India’s core sector growth came in at 4.1% for the month of March, which represents a 3-month low for the core sector number. While cement and refinery products continued to flatter with their positive growth, the slowdown was visible in coal, electricity and steel. Core sector growth or Infrastructure output is a combination of 8 key sectors viz. coal, crude oil, natural gas, refinery products, steel, cement, fertilizers and electricity. The core sector numbers are extremely critical as they represent over 40% of the IIP growth each month and also have a major bearing on the quarterly GDP growth.
In an effort to focus on its core infrastructure business, L&T has signed an agreement to hive off its Electrical & Automation division to Schneider Electric of France for a consideration of $2.1 billion. The E&A business of L&T had total revenues of Rs.5038 crore in the last fiscal. Over the last few years the company has been rationalizing its business mix. While financial services and IT Services became separate listed companies, the sale of E&A will enable L&T to focus on the value accretive businesses. For Schneider, this assures them a ready platform to capitalize on the shift to organized post GST.
One of Egypt’s wealthiest investors, Naguib Sawiris, has allocated nearly 50% of his $5.7 billion portfolio to gold. Normally, gold happens to be a very strong value creating asset in times of global uncertainty or when the paper currencies are being undermined by an excessively loose monetary policy. In fact, Naguib expects gold to get back to the September 2011 high of $1800/oz, which is nearly 40% higher from current levels. Interestingly, Naguib founded the first telecom operator in North Korea which was recently smoking the peace pipe with South Korea after 70 years. It is, perhaps, a big gold bet!
There could be good news on the fiscal front. The fiscal deficit for 2017-18 will now end up 3.4%, lower than the revised figure of 3.5%. That means the total spill over is just 20 basis points. While lower capital spending by Railways was one reason for the improved Fisc, the special interim dividend paid by the RBI also helped matters. It may be recollected that as a special interim dividend, the RBI had transferred Rs.10,000 to the government coffers. The government has managed to achieve its full year target on direct taxes. This year the government will have to allocate higher sums to bank recapitalization.
Even as the Ultratech – Dalmia Cement battle goes on for control of Binani Cements, there are now questions over whether an auction will be a better method of conducting the IBC auctions compared to the sealed tender submission. The recent win by Liberty House in case of Bhushan Steel will raise hopes for Ultratech, which did a backroom deal with the Binani promoters. While the large business houses are all in favour of electronic auctions, the IBBI chairman, M S Sahoo, does not share the view. According to Sahoo, the whole idea of giving financial lenders the final say is meant to ensure that the best available bid is accepted and actioned. Sahoo is of the view that an auction may not really consider the interests of all the stakeholders in the process, which is why the IBC process is time-bound.
Maruti recorded its 14th straight month of growth in sales and this was largely driven by the compact segment. On a YOY basis, Maruti sold 14.4% more units in April 2018 at 172,986 units. While growth in the entry level segment was just 2.8% the compact segment consisting of Swift, Baleno and Dzire recorded 31.8% growth on a YOY basis. The sales in the utility vehicles space were flat while the van segment saw 14% growth in the month of April. It may be recollected that for Q4 Maruti had reported lower than expected margins on the back of higher operating costs and a higher tax impact!
