INDIA BUSINESS THIS WEEK (Aug 26 - Sept 1, 2012)

INDIA NEWS

Investments may not revive in the near future. Savings by individuals & investments by companies have not been picking up. The relatively high savings rate which prevailed in the country prior to the 2008 crisis supported the investments; the same is faltering thanks to squeeze on margins of corporate; the inflation is driving individuals to other means of investments like Gold & real estate. The RBI cut, in July, the economic growth estimate to 6.5 % (from 7.3%) and raised its inflation forecast to 7 % (from 6.5%). The inflation, according to the central bank, should be around 5%.  Many, however, feel that a cut in the interest rates can give a boost to the economic activity.

The Indian economy posted a 5.5% annual growth during the first quarter of the current fiscal (Q1 FY13), beating the estimates of most analysts (at 5%). After four consecutive quarters of decline, the latest GDP growth rate would indicate a bottoming-out effect with the worst behind. However issues such as slow growth in fixed assets, lower growth (compared to previous two quarters) in top line of companies in the S&P CNX 500 etc. are matters of concern. The real estate and construction sectors have contributed in a significant way to the current quarter’s growth; the growth in the sectors may be attributed to two key reasons- execution of delayed projects & funneling of investment into real estate which is considered a safe investment in times of economic crisis.   The industry & business continue clamoring for fast-tracking reforms, cutting policy rates & implementing second phase of spending; providing impetus for investment & consumption demand.

More Update

Panel calls for Rs 5,000 cr Sovreign ‘Fund of Funds’ THE HINDU BUSINESS LINE Aug 28,2012 

A planning Commission appointed committee has recommended creation of a Sovereign ‘Fund of Funds’ to aid early stage venture funds. The recommendations of the committee aim to create a ‘Vibrant Entrepreneurial Ecosystem in India’

• India has potential to build about 2,500 highly scalable businesses in next 10 years
• The business could generate revenue of about Rs 10 lac cr
• Angel investing, in 2011, was just Rs 100 ce as against Rs 2,000 cr in Canada
• Early stage venture capital is just 1,200 as against Rs 29,000 cr. in the US & around Rs 3,000 cr in China
• Angel investment & Early Stage Venture Capital could rise to Rs 3,5000 cr and Rs 14,000 cr in next 10 years

Guv Says Inflation Still High, Rate Cut unlikely THE ECONOMIC TIMES Aug 30, 2012

Hopes of a rate cut by RBI to kick-start the economy may be dashed as the Governor indicated the inflation still needs to be brought down to an acceptable levels of 5% or even less

For Growth's Sake Cut Rate 1%, Says Kamath THE ECONOMIC TIMES Aug 30, 2012


The Central Bank must go bold and big with 100 basis points reduction in its main policy rater to spy consumption, KV Kamath said

Five Ways To Lead a Team of Older Colleagues THE ECONOMIC TIMES Aug 31, 2012

Young managers have to walk the tightrope of getting a team of older colleagues to perform without sounding aggressive and offensive. With proper communication, they can leverage the skills of the older employees without burning bridges

1.   Keep an Open Mind  
2. Communicate Directly
3.  Seek Feedback
4. Leverage their Skills
5. Lead by Example

Corporate loan rejig could soar to Rs 3.25 lac cr THE HINDU BUSINESS LINE Aug 31, 2012

Loan restructuring by banks could soar to Rs 3.25 lac cr this fiscal against the earlier estimate of Rs 2 lac cr. A chunk of restructuring will be loans to State power utilities, and the firms in the construction and infrastructure sectors

Sahara group told to refund Rs 24,000 cr to investorsTHE HINDU BUSINESS LINE  Sept 1, 2012

Holding that economic offences committed by the Sahara Group must be dealt with an iron hand, the Supreme court directed its group companies- Sahara India Real Estate Corporation Ltd and the Sahara Housing Investment Corporation Ltd to fund over Rs 24,400 cr  collected from 2.21 cr depositors through an instrument called optional fully convertible debentures (OFCD); the amount collected alongwith interest @ 15% is to be deposited within 3 months in a nationalized bank.    

Lifeline for investors:

• Sahara India Real Estate Corporation Ltd ( now Sahara Commodity Services) file Red Herring Prospectus (RHP) for OFCD with 15% interest pa: Ma2 ‘08
• Sahara Housing Investment Corporation Ltd file RHP with 15% interest: Oct ‘09
• SEBI restrains the both the companies from funds mobilization: Nov ‘10
•  Allahabd High Court stays SEBI order, but allows SEBI to proceed with enquiry: Dec ‘10
•  SEBI moves Supreme Court : Jan ‘11
•  High Court vacates stay: Apr ‘11
•  SEBI orders both the companies to return funds to investors : Jun ‘11
•  Sahara moves Appellate Tribunal challenging SEBI: Aug ‘11
•  Appellate Tribunal uphols SEBI order & directs the companies for refund: Oct ‘11
•  Sahara challenges Appellate Tribunal in Supreme Court: Nov ‘11
•  Supreme Court stays Appellate Tribunal’s order
•  Supreme Court upholds Appellate Tribunal’s order 

Economy grows 5.5% in Q1 on farm, construction push THE HINDU BUSINESS LINE  Sept 1, 2012

The   performance is slightly better than Jan- Mar quarter growth of 5.3%, which was the lowest quarterly growth in nine years. It is, howver, much lower than the 8% GDP growth in Apr-June last year. The slow growth of fixed investment, according to the Finance Minister, is a source of concern