infotonic

The US consumer, they say, is broke. And we got another evidence of the same, albeit not in the US but in Japan, its trans-pacific neighbor. As per Bloomberg, the world’s second largest economy saw its exports plunge by a whopping 49% in the month of February on a YoY basis, its worst showing in almost 30 years. What more, exports to the US fell even more, a shade under 60% as consumers in the world’s largest economy scaled back their purchases of autos and electronics big time. Courtesy the miserable showing, Japan’s economic contraction in the current quarter could well match the 12% decline it experienced in the previous quarter, forcing the government to resort to yet another round of fiscal stimulus. However, this is easier said than done as the country already is knee deep in public debt. Its public debt to GDP ratio currently stands at a whopping 170% and any further stimulus will only exacerbate matters. Furthermore, its rapidly ageing population means that every year, the univ...

We indeed live in a strange world. While Tata Motors has tried to put car ownership within the reach of millions of Indians, an altogether different company belonging to the Murugappa group is making an effort to wean away people from cars by offering them a bicycle. And this is no ordinary bicycle. As per a leading daily, each cycle is a good 3-5 kgs lighter than the ones available in the market and has been handcrafted and fitted with tubeless tyres and cutting edge technologies in shock absorbers and gears. Already surprised? Well, the most surprising part is yet to come. And it lies in the bicycle’s price. The company has priced the most premium model, hold your breath, at a whopping Rs 2 lakh. Nearly twice the price of Tata Nano! And just as Tata Motors is confident that the Nano will sell like hot cakes, even this company is quite bullish on the prospects of its products. After all, it reckons that the market for such bicycles is growing at a rate of 25% annually. Indeed, when on...

Most Indian media companies rely on advertising revenue. That explains why they are having a tough time in the economic slowdown. However, they are not alone. As per CNN Money, advertising revenue has declined dramatically for the two iconic American newspapers - The New York Times and The Washington Post. As a result, the papers are resorting to cost cutting and layoffs. The Times will cut the salaries of its non union workers. It has already laid off 100 union workers and has asked the unions to take pay cuts in order to avoid further job cuts. A bunch of other American newspapers have shut down or gone bankrupt. The newspaper industry broadly relies on two sources of revenues -subscription and advertising. The advent of the internet has meant that readers look for news online. However, online subscription revenues have not been able to replace the print subscription that has been lost. Overall, the hold of newspapers on paid subscribers has weakened considerably. Still, when it come...

The much awaited production of KG basin gas is finally on the horizon. As per a leading business daily, Reliance Industries (RIL) has signed contracts with 12 fertiliser firms for the sale of its first stream of natural gas from its D6 block in the Krishna Godavari basin. The company will sell around 15 m standard cubic meters of gas per day (mscmd) to these firms from mid April at US$ 4.2 per m British thermal units (mbtu). In addition, these companies will pay a transportation margin to RIL, Gail or Gujarat State Petronet. Hence, the actual delivered price will range from US$ 5.34 per mbtu in Andhra Pradesh to US$ 6.21 in Uttar Pradesh. Fertiliser companies have received a priority allocation because of the gas utilisation policy. Other users like gas based power plants and city gas distribution will receive a share from the subsequent streams from the D6 block. The production is set to increase to 40 mscmd during the year and eventually to 80 mscmd. It may be noted that production w...

It is important to look at the holistic picture and have an individual opinion rather than get swayed away by the public consensus. This is the view of the man who pioneered the retailing boom in India - Mr. Kishore Biyani, the founder of India’s largest retailing company - Pantaloon. In an article in the Wall street Journal, Mr. Biyani wrote, "Almost daily doses of bad news on television screens and newspapers have possibly done as much damage to the economy as the events on either side of the Atlantic." I completely agree with him. Mr. Biyani’s predicament is based on the fact that an overwhelming majority of Indian consumers are self-employed, who can neither get laid off nor can have pay cuts. Consider some statistics he has provided. The share of the national income represented by proprietor-run concerns and partnerships is 35%. The share of companies is around 15%, government around 25%, and agriculture around 25%. Combine agriculture and the self-employed in industry a...

India Inc. might have something to cheer about on the forex front. The National Advisory Committee on Accounting Standards (NACAS), whose accounting policies are followed by the Indian industry, has favoured suspending for two years, the Accounting Standard 11 (AS-11) that requires firms to mark-to-market foreign exchange assets and liabilities. The last two years had seen very volatile movements in the foreign exchange rates which had severe repercussions on the profitability of companies. In the last year especially, the sharp depreciation of the rupee against the dollar compelled many companies to report losses in their profit and loss accounts, thereby denting net profits. The purpose of AS-11 was to account for forex gains or losses under normal business conditions, but because of the sharp fluctuations in currency movements and the unpredictability of the same, it has been contended to suspend this standard for the time being. Thus, corporates will be able to report higher profit...

With markets testing their mettle, the new mantra for hedge funds is ‘perform or pay back’! - a la shapeup or ship out. Hedge funds that enjoyed a one-sided bargain with their clients in reaping handsome fees now need to pull up their socks. For if they don’t, they will be losing some of their biggest clients. As per Wall Street Journal, the California Public Employees' Retirement System, popularly known as Calpers, that is one of the biggest investors in hedge funds, is demanding better terms from funds. This includes lower fees and claw-back of fees if performance weakens. For the uninitiated, the US$ 172 bn pension fund is a bellwether in the money-management business. A Calpers investment can in fact help money managers like hedge funds attract other clients. This move by Calpers therefore underscores the changing dynamics between hedge funds and their clients. Just a couple of years ago, investors clamored to get an entry into these funds, agreeing to pay fees that in some cas...

I don’t know why I am blogging this– my guess – a typical (perfect??) Indian middle class – common man – who can read & write these kinds of articles and hope that things will improve one day! Wimp: (noun) a weak, cowardly, or ineffectual person (Merriam Webster) We have had India Shining; Resurgent India; and India Incredible. And we were the "I" in the greatest growth story in economic history that this generation was all set to witness. India is the world’s largest democracy and the "I" within the "BRIC" area that comprised of Brazil, Russia, India, and China. But that was when semi-nude women graced the front pages of the financial newspapers. And the now-naked CEOs and financial geniuses flashed their power and wealth on the TV channels. And the leaders of India went around the world staking their rightful claim in the New World Order. But this is now. Welcome to the New India, where a billion heart beats are beating so faintly that the patient i...