Slowdown woes revealed in India Inc's changing tone and tenor
Indians are buying less of everything as the economy is losing steam, slowing down for the third consecutive quarter. One indication of this is the changing commentary of managements, which are aimed at pacifying the shareholders at a time of unusual circumstances.
 
Major fast moving consumer goods (FMCG) companies are suffering the impact of rural distress. Sales growth of even basic products like atta, hair oil and toothpaste have declined.
 
ITC, while announcing its latest quarterly results said: "The FMCG-Others segment delivered a resilient performance during the quarter amidst a marked slowdown in the FMCG industry across urban and rural markets".
 
The well known coffee and Maggie maker Nestle India said: "We are proud of our strong performances in Maggi, Kitkat and Munch among others. However, environment continues to be challenging with headwinds in commodity prices and softer demand conditions".
 
The Cinthol soap, GoodKnight mosquito repellant and Ezee detergent maker, Godrej Consumer Products, said: "Our India business delivered a steady volume growth of 5 per cent, amidst a general slowdown in staples consumption. We expect a gradual recovery in the coming quarters for the industry and also for our business".
 
Weak rural demand also impacted the sale of two wheelers. Commenting on the company's mperformance Eicher Motors said: "The two-wheeler and the CV (commercial vehicles) industry continue to face headwinds on account of weak consumer demand".
 
"In the CV industry, sales have been low due to the weak demand on account of economic slowdown and liquidity and it is also witnessing heavy discounting," the company added.
 
FMCG giant Hindustan Uniliver, which saw a significant decline in sales volumes during the June quarter, had also said that "the near-term demand will remain subdued given macroeconomic conditions."
 
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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    MOHAN BHASKAR WAGH

    1 year ago

    This is very dangerous situation. It may be Long term also

    Financial surplus of Indian households falling since 2017-18
    Indians, traditionally known to save money, have of late shown a behavioural change in terms of managing their money as their financial surpluses have shrunk in the last couple of years.
     
    A recent Reserve Bank of India (RBI) report said that although currency and deposits constitute more than half of the total assets held by households, their share in total assets have been declining over time and are being replaced by equities and debt securities. 
     
    Among household assets, the share of insurance and pension funds have gradually increased, indicative of the growing risk appetite and portfolio diversification, while the major liability in household balance sheets are loans and borrowings, primarily from other depository corporations (ODC) and other financial corporations (OFCs), the report said.
     
    According to official data, household financial assets and their surplus showed an uptick during 2015-16 on account higher currency and deposits supported by high income growth as India's gross domestic product (GDP) growth touched 8 per cent for the first time during the current decade. 
     
    "The financial surplus of households have shrunk in subsequent years. In 2017-18, both household assets and liabilities expanded but the growth in the latter outpaced the former resulting in further moderation in surplus," as per the the report.
     
    The data suggested that households are connected the most with financial corporations which act as intermediaries to channel their surpluses to deficit sectors.
     
    The report said that "demonetisation had a significant but transitory impact on the instrument used for acquisition of financial liabilities during 2016-17, and a quick reversal in the following year. Increased number of insurance policies and mutual funds units were issued during 2016-17."
     
    Talking of the governments, both in the Centre and states, the report said that on the governments' assets side, equity has the largest share, which is reflective of participation of the central government in corporations, both financial and non-financial. This is followed by deposits held with ODCs, more pronounced in the case of state governments which have accumulated large cash balances, reflecting poor cash management.
     
    The financial resource gap of the general government sector remained stable during the period 2012-13 to 2016-17, widening somewhat during 2017-18. "This gap was primarily financed by the OFCs and ODCs, " it said. 
     
    The resource flow from households, primarily via debt securities, picked up from the year 2014-15. Debt securities make up almost three-fourths of total financial liabilities. These debt securities act as a safe haven for investors and are statutorily mandated for scheduled commercial banks (SCBs) under the liquidity coverage ratio (LCR) in addition to the minimum statutory liquidity ratio (SLR) requirement.
     
    In its conclusion, the report noted that in the recent years, the general government has emerged as the major deficit sector in the economy exhausting a major share of the surplus of households. 
     
    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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    B. Yerram Raju

    1 year ago

    Indians are now tuned to debt. Long gone is Y=C+S. Debt is committing an uncertain future. Most individuals enjoy present with retail credit flowing to them for all purposes including leisure travel. The future therefore is bartered for the present. Most consumables and spares are on debt and on uncertain incremental incomes. Banks are jumping the gun and lending. Financial extravaganza is a long term injury.

    Govt in no hurry to float foreign currency bonds: CEA
    Chief Economic Advisor to the Government, Krishnamurthy Subramanian, on Friday indicated that the government was not rushing into the idea of floating foreign currency sovereign bonds and "there is a deep thinking about the issue and all options will be considered".
     
    "Adequate thought will be put into this (sovereign bonds) and all the trade-offs involved will be considered," Subramanian, who was here to deliver a lecture, told reporters. 
     
