Economic Survey 2008-09-I: Feeling the effects of the meltdown

July 2: 8In the backdrop of the global recessionary trend, India posted a GDP growth of 6.7% in 2008-09. While lower than projections made by the Department of Economic Affairs and the Central Statistical Office, and much lower than the 9.0% seen the previous year, this figure was much better than that of the OECD countries. Even as the Indian economy, to some extent, was insulated from the global economic crisis because of the regulatory framework that restricted exposure of banks and financial institutions to risky financial products, inadequate infrastructure growth and a languid central government, which has a huge role in the Indian economy, continue to constrain the nation's economic potential. The performance of six core industries related to infrastructure, comprising crude oil, petroleum refinery products, coal, electricity, cement and finished steel, grew at 2.7%, as compared to 5.9% in 2007-08. The index for crude oil declined by 1.8%, against an increase of 0.4% in 2007-08. There was a deceleration in the growth of cement and finished steel reflecting the negative sentiments in the construction and manufacturing sectors.
8All sectors, save mining and quarrying, and community, social and personal services, felt the effects of the slowdown. The electricity sector continued to be hampered by capacity constraints and the availability of coal, particularly during the first half of the year. This sector grew only by 3.4% over the fiscal, against the growth of 5.3% seen in 2007-08. As long as the coal sector remains a public sector monopoly, it would act as a bottleneck towards the accelerated development of the power sector. In addition, growth rates in the manufacturing and construction sectors decelerated to 2.4% and 7.2% respectively during 2008-09, from the corresponding figures of 8.2% and 10.1% in 2007-08. The slowdown in manufacturing can be attributed to lower exports, due to lower global demand, followed by a decline in domestic demand in the second half of the fiscal. Double digit inflation in the first half of the year, which contributed to extremely high input prices, and, consequently, the tight monetary policy followed by the Reserve Bank, which contributed to increased costs for credit, also adversely affected the sector. The construction industry, after going through a boom phase, with growth as high as 16.2% in 2005-06, has been, in more recent years, been impacted by increased construction costs due to a rise in the price of inputs, such as cement and steel, due to heightened demand from China. The rise in interest rates and the resulting slowdown in loans has also dented the industry.
8On the macroeconomic front, the growth in per capita GDP decelerated from 8.1% in 2006-07 to 4.6% in 2008-09, while the per capita consumption growth declined from 6.9% to 1.4% over the same period. The per capita income of the country, at constant 1999-2000 price levels, stood at Rs 31,278. More worryingly, the contribution of the more-efficient, private consumption to aggregate growth declined dramatically from 53.8% in 2007-08 to 27% in 2008-09. This decrease was cushioned by an increased contribution of government consumption. Consequently the overall contribution of consumption demand to growth was only marginally lower than that in 2007-08. In addition, for the year as a whole, the nominal value of the rupee declined from Rs 40.36 per US dollar in March 2008 to Rs 51.23 per US dollar in March 2009, reflecting a 21.2 per cent depreciation during the fiscal. Due to the increase in government spending, and not enough growth in taxable income in the private sector, the gross fiscal deficit of the Union Government increased from a reasonable 2.7% in 2007-08 to 6.2%, an unsustainable level in the long run. This would, in the medium to long run, crowd out private investments in the economy. On the brighter side, Gross Domestic Savings, and, consequently, Gross Capital Formation, have, as a proportion of GDP, have been increasing steadily since 2002-03, leading to better long term growth prospects.
8The good: Growth was not as low as in some other similar countries and OECD
The bad: The infrastructure sector, which contributes to long term GDP growth rates, has slowed down considerably. Interest rates still among the highest in the world.
The ugly: Increased influence of the government in aggregate consumption will distort markets and lead to lower growth in the future. The substantial decline of the Rupee can cause further erosion in balance of trade and inflationary pressures. Fiscal deficit can lead to higher real interest rates, depressing investments.
Click on 'Reports' to download the Economic Survey. By Abir Mandal

Vivimed Labs Limited asked to provide relevant information for raw material imports

