ECONOMIC SLOWDOWN - KiritSomaiya.com

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					Slow Down
   Break Down
Dr. Kirit Somaiya
 Chartered Accountant, Ph.D
Member BJP National Executive,
Vice-President BJP Maharashtra
SLOW DOWN OR BREAK DOWN?

Indian history is witnessing steep downslide in all segments of the economy. The vast
investment in basic, core sector, infrastructure, housing sector in early 21st century gave
momentum to the Indian economy. 8.5% growth since 2003. The jubilant Economy
suddenly seems to have burst.
•   Bubble created in the Economy during 2007 & 2008
•   Bubble has burst
•   Industry facing turmoil
•   Sensex disaster
•   Prices of 17 essential commodities doubled in 4 years
•   Closures, slow down in industries
•   Chaos in job market
resulting in
LOSS OF ONE CRORE JOBS & SUFFERING OF COMMON MAN
DISASTER SYMPTOMS

•    Financial services segment witnessed steep downfall
•    Real estate – lost estate
•    Large retailers/malls closing down speedily
•    Half of small scale industries of industrial townships facing closure
•    Several Large Industries have declared Closure /Partial
Closure e.g.:
•    Tata Motors                 •   Thyseeankurup Industries
•    Ford Motors                 •   Tata Yazaki
•    Kirloskar Brothers          •   Bosch
•    Bharat Forge                •   Bajaj Auto
DOWN…INCOME TAX COLLECTIONS

•   Direct Tax receipt down by 13.4% in Dec 2008.
•   Direct Tax collection down to Rs.52,749 Cr in Dec 2008 against Rs.60,976 Cr of
    December 2007
•   Central Board of Direct Taxes Chairman stated “Direct Tax collection shall be short by Rs 1
    Lac Crores in 2008/09

•   The tax collection will be less than Rs.3 lac crore against the target of Rs.3 lac 95
    thousand crores
SLOWDOWN BLUES: TAXES COLLECTION DOWN


Tax Times

                             Actuals     % of Actuals            % of Actuals
                  BE FY 08
                             till Dec.   to BE FY 09             to BE FY 08

   Excise duty     10671      9017         75485        77108       -15.5

  Customs duty     8175       7399         74455        82741        -9.5

    Service tax    4414       4254         31420        39416        -3.6
      Total        23260     20670         181360       199265      -11.1
FISCAL DEFICIT UP


                                        Actuals       % of Actuals     % of Actuals
                         BE FY 08
                                        till Dec.     to BE FY 09      to BE FY 08

    Total receipts       6,17,597      3,78,954          61.40            74.90

     Fiscal Deficit      1,33,287      2,18,262         163.80            51.40

   Revenue deficit        55,184       1,73,830         315.50            54.90


• Revenue deficit was estimated at Rs.55,184 crores in the Budget of
• 28.2.08. This has gone up by Rs.1,73,830 crores as on 31.12.08
FOREX RESERVE DIPS

• Forex reserve down by $4.5 billion to $247.6 billion

• Forex reserve had gone up to $315 billion

• The reserve was increasing since the year 2000

• Forex reserve is coming down consistently for more than 3 months
GOVT. EXPECTS JAN. EXPORTS TO FALL 22%

•     December figures showed exports declining by 1.1% to $12.69 billion against 21%
      growth in December 2007. Exports had shrunk 12.1% in October 2008 and 10% in
      November 2008

•     Exports have dipped for the first time in 7 years

•     Trends of overseas shipments taking a plunge in January due to slump in demand
      for Indian goods in the global market

•     India may achieve $170 billion exports in the current fiscal against the target of
      $200 billion

                % growth in December 2007 ($)             % growth in December 2008 ($)
    Exports                   20.85                                    - 1.1
    Imports                   24.26                                     8.8
FUNDS FLOW TO INDIA SHRINKS Rs.94,000 CRORE

                                                              2007-08 ($bn)     2008-09 ($bn)

    Credit by commercial banks (A)                                    50            63.7

    Flow from other major sources (B)                                 68.4          41.6

