Transcript Presentation on Economic Slowdown

Slow Down
Break Down
Dr. Kirit Somaiya
Chartered Accountant, Ph.D
Member BJP National Executive,
Vice-President BJP Maharashtra
SLOW DOWN OR BREAK DOWN?
Indian history is witnessing steep downslide in all segments of the economy. The vast
investment in basic, core sector, infrastructure, housing sector in early 21st century gave
momentum to the Indian economy. 8.5% growth since 2003. The jubilant Economy
suddenly seems to have burst.
•
Bubble created in the Economy during 2007 & 2008
•
Bubble has burst
•
Industry facing turmoil
•
Sensex disaster
•
Prices of 17 essential commodities doubled in 4 years
•
Closures, slow down in industries
•
Chaos in job market
resulting in
LOSS OF ONE CRORE JOBS & SUFFERING OF COMMON MAN
DISASTER SYMPTOMS
•
Financial services segment witnessed steep downfall
•
Real estate – lost estate
•
Large retailers/malls closing down speedily
•
Half of small scale industries of industrial townships facing closure
•
Several Large Industries have declared Closure /Partial
Closure e.g.:
•
Tata Motors
•
Thyseeankurup Industries
•
Ford Motors
•
Tata Yazaki
•
Kirloskar Brothers
•
Bosch
•
Bharat Forge
•
Bajaj Auto
DOWN…INCOME TAX COLLECTIONS
•
Direct Tax receipt down by 13.4% in Dec 2008.
•
Direct Tax collection down to Rs.52,749 Cr in Dec 2008 against Rs.60,976 Cr of
December 2007
•
Central Board of Direct Taxes Chairman stated “Direct Tax collection shall be short by Rs 1
Lac Crores in 2008/09
•
The tax collection will be less than Rs.3 lac crore against the target of Rs.3 lac 95
thousand crores
SLOWDOWN BLUES: TAXES COLLECTION DOWN
Tax Times
BE FY 08
Actuals
till Dec.
% of Actuals
to BE FY 09
% of Actuals
to BE FY 08
Excise duty
10671
9017
75485
77108
-15.5
Customs duty
8175
7399
74455
82741
-9.5
Service tax
4414
4254
31420
39416
-3.6
Total
23260
20670
181360
199265
-11.1
FISCAL DEFICIT UP
BE FY 08
Actuals
till Dec.
% of Actuals
to BE FY 09
% of Actuals
to BE FY 08
Total receipts
6,17,597
3,78,954
61.40
74.90
Fiscal Deficit
1,33,287
2,18,262
163.80
51.40
Revenue deficit
55,184
1,73,830
315.50
54.90
• Revenue deficit was estimated at Rs.55,184 crores in the Budget of
• 28.2.08. This has gone up by Rs.1,73,830 crores as on 31.12.08
FOREX RESERVE DIPS
• Forex reserve down by $4.5 billion to $247.6 billion
• Forex reserve had gone up to $315 billion
• The reserve was increasing since the year 2000
• Forex reserve is coming down consistently for more than 3 months
GOVT. EXPECTS JAN. EXPORTS TO FALL 22%
•
December figures showed exports declining by 1.1% to $12.69 billion against 21%
growth in December 2007. Exports had shrunk 12.1% in October 2008 and 10% in
November 2008
•
Exports have dipped for the first time in 7 years
•
Trends of overseas shipments taking a plunge in January due to slump in demand
for Indian goods in the global market
•
India may achieve $170 billion exports in the current fiscal against the target of
$200 billion
% growth in December 2007 ($)
% growth in December 2008 ($)
Exports
20.85
- 1.1
Imports
24.26
8.8
FUNDS FLOW TO INDIA SHRINKS Rs.94,000 CRORE
2007-08 ($bn)
2008-09 ($bn)
50
63.7
Flow from other major sources (B)
68.4
41.6
Public issues by non-financial entities
8.6
2.9
Gross private placements by non-finance entities
8.6
2.9
ECB
15.7
12.6
Short-term credit from abroad
10.4
8.3
FDI
4.8
3.8
Credit by commercial banks (A)
Total (A+B)
124.5
105.2
•
External commercial borrowing (ECB) and short-term credit from abroad
contributed 8.2% in 2008-09 of the financing against 20% in 2007-08
•
While credit to the agriculture & service sectors have remained largely unchanged,
personal loans have declined due to falling housing loans
TAX COLLECTIONS - DOWN
•
Since Diwali, States & Union Govt. experiencing steep downfall in tax collections.
