Business Today 9-Sep-2018

JAGUAR AND Land Rover started life as independent ventures, both born in the UK a few years apart. In the early 1900s, the S S Company made a number of cars that were branded Jaguar. In 1945, the company renamed itself Jaguar Cars. It quickly became known for building sporty and beautifully designed cars. Land Rover was born as a part of the Rover group in either 1947 or 1948. It developed the reputation for building some of the toughest off-road vehicles – maybe even better than the legendary Jeep that was considered its inspiration initially. Land Rovers entered the luxury SUV segment much later through the Range Rover label. Both cars made names for themselves but neither were financial successes. Jaguar and Land Rover became part of the Leyland…

THAT the savings rate of a country is important for its GDP growth has long been known. In recent years, both India and China have grown fast and have had high savings rates. But since 2011/12, the saving rate, measured as a share of gross saving to GDP has been continuously falling in India — there was just a minor improvement in 2014/15. It declined 4.7 percentage points over the period to stand at 30 per cent in fiscal 2017. The highest contributor to gross savings is the household sector, with a share of 54.2 per cent in 2016/17; this declined from 56.9 per cent in 2015/16. The household saving rate plunged to 16.3 per cent from a high of 23.6 per cent in 2011/12. The recent decline in the…

FOR three consecutive months, India’s merchandise exports have shown double-digit growth. Add imports to it, and see the country's trade data as a whole, the picture will start looking different. While the value of exports grew 14.32 percent to $25.77 billion in July 2018 (as compared to July 2017), imports shot up 28.81 percent to $43.79 billion during the same period. The resultant trade deficit was the highest in five years. Unlike a deficit in merchandise trade, India has a surplus in services, but that is not large enough to offset the gap caused by the goods import bill. India’s increasing trade deficit is thus key to the widening of the country’s CAD or current account deficit (the sum total of goods and services trade and other receivables such as…

WHEN IT RAINS, it pours. The country’s largest bank, the State Bank of India (SBI), is caught in the provisioning mess. If it was bad loan provisioning eating away its profits earlier, it is now investment depreciation (Mark To Market losses for fall in bond prices) that is applying pressure on SBI’s profitability. In the first quarter (April-June) of 2018/19, the bank has reported a loss of ₹4,875 crore. This is also the third consecutive quarterly loss. The bank clocked a loss of ₹6,500 crore plus in 2017/18. It, however, appears to have fully provided for both bad loans as well as investment losses. The financial performance will certainly improve from third quarter.…

INDIA’S AVIATION sector is down and out. A three-year long run of good times seems to be making way for hardships. The two major airlines – IndiGo and SpiceJet – have reported decline in financial performance while Jet Airways has deferred its first quarter results to an unspecified date. IndiGo’s profit tanked 96.6 per cent to ₹ 28 crore and Spice-Jet registered losses of ₹38.06 crore in the quarter ending June 2018. There are four culprits, in no particular order: high Aviation Turbine Fuel price, rupee depreciation, rising maintenance costs, and elevated competition. The biggest agony for airlines is that the first three factors are beyond their control, and as for soaring competition, airline managements hope the current level of fares is unsustainable over a longer period. With most airlines…

₹ 8,000 CRORE WASHED AWAY THE WORST flood in the past century hit Kerala and wreaked devastation. Initial estimates of economic losses - damaged buildings, roads washed away, and destroyed agricultural crops – place the figure at over ₹8,000 crore. The severely hit areas are where the fragile ecosystem has been tampered with – paddy fields turned into human settlements, flood plain agriculture in the backdrop of receding waters from dammed rivers, landslides in ecologically sensitive, hilly terrains ravaged by quarrying, have seen the maximum destruction. This is not the first time the relationship between climate change and extreme climatic conditions and unpredictable weather patterns is in the spotlight. The Chennai floods reminded us of the disappearance of swamps and lakes, the Uttarakhand disaster pointed to the problems of unplanned…