Investors start to return to PE funds, but with caution

A number of funds that were struggling to achieve closure are hopeful of reaching targets

Mumbai: As market conditions around the globe improve gradually, private equity (PE) firms are readying for fresh fund-raising as investors loosen their grip on capital, though with some caution.
A number of PE funds that Mint spoke with, such as Multiples Alternate Asset Management, Future Capital Holdings, AMP Capital Advisors India Pvt. Ltd and Axis Private Equity Ltd, said they were going back to seek funds from investors to cash in on the improved market environment.
These firms will likely raise at least $2 billion (Rs9,260 crore) over the next six months.
In a Mint poll of at least 30 PE funds at the two-day PE International India Forum in Mumbai this week, at least 70% of the PE funds responded that the fund-raising environment has improved considerably over the past four months.
“Fund-raising is back,” said Yosuke Kogure, vice-president, (Asia Merchant Banking), Nomura International (Hong Kong) Ltd. “It is still not at the levels seen in 2007… But it is lot better than last year’s lows.”
In another sign of improvement, lawyers are beginning to work on fund structures again. Benjamin R. Newland, the Dubai-based partner of US law firm King and Spalding Llp, said he is working on a couple of funds “right now”.
“It was a hard cut last year. But it is recovering,” he said.
Data from Preqin Ltd, a UK-based research firm focused on alternative assets, shows that India-specific vehicles raised $9 billion in 2006, up from about $3 billion the previous year. In 2007, they raised $11.1 billion and $12 billion in 2008.
“An LP (limited partner) told me in 2006 anybody and his dog would have raised an India fund. And in 2007, you didn’t need the two. Only the dog would do,” Alok Gupta, managing director and chief executive officer of Mumbai-based Axis Private Equity, said in his address at the forum.
However, the financial environment took a sharp turn for the worse after the September 2008 collapse of investment bank Lehman Brothers Holdings Inc., followed by a global economic slowdown.
In the first three quarters of 2009, India funds raised just $3 billion.
Vivek Pandit, Mumbai-based partner at global consulting firm McKinsey and Co., said in his address that India needs $85-90 billion of PE investments over the next three years. “The country needs a lot of capital. India’s success so far has been a result of capital being made available,” he said.
Deepak Parekh, chairman, HDFC Bank Ltd, reiterated that sentiment, saying in his keynote address on Wednesday that “India needs private equity much more than private equity needs India”.
That is a gap PE funds are willing to step into.
“As the market uptrend continues, we are planning to raise $300-400 million by 2011 end,” K. Srinivas, managing partner, BTS Investment Advisors Ltd, said.
Samrat Ganguly, managing partner of Singapore-based Capital Square Partners, is planning to raise a $200 million sector-agnostic fund. “We are open to investments all over the world but we will be focusing on Asian investors because Asia understands Asia best,” he said.
Also, a number of PE funds that were struggling to achieve closure are now hopeful of reaching their targets soon.
IL&FS Investment Managers Ltd has received commitments for $640 million in its infrastructure fund and is expected to close it by December.
“We had targeted $750 million when we launched the fund last year but for six months between October and March, the activity had come to a standstill,” Krishnakumar G., managing partner at the firm, who has been meeting investors in Europe and the US, said. “It is only post-May we have started seeing some activity.”
However, LPs, who are the primary source of funds for PE firms, are still cautious about this new found enthusiasm.
“Sentiments have improved over what it was during the beginning of the year. But investors are still cautious,” said Gupta of Axis Private Equity, who is planning to raise $250 million for his India fund.
“We believe there is an overhang of capital. We need to digest that before making further commitments,” said Xiamoei Olivia Ouyang, investment officer, International Finance Corp., which is an investor in PE funds.
Jonathan M. Harris, president of New York-based Alternative Investment Management Llc, put it more precisely: “They (investors) are optimistic, but cautiously optimistic.”