•
Maharashtra Tax Collections down in Nov & Dec 2008.
VAT (Maharashtra) down in last 2 months
33%
Octroi, consumption down in 2 months
40%
Stamp duty collection down in last few months
80%
Vehicle tax collection down in 2 months
30%
VAT SLOWDOWN – MAHARASHTRA
•
VAT means actual use – consumption
•
Oct. 2008 -3197
•
Nov. 2008 – 2809
•
Dec. 2008 – 2474
•
Jan. 2009 – 2274
•
Stamp Duty Collection down by 25-30%
by Rs.1200 Crore
INCOME FROM VAT MAHARASHTRA
(ALL FIGURES IN RS. CR.)
Actual Collection
Target
Aug 2008
2664.12
2247.81
Sept 2008
2413.54
2561.05
Oct 2008
3190.36
2736.19
Nov 2008
2804.59
3004.33
Dec 2008
2474
3200
Jan 2009
2274
3400
VEHICLE TAX
Upto Dec 2008
Actual Collection
Target
1621.79
1735.00
REVENUE COLLECTION-MAHARASHTRA
STAMP DUTY (upto Dec 2008)
FIGURES IN RS. CR.)
Actual Collection
Target
2007-2008
8500.00
7200.00
2008-2009
6448.00
9600.00
Against the target of 7200 Cr. In 2007-08, income was 8500 Cr. However, in 2008-09 against
the target of 9600 Cr. upto Dec 08, Rs 6448 Cr have been collected
DROP IN OCTROI (CONSUMPTION)
Dec. 2008 in comparison with Dec. 2007
•
Mumbai
•
Pune
•
Pimpri-Chinchwad
•
Nasik
19.16%
20.22%
32.06%
10.57%
OCTROI COLLECTION – PIMPRI-CHINCHWAD (PUNE)
•
COLLECTION
Rs. Crores
•
September 2008
58.00
•
October 2008
94.00
•
December 2008
44.20
COMMERCIAL VEHICLE-TRUCK SALES DOWN BY 73% IN DECEMBER 2008
Sales in
Dec 07
Sales in
Dec 08
% change
Light Commercial Vehicle (LCV) (5-7.5 tn)
3294
1586
- 51.8
Intermediate Commercial Vehicle (ICV) (8.12 tn)
3414
1053
- 69.2
Medium Commercial Vehicle (MCV) (15-16.2 tn)
5794*
1635*
- 71.8
Multi-Axle Vehicle (MAV) (25.2-31 tn)
9587*
2033*
- 78.8
Multi-Axle Trailer/Vehicle (MAT) (30-49 tn)
2143
114
- 94.7
Gross Total
24222
6221
- 73.5
Categorya
•
MCV and MCV include tipper truck sales
MELTDOWN SIGNS REGISTER ON THE ROAD
•
In a sign that the economic meltdown has hurt the automobile industry, Regional
Transport Offices across Mumbai reported a big drop in registration of vehicles in the
last few months.
MUMBAI
2008
2007
Wadala
14,240
20,160
Tardeo
17,262
26,108
Andheri
38,870
40,181
Total
70,372
86,449
ELSEWHERE
2008
2007
Thane
58,013
64,367
Navi Mumbai
17,482
20,183
Kalyan
19,213
18,609
SALES – DISASTER ? COMPARISON OF COMPANIES SALES
•
Bajaj Auto Ltd. – Sales down to Rs.7.90 Cr in Sept. 2008 from Rs.57.39 Cr in Sept 2007
•
D S Kulkarni Developers Ltd. – down to Rs.-26.64 Cr in Jun 08 from Rs.122.10 Cr in
Mar 08
•
Idea Cellular Ltd. – down to Rs.47.05 Cr in Sept 08 from Rs.147.34 Cr in June 07
•
D F L Finance Ltd. – down to Rs.7.88 Cr in Sept 08 from Rs.98.31 Cr in Sept 07
DOWN, DOWN – LARGE RETAILER
• Large Retailers, Malls found empty. 40% Closed e.g. Suvidha 40% Stores closed down in
Mumbai
• December 2008 sharp fall in Sales
Dec. 2007
(Rs. Cr)
Dec. 2008
(Rs.Cr)
% change
Value
345.67
333.37
- 3.56
Lifestyle
147.49
126.88
-13.97
Home
38.25
34.43
-10.00
• “These are unpredictable times, we are also surprised. Our January sales will be in
double digits” – Kishore Biyani – Managing Director, Pantaloon Retail
SUBHIKSHA – LARGE RETAILER
CLOSING DOWN PART OPERATION
•
Subhiksha has chain of 1600 stores
•
Turnover in 2008 – Rs.2305 crores
•
Total staff employed – 15,000
•
6500 stores closed down
•
Due to lack of funds, may closed down half of its chain of stores
•
Unable to pay rental and salaries of employees
CAPITAL MARKET
•
25% Stocks / Shares on NSE & BSE found illquid in Dec. 2008
•
9th January BSE Sensex touched 21000. Finance Minister immediately came on TV &
stated “Its my economic policies. India will not look back. We are now in double digit
Growth”.
