Reliance Life aims over 25% growth in new business premium

Reliance Life Insurance is targeting over 25 per cent growth in its new business premium at Rs 2,300 crore in the current fiscal, according to a senior official. The company expects new business premium of Rs 2,300 crore in 2012-13, as against Rs 1,809 crore collected in the last fiscal.

“We are hopeful that our new business premium will grow more than 25 per cent by the end of the current financial year,” said Reliance Life Insurance President and Executive Director Malay Ghosh. To achieve its business targets, the company is expanding its reach by employing 50,000 advisors and focusing on Tier II and III cities with a wide range of product and services during 2012-13, he said

Reliance Life, however, is eyeing a marginal growth in the renewal premium to Rs 3,800 crore this fiscal from Rs 3,688 crore in 2011-12. The Anil Ambani-led Reliance Life is aiming at collecting over Rs 6,000 crore premium by this financial year, as against a total premium of Rs 5,497 crore in the previous fiscal 2011-22.

Ghosh said the company is confident of growing over 10 per cent in 2012-13. “I believe that there is still tremendous untapped potential in the country to ensure long-term growth of the domestic insurance industry,” he said.

The company has registered a total premium collection of Rs 810 crore during the April-June quarter 2012 and it expects premium income to grow further in the next three quarters of the current fiscal. He said the premium income is being largely driven by traditional products, rather than unit-linked plans.

 

Samsonite eyes US for mfg to tailor cost, maintain margins

Samsonite’s Indian business is carrying a bag of worries weighed down by the double impact of costly imports and falling sales. But the world’s largest luggage company refuses to be burdened for long and is taking immediate steps to recharge one of its fastest-growing markets in Asia, reports Farah Bookwala of CNBC-TV18.

Luggage maker Samonite India, has been struggling with its own baggage, on one hand, the sharp rupee depreciation has badly stung its wallet as 70% of its products sold in India, including its entire soft luggage collection, is imported.  On the other, a drop in discretionary spending has dented sales with sales growth in the first half of 2012 plunging to 30% from the 53% recorded in the same period last year.

But now, the company’s global management has decided to take drastic steps to stop further growth decline in the Indian market.

Ramesh Tainwala, President, Asia Pacific & Middle East Samsonite, says that right now we are heavily focussing on further automation, cutting down on costs, cutting down wastage, improving manufacturing efficiencies so that we do not have to resort to any price increases and yet maintain gross margins.

This includes shifting the company’s manufacturing bases out of China, which is seeing high wage inflation and while this could have been an opportunity for India, Samsonite says this isn’t feasible

“Soft luggage, it’s an entire industry. So you need all the components, all the raw materials. So, China is able to have that kind of competitive advantage because they are more backwardly integrated. When we really simulate our own cost of outsourcing in India, we find that inspite of where the dollar is, it’s not viable,” says Tainwala

So instead, Samsonite has set its sight on Europe and the US where skilled labour and infrastructure has become cheaper post the financial crisis. The company is also planning to aggressively up its store count in india to increase penetration and drive sales.

Tainwala, says that we have 3,500 points of sale and we roughly add about 300-400 new point-of-sales every year. We cover 110 towns in India and cover all tier-1, tier-II cities and 50% of tier- III cities currently. We will cover 100% of tier III cities in three-five years and expand into few tier-4 cities by then. And recently acquired American brands, High Sierra and Hartmann, will also be brought to India this year.

Packing-in all these measures, Samsonite hopes to revive its India market soon with the ultimate aim of seeing a near four-fold rise in its India turnover to Rs 2,500 crore over the next three-five years.

Narayana Murthy to exit HSBC board

UK-based global banking giant HSBC Holdings Plc today said N R Narayana Murthy, co-founder of IT giant Infosys   and the only Indian on its board, would retire as its director at the end of 2012.

Announcing the changes in its board and board-committees, HSBC Holdings Plc said in a regulatory filing here that Renato Fassbind, former Chief Financial Officer of Credit Suisse Group, has been appointed a Director with effect from January 1, 2013.