    Public issues by non-financial entities                           8.6            2.9

    Gross private placements by non-finance entities                  8.6            2.9

    ECB                                                               15.7          12.6

    Short-term credit from abroad                                     10.4           8.3

    FDI                                                               4.8            3.8

    Total (A+B)                                                   124.5            105.2

•         External commercial borrowing (ECB) and short-term credit from abroad
          contributed 8.2% in 2008-09 of the financing against 20% in 2007-08
•         While credit to the agriculture & service sectors have remained largely unchanged,
          personal loans have declined due to falling housing loans
TAX COLLECTIONS - DOWN


•   Since Diwali, States & Union Govt. experiencing steep downfall in tax collections.
•   Maharashtra Tax Collections down in Nov & Dec 2008.


    VAT (Maharashtra) down in last 2 months                                   33%

    Octroi, consumption down in 2 months                                      40%

    Stamp duty collection down in last few months                             80%

    Vehicle tax collection down in 2 months                                   30%
VAT SLOWDOWN – MAHARASHTRA

•     VAT means actual use – consumption

•     Oct. 2008 -3197

•     Nov. 2008 – 2809

•     Dec. 2008 – 2474

•     Jan. 2009 – 2274

•     Stamp Duty Collection down by 25-30%
      by Rs.1200 Crore
INCOME FROM VAT MAHARASHTRA
(ALL FIGURES IN RS. CR.)

                           Actual Collection       Target
  Aug 2008                     2664.12             2247.81
  Sept 2008                    2413.54             2561.05
  Oct 2008                     3190.36             2736.19
  Nov 2008                     2804.59             3004.33
  Dec 2008                      2474                3200
  Jan 2009                      2274                3400


VEHICLE TAX
                               Actual Collection     Target
  Upto Dec 2008                     1621.79         1735.00
REVENUE COLLECTION-MAHARASHTRA

STAMP DUTY (upto Dec 2008)
FIGURES IN RS. CR.)


                                        Actual Collection                  Target

  2007-2008                                 8500.00                       7200.00

  2008-2009                                 6448.00                       9600.00



Against the target of 7200 Cr. In 2007-08, income was 8500 Cr. However, in 2008-09 against
the target of 9600 Cr. upto Dec 08, Rs 6448 Cr have been collected
DROP IN OCTROI (CONSUMPTION)

Dec. 2008 in comparison with Dec. 2007
•     Mumbai                             19.16%
•     Pune                               20.22%
•     Pimpri-Chinchwad                   32.06%
•     Nasik                              10.57%



OCTROI COLLECTION – PIMPRI-CHINCHWAD (PUNE)

•    COLLECTION                          Rs. Crores
•    September 2008                      58.00
•    October 2008                        94.00
•    December 2008                       44.20
COMMERCIAL VEHICLE-TRUCK SALES DOWN BY 73% IN DECEMBER 2008

                                                  Sales in   Sales in
                    Categorya                                           % change
                                                  Dec 07     Dec 08

Light Commercial Vehicle (LCV) (5-7.5 tn)          3294       1586       - 51.8

Intermediate Commercial Vehicle (ICV) (8.12 tn)    3414       1053       - 69.2

Medium Commercial Vehicle (MCV) (15-16.2 tn)       5794*      1635*      - 71.8

Multi-Axle Vehicle (MAV) (25.2-31 tn)              9587*      2033*      - 78.8

Multi-Axle Trailer/Vehicle (MAT) (30-49 tn)        2143         114      - 94.7

Gross Total                                       24222       6221       - 73.5


•   MCV and MCV include tipper truck sales
MELTDOWN SIGNS REGISTER ON THE ROAD

•   In a sign that the economic meltdown has hurt the automobile industry, Regional
    Transport Offices across Mumbai reported a big drop in registration of vehicles in the
    last few months.