•
Bull run in an Open Economy - Capital Market may be accepted but conversion of it
into Bubble is dangerous. Bubble is to Burst, we are observing the same now. 2009
could be the worst year India has seen in decades.
SMALL INVESTORS RUBBED
•
Bubble was created in Capital Market in 2007-08
•
Sensex was manipulated upto 21000 from 15000
•
Promoters (bogus intention) sold their stakes at higher
rates
•
Promoters pledged their stakes at higher value with
banks and financial institutions and borrowed heavily
•
Satyam Promoters’ stake has come down to 4% as on
7.1.2009
3 CRORE SMALL INVESTORS LOOTED
•
Congress Govt. – Mr. Chidambaram pushed creation of Bubble in Share Bazar –
Capital Market
•
Sensex was 21000 – Jan 2008
•
Sensex now 9000 – Jan 2009
•
Small Investors of Share Bazar, Mutual Fund, ULIP lost their savings
•
1 Crore Small Investor-Demat Accounts holders & 2 Crores Small Investors of
Mutual Funds, Unit Link Insurance Policy lost heavily.
•
Rs.10000 Invested in year 2007 has become Rs.4900 now
DIWALI OR DIWALA
Sensex close
% change
BSE mkt cap
(Rs. Cr)
Change
Oct 28,2008
8,510
-55
2,651,933
-3,594,012
Nov. 9, 2007
19,059
50
6,245,945
2,984,939
Oct. 21, 2006
12,709
61
3,261,006
1,208,448
Nov. 1, 2005
7,892
33
2,052,561
899,642
Nov. 12, 2004
5,954
25
1,452,919
501,102
Oct. 28, 2003
4,757
61
951,817
412,557
Diwali Day
•
Since Diwali (Muhurt) 2002 Sensex gone up till Diwali of 2007. At the end of Samvat
year on Diwali 2008 Sensex lost 55%, loss of Rs.35,94,012 Crore of Market Capital
SMALL INVESTOR – MUTUAL FUND DISASTER
Largest Mutual Fund Companies
Loss in 2008
•
Franklin Templeton Mutual Fund
-
- 37.85%
•
ICICI Prudential Mutual Fund
-
- 26.13%
•
UTI Mutual Fund
-
- 19.30%
•
Baroda Pioneer Mutual Fund
-
- 63.51%
•
Sahara Mutual Fund
-
- 28.07%
•
Taurus Mutual Fund
-
- 47.21%
TOP 10 PERFORMANCE
SCHEME
RETURNS*(IN%)
UTI MNC
-32.34
Birla Sun Life Asset Allocation
-32.51
Birla Sun Life Dividend Yield
-33.27
UTIDivident Yield
-34.08
IDFC Imperial Equity
-35.21
FT India Life State FoF
-36.77
UTI Contra
-37.11
DSPBR Top 100 Equity Inst.
-37.21
Sahara Growth
-37.48
DSPBR Top 100 Equity Reg
-37.67
Source : Value research;*1 year
MUTUAL FUNDS GET POORER BY RS. 1,50,000 CRORE
•
In 2008 Mutual funds became poorer by about Rs 1,50,000 crore, or about one-third
of their total size.
•
The mutual fund industry in India, with nearly 36 members, was regarded as a safe
avenue of mutual gains for investors till 2007 — when their total wealth grew by more
than Rs 2,30,000 crore to Rs 5,50,000 crore.
•
However, in 2008, lost Rs 1,50,000 crore, bringing its asset size to nearly Rs 4,00,000
crore.
