The Hindu Business Line : Weekly News Round-up

The RBI on Saturday cut key short-term lending and borrowing rates by 100 basis points each and pumped in Rs 11,000 crore for housing and micro industries.

The short-term lending rate - repo - has been brought down to 6.5 per cent, while the overnight rate at which it borrows from banks - reverse repo - has been slashed to 5 per cent with effect from Monday. However, the CRR and SLR were unchanged at 5.5% and 24% respectively.

The Government on Friday announced a cut in auto fuel prices. Passing on the benefit of steep fall in international crude prices to the consumers, the retail selling price of petrol was cut by Rs 5 a litre and diesel by Rs 2. The prices of cooking fuels were, however, left untouched.

In an unprecedented move, the Communications and IT Ministry has agreed to refund about Rs 112 crore to Reliance Communications, which the company had paid as part of the entry fee at the time of taking the approval for offering dual technology in 2007.

The refund is on account of the company surrendering the permission for dual technology in six circles where it already has GSM services.

The Bombay High Court on Wednesday dismissed the writ petition filed by Vodafone International Holdings challenging the jurisdiction of Indian tax authorities to assess withholding tax arising out of the UK-based company's acquisition of a controlling stake in Hutchison Essar.

However, the Division Bench of Mr Justice S. Radhakrishnan and Mr Justice Anand Nirgude has extended by eight more weeks the earlier stay order on the tax department from proceeding in the case against Vodafone.

The Income-Tax Department estimates that tax deducted at source amounting to about $ 2 billion had not been paid to the exchequer in the $ 11.2-billion Hutch-Essar deal. Although the TDS amount involved has been pegged around $ 2 billion, official sources noted that the amount is subject to final computation by the department.

The annual Wholesale Price Index-based inflation rose 8.4 per cent for the week ended November 22, lower than the previous week's annual rise of 8.84 per cent. The dip in the year-on-year inflation rate was entirely on account of a big fall in the inflation in the fuels group. The annual rate of inflation, calculated on point to point basis, was 3.11 per cent during the corresponding week of the previous year.

The mutual fund industry's assets under management fell seven per cent in November. The fall was led by a substantial decline in the asset bases of mid-sized mutual fund houses.

The industry shed Rs 29,831 crore worth of assets in the past month. Their Asset Under Management now stands at Rs 4,02,029 crore against Rs 4,31,860 crore in October. Of the 35 mutual fund houses which have declared their assets under management data, only Tata Mutual Fund and UTI Mutual Fund reported increase in their asset base.

Reliance Industries has suspended operation of four units at the Vadodara petrochemicals facility in Gujarat. Sources told Business Line that the Indian refining and petrochemicals major recently stopped operations of acrylic fibre, acrylo nitrile, PVC and Linear Alkyl Benzene plants in the complex. The decision to stop operations of four units was taken in the light of the global meltdown in petrochemical product prices.

November was a horrendous month for car and two-wheeler manufacturers. What was particularly alarming was the sharp fall in numbers by market leader Maruti Suzuki. The company posted a 27 per cent fall in domestic sales to a new low of 47,704 units as against 59,127 units in October. November's fall was sharp which could indicate that December could be a lot worse.

Tata Motors was also a casualty of the rigid financing trend and sold only 14,327 cars in November. Mahindra & Mahindra also had a rough run in November. Domestic sales of Mahindra's multi-utility vehicles as well as the Logan sedan totalled 7,823 units, a 12 per cent fall from the same period last year.

Bajaj Auto's sales of two-and three-wheelers totalled 1.59 lakh units in November, a fall of over 35 per cent from the same period last year. TVS Motors's sales slipped to below one lakh in November. In the previous two months, it had managed to keep its sales figure at six digits.

Private and public players in the non-domestic liquefied petroleum gas (LPG) business have passed on the benefit of reduction in international product prices to customers. The price of commercial LPG that is sold in 19-kg cylinder has been reduced in the range of Rs 240-270 and is expected to go down further in January. Originally, the non-domestic LPG prices was expected to go down by Rs 300-Rs 320 a cylinder, but due to rupee depreciation the entire benefit of the international prices could not be passed on to the customers.

Compiled by M J Madhavan
Podcast by S Vasudevan