Hindustan Unilever has products in soaps, detergents and skincare, and in discretionary segments like packaged foods and water purifiers. It will be affected adversely by the slowdown in the consumer sector, says SBICAP Securities
With the economic growth tapering down to 4% for India, slowdown has seeped into the premium/ discretionary end of consumer sector. SBICAP Securities in its research note estimates that overall market volumes are down by more than 1,000 bps in the last 12 months in personal products. Last year itself, the market segment for food products saw a fall in volumes.
Hindustan Unilever is the largest FMCG player in India and it will clock a CAGR of 6.5% in EPS (earnings per share) over FY13-15. This is much lower than the CAGR of 13% year-on-year in FY07-13. It has products in soaps, detergents and skincare, and in discretionary segments products like packaged foods and water purifiers. It will be affected adversely by the slowdown in the consumer sector, says SBICAP Securities in its research note.
While evaluating the recent quarterly performance of Hindustan Unilever, the research note points out that value growth declined due to 500bps reduction in volume growth over the last one year due to pricing anniversary effect in the detergents category.
In terms of stock market performance of the Hindustan Unilever share, the research note says that the share is trading at 37% premium to the sector compared to the 25% premium observed historically. SBICAP Securities has valued the stock at Rs600 and given a ‘SELL’ rating on the stock.
However, for major players in the consumer sector, ad spends are likely to be on the higher side, and market shares are likely to be maintained due to fewer new product launches.
During FY2012, the union government was unable to collect indirect taxes worth Rs63,000 crore due to reasons like injuction or appeal, often called as 'call book'
The Comptroller and Auditor General (CAG) has said that the Centre has been unable to collect more than Rs63,000 crore in indirect tax revenue in 2011-12 which were pending due to injunction or appeal among other reasons under a head called ‘call book’. The CAG while giving out this figure called for close monitoring of the process of review of call book items.
The CAG, in its report tabled in the Parliament, said, "Over 40,000 cases involving revenue of Rs63,191.14 crore-Rs 46,586 crore related to central excise and Rs16,605.14 crore from service tax-were pending in call book as of 31 March 2012."
A call book is a repository for those central excise and service tax cases where the demand could not be realised due to various reasons.
The number of such pendency has increased despite the Central Board of Excise and Customs (CBEC) emphasising on monthly review of call book cases.
“We tabulated the performance of the department in respect of call book clearance in central excise and service tax during recent years and noted that the pendency of call book cases is still very high indicating the need for close monitoring of the process of review of call book items. During FY 2011-12, the number of call book cases pending for over one year has crossed 20,000 in respect of central excise alone. The need for strengthening monitoring and review is also brought out through our observations raised during the course of compliance audit,” it said.
As many as 30,542 call book cases related to central excise were pending during fiscal 2012, of which 21,966 were pending for a year, 2,874 were six to 12 months old, 2,438 cases were three-six months old and 3,264 pending for over three months, the report said.
A total of 9,590 cases related to service tax were pending in call book during 2011-12. Of these, 3,780 were pending for more than two years, 3,322 were between one and two years old and 2,488 cases pending for up to one year, it said.
As per CBEC norms, cases which have reached a stage where no action can or need be taken to expedite their disposal for at least six months may be transferred to the call book with the approval of the competent authority.
Also, the cases in which the department had gone in appeal or injunction has been issued by the Supreme Court, High Court or Tribunal, cases where audit objections are contested and where CBEC has specifically ordered the same to be kept pending are entered into the call book.
These call book pendency were in addition to about Rs1.27 lakh crore central excise and service tax revenue stuck due to appeals and litigations pending before various authorities during 2011-12. Of the total of Rs1.27 lakh crore pending demand, Rs73,274.74 crore was for service tax and Rs54,172.65 crore for excise duty, it said.
During August 2013, liquid funds reported inflows of Rs321billion even as income funds observed outflows for the third successive month of Rs84 billion, Morgan Stanley in its research note on domestic mutual funds
During August 2013, equity funds saw marginal inflows of Rs4 billion after reporting outflows of Rs19 billion in the previous month. Similarly, fixed income funds reported inflows of Rs237 billion versus outflows of Rs479 billion in July 2013. This is according to a Morgan Stanley in its research note on domestic mutual funds.
During August 2013, according to Morgan Stanley, liquid funds reported inflows of Rs321 billion even as income funds observed outflows for the third successive month of Rs84 billion. At the aggregate level, the mutual fund industry saw inflows of Rs242 billion.
The trend in equity fund flows is given in the following chart:
At the end of August 2013, the domestic mutual fund industry assets remained at Rs7.6trillion, added the research note.
The fixed income assets under management rose 2% month-on-month to Rs6 trillion in August 2013.
On sector trends, according to Morgan Stanley, in July 2013, as per SEBI, assets under management for Technology continued to see the most month-on-month increase, while assets under management of Financials declined the most. At the end of July 2013, Financials sector continues to enjoy the largest weight in the domestic MF assets under management (at 22.8%) followed by Technology sector (at 13.1%).
Finally, the overall picture for the domestic mutual funds industry is given in the following table: