Industcruyrsor Strictly for Private Circulation Issue 70 | June 2014 CONTENTS Macroeconomic Update MACROECONOMIC UPDATE Auto Components 2 Highlights Banking 3 n GDP growth in Q4 FY14 stood at 4.6%, as compared with 4.4% in Q4 FY13. India's GDP Commercial Vehicle 4 growth stood at 4.7% in FY14, as compared to 4.5% in FY13. n Growth in private final consumption expenditure remained subdued at 4.8% in FY14, as Gems & Jewellery 5 compared to 5.0% in FY13. Growth in gross fixed capital formation declined by 0.1%, as compared to the growth of 0.8% in FY13. Healthcare & Pharmaceutical 6 n The Index of Industrial Production (IIP) grew by 3.4% in Apr-14, as compared to -0.5% in Mar-14 and 1.5% in Apr-13. The consumer goods sector continued to register a negative Hi-Tech 7 growth of 5.1% on account of a decline in growth in both the consumer durables and consumer non-durable segments. Hospitality 8 n The Reserve Bank of India (RBI) kept the repo rate under the liquidity adjustment facility (LAF) unchanged at 8.00%. The RBI reduced the statutory liquidity ratio (SLR) of IT-Hardware 9 scheduled commercial banks by 50 basis points from 23.0% to 22.5% of their NDTL with effect from the fortnight beginning June 14, 2014. Logistics & Supply Chain 10 n The aggregate deposit and bank credit grew by 14.1% (y-o-y) and 13.0% (y-o-y) respectively in the week ended May 30, 2014, as against the growth of 13.1% and 13.9% Passenger Vehicle 11 in the year-ago period. n India's current account deficit (CAD) narrowed sharply to US$ 1.2 billion (0.2% of GDP) Retail 12 in Q4 of FY14 from US$ 18.1 billion (3.6% of GDP) in Q4 of FY13. CAD stood at 1.7% of GDP during FY14, as compared to 4.7% of GDP in FY13. Steel 13 Textile & Garment 14 GDP: Growth (%) IIP and core infrastructure: Growth (%) Two and Three-Wheeler 15 14.0 8 12.0 7 6 10.0 5 8.0 4 6.0 3 4.0 2 2.0 1 0.0 0 -2.0 -13 -14 -14 -1 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 E Jul-13 Jan-14 Jun-13 Oct-13 Sep-13 Feb-14 Dec-13 Apr Apr Nov-13 Mar Aug-13 May-13 Agriculture Industry Services GDP at factor cost Eight core industries IIP E: D&B estimate Source: Ministry of Commerce and Industry, CSO Source: CSO India's exports & imports (US$ bn) Macroeconomic triad (forecast) 35.0 50.0 Inflation 45.0 30.0 6.0-6.2% 40.0 25.0 35.0 20.0 June 14 30.0 15.0 25.0 Exchange rate Interest rate 59.70 - 59.90 8.4 - 8.5% -14 -14 Jul-13 Jan-14 Jun-13 Oct-13 Sep-13 Feb-14 Dec-13 Apr Nov-13 Mar Aug-13 May-14 May-13 Exports (LHS) Imports (RHS) Note: Exchange rate: INR/US$ at month end Interest rate corresponds to yield on T-Bills 15-91 days Source: Ministry of Commerce and Industry Source: D&B Industry Research Service AUTO COMPONENTS INDUSTRY Highlights Steel prices (Mumbai) (`/tonne) n Motherson Sumi Systems, the flagship company of the Samvardhana 58000 Motherson Group, announced the acquisition of US-based Stoneridge Inc's wiring harness business for US$ 65.7 million. The US company has six 56000 manufacturing facilities spread across Portland, Indiana in the US, 54000 Chihuahua, Saltillo and Monclova (Mexico), and engineering and administrative centre located in Warren, Ohio, and caters to the commercial 52000 vehicles, agricultural equipment, material handling equipment and off- highway vehicle segments. 50000 n Magneti Marelli, the auto component arm of the Fiat Group, divested its 48000 50% stake in its wholly-owned Indian subsidiary, Magneti Marelli Shock Absorbers, in favour of Samvardhana Motherson International, and has spun 46000 it into an equal joint venture. The company believes that the new JV would -14 -14 be the most appropriate way of maximising the Magneti Marelli's Jul-13 Jan-14 Jun-13 Oct-13 Sep-13 Feb-14 Dec-13 Apr Nov-13 Mar Aug-13 May-13 May-14 investment in the shock absorber sector in India. HR coils 2.00 mm CR coils 0.63 mm n As part of its plan to enhance annual revenues from ` 70 billion to ` 100 billion, Delhi-based JBM Group plans to invest ` seven billion in automobile component business over the next two years. The group, which presently has on offer only 12-metre buses, also plans to expand its range of buses by Rubber prices* (Kottayam) launching six-metre and 18-metre buses over the next five years. (`/quintal) n 22000 Auto component manufacturer Omax Autos announced its entry into full- fledged truck assembly, with plans to roll out 10,000 units in three years from its Bengaluru plant. 