Economist

NOV 12 - India’s Factory Output Rises More-Than-Forecast 9.1%

India’s industrial production grew more than economists forecast in September, adding to positive economic signs.

Output at factories, utilities and mines rose 9.1 percent from a year earlier after gaining a revised 10.96% percent in August, the statistics agency said in New Delhi today. The latest increase was more than the median 7 percent forecast in News survey of 24 economists. None of the economists predicted such a large gain.

“This number is confirmation of a solid India story as far as consumer demand is concerned,” said S.Varma, an economist at Nomura Securities Co. “Consumer confidence is slowly coming back and the acceleration in output could be due to the festival demand.”

The yield on the 6.9 percent note due July 2019 rose two basis points to 7.35 percent in Mumbai, from 7.33 percent before the report.
Output accelerated as car makers such as Maruti Suzuki (India) Ltd., and Tata Motors Ltd., maker of the world’s cheapest car, boosted production to meet anticipated demand.
Car sales in October jumped 33.9 percent from a year earlier to 132,615 and two-wheeler sales rose 10.6 percent while sales of trucks and buses accelerated to 51.9 percent in the month, a report by the Society of Indian Auto Manufacturers showed yesterday.
The nation, which has a population of more than 1 billion population and where incomes are rising, is attracting companies such as Renault SA, DHL Worldwide Express and Wal-Mart Stores Inc., who are trying to expand in India.

Renault, France’s second-largest carmaker, and affiliate Nissan Motor Co. plan to introduce their made-in-India $3,000 car by 2012 and Walmart, the world’s largest retailer that has a wholesale venture with India’s Bharti Group, plans to open 40 more “cash & carry” stores in the South Asian country.

India’s $1.2 trillion economy expanded 6.1 percent in the three months through June from a year earlier, accelerating from 5.8 percent in the previous quarter.

Manufacturing, which makes up 80 percent of the production basket, rose 9.3 percent in September from a year ago, while electricity gained 7.9 percent and mining rose 8.6 percent, today’s report showed. Capital goods production climbed 12.8 percent and consumer goods rose 8.2 percent.

Manufacturing across Asia is showing signs of improvement, with China’s industrial output growing last month at the fastest pace since March 2008

Economist

DHL, Renault, Wal-Mart Bet on India


Nov 11, 2009 - Renault SA, DHL Worldwide Express and Wal-Mart Stores Inc. plan to expand in India, betting the government will deliver on a pledge to spend $500 billion by 2014 to fill pot-holed roads and build power plants.

“I had the opportunity to meet with different ministers and it looks like everybody has sized up exactly what’s the challenge,” Renault Chief Executive Officer Carlos Ghosn said in New Delhi yesterday while unveiling plans to make ultra low cost cars in India.

India plans to build roads at the rate of 20 kilometers a day until 2014, seven times the pace since 2004, and raise the power capacity by 75 percent in the next three years. India received $120 billion of foreign direct investments this decade, Prime Minister Singh said on the weekend.

“There is progress on critical issues such as infrastructure,” said Chetan Ahya, Singapore-based regional economist at Morgan Stanley. “With India gradually catching up to China on growth, it won’t be a surprise to see India reach very close to China on FDI inflows in the next five years.”

Finance Minister Mukherjee said yesterday that India’s economic growth may accelerate to 9 percent by 2012.

Morgan Stanley’s Ahya said that if the trend in FDI into India is maintained, the nation could this year get close to the record $33 billion it received in 2008. If re-invested earnings are included, that amount could reach $40 billion, Ahya said.

Investment Potential

The United Nations Conference on Trade and Development ranks India third after China and the U.S. for potential FDI during 2009-11.

Renault, France’s second-largest carmaker, will introduce their made-in-India $3,000 car by 2012, a year later than planned, due to delays in fixing details of the product with its Indian partner.

“The Prime Minister now directly oversees efforts to improve infrastructure, so what has changed is the seriousness and realization that India can only grow if roads and power are fixed,” said Malcom Monteiro, senior vice-president and Asia Director at DHL, Deutsche Post AG’s courier unit.

“We are willing to invest more,” Monteiro said. DHL has invested $300 million in India in the past seven years.

Walmart, the world’s largest retailer that has a wholesaling venture with India’s Bharti Group, plans to open 40 more “cash & carry” stores in India, Trade Minister Anand Sharma said Nov. 8.

Bharti Wal-Mart Pvt., in which the two companies are equal partners, opened its first Indian wholesale store in the northern city of Amritsar on May 30, with initial plans to start 10 or 15 more outlets and hire 5,000 people during the next three years.
Yum! Brands Inc. plans to open its first Taco Bell restaurant in Bangalore by the end of next year, India Managing Director Niren Chaudhary said yesterday in New Delhi. The company plans to invest $150 million in India by 2015.

“Foreign direct investment into India will increase,” said DHL’s Monteiro.

Economist

Warren Buffett: The financial panic is over


Words of "Oracle of Omaha"

Warren Buffett, perhaps the world's most admired investor, said on Thursday the financial panic that gripped the globe last year is a thing of the past.

"The financial panic is behind us," the world's second-richest person said at Columbia University's business school. "Our economy was sputtering, still is sputtering some."

Buffett, 79, nevertheless said there is greater opportunity for investments.

He appeared at Columbia with Microsoft Corp founder Bill Gates, the world's richest person and a Buffett friend and bridge partner.

Last month, preliminary government data showed the US economy expanded in the third quarter, the first three-month period of growth since the second quarter of 2008.

Buffett last week made a big bet on the US economy when his Berkshire Hathaway Inc agreed to pay about $26.4 billion for the 77 per cent of railroad company Burlington Northern Santa Fe Corp that it did not already own.

Gates, who is also a Berkshire director, said other sectors might also boost the economy over the long term, including information technology, energy and medicine.

Buffett gave Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Timothy Geithner "high marks" for how they managed the financial crisis.

The billionaire has praised Bernanke in the past, while mocking Geithner's stress tests for banks.