Mar Mehangai & Mandee Mar Mehangai & Mandee kiki

Economic Chaos & CrisisEconomic Chaos & Crisis

Factories Bandh – Naukari Bandh

9% Growth in 2007! NEGATIVE Growth in 2008

A presentation on Facts of Indian Economy

Wednesday, 7nd January 2009, Mumbai

Dr.Kirit Somaiya, Chartered Accountant, Ph.DMember BJP National Executive

Economic Chaos & CrisisEconomic Chaos & Crisis We are in economic crisis. December 31 data indicates its

beginning of Layoff & Closures.

Octroi collection reflects pattern of consumption in a city. Octroi collection of Mumbai in Dec 2008 is down by 19.16% than Dec 2007. Crude Oil consumption in the city is down by 51.21%

Pune-Pimpari-Chinchawad 4500 workshops closed down resulting into unemployment of 1 lac workers

Export down by 10%

7 lac workers lost job in Export Industries

Financial Services, Real Estate, Large Retailers same story

In the same year 2008 we are experiencing ‘Top of Inflation & Deflation’. 2009 going to be the worst

Economic Disaster…Economic Disaster… Vehicles sale down by 25%-Bajaj sale down by 33% in Nov 2008

Truck- Commercial vehicle sales down by 73% in Dec. 2008

Tata Steel sales down by 14% in the quarter end on Dec. 2008

Labour intensive expose down by 64.4% in Dec. 2008

25% Stocks / Shares on NSE & BSE found illequid in Dec. 2008

20.8 million sq.ft. Mall supply projected in 2008 is brought down

to 9.7 million sq.ft. in Dec. 2008

Observations..

Out of 74 Malls to be constructed / completed / started. Only 34

seems to be under completion. 40 Malls scrapped.

Economic Disaster…Economic Disaster… Two young lady engineers running an electrical workshop in Pune for

more than 10 years. Facing 20 days closure/pm from December

resulting into unemployment for staff of 62

Mumbai Building Construction activities are at halt since Feb 08. For

past six months more 1 lac construction workers have no work.

They have no security as employed through Contractors. All major

cities in India facing the same situation.

Hotels in Mumbai & other Metro cities occupancy rate was 110% in

December 2007. December 2008 its 20 to 30%. One 5 star Hotel

Owner told me ‘Since starting of My Hotel this is first time I am

facing Operational Loss’.

Premium Airways of India are abandoning their late evening Mumbai-

Delhi flights due to ‘No Passengers’

Economic Disaster…Economic Disaster… A Share Broker of Mumbai closed 3 of 5 Outlet-Terminals lay-off to 73

9th January BSE Sensex touched 21000. Mr. Chidambaram, Finance

Minister immediately came on TV & gave statements “Its my

economic policies. India will not look back. We are now in double

digitGrowth”.

28 Feb 2008, Congress-UPA govt. presented Budget. All three Finance

persons of present govt. Prime Minister Manmohan Singh, Finance

Minister Chidambaram & Deputy Chairman of Planning Commission

Montek Singh Ahluwalia started boasting “Ours is internal growth.

Fundamentals are sound. Ab pichhe mudake nahi dekhenge.”

In the same year 2008, just in 10 months the country is facing worst

economic situation of decades.

Factories Bandh – Naukari Bandh

Economic Disaster…Economic Disaster… December 2008 Mumbai Municipal Corporation’s Octroi

collection is down by 19.16% compare to December 2007

December 2008 India is to have negative growth but Our

PM,FM mis-leading the Country by projecting 7% growth

Bull run in an Open Economy- Capital Market may be

accepted but conversion of it into Bubble is dangerous.

Bubble is to Burst, we are observing the same now. 2009

shall be the worst year India has seen in decades.

