Companies & Sectors
Maruti Suzuki suspends production over component supplies
Automobile major Maruti Suzuki on Monday said that it has suspended production of cars at its Manesar and Gurgaon facilities, due to component supply constraints.
 
According to the company, a fire incident at its component manufacturer Subros' production facility on Sunday (May 29) has disrupted supplies.
 
"Owing to an unfortunate incident of fire at the Manesar facilities of our supplier Subros Limited on Sunday (May 29), supplies of components from that plant have been disrupted," the company said in a statement.
 
"As a consequence, Maruti Suzuki India Limited will have to temporarily suspend manufacture of cars at its facilities in Manesar and Gurgaon, starting second half Monday (May 30)."
 
The statement said that Subros and Maruti Suzuki were jointly assessing the extent of damage the fire caused to essential equipment. 
 
"We are also examining the options available to start supply of components from other facilities. Production will resume as soon as components become available," the company added.
 
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.

User

COMMENTS

B Pugazhendhi

6 months ago

Is this the flip side of the 'just-in-time' concept?

India's Gross Value Added growth to inch up to 7.2% in March quarter

This week, India will be announcing its gross domestic product (GDP) and balance of payments (BOP) numbers for the March quarter as well as for FY2016. Due to favourable base, India's gross value added (GVA) growth is likely to pick up and the country will also see current account surplus to rise in fourth quarter, its first in past decade, says a research note.

 

 

Religare Capital Markets Ltd, in a report says, "We expect GVA growth to pick up to 7.2% in Q4 from 7.1% in December 2015 quarter off a favourable base. On the BOP front, India is set to witness its first current account surplus ($1.9 billion) in a decade in Q4. For FY16, we expect GVA to rise by 7.2% as against the government estimate of 7.3%, while the current account deficit (CAD) to come in at an 11-year low of 1% of GDP led by savings in net oil trade."

 
As per Ministry of Agriculture’s third advanced estimates, Rabi foodgrain output rose 3.5% despite poor monsoons. This was off a low base as unseasonal rainfall had damaged crops in March 2015. "Given that crops account for around 60% of agri GVA, we expect agri GVA growth to have picked up to 2% in Q4 (Q4FY15/Q3FY16: -1.7%/-1%). Services sector growth is likely to have been resilient at 9.5%," the note added.
 
Religare pointed out that during the March quarter, India's industrial growth to have slowed down. Led by a double-digit drop in capital goods output, India's manufacturing Index of Industrial Production (IIP) declined by 1.1% in the last quarter of FY2016. Mining activity also inched down due to a sharper fall in natural gas (NG) output and a slower rise in coal production. The report says, "We expect construction to have picked up; cement output rose 11.4% in Q4 (Q3: 4.3%) while steel production was flat after declining in last two quarters. Overall industry growth is likely to have slowed to 6.1% in Q4 from 9% in Q3."
 
 
India is likely to see current account surplus in the March quarter. India’s merchandise trade deficit contracted 29.2% YoY ($7.7 billion) to a seven-year low of $18.4 billion in Q4, led by sharply lower gold imports in March due to jewellers’ strike and continued savings in net oil trade on lower crude prices (Q4: -40% YoY). "While we expect invisible earnings to decline on lower remittances and weak service exports, this will be comfortably offset by a drop in merchandise trade deficit. India should thus see a current account surplus of $1.9 billion (0.3% of GDP) in Q4, its first in a decade," Religare added.
 
During the March quarter, net foreign direct investment (FDI) inflows remained healthy at $9 billion, while foreign institutional investment (FII) flows turned positive after three quarter, mainly due to large inflows in the last month of FY2016. Inflows into non-resident Indian (NRI) deposits surged to $4.3 billion – the highest in two years. Overall, a current account surplus and healthy capital flows would have added about $8.9 billion to reserves. Forex reserves also rose by $6.5 billion during the quarter.
 
According to Religare, India's CAD-GDP ratio for FY2016, is likely to touch 11-year low. India saved about $29 billion in FY2016 due to lower crude prices. "Due to this, CAD is set to drop to $20 billion, with the CAD/GDP ratio falling to an 11-year low of 1%. We expect capital flows to have halved year-on-year to $44.6 billion in FY2016 on net outflows of portfolio investments. But they would be more-than-sufficient to fund the CAD, leading to an accretion of $23.5 billion during the year," the report concluded.
 

 

User

US Presidential elections in November may just prompt a rate hike now
The probability of a rate hike at the US Federal Open Market Committee (FOMC)’s meeting on 14-15 June 2016 meeting rose to 28% from 13% a month ago. Bets on a rate increase at the 26-27 July 2016 policy meeting edged up to 61%, more than double the estimate from a month ago. If the economy picks up as expected and jobs continue to be generated, the US Federal Reserve (US Fed) should raise interest rates in the coming months, says a research note.
 
The Ecowrap report of State Bank of India (SBI) says, "Even after this, if the US Fed goes for a hike sooner than later it will be a decision purely based on non-macro factors, we believe. Thus a US Presidential elections in November may just prompt a rate hike now rather than later".
 
The markets are abuzz over a US Fed rate hike sometime in June. The reasons seem to be following. It seems there are two opposing viewpoints within Fed. In 2014, Stanley Fischer had argued strongly that there were indeed global spill overs that the FOMC needed to consider, but the US Fed should primarily focus on its own domestic objectives. This view has supposedly gained prominence in recent FOMC meetings and members have argued that the current level of US rates is still far below equilibrium and should be raised. Further, it was also argued that foreign influences may not be used as a reason to delay the rate increases.
 
"We, however, believe such a decision is unlikely," says SBI Ecowrap, adding, "The US President has openly advocated that UK stayed in the EU. The next Fed announcement falls a week before the Brexit referendum. A further slowdown in China’s economy also impacts the US economy through impact on asset prices through the capital account. Furthermore, China has condemned the US Defense Department's annual report on the Chinese military calling it deliberate distortion that has 'damaged' mutual trust. How should one connect these dots?"
 
Prior to the symbolic rate hike of 25 bps, the Fed decision was not conditional on factors outside the US. This changed by the end of the 2015, when the Fed acknowledged that they reviewed developments in all important areas of the world, but they were particularly focused on China. This remark was a marked departure from Fed stance and in the Minutes of the meeting of 18 May 2016, we find that British referendum on membership in the European Union and an unanticipated development associated with China's management of its exchange rate was point of concern, it says.
 
Basing a rate hike decision when labour market trends and GDP trends are at odds, cost of model risk is way too high. It appears that Philip Curve relationship has weakened post 2008. In addition, little has changed since 2008 in terms of macro data (see table below), but for unemployment rate, which again is difficult to digest for reasons cited above, SBI in the Ecowrap says.
 
"In light of this, there is a case to draw that the US Fed will adopt a long pause strategy before its next rate hike. The domestic environment does not hold any promise. Although the unemployment rate has fallen, the participation rate among the young population group is either stagnating or declining. To add to the woes, the participation rate among higher age groups is expected to rise by 1.6% per annum over the next eight years. The cumulative drag on labour productivity will moderate growth and therefore favours a rate hike with long gaps," the report added.

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)