Industrial Output Growth Slows in India

Chandrasekhar Atreya
12 Aug, 2010
New York City

Stocks in Mumbai closed little changed despite SBI reported a 25% increase in quarterly profit. Industrial production increased at a slower pace in June. Reserve Bank of India is reviewing its policy to issue additional bank licenses and may require minimum capital of $250 million.

[R]5:00 PM Mumbai – Stocks in Mumbai closed little changed despite SBI reported a 25% increase in quarterly profit. Industrial production increased at a slower pace in June. Reserve Bank of India is reviewing its policy to issue additional bank licenses and may require minimum capital of $250 million. Ssangyong Motor chooses Mahindra & Mahindra as preferred bidder.[/R]

Stocks in Mumbai trading fluctuated but closed nearly unchanged helped by sharply higher than expected earnings at State Bank of India.

Indexes failed to build on the SBI earnings after a sell-off in world markets limited the gains. In addition, industrial production increase was less than expected.

The Sensex Index gained 0.02% or 3.71 points to close little changed at 18,073.90.

Industrial production rose at the slowest pace in June in more than a year, adding to concerns that the economic growth may be lower than targeted rate of 8%.

Output at factories, utilities and mines rose 7.1% in June after rising 11.3% in May from a year earlier, the statistics department said in New Delhi today.

The index was up 11.6% in the first three months compared to a year ago period. Manufacturing index advanced 7.3% and electricity output rose 3.5% in the month.

The wholesale price index in India decreased 0.1% to 308.0 from 308.2 for the previous week. For the year ending in the week average inflation surged to 15.66% compared to 6.69% in the same period a year ago.

Ssangyong Motor Co selected Mahindra & Mahindra Ltd as the preferred bidder to acquire a majority stake in the cash-strapped car maker and named Raghav Industries Ltd as the second preferred bidder. Raghav Industries is an investment affiliate of Indian conglomerate Ruia Group, a Macquarie Securities official said by phone.

“We have reached this decision after reviewing offered bidding prices, fund-raising capability, management plans after acquisition, job guarantee for current employees and other terms,” Ssangyong Motor said in a statement.

State Bank of India, India’s largest bank, posted its highest profit growth in four quarters as accelerating economy boosted its earnings from retail banking.

Net income soared 25% to Rs 2,910 crore in the quarter ended June 30 from Rs 2,330 crore a year earlier, the bank reported in its regulatory filing to the Bombay Stock Exchange today.

India’s Ministry of Mines and Steel said it is considering a proposal whereby mining companies will allocate as much as 26% of their profits to develop the area from which they operate. An earlier proposal to also give local community to give an equal stake was dropped.

The proposal needs approval of the Cabinet and then passed by the parliament to become law. This would affect miners of ferrous and non-ferrous minerals, Mines Minister B.K. Handique told reporters in New Delhi today.

National Aviation Co of India Ltd, the parent of state-owned Air India, plans to seek compensation of about $840 billion from Boeing Co, for a three year delay in delivery of its 787 Dreamliner Jets.

The company has raised its earlier demand for $710 million sought in January 2009, it said in a statement today. The company said delays have hampered its growth plans and saddled it with additional costs. It also said the claim may go up further if the delivery is delayed beyond March 2011.

Gainers & Losers

Britannia Industries Limited rose 1.35% to Rs 2,105.00 after the bakery product maker fixed September 9 as the record date for a 5-for-1 stock split.

Bajaj Hindusthan Sugar and Industries Limited fell 1.3% to Rs 22.00 after the sugar, distillery and power generator reported higher third quarter net loss of Rs 34.17 crore compared with net loss of Rs 23.62 crore in quarter of year ago.

Cummins India Limited gained 2.9% to Rs 657.10 after the diesel engines manufacturer reported net profit surged 56.4% to Rs 140.23 crore.

Cairn India Limited increased 2.1% to Rs 339.55 after the minerals, oils, petroleum, gas and related by-products company reported Vedanta Resources Plc is in talks to purchase assets or buy a stake in Cairn Energy Plc., the parent of Cairn India.

Greaves Cotton Limited rose 0.7% to Rs 374.00 after the diversified engineering company net profit jumped 109.5% to Rs 27.77 crore.

ICRA Limited dropped 2.5% to Rs 1,210.00 after the investment information company said consolidated net profit fell 14% to Rs 10.61 crore.

Info Edge (India) Ltd surged 6.6% to Rs 1,040.00 after the online classified company board recommended a 1:1 bonus issue.

Indsil Hydro Power and Manganese Limited soared 11.3% to Rs 88.20 after the mineral products & hydro electric company reported its board will meet on 23 August to consider issue of bonus shares.

Man Industries (India) Limited surged 4.8% to Rs 90.40 after the manufacturer and exporter of large diameter carbon steel line pipes said net profit galloped 677.62% to Rs 22.24 crore.

Mahindra & Mahindra Limited rose 0.6% to Rs 632.00 after the automobile, finance, tourism and infrastructure developer won the bid to acquire South Korea''s Ssangyong Motor after offering the highest bid and securing financing plans.

Nagarjuna Construction Company Limited fell 0.06% to Rs 161.00 after the construction company secured six orders aggregating Rs 673 crore.

Nectar Lifesciences Limited declined 2.4% to Rs 32.40 after the pharmaceuticals company net profit fell 23.3% to Rs 15.68 crore.

State Bank of India soared 6.7% to Rs 2,780.15 after the bank consolidated net profit rose 25% to Rs 3365.26 crore.

Sterlite Industries (India) Limited fell 2.7% to Rs 167.65 after the non-ferrous metals and miner’s American depository receipt declined 4.18% to $14.45 on the New York Stock Exchange on August 11.

Wipro Limited declined 1.4% to Rs 412.10 after the information technology solutions and service provider’s American depository receipts dropped 4.28% to $13.21 at New York Stock Exchange on August 11.