Week in review for 17 June 2011

Week in review for 17 June 2011

The Reserve Bank of India has increased key rates during its mid quarter review. As expected, the Repo rate was revised up by 25 basis points to 7.5% and the reverse repo is now at 6.5%. This is RBI’s tenth hike since March of last year as a continued effort to curb inflation.

Finance Minister Pranab Mukherjee endorsed RBI’s anti-inflation monetary measures. He said that the major challenge was to contain the price rise. The Finance Minister also admitted that the Reserve Bank’s policy may impact growth, but stressed it was necessary.

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Going by the inflation figures for May, there is more reason for the policy makers to be worried about price rise. The country’s Wholesale price Index or the WPI jumped 9.06% in May which was higher than expected. The WPI was 8.66% in April. Surprisingly, one of the drivers of inflation in May was manufacturing .Manufacturing inflation during the month shot up 7.27%, compared to 6.18% in April. Fuel and power inflation is easing despite hikes in some prices. The fuel price index was just 12.32% on a year on year basis. That’s compared to 13.32% in April. Food inflation also eased marginally. India’s food price increased by 8.96 % in the period to the 4th of June. The previous week it had gone up by 9.01 % .The moderation of food prices is expected to continue due to prospects of a good monsoon.

The advance Tax Numbers for the first quarter were out and corporate India seems to be in good shape. According to the numbers released, Payments from 100 companies based in Mumbai grew 14% in the quarter ending June. ICICI Bank paid 390 cr, an increase of 11.42 % compared to the same period last year. And the country’s biggest bank, SBI, paid 1100 cr, an increase of 29 % .Reliance Industries was second and paid some 38% more during the quarter, turning in 900 cr. Companies pay advance tax every quarter based on what they expect to earn.

After almost two weeks of standoff, the strike at Maruti Suzuki’s Manesar plant has been called off. The protesting workers and the company reached an agreement to end the deadlock late on Thursday night. India’s largest carmaker has agreed to take back 11 sacked employees, but turned down the demand to form an independent union. The strike has resulted in a revenue loss of nearly 550 cr and a production loss of over 12,600 cars.

GVK Infra and Power may soon own coal mines in Australia. In what will be one of the largest overseas coal mine acquisition, the company will purchase two of Hancock Prospecting’s coal mines in Australia. Mint learnt that the initial agreement is signed by both the parties. The deal would cost about $ 2.4 billion. The mines in question are Tad’s Corner and Kevin’s corner in Queensland. Both have an annual capacity of 30 million tonnes.

NTPC is making fresh moves in its bid to revive two stalled power projects. It has got Russian firms Technoprom Exports and Power Machines to commit to new deadlines. Mint has learnt the commitments were extracted last month, when NTPC officials visited Russia. The two projects in question have been delayed for three years now.

UK-based oil explorer Cairn Energy has announced a sweeping board shake-up on Thursday. Company founder and Chief Executive Officer Bill Gammell will now step up to the role of chairman. Cairn Energy is currently battling to complete the planned sale of most of its stake in its Indian subsidiary, Cairn India to Vedanta Resources.

IndiGo airlines will soon fly to newer skies! The low cost airlines will launch its international operations in September. Indigo currently has a fleet of 39 aircrafts but has placed an order of 180 more Airbus A320’s. Also shopping for more aircrafts was GoAir. The managing director of the airline, Jehangir Wadia announced that the company has placed an order for 72 A320’s.

The Central Bureau of Investigation on Friday opposed the bail of DMK MP Kanimozhi and Kalaignar TV MD Sharad Kumar. Earlier in the week, the hearing in bail pleas of Kanimozhi and Kumar was adjourned till 20th of June in the Supreme Court. The Apex court had sought details of the scam from the CBI in writing.

The Lokpal drafting committee meet on the 15th of June ended amid growing differences. The members of the civil society and the government are likely to submit separate drafts to the union cabinet. The government though maintains that a final draft of the lokpal bill would be ready by the 30th of June.