http://www.livemint.com/2009/10/08212159/Investors-start-to-return-to-P.html

Best funds to save tax

Wed, Oct 7 07:37 PM
In all probability, your checklist for the month's errands reads something like this: get the house painted before the festive season; refurbish the living room; finish the Diwali shopping. Now, add one more to this list: start tax planning. But it's just October. Why should you start your tax planning right now? It should be done at the beginning of the new year when your employer sends you the tax deduction notice, right?
Wrong. We have said this before and we are saying it again. Don't compress your tax planning in the last one or two months of the financial year. Spreading your investments over the year is crucial if you are investing in tax-saving mutual funds. Stock markets have been very volatile in the past two years. If you don't want to be caught on the wrong foot, take the SIP route instead of a lump-sum investment at the end of the year.
We have shortlisted eight of the best tax plans for you. Performance is not the only reason why these funds have been chosen. Each scheme has been handpicked on the basis of its risk profile, consistency of returns, investment style and quality of holdings. Using the same parameters, we have put these eight funds in four broad categories. This is not a ranking of the ELSS funds; all are good performers. Your choice should depend on your risk profile and expectations.
Large-cap solidity
Slow and steady wins the race. Both Franklin Templeton Taxshield and SBI Magnum Taxgain have a decidedly large-cap orientation. While this means muted returns when the markets are rising, it also means a limited downside when the going gets tough. Franklin Taxshield fell less than the category in 2008, but has risen less than the average ELSS fund in 2009. In fact, both the funds have underperformed the category in the short term, but outperformed it over the longer term. Investors can expect returns in line with the broader market.
Incidentally, Magnum Taxgain is the largest ELSS fund, with assets worth Rs 4,434 crore almost 40% of the ELSS category. It tops the category for a five-year period with annualised returns of 35.56%. Don't expect an encore though. It is likely to give middle-of-the-road returns.
Fast-track growth
For those who like to drive a bit faster, the Sundaram BNP Paribas Taxsaver and Fidelity Tax Advantage are good options. Though the former has underperformed the category in 2009, don't let this stop you. The fund has given scorching returns over the longer term 19% in the past three years and 33% in the past five years. It has 35% of its assets in mid-cap stocks, which can prove very rewarding. Fidelity Tax Advantage has matched the category average, but this can change to outperformance due to the 25% exposure to mid-caps and 11% to small-caps in its portfolio.
Mid-cap aggression
No pain, no gain. If you can stomach a little risk, you have two winners in HDFC Taxsaver and Canara Robeco Equity Taxsaver. Both the funds have a sizeable exposure to mid-caps and small-caps. This aggression has paid rich rewards. While Canara Taxsaver has shot up 110% in the past six months, HDFC Taxsaver has risen 100%. It doesn't always pan out this way. HDFC Taxsaver was among the best performing ELSS funds between 2002 and 2005, but slipped subsequently. It has now regained lost ground. On the other hand, Canara Robeco Taxsaver has consistently beaten the category average and has been the best performer since 2006.
Turbo-charged on small-caps
Small-cap stocks are like performance enhancing drugs. In the six funds discussed earlier, the maximum allocation to small-caps was 12%. However, Taurus Taxshield and Sahara Taxgain have invested almost 20% in this high-risk zone. This can be very rewarding when the going is good, but a dream run can easily become a nightmare.
Taurus Taxshield has given 76.12% returns in 2009, the highest in the category, but its performance has been erratic. The fund lost 10% in 2006 when the category rose by 30%. The next year, the fund shot up by 111%, while the ELSS average was 57%. Buy if you can handle the risk.

http://in.news.yahoo.com/248/20091007/1596/tbs-best-funds-to-save-tax.html

KYC is not ‘Kill Your Customer’

