http://digital.afaqs.com/perl/digital/news/index.html?sid=22572
A very useful article on Obama's digital marketing strategy. Click on the link or visit afaqs.com and look for the Guest Article by VijaySankaran of Urja Communications dated 7th November 2008
Friday, November 7, 2008
Thursday, November 6, 2008
LIGHT AT THE END OF THE TUNNEL
Light at the end of the tunnel
* PWC’s Sivarama Krishnan’s take on the economy is that ,there is enough liquidity with individuals and banks and that given the cautious sentiment , there is none being put to use, either as loans or as investments.
*The argument is that this “meltdown” and “crunch” for
*Given that the fundamentals of the economy are robust (agriculture, industry), the industry belief is that the GDP growth rates would be at least 6% by the next fiscal. In the medium term therefore, there would be revival of demand for project finance. (50% of companies are looking at cheaper sources of funds for the medium term).
*Innovative methods like public deposits as also forming JV’s(40%) are being considered. Acquiring of competitors is likely to happen as the “consolidation’ phase happens and the “shakeouts” throw up the weak players.
*This seems to be true. While Foreign Institutional Investors have pulled out $12 billion from the Indian bourses this year, Foreign Direct Investment to
* The Oman State General Reserve Government Fund has picked up 24.5% in the 2500 acre
The land acquisition price was reported to be Rs 40 lakh an acre.
*Struggling
*
*However Tata Motors shut down its plants for 3 days to reduce build up of inventories and while blue collar workers ended up with a reduced pay for the period, white collar was not paid at all.
* Production has been reduced in all auto plants and this includes Ashok Leyland (26% reduction), Eicher (38%, in response to a slide in sales of 55%), Mahindra‘s figures are not available.
Consumer Durables have had a good season it seems. The season (sept –oct)
Accounts for 25% of annual sales. Apparently the growth was 50% over the same period last year. This could partly be because last year, Diwali was in November and this year it has come to be counted with the October sales.
The disbursements to Government employees was made prior to Diwali and with the revisions and arrears, there was sufficient liquidity to drive off take this year.
LG claims a 50% growth with LCD TV’s leading the pack. Samsung has had a 35% growth trajectory, here too LCD TVs is the driver. Refridgerators and Washing Machines are next in row. For Godrej, it was washing machines.
*Incidentally these Durable Mfrs have not used any discount schemes and most schemes offered were at the retail level. This probably explains why the primary sales to retailers is being slowed down this quarter. There is likely to be an inventory pile up with the retailer in the next two months!!!
THE BOTTOM LINE IS THAT THERE IS LIGHT AT THE END OF THE TUNNEL IN THE MEDIUM TERM.
*Swaminathan Aiyar’s column this Sunday in TOI is a worthwhile read as also Shashi Tharoor’s take on Obama’s chances. To complete the list , add Shoba De on “Fashion” the movie, very incisive, intelligent and insightful.
Wednesday, November 5, 2008
TRACKING THE INDIAN ECONOMY -NOV 6TH ,2008
The Indian Economy as on
*The PM has requested the industry to ensure that there are no lay off’s. With the elections round the corner that is understandable. There is also talk of enhanced investments in infrastructure to expedite projects (read : improve liquidity in the system). Expenditure is social sectors would be enhanced. This will ostensibly be not done through the “smart cards” that have been used in some States and proved extremely effective in welfare projects but through the “traditional” health and educational projects. (grass root level politicians should be happy!).
*As if on cue, the LIC has pumped 15000 crores into non convertible debentures of private companies with AA ratings.
*While Mulri Deora will celebrate his son’s wedding to Manmohan Shetty’s daughter in an austere fashion, with due respects to the economic situation in the country, he might treat the country to a reduction of at least Rs 2 per litre on petrol given that crude has come down to the figure of 69$ per barrel.
*The calm on the surface however, belies the undercurrents.
* Kingfisher defaulted on lease payments for 4 jets. Given what happened to Jet, he may not risk slashing jobs, but salaries are likely to be cut .The “sons of the soil” argument is now being extended to “desi vs videsi” pilots. Cutting the salary of expats is now the clarion call. This has been heard at Jet and is likely to be the scenario at KF. “King of hard times” seems to be the best way to describe Vijay Mallya nowadays J
*The fall in crude and ATF has not seen a cut in prices from the premium airlines, but the budget airlines are expected to reduce prices. Some of them have introduced full service “value class” options. I guess now it is a case of “anything that flies”!!! There should be some downward migration of customers from the Mallya- Goyal Alliance.
* In the travel and tourism sector, it is learnt that web sites and agents are not likely to be given commissions as of yore and travelers may soon be getting better deals by dealing directly with airlines. Hotels may remain the bread n butter of these sites
*From 150 proposals every week for realty projects in BMC(Mumbai Muncipality), it has come to 15. According to the TOI Mumbai ( a couple of days ago)there is a list of real estate projects in Mumbai which are on hold. Real estate prices are likely to move down significantly in the next quarter.