July 2: 8The Department of Chemicals and Petrochemicals (DCP), under the Ministry of Chemicals and Fertilizers in the Government of India, has sought the following information from Vivimed Labs Limited (VLL) in order to gather vital inputs for the formulation of  the relevant recommendations pertaining to the grant of licences to the company for importing the requisite raw materials to manufacture and subsequently export Betoxol, Platinum Grey and Foreign Blue:
 --Stagewise percentage yield with respect to each reactants alongwith justifications.
 --Chemicals names of export as well as import items.
 --Details of solvents used, recovered and lost per kg in the manufactures of the export items.
 --Documentary evidences of the use of the export items in hair dyes and other products.
 --Production history of the export items and the consumption patterns of each input.
8The recommendations have been done by DCP after examining the applications submitted by the company originally to the Joint Director General of Foreign Trade (JDGFT), Hyderabad, for obtaining the corresponding licences for:
 --Importing raw materials for a total Cost Insurance and Freight (CIF) value of Rs 0.83 crore for the manufacture and subsequent export of 10 tonne of Betoxol (Jarocol Betoxol) for a total Freight on Board (FoB) value of Rs 1.11 crore.
 --Importing raw materials for a total CIF value of Rs 1.17 crore for the manufacture and subsequent export of 60 tonne of Platinum Grey (Reversacol Platinum Grey) for a total FoB value of Rs 2.35 crore.
 --Importing raw materials for a total CIF value of Rs 1.18 crore for the manufacture and subsequent export of 10 tonne of Fountain Blue (Reversacol Fountain Blue) for a total FoB value of Rs 2.29 crore.
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FY09 facts of the chemical industry

July 2: The chemical industry in India, as per the Index of Industrial Production (IIP) data, had grown by 2.9% in FY09 against 10.6% in FY08. As a matter of fact, majority of the chemicals undergo several processings to result in the downstream chemicals which are used as end products by various industries. As per the implied data, the production, during FY09, of Alkali Chemicals, Inorganic Chemicals, Organic Chemicals, Pesticides, Dyes and other major chemicals were 5,430 Thousand Metric Tonnes (TMT), 504 TMT, 1,212 TMT, 74 TMT, 31 TMT, 7,251 TMT respectively. On the other hand, the total exports and imports of chemicals in the country, in FY09, were worth Rs 77,134 crore and Rs 82,064 crore respectively.
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Hemani Intermediates Private Limited to receive permit for raw material import

July 2: The Department of Chemicals and Petrochemicals, under the Ministry of Chemicals and Petrochemicals in the Government of India, has directed the Central Insecticides Board and Registration Committee, under the Directorate of Plant Protection, Quarantine and Storage, to grant the permit to Hemani Intermediates Private Limited (HIPL) for the import of 52 Metric Tonne (MT) of Thiourea, as the company`s total requirement for FY10, for the manufacture of 3,3 Dichloro Benzidine Di Hydrochloride.
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Shyam Chem Impex's application for obtaining licence for raw material imports faces rejection

July 2: The Department of Chemicals and Petrochemicals, under the Ministry of Chemicals and Fertilizers in the Government of India, has rejected the application submitted by Shyam Chem Impex, based at Bangalore, for obtaining a licence in order to import raw materials for the manufacture and subsequent export of Catinsta Powder. The application has been rejected on the grounds of the company having not provided the details of the manufacturing process of the item, production and consumption data, and other relevant details in its application. Besides, the company has not clearly defined the role of Dimethyl Sulphate in the manufacture of the export item. And, the chemical name of the ingredient has also been found to be vague and is not being supported by any authentic technical literatures.
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Indofil Chemicals Company to receive permit for importing Carbon Disulphide

July 2: The Central Insecticides Board and Registration Committee, under the Directorate of Plant Protection, Quarantine and Storage, has been directed by the Department of Chemicals and Petrochemicals, under the Ministry of Chemicals and Fertilizers in the Government of India, to permit Indofil Chemicals Company (ICC) for the import of 8,937 Metric Tonnes (MT) of Carbon Disulphide, as its total requirement for FY09, to manufacture Mancozeb. In fact, Carbon Disulphide is reacted with Ethylene Diamine and Sodium Hydroxide to obtain Disodium Salt of Ethylenebisdithio Carbamate, which is reacted with Manganese Sulphate and Zinc Sulphate to obtain Mancozeb.
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ABNL's Carbon Black Business recorded 5% lower sales in FY09

July 2: 8Aditya Birla Nuvo Limited (ABNL) had experienced a lower demand for its Carbon Black division during FY09. In fact, the Carbon Black industry had been severely affected by the sharp volatility in the prices of the key raw material, Carbon Black Feed Stock (CBFS). On account of lower demand from the tyre industry in the country, which was due to slowdown in the auto industry, the Carbon Black industry exhibited a sub-optimal performance during FY09. This had led ABNL to experience a 5% decline in the sales of the product during the fiscal. However, the company saw the demand for Carbon Black slightly picking up towards the fourth quarter of the fiscal. And the succeeding fiscal is expected to see stabilization in the demand to benefit the company.
8The company had received the relevant regulatory approvals, including environmental clearance, for the capacity expansion of its existing plant at Patalganga in Maharashtra, and the expansion is expected to enhance the capacity of the plant to 75,000 Metric Tonne Per Annum (MTPA) by 2010, at a capital expenditure of Rs 240 crores. On the other hand, the Caustic Soda business of the company exhibited satisfactory performances during FY09, with the sales volume having grown by 4%. Besides, the company had enhanced its Carbon Black production by 25 Tonnes Per Day (TPD) during the fiscal.
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Grasim Industries Limited's FY09 growth strategy

