Fed xExpress

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Issue 7 March 2009

rysudnI C U R S O R

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Strictly for Private Circulation

Index of Industrial Production: Growth (%)

Indian macroeconomic update

Highlights

Macroeconomic triad (forecast)

E: D&B estimateSource: CSO, D&B Industry Research Service

IIP and core infrastructure: Growth (%)

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The Index of Industrial Production (IIP) declined by 0.53% in January 2009. The electricity sector registered a growth of 1.83%, while the mining and manufacturing sectors registered declines of 0.43% and 0.76% respectively.

WPI-Inflation fell for the sixth consecutive week to 2.43%, to reach a six-year low, for the week ending February 28, 2009.

India's exports declined by 15.9% to US$ 12.4 bn while imports decreased by 18.2% toUS$ 18.5 bn during January 2009.

A spate of fiscal stimulus measures was announced on February 24, 2009, including a reduction in the general rate of central excise duty from 10% to 8% and in the rate of service tax on taxable services from 12% to 10%. The general reduction in excise duty rates by 4% was extended beyond March 31, 2009.

Macroeconomic update

Auto components

Banking

Cement

Commercial vehicle

Hospitality

IT hardware

IT-ITeS

Passenger vehicle

Pharmaceutical

Power

Retail

Steel

Textile & garment

Two and three-wheeler

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Contents

GDP: Growth (%)

Note: Exchange rate: INR/US$Interest rate corresponds to yield on T-Bills 15-91 daysSource: D&B Industry Research Service

Note: Figures in ( ) indicate the same period last yearSource: CSO

Source: CSO, Ministry of Commerce and Industry

Inflation(0.90-1.10%)

Exchange Rate(51.20-51.50)

Interest Rate(4.40-4.70%)

Mar-09

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Q3FY08 Q4FY09 Q1FY09 Q2FY09 Q3FY09 Q4FY09 E

Agriculture Industry Services GDP at factor cost

-2.0

0.02.0

4.0

6.08.0

10.0

12.0

Dec-

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Jan

-08

Feb

-08

Mar-

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Six core infrastructure IIP

Dec-

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Jan

-09

Indicator Jan-09 Apr08-Jan09

IIP General -0.53 (6.18) 2.99 (8.74)

Mining & Quarrying -0.43 (2.87) 2.65 (4.86)

Electricity 1.83 (3.66) 2.59 (6.32)

Manufacturing -0.76 (6.72) 3.05 (9.31)

Use based

Basic goods -0.98 (3.57) 2.92 (7.34)

Capital goods 15.35 (2.63) 8.64 (18.46)

Intermediate goods -9.19 (7.98) -2.51 (9.41)

Consumer goods -1.07 (8.37) 5.3 (6.06)

Consumer durables 2.48 (-0.54) 3.52 (-1.35)

Consumer non-durables 0.68 (11.07) 5.86 (8.7)

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Auto components industry

Highlights

Auto components industry:Outstanding investments(Rs billion)

Source: CMIE

Change in steel prices (%)

Note: For Mumbai marketSource: CMIE

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The demand slowdown has resulted in auto components players going

through a financial crisis. Some companies, such as Wheels India, are

considering renting out their idle capacities to industries such as

consumer durables, to manage costs. Meanwhile, State Bank of India

has decided to restructure around 15,000 SME loan accounts by FY09, a

majority of which were in the auto components and garment sectors.

This would provide the SMEs with extended repayment period along

with reduced equated monthly installments.

Auto parts SMEs in Chandigarh, which mostly supply components to

the tractor manufacturing units in the state, have been performing well

amidst the slowdown due to a dip in steel prices and good sales of

tractors.

In February, the Uttar Pradesh government made an announcement to

set up 33,000 micro enterprises in FY10, which would generate around

130,000 employment opportunities. The units will span across many

sectors including auto components.

Hindustan Motors is looking at diversifying into non-auto sectors such

as infrastructure, power and railways in view of the demand slowdown

in the auto components industry.

RBI's reduction in repo and reverse repo rates is expected to bring about

an improvement in the overall liquidity condition and likely reduction of

interest rates on auto loans. The effect would be highly beneficial to the

auto components sector.

MRP AutoRub, a rubber-based auto parts manufacturer, has formed a

74:26 JV with rubber and plastic molded and extruded parts

manufacturer Molded Dimensions, US. The JV would set up a plant in

Chennai for manufacturing molded parts worth Rs 150 million

annually.

Company: Key financial indicators (October-December 2008) (%)

Note: n.a. – Not applicable (losses incurred) Operating profit: PBDIT net of P&E; Net profit: PAT net of P&ESource: CMIE

ParametersAmtek Auto

Bharat Forge

Bosch Ltd

Motherson Sumi

Omax Autos

Rico Auto

Sundram Fasteners

Growth in net sales -24.6 -18.6 -15.5 -4.9 6.7 -8.4 -3.6

Growth in operating profit -43.1 -52.9 -16.2 -32.2 37.5 -29.3 -42.9

Growth in net profit -68.5 -96.7 -24.2 -52.2 n.a. n.a. -96.5

Operating profit margin 27.9 15.8 21.4 11.2 10.0 10.2 8.2

Net profit margin 8.4 0.4 8.1 3.8 1.2 -1.3 0.2

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HR coils 2.00 mm CR coils .63 mm

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Banking industry

Highlights

Deposits, credit and growthrates

Movement in call money rates(%)

nThe Swiss banking major, UBS, has admitted to helping American taxpayers in hiding accounts to evade taxes. It will pay $780 million in fines and penalties to the US government. UBS may also have to reveal to the US government, the identities and account details of some of its clients.