* There is a reported freeze on new recruitments in most companies in all sectors. Spice Group has gone in for salary cuts and probably there are others too.
* News channels seem to have been the worst hit. Most financial services, realty companies which form the bulk of advertisers in these channels are “flighting “ their schedules and the channels in turn seem to be “grounding” variable costs and that now seems to include staff costs. There is no blood bath as yet but the chiseling has started according to news reports.
*PWC mentions that in the Rs 51,300 crores ,Entertainment and Media sector, the growth rates would come down from 17% to single digits.
*The sports industry too will show a decline with sponsors backing off and in case of the EPL , the precarious situation of a lot of Clubs were exposed with the crisis of the Iceland Bank.
*The only saving grace is the 6th Pay Commission report which was disbursed to the Govt employees this Diwali (40%) .The next instalment (60%) is scheduled for next year.
*FMCG too, should hold fort. People will continue to eat and have a bath and brush their teeth J never mind the meltdown and the roll backs!!
Tuesday, November 4, 2008
GLOBAL MELTDOWN- IMPACT ON THE INDIAN ECONOMY
According to Percy Mistry who was writing in the Business Standard, the world financial crisis has turned into a global economic slump. Fear about future job and income security has spread more rapidly in all countries than anyone thought possible.
In a few days, people have reined in spending, more swiftly than central banks had contemplated. So have companies. Volvo reported that its total global orders for new trucks in Q3-08 were 115, vs. 42,000 for Q3-07, when things were turning bad. Auto firms are gearing for a 25-40 per cent fall in global demand. So, steel mills are shutting down furnaces across
The
But the issue is not whether growth in OECD in the next few quarters is minus 0.5 per cent or minus 2.0 per cent, or whether Indian growth turns out to be 7 per cent or 8 per cent.
The Reserve Bank of
The issue right now is whether governments and central banks realise the magnitude of the economic implosion they risk (through complacency or fright, even in relatively robust economies like
The facts have changed dramatically. Governments and central banks must respond accordingly. Right now, perception and signalling are even more important than reality in ensuring that the public's fearful sentiments are allayed.
But governments and central banks seem in denial about the ineffectual impact of their Herculean exertions last month, which saw unprecedented financial rescue and liquidity pump-priming packages being put in place.
Yet, despite these efforts, which were necessary (if too little too late), the second shoe has dropped. The effects of that are likely to be large and contagious, as sudden concern about the vulnerability of ALL emerging markets suggests.
The financial crisis of 2007-08 required bank balance sheets to be propped up through measures unimaginable two months ago. But those rescues were based on harm done by sub-prime debt, toxic securitisation, and uncertainty about coverage in the credit-default swap market, which unzipped after the demise of Lehman Brothers and (virtually) of AIG.
With a full-blown global recession now under way for 2008-10, even prime loan portfolios will turn sour until economies turn around. That will result in increasing non-performing assets in portfolios that were until two months ago regarded as secure.
So banks will go into a second round of provisioning, write-downs and reserve accretion, requiring more capital. But government rescues have exhausted the ammunition available to fight this new scourge. The Brown Plan will make it more, not less, difficult to raise more bank capital.
National governments, having mutilated their budgets with financial rescues, are now talking up plans to launch counter-recessionary public capex programmes; even as demands on social security safety net financing increases with rising unemployment.
But, with governments having stretched their fiscal deficits beyond tolerable limits, those measures seem counter-intuitive and dangerous. If a first-order problem has been created by spending and borrowing too much (whether by individuals, families, banks, companies or governments), can it be solved by spending and borrowing even more?
The answer intuitively is NO. But the consensus among global policymakers seems to be YES - at least until panic subsides and normalcy returns. Even if one agrees, it cannot be without deep concern about mortgaging the future.
The World Bank report on "Global Financial Crisis: Implications for South Asia" released on Thursday shows that even as India is relatively more exposed to the contagion effects of global financial markets, risks associated with it are countered by a fundamentally strong macro economy including prudent foreign debt management, high savings rate, solid financial sector health, and a pro-active monetary policy management.
These steps will allow
According to the report, "The largest economy,
RBI has already responded by letting the exchange rate depreciate to stem the outflow on the current account, by providing extra liquidity to the financial sector, and by raising the limit on private foreign borrowing. The nature and depth of the global financial crisis is still evolving and there is a significant downside risk of further slowing down of net capital flows and a hardening of terms. But these are countered by an overall healthy banking sector with low non-performing loans and a comfortable capital base and a pro-active monetary and exchange rate management. Foreign debt and debt service is low, and reserve cover ($274 billion) is still substantial. The high domestic saving rate (34% of GDP) provides added cushion."
Given that an election year is around the corner, Government is pulling all stops to ensure that there is no "blood on the streets". The roll back of the Jet Airways layoff and the instruction to the Industry captains to avoid "pink slips" is aimed in this direction. LIC and public institutions stepping in to improve liquidity is part of the symphony being played by the Government orchestra. No wonder Karl Marx has suddenly emerged as the best ing author of the week!!!
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