In recent years, the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the banks and the mutual funds have been shouting from the rooftops that customer service is their creed. One does not question their intent, but the ground reality is very different. One is reminded of the observation of Wilhelm Ropke, a Swiss economist who, 50 years ago, said that the more people talk about co-operation the less there is of it.
There is no denying that the RBI, SEBI the Indian Banks’ Association (IBA), the banks and mutual funds have made genuine efforts to improve customer service for the common person in the financial sector. Yet, these efforts haveworsened the position of the customer. It is understandable that in view of the worldwide problem of disruptive anti-social activities, all official bodies and other economic agents have to be on high alert. To assess the quality of customer service it is essential to assess service at the grassroots level.
It is unfortunate that in the Indian financial sector, the quality of customer service is directly dependent on who you are and who you know. The common Person has to reconcile to this brutal fact.
CUSTOMERS HARASSED
The new mantra in the financial sector is ‘Know Your Customer’ (KYC). One cannot imagine the reign of terror unleashed by the banks/institutions on their innocent customers. It is true that a bank or a mutual fund may have faced the wrath of the regulators for an occasional lapse. The response of banks/mutual funds is to resort to medieval/colonial punitive retaliation — for one person challenging the authority in a village, burn all crops, kill 20 innocent persons and injure a 100.
No one would dare raise their voice against the authority. In response to the odd KYC lapse, a holy reign of terror is unleashed on innocent customers, some of whom may have been with the bank/mutual fund for 40 years. These customers are worried that despite having provided all the information earlier, they must once again provide all the details or else face a freeze on their account.
The banks/institutions have been singularly insensitive. Illustratively, a customer of a bank of 20 years standing was asked to produce proof of residence based on an account in another bank — one can always blame the other bank for not having properly undertaken KYC. In another Ripley’s ‘Believe it or Not’ episode the mother (guardian) is told that all other KYC norms have been met but the infant’s residence cannot be accepted on the basis that the mother has provided documentary evidence of her own residence. Are we worried that a 10-month-old infant could be indulging in nefarious activities?
It is bad enough that a customer might be thrown out of a bank for the unpardonable sin of wanting to open a bank deposit account. Why cannot the financial services sector provide service quality that is on a par with other public utilities? The authorities simply cannot afford to talk about high finance and be unaware of the brutal treatment meted out to depositors.
MUTUAL FUNDS NO BETTER
Mutual funds are equally competitive in their endeavour to win the wooden spoon in the league of service providers. Spokespersons of mutual funds would vigorously deny their predilection for corporate/large institutional investors. As far back as in the 1960s the officials in the RBI and government were against opening up mutual funds to corporates and institutions, yet the brute force of the big boys saw to it that corporates and large institutional investors were given access to mutual funds.
Corporates and other large institutional investors enter and exit from mutual funds schemes at their own free will, leaving the small individual investor to carry the can. Intentions to separate individual and institutional investors have remained just that — an intent — for decades. In the recent period banks have been putting large funds into mutual funds and in turn mutual funds are parking large funds with banks. Of course, the RBI obliges with refinance facilities for mutual funds!
Not to be outdone by banks, mutual funds have also unleashed a reign of terror. The intent and content of the mutual funds’ KYC norms are unexceptionable. But these are totally derailed at the actual implementation stage. The grand design was that there would be a centralised registry under the aegis of the Central Securities Depository Limited Ventures which would imply a single point registration.
In practice, there are horror stories. Illustratively, in the case of joint holders, there is a communication that ‘A’ is not compliant but ‘B’ is. Shortly, thereafter a communication is received that ‘A’ is compliant but that ‘B’ is not. Now while all this confusion prevails, the mutual fund holders are told that they cannot transact.
Mutual funds apply their own interpretation on the practices by the tax authorities. While the income tax authorities grant a PAN Card on the basis of a power of attorney, the mutual funds, on the authority of the majestic CSDL Ventures, disallows such documentation.
REMEDIAL ACTION
This is not meant to be a litany of complaints. Rather, it is to stress the need for the authorities to undertake remedial action. There should be a Committee chaired by the RBI Deputy Governor in charge of the regulatory department dealing with KYC.
The Committee should look at issues at the grassroots level and come up with specific remedial action to be implemented within a period of three months. Such a Committee has to be an infantry brigade and not undertake esoteric, ivory-tower discussions.
A second Committee headed by SEBI Chairman/Member should undertake a similar exercise for mutual funds. There should be close consultation between the two committees. Pending these two Committees resolving genuine problems at the grassroots level, the banks and mutual funds should be advised to hold back any form of punitive action against individual investors.
It is essential that KYC does not become a licence to ‘Kill Your Customer’. This issue brooks no further delay. The Banking Codes and Standards Board of India, a noble Florence Nightingale, tends to the wounded, the dying and the dead. The RBI and SEBI need to put an early end to the harassment of innocent customers of the financial sector — Les Miserables.