             MUMBAI                        2008                        2007
              Wadala                      14,240                      20,160
              Tardeo                      17,262                      26,108
              Andheri                     38,870                      40,181
               Total                      70,372                      86,449


           ELSEWHERE                       2008                        2007
              Thane                       58,013                      64,367
           Navi Mumbai                    17,482                      20,183
              Kalyan                      19,213                      18,609
SALES – DISASTER ? COMPARISON OF COMPANIES SALES

•   Bajaj Auto Ltd. – Sales down to Rs.7.90 Cr in Sept. 2008 from Rs.57.39 Cr in Sept 2007
•   D S Kulkarni Developers Ltd. – down to Rs.-26.64 Cr in Jun 08 from Rs.122.10 Cr in
    Mar 08
•   Idea Cellular Ltd. – down to Rs.47.05 Cr in Sept 08 from Rs.147.34 Cr in June 07
•   D F L Finance Ltd. – down to Rs.7.88 Cr in Sept 08 from Rs.98.31 Cr in Sept 07
DOWN, DOWN – LARGE RETAILER

• Large Retailers, Malls found empty. 40% Closed e.g. Suvidha 40% Stores closed down in
   Mumbai

• December 2008 sharp fall in Sales

                           Dec. 2007               Dec. 2008               % change
                            (Rs. Cr)                (Rs.Cr)
        Value                345.67                 333.37                  - 3.56
      Lifestyle              147.49                 126.88                  -13.97
       Home                   38.25                   34.43                 -10.00


• “These are unpredictable times, we are also surprised. Our January sales will be in
   double digits” – Kishore Biyani – Managing Director, Pantaloon Retail
SUBHIKSHA – LARGE RETAILER
CLOSING DOWN PART OPERATION

 •    Subhiksha has chain of 1600 stores

 •    Turnover in 2008 – Rs.2305 crores

 •    Total staff employed – 15,000

 •    6500 stores closed down

 •    Due to lack of funds, may closed down half of its chain of stores

 •    Unable to pay rental and salaries of employees
CAPITAL MARKET

•   25% Stocks / Shares on NSE & BSE found illquid in Dec. 2008
•   9th January BSE Sensex touched 21000. Finance Minister immediately came on TV &
    stated “Its my economic policies. India will not look back. We are now in double digit
    Growth”.
•   Bull run in an Open Economy - Capital Market may be accepted but conversion of it
    into Bubble is dangerous. Bubble is to Burst, we are observing the same now. 2009
    could be the worst year India has seen in decades.
SMALL INVESTORS RUBBED

•   Bubble was created in Capital Market in 2007-08
•   Sensex was manipulated upto 21000 from 15000
•   Promoters (bogus intention) sold their stakes at higher
    rates
•   Promoters pledged their stakes at higher value with
    banks and financial institutions and borrowed heavily
•   Satyam Promoters’ stake has come down to 4% as on
    7.1.2009
3 CRORE SMALL INVESTORS LOOTED

•   Congress Govt. – Mr. Chidambaram pushed creation of Bubble in Share Bazar –
    Capital Market
•   Sensex was 21000 – Jan 2008
•   Sensex now 9000 – Jan 2009
•   Small Investors of Share Bazar, Mutual Fund, ULIP lost their savings
•   1 Crore Small Investor-Demat Accounts holders & 2 Crores Small Investors of
    Mutual Funds, Unit Link Insurance Policy lost heavily.
•   Rs.10000 Invested in year 2007 has become Rs.4900 now
DIWALI OR DIWALA

                                                       BSE mkt cap
    Diwali Day        Sensex close    % change                                Change
                                                         (Rs. Cr)

    Oct 28,2008          8,510           -55            2,651,933           -3,594,012

    Nov. 9, 2007        19,059            50            6,245,945           2,984,939

    Oct. 21, 2006       12,709            61            3,261,006           1,208,448

    Nov. 1, 2005         7,892            33            2,052,561            899,642

    Nov. 12, 2004        5,954            25            1,452,919            501,102

    Oct. 28, 2003        4,757            61             951,817             412,557

•    Since Diwali (Muhurt) 2002 Sensex gone up till Diwali of 2007. At the end of Samvat
     year on Diwali 2008 Sensex lost 55%, loss of Rs.35,94,012 Crore of Market Capital
SMALL INVESTOR – MUTUAL FUND DISASTER

