Weekly Business Roundup: Posco Suspends Odisha Steel Project

Posco Suspends Odisha Steel Project - Weekly Business News

Posco Suspends Odisha Steel Project - Weekly Business News

Markets This Week

Greece and the Euro nations have succeeded in reaching a bailout deal following hours of nerve wrecking negotiations. Dalal Street reacted to this singular development with exuberant cheer.  Nothing much has changed in the international or domestic economic scenarios this week but the weekly closing has certainly brought back hope to the retail investors of Indian markets. S&P BSE Sensex, the 50 scrip sensitive index closed the week ending 17 July, 2015, at 28,463.31 points (a hike of 801.91 points or 2.89 percent over last week’s closing at 27,661.40 points). The other key index, the 50 scrip CNX Nifty also ended this week in the green at 8,609.85 points – a growth of 249.3 points or 2.98 percent over its last weekly closing at 8360.55 points. Top gainers at the Sensex were Infosys, BHEL, Maruti Suzuki, and Tata Power. Top losers at the Sexsex include Tata Motors, DLF, ONGC, and L&T. Market watchers and experts are advising caution in investments for the week to come. International cues may lead Indian trends. Declaration of Q1 results and corporate earnings will also influence the equity markets in the week to come. Some of the major companies that are to declare quarterly results this week include Infosys, HDFC Bank, Asian Paints, and HUL. The oil and gas sector may to do well if global oil prices continue to drop.

Posco Suspends Odisha Steel Project

South Korean steel giant Posco has suspended its USD 12 billion steel project in the Jagatsinghpur district of Odisha following a decade long delay in obtaining raw material, government clearances, and land acquisition. Posco’s Odisha steel project was slotted to be the largest FDI project in India and if implemented would have produced 12 million tonne of steel each year. Ever since the steel major announced the setting up of a steel plant in India and set about acquiring the necessary land and permits, it has come up against a number of roadblocks. Locals protested against the loss of farmland and burnt up the temporary offices, government clearances did not come by, and to deliver the final blow, the government declared that Posco would be required to participate in an auction to secure iron ore mines. These were to supply the plant its raw material and Posco had initially been assured an allotment. Posco’s suspension of the project comes as a major blow to the Modi government’s Make in India campaign.

At 142nd position, India currently ranks very low among the various nations rated in the Ease of Doing Business Index. The NaMo administration has been trying hard to reverse this trend.

39 Additional Drugs in NPPA’s Price Control List

The government of India has brought 39 drugs used to treat infections, diabetes, digestive problems, and such diseases under the price control regime. This is part of the NDA government’s efforts to make essential medicines affordable for the masses. The National Pharmaceutical Pricing Authority (NPPA) regulates the prices of all pharmaceutical products in India. The NPPA said that “it has fixed/revised the prices in respect of 39 formulation packs” with immediate effect. The revision is likely to impact a number of drugs and formulations such as Cefotaxime, Ciprofloxacin Hydrochloride, Domperidone, and Metformin-Glimepiride combination, and Paracetamol. In all about 500 drugs feature in NPPA’s regulated list. In India a number of these drugs are marketed by major pharmaceutical companies including Abbott Laboratories, Cadila Healthcare, GlaxoSmithKline, IPCA Laboratories, Lupin, and Sun Pharma. Markets expect the profits of these companies to show a decline following the announcement. By what degree, however, remains to be seen.

New Concurrent Audit Guidelines for Banks

This week, India’s central bank, the RBI issued new guidelines for concurrent audits at banks. The RBI said concurrent audit at bank branches should at least cover 50 percent of their advances and deposits. The new guidelines also say that all high-risk branches must be subjected to concurrent audit without regard to their business size. According to the RBI, the bank may use its discretionary power to use either external auditors or internal personnel to conduct such concurrent audits.

Concurrent audits are systems through which a bank’s financial transactions are audited at the same time at which they are carried out. The system ensures timely detection of irregularities and fraudulent transactions. All specialised branches dealing with specific sectors such as agriculture, foreign exchange, portfolio management, and treasury should also be subject to concurrent audit.

Maruti Suzuki Beats Tata Motors in Market Cap

This week, Maruti Suzuki once again reclaimed its position as India’s most valuable automobile company after a gap of about 5 years. With a market capitalisation of about INR 1.26 lakh crore, it crossed Tata Motors on Thursday. Tata Motors clocked a market cap of about INR 1.13 lakh crore on Thursday. Maruti Suzuki has announced its confidence in a sharp increase in sales this fiscal year. Credit Suisse has commented that the implementation of the 7th Pay Commission is likely to lead to a big boost in automobile sales in the coming fiscal year.

SBI Plans to Share 3% Profits with Staff

One of India’s top public sector banks, the State Bank of India announced that it plans to share about 3 percent of its annual profit with its personnel and employees as part of an incentive scheme. Such sharing of profits will also allow state run banks to attract top talents and young hires who usually prefer private banks. The bank currently employs about 2 lakh employees and plans to share some INR 390 crore among them. The plans, however, will be subject to approval from the center.