RBI hikes CRR, keeps policy rates unchanged; Air India’s revival plans run into opposition from within the government.
Web Text: The RBI managed to both reassure and surprise observers on Friday with its quarterly monetary policy review. As expected, it left policy rates unchanged. But the RBI also hiked the cash reserve ratio or CRR by 75 basis points to 5.75%. Most analysts had expected a rise of 50 basis points. The CRR hikes will take place in two phases through February and are expected to drain about Rs36,000 crore in liquidity out of the system.
Jet Airways announced its third quarter results on Monday. Net profits soared to reach Rs106 crore compared to a loss of Rs214 crore in the same period last year. Jet airways profits were helped by an increase in air traffic and major cost-cutting measures.
Hindustan Unilever saw very little profit growth in the third quarter. Net profit went up 5.4% to Rs649 crore. But after taking out exceptional items and the market value of foreign exchange transactions, net profit only went up 0.1% to Rs610 crore. Part of the reason for the low numbers was the high spending on advertisements. HUL spent Rs632 crore on ads on promotions in the third quarter compared to just Rs380 crore in the same quarter the previous year.
In banking results, State Bank of India reported a steady third quarter net profit of Rs2,479 crores compared to Rs2,478 crores in the same period last year. And another lender, Punjab National Bank saw its net profit climb to Rs1,011 crore, an increase of just 0.5%. The flat growth from the two banks come after another giant, ICICI announced a fall in quarterly profits the previous week.
The Central Board of Direct Taxes or CBDT believes Mumbai’s taxpayers owes it a fortune. An internal report of the CBDT says companies and individuals in the city together owe it Rs135,000 crore in outstanding dues that have accumulated over the years. According to the report, some of the top defaulters are Hinduja Ventures, UltraTech Cement, Reliance Industries Limited and State Bank of India.
The government’s plan to get Air India off the ground has received criticism from an unexpected source. Mint has learnt that home minister P Chidambaram questioned the revamping plan for the airline during a group of ministers meeting in November. At that time, the group of ministers had decided to infuse Rs2,000 crore of capital into Air India over several months, even though Chidambaram wanted the airline to come up with a proper plan to get its balance sheet in order. Air India is demanding Rs5,000 crore in equity to cope with losses and to pay off loans.
In other results this week, Tata Steel reported net profits for Indian operations shot up to Rs1,192 crore compared to just Rs466 crore in the same period last year.
Tata Motors reported a turnaround with net profits jumping to Rs400 crore compared to a loss of Rs263 crore in the previous year’s third quarter. The company said new products and the government’s stimulus packages helped propel growth.
Hero Honda also overtook expectations. Net profits went up 78.3% to Rs536 crore. The company sold 1.1 million units during that period and expects to sell a total of four million units in the current fiscal year.