DECEMBER 2021

Commodity price inflation will continue: GODREJ APPLIANCES

Commodity price inflation has been plaguing the white goods industry throughout the year. Kamal Nandi, Business Head and Executive VP at Godrej Appliances, mentioned that 18 percent of the 23-24 percent commodity price hike have seen due to inflation. There is still a gap of 5-6 percent that is considered as an opportunity. The next hike is not yet planned. The market will bounce back in the fourth quarter of this fiscal year though there is uncertainty with the Omicron variant. Summer demand for ACs etc will be good, since there has been postponement of purchase last year, due to the second wave as well as inflation.   From copper, steel aluminum, MBI which is used for foaming, plastics are going up. There are no signs of resolution in the near future. It will continue to be at this inflated level for some time. Godrej appliances has gone ahead and made investments in developing components specifically derisking from all imports. India specifically looked for alternative vendors and vendor sources which were localized. In the appliances industry, the component import varies from category to category anywhere between 15 to 75 percent  (75 percent of import of components is found in air conditioners). Highest percent import has gone down roughly 50 percent and overall 20 percent reduction has happened in imports. Godrej invested closely Rs. 1,000 crore to develop critical components in house, in the last 5 years and the investment will continue for the next three years as well.

GST Hike on footwears, textiles will render 15 lakh people jobless.

Amit Mitra, Principal Chief Advisor to Chief Minister and Finance Department, West Bengal urged Finance and Corporate Affairs Minister Nirmala Sitaraman to call for a GST Council meeting at the earliest and revert the decision to increase GST rate to correct the inverted duty structure in footwear and textiles sector. The Council’s 45^th meeting had proposed to increase GST on textiles and footwear to percent from the current percent effective 1^st January 2022. The textile sector is estimated to be close to Rs. 5.4 lakh crore, and over 80 percent comes from natural fibres such as cotton and jute. The 45^th meeting of the GST Council did not discuss this matter at any depth. It is estimated that one lakh small units will be closed because of this 7 percent additional GST. Job loss including ancillaries is estimated to be close to 15 lakh. An estimated one lakh unuts amy choose to become informal and may go out of the tax purview. The total tax collection from the sector is close to Rs. 19,000 – 21,000 crore and it accounts for only two percent of GST collections. The estiated revenue gain from this increase is likely to be close to Rs. 7,000 crore.

Engineering exports to China double in Nov

Export of engineering goods to China more than doubled in November 2021 to $434.6 million compared to $ 205.3 million in the same month last year. The US remained top destination for Indian engineering exporters with exports worth $1,1196 million during this period, over $875 million in November 2020, registering a growth of 36.6 percent. There was a decline in the shipment value too. The EEPC India analysis of the monthly data showed engineering exports in November 2021 slowing $7.7 billion in October 2021. However, the growth was still substantial at 37.12 percent over the exports of November 2020 at $5.62 billion. Engineering exports in November 2021 grew by 25.74 percent compared to pre-Covid year of 2019. Exporters need complete support within the country such that they may remain competitive even during the upcoming uncertainties. Exports rose to 21out of 25 top export destinations and all regions. Italy, China and Belgium were the top three importers of Indian iron and steel during April- November 2021 whereas the US, Germany and UK were the top three importers of India’s products of iron and steel. The US was the largest importer of Indian industrial machinery followed by Thailand and China. South Africa, Mexico and Nepal were the top three importers of India’s automobiles.  In the non-ferrous metals and products segment, China, South Korea and the US were the top three importers from India. The US, Germany and Poland were the three top importers of Indian electrical machinery and components.

Canara Bank raises Rs. 2,500 Cr via bonds

The bank has successfully raised Rs. 2,500 crore by issuing Basel – III complaint bonds to a total of 10 allottees on December 2021 The bank received a total bid amount of Rs.9,374 crore out of which full issuance of Rs.2,500 crore was accepted at a coupon rate of 7.09 % per annum. The issue opened on December 23, 2021 and closed on the same day. To comply with Basel III capital regulations, banks globally need to improve and strengthen their capital planning processes. These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. Canara banks stock settled at Rs.193.90 apiece on the BSE, down 3.27% over the previous closing.

Aditya Birla Money allots non-convertible preference shares to promoter for Rs.80 cr

Aditya Birla money has allotted 16 lakh non-convertible preference shares to its promoter Aditya Birla Capital for Rs.80 cr. The BOD approved and allotted 16,00,000 (4%) non-cumulative non-convertible redeemable preference shares at an issue price of Rs. 500 pr share, including a premium of Rs.400 per share aggregating to Rs. 80 crore to Aditya Birla Capital promoter and the holding company in a regulatory filing.