Congress-UPA Govt. , PM & FM pushed-allowed creation

of Bubble which has Burst now. They owe explanation to

the Country

Kirit Somaiya

COMMERCIAL VEHICLE-TRUCK COMMERCIAL VEHICLE-TRUCK SALESSALESDOWN BY 73% IN DECEMBER 2008DOWN BY 73% IN DECEMBER 2008

MCV and MCV include tipper truck sales

Category Sales in Dec 07

Sales in Dec 08

% change

Light Commercial Vehicle (LCV) (5-7.5 tn) 3294 1586 - 51.8Intermediate Commercial Vehicle (ICV) (8.12 tn) 3414 1053 - 69.2Medium Commercial Vehicle (MCV) (15-16.2 tn) 5794* 1635* - 71.8Multi-Axle Vehicle (MAV) (25.2-31 tn)

9587* 2033* - 78.8Multi-Axle Trailer/Vehicle (MAT) (30-49 tn)

2143 114 - 94.7

Gross Total 24222

6221 - 73.5

PROPERTIES REGISTERED AND STAMP PROPERTIES REGISTERED AND STAMP DUTY PAID IN DEC. 2007 & DEC. 2008 – DUTY PAID IN DEC. 2007 & DEC. 2008 – KURLA II AREAKURLA II AREA

Month/Year Properties

registered

RegistrationFee

received

Stamp duty

received

December 2007

293 65,70,000 5,99,42,000

December 2008

119 19,33,000 1,06,44,000PROPERTIES REGISTERED AND STAMP DUTY PAIDPROPERTIES REGISTERED AND STAMP DUTY PAID

IN DEC. 2007 & DEC. 2008 – KURLA IV AREAIN DEC. 2007 & DEC. 2008 – KURLA IV AREA

Month/Year Properties

registered

Registration Fee

received

Stamp duty

received

December 2007

390 84,30,000 5,35,02,000

December 2008

185 42,78,000 3,39,97,000

City Bank report on Financial City Bank report on Financial Markets prospects in 2009Markets prospects in 2009 India's exports declined by over 12 per cent to $12.8 billion in

October against $14.5 billion a year ago

due the global recession, India's export growth would slow to

5.9 per cent in the next fiscal.

exporters have lost orders worth Rs 1,792 crore on account of

the slowdown in global trade and lack of demand from the US

and European markets, the main destinations of Indian products

A sample survey of 21 companies found that 65,507 jobs were

lost in the country in various sectors between August and

October,“

According to citi sources, over 65,000 employees have lost jobs

during the three-month period ending October in India on

account of the economic slowdown.

Tata MotorsTata Motors Block closure from 21.11.2008 to 26.11.2008 for six

days, as per provision in Agreement of 2001 for 12 days block closure every year by 50 : 50 principle of leave, Workers - 3 days leave by workmen, 3 days paid leave by Company, Management staff required to apply leave for all six days. Have removed about 4000 Temporary workers.

Force MotorsForce Motors

Power shortage added to problems

Have introduced 5 days a week for November 2008 and may extend the same to December 2008, this is done as per the provisions in the agreement for block closure, applicable to all workmen and staff also.

SKFSKF

A section, supplying bearings mainly to textile machinery manufacturer has less work load since last 4 to 5 months, so around 20 employees are transferred to other sections.

Company is to run 7 days with staggered off, now they have implemented 6 days working with one common off for all the departments.

Kirloskar Oil EnginesKirloskar Oil Engines

Have introduced, 5 days a week working for Pune,

Ahmednagar and Nasik Plant.

Management staff will not get salary for the 6th day,

which is declared as off.

Negotiations are in progress with workers for

agreeing to similar principle of no wages for workers.

Bharat Forge Ltd Bharat Forge Ltd

Have introduced, 5 days week for most of the areas, Wages, Salaries are paid for the additional day off.

Trainee Technicians to be removed as per date of completion of Training period.

Probationary Technicians to be removed as per dare of completion of probation.

Buying new cars for new promotees and replacements stopped. Buying of cars for VP's stopped.

Thyseeankrupp Industries Ltd Thyseeankrupp Industries Ltd

5 days week for production.

No wages will be paid, as it is provided in the Wage Settlement.

Air Travel, only for GM and above positions, only by economy class

Kirloskar Brothers Ltd.Kirloskar Brothers Ltd.

5 days week in Dewas plant, employee may take leave or it will be leave without pay.

Hiring of high end Taxis stopped, hiring of taxies only in case of emergency and only Tata Indica taxies.

No guest entertainment.

Air travel only for GM and above and that too only by economy class.

External Training Programs stopped.

Recruitment freezed.

Foreign travels, bare minimum, only with CMD's approval.