    The Union Budget of 2019-20 had floated an idea of proposing to fund the fiscal deficit by borrowing foreign savings by issuing sovereign bonds in foreign currency.The idea has generated stiff resistance from several quarters, including from within the ruling establishment.
     
    Specifically asked if the government was reviewing and reconsidering the floating of such bonds, Subramanian said all options were being explored.
     
    "Currently, all the options are being considered such as rupee versus dollars and the costs and benefits involved will be considered. We will be thinking deeply about it and all options will be considered," he said, but declined to put a time frame on the issue.
     
    Subramanian, who was to deliver the 16th Dr R.L. Sanghvi Endowment AMA Annual Lecture on Economics at the Ahmedabad Management Association, said he was confident that the GDP growth estimates of seven per cent for the year 2019-20 would be achieved and that the government had already laid out a strategic blueprint for this as articulated by the Economic Survey tabled in the Parliament earlier this month.
     
    "We have laid out the blueprint of the investment-driven virtuous cycle, which is important if you look at countries that have grown over long periods at high growth rates, which has always been on the back of investments," he said. 
     
    Investment leads to improvement in productivity and this in turn fuels exports and jobs, according to him.
     
    "And the increase in exports and jobs creates purchasing power, which in-turn creates demand and anticipating that demand, firms invest more. That's how the virtuous cycles proceed, when economies do well."
     
    The CEA also said that the "part A of the (budget) speech focuses substantially on investments". 
     
    "In fact if you notice, the word investment appeared in the speech close to 30 times. In the budget, there are a lot of steps taken (including) package of proposals for start-ups, FDI and FPI both of which together have created an environment for investments. The budget takes into account significantly the fact that virtuous cycle has to be triggered."
     
    He said concerns regarding the job losses in the automobile sector were essentially cyclical issues in a market-driven economy. 
     
    "In a market-driven economy, there are sometimes some sectors that go through cycles. That is inevitable in any economy across the world. And we also have to be careful, that you can't always intervene in a market economy," the CEA pointed out.
     
    "As a policy maker, it is important to have this Hippocratic oath that if you can not, through your intervention, resolve, you don't want to create more harm. The moral hazard that gets created sometimes, that we have to be careful about. Interventions in a market economy have to be limited to only in cases where there is possibility of contagion. I don't see that is the case in some of these sectors," he said, adding that Indian economy was quite resilient.
     
    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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    COMMENTS

    Dr.Dhananjaya Bhupathi

    1 year ago

    https://www.thehindu.com/business/Economy/yields-decline-as-fm-says-no-rethink-on-raising-foreign-funds/article28750914.ece
    1. To raise funds [the US $.5 trillion] from abroad is the right decision; wherein major chunk can be contributed by NRIs. How about cornering of Sovereign Bonds by Indian fugitives from the UK, USA, Hong Kong, France & Germany, etc.?
    2. An RBI intellectual worries about misuse of this huge sum by certain existing/past MPs, MLAs, Ministers, prospective fugitives; who can move levers of power in GOI/PMO/UFM/RBI/SBI/IBA/PSB BOARDS/PSB-CMDs/ CEOs/EDs & DUDS OF AD-HOCISM IN GOI, ETC.
    3. Any plans to refurbish/replace sycophants, notwithstanding punitive action on culprits.
    [a]. PMO/UFM – duds of adhocism. [b].RBI’S Audit Department + scrutiny OF RBI transactions + audit-without affecting its independence. [c]. Refurbish-SBI + PSB Boards, CMDs, CEOs, & EDs, etc. [d]. IBA, an Unregistered Voluntary Organization functioning successfully for 74 years by colluding with duds in PMO & UFM. IBA collects & spends about INR.200 crores annually from 243 members [scheduled commercial Banks] with zero audits/accountability.
    4. No dearth of honest to the core + hard working VISIONARIES-GMs in PSBs/Private Banks /GOI/STATES.
    5. Refurbishing the existing organizations does not need any funds. They are essential non-economic measures with a political will to realize the dreams of Shri Narendra Modi S/O.Late Damoardas Modi, the Indian PM-- “BRIGHT FUTURE FOR THE TEAMING MILLIONS OF THE TALENTED & QUALIFIED YOUTH OF INDIA”.
    6. https://www.youtube.com/watch?v=T7fOf8rUrdw.
    7. SATYAMAEVA JAYATHE!!!

    shadi katyal

    1 year ago

    How much confusion is in this new Modi sarkar. The question is simple if you were not in hurry for such borrowing,why was it brought up in budget. The govt is well aware that any investments both domestic and foreign have dried up as the climate of such risk does not exist and unless Modi can bring Law and Order and stop mob and vigilante rule, one should dream of such investments.
    Modi made many trips abroad and misled nation of investments [promises but those were Jumalas. Now with mandate he has not to move a finger as people have voted with even jumalas.
    Will wee ever see the nation out of the religious net and think of progress as our first duty?

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