India Aviation 2008 meet.

To be spread across 351 acres, the Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) has identified the land. An advisory group is being formed to be chaired by eminent aerospace scientist K Harinarayana to over see the project implementation. The focus areas of the SEZ include manufacturing of defence, aerospace and commercial aircraft components, testing and calibration labs, high precision metrological labs operation, a commercial MRO and flying training hub, design and development of satellite missiles apart from the common facilities. Apart from this, engineering services, an avionics systems repair and supply chain management is also facilitated.

The SEZ aims to have tail or made benefits to suit to particular investment requirement on case-to-case basis for mega projects with investments more than Rs 100 crore.

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Retail loans become cheaper

As the festive season nears, banks are not only offering higher deposit rates but also reducing rates for their retail loans. This is despite a tight monetary policy.

Two major state-owned banks--Bank of Baroda and Union Bank of India---have decided to slash rates by 25 basis points on their home loan rates. They are keen to continue with the lower rates even after the festive season if the Reserve Bank of India (RBI) announces cuts in repo rate and the statutory liquidity rate (SLR) in its forthcoming credit policy on October 24.

MD Mallya, chairman & managing director, Bank of Baroda, confirmed that his bank would charge 0.25% less on the interest rates for housing and vehicle loans on account of the festive season. The scheme, which began on October 1, will continue until the end of the month.

“We find it a good opportunity as it helps us make our relationship stronger with our customers. But we are not offering any high interest rates on any of the term deposits,'' he said.

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Salman Rushdie calls Palin a joke

British author Salmond Rushdie branded US vice-presidential candidate Sarah Palin as a “joke” Sunday and said naming her as Republican John McCain’s running mate was a “colossal misjudgment”.

Rushdie, a vocal supporter of Democratic White House candidate Barack Obama, told Ireland’s TV3 channel that Palin was extreme and incompetent.

“I think she’s a joke. I mean I always thought, she’s a bad joke,” he said. “But I always thought it was a colossal misjudgment of McCain’s to appoint her as his running mate because she’s not even borderline competent and what we know about her, or increasingly what we are beginning to know about her, is how very, very, very far to the right she is.”

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When falling Sensex becomes a butt of joke

Everything about the financial crisis need not be depressing. People are finding humour in the middle of the stocks meltdown, although punters who have burnt their fingers and much more would find it rude.

Mobile phones are abuzz with funny SMSs doing the rounds about the financial storm and the stocks crash.

Consider this SMS that goes: “Markets are set to regain 20,000 mark... (But only if) Sensex, Nikkei and Hang Seng are put together at 5,000 points each, NYSE Composite at 1,000 points, Dow Jones Industrial Average at 3,500 and Nasdaq at 500 points.” In the real world, Sensex is still above 10,000-point mark, but has nearly halved from its record high level seen early this year, DJIA has dipped to near 8,450, Nikkei is trading near its 20-year low at over 8,000 points.

There are also jokes online like “Black Mondays used to be a once-in-a-lifetime event. Now they are coming along more regularly than Delhi Metro trains.” Another SMS doing the rounds says: “Respected Sensex Sir passed away on October 10, 2008 after not keeping well for nine months.

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Health insurer Cigna seeks India re-entry

In a major comeback plan, the $18-billion Cigna Corp, one of the largest health insurers in the world,has given consultancy firm Ernst & Young them an d ate to assess the Indian health insurance market and advice it on a re-entry into the country. The US major had exited the country in 2001,disappointed with the slow pace of insurance reforms here. The company's plans for re-entry come when regulators are debating sweeping insurance reforms and insurance players expect the foreign direct investment (FDI) cap to go up to 49% from 26% now. Also, private health insurance in India is growing at 40% a year.

According to sources, Cignas entry is imminent, as three large global health insurers have already entered India through joint ventures. They are: Star Health & Allied Insurance (a JV between Oman Insurance Company, ETA Ascon Group, and a few insurance industy veterans in India) Apollo DKV Insurance Corporation, a JV between Apollo Group of Hospitals and DKV,a European insurance company, and Max Bupa Health Insurance Ltd, a JV between Max India and the British United Provident Association Ltd(Bupa).

The current norms mandate a foreign investment cap of 26% and a minimum capitalisation of Rs 100 crore. But last month, the empowered group of ministers (EGoM) headed by external affairs minister Pranab Mukherjee

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Global meltdown affects banks in Bric nations

Banks globally have found their bottoms ripped off by the global meltdown Bank in emerging economies have have also suffered. It has, in fact, been an eye-opener for these countries’ banking fraternity.

ICICI whose market capitalisation fell by8.6% and HDFC Bank,which fell by 6%, were among those Indian firms listed on American bourses that incurred loss to the tune of $10 billion during the past one week alone. Now the most important lesson to be learnt for the Bric countries’ banking community is be conservative in that follow strict rules while disbursing sub-prime loans and have thorough due diligence before finalising the loans. Another message for these countries from the US credit crunch may be to go aggressively for mutual cooperation.

Yet another major positive development for highly populous countries like India and China can be focus more attention to the domestic consumerism and generate more employment to their skilled youth which is coming up in the form of demographic dividend.

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Massive wealth erosion at top biz houses

In the current calendar year, the wealth of India’s top 25 industrial houses decreased 50.3% to Rs 9.61 lakh crore. As the credit crisis deepens in the US and Europe, investor wealth is rapidly eroding with the Sensex losing 41.9% this year alone. From above 20,000 levels in January, the benchmark index has plunged to 11,800 levels on Monday.

Dinesh Thakkar, CMD, Angel Broking, said, “The markets are near their bottom. So a fur ther correction to the tune of 5% cannot be ruled out. I feel the market will take support at 11,000 and bounce back to achieve a sustained growth of 15 to 20% per annum.” The market capitalisation of Jaiprakash, Sterlite, Essar and Hinduja declined significantly this year. The Mcap of Jaiprakash group dropped the most by 76.34% to Rs 12,171 crore. Among the Jaiprakash group companies, Jaiprakash Associates suffered the most. Sterlite Industries led the fall in its group companies’ M-cap which dipped 63.5% to Rs 41,165 crore.

A lot of wealth that was created in the market upswing is being wiped out in the current market meltdown. As the subprime crisis that originated in the US is spreading to Europe, foreign institutional investors are pulling out money from emerging markets.

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Half the stocks going below book value

With the markets seeing consistent selling by overseas investors and the benchmark indices taking a tumble, many stocks have retreated,and are now quoting below their book value.A study by FE indicates that as many as 49% stocks from the 2,699 listed companies traded below their book value at the end of September, sharply down from the 22% on January8, this year.

And this is not just about a large sample size,including many trashy companies and penny stocks.Around 7% companies on the BSE 500 were quoting below their book value in January and now the share has swollen to 20%. Clearly,the pounding has been severe as the Sensex has fallen by 38.39%(-8,012.90 points)to 12,860.43 on September 30,from the peak of 20,873.33 on January 8,2008.

Out of 2,699 quoted companies, 1,319(49%) quoted below of their book value as on Sep30.But on January 8,the number was 584(22%).

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Tata pulls out of Singur, blames Trinamool stir

Twenty-eight months after announcing his small-car project at Singur in West Bengal, and having invested around Rs 1,500 crore at the site already, Tata Motors chairman Ratan Tata on Friday announced the company’s decision to pull out of the state its plant for the much a waited Rs 1-lakh Nano.

“We have taken the decision to move the Nano project out of West Bengal. It is an extremely painful decision, but there was no other option. There is also a great feeling that we are doing the right thing,” Tata said, addressing a press conference after an hour-long meeting with state chief minister Buddhadeb Bhattacharjee.

Tata Motors had to move the project out of West Bengal entirely due to the continued agitation by the opposition Trinamool Congress, led by Mamata Banerjee, with total disregard for the rule of law, Tata said.

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Indian Cricket League ropes in big brands for season two sponsorship

Essel Group-owned Indian Cricket League (ICL) is going all out to promote its latest season, after having had a lack lusture outing in its first version.

The BCCI-promoted Indian Premiere League (IPL) had stolen the limelight from ICL in the previous season, despite the fact that the Essel Group was the first to bring the Twenty20 league format, with international stars playing alongside domestic players, to India.

For ICL’s second season, starting October 10, the organisers have managed to rope in a few sponsors and have raked in close to Rs 100 crore as advertising revenues, say sources.

Provogue has come on board ICL as the tournament’s apparel sponsor, Future Group and Airtel have signed on as on-air co-presenting sponsors, while Manikchand Oxyrich is ICL’s bottled water partner.

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United States Senate may take up rescue plan today

Shudders were felt on both sides of the Atlantic after the Dow's historic fall on Monday in the wake of the US House of Representatives rejection of a $700-billion financial-rescue package. As lawmakers in Washington scrambled to save the deal,bank rescues spread in Europe and the London interbank offer rate (Libor) soared.

There were indications on Tuesday that the US Senate will try to salvage the package, but lawmakers won't have a lot of room to negotiate. While they need to tweak the legislation enough to win over reluctant Republicans, they'll risk losing votes from Democrats if they veer too far from the delicate compromise that congressional leaders hammered out with the US treasury.

"They're not going to totally revamp the Bill," said Pete Davis, president of Davis Capital Investment Ideas in Washington, who spoke to House and Senate leaders on Monday."They'll make some minor changes and pass it. This is all about political cover."

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