90% IPOS TRADE BELOW ISSUE PRICE
•
38 of 42 initial public offers (IPOs) that were listed since January 2008 trading below
their issue price.
•
Mumbai-based engineering and construction company Niraj Cement Structural's is the
worst performer. The stock at Rs 17.80 on the BSE, down 90.6 per cent from the issue
price of Rs 190.
•
For the remaining 37 firms, 2008 has been no different. Stock of companies —
Chemcal Biotech, First Winner Industries, Tulsi Extrusions, — are down over 80 per
cent from their issue prices.
ULIP (LIC) – VALUE DEPRECIATED TO 50% IN ONE YEAR
Plan
Premium
Investment
Value on
1 year ago
26.10.2008
(in Rs.)
(in Rs.)
Market Plus
Annual
10000
5818
Money Plus
Annual
10000
4743
Profit Plus
Annual
10000
4920
Defaults threaten fixed maturity plans
Joydeep Ghosh & Sidhartha K / Mumbai October 8, 2008, 0:22 IST – BUSINESS STANDARD
The mutual fund industry is under
pressure and not just from falling
markets. Fixed maturity plans
(FMPs), which have garnered Rs
102,133 crore of average assets
under management (AAUM), are
facing the prospect of rising
defaults on their investments in
real estate and non-banking
financial companies (NBFCs). This
implies that if there are
redemption pressures from their
corporate and retail clients, these
FMPs would have to raise cash
from other resources to meet the
demand.
FMPs contribute almost 19 per
cent to the Rs 5.29 lakh crore
average assets of the industry.
Though mutual funds have turned
cautious about investing in these
sectors since early 2008, the fear
is that the money that has already
been invested could be in for
some trouble in terms of payment
delays.
Sources said some of the leading
real estate companies have
defaulted on their repayments
and are seeking rollovers. And
though there hasn’t been any
huge
redemption
pressure,
mutual funds are gearing up for it,
especially from companies that
have invested in the FMPs.
WHAT ARE FMPs?
FMPs are funds in which investors park
their funds for one to six months,
sometimes for more than a year. These
plans invest in corporate bonds, bank
deposits and commercial papers. The
longer tenure is offered to take
advantage of double indexation benefits.
This implies that if someone invests in an
FMP for 13 months, say, between March
2008 and April 2009, his capital gains will
get indexation benefit for 2007-2008 and
2009-2010. So his tax liability would go
down substantially. That is why retail
investors prefer to invest in the longerterm FMPs. The shorter-term ones cater
to the needs of corporate clients. Market
experts say retail investors contribute 20
to 30 per cent of the AAUM.
According to senior banking sources, a
large fund recently had to borrow on
the call money market at over 20 per
cent to meet redemption pressures.
Last month, a medium-sized fund faced
redemption pressure on its FMP from
high net worth individuals, when it was
declared that the company was being
taken over.
“When investors are willing to even
shell out 2 per cent as exit load to
redeem, it becomes very difficult for
us,” said a fund manager. Many others
have resorted to rolling over schemes
to avoid paying their clients.
Mutual funds, on their part, said
investor wealth is not at risk at the
moment.
“There may be isolated instances but
the overall system is sound,” said the
head of a fund house.
Though the industry has not seen any
pressure from corporate clients as of
now, the head of a financial
conglomerate said there have been
some withdrawals by companies in
the last few weeks to meet their
immediate liquidity needs. Over the
last fortnight, the liquidity in the
market has been tight as companies
had to pay advance tax and there
were large borrowings by cashstrapped oil and fertiliser companies.
As a result, banks borrowed heavily
from RBI and call rates touched 17 per
cent.
A senior executive in the industry
claimed that around 10 to 15 per
cent money of the total AAUM has
been invested in real estate and
NBFC papers. Over the last two
years, the real estate sector was
offering 1-2 per cent higher yield
than the market, luring many fund
managers to invest almost 60 to 70
per cent of their corpus in them.
In fact, for the past eight to ten
months, most fund managers have
stayed away from these papers.
Some like UTI Mutual Fund stopped
investing in them since December
2007 and Kotak Mutual Fund even
declared in the offer documents of
some of their FMPs that they would
not have any exposure to real
estate and NBFCs.
Another important development in
the recent months has been that all
fund houses have started declaring
their FMP portfolios to investors.
Earlier, only a few leading funds
would do so.