Entitlement of unlimited petrol limited to 225 liters.

Tata YazakiTata Yazaki 5 days week for all employees, no wages paid for the

day of extra closure to contractor operators.

Foreign travels restricted. Daily Allowance while on travel reduced.

Travel entitlement reduced by one step for all grades.

No power is provided after 6 pm, all offices to work only till that time.

Contract employees will be reduced by 50-60%.

No external training.

Sales – Disaster ?Sales – Disaster ?Comparison of Companies SalesComparison of Companies Sales Bajaj Auto Ltd. – Sales down to Rs.7.90 Cr in Sept.

2008 from Rs.57.39 Cr in Sept 2007

D S Kulkarni Developers Ltd. – down to Rs.-26.64 Cr

in Jun 08 from Rs.122.10 Cr in Mar 08

Idea Cellular Ltd. – down to Rs.47.05 Cr in Sept 08

from Rs.147.34 Cr in June 07

D F L Finance Ltd. – down to Rs.7.88 Cr in Sept 08

from Rs.98.31 Cr in Sept 07

Meltdown signs register on the Meltdown signs register on the roadroad In a sign that the economic meltdown has hurt the automobile

industry, Regional Transport Offices across Mumbai reported a big drop in registration of vehicles in the last few months.

MUMBAI 2008 2007

Wadala 14,240 20,160

Tardeo 17,262 26,108

Andheri 38,870 40,181

Total 70,372 86,449

ELSEWHERE 2008 2007

Thane 58,013 64,367

Navi Mumbai 17,482 20,183

Kalyan 19,213 18,609

Deflation fears in 2009-’10Deflation fears in 2009-’10

Indian economy may go into deflation by the second

quarter of financial year 2009-10, as there are fears

of inflation going below zero per cent in the face of

unprecedented fall in crude and commodity prices.

“If the current pace in inflation-decline continues, the

figure (in WPI-based inflation) may slide below 2% by

end-fiscal,” HDFC Bank’s deputy head of treasury,

Ashish Parthasarathy, said, adding “it may fall further

to below zero per cent by second quarter of next

fiscal”.

Deflation fears in 2009-’10Deflation fears in 2009-’10 Inflation almost halved to a nine-month low of 6.61% from this

year’s peak of 12.91%, giving more space to the RBI to signal

further cuts in interest rates. Deflation occurs in an economy

when the negative inflation prevails for a long period. In the

event of deflation, the Reserve Bank will have to enhance

money supply and lower rates further “to support inflation”,

IDBI Gilts’ Economist Amol Agarwal said. Citibank India’s CFO

Abhijit Sen echoed this view saying the rapid decline in the

headline inflation is likely to continue in the coming months. “In

my view, deflation is a remote possibility in this economy.

However, if the inflation continue to fall to much lower levels,

this would have an impact on the profitability of banks, as it

would affect the credit demand,” Sen said.

Is slowdown forcing employee Is slowdown forcing employee down-sizing, cost-cutting at RIL?down-sizing, cost-cutting at RIL?

Mon, Dec 22 02:15 AM

Economic slowdown has not spared even the largest conglomerate in India, Reliance Industries, which is carrying out major cost cutting measures, including downsizing of the staff, and has apparently put on hold mega investment plans.

From retail to SEZs to the $6 billion semiconductor business, investment plans appear to be caught in the web of the slowdown.

"As a good corporate practice, we constantly examine cost competitiveness and take appropriate measures regularly. It is a practice which is undertaken constantly at Reliance," a spokesperson for Mukesh Ambani-led RIL group said.

Is slowdown forcing employee Is slowdown forcing employee down-sizing, cost-cutting at RIL?down-sizing, cost-cutting at RIL? He was responding to a query whether the group was going

ahead with a major restructuring and if it had mandated consultants like Cummins to recommend human resource remedy

Though the spokesperson dismissed the possibility of restructuring as speculative, sources said that one of major indicators of the cost-cutting was that RIL had vacated five floors it had rented in a Connaught Place building and moved to another office in Okhla, amid speculations that many of the outsourced employees—be those for retail or SEZ businesses—were shown the door.

Asked if a salary cut of up to 15% was in the offing for its middle-to-senior level executives, he said the query was "baseless and speculative" and "we do not wish to comment on the same".

