Finance

Tuesday, October 14, 2014

More travel, but not enough insurance

Frequency of international as well as domestic air travel by residents of smaller cities is in line with metro residents.

A survey conducted by ICICI Lombard General Insurance Co. Ltd found that 64% of the respondents based in Ahmedabad travelled within India. This was 54% for those from Chandigarh. These are at par with the travellers from metros Mumbai (61%) and Kolkata (54%). For overseas travel as well, while 87% of the Chandigarh based respondents said they travelled abroad once a year, the number was a similarly high 86% in Ahmedabad.

Mumbai, however, had the most overseas travellers—92%. Of the five cities in the survey, the lowest numbers came from Hyderabad—63%. The above study was conducted with 1,063 respondents from Mumbai, Kolkata, Hyderabad,

Ahmedabad and Chandigarh, and who have travelled to international as well as domestic locations. The two biggest reasons behind increased frequency of travel to foreign destinations were more trips during weekends or short holidays (56%) and off-season discounts (39% travellers).

For a higher number of domestic tours, more than half the people said the reasons were unplanned trips (57%) and deals (53%). Low travel fare was not an important factor for domestic travel. Irrespective of the destination, most people prefer to take a holiday for 4-7 days. Only a few wanted to be away for more than 10 days at a time (8% respondents for foreign travel and 9% for domestic tours).

The trips are funded mostly through savings (said 89% of the respondents). Only a few—16%—used their salary bonus. While online and offline self-booking is popular in India, the local travel agent remains the most favoured window.

Frequency of international as well as domestic air travel by residents of smaller cities is in line with metro residents. A survey conducted by ICICI Lombard General Insurance Co. Ltd found that 64% of the respondents based in Ahmedabad travelled within India. This was 54% for those from Chandigarh. These are at par with the travellers from metros Mumbai (61%) and Kolkata (54%). For overseas travel as well, while 87% of the Chandigarh based respondents said they travelled abroad once a year, the number was a similarly high 86% in Ahmedabad. Mumbai, however, had the most overseas travellers—92%. Of the five cities in the survey, the lowest numbers came from Hyderabad—63%. The above study was conducted with 1,063 respondents from Mumbai, Kolkata, Hyderabad, Ahmedabad and Chandigarh, and who have travelled to international as well as domestic locations. The two biggest reasons behind increased frequency of travel to foreign destinations were more trips during weekends or short holidays (56%) and off-season discounts (39% travellers). For a higher number of domestic tours, more than half the people said the reasons were unplanned trips (57%) and deals (53%). Low travel fare was not an important factor for domestic travel. Irrespective of the destination, most people prefer to take a holiday for 4-7 days. Only a few wanted to be away for more than 10 days at a time (8% respondents for foreign travel and 9% for domestic tours). The trips are funded mostly through savings (said 89% of the respondents). Only a few—16%—used their salary bonus. While online and offline self-booking is popular in India, the local travel agent remains the most favoured window. While 78% of those who travelled abroad (total: 728) did the bookings through an agent, 69% of domestic travellers (total 460) among the respondents did so. photo Travel insurance, however, remains a weak point. While almost all the respondents said they were aware of overseas travel insurance and 88% said they considered it essential, only a few—38%—had actually bought travel insurance. City-wise, many travellers from Hyderabad bought travel insurance (about 115 of 165 respondents). But only 9% of those from Ahmedabad (131) did so. Domestic travel insurance is even less of a priority in all terms. While 86% said they knew about it, only 64% thought it essential. So, it’s not surprising that only 4% respondents said they had actually bought travel insurance for domestic trips. The trend was uniform in all cities, with more than 94% travellers from each city having not bought any travel insurance. Most said that it wasn’t really needed for travel within India (58%), and that medical insurance would suffice (23%). In fact, 30% of those who travelled abroad said travel insurance had nothing to do with medical support.

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While 78% of those who travelled abroad (total: 728) did the bookings through an agent, 69% of domestic travellers (total 460) among the respondents did so. photo Travel insurance, however, remains a weak point.

While almost all the respondents said they were aware of overseas travel insurance and 88% said they considered it essential, only a few—38%—had actually bought travel insurance. City-wise, many travellers from Hyderabad bought travel insurance (about 115 of 165 respondents).

But only 9% of those from Ahmedabad (131) did so. Domestic travel insurance is even less of a priority in all terms.

While 86% said they knew about it, only 64% thought it essential. So, it’s not surprising that only 4% respondents said they had actually bought travel insurance for domestic trips. The trend was uniform in all cities, with more than 94% travellers from each city having not bought any travel insurance.