Besides, Fassbind would also become a member of the Group Audit Committee and the Group Remuneration Committee with effect from March 1, 2013. He will be an independent non-executive Director.

Murthy will retire as a Director of HSBC Holdings plc on December 31, 2012 and will be succeeded as Chairman of the Corporate Sustainability Committee by Laura Cha. While Cha is already a director, Murthy had joined the board in 2008.

James Hughes-Hallett has also been appointed a member of the Corporate Sustainability Committee from January 1, 2013. On Murthy’s retirement, HSBC Group Chairman Douglas Flint said: “Narayana has made an important contribution to the Group since his appointment in 2008, in particular on technology matters, where his guidance and experience was invaluable to the Board, and also very importantly in leading the Corporate Sustainability Committee.

“On behalf of the Board I thank him for his counsel and service,” Flint said. On Fassbind’s appointment, Flint said that “his international trade experience makes him ideally suited to offer independent advice and challenge from within the Board as we implement our strategy to become the world’s leading international bank.”

Fassbind was the Chief Financial Officer and a member of the executive board of Credit Suisse Group from June 2004 until September 2010. He is Vice Chairman of Supervisory Board of Swiss Reinsurance Company, and a member of the Supervisory Board of the Swiss Federal Audit Oversight Authority.

Fassbind’s appointment will be for an initial three-year term, subject to re-election by shareholders as appropriate. After these changes, the Board of HSBC Holdings plc on January 1, 2013 will comprise of 16 directors, of which three will be executive Directors and 13 will be independent non-executive directors.

As a non-executive Director, Fassbind will not have a service contract with HSBC Holdings plc and will be paid a director’s fee of 95,000 pound per annum. He will also receive fees totalling 60,000 pound per annum as a member of the Group Audit Committee and the Group Remuneration Committee.

Subsidies are a must; prevent leakage: Kamath

India Inc has commented there had to be a balance as far as subsidies are concerned and  emphasised that subsidies were crucial for the poor. KV Kamath, chairman, Infosys   and non-executive chairman, ICICI Bank   offers his opinion on the Kelkar Committee report.

“My view is that we need to have subsidies in the context of poverty and maintain a balance in the economy. The challenge here is to make sure there is no leakage in the subsidy meant for the poor and ensure that those who can afford to do without the subsidy do not benefit from the subsidy,” he told CNBC-TV18.

“I think the Prime Minister has articulated certain steps in the context of cash transfers which was announced today in the report. I think that’s a great first step.”

Govt to give 2% interest subsidy on farm loans: RBI

In a bid to ensure enough credit in agriculture sector, the government decided to give interest subsidy of 2% a year to all state owned banks for farm loans upto Rs 3 lakh in 2012-13 in respect of special interest subvention scheme already introduced by the ministry. In the Union Budget 2012-13, the then Finance Minister proposed to continue the interest subvention scheme for providing short term loans to farmers at 7% p.a in FY13.

Public sector banks (PSBs) generally charge 9% rate of interest on farm loans. Lenders can now claim for 2% back from the government of India while disbursing such loans at 7%.

“In pursuance of this announcement, government of India will provide interest subvention of 2 % p.a. to public sector banks in respect of short-term production credit up to Rs.3 lakh during the year 2012-13,” the Reserve Bank of India (RBI) said on Friday in a notification.

“This amount of subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks for the repayment of the loan, whichever is earlier, subject to a maximum period of one year.”

Impact on banks

In case any farmer fails to repay and the loan account turns bad, according to Ram Sangapure, general manager retail, Central Bank of India , a bank can at least be assured of getting back 2% of interest instead of total interest along with the principal amount.

“Agricultural credit is important for the growth of economy. All these measures are aimed at facilitating loans to farmers. However, banks can also secure their asset quality to a little extent. In a sense, the government is subsidizing banks in the form of interest subvention benefits,” Sangapure told moneycontrol.com.