http://www.thehindubusinessline.com/2009/10/09/stories/2009100950370800.htm

Soon, corporates to give shareholders more non-financial information

Arun S.
New Delhi, Oct 8 Companies may soon have to compulsorily make non-financial disclosures to their shareholders.
These include disclosures on diversity profile of their employees, representation of disabled people, practices on labour and environment as well as promotion of literacy, education and health.
Companies will be mandated to include these non-financial disclosures in their annual reports. The move is aimed at enhancing corporate governance standards.
In this regard, the Institute of Company Secretaries of India (ICSI) will shortly come out with a first-of-its-kind ‘Secretarial Standard on Non-Financial Disclosures’, which is expected to be made mandatory by the Government, Mr N. K. Jain, Secretary and CEO, ICSI, told Business Line.
Diversity profile
Besides diversity profile, companies will have to disclose their practices regarding human resources, state whether they are employing child labour, what the company has done to curb global warming, whether it has followed all environmental rules, including water management and waste management norms.
“We will take a holistic approach while framing this Standard. Initially, some companies may find it difficult to comply with it. But it will help them in the long run. We want to ensure that this Standard is made mandatory by the Government because it will also help in determining the best governed organisations. Companies must disclose whether and how they are following all the existing laws on non-financial matters,” Mr Jain said.
Best practices
The National Convention of Company Secretaries, to be held next month, will discuss this topic and give inputs. Besides, the ICSI has contacted experts to study the global best practices and the Indian corporate practices on non-financial issues. It will then release a draft Standard and seek comments from all stakeholders.
Mr Abhay Gupte, Senior Director, Deloitte (that recently launched a Centre for Corporate Governance), said, “Organisations following good governance practices and better transparency in dealings have a healthier market cap. Such companies attract higher foreign investment and more orders for their goods and services from around the world.”

http://www.thehindubusinessline.com/2009/10/09/stories/2009100951980100.htm

Telecom price war to hit MFs

Mumbai
Oct. 8: The mutual fund investors having exposures to the telecom companies stocks are likely get affected due to the tariff war between telecom companies.
The investment by the mutual funds in telecom stocks is estimated at Rs 8,000 crore. According to the experts, the tariff war between the telecom companies would hamper the profits of those companies and consequently it would affect the NAVs of mutual fund schemes having exposure to the telecom stocks.
Admitting that there is a concern over mutual funds’ exposure to the telecom sector, Mr Alok Mahesh-wari, the executive vice-president and head equities of DSP Blackrock AMC, said: “Fund houses on a regular basis reduce or increase their exposure to various sectors depending upon the performance. Since the last few days, when concerns have been raised about the profitability of telecom companies, fund houses across the board have started reducing the exposure to telecom companies.”
According to some experts, already investors in the mutual funds have seen NAVs declining on account of poor performance of telecom companies.
Mutual funds have invested about Rs 8,000 crore in five major telecom companies. According to valueresearchonline, mutual fund’s share of exposure is largest at 39.06 per cent in Bharti Airtel followed by Reliance Communications (20.38 per cent), Tulip Telecom (18.24 per cent), Sterlite Technol-ogies (13.34 per cent) and Idea Cellular (8.07 per cent).
According to Mr Binu Joseph, research analyst, capital markets of JRG Securities, “Fortunately mutual fund houses have not launched schemes dedicated to the telecom sector. Otherwise, the losses to the investors would have been far more. In the last couple of days the market capitalisation losses of telecom sto-cks were about Rs 35,000 crore and the mutual fund investors also had to bear their share in these losses which was evident in the declining level of NAVs.”
He said: “Though, mutual fund houses would take corrective measures, the bigger threat in the near term would be mobile number portability.”

