Category Archives: Markets

Markets

Sales of diesel decline for first time since May 2009

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In some good news for diesel vehicle owners in India, domestic diesel sales had gone down by 2 percent in the month of February 2013. This was the first dip since May 2009 and the hike in prices, along with improved electricity supplies managed to keep demand under control.

The decline in diesel rates resulted in the fall of the overall local fuel sales by 1.5 percent in the month of February 2013, as compared to a year ago. This was the first decline since September 2010. The oil product sales, which are a proxy for oil demand in India had reached a total of 12.25 million tonnes in February.

The figure was lower, as compared to 12.44 million tonnes a year ago. The figures were revealed according to data from the petroleum planning analysis cell of the oil ministry. The consumption of diesel makes up for 40 percent of local fuel sales, which fell to 5.39 million tonnes. Moreover, India had also removed subsidies from diesel, which was sold to bulk buyers in the month of January.

The Indian government also allowed state fuel retailers to raise prices by up to 0.50 rupees (or one US cent)  per liter every month. This helped rates to be gradually aligned with market rates. In recent times, the consumption of gasoline has increased by 3.1 percent on an annual basis.

Markets

Chocolate companies in India not to cut product rates

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In recent times it has been observed that the prices of milk, coffee, cocoa and sugar have been dropping in India. Despite this,  the domestic prices of dairy and chocolate products are not likely to come down.

The raw materials for these products became about 20% cheaper around 2011. Leading food manufacturers like Cadbury, Nestle, Amul, Britania and Parle have not reduced their prices and are not likely to do so in the near future as many of them say that the dip in the cost is seasonal.

The companies also said that the prices will not have to be increased for some time to come. Vipul Chaudhary, the chairman of the Gujarat Cooperative Milk Marketing Federation, which sells products under the brand Amul said, “We will not be lowering prices of milk or milk products, whether it’s ice-cream or cheese”. Chaudhary added that it is seasonal to see milk volume increase and the prices of certain commodities come down as arrivals pick up.

At present, the price of skimmed milk is about 15% cheaper as compared to 2011 prices, which were at Rs. 150 per Kg. Even the prices of green bean Arabica coffee has come down by 20% and is now available at Rs. 200 per Kg, while cocoa prices have dropped by 20% in the recent months as well. It is just sugar prices that have remained stable at Rs 35-40 per Kg so far.

Markets

Inactive pre-paid mobile connections to be disconnected

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The Telecom Regulatory Authority of India (TRAI) said that about two million pre-paid mobile connections are not active,  out of which about 55 million have remained unused for about six months. The country had 907 million mobile phone connections as of the end of September, 2012, according to TRAI, more than one-fifth of these connections are inactive.

TRAI has also proposed to put up some guidelines in place to disconnect non- active connections and free up the bulk of these numbers for reuse.

The regulator also said that it is of the view that the industry needs some uniform standards for disconnection,  since operators use different parameters. Many telecom operators cut off their unused mobile connections after about 30 days,  while others have a 90-day deadline for disconnection.

TRAI will also mention what constitutes usage. Some of the mobile operators said that their customers will have to make at least one call to keep their numbers active, while other mobile phone companies disconnect if customers fail to activate a recharge voucher within the prescribed time frame. The telecom department had abandoned its plans to move to 11-digit numbers, but decided to create additional capacity in the 7 and 8 series.

Markets

Action to be taken against food manufacturers for their misleading ads

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Many food item manufactures in India might be in trouble for making misleading claims in the advertisements of their products. For this, the Indian government has launched a prosecution against such food manufacturers of 19 food items.

The Minister of State for Health  AHK Choudhary said in a written statement that the alleged misguiding claims in advertisements were monitored by the Food Safety Standards and Authority of India. Choudhary added, “So far 38 food items had been identified with misleading claims. Manufacturer of these articles were served with show-cause notices and their replies were examined at FSSAI by a three-member committee.”

The recommendations of the committee state that prosecutions have been launched in 19 cases by designated officers at the regional level. Ghulam Nabi Azad,  the Union Health Minister,  upon a query over sale of soft drinks in hospitals said that his ministry has not issued any such directive in this regard.

Azad also said that since health is a state subject,  it is up to the state governments to take decisions about the matter. On the queries regarding the misuse of correction fluids and nail paint removers, the minister said that the states have been requested to take action for the enforcement of necessary measures by sensitizing the industries producing these products.

Markets

RBI bans banks from providing loans for gold

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On November 19, 2012, the Reserve Bank of India (RBI) has notified all banks that there is a total ban from advancing any loans to their customers in regards the purchase of gold in any form. This will include gold billion, primary gold, gold jewelry, gold coins, units of gold Exchange Traded Funds and units of gold mutual funds.

The decision was announced at the October 30, 2012 policy meet by the central bank. However, the regulator had also announced that banks are allowed to give loans for genuine working capital requirements to jewelers.

The new notification was issued after it found that there has been a major rise in the import of gold into the country in recent times. The recent step has been taken by the central bank on concerns that direct bank financing for the purchase of gold in any form which is billion, primary gold, jewelery, gold coin etc, could lead to further  fueling demands for gold in the country.

Over the course of the last year the price of gold has risen by 10%, however the demand for the  metal during the July-Sept, 2012 quarter was up by 27 % on an annual basis. India has been a major consumer and importer of gold and the surge in gold imports can put pressure on the country’s trade balance.