The threat of exit of large investors
accentuates the problem for FMPs
as there will be pressure or
withdrawal. Also, little money will
trickle in from fresh investors to
counter the outflows
TATA STEEL – STEEP DOWN
• Revenue & profit of Tata Steel goes up and up till Diwali of 2008
• Steep down slide since Diwali 2008 may be observed
Quarter ending
Total Revenue
Profit
(Rs.Cr.)
(Rs.Cr.)
30.6.08
6,177
1,488
30.9.08
7,089
1,787
31.12.08
4,735
466
• Turnover and profit of Tata Steel for the Quarter ended 30th June 2008 was Rs.6,177 crores
and Rs.1,488 crores respectively.
• The same went up by 75% for the Quarter ended 30th Sept. 2008
• Steep downfall observed in 3 months ended 31st Dec. 2008. Profit down by 80%, turnover
down by 40%
TATA MOTORS DOWN DOWN
Quarter ending
Total Revenue
Profit
(Rs.Cr.)
(Rs.Cr.)
30.12.07
7251.8
499.0
30.6.08
6928.4
326.1
30.9.08
7078.8
346.9
31.12.08
4758.6
- 263.2 (loss)
• Revenue of Tata Motors has come down to Rs.4758 crores in the Quarter ended
31.12.08 from the previous Quarter of Rs.7078 crores
• In just 3 months, the Profit of Rs.346 crores has turned into loss of Rs.263 crores
QUARTERLY RESULTS
Dec ’07
Mar ’08
Jun ’08
Sep ’08
Dec ’08
Sales
Turnover
7,251.83
8,749.52
6,928.44
7,078.85
4,758.62
Other
Income
91.81
234.34
315.61
429.28
99.51
Gross Profit
924.38
890.16
838.14
994.18
-49.08
Profit
Before Tax
665.10
698.05
345.09
358.01
-419.15
Net Profit
499.05
536.27
326.11
346.99
-263.26
QUARTERLY RESULT OF 31.12.2008
DOWN! DOWN! DOWN!
Company
Down by
Videocon Industries
76%
M&M
93%
DLF
67%
Parsvnath
95%
Unitech
74%
• Experts feel these results also do not reflect the correct status of the company
• Window dressing is adopted to show less loss/downfall
• Sales to subsidiaries form bigger part of the above
FACTORY BANDH !
NAUKARI BANDH !!
EVERYWHERE SLOW DOWN – BREAK DOWN
Visited various towns in last 4 weeks –
•
Pune
•
Pimpri, Chinchwad
•
Aurangabad
•
Nasik
•
Nagpur
•
Thane Belapur Industrial Belt
•
Mumbai
•
Noida
•
Hyderabad
DISASTER PIMPRI CHINCHWAD ( PUNE)
•
Major 7 Co’s TATA MOTORS, M Forge…. closed / partial closed .
•
The production reduced by 30%.
•
14000 Temporary workers have been removed.
•
Small Scale Industrial Units.
•
Production reduced by around 40%.
•
Pune-Pimpari-Chinchawad 4500 workshops closed
down resulting into unemployment of 1 lac workers.
•
Demat Account reduced by 30% turnover down by 67%.
NASHIK – SLOW DOWN
Mahindra & Mahindra-SCORPIO requirement reduced to 50% in December 2008
After Diwali total supply to MICO,M&M is reduced to 50%.
Small Scale down by 30 to 50%
An Inverter manufacture sale down to 50 units from 300 units p.m.