Additional interest subvention of 3%

Moreover, the ministry had also offered additional 3% interest subvention for farmers who repay their loans promptly. In view of that, the government is also providing 3% p.a. to all PSBs. This suggests, a prompt paying farmer can avail a loan effectively at 4% (9-2-3= 4%) wherein banks later can claim 5% (2+3) from the government of India.

“This additional subvention will be available to Public Sector Banks on the condition that the effective rate of interest on short-term production credit up to Rs. 3 lakh for such farmers will now be 4 % p.a. This benefit would not accrue to those farmers who repay after one year of availing such loans,” RBI said.

In respect of 2 % interest subvention, according to the central bank, lenders need to submit their claims on a half-yearly basis as at September 30, 2012 and March 31, 2013 while they may submit their one-time consolidated claims pertaining to the disbursements made during the entire year 2012-13 latest by April 30, 2014; in case of 3% additional subvention.

 

April-June CAD narrows from record high

India’s current account deficit shrank by 24 percent in the April-June period from an all time high in the previous quarter, returning the balance of payments to surplus after an earlier worrying slide towards dangerous territory.

The Reserve Bank of India data released on Friday showed India ran a balance of payments surplus of USD 0.5 billion in the April-June quarter, versus a deficit of USD 5.7 billion in previous three months. In the June quarter last year, India had posted a USD 5.4 billion surplus.

The current account deficit fell to USD 16.55 billion in the June quarter, down from an all-time high of USD 21.76 billion in the March quarter, and also below the USD 17.54 billion deficit posted in the June quarter last year.

The reduced deficits will be some relief for Prime Minister Manmohan Singh, whose government was reduced to a minority last week by the withdrawal of a coalition ally in protest at a package of reforms aimed at shoring up finances, cutting fuel subsidies and opening the economy further to foreign investment.

The data should bolster hopes India will keep its investment-grade credit rating and boost markets already buoyed by the government’s raft of reforms.

“Current account deficit narrowing is a positive,” Sudip Bandyopadhyay, managing director and chief executive officer of Destimoney Securities in Mumbai. “The stock market would get enthused by this as it is after a long time something positive has come on BOP (balance of payments) front.”

The rupee rose to a near five-month high of 52.4950 to the dollar on Friday, marking a strong recovery from a record low of 57.32 hit in late June due to the deteriorating external deficits. Strong dollar inflows worth USD 3.3 billion so far in September alone have helped the rupee’s recovery.

The 80-year-old Singh had been seen at risk of letting India slide into a balance of payments crisis, ruining a reputation built two decades ago as the finance minister who led the country out of a payments crisis by liberalising the economy.

Unfortunately a key reason for the reduced deficits, a fall imports, reflected the slowdown an economy that grew at its slowest in nearly three years in the June quarter, with 5.5 percent growth from a year earlier.

But measures taken to curb Indians’ love of gold also played a part, as the trade deficit fell to USD 42.5 billion in the June quarter, down from around USD 51.6 billion in the March quarter and USD 45 billion in the June quarter last year..

“While decline in non-oil non-gold imports largely reflects slowdown in economic activity, sharp decline in import of precious metal also seems to have been caused by various policy measures to discourage such imports including increase in custom duty,” the RBI said in its report.

The financial and capital account stood at a surplus of USD 16.8 billion in June quarter, lower than USD 23.8 billion a year ago.

 

Oil falls below $110 on growth worries

Brent crude oil fell below USD 110 a barrel on Monday, dragged down by a firm dollar and worries over weak global economic growth after disappointing German data.

Initial enthusiasm has faded over planned economic stimulus measures and steps by central banks in the United States, Europe and Japan to boost asset markets as data has shown growth rates still slow and consumer confidence ebbing.

German business sentiment dropped for the fifth successive month in September, Munich-based think tank Ifo said on Monday, a sign companies are being hit by the euro zone debt crisis which is squeezing demand and investment.