Global news

Note: PLR relates to 5 major banksDeposit rate relates to major banks for termdeposits of more than one year maturitySource for all above charts: RBI

Movement in PLR & depositrates (%)

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The RBI has lowered the repo and reverse repo rates by 50 basis points each, to 5.0% and 3.5% respectively.

In the interim budget, the Government allocated a sum of Rs 19 billion for recapitalising banks over the next two years. The Government has also earmarked a major chunk of the $ 4 billion aid it is seeking from the World Bank to recapitalise banks.

Interest subvention of 2% on pre and post shipment credit for certain employment oriented sectors has been extended beyond March 31, 2009 till September 30, 2009.

Some banks, including SBI and IDBI Bank have cut deposit rates by up to 50 basis points.

NABARD has cut the rate at which it lends to RRBs and commercial banks by 50 basis points, to 8.5% and 9.0% respectively.

Some large banks, including SBI, have reported large scale restructuring, especially in SME accounts.

The RBI has permitted banks to open and renew diamond dollar accounts without its approval.

The RBI has proposed to reopen the issue of holding company structure for banks as a part of its review of the roadmap for foreign bank operations in India.

HSBC India has launched a card protection plan in association with CPP Assistance Services that provides protection to card holders against frauds.

Kotak Investment Banking and GCA Savvian Corporation entered into an alliance with the purpose of providing M&A advice on cross border transactions involving Indian and Japanese firms.

Andhra Bank has entered into an alliance with Bank of Baroda and Legal & General Group, a London-based financial services company, to launch its insurance business.

On a petition filed by ICICI Bank, Kotak Mahindra Bank and Standard Chartered Bank, the Supreme Court has ruled that banks should be allowed to trade in debt, till it takes the final decision on the validity of the practice.

Indian Bank started a pilot project in Tamil Nadu for the introduction of biometric ATMs.

Dena Bank has shelved its plan of entering into the general insurance business due to the financial crisis.

0

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Call money rate-High

Call money rate-Low

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PLR (max) PLR (min)

Deposit rate (max) Deposit rate (min)

Feb

-09

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25

27

29

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15,000

20,000

25,000

30,000

35,000

40,000

%Rs bn

Deposits (LHS) Credit (LHS)y-o-y growth rates of deposits (RHS)y-o-y growth rates of credit (RHS)

Ap

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Cement industry

Highlights

Trend in average wholesalecement prices – Mumbai(Rs/bag)

Trend in cement production(mn tonnes)

Source: CMIE

Source: CMA, D&B Industry Research Service

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Cement production and despatches in the country grew by 8.6% and

8.7% y-o-y respectively in February 2009 as compared with 8.0% and

7.9% y-o-y in February 2008.

In February 2009, the government announced a reduction in excise

duty on bulk cement to 8% or Rs 230 per tonne, whichever is higher.

This is expected to have a marginal impact on overall demand for

cement.

Cement consumption in the central, eastern and northern regions grew

by 10-12% while, in the northern and western region, it grew merely by

4.2% and 5.9%, respectively, during April 2008 - January 2009.

Cement production in the western region declined by 1.6% during

April 2008 - January 2009.

Capacity utilisation in the cement industry recovered to over 90%

during December 2008 to January 2009, from four year low of 77% in

August 2008.

Ultra Tech cement will open four more outlets of its construction

materials retail chain, Ultra Tech Building Solution, in Maharashtra. At

present, it has 130 existing outlets in different states (Rajasthan,

Haryana, UP, Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh,

Karnataka, Chhattisgarh and Orissa) of the country.

Cement: Production and despatches

Source: CMA

Cement: Region-wise scenario (April 2008 - January 2009)

Source: CMIE

No

v-0

8

Oct

-08

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-09

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Jul-

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Parameters

Feb-09 Apr08-Feb09

mn tonnes

y-o-y growth (%)

mn tonnes

y-o-y growth (%)

Production 16.0 8.6 163.3 7.5

Despatches 16.1 8.7 162.9 7.7

Regions

Production Consumption

mn tonnes

y-o-y growth (%)

mn tonnes

y-o-y growth (%)

Northern 33.3 12.3 28.4 4.2

Western 23.1 -1.6 27.6 5.9

Central 21.2 4.3 21.1 9.8

Eastern 20.9 11.4 22.4 12.5

Southern 48.9 10.1 44.5 10.5

Segmental growth in CV sales(%)

Source: CMIE

Commercial vehicle industry

Highlights

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In February, over 30,000 units of commercial vehicles were sold, as compared to 17,000-28,000 CVs sold in the preceding four months. Sales, however, continue to remain lower than the year-ago levels. Sales in February were 31.7% lower than sales in February 2008. The decline in sales was steeper in medium & heavy vehicles (-51.3%), as compared to the light vehicles (-3.7%).