Transporter /Tempo Owners within MIDC area
From last month demand down from 2 ferries-trip a day to only one trip in two days
FINANCIAL SERVICE - NAGPUR
Brokers
•
5 branches closed
•
2 Terminals closed
•
80% Revenue down
THANE DISTRICT SLOWDOWN
•
35000 workers: contract/casual workers of large industries-automobile, construction,
bpo, call center, financial services etc laid off
•
65,000 workers in small industries, ancillary units lost jobs
•
Many Industries-estates, Roads in Thane Belapur zones feels like Ghost Zones
•
Transport, Tempos, Hire Car business loss by 50%
•
Tax collections Excise, Octroi, Cess, Income Tax, Service Tax collection down to 50 %
•
Industrial Estates in All Towns New Mumbai, Thane, Kalava, Dombivali, Vasai,
Ambernath, Tarapore feels heat
AURANGABAD SLOWDOWN
•
•
7,500 workers (contractor workers) laid off from following companies –
•
Bajaj Auto
•
Videocon
•
Good Year
35000 small persons, casual /contract workers jobless
since Diwali
•
Chhote udyojak HAIRAAN
•
Tempowala, Rikshawala, Wadapawala, Chahawala,
Hathgadiwala… PARESHAN
SLOWDOWN IN GOA TOURISM
•
Slowdown Goa. Down in Tourism
•
25 lac tourist in 2007/08
•
11 lac tourist only in 2008/09
•
Chartered planes down to 247 planes in 2008 from 748 in 2007
•
Domestic tourist (Indians) down to 9 lac in 2008 from 22 lac in 2007
NOIDA
•
Automobile, BPO, Automobile ancillaries worst affected
•
Large companies production down by 25% to 60%
•
40% of Small Scale units affected
•
1 lac casual contract, construction workers affected
•
BPO sector facing
•
Noida & Gurgaon heavily affected
•
Construction work is at halt since Feb. 2008
HYDERABAD
•
IT, KPO, BPO, Automobile, construction industry worst affected
•
The above industries growing upward continuously since the year 2000/01
•
1 lac labour affected
•
Large industries, particularly Automobile functioning at 50% level
•
Small scale units production down by 40 to 50%
•
Default started in loans repayment
STORIES OF SOME OF THOSE AFFECTED BY
THE RECESSION IN THE JOB MARKET
•
ASHOK JAISWAL, 30 Company: GlobalLogic Position: Software engineer Salary: Rs 18
lakh p.a. The week couldn’t have started on a worse note for Ashok Jaiswal, an
employee of the Noida-based Itcompany who was summoned by his employer only to
be told that he was among the 17 employees who were being “laid off”.
•
AYUSH JAIN, 30 Company: Kotak Mahindra Position: Trainee (wealth management)
Salary: Rs 15,000 and above Family: Seven members. This business administration
graduate from University of Indiana, US, thought he was one of the luckiest guys to
have returned to India and clinched an offer from a leading bank. Not any longer. He
was told resign on October 31, with three others.“It was a rude shattering of a dream,”
says Ayush. “Buoyed by the increasing presence of high networth individuals in India,I
was looking forward to a career in this lucrative line. ”Within 3 month of working,the
ominous signs made their telltale presence felt.
Courtesy: India Today
STORIES OF SOME OF THOSE AFFECTED BY
THE RECESSION IN THE JOB MARKET.
•
Sunil Jain, Proprietor/Exporter IC Textiles- 1100 workers sacked
•
It was a 100 per cent export oriented unit with a turnover of Rs 120 crore. Last
November unit shut down. 1100 workers retrenched.
•
Ashok Leyland has decided to moderate the production plan for the next two months.
Ashok Leyland's manufacturing plants, worked 3 days a week, till December 08.
•
S.P. Oswal, chairman, Vardhman Group, Ludhiana-based Rs 3000-crore textile giant
says ‘ The textile industry is definitely hit by detrimental effect of slowdown. More so,
because exports form 40 per cent of India's 55 billion dollar textile industry.
•
Never before in my 42 years in textile industry did I ever have to shut down our
capacity because of a lack of orders.
Courtesy: India Today
Some top Indian information
technology (IT) firms such as
Tata Consultancy Services (TCS),
Satyam Computer and Polaris
could feel the heat if Citigroup
decides to sell part of its
business or look for partners to
tide over its losses.
Analysts feel TCS’ revenue
might have an impact as Citi has
signed an assured revenue
agreement of $2.5 billion (Rs
12,500 crore) for a period of
over nine years. This was the
part of the $505 million
acquisition of Citigroup Global
Services (CGSL) — the business
process outsourcing (BPO) arm
of Citigroup — by TCS a few
months back.
When contacted, a TCS
spokesperson
said,
“TCS
announced its intention to
acquire
Citigroup
Global
Services in October and the
transaction is proceeding as per
the terms of the agreement in a
planned manner.
Our agreement with Citigroup
adequately
addresses
our
interests in case of a sale or
merger of the bank.” However,
analysts are not convinced. Citi is
a $300 million account for TCS.
With the acquisition of CGSL, Citi
not only catapults itself as the
largest client for the IT giant but
also means an account size of
half abillion. Experts point out
that Citi would easily account for
around 5-6 per cent of the IT
giant’s revenue.