http://www.deccanchronicle.com/business/telecom-price-war-hit-mfs-978#

INSURANCE

Bharti Axa to get Rs 645 crore capital infusion

Bharti Axa General Insurance Company is planning to infuse Rs 645 crore of capital in the next five years. It is also looking at expanding its network and planning to add 500 agents during the current year.
Speaking to reporters after launching new products under its Health Insurance Portfolio, Amarnath Ananthanarayanan, chief executive officer, said the current capital base is around Rs 230 crore, including Rs 40 crore infused last month. “Over the next five years, the company’s promoters will infuse around Rs 645 crore,” he said.
Bharti AXA General is a joint venture between Bharti Enterprises, a leading Indian business group and AXA Group. Bharti has a 74 per cent stake in this JV and 26 per cent is with AXA. Currently, the company has over 40 branch offices across the country, and plans to expand to 70 branches by the end of 2009.
The company is also planning to increase the number of agents to 2,000 from the current 1,500.
From August 2008, the commencement of operations, to March 2009, the company has collected premium of Rs 32.3 crore and from March 2009 till now, another Rs 100 crore premium was collected. The company had set a target to close the current financial year with a little over Rs 150 crore, he said.
Of the total premium, currently 13 per cent id contributed by health which will be increased to 20-25 per cent, said Ananthanarayanan.
Balaji C, vice president, property and engineering, added that the company already has a Smart Health Individual policy and a Smart Health Critical Illness policy. It has also filed more products with the regulator, including SmartHealth essential, which will be launched soon.
He noted health insurance constitutes around 15 per cent of total general insurance premiums, about Rs 4,500 crore against the total general insurance premium of Rs 28,000 crore.

Life Insurers seek lower minimum alternate tax.

The life insurance industry has serious concerns that the minimum alternate tax of 2 per cent proposed in the draft Direct Taxes Code will adversely impact the health of companies. Further, it wants long-term investments to be defined as those which have a tenure of 10 years and not 20 years as proposed in the code.
The Life Insurance Council, an industry body, feels that insurance companies’ assets belong largely to policy holders. “We are suggesting that MAT should be applied at a lower rate only on shareholders’ assets and not on total assets. A 2 per cent MAT is very high,” said S B Mathur, secretary general, Life Insurance Council. The way DTC is framed right now, MAT may also lead to double taxation. The government proposes to tax insurance companies through MAT and then tax policy-holders as well.
Further, the draft code defines 20 years or more as a benchmark for long-term investments. Therefore, it proposes to tax maturity proceeds of life insurance policies that have a policy term of less than 20 years and premium of more than 5 per cent of the sum assured. According to the current laws, maturity proceeds of life insurance policies are not taxed. The proposed change will have huge liability on life insurers. The insurance industry is opposing this recommendation and suggesting that this limit should be brought down to 10 years.
Although investment in insurance products qualifies for exemption under Section 80C, the maximum tax beneft is limited to one-fifth of the sum assured. The council has recommended that premium amount that doesn’t qualify for tax exemptions at the investment stage should not be taxed at maturity. “We have suggested that the policy premium which is not exempted should not be taxed at maturity as it will lead to double taxation,” said Mathur.