Cumulative sales of CVs during April-February FY09 were lower by 21.1%; sales of M&HCVs declined by 31.7%, while those of LCVs declined by 7.9%. Even exports of CVs were lower by 22.9% during this period.

A recovery in sales in February has encouraged Ashok Leyland to increase the number of working days at its manufacturing units to 5 days a week. In view of the slackened demand, in November 2008, it had reduced the working days to 3 days a week.

Tata Motors and Ashok Leyland expect their buses sales to increase by 10-15% in FY10 because of the stimulus packages announced by the government. Volvo Buses India also expects its sales to grow by 25% in 2009, over sales in 2008.

During February-March, Ashok Leyland entered into tie-ups with Bank of Baroda and Corporation Bank to offer retail financing to its commercial vehicle customers.

4.5

32.8

-1.7

-31.7

19.7

33.9

12.3

-7.9

-40

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FY06 FY07 FY08 Apr08-Feb09

M&HCV LCV

Company: Key financial indicators (Rs million)

-80

-60

-40

-20

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40

60

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100

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

FY07 FY08 FY09

Trend in monthly CV sales (%)

Source: CMIE

Company/Parameter

Q1FY09 Q2FY09 Q3FY09

Net sales Net profit Net sales Net profit Net sales Net profit

Tata Motors 69,284.4 3,261.1 70,788.5 3,469.9 47,586.2 -4,191.5

Ashok Leyland 18,838.6 505.7 18,664.0 672.4 10,008.5 -12.3

Force Motors 2,200.5 -224.4 2,385.0 -171.8 1,478.9 -942.8

Swaraj Mazda 1,627.0 61.0 2,054.0 61.0 429.0 -148.5

Note: Net profit: PAT net of prior period and extraordinary itemsSource: CMIE

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Domestic tourist visits in India

Source for all above charts: Ministry of Tourism

Foreign tourist arrivals in India('000 nos.)

Hospitality industry

Highlights

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Due to the global economic slowdown and heightened security threat due to terrorism, foreign tourist arrivals (FTA) in the country registered negative growth (y-o-y) for the third consecutive month in January. FTA fell by 17.6% in January 2009, as compared to a growth of 10.4% in January 2008.

The Centre has introduced the National Commission for Heritage Sites Bill, 2009, to set up a national body for the conservation, preservation and management of heritage sites.

India Trade Promotion Organisation (ITPO) has forged a special partnership with the US-based Foodservice Consultants Society International (FCSI) to launch the FCSI India Chapter at the International Food & Hospitality Fair in Delhi in March.

The Central Government is aiming to develop 22 mega tourist destinations, in a phase wise manner, in order to overcome the slowdown that has hit the tourist inflow in India.

The 'Visit India 2009' programme of India Tourism was launched as a joint initiative of the Government and private stakeholders of the industry to boost inbound tourism in the country. As per the scheme, all the Hotel Association of India (HAI) members will join this campaign.

Hiranandani Constructions, part of the Mumbai based real estate developers, Hiranandani Group, is looking to invest more than Rs 6.4 billion for developing five new hotels in Mumbai, Bangalore, Chennai and Hyderabad. The company is in talks with Accor Hospitality, InterContinental Hotels, Global Hyatt Corporation and Hilton Hotels, among others, for the purpose.

Panoramic Universal is planning to develop two exclusive properties in Hyderabad and Jaipur, in an effort to expand its footprint in India. It intends to raise Rs 500 million from PE players for the purpose.

Robust Hotels Pvt Ltd is planning to launch its five star hotel property in Chennai by the end of 2009. The 18-floor hotel will be run by Hyatt.

As a part of its plan of promoting fisheries tourism, the Kerala government has initiated a proposal to set up an 'Oceanarium' in Kochi, at an estimated cost of Rs 3.5 billion.

Foreign exchange earnings from tourism in India

Source: Ministry of Tourism

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No. of domestic tourist visits

Growth in domestic tourist visits

1996

1997

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YearFEE from Tourism in

India (Rs. Billion)Growth in FEE

(y-o-y)

2001 150.8 -3.5

2002 150.6 -0.1

2003 207.3 37.6

2004 279.4 34.8

2005 331.2 18.5

2006 390.3 17.8

2007 443.6 13.7

2008 507.3 14.4

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IT hardware industry

Highlights

Domestic computer hardware& peripheral production(Rs billion)

Source: CMIE

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The government reduced the excise duty on IT peripherals by

2 percentage points, bringing it down to 8%. However, existing 8%

excise duty charge on personal computers and notebooks would

remain unchanged.

In a bid to modernise the country's postal services, the Cabinet

Committee on Economic Affairs (CCEA) approved the computerisation

and networking of post offices. An amount of Rs 6.3 billion has been

earmarked for this project.

Hewlett-Packard (HP), world's leading desktop and notebook vendor,

has started the manufacturing of business notebooks at its Pantnagar

plant in India. HP expects this move to enable it to service its sales

channel and clients faster besides providing flexibility to its supply chain

in India.