Is slowdown forcing employee Is slowdown forcing employee down-sizing, cost-cutting at RIL?down-sizing, cost-cutting at RIL? He also evaded a direct reply to a question whether the group

had cut its workforce, including a majority of the contractual as also the workers from contractors for various businesses, by up to 20,000 people so far this year.

However, some of the employees working with the conglomerate said that the cost-cutting is to the extent that a department head, who was used to having an army of people, has been asked to limit his sub-staff strength to just one and work on a shoe-string budget on cars, petrol, office boys, travel and entertainment.

Though there is no formal word on the exact staff downsizing that has taken place or what was the cost of severance, it is interesting to note that RIL's staff cost dropped over 10 per cent to Rs 588 crore in quarter ending September, 2008 from Rs 651 crore in the previous quarter.

India’s top 20 business houses see India’s top 20 business houses see 65% value erosion in 200865% value erosion in 2008

Business house

Promoter Dec 28,07

Dec 29,08

% chg

Unitech Ramesh Chandra

78540.09 6160.8 -92.16

O P Jindal Sajjan & Navin Jindal

84545.69 20454.04 -75.81

Adani Gautam Adani 76887.67 19945.04 -74.06

DLF K P Singh 181344.89

47147.63 -74.00

ADAG Anil Ambani 300793.32

79943.64 -73.42

Vedanta Anil Agarwal 128158.5 39803.85 -68.94

A V Birla K M Birla 144345.84

48373.32 -66.49

Tata Group Ratan Tata 326184.09

124648.83

-61.79

Reliance Mukesh Ambani 559389.6 236621.37

-57.70

Wipro Azim Premji 77568.78 33255.26 -57.13

Bharti Telecom

Sunil Mittal 178563.67

134990.49

-24.40

(Market Capitalisation in (Market Capitalisation in Rs Cr)Rs Cr)HOW THE BIG TEN FAREDHOW THE BIG TEN FARED

90% IPOs trade below issue 90% IPOs trade below issue priceprice NEWSWIRE18 New Delhi, 31 December With 38 of 42 initial public

offers (IPOs) that were listed since January 1 trading below their issue price, primary market investors and India Inc never had it so bad. If the euphoria over the Reliance Power’s 260-million-share mega issue in January gave the impression that Dalal Street would kick off 2008 with a bang, the subsequent market meltdown and the global financial turmoil has ensured that the IPO market would end in a whimper instead.

Among 38 companies trading below the issue price, Mumbai-based engineering and construction company Niraj Cement Structurals is the worst performer. The stock ended on Tuesday at Rs 17.80 on the BSE, down 90.6 per cent from the issue price of Rs 190.

For the remaining 37 firms, 2008 has been no different. Stock of companies — Chemcel Biotech, First Winner Industries, Tulsi Extrusions, — are down over 80 per cent from their issue prices

MFs get poorer by Rs 1,50,000 MFs get poorer by Rs 1,50,000 crorecrore PRESS TRUST OF INDIA New Delhi, 27 December For years, they

used to be ameans of gains for investors in both good and bad times. But 2008 was different. Mutual funds became poorer by about Rs 1,50,000 crore, or about one-third of their total size this year.

Such has been the impact of these losses — which accounted for nearly three-fourths of the overall gains in 2007 —that investor confidence was shattered in just a few months of the downturn.

The mutual fund industry in India, with nearly 36 members, was regarded as a safe avenue of mutual gains for investors till 2007 — when their total wealth grew by more than Rs 2,30,000 crore to Rs 5,50,000 crore.

However, beginning early in 2008, wiped off close to Rs 1,50,000 crore this year, bringing its asset size to nearly Rs 4,00,000 crore and leaving the industry shattered with ahuge liquidity crunch.

ULIP (LIC) – VALUE DEPRECIATED TO ULIP (LIC) – VALUE DEPRECIATED TO 50% IN ONE YEAR50% IN ONE YEAR

The above figures doesn’t include charges deducted towards Risk Premium - Accident Benefit Premium Critical Illness Premium. And Service Tax on above charges. The actual amount will be less due to above charges. This is NAV of Rs.10,000/- invested a year ago.

Plan PremiumInvestment1 year ago

(in Rs.)