Largest Mutual Fund Companies             Loss in 2008
•    Franklin Templeton Mutual Fund   -   - 37.85%
•    ICICI Prudential Mutual Fund     -   - 26.13%
•    UTI Mutual Fund                  -   - 19.30%
•    Baroda Pioneer Mutual Fund       -   - 63.51%
•    Sahara Mutual Fund               -   - 28.07%
•    Taurus Mutual Fund               -   - 47.21%
TOP 10 PERFORMANCE

SCHEME                            RETURNS*(IN%)
UTI MNC                           -32.34
Birla Sun Life Asset Allocation   -32.51
Birla Sun Life Dividend Yield     -33.27
UTIDivident Yield                 -34.08
IDFC Imperial Equity              -35.21
FT India Life State FoF           -36.77
UTI Contra                        -37.11
DSPBR Top 100 Equity Inst.        -37.21
Sahara Growth                     -37.48
DSPBR Top 100 Equity Reg          -37.67


Source : Value research;*1 year
MUTUAL FUNDS GET POORER BY RS. 1,50,000 CRORE

•   In 2008 Mutual funds became poorer by about Rs 1,50,000 crore, or about one-third
    of their total size.


•   The mutual fund industry in India, with nearly 36 members, was regarded as a safe
    avenue of mutual gains for investors till 2007 — when their total wealth grew by more
    than Rs 2,30,000 crore to Rs 5,50,000 crore.


•   However, in 2008, lost Rs 1,50,000 crore, bringing its asset size to nearly Rs 4,00,000
    crore.
90% IPOS TRADE BELOW ISSUE PRICE

•   38 of 42 initial public offers (IPOs) that were listed since January 2008 trading below
    their issue price.
•   Mumbai-based engineering and construction company Niraj Cement Structural's is the
    worst performer. The stock at Rs 17.80 on the BSE, down 90.6 per cent from the issue
    price of Rs 190.
•   For the remaining 37 firms, 2008 has been no different. Stock of companies —
    Chemcal Biotech, First Winner Industries, Tulsi Extrusions, — are down over 80 per
    cent from their issue prices.
ULIP (LIC) – VALUE DEPRECIATED TO 50% IN ONE YEAR

                                    Investment       Value on
         Plan         Premium        1 year ago     26.10.2008
                                      (in Rs.)        (in Rs.)

     Market Plus       Annual         10000           5818

     Money Plus        Annual         10000           4743

      Profit Plus      Annual         10000           4920
  Defaults threaten fixed maturity plans
                      Joydeep Ghosh & Sidhartha K / Mumbai October 8, 2008, 0:22 IST – BUSINESS STANDARD