HP India announced the launch of six business notebooks under the

“HP Elite Notebook PC” series. The models under this series are

designed to withstand dust, vibration, altitude and high temperature.

These notebooks have features like spill resistant keyboards and shock-

resistant hard drives which assist in protecting confidential data in the

notebooks against bumps, drops and spills.

Wipro, India's leading IT company, launched a new series of notebooks

priced under Rs 20,000 featuring a 10 inch screen. The company also

launched notebooks called “Ego”. These notebooks available in screen

sizes of 12 inch and 14 inch will be priced over Rs 20,000.

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Japanese electronics manufacturer, Toshiba, has agreed to buy Fujitsu's

hard disk drive (HDD) business. Toshiba expects this deal would help

increase its share in the overall HDD market to 20% by 2015.

Global news

Company: Key financial indicators (October-December 2008)

Note: Operating profit – PBDIT net of P&E; Net profit – PAT net of P&ESource: CMIE

CompanyNet sales (Rs mn)

Operating profit (Rs mn)

Net profit (Rs mn)

Operating profit margin (%)

Net profit margin (%)

Moser Baer India Ltd. 6552.4 1576.2 -267.6 24.1 -4.1

H C L Infosystems Ltd. 30971.0 985.4 577.0 3.2 1.9

P C S Technology Ltd. 676.4 35.9 4.3 5.3 0.6

Zenith Computers Ltd. 684.6 32.6 2.6 4.8 0.4

D-Link (India) Ltd. 623.0 26.9 7.2 4.3 1.2

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IT-ITeS industry

Highlights

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According to Nasscom estimates, the Indian IT and BPO exports would

touch US$ 60-62 billion by FY11 from US$ 31.4 billion in FY07. The

global technology spending which is currently affected by the economic

slowdown is expected to revive from FY10.

Leading IT companies like TCS, Wipro, HCL and Infosys are

signing/renewing contracts at a 15-20% lower billing rates so as to help

their clients manage with lower IT budgets.

JP Morgan Chase announced increase in its outsourcing to India by

25% to US$ 400 million. The bank also plans to manage integration of

its acquired companies from India to cut down the costs associated with

integration of different IT systems.

Aequitas Group, based in Germany, has picked up a 26% stake in Aakit

Technologies (an IT consulting and services company). This move has

given Aequitas Group access to customers in India while enabling Aakit

Technologies to strengthen its presence in the European markets.

Infosys Technologies has restructured its operations in Australia which

has subsequently led to a 5% reduction in the workforce.

Patni Computer Systems, leading global IT and BPO services provider,

announced a local SAP services partnership with SAP Japan. This

partnership will enable the company to improve its efficiency in

delivering high value to its customers in Japan.

HCL Technologies has won a Rs 3.9 billion contract from National

Insurance Corporation (NIC) for the implementation of software

application and its maintenance and for supporting NIC's infrastructure

for a period of seven years.

Indian IT companies are utilising human resources on “bench” so as to

avoid recruiting new people and save costs associated with training.

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ITeS-BPO: Share of exports anddomestic sales

Note for all the charts aboveValue indicate earnings in US$ billionE: estimateSource: NASSCOM, D&B Industry Research

Note: Operating profit – PBDIT net of P&E; Net profit – PAT net of P&ESource: CMIE

6.3 8.4 10.9 12.8

0.9 1.1 1.6 1.9

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100

FY06 FY07 FY08 FY09E

Exports Domestic sales

CompanyNet Sales (Rs mn)

Operating profit (Rs mn)

Net profit (Rs mn)

Operating margin (%) margin (%)

Net Profit

Tata Consultancy Services Ltd. 58754.8 14709.3 11296.0 25.0 19.2

Wipro Ltd. 53970.0 11718.0 7330.0 21.7 13.6

Infosys Technologies Ltd. 54290.0 20040.0 15380.0 36.9 28.3

H C L Technologies Ltd. 13048.5 5426.5 3980.1 41.6 30.5

Tech Mahindra Ltd. 11024.0 2648.8 2149.1 24.0 19.5

Company: Key financial indicators (October-December 2008)

Passenger vehicle industry

Highlights

Trend in passenger vehiclesales (%)

Source: CMIE

Passenger vehicle statistics

Source: CMIE

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After 4 consecutive months of depressed demand, in February, sales of

passenger vehicles grew by 15% over February 2008. While sales of

passenger cars surged by 21%, sales of multi-utility vehicles declined by

13.1%.

During April-February FY09, cumulative sales of passenger vehicles

posted marginal growth of 0.3%, over sales in the same period of FY08.

Exports of passenger vehicles continue to grow sharply. During April-

February FY09, exports shot up by 56.3%, driven by exports of cars.

To enhance reach of retail finance to their customers, several

manufacturers announced tie-ups with public sector banks.

Several high-end carmakers are optimistic on their sales prospects for

2009. Audi India aims to sell 1,500 vehicles this year, over 40% higher

than its sales in 2008. BMW India expects its sales in 2009 to be higher

than the 2,908 vehicles it sold in 2008. General Motors India aims to sell

72,000 vehicles in 2009, 10% higher than last year. Meanwhile, super

luxury carmaker Rolls Royce Motor Cars expects to sell 14 cars in India

this year, which will be the same number it sold in 2008.