Value on 26.10.2008

(in Rs.)

Market Plus Annual 10000 5818

Money Plus Annual 10000 4743

Profit Plus Annual 10000 4920

You did not see this Prime You did not see this Prime Minister!Minister! Sunil Jain, Proprietor/Exporter IC Textiles- 1100 workers

sacked

The textile sector has been facing downturn since last year. Sunil had a mill manufacturing cotton yarn. It was a 100 per cent export oriented unit with a turnover of Rs 120 crore. Last November it had to shut down the mill and sack 1100 workers.

Now things are worse. Sunil had a staff of 150, now just have five. Had an office of 3000 sq feet but now it is less than 1000 sq ft.  

Ashok Leyland has decided to moderate the production plan for the next two months.Ashok Leyland's manufacturing plants, will work 3 days a week, until December 08.

You did not see this Prime You did not see this Prime Minister!Minister! S.P. Oswal, chairman, Vardhman Group, Ludhiana-based

Rs 3000-crore textile giant says ‘ The textile industry is definitely hit by detrimental effect of slowdown. More so, because exports form 40 per cent of India's 55 billion dollar textile industry.

The orders are less and pressure of prices is far more, the retailers want the prices to be cut further. We have shut down our capacity from 7 to 10 per cent. The product lines where the orders are less are being shut down.

Never before in my 42 years in textile industry did I ever have to shut down our capacity because of a lack of orders. In the present circumstances, holding inventory is far more criminal and shutdown is an easier option’.

You did not see this Prime You did not see this Prime Minister!Minister! Many of the software companies in Tamil Nadu have

postponed their expansion plans including infrastructure development. Companies that survive in this slow growth phase would see a robust rise in the long run. —Sankara Raman Vaidhyanathan, Managing Director, Quintegra Solutions, a 100 million dollar company IT, Textiles and manufacturing companies are worst hit by the current US and Indian financial crisis. —Manickam Ramasamy, Chairman, Tamil Nadu state council-CII We are closing down our 50 branches. Around 200 employees are to be affected. But we would endeavour to accommodate them in other companies in Murugappa group. —Atul Pande, Managing Director, Cholamandalam DBS Finance (With Ramesh Vinayak from Chandigarh and Duraiarasu from Chennai)

Stories of some of those affected Stories of some of those affected by the recession in the job market.by the recession in the job market. ASHOK JAISWAL, 30 Company: GlobalLogic Position: Software

engineer Salary: Rs 18 lakh p.a. The week couldn’t have started on a worse note for Ashok Jaiswal, an employee of the Noida-based Itcompany who was summoned by his employer only to be told that he was among the 17 employees who were being “laid off”.

AYUSH JAIN, 30 Company: Kotak Mahindra Position: Trainee (wealth management) Salary: Rs 15,000 and above Family: Seven members. This business administration graduate from University of Indiana,US, thought he was one of the luckiest guys to have returned to India and clinched an offer from a leading bank. Not any longer. He was told resign on October 31, with three others.“It was a rude shattering of a dream,” says Ayush. “Buoyed by the increasing presence of high networth individuals in India,I was looking forward to a career in this lucrative line. ”Within 3 month of working,the ominous signs made their telltale presence felt.

SHOCK AND AWESHOCK AND AWE Economic Times, 13 December 2008, SHOCK AND AWE

IIP IN THE RED FIRST TIME IN 15 YEARS

OCT OUTPUT FALLS O.4% VS 12.2% GROWTH IN OCT ’07

INDUSTRIAL production unexpectedly fell 0.4% in October, slipping into the negative territory for the first time in 15 years, The drop was on the back of a 1.2% year-on-year contraction in manufacturing activity,

Drop in demand in overseas and domestic markets. Manufacturing accounts fornearly 80% of the index of industrial production (IIP), which rose by a revised 5.5% in September.

“The situation is much graver than expected,” said Suresh Tendulkar, chairman of the Prime Minister’s Economic Advisory Council.

Negative returnsNegative returns Indian Express, 13 December 2008, Negative returns

The fall in industrial production in October 2008 is an

indication of what sudden drying up of liquidity can do

to production. For the first time in a decade output

actually fell, rather than merely having a lower

growth rate. October was a very difficult month with

both big and small companies suddenly witnessing

huge credit constraints.