BANK

FM to review banks' performance

Banks from four regions will meet Mukherjee separately this month.
With credit growth remaining low, the government is likely to prod public sector banks later this month to ensure that loans are made available and a soft interest rate regime is maintained.
Finance Minister Pranab Mukherjee is expected to take up the issues during a review meet with bank chiefs later this month. Breaking from practice, Mukherjee has decided to meet bankers on a region basis. So, the finance minister would meet the chiefs of Kolkata-headquartered banks on October 24 and a meeting with north-based banks was scheduled for October 28, sources said.
Dates for the minister’s meeting with the western and southern banks are yet to be finalised. Bankers are also scheduled to meet Reserve Bank of India officials for customary pre-policy meeting on October 12.
By meeting bank chiefs around the time of the credit policy, Mukherjee would also set the tone for interest rate movements irrespective of what Reserve Bank of India Governor D Subbarao announces on October 27.
The meetings would also be attended by officials from National Bank for Rural and Agricultural Development (Nabard), National Housing Bank and Small Industries Development Bank of India (Sidbi). Officials said that apart from providing a thrust to overall lending activities of public sector banks, the government wanted to ensure that the interests of the small and medium enterprises, farmers and retail borrowers were not affected.
According to the agenda circulated to bank chiefs, Mukherjee would review bank lending to agriculture, housing, automobiles, micro and small enterprises and to the weaker section of the society.
“The agenda mentions review of different financial parameters like non-performing asset and capital adequacy ratio. Though discussion on interest rates is not mentioned in the agenda, ministry officials may seek our views on the issue,” chairman of a mid-sized bank said.
The review would come around the time when banks would be finalising their second quarter results.
http://www.business-standard.com/india/news/fm-to-review-banks-performance/372686/

ICICI Bank to lend more to small, medium sectors

Our Bureau
Mumbai, Oct. 8 ICICI Bank is looking to increase its lending to the Micro Small and Medium Enterprises (MSME) segment this fiscal, said Ms Chanda Kochhar, Managing Director and CEO.
The bank currently has a lending portfolio of Rs 12,000 crore to this segment and will look at specific strategies and products for various segments.
She was speaking to reporters on the sidelines of a seminar for MSME organised by the bank here.
The bank has relationships with over one million MSME clients. These include lending and transaction banking services. It accounts for 20 per cent of the total private sector lending to the MSME segment, she said. .
According to Ms Kochhar, challenges for this segment include understanding customers’ evolving needs, communicating with customers, segregating good and bad costs and changing the business model to be relevant to the current environment.
Going forward, the MSME segment is going to play an even more important role in the growth of the country’s economy, because of ability to change and innovate will be faster and better, she added.
Better infrastructure
Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, said that if India needs to sustain 9-10 per cent growth, then the MSME segment has to be the main vehicle. But MSMEs should not just ask for cheap credit, they should also ask for better infrastructure facilities such as ports and roads.
Today, nobody can have the grievance that interest rates are high, Dr Chakrabarty said.
The incremental credit-deposit ratio for the banking industry has fallen to 20 per cent, because borrowers are waiting for cheap rates. But the fact is that plenty of funds are available at competitive rates, he pointed out.
http://www.thehindubusinessline.com/2009/10/09/stories/2009100951431700.htm

Our Bureau
New Delhi, Oct. 8 Imports will attract Goods and Services Tax (GST) under the new tax regime to be ushered in from next year.
The Empowered Committee of State Finance Ministers has endorsed in principle the levy of GST on imports and mandated a Joint Working Group to prepare a report in four weeks on the structural changes necessary to be adopted for this purpose.
The current thinking is to have a system where the basic Customs duty will continue to be levied by the Centre on goods imported.
The countervailing duty regime, however, is likely to be altered and broad-based to include both Central and State GSTs.
This may imply higher incidence of countervailing duty in the proposed GST system.
The current countervailing duty regime provides a level playing field only with regard to the excise duty applicable on the same goods in the domestic market.
“The Empowered Committee endorsed some of the decisions relating to the preparation of GST,” Dr Asim Dasgupta, Chairman of the committee, told reporters here on Thursday.
A discussion paper will be released within the end of the month.
A draft of the discussion paper has been circulated to the State governments so that interaction with the trade, industry and others concerned can start immediately, Dr Dasgupta said.
Also, the existing Joint Working Group, comprising officials of Central and State governments, has been mandated to prepare within four weeks a report on the Constitutional amendments necessary for GST, the changes required for levy of GST on imports, a draft legislation for Central GST, a draft for common legislation for State GST besides a draft for rules and procedures that may be required to administer the GST.
Four-week deadline
“The deadline for the working group will be four weeks. The report will then be considered by the empowered committee and then the Union Finance Minister for a final view,” Dr Dasgupta said. He also said that the Empowered Committee also discussed the revenue-neutral rates of States for the GST system, but no final view had been taken. Further discussions would be held in the coming days. The method of compensation in a neutral manner was also discussed.
“The Finance Ministers of Gujarat, Madhya Pradesh and Chhattisgarh, the Deputy Chief Minister of Bihar and the Home Minister of Karnataka emphasised that the preparation of IT infrastructure was absolutely essential for tracking inter-State transactions and tying up with State infrastructure,” Dr Dasgupta said.
He also said that the Centre would have to “share a major responsibility” in upgrading the infrastructural requirements for inter-State transactions. The States also drew the attention of the Committee on the need to compensate them for the CST revenue losses arising from GST implementation.
Indications are that the issue of compensation for CST revenue losses will come up at the meeting between the State Finance Ministers and the Union Finance Minister, Mr Pranab Mukherjee, slated for October 27.
Inter-State deals
For inter-State transactions, the Committee is now looking at a system of Integrated Goods and Services Tax (IGST). January 2010 has been set as the target date for completing the preparations for IT infrastructure.
The Working Group report on service tax has more or less been accepted.