The much-awaited Tata Motors' car Nano is scheduled for launch on

March 23, 2009. There are several new model launches lined up for

2009. Honda Siel Cars India plans to launch its premium hatchback Jazz

by mid-2009. Audi India plans to roll out the SUV Q5 in June this year,

while Volkswagen intends to launch the Beetle car by October.

Recent tie-ups with public sector banks

Compiled by D&B Industry Research Service

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FY07 FY08 FY09

Period

Production Domestic sales Exports

Vol. (nos.)y-o-y

growth (%)Vol. (nos.)

y-o-y growth (%)

Vol. (nos.)

y-o-y growth (%)

Feb-09 164,777 -4.9 145,019 15.0 26,278 28.8

Apr08-Feb09 1,634,458 2.4 1,386,692 0.3 301,952 56.3

FY08 1,762,129 14.0 1,547,985 12.2 217,054 9.4

Company Banks

General Motors India Andhra Bank

Hyundai Motor India Syndicate Bank

Maruti Suzuki IndiaAllahabad Bank,Corporation Bank,Punjab & Sind Bank

Tata Motors

Bank of India,Central Bank of India,Corporation Bank,State Bank of Bikanerand Jaipur,State Bank of India,State Bank of Mysore,State Bank of Patiala,State Bank of Travancore, Union Bank of India

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Pharmaceutical industry

Highlights

Trend in segmental salesgrowth (%) - 2008

Segmental market share (%)-2008

Note: Market share for formulations in thedomestic market during 2008Source: ORG-IMS December 2008(MAT)

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In January 2009, domestic retail sales of formulations grew by 14.4% (in value terms), as per ORG-IMS audit.

NPPA revised the prices of 285 formulation packs and 3 bulk drugs during March 2009. Most of the price revisions were downward.

Piramal Healthcare has completed the acquisition (100% stake) of US-based Minrad International (merger agreement signed during December 2008) for US$ 40 million.

US-based Pfizer has entered into a licensing and supply agreement with Aurobindo Pharma with the intent of expanding its portfolio of generic drugs. Under the terms of the agreement, Pfizer has acquired rights to sell 50 generic solid oral dose products and 12 sterile injectable products in the US and Europe.

Aurobindo Pharma has got approval from US FDA to market Escitalopram oxalate tablets (anti-depressant) in the US.

Aurobindo Pharma Australia Pty Ltd, Australia-based subsidiary of Aurobindo Pharma, has received an approval from Australia's drug regulator (Therapeutic Goods Administration) for marketing Lisinopril tablets (anti- hypertensive) in Australia.

Draxis Health, Canada-based subsidiary of Jubilant Organosys, has received an approval from Health Canada, the drug regulatory authority of Canada for marketing the drug 'Sestamibi' (used in treatment of cardiovascular diseases) in Canada.

Wockhardt has received US FDA approval for marketing Ranitidine tablets (anti-ulcer) in the US.

During February 2009, US FDA stopped approval of all drug applications from the Paonta Sahib plant of Ranbaxy Laboratories because of falsifying data and test results in its approved and pending drug applications.

Note: Growth is y-o-y basis in value terms forformulations in the domestic market during 2008Source: ORG-IMS December 2008 (MAT)

Chronic segment28%

Acute segment72%

Super group performance (2008)

Note: Market share, value, and volume growth for formulations in the domestic market is on a y-o-ybasis during 2008Source: ORG-IMS December 2008 (MAT)

Market share, value and volume growth for top players (2008)

Note: Market share, value, and volume growth for formulations in the domestic market is on a y-o-ybasis during 2008Source: ORG-IMS December 2008 (MAT)

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Chronic segment Acute segment

Jan

-08

Feb

-08

Mar-

08

Ap

r-08

May-0

8

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

Oct

-08

No

v-0

8

Dec-

08

Super group Market share (%) Value growth (%) Volume growth (%)

Anti-infectives 17.9 11.5 12.0

Cardiac 11.1 14.1 11.6

Gastro Intestinal 10.7 6.7 5.3

Respiratory 8.8 7.2 5.8

Pain / Analgesics 8.8 7.7 6.3

Companies Market share (%) Value growth (%) Volume growth (%)

Cipla 5.3 13.4 12.6

Ranbaxy Laboratories 5.1 12.5 11.0

GlaxoSmithKline Pharmaceuticals 4.3 -1.8 -0.5

Piramal Healthcare 3.9 8.5 7.3

Zydus Cadila 3.6 6.5 4.2

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Power generation (billion units)

Power industry

Highlights

PLF of thermal plants (%)

Source: CMIE

*Provisional Source: CEA

Trend in energy deficit - All India(%)

Source: CMIE

n

n

n

n

n

n

Kalpataru Power Transmission (KPT) has received orders worth Rs 3.73

billion from Power Grid Corporation of India for supplying power

transmission equipments for the Sasan Ultra mega power project in

Madhya Pradesh. It would supply and erect transmission towers for 413

kms and would also provide 765 KV transmission lines for the Silwar-

Satna and Satna-Bina sections.