The mutual fund industry is under
pressure and not just from falling                                                                                             A senior executive in the industry
                                                                                 WHAT ARE FMPs?
markets. Fixed maturity plans                                                    FMPs are funds in which investors park        claimed that around 10 to 15 per
(FMPs), which have garnered Rs                                                   their funds for one to six months,            cent money of the total AAUM has
102,133 crore of average assets                                                  sometimes for more than a year. These         been invested in real estate and
                                                                                 plans invest in corporate bonds, bank
under management (AAUM), are                                                                                                   NBFC papers. Over the last two
                                                                                 deposits and commercial papers. The
facing the prospect of rising                                                    longer tenure is offered to take              years, the real estate sector was
defaults on their investments in                                                 advantage of double indexation benefits.      offering 1-2 per cent higher yield
real estate and non-banking                                                      This implies that if someone invests in an    than the market, luring many fund
financial companies (NBFCs). This                                                FMP for 13 months, say, between March
                                                                                                                               managers to invest almost 60 to 70
implies that if there are                                                        2008 and April 2009, his capital gains will
                                                                                 get indexation benefit for 2007-2008 and      per cent of their corpus in them.
redemption pressures from their
                                                                                 2009-2010. So his tax liability would go      In fact, for the past eight to ten
corporate and retail clients, these                                              down substantially. That is why retail
FMPs would have to raise cash                                                                                                  months, most fund managers have
                                                                                 investors prefer to invest in the longer-
from other resources to meet the                                                                                               stayed away from these papers.
                                                                                 term FMPs. The shorter-term ones cater
demand.                                                                          to the needs of corporate clients. Market     Some like UTI Mutual Fund stopped
FMPs contribute almost 19 per                                                    experts say retail investors contribute 20    investing in them since December
cent to the Rs 5.29 lakh crore                                                   to 30 per cent of the AAUM.                   2007 and Kotak Mutual Fund even
average assets of the industry.                                                                                                declared in the offer documents of
                                                                                “There may be isolated instances but
Though mutual funds have turned       According to senior banki ng sources, a   the overall system is sound,” said the         some of their FMPs that they would
cautious about investing in these     large fund recently had to borrow on      head of a fund house.                          not have any exposure to real
sectors since early 2008, the fear    the call money market at over 20 per      Though the industry has not seen any           estate and NBFCs.
is that the money that has already    cent to meet redemption pressures.        pressure from corporate clients as of
                                      Last month, a medium-sized fund faced                                                    Another important development in
been invested could be in for                                                   now, the head of a financial
                                      redemption pressure on its FMP from       conglomerate said there have been              the recent months has been that all
some trouble in terms of payment
                                      high net worth individuals, when it was   some withdrawals by companies in               fund houses have started declaring
delays.
                                      declared that the company was being       the last few weeks to meet their               their FMP portfolios to investors.
Sources said some of the leading      taken over.
real estate companies have                                                      immediate liquidity needs. Over the            Earlier, only a few leading funds
                                      “When investors are willing to even       last fortnight, the liquidity in the
defaulted on their repayments         shell out 2 per cent as exit load to                                                     would do so.
                                                                                market has been tight as companies
and are seeking rollovers. And        redeem, it becomes very difficult for     had to pay advance tax and there               The threat of exit of large investors
though there hasn’t been any          us,” said a fund manager. Many others     were large borrowings by cash-                 accentuates the problem for FMPs
huge      redemption     pressure,    have resorted to rolling over schemes     strapped oil and fertiliser companies.         as there will be pressure or
mutual funds are gearing up for it,   to avoid paying their clients.            As a result, banks borrowed heavily            withdrawal. Also, little money will
especially from companies that        Mutual funds, on their part, said         from RBI and call rates touched 17 per
                                      investor wealth is not at risk at the                                                    trickle in from fresh investors to
have invested in the FMPs.                                                      cent.
                                      moment.                                                                                  counter the outflows
 TATA STEEL – STEEP DOWN

 • Revenue & profit of Tata Steel goes up and up till Diwali of 2008

 • Steep down slide since Diwali 2008 may be observed

        Quarter ending                 Total Revenue                    Profit
                                          (Rs.Cr.)                     (Rs.Cr.)
            30.6.08                        6,177                        1,488
            30.9.08                        7,089                        1,787
           31.12.08                        4,735                         466


• Turnover and profit of Tata Steel for the Quarter ended 30th June 2008 was Rs.6,177 crores
   and Rs.1,488 crores respectively.

• The same went up by 75% for the Quarter ended 30th Sept. 2008

• Steep downfall observed in 3 months ended 31st Dec. 2008. Profit down by 80%, turnover
   down by 40%
 TATA MOTORS DOWN DOWN

       Quarter ending                   Total Revenue                       Profit
                                           (Rs.Cr.)                         (Rs.Cr.)
          30.12.07                         7251.8                            499.0
          30.6.08                          6928.4                            326.1
          30.9.08                          7078.8                            346.9
          31.12.08                         4758.6                          - 263.2 (loss)



• Revenue of Tata Motors has come down to Rs.4758 crores in the Quarter ended
   31.12.08 from the previous Quarter of Rs.7078 crores

• In just 3 months, the Profit of Rs.346 crores has turned into loss of Rs.263 crores
QUARTERLY RESULTS

               Dec ’07    Mar ’08    Jun ’08    Sep ’08    Dec ’08
   Sales       7,251.83   8,749.52   6,928.44   7,078.85   4,758.62
 Turnover
   Other        91.81     234.34     315.61     429.28      99.51
  Income
Gross Profit   924.38     890.16     838.14     994.18      -49.08
  Profit       665.10     698.05     345.09     358.01     -419.15
Before Tax
Net Profit     499.05     536.27     326.11     346.99     -263.26
QUARTERLY RESULT OF 31.12.2008
DOWN! DOWN! DOWN!