July 2: Grasim Industries Limited (GIL) had recorded an 11% decline in its Viscose Filament yarn (VSF) sales in FY09, mainly, out of the sharp fall in the exports due to contraction in overseas demand, which had also led to considerable reduction in the profit margins of the company. Amongst the perceptible aspects exhibited by the company in FY09, its growth strategy was remarkable. The company, during FY09, had increased the capacity of its Kharach plant at Gujarat from 270 Kilo Tonne Per Annum (KTPA) to 334 KTPA. And, considerable thrust was laid on promoting its specialty fibre priducts, both in the domestic as well as overseas markets. Also, several co-branding activities with leading textile brands were undertaken by the company during the fiscal. Besides, one of its mills was upgraded, rendering it capable to produce rayon grade pulp during FY09.
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FY09 highlights of Max India Limited's specialty products division

July 2: Max India Limited (MIL) has recorded the following highlights in FY09 for its specialty products division:
 --Biaxially Oriented Poly Propylene (BOPP) sales grew by 19% to 28,503 tonnes against 23,929 tonnes in FY08.
 --Revenue grew by 21% to 370.4 crore against Rs 306 crore in FY08.
 --All BOPP lines operated at 100% capacity utilization.
 --Planned  for the addition of a capacity of 20,000 Tonne Per Annum (TPA) by 2010.
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Fitch Ratings downgrades ratings to Chemplast Sanmar Limited's bank facilities

July 2: Fitch Ratings has recently downgraded the National Long Term Rating to Chemplast Sanmar Limited (CSL) from 'BBB(ind)' to 'BBB-(ind)' and placed it in the Rating Watch Negative (RWN). Furthermore, the rating to the company's Rs 1,122 crore long term bank loans alongwith the Rs 118 crore secured fund based lines of credit has been downgraded to 'BBB-(ind)' from 'BBB(ind)'. And, the rating to the company's Rs 324 crore secured non-fund based lines alongwith the Rs 65 crore unsecured non-fund based lines of credit has also been downgraded from 'F2(ind)' to 'F3(ind)'. The downgrades are the consequence of the delay in the implementation of the company's greenfield Poly Vinyl Chloride (PVC) plant and the coal based captive power plant, which were originally scheduled to be operational by FY09.
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ICRA assigns LAAA and A1+ ratings to MRPL's bank facilities

July 2: ICRA has rated the Rs 900 crore fund based limits of Mangalore Refinery and Petrochemicals Limited (MRPL) as 'LAAA'. Facilities rated in this category are of the highest credit quality and possess the lowest credit risks. And, the Rs 5,500 crore non-fund based facilities of MRPL have been rated as 'A1+', signifying the highest credit quality of the rated instruments apart from lowest credit risks in the short term. Moreover, ICRA has retained the issuer rating of 'Ir AAA' for the general credit worthiness of the refinery. Also, the 'A1+' rating to the refinery's Rs 300 crore Commercial Paper and Short Term Debt programmes has been withdrawn on account of no outstanding amounts pending against the rated instruments. The ratings are indicative of the majority ownership of Oil and Natural Gas Commission (ONGC), the demonstrated track record of ONGC's support to MRPL, and the strong operational as well as financial performances of the refinery over the last few years. However, these aspects are susceptible to the weak outlook on the international refining margins in the near to medium term, profits on domestic sales to import duty differentials and project implementation risks out of the large expansion plans of the refinery.
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IOCL,BPCL and HPCL invite bids for supplying Indigenous Anhydrous Ethanol in Gujarat

July 2: Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have invited bids from Ethanol manufacturers for the supply of Indigenous Anhydrous Ethanol to the various depots and terminals of IOCL, BPCL and HPCL in Gujarat for a period of one year, effective from November 1, 2009. The scope of works, under the bids, involve the supply of 60,770 Kilo Litres (KL) of Indigenous Anhydride Alcohol, conforming to the 15464:2004 specification, in the quantities of, 30,600 KL to IOCL, 14,720 KL to BPCL, 15,450 KL to HPCL for the mentioned period which is extendable for another one year on mutual consent. The last date for submission of the bids has been fixed on July 22, 2009.
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