NHPC Ltd plans to commission two of its projects, Teesta hydro-electric

project of 132 MW and 120 MW Sewa-II project in Jammu & Kashmir by

December, 2009. NHPC Ltd is also planning to set up two hydro electric

projects in Myanmar.

Reliance Power Transmission Ltd (RPTL) has signed agreements with 8

entities in the western region for two inter-state power transmission

projects worth Rs 18 billion. The agreements have been signed through

its two special purpose vehicles for the projects under the Western

Region System Strengthening Scheme-II (WRSSS-II).

The Board of Directors have granted approval to Power Grid

Corporation of India Ltd (PGCIL) for implementation of 'North East –

Northern/Western Interconnector-I project at an estimated cost of Rs

111.3 billion. It has also granted approval for implementation of

'Transmission system associated with Korba-III generation project at an

estimated cost of Rs 2.77 billion and implementation of 'System

Strengthening-XI in the Southern Regional Grid.

Areva T&D India Ltd has signed an agreement with Rajasthan Rajya

Vidyut Prasaran Nigam Ltd (RRVPNL) to set up a hybrid gas-insulated

substation (GIS) for Indira Gandhi Nagar substation (Jagatpura) at

Jaipur. The order is approximately worth Rs 0.6 billion.

KLG Systel Ltd has bagged an order worth Rs 300 million from Uttar

Haryana Bijli Vitran Nigam Ltd to set up thirteen 33 KV substations and

lay down 33 KV and 11 KV electrical lines on turnkey basis. It has also

been awarded a contract worth Rs 0.40 billion from Punjab State

Electricity Board for an EPC project on a turnkey basis.

Power generation

Source: CMIE

53.054.055.056.057.058.059.060.061.062.063.0

FY08 Apr08-Jan09

Apr-

08

May

-08

Jun-0

8

Jul-0

8

Aug-0

8

Sep-0

8

Oct

-08

Nov-

08

Dec

-08

Jan-0

9

Feb-0

9

Mar

-09

De

c-0

8

Jan

-09

Feb

-09

*

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Ap

r-0

8

Ma

y-0

8

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

Oct

-08

No

v-0

8

De

c-0

7

Jan

-08

Feb

-08

Ma

r-0

8

60.0

65.0

70.0

75.0

80.0

85.0

De

c-0

8

Jan

-09

Ap

r-0

8

Ma

y-0

8

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

Oct

-08

No

v-0

8

De

c-0

7

Jan

-08

Feb

-08

Ma

r-0

8

Parameters

Jan-09 Feb-09 Apr08-Feb09

mn kWhy-o-y

growth (%)mn kWh

y-o-y growth (%)

mn kWhy-o-y

growth (%)

Thermal 53,212.50 4.63 49,330.51 1.44 533,225.13 5.2

Hydro 6,993.32 -12.36 6,514.37 -7.29 105,872.21 -8.56

Nuclear 1,107.85 -19.11 905.27 -25.65 13,317.87 -13.73

All India 61,443.57 1.84 56,841.27 -0.24 658,238.83 2.33

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Retail industry

Highlights

Penetration of food & grocerysegment in organised andunorganised retail (%)

Wholesale Price Index (%)

Source: RBI

Note: Figures represent share of food andgrocery in total retailSource: F&R Research, D&B Industry Research Service

n

n

n

n

n

n

Wholesale Price Index (WPI) for the week ending February 28, 2009

stood at 2.43% - lowest in six years. However, retail consumers are still

facing high prices, especially for food items. WPI for food articles was

8.3% for the same period. High minimum support prices for major

commodities are primarily responsible for higher food prices.

The government slashed excise duty and service tax by 2%. This move is

expected to translate into lower prices and thus boost domestic retail

consumption.

Pantaloon Retail (India) Limited posted an encouraging 26% increase in

sales (y-o-y) in February 2009.

Hardcastle Restaurants, the JV partner of McDonalds for south and

west region, has decided to enter kids' apparel retailing. The company

will bring two Disney brands into the country, in partnership with the

Mumbai-based Prakash Cotton Mills. The apparel business will be

handled by another JV company, Global Trendz Retail (GTR).

Vishal Retail has decided to open shop-in-shops in its hypermarket to

increase footfalls. The company has decided to rent out the space to

White Tiger, a laundry services company. It is looking for other such

alliances which will add value for the customer.

Owing to massive liquidity crunch, Subhiksha has decided to shutdown

20% of its outlets and renegotiate rentals for 30-35% of the remaining

outlets.