                    Company                                  Down by
               Videocon Industries                             76%
                      M&M                                      93%
                       DLF                                     67%
                    Parsvnath                                  95%
                     Unitech                                   74%


• Experts feel these results also do not reflect the correct status of the company

• Window dressing is adopted to show less loss/downfall

• Sales to subsidiaries form bigger part of the above
FACTORY BANDH !
    NAUKARI BANDH !!
EVERYWHERE SLOW DOWN – BREAK DOWN

Visited various towns in last 4 weeks –
•    Pune
•    Pimpri, Chinchwad
•    Aurangabad
•    Nasik
•    Nagpur
•    Thane Belapur Industrial Belt
•    Mumbai
•    Noida
•    Hyderabad
DISASTER PIMPRI CHINCHWAD ( PUNE)

•   Major 7 Co’s TATA MOTORS, M Forge…. closed / partial closed .
•   The production reduced by 30%.
•   14000 Temporary workers have been removed.
•   Small Scale Industrial Units.
•   Production reduced by around 40%.
•   Pune-Pimpari-Chinchawad 4500 workshops closed
    down resulting into unemployment of 1 lac workers.
•   Demat Account reduced by 30% turnover down by 67%.
NASHIK – SLOW DOWN

Mahindra & Mahindra-SCORPIO requirement reduced to 50% in December 2008
After Diwali total supply to MICO,M&M is reduced to 50%.
Small Scale down by 30 to 50%
An Inverter manufacture sale down to 50 units from 300 units p.m.
Transporter /Tempo Owners within MIDC area
From last month demand down from 2 ferries-trip a day to only one trip in two days
FINANCIAL SERVICE - NAGPUR

Brokers
•    5 branches closed
•    2 Terminals closed
•    80% Revenue down
THANE DISTRICT SLOWDOWN

•   35000 workers: contract/casual workers of large industries-automobile, construction,
    bpo, call center, financial services etc laid off
•   65,000 workers in small industries, ancillary units lost jobs
•   Many Industries-estates, Roads in Thane Belapur zones feels like Ghost Zones
•   Transport, Tempos, Hire Car business loss by 50%
•   Tax collections Excise, Octroi, Cess, Income Tax, Service Tax collection down to 50 %
•   Industrial Estates in All Towns New Mumbai, Thane, Kalava, Dombivali, Vasai,
    Ambernath, Tarapore feels heat
AURANGABAD SLOWDOWN

•   7,500 workers (contractor workers) laid off from following companies –
    •   Bajaj Auto
    •   Videocon
    •   Good Year
•   35000 small persons, casual /contract workers jobless
    since Diwali
•   Chhote udyojak HAIRAAN
•   Tempowala, Rikshawala, Wadapawala, Chahawala,
    Hathgadiwala… PARESHAN
SLOWDOWN IN GOA TOURISM

•   Slowdown Goa. Down in Tourism
•   25 lac tourist in 2007/08
•   11 lac tourist only in 2008/09
•   Chartered planes down to 247 planes in 2008 from 748 in 2007
•   Domestic tourist (Indians) down to 9 lac in 2008 from 22 lac in 2007
NOIDA

•   Automobile, BPO, Automobile ancillaries worst affected
•   Large companies production down by 25% to 60%
•   40% of Small Scale units affected
•   1 lac casual contract, construction workers affected
•   BPO sector facing
•   Noida & Gurgaon heavily affected
•   Construction work is at halt since Feb. 2008
HYDERABAD

