Economy
Q1 investment remains muted on fiscal constraints, weak demand
Actual and announced investment slowed significantly in first quarter (Q1) of FY17, pulled lower by the private sector. Investment in projects under implementation across sectors also slowed in Q1-FY17 with the value of stalled projects remaining near an all-time high while there was no significant rise in stalled projects during the quarter. Fiscal constraints, weak demand and a leveraged private sector to keep the investment revival slow over coming quarter, says a research report.
 
In a note, Standard Chartered Bank (StanChart) says, "Despite interest rate cuts in the past 18 months, inflation and currency stability, and a significant improvement in the pace of project approvals, private investment remains muted. This indicates that headwinds such as excess capacity and high leverage continue to weigh on private-sector business confidence. Increased public investment spending in FY16 and FY17 (budgeted) has so far failed to ‘crowd in’ private-sector investment. We think a recovery in private-sector investment will take time, based on our analysis of past cycles, the current challenging environment and fiscal constraints on the government."
 
 
According to the report, during Q1, the value of stalled projects remained high, at Rs11.2 lakh crore as against Rs11.3 lakh crore in FY2016, with the bulk of them or around 75% in the private sector. It says, "Central government remained the biggest driver of investment growth, while private-sector investment fell in Q1-FY17. Lack of regulatory clearance and inadequate input availability explained the delays for 42% of stalled projects, while weak business sentiment including lack of investor interest, lack of funds, and unfavourable market conditions, accounted for 28%. Most of the stalled projects are in the electricity (31%) and steel (25%) sectors."
 
 
About 56% of total stalled projects are in the electricity and metals sectors, StanChart says, adding, "Regulatory clearance bottlenecks and input availability (combined) was the main reason for project delays in the private sector, at 42%. Weak business sentiment explained 28% of project delays, up from 14% in FY12, indicating weak demand and excess capacity. A much lower proportion of projects is now stalled due to land acquisition issues (10%) compared to FY12 (17%)."
 
 
The Centre for Monitoring Indian Economy (CMIE) data shows that the signs of a pick-up in the investment cycle, especially in the private sector, remained elusive in Q1-FY17.
 
StanChart says, "The decline in Q1-FY17 would have been sharper had it not been for the announcement of a large steel plant, contributing about 15% of the total value of announced investments during the quarter, although this was by a company recognised by Indian banks as stressed. The slowdown in new announcements in Q1-FY17 is a concern, as new project announcement and projects under implementation (PUIs) have a positive correlation."
 

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Bajaj Auto's June sales decline
Two- and three-wheeler major Bajaj Auto on Monday reported a 4% decline in its total sales for June.
 
According to the company, its total sales during the month under review stood at 316,969 units from an off-take of 331,317 units during the corresponding month of 2015.
 
However, total domestic sales in June were up 11% to 193,717 units from 175,243 units sold during the like month of last year.
 
The overall exports during the last month declined by 21% to 123,252 units from 156,074 units shipped out during the corresponding month of 2015.
 
The company's total motorcycle sales during the month under review decreased by five per cent to 273,298 units from 287,582 units sold in the like month of last year.
 
The overall commercial vehicle sales slipped by 0.14% to 43,671 units from 43,735 units sold during June 2015.
 
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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TeamLease buys ASAP Info Systems for Rs 67 crore
Leading human resources services firm TeamLease Services Ltd on Monday announced acquiring ASAP Info Systems Ltd for Rs67 crore through its subsidiary.
 
"The transaction, which will be accretive to our earnings per share (EPS), will be funded from internal resources by August," TeamLease said in a statement here.
 
As a tier-1 IT staffing provider, Bengaluru-based ASAP offers staffing solutions to multinationals and domestic firms with 1,000 associates and 171 core employees.
 
ASAP reported Rs63 crore revenue, with Ebitda (earnings before interest, tax, depreciation and ammortisation) of Rs.11 crore for last fiscal (2015-16).
 
The 14-year-old city-based TeamLease also offers staffing, payroll processing, recruitment, compliance and training services to about 1,400 clients across the country.
 
"The transaction creates an opening balance for us to build an IT staffing business. The acquisition is also in sync with our strategy of margin expansion through new product verticals and new client segments," said TeamLease co-founder and managing director Ashok Reddy.
 
TeamLease, which has been servicing IT firms for non-IT staffing positions, expects ASAP to help expand in the space post-merger.
 
"As TeamLeases' vision of 'putting India to work' resonates with us, we were attracted to its track record of growth and long-term strategy of building an institution. We are confident that our combined capabilities and resources will create a formidable force in IT staffing," said ASAP director K.J. Suweresh.
 
In partnership with the Gujarat government, TeamLease has set up TeamLease Skills University (TLSU) at Vadodara.
 
In 2014-15, TeamLease rolled out national employability through apprenticeship programme) to provide on-the-job training to apprentices.
 
TeamLease has 125,000 associates/trainees across the country and has given jobs to 1.2 million people with an aim to hire millions more.
 
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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