Companies & Sectors
India's core industry index shows positive growth in January

The index representing major infrastructure sectors had also recorded growth in December 2015

 

The industrial output index for India's eight core industries registered growth in January, pushed up by higher coal, refinery products, fertilizers, cement and electricity output, an official statement said.
 
The index representing major infrastructure sectors had also recorded growth in December 2015.
 
The index showed a rise of 2.9 percent in January 2016 on a month-on-month basis, compared to the 0.9 percent marginal growth in December 2015, official data showed on Monday.
 
The core industries fell by 1.3 percent in November last year.
 
The select factory output index for January is more than the growth of 2.3 percent achieved during the corresponding month in 2015, a commerce ministry release said.
 
This index comprises 38 percent of the total weightage of items included in the Index of Industrial Production (IIP).
 
Its cumulative growth from April to January 2015-16 stood at 2 percent, as compared to 5.3 percent during the corresponding period of 2014-15.
 
Out of the eight core industries, coal and cement reported healthy output numbers. However, production of oil, natural gas, and steel dipped in the period under review.
 
Electricity recorded 6 percent change in January 2016 as compared with 3.3 percent in January 2015. Its cumulative index during April to December 2015-16 rose by 7.6 percent over the corresponding period of previous year.
 
Distilling of refinery products, the third most important component as per weightage, increased by 4.8 percent in January.
 
Extraction of crude oil, which has a 5.21 percent weightage in IIP, fell by 4.6 percent during the month under review in comparison with 2.3 percent decline of January 2015.
 
Coal mining, with a 4.38 percent weightage, increased by 9.1 percent.
 
The sub-index for natural gas output, with a weightage of 1.71 percent, slipped by 15.3 percent in the month under consideration.
 
The fertilisers manufacturing with a weightage of only 1.25 percent rose by 6.2 percent.
 
Steel declined by 2.8 percent in January 2016.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
 

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IDBI MD’s town hall meeting asks officers to get ready for radical changes
Business plan to reduce government stake and hit Rs5,000 crore of net profit by 2019
 
After reporting the second highest ever quarterly loss among all banks, state-run IDBI Bank is reportedly making plans for its survival, including reduction in the government’s stake and taking its net profit to a Rs5,000 crore by 2019. This was revealed during a town hall meeting of officers with the Bank’s Managing Director (MD) and Deputy MD. 
 
The management is very serious on reducing government’s share to less than 49%, citing inadequate capital, and non-performing assets (NPAs) as major reasons, says a source. 
 
During the meeting, the MD announced that International Finance Corp (IFC), an affiliate of the World Bank and others are keen to invest in IDBI and they are waiting for government’s nod. A business transformation model has been drawn up with 35% growth in current account and savings account (CASA) and Rs10 lakh crore total business and Rs5,000 crore net profit by 2019. The plan has been approved by Board, said the MD and the Minister of State Jayant Sinha has “appreciated the plan,” he claimed. DMD asked to take this additional responsibility to the employees.
 
After IDBI Bank’s initial public offering (IPO) as a financial institution in 1995, the government shareholding had come down to 72.7%. After merger of its subsidiary IDBI Bank in FY2004, the government’s shareholding dipped to 51.2%.  Over years, it has galloped to 80.2%. As a result, IDBI Bank has the highest paid-up capital, with relatively low retained earnings and lowest asset base among its peers. This constitutes limitless tolerance of the government, which has been injecting equity in the banks without deliverables, and without holding anyone accountable for second failure in ten years. 
  
During the meeting, in the manner that sales teams are energised, the MD asked those gathered: "Do you want success in life? Do you want to go up the career ladder? These questions were met with a loud YES,YES from the 150 officers gathered in the meeting. Conversely, the MD asked the crowd, "Do you want IDBI brand to get lost? Do you want to see IDBI losing out like IFCI? If our NPA goes more than 10% RBI will impose prevention of expansion and recruitment in IDBI. Would you like that?" These were followed by a repeated chorus ‘No’ from the officers. The MD announced that six new zones and six different verticals and new posts of Chief General Managers will be created. It appears that employees have been told of incentives like stock options promotions.
 
IDBI Bank, which has an attractive promotion policy also enjoys higher salaries plus perquisites than other PSBs. Whereas PSBs other than SBI generally have two-three Executive Directors (EDs) and around 10-15 General Managers, IDBI Bank has a posse of 11 Executive Directors, 35 Chief General Managers and 133 General Managers. Yet the Bank is in serious distress, and the management cannot be absolved of criminal negligence. The Board of Directors has also proved irrelevant to say the least. The regulator has swung into action only following prodding by the Reserve Bank of India (RBI) Governor, who has diagnosed the malaise.
 
There was an interactive session in which someone asked questions about the need to implement Basel III norms. Some other officer asked, "is it not possible to transform the bank with under the government"? A tense and MD and DMD said its possible but with severe compromises, which the top management is not willing to make. It seems odd that the same salaried senior employees who have run the bank to the ground would like to get out of the clutches of the government when they have no stakes to do so. 
 
The MD and DMD pointed out that these kinds of anxiety and fears (not remaining a government-controlled bank) will come to people who are not confident of themselves. But only the “fittest will survive”. “Don't listen to any unwanted outsiders to influence your decision to accept the change,” they added.
 
For the quarter ended 31 December 2015, IDBI Bank reported a loss of Rs2,184 crore, the second highest ever quarterly loss among all banks. It has to be understood that the NPA levels are still grossly understated and will continue to hit IDBI and other banks. The PSB structure has failed and the best course is to transfer all the NPAs and camouflaged NPAs at fair market value to a government-funded but professionally run asset management company. 

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COMMENTS

Aishwarya Gulati

2 years ago

Such a top heavy bank. And yet, losses?
Try Trimming off the top.

SANTOSH SAHU

2 years ago

I wish it really happens. Investors and economy at large will be relieved if idbi bank performs well. I suggest IDBI bank should start recruitment at managerial levels as like other pvt banks counterparts who are successful overrally. Senior level churning is best solution to bring in change.

PSEs to divest assets for investing in new projects
New Delhi : The government would encourage the central public sector enterprises (CPSEs) to divest individual assets like land and manufacturing units to release their asset value for investing in new projects, said Finance Minister Arun Jaitley here on Monday.
 
"We will encourage CPSEs to divest individual assets like land, manufacturing units to release their asset value for making investment in new projects," Jaitley said in the Lok Saba, presenting the Union Budget for fiscal 2016-17.
 
Asserting that assets of the enterprises have to be leveraged for generating resources for investment in new projects, Jaitely told lawmakers that a new policy for management of government investments and strategic sale has been approved.
 
The National Institution for Transforming India (NITI) Aayog will identify the enterprises for strategic sale.
 
The Ayog was set up by Prime Minister Narendra Modi in 2015 as the country's new policy think-tank in place of the erstwhile Planning Commission.
 
Declaring that the disinvestment department would be renamed the department of investment and public asset management (Dipam), the minister said a new approach would be adopted for efficient management of investments in the PSEs.
 
"We will also address issues such as capital restructuring, dividend, bonus shares, etc.," Jaitley affirmed in his 100-minute long speech in English while seated.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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