Companies & Sectors
Rural market in India is a $1.8-trillion opportunity, says HUL


According to HUL chairman Harish Manwani, rural India is a powerhouse bigger than urban markets with a potential opportunity of $1.8 trillion 

Mumbai: Indicating that Hindustan Unilever Ltd (HUL) which sells almost 40% of its brands in the hinterlands will increase its focus on rural markets, the consumer goods major on Monday called for convergence of urban and rural marketers so that prosperity spreads to the rural areas, reports PTI.
Describing rural India as a powerhouse which can even be bigger than the urban markets, HUL chairman Harish Manwani said, "rural India is an incredible opportunity of potentially adding $1.8 trillion to our economy, equal to current GDP."
Addressing shareholders at the 79th annual general meeting of the company in Mumbai today, Manwani said, "it is often said there are two Indias--Bharat which exists in villages and India that thrives in urban areas. If we want to make a mark on the global stage, then these two Indias must converge."
Manwani further said, "We have an opportunity to create a thriving rural middle-class, even bigger than in urban India. We need to build a new generation of leaders and entrepreneurs from villages who will help power the future of our nation."
He also said a new vision for agriculture will uplift millions of small farmers but added the country needs to look beyond agriculture and we need a strategy to provide rural India access to markets and technology, financial inclusion and human capital development.
Calling for improving agricultural productivity, he said, "if our agricultural growth can pick up to 4% as envisioned by the Planning Commission, the cascading impact that rural prosperity will have on the national economy could add up to an additional 2% to our GDP and enable us to go for double-digits growth."
Manawani also emphasised on sustainable sourcing and said the company is working in Karnataka, Punjab and Maharashtra with small tomato farmers to help them adopt sustainable agricultural practices.
"In 2011, 60% of tomatoes used in Kissan Ketchup in the country were from sustainable sources," he said.
He further said the company's wide distribution reach can help the Reserve Bank in its financial inclusion plan.
"Along with the government, banks and corporates can play a synergistic role in realising this plan. Companies like HUL have a wider distribution network than any government agency as our products reach almost every village in the country. And leveraging this high quality last-mile can help bring financial inclusion to every Indian," he said.
Manwani pointed out as to how access to urban services had led to new sources of livelihood in villages located in 19 rural-urban clusters like the National Capital Region, which has emerged as a single geographical entity from Meerut in UP to Faridabad in Haryana.
"Creating another 50 rural-urban hubs where every village is within one hour of travel to an urban centre would be transformational. This could ensure that over two-thirds of the rural population have easy access to urban India. These urban hubs will support rural areas and become the big markets of tomorrow," he said.



Anil Agashe

4 years ago

Zeros have lost all meaning. How did he calculate this amount, he should explain because this is greater than India's current GDP! And what is the time frame for achieving this?

Mazgaon Docks to set up JVs with L&T, Papavav Defence

The agreements came nearly a year after such an agreement was first signed between MDL and Pipavav, only to be put on hold in the wake of opposition from some companies

Mumbai: State-run warship building yard Mazgaon Docks Ltd (MDL) has entered into separate joint ventures with Larsen & Toubro (L&T) and Pipavav Defence and Offshore Engineering for constructing submarines and warships, respectively, reports PTI.
The agreements, part of a government policy on formation of JVs to produce Naval assets within set timelines and avoiding cost overruns, come nearly a year after such an agreement was first signed between MDL and Pipavav, only to be put on hold in the wake of opposition from some companies.
Interestingly, L&T was reportedly first among those who had opposed the deal.
Following objections from bidders who lost out, the defence ministry had put on hold the award to Pipavav on 3 September 2011.
MDL, which is sitting on an order book of over Rs1 lakh crore which includes submarines, destroyers and frigates, said it will also "explore the feasibility of diversifying its product profile by entering into partnerships with other eligible leading shipbuilders as well." 
"The JVs (with L&T and Pipava) will leverage the strengths of the respective JV partners in the public and private sectors to work out a collaborative strategy for taking the nation towards self-sufficiency in warship construction," it said.


Scope for interest rate cut low, says BNP Paribas

Market expectations on rate cuts, as reflected by the overnight indexed swap (OIS) level, shows lower expectation of rate cuts over the next one year

The market players are veering towards the view that the RBI (Reserve Bank of India) is likely to maintain status quo in the policy review meeting on 31 July 2012, says BNP Paribas. While the WPI (wholesale price index) data gave rise to some expectations of rate cuts, comments from RBI governor D Subbarao were interpreted by the market as indication of status quo on 31 July 2012. CPI (Consumer Price Index), even after marginal deceleration, remains over the double digit threshold. All in all, the policy space for the RBI to cut rates in the near term remains cramped, says a BNP Paribas.
Market expectations on rate cuts going forward, as reflected by the overnight indexed swap (OIS) level, shows a similar trend. One-year OIS came down to 7.52% on Monday 16 July 2012, representing expectation of around 50 basis points (bps) rate cut over the next one year. This has moved up to 7.67% now, showing a lower expectation of rate cuts over the next one year.
At this juncture, monetary policy makers are in a dilemma. While broadly it is a soft/easing rate regime, inflation and inflationary expectations (below par monsoon, etc) are posing hurdles. Add to that, we are yet to see concrete steps towards fiscal consolidation by the government, apart from one step on the petrol price hike.
BNP Paribas backs up its argument with inflation figures and macro-economic data. Headline WPI inflation eased to 7.25% y-o-y in June from May’s 7.55% y-o-y rate. Non-food primary articles and energy prices, especially diesel, led the pull-back. Core inflation measures held broadly steady. April WPI was revised upwards to 7.50% y-o-y from provisional 7.23% y-o-y announced earlier. The All-India combined CPI eased to 10.02% y-o-y in June versus 10.36% y-o-y in May. Food inflation ticked up to 10.9% y-o-y against 10.6% in May. ‘Core’, ex-food and energy inflation eased to 9.1% y-o-y compared to 10.0% y-o-y in May. A sharp pull back in housing inflation accounted for most of the improvement.
G-Sec (government securities) yield levels eased on Monday 16 July 2012 following lower than expected wholesale inflation data and the possibility of a rate cut. The CPI data released on Wednesday 18th July had a mild positive impact on the market, though it was still in double digits, as there was a small deceleration.  In the T-Bill auction on 18th July, the cut-off yield in the 91-day T-Bill was 8.19%, marginally lower than 8.23% previous week (11 July 2012). In the 182-day T-Bill, the cut-off was 8.12%, lower than 8.27% on 4 July 2012. Reduced system liquidity tightness contributed to lower yields.
According to BNP Paribas, there are a number of reasons for the current low yields. One of them is the search for safe havens. The current economic and financial environment favours bids for safety—and the safest areas are the short maturities and the best credit-quality countries. 
The ECB’s (European Central Bank) decision to lower the rate on the deposit facility has strengthened the case for negative policy rates in the coming months. In Europe, negative rates would also have important repercussions for money market funds (MMFs), which may be driven out of business, as investors with excess liquidity shift to alternative, more profitable market segments. But MMF activity is already expected to decline very sharply in the coming months, as the deposit rate is already at zero. 


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