Slide 1

Mar Mehangai & Mandee ki
Economic 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.D
Member BJP National Executive
Economic 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…
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
Out of 74 Malls to be constructed / completed / started. Only 34
seems to be under completion. 40 Malls scrapped.
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 MumbaiDelhi flights due to ‘No Passengers’
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…
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
Light Commercial Vehicle (LCV)
(5-7.5 tn)
Intermediate Commercial Vehicle (ICV) (8.12 tn)
Medium Commercial Vehicle (MCV) (15-16.2 tn)
Multi-Axle Vehicle (MAV) (25.2-31 tn)
Multi-Axle Trailer/Vehicle (MAT) (30-49 tn)
Gross Total
MCV and MCV include tipper truck sales
Sales in
Dec 07
Sales in
Dec 08
% change
- 51.8
- 69.2
- 71.8
- 78.8
- 94.7
- 73.5
December 2007
December 2008
Properties Registration Stamp duty
IN DEC. 2007 & DEC. 2008 – KURLA IV AREA
December 2007
December 2008
Fee received
Stamp duty
City Bank report on Financial Markets
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 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 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.
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
Kirloskar 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
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
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.
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 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
Contract employees will be reduced by 50-60%.
No external training.
Sales – Disaster ?
Comparison 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 road
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.
Navi Mumbai
Deflation 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
Deflation 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 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 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 middleto-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 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 65%
value erosion in 2008
(Market Capitalisation in Rs Cr)
Business house
Dec 28,07
Dec 29,08
% chg
Ramesh Chandra
O P Jindal
Sajjan & Navin Jindal
Gautam Adani
K P Singh
Anil Ambani
Anil Agarwal
A V Birla
K M Birla
Tata Group
Ratan Tata
Mukesh Ambani
Azim Premji
Bharti Telecom
Sunil Mittal
90% IPOs trade below issue price
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-millionshare 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 crore
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
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.
Value on
Premium 1 year ago 26.10.2008
(in Rs.)
(in Rs.)
Market Plus
Money Plus
Profit Plus
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.
You did not see this Prime 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 Minister!
S.P. Oswal, chairman,Vardhman Group, Ludhiana-based Rs 3000crore 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 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 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.
Economic Times, 13 December 2008, SHOCK AND AWE
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
Negative 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
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 dinosaurs
Down To Earth - 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 dinosaurs
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.”
The Telegraph, 25 November 2008, MISREADING THE CRISIS
- Indian producers are running into losses and out of cash Ashok V.
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.
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.”
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 200607 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.
Economy will rebound by middle of next year
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
Crisis & 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

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