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Major expansion plans of retailers

Source: Company announcements

0

2

4

6

8

10

12

14

All Commodities Food Articles

24-0

1-20

09

31-0

1-20

09

7-2-

2009

14-2

-200

9

21-2

-200

9

28-2

-200

9

Company Format/Vertical No. of stores Deadline

Tata Croma Electronics 20 March 2010

Nirula’s F&B 138 2011

Delight (RRL) Non-veg food 1000 2010

Bata Footwear 40 March 2009

Provogue Apparel 35 2010

Titan Timewear and Eyewear 40 March 2010

Jumboking F&B 60 2009

Cookie Man F&B 200 2013

Spencer’s Hyper Hypermarket 15 2010

Dominoes Pizza F&B 80 2009

McDonalds F&B 40 2010

Unorganised (LHS) Organised (RHS)

9.0

9.5

10.0

10.5

11.0

11.5

12.0

59

60

61

62

63

64

65

66

67

68

69

2004 2005 2006 2007

Sh

are

in

un

org

an

ised

reta

il

Sh

are

in

org

an

ise

d r

eta

il

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Steel industry

Highlights

Trend in HRC and CRCprices-Mumbai (Rs/tonne)

Source: CMIE

Source: JPC

Trend in capacity utilisationrate for crude steel (%)

n

n

n

n

n

n

Ministry of Steel has initiated a rebuilding project for reviving a sick steel

plant (Malvika Steel) at Jagdishpur Industrial area in Uttar Pradesh. The

steel plant has now been taken over by SAIL. This plant is expected to

start its operations on January 26, 2011.

Pig iron manufacturer, Tata Metaliks has identified the Bellary-Hospet

iron belt for its planned integrated steel plant in Karnataka.

The government is planning to tighten the norms for usage of steel

scrap. Under these norms, importers would have to provide a certificate

from designated international agencies to prove that the imported

scrap is not contaminated with radioactive elements like Cobalt-60.

JSW Steel Ltd commissioned a new 3.0 MT blast furnace at its

Vijaynagar plant. With this move, JSW Steel Ltd is now the largest

private steel player in India with 7.8 MT production capacities as against

the erstwhile largest player Tata Steel, which has a production capacity

of 6.8 MT. However, commissioning of this blast furnace has been

delayed by six months due to subdued steel demand scenario in the

country.

SAIL will set up a steel processing unit of 0.1 MT per annum capacity to

produce TMT bars from input material obtained from SAIL's integrated

steel plants in Lakhimpur Kheri district of Uttar Pradesh. The investment

in this project would be around Rs 0.85 billion.

The government reduced excise duty on steel from 10% to 8%.

Consequently, the steel prices are expected to reduce by Rs 500-600 per

tonne. Most of the steel items like hot rolled coils, cold rolled coils and

TMT bars are likely to show reduction in prices, which is expected to

boost the steel demand from construction and automobile sectors.

Steel: Demand supply dynamics ('000 tonnes)

* Provisional# EstimateSource: JPC

82

8787

89

91

89

91

76

78

80

82

84

86

88

90

92

FY02

FY03

FY04

FY05

FY06

FY07

FY08

0.0

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

60,000.0

Aug-0

8

Sep-0

8

Oct

-08

Nov-

08

Dec

-08

Jan-0

9

Feb-0

9

Prices of 2.00 mm HR coils

Prices of 1.00 mm CR coils

Period Production Consumption Imports Exports

Apr-08 4,338 4,165 360 375

May-08 4,380 4,412 469 289

Jun-08 4,637 4,613 381 356

Jul-08 4,685 5,280 620 275

Aug-08 4,782 4,980 595 295

Sep-08 4,808 5,080 661 320

Oct-08* 4,944 4,670 478 370

Nov-08# 3,999 3,870 653 330

Dec-08# 5,537 5,675 558 320

Jan-09* 4,690 4,615 225 200

Feb-09* 4,703 4,980 525 250

Apr 2008-Feb 2009 51,503 52,340 5,525 3,380

Textile & garment industry

Highlights

Textile exports forApr08-Oct08 (US$ million)

Garment exports forApr08-Oct08 (US$ million)

Textile and garment importsfor Apr08-Oct08 (US$ million)

Source for all charts above: DGCI&S

Financial snapshot of selected companies (October-December 2008)

Note: Operating profit – PBDIT net of P&E; Net profit – PAT net of P&ESource: CMIE

Installed capacities in textile mills

Source: Office of Textiles Commissioner

Textiles production

Source: CMIE

n

n

n

n

n

n

Inflation index for textile declined marginally by 0.7% to 139 for week ended February 7, 2009. This decline was on account of reduction in prices of cotton yarn-cones, cotton yarn-hanks and raw cotton.

The government announced a five percent duty incentive on the export of raw cotton by including the fibre in the Vishesh Krishi and Gram Udyog Yojna.

Despite rupee depreciation vis-à-vis the US dollar, Indian textile exporters have been forced to cut prices of their products on account of contracting international orders and increased competition from neighbouring low cost countries.

Century Textile & Industries announced a 25% cut in production of viscose filament yarn on account of adverse market conditions and lacklustre demand.

Shri Lakshmi Cotysn (SLCL), a diversified textile company, has announced diversification of existing verticals and acquisition of mills over the period of next three years. An amount of Rs 8 billion has been earmarked for this project by the company.

Raymond Ltd has announced plans of increasing its retail outlets in the Middle-East from the current 35 to 50 by 2012. Middle-East/SAARC accounts for 37% of total international business of Raymond. The company expects this number to expand to 45% in future.

Category Units Oct-08 Nov-08 Dec-08

Spun yarn ‘000 tonnes 306.23 311.6 317

y-o-y growth % -9.5 -0.5 -7.6

Fabrics mn sq mtr 4152 4431 4685

y-o-y growth % -6.7 -2.4 1.2

Spindles Rotors Looms

mn ‘000 nos.