•   IT, KPO, BPO, Automobile, construction industry worst affected
•   The above industries growing upward continuously since the year 2000/01
•   1 lac labour affected
•   Large industries, particularly Automobile functioning at 50% level
•   Small scale units production down by 40 to 50%
•   Default started in loans repayment
STORIES OF SOME OF THOSE AFFECTED BY
THE RECESSION IN THE JOB MARKET
•   ASHOK JAISWAL, 30 Company: GlobalLogic Position: Software engineer Salary: Rs 18
    lakh p.a. The week couldn’t have started on a worse note for Ashok Jaiswal, an
    employee of the Noida-based Itcompany who was summoned by his employer only to
    be told that he was among the 17 employees who were being “laid off”.
•   AYUSH JAIN, 30 Company: Kotak Mahindra Position: Trainee (wealth management)
    Salary: Rs 15,000 and above Family: Seven members. This business administration
    graduate from University of Indiana, US, thought he was one of the luckiest guys to
    have returned to India and clinched an offer from a leading bank. Not any longer. He
    was told resign on October 31, with three others.“It was a rude shattering of a dream,”
    says Ayush. “Buoyed by the increasing presence of high networth individuals in India,I
    was looking forward to a career in this lucrative line. ”Within 3 month of working,the
    ominous signs made their telltale presence felt.
                                                                     Courtesy: India Today
STORIES OF SOME OF THOSE AFFECTED BY
THE RECESSION IN THE JOB MARKET.
•   Sunil Jain, Proprietor/Exporter IC Textiles- 1100 workers sacked
•   It was a 100 per cent export oriented unit with a turnover of Rs 120 crore. Last
    November unit shut down. 1100 workers retrenched.
•   Ashok Leyland has decided to moderate the production plan for the next two months.
    Ashok Leyland's manufacturing plants, worked 3 days a week, till December 08.
•   S.P. Oswal, chairman, Vardhman Group, Ludhiana-based Rs 3000-crore textile giant
    says ‘ The textile industry is definitely hit by detrimental effect of slowdown. More so,
    because exports form 40 per cent of India's 55 billion dollar textile industry.
•   Never before in my 42 years in textile industry did I ever have to shut down our
    capacity because of a lack of orders.
                                                                         Courtesy: India Today
Some top Indian information
technology (IT) firms such as                                                                                   Polaris is another firm that may
Tata Consultancy Services (TCS),                                                                                be in a spot if Citi sells some of
Satyam Computer and Polaris                                                                                     its business units. “Citi does
could feel the heat if Citigroup                                                                                source some work to Polaris as
decides to sell part of its                                                                                     well. But the biggest impact
business or look for partners to                                                                                would be if Citi sells its stake in
tide over its losses.                                                                                           Polaris, which is over 40 per
Analysts feel TCS’ revenue                                                                                      cent,” said an analyst. Citigroup
might have an impact as Citi has                                                                                holds 22.88 per cent in
signed an assured revenue           Our agreement with Citigroup          in case Citi has a change of          Chennai-based Polaris and an
agreement of $2.5 billion (Rs       adequately       addresses      our   owners, we assume even the            additional 20.45 per cent
12,500 crore) for a period of       interests in case of a sale or        $2.5 billion contract will also       through       its   wholly-owned
over nine years. This was the       merger of the bank.” However,         come under review. It’s too           subsidiary, Orbitech.
part of the $505 million            analysts are not convinced. Citi is   early to predict anything. But        The rumours on Citigroup led to
acquisition of Citigroup Global     a $300 million account for TCS.       there are chances of price            changes in share prices of the
Services (CGSL) — the business      With the acquisition of CGSL, Citi    negotiations,” said another deal      Indian IT companies in different
process outsourcing (BPO) arm       not only catapults itself as the      tracker.                              ways. While the TCS stock price
of Citigroup — by TCS a few         largest client for the IT giant but   Analysts said they are hoping         went up by 7.8 per cent to close
months back.                        also means an account size of         that TCS has made no upfront          at Rs 506 on Friday, Satyam was
When contacted, a TCS               half abillion. Experts point out      payment. “However, we think           up 3.08 per cent. However,
spokesperson         said,   “TCS   that Citi would easily account for    TCS would have structured the         Polaris was down by 0.52 per
announced its intention to          around 5-6 per cent of the IT         deal accordingly and would            cent on buzz that Citi might sell
acquire       Citigroup    Global   giant’s revenue.                      have built such a scenario into       its stake in the company.
Services in October and the         “Whenever the ownership of a          the contract,” they said.             TCS, Satyam and Polaris are
transaction is proceeding as per    company changes, all the              TCS is not the only IT firm.          likely to be impacted by the
the terms of the agreement in a     contracts and deals come under        Satyam, India’s fourth largest IT     change of fortunes of Citigroup
planned manner.                     the review of the new owner. So,      firm might also be impacted as
                                                                          Citi is part of its top 10 clients.
“1 CRORE JOB LOSS IN 2009”