Front-month Brent crude futures fell USD 2 a barrel to a low of USD 109.42, before recovering slightly to trade around USD 109.75 by 0910 GMT. US crude was USD 1.30 lower at USD 91.59 per barrel.

Brent dropped 4.5 percent last week, while US crude lost 6.2 percent on demand worries and a pledge by Saudi Arabia to supply enough oil to the market to keep prices down

“Slowing economic growth is the major concern for oil markets,” said Olivier Jakob, energy consultant at Petromatrix in Zug, Switzerland.

The Ifo business climate index, based on a monthly survey of some 7,000 firms, fell to 101.4 in September from 102.3 in August, defying expectations for a slight rise. A Reuters poll of 45 economists had forecast a slight increase to 102.5.

“September’s fall in the German Ifo business survey is a reminder that even the euro-zone’s strongest economies are suffering from a serious economic downturn,” said Jennifer McKeown, economist at Capital Economics.

Gold prices slip in major metros in India

Gold prices slipped in major metros in India. In Delhi market, Standard gold (995 purity) was down Rs 300 at Rs 31750 and pure gold (999 purity) was down Rs 300 at Rs 31950.

In Jaipur market standard gold (995 purity) was down Rs 395 at Rs 31680 and pure gold (999 purity) was down Rs 395 at Rs 31705.

Spot Gold Rates for 10 grams in major metros in India:

City Gold 995 (Rs) Change (Rs) Gold 999 (Rs) Change (Rs)
Mumbai (Sep 24) 31875 -21 31735 -312
Delhi (Sep 24) 31750 -300 31950 -300
Chennai (Sep 24) 31880 -570 31880 -220
Jaipur (Sep 24) 31680 -395 31705 -395
Ahmd (Sep 24) 31665 -291 31790 -295

Click here for all other information on gold

Disclaimer: These are only indicative spot market prices obtained from market sources from various cities by commoditiescontrol.com. Investors are advised to confirm the rates before buying or selling as actual prices may vary. Moneycontrol.com will not responsible for any loss incurred by acting on these prices.

SBI execs to meet Kingfisher Airlines founders within days

State Bank of India  (SBI) officials will meet the founders ofKingfisher Airlines  in the next couple of days, S Vishvanathan, the bank’s deputy managing director said, after India allowed foreign airlines to take stakes in local carriers.

“(Vijay) Mallya is keen to keep control of Kingfisher… So the sense we have from him is that he is willing to do everything possible, including big sacrifices,” SBI Chairman Pratip Chaudhuri said, adding that the bank had no specific details on a reported sale of a stake in United Spirits .

India’s decision this month to allow foreign carriers to invest in local airlines was welcomed by Kingfisher, which is saddled with a debt of USD 1.4 billion.

PMEAC expects 6.7% growth this fiscal

he country’s growth rate is expected to pick up in the second half of this fiscal and reach 6.7 percent for entire 2012-13, Prime Minister’s Economic Advisory Council Chairman C Rangarajan said today.

Stating that there were indications to this effect, he told reporters here that the monsoon had turned out to be better than predictions made a few months ago.

Also Read: S&P cuts India GDP growth forecast to 5.5%

“Our own forecast is that the growth rate of economy in the current (financial) year will be 6.7 percent, that is a better shape than last year. I think, the growth will pick up in the second half of this year. Enough indications are there,” Rangarajan said.

He said the agriculture performance this year would also be better than what was expected a few months ago. “Therefore, taking all these factors into account, I expect there will be a growth rate of 6.7 percent in current (financial) year.”

Economic growth had slowed to a nine-year low of 6.5 percent in 2011-12. The GDP growth in the April-June quarter was 5.5 percent, lower than 8 percent recorded in same period of last fiscal.

On the diesel price increase, he said it would result in some increase in the wholesale price index as well as other price indices.

“But in the absence of the increase of diesel price, the fiscal deficit would have been higher. Therefore, one has to balance against the other,” he said.

He defended the diesel price hike, which has evoked opposition from various quarters, saying it was “appropriate” in the medium term so as to contain “inflation”.