20000 Auto Components: Key financial indicators 18000 Parameters Units Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Net sales ` bn 283.0 282.7 277.2 282.6 301.5 y-o-y growth % -6.6 -1.5 -0.1 4.0 6.5 16000 Operating profit ` bn 35.3 34.6 35.0 35.6 37.8 y-o-y growth % -2.3 6.5 14.6 21.6 7.1 Net profit ` bn 14.9 14.0 14.4 13.7 15.8 14000 y-o-y growth % -21.9 2.6 16.4 31.3 6.0 Operating profit margin % 12.5 12.2 12.6 12.6 12.6 -14 -14 Jul-13 Jan-14 Jun-13 Oct-13 Sep-13 Feb-14 Dec-13 Net profit margin % 5.2 4.9 5.1 4.8 5.2 Apr Nov-13 Mar Aug-13 May-13 May-14 Note: Operating profit: PBDIT net of prior period and extra-ordinary items (P&E) & Other income; *Rss-4 Net profit: PAT net of P&E Source for all above charts: CMIE Source: CMIE BANKING INDUSTRY Highlights Deposits, credit and growth rates n With a view to augment financial inclusion, especially in semi-urban and ` bn % rural areas, the RBI authorised three more non-banking entities, namely, BTI 90,000 20 80,000 18 Payments Pvt Ltd, Srei Infrastructure Finance Ltd and RiddiSiddhi Bullions 70,000 16 60,000 14 Ltd, to set up white label ATMs. 50,000 12 10 n 40,000 8 In order to deal with problems faced by migrant workers, transferred 30,000 6 20,000 4 employees and others, while submitting proof of address to open a bank 10,000 2 0 0 account, the RBI has allowed banks to open accounts on the basis of a single -14 -14 proof of address (either current or permanent). Jul-13 Jan-14 Jun-13 Oct-13 Sep-13 Feb-14 Dec-13 Apr Nov-13 Mar Aug-13 May-13 May-14 n With an aim to enhance its customer service, Syndicate Bank plans to invest Deposits (LHS) Credit (LHS) y-o-y growth rates of deposits (RHS) about ` one billion to upgrade its information technology platform. y-o-y growth rates of credit (RHS) Furthermore, as part of its expansion plans, the bank intends to recruit 5,200 Note: Data for May-14 is as on May 16, 2014 people and open 350 branches across the country during FY15. n As a part of its global expansion plans, Canara Bank made a foray into South Movement in call money rates (%) Africa by opening a branch in Johannesburg. It further announced that it 40 would expand presence in South Africa by setting up branches in Durban, 35 Cape Town and Pretoria. Globally, the bank also plans to enter Tanzania, 30 Mozambique, Germany, Dubai, Mexico, Australia and New Zealand. In the 25 domestic market, Canara Bank intends to set up 1,200 branches in FY15. 20 n Kochi-based Federal Bank announced that it received approvals from the RBI 15 to open a representative office in Dubai, which would be its second office in 10 the United Arab Emirates. Through this office, the bank would serve the 5 Indian diaspora and act as a source of information to non-resident Indians 0 interested in foreign investments in the country. -14 -14 Jul-13 Jan-14 Jun-13 Oct-13 Jun-14 Sep-13 Feb-14 Dec-13 Apr Nov-13 n Mar Aug-13 May-14 Punjab National Bank announced its plans to open 500 new branches in India Call money rate- High (%) in order to expand its market presence. Call money rate- Low (%) Note: Call rates for Jun-14 are up to Jun 12, 2014 n In the pre-budget consultation meeting with the Union Finance Minister, some representatives from banking and financial institutions made the Source for all above charts: RBI following suggestions: n Recapitalisation of public sector banks n Dilution of Government ownership in public sector banks to up to 51% n Setting-up of National Asset Management Company for dealing with non-performing assets of the banks. Banking: Key financial indicators Parameters Units Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Net sales ` bn 1,847.1 1,905.3 1,980.6 2,049.2 2,098.2 y-o-y growth % 10.7 9.4 11.5 12.8 13.6 Net profit ` bn 188.1 204.6 134.6 149.8 184.1 y-o-y growth % -10.0 2.2 -29.0 -23.9 -2.1 Net profit margin % 8.9 9.4 6.2 6.6 7.7 Note: Net profit: PAT net of prior period and extraordinary items Source: CMIE COMMERCIAL VEHICLE INDUSTRY Highlights M&HCV: Domestic sales (Nos.) n Sales of commercial vehicles continue to remain subdued.