Nov-08 36.6 479.0 57.0

Dec-08 37.0 483.0 57.0

Jan-09 37.0 484.0 57.0

CompanyNet sales (Rs mn)

Operating profit (Rs mn)

Net profit (Rs mn)

Operating profit margin (%)

Net profit margin (%)

Alok Industries Ltd 8164.1 2148.8 498.4 26.3 6.1

Arvind Ltd 6134.0 549.5 -331.7 9.0 -5.4

Indo Rama Synthetics (India) Ltd

5379.3 112.1 -363.6 2.1 -6.8

J B F Industries Ltd 6296.5 747 378.1 11.9 6.0

Vardhman Textiles Ltd 6505.1 1077.6 92.1 16.6 1.4

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‘000 nos.

Apr-Oct07 Apr-Oct08

6,938

5,762

5,000

5,500

6,000

6,500

7,000

7,500

8,000

Apr-Oct07 Apr-Oct08

5,288

5,667

5,000

5,100

5,200

5,300

5,400

5,500

5,600

5,700

Apr-Oct07 Apr-Oct08

1,429

1,499

1,380

1,400

1,420

1,440

1,460

1,480

1,500

1,520

Highlights

Three-wheeler: Domestic sales(units)

Two-wheeler: Domestic sales(million units)

Source: CMIE

Source: CMIE

n

n

n

n

n

Domestic sales of two-wheelers witnessed recovery in February 2009;

sales grew at a healthy rate of 16.2% y-o-y. This growth was driven by

healthy rise in sales of all the three segments (i.e motorcycles, mopeds

and scooters).

During April08-February09, cumulative domestic sales of two-wheelers

grew by 2.5%, over sales in the same period in FY08.

Two-wheeler exports witnessed a decline of 10% y-o-y during February

2009. However for April08-February09 period, exports grew by 25.6%

y-o-y. Suzuki Motorcycles India Pvt Ltd launched its first 150 cc

motorcycle GS150R at a price of Rs 67,400 (on-road Chennai). The

company aims to sell around 5,000 units of this model in the initial few

months. Yamaha Motor launched a new 150 cc motorcycle FZ-S, for Rs

67,000 (ex-showroom Delhi). And TVS Motor Company launched a 90

cc light ungeared scooter model Streak, at a price of Rs 36,480 (ex-

showroom Chennai).

Suzuki Motorcycles India Pvt Ltd. is planning to invest around Rs 1,500

million by 2010-11 to enhance its manufacturing capacity from current

around 0.18 million units to around 0.5 million units. Domestic sales of

three-wheelers witnessed a moderate growth of 5.1% y-o-y in

February. This growth was primarily driven by a strong 23% growth in

sales of passenger carriers. This in turn, negated the sharp decline of

around 33% in the goods carrier segment.

Three-wheeler manufacturer Piaggio launched 'Ape Life', a venture for

purchase and exchange of pre-owned Ape vehicles. This is the first

venture of its kind in the three-wheeler industry.

Source: CMIE

Comment

Healthy rise in two-wheeler sales in February 2009 has triggered recovery in the market after the slump in the last four months. Softening of interest rates and implementation of the Sixth Pay Commission recommendations is expected to increase two-wheeler demand going forward. However, the concerns arising due to poor sentiments because of job uncertainties and slowdown in economic growth could act as dampeners to future growth.

Two-wheeler sales Three-wheeler sales

Two-wheeler and Three-wheelerindustry

Feb-09 Apr08-Feb09

Vol (Nos)

Y-o-Y growth

(%)

Vol (Nos)

Y-o-Y growth

(%)

Motorcycles 491,462 15.6 5,313,169 1.0

Scooters 100,789 21.1 1,059,074 9.6

Mopeds 37,252 8.8 388,120 4.4

Electric vehicles 1,346 652.0 23,334 45.2

Total domestic 630,849 16.2 6,783,697 2.5

Exports 72,510 -10.0 934,731 25.5

Total 703,359 12.8 7,718,428 4.9

Feb-09 Apr08-Feb09

Vol (Nos)

Y-o-Y growth

(%)

Vol (Nos)

Y-o-Y growth

(%)

Passenger carriers 24,014 23.0 238,062 11.5

Goods carriers 5,975 -33.8 78,122 -35.4

Total domestic 29,989 5.1 316,184 -5.5

Exports 9,447 -25.0 140,364 7.4

Total 39,436 -4.1 456,548 -1.9

Ap

r-0

8

May-

08

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

No

v-0

8

Oct

-08

De

c-08

Jan

-09

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Feb

-09

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Ap

r-08

May-

08

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

No

v-08

Oct

-08

De

c-0

8

Jan

-09

Feb

-09

Fed xExpress

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D&B's Industry Research Service (IRS) provides comprehensive industry analyses with focus on the strategic considerations. D&B's IRS employs an integrated framework to analyse industry attractiveness in terms of its future growth potential, competitive intensity and risk assessment.

The reports' in-depth analytical content would provide valuable insights to financial institutions, banks, equity broking houses, and corporates towards accurate & informed decision making. The reports would also be useful to the industry practitioners, academicians & scholars.

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