With a slowdown in the world economy, the months

ahead are going to be difficult and there is no room

for complacency.

The tale of 21st century’s The tale of 21st century’s dinosaursdinosaurs Down To Earth - http://www.downtoearth.org.in VOL 17 ,NO 15

December 19, 2008

The tale of 21st century’s dinosaurs

Have you noticed how the mighty automobile industry in the US is beginning to sound like the now infamous tobacco industry at the time of its collapse, taking cover behind the people it employed to whitewash its inefficiency and perhaps its sheer inappropriateness?

The tobacco industry, in its last days of conviction, when it became clear that the science of toxicity of this leaf was real, hid behind farmers who grew it.

It argued (as it still does in India) that if cigarettes went out of favour, it would destroy the livelihood of thousands who toiled in the fields, as also its workers and ancillary infrastructure.

The tale of 21st century’s The tale of 21st century’s dinosaursdinosaurs Of course, nothing like that happened. The farmers

switched to another crop.

Today, Detroit’s three big guys—General Motors (GM), Ford, Chrysler—are wrangling before the US Congress for a US $30 billion bailout.

And even though they face tough going to explain why they deserve this massive injection of funds, when they missed all the signs to reinvent their business towards fuel efficiency, influential senators have made it clear, “bankruptcy is not an option.”

MISREADING THE CRISISMISREADING THE CRISIS The Telegraph, 25 November 2008, MISREADING THE

CRISIS

- Indian producers are running into losses and out of cash Ashok V. Desai

The prime minister has much to think about. So he leaves management of the economy to his finance minister. But he reads newspapers, and travels round the world; the developing global crisis could not escape him forever. He first took cognizance of it while he was in Paris for the Indo-European Union summit at the end of September.

MISREADING THE CRISISMISREADING THE CRISIS What he said then was lifted almost verbatim out of P.

Chidambaram’s catechism: “The Indian economy has grown at an average rate of 9 per cent in the past four years. It is expected to slow down in 2008-09 reflecting the slow down in the global economy. Even so,it will grow between 7.5-8 per cent. More importantly our medium term prospects remain strong based on sound fundamentals. We have weathered the current credit crisis facing the global banking and financial sectors. Our savings rate is touching 35 per cent. Our direct tax collections for the first five months of the current financial year grew by 48 per cent compared to last year. India would, therefore, continue to provide a stable platform for businessmen and investors.”

MISREADING THE CRISISMISREADING THE CRISIS

He was saying that he believed the “slowdown” in India was imported. Figures of industrial growth produced by his own statistical office were showing a slowdown from March 2007 onwards, much before the global crisis; but he either missed them or accepted Chidambaram’s belief that they were hocus-pocus. He had blind faith in high growth being India’s privilege and prerogative. He thought that a high ratio of savings to national income in 2006-07 could ensure high growth in 2008-09; he forgot what Keynes taught: savings are income that is not spent; they actually reduce aggregate demand if they are not matched by investment.

NO RECESSION HERE, SAYS NO RECESSION HERE, SAYS CHIDAMBARAMCHIDAMBARAMEconomy will rebound by middle of next Economy will rebound by middle of next yearyear Economic Times, 25 November 2008,

INDIA’S economic growth will rebound by the middle

of next year, after expanding at a slightly slower pace

this financial year, because of the ripple effects of

various stresses in the global economy, finance

minister P Chidambaram said. Although the

government has already forgone revenue worth Rs

31,000 crore through tax cuts, it is open to doing

more to stimulate the economy if needed, the

minister told an annual conference of economic

editors here on Monday.

Crisis & ChaosCrisis & Chaos

Yes its true. We wasted the Opportunity. Government allowed, participated in creation of bubble. Did not created sustaining capacity to maintain 8+ % growth. Neglected infrastructure. Went into short term benefits. Our Finance Minister was busy with Sensex. Mr Prime Minister December 2009 is negative. Please accept the facts & stop talking about 9% growth

We are moving from inflation to deflation. Millions are going to loose jobs. Small & Big. Construction worker to IT Engineer. Its crisis of confidence. Congress- UPA government owes explanation to the country

Dr Kirit Somaiya