POPSCI2014JULYJuly 2014

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Calibrated Approach

At its monetary policy review early last month the Reserve Bank of India kept the key rates unchanged and cut the Statutory Liquidity Ratio (SLR) by 50 basis points. Cutting SLR can boost morale and build confidence, infusing additional funds in the banking system, eventually offering a little more freedom for banks to expand credit to non-governmental sectors. The apex bank has maintained the repo rate at 8% and Cash Reserve Ratio (CRR) at 4%. Is this a move to strike a balance between growth and inflation? Well, this can support the economy only if the government addresses the problem of price by augmenting supplies. The Central Bank’s move seems to be a calibrated approach waiting for the government to take up several issues including that of the rising commodity price index. Having risen by over $6 per barrel in a week – just before going to press – oil prices are at a nine-month high. Coupled with the rupee’s fall, inflation that rose by one percentage point within a month, poses a major threat to the economy. Adding to the problem is the poor off-take of the monsoon which is likely to impact prospects further. The events of the past three weeks have discouraged expectations of an easier interest rate regime, even if the government decides to take a soft approach.

Among others, the auto component industry is looking towards continuing the 10% Excise duty on auto components valid till 30 June, and eliminating Customs Duty on some raw materials including alloy / mild steel, aluminium and secondary aluminium alloy. With the ever increasing diesel prices, the industry is looking forward to allow input credit on diesel and permit 100% Cenvat credit on capital goods in the year of purchase. In addition, it is necessary to implement GST early and phase out the CST. The new government, currently preparing to present its first Union Budget on 10 July, has already signalled that hard measures are on the way to turnaround the economy. These tough measures will certainly hit the citizens hard; who have been reeling under the slowdown for more than 2 years. However, considering the current situation, a calibrated approach will help to realise the objective. It is a signal of caution for every organisation to prudently use resources, not only to tide over the situation but to stay healthy in future.

The cover story of this issue is – Energy Savings: Proactive or Reactive? With rising competition coupled with ever increasing operating costs, the challenge for any component manufacturer to stay afloat is to contain the cost of manufacturing. The story will give you some idea on the importance of energy conservation and how it can help improve bottom lines and make you exist in the business. Chennai based Comstar Automotive Technologies has won the prestigious Ford Global Supplier Excellence Award in the ‘Silver’category. The CEO of the company shared his views on the journey towards this pinnacle of success, which you will find in the Q&A section. We have visited Tenneco’s Chakan plant in Pune for Shop Floor Sojourn. The company has taken measured steps from the time it decided on setting up a new plant; the momentum continues…

Wish you Happy Reading. Do send us your feedback

T Murrali
Editor
t.murrali@nextgenpublishing.net

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