•   Horrible downslide in Textile Jwellery exports
•   Industries Association & Govt. Official wories 1 Cr Job loss
•   Exports orders dying up
•   Exporter says no order beyond January 2009
•   Labur intensive industry affected
•   Export down by 54% in Oct – Dec 2008
UPA-CONGRESS PROMISES - FACTS

•   UPA promises 1 crore new employment
•   Reality check after 5 years
•   Worrying scenario-recession & retrenchment
•   UPA economic policy responsible
•   Global economic crisis: an excuse
•   UPA economic policy: driven by politics & short
    term measures
UPA-CONGRESS ECONOMIC POLICY RESPONSIBLE

•   However, the fact is that India is not as exposed to export-led growth as people think.
    India’s net exports are very low. Unlike China, India’s current account has more or less
    been in balance in the last five years. The global impact can be counter balanced by
    local proactive initiatives.


•   India’s growth is based essentially on investing its own savings, and so is relatively
    insulated from global finance and fashions. India’s savings rate has shot up from 23.5%
    in 2001-02 to 37.4% in 2007-08, a phenomenal achievement.
MAR MEHANGAI & MANDEE KI

•      Prices of essential commodities doubled in last 4 years of UPA-Congress regime


               Item                  Price – May 2004              Price – 3.2.2009
    Rice                                     10                           27
    Sugar                                    14                           25
    Tea Powder                               80                           200
    Mung Dal                                 24                           55
    Onion                                    6                            18
    Milk                                     14                           23
    Petrol                                 33.15                         44.55
    Diesel                                 22.50                         34.45
ECONOMIC CRISIS – AFFECTED FROM BIG TO SMALL MAN

Chaos started from the Capital Market, then Real Estate, Automobile, luxury segments, has
gone up to the Smallest person. More than 1 crore lost jobs.


                                 Industry                                     Job loss (in lacs)
 Construction workers                                                                10
 Small scale industries/workshops                                                    25
 Labour-oriented export                                                              25
 Service sector, financial services, large retailers, hospitality, tourism,          20
 transport
 Contract/casual workers of big industries                                           10
 Job loss/partial loss/income loss to tempo, autoriskshaw, tea                       25
 vendors, hamals, etc.
 Total job loss/income loss in all                                               1.15 crore
CONCLUSION

•   April 2004 – Congress-UPA
    Promise of creation of new Job 1 crore


•   April 2009 – Congress-UPA
    Converted employed into unemployed/jobless 1 crore
CRISIS & CHAOS

•   Yes its true. We wasted the Opportunity. Government allowed, participated in creation
    of bubble. Did not created sustaining capacity to maintain 8+ % growth. Neglected
    infrastructure. Went into short term benefits. Our Finance Minister was busy with
    Sensex.


•   Millions lost jobs. Small & Big. Construction worker to IT Engineer. Its crisis of
    confidence. Congress- UPA government owes explanation to the country


•   We must have dynamic long term plan. Execution to be started from tomorrow.


                                                                       Dr. KIRIT SOMAIYA
           Prakashak:



BHARTIYA JANATA PARTY
      11, Ashoka Road,
     New Delhi – 110 001

				
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