ECONOMY

Inflation rate eases marginally to 0.7%

Our Bureau
New Delhi, Oct. 8 The annual Wholesale Price Index-based inflation rose 0.7 per cent during the week ended September 26, below the previous week’s annual rise of 0.83 per cent.
The official WPI for ‘All Commodities’ for the latest reported week declined by 0.1 per cent to 243 points from 243.3 points for the previous week.
Headline inflation was recorded at 12.08 per cent during the corresponding week of the previous year. The 52-week average inflation for the week ended September 26 was 2.84 per cent.
On a disaggregated basis, the Primary Articles group index for this major group rose by 0.1 per cent as the index for ‘Food Articles’ group declined by 0.2 per cent due to lower prices of poultry chicken (3 per cent) and bajra, fruits and vegetables, condiments and spices and arhar (1 per cent each).
However, the prices of tea (2 per cent) and maize and eggs (1 per cent each) moved up.
Non-food articles rise
The index for ‘Non-Food Articles’ group rose by 0.2 per cent due to higher prices of groundnut seed (3 per cent). However, the prices of gingelly seed (9 per cent) and rape and mustard seed (1 per cent) declined.
The index for the ‘Minerals’ group rose by 4 per cent due to higher prices of gypsum (9 per cent) and iron ore (6 per cent).
However, the prices of chromite (50 per cent), barites (8 per cent), fire clay (7 per cent), steatite (6 per cent) and vermiculite (1 per cent) declined.
The Fuel and Power group index declined by 0.1 per cent due to lower prices of bitumen (2 per cent).
The Manufactured products group index declined by 0.2 per cent as the index for ‘Food Products’ group declined by 1.3 per cent due to lower prices of oil cakes (5 per cent), imported edible oil (2 per cent) and sugar, malted food, coconut oil and groundnut oil (1 per cent each).
However, the prices of gur (3 per cent), salt (2 per cent) and butter (1 per cent) moved up.
The index for ‘Textiles’ group rose by 0.3 per cent due to higher prices of hessian and sacking bags and hessian cloth (4 per cent each).
The index for ‘Chemicals and Chemical Products’ group rose marginally due to higher prices of methanol (9 per cent).
However, the prices of PVC resins (4 per cent) declined.
The index for ‘Basic Metals Alloys and Metal Products’ group declined marginally due to lower prices of zinc (6 per cent), steel ingots (4 per cent). However, the prices of steel wire ropes (2 per cent) moved up.
Machinery and tools
The index for ‘Machinery and Machine Tools’ group declined by 0.1 per cent due to lower prices of components and accessories of switch gears (6 per cent) and electric motors (2 per cent). However, the prices of air and gas compressors (1 per cent) moved up.
For the week ended August 1, the final WPI for ‘All Commodities’ stood at 239.4 points compared with the provisional estimate of 237.2 points and annual rate of inflation based on the final index, calculated on point-to-point basis, stood at -0.83 per cent compared with -1.74 per cent points.

http://www.thehindubusinessline.com/2009/10/09/stories/2009100952021500.htm

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