“Whenever the ownership of a
company changes, all the
contracts and deals come under
the review of the new owner. So,
in case Citi has a change of
owners, we assume even the
$2.5 billion contract will also
come under review. It’s too
early to predict anything. But
there are chances of price
negotiations,” said another deal
tracker.
Analysts said they are hoping
that TCS has made no upfront
payment. “However, we think
TCS would have structured the
deal accordingly and would
have built such a scenario into
the contract,” they said.
TCS is not the only IT firm.
Satyam, India’s fourth largest IT
firm might also be impacted as
Citi is part of its top 10 clients.
Polaris is another firm that may
be in a spot if Citi sells some of
its business units. “Citi does
source some work to Polaris as
well. But the biggest impact
would be if Citi sells its stake in
Polaris, which is over 40 per
cent,” said an analyst. Citigroup
holds 22.88 per cent in
Chennai-based Polaris and an
additional 20.45 per cent
through
its
wholly-owned
subsidiary, Orbitech.
The rumours on Citigroup led to
changes in share prices of the
Indian IT companies in different
ways. While the TCS stock price
went up by 7.8 per cent to close
at Rs 506 on Friday, Satyam was
up 3.08 per cent. However,
Polaris was down by 0.52 per
cent on buzz that Citi might sell
its stake in the company.
TCS, Satyam and Polaris are
likely to be impacted by the
change of fortunes of Citigroup
“1 CRORE JOB LOSS IN 2009”
•
Horrible downslide in Textile Jwellery exports
•
Industries Association & Govt. Official wories 1 Cr Job loss
•
Exports orders dying up
•
Exporter says no order beyond January 2009
•
Labur intensive industry affected
•
Export down by 54% in Oct – Dec 2008
UPA-CONGRESS PROMISES - FACTS
•
UPA promises 1 crore new employment
•
Reality check after 5 years
•
Worrying scenario-recession & retrenchment
•
UPA economic policy responsible
•
Global economic crisis: an excuse
•
UPA economic policy: driven by politics & short
term measures
UPA-CONGRESS ECONOMIC POLICY RESPONSIBLE
•
However, the fact is that India is not as exposed to export-led growth as people think.
India’s net exports are very low. Unlike China, India’s current account has more or less
been in balance in the last five years. The global impact can be counter balanced by
local proactive initiatives.
•
India’s growth is based essentially on investing its own savings, and so is relatively
insulated from global finance and fashions. India’s savings rate has shot up from 23.5%
in 2001-02 to 37.4% in 2007-08, a phenomenal achievement.
MAR MEHANGAI & MANDEE KI
•
Prices of essential commodities doubled in last 4 years of UPA-Congress regime
Item
Price – May 2004
Price – 3.2.2009
Rice
10
27
Sugar
14
25
Tea Powder
80
200
Mung Dal
24
55
Onion
6
18
Milk
14
23
Petrol
33.15
44.55
Diesel
22.50
34.45
ECONOMIC CRISIS – AFFECTED FROM BIG TO SMALL MAN
Chaos started from the Capital Market, then Real Estate, Automobile, luxury segments, has
gone up to the Smallest person. More than 1 crore lost jobs.
Industry
Job loss (in lacs)
Construction workers
10
Small scale industries/workshops
25
Labour-oriented export
25
Service sector, financial services, large retailers, hospitality, tourism,
transport
20
Contract/casual workers of big industries
10
Job loss/partial loss/income loss to tempo, autoriskshaw, tea
vendors, hamals, etc.
25
Total job loss/income loss in all
1.15 crore
CONCLUSION
•
April 2004 – Congress-UPA
Promise of creation of new Job 1 crore
•
April 2009 – Congress-UPA
Converted employed into unemployed/jobless 1 crore
CRISIS & CHAOS
•
Yes its true. We wasted the Opportunity. Government allowed, participated in creation
of bubble. Did not created sustaining capacity to maintain 8+ % growth. Neglected
infrastructure. Went into short term benefits. Our Finance Minister was busy with
Sensex.
•
Millions lost jobs. Small & Big. Construction worker to IT Engineer. Its crisis of
confidence. Congress- UPA government owes explanation to the country
•
We must have dynamic long term plan. Execution to be started from tomorrow.
Dr. KIRIT SOMAIYA
Prakashak:
BHARTIYA JANATA PARTY
11, Ashoka Road,
New Delhi – 110 001