Most said that it wasn’t really needed for travel within India (58%), and that medical insurance would suffice (23%). In fact, 30% of those who travelled abroad said travel insurance had nothing to do with medical support.

md./aquil alam

pgdm 2^nd year

iimt college of management

Citigroup pulls out of consumer banking in 11 countries, profit jumps.

New York/Bangalore: Citigroup Inc. said it is pulling out of consumer banking in 11 markets, including Japan and Egypt, as the US bank with the biggest international business looks to cut persistently high costs. The third-largest US bank, built with a series of acquisitions spanning back to the 1980s, has been trying to slim down since the financial crisis to be as profitable as rivals. It has shed hundreds of billions of dollars of bad assets.

The latest exits were the result of studies the bank began in early 2012 to figure out which countries were not profitable enough for retail banking. Getting results took a long time, partly because the bank did not have standardized accounting systems across all countries to compare the units’ profitability, sources familiar with the matter told Reuters in 2013. A spokesman for Citigroup said that the sources’ comments were false, and the bank has long had systems in place to consistently measure profitability across businesses and geography.

The deliberate pace at which chief executive officer Michael Corbat is fixing its business underscores how hard it is to fix a business as sprawling as Citigroup, which operates in more than 100 countries. Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity. Chief financial officer John Gerspach, speaking earlier to reporters, said the bank first identified sub-standard businesses about a year-and-a-half ago, and tried to fix them before deciding to they had to go. “Better late than never,” said stock analyst Mike Mayo of CLSA. Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank: it found a new $15 million fraud at its Mexican unit, Banamex, which has been roiled by a series of mishaps.

The bank is showing some signs of progress in streamlining itself. On Tuesday, it posted stronger-than-expected third-quarter adjusted net income of $3.67 billion, or $1.15 per share, from $3.26 billion, or $1.02 per share, a year earlier. Profit was boosted by better results from its portfolio of troubled assets left over from the financial crisis and its shares rose 3.1% on Tuesday to $51.47. Adjusted results exclude a tax benefit from last year and accounting adjustments linked to changes in the value of the company’s debt. Analysts had expected earnings of $1.12 per share, according to Thomson Reuters. Focusing on expenses But the bank still has work to do. Expenses at Citicorp, which houses the bank’s main businesses, rose 11%, while revenue rose 8%.

The increase in expenses came from money set aside to cover expected legal liabilities. The bank has been trying to rein in its expenses for about a decade. At a meeting with 300 Citigroup executives in February, CEO Corbat stressed the need to focus on expenses and efficiency this year. Shedding retail businesses in 11 markets may help—sripping out these units would have reduced operating expenses by $1.34 billion over the last year, while reducing net income by only $34 million. The bank said it will exit Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.

It will continue to serve institutional clients in these markets. In December 2012, Citigroup said it was withdrawing from consumer banking in five other countries. After these latest exits, the bank will serve consumers in about 24 countries.

RANJAY KUMAR,

PGDM 2^ND YEAR,

SOURCE- MINT

COMMENT=MY VIEW IT IS A GOOD FOR CITYBANK AND GOOD PERFORMANCE OF C.E.O OF CITYBANK.

Monday, October 13, 2014

CPI inflation falls in September; will RBI act?

New Delhi: Inflation based on the Consumer Price Index (CPI) has decelerated to a record low since the index was launched in January 2012, even as factory output growth continues to be flat, increasing pressure on the central bank to cut interest rates earlier than it would have wanted to. CPI-based inflation eased for the second month in a row to 6.46% in September, compared with a downward revised 7.73% a month ago, driven by lower price increases in food and fuel items.

A Reuters poll of 28 economists had predicted retail price inflation in September at 7.2%. The Index of Industrial Production (IIP) rose 0.4% in August, unchanged from July and down from 3.94% in June, data released on Friday showed. JPMorgan cut its India gross domestic product (GDP) growth projection for 2014-15 to 5.1% from 5.3% after the factory output data was released. “IP (industrial production) debacle is the straw that breaks the camel’s back,” JPMorgan said in its 10 October report.

India’s GDP grew 5.7% in the three months ended 30 June, the fastest pace in two-and-a-half years, and had sparked optimism that Asia’s third largest economy was set for a rebound after two years of sub-5% GDP expansion. Weak factory output growth in the past two months has dampened some of the optimism and enthusiasm that followed the ascent of the Bharatiya Janata Party to power with a decisive mandate in the April-May general election. In the year to next March, the government expects the economy to grow 5.8%, and is counting on a revival of investments and big-ticket infrastructure projects.

The Reserve Bank of India (RBI) left its policy rates unchanged last month, citing high retail inflation and reiterated its resolve to bring down consumer price inflation to 6% by January 2016.

The continuing decline in crude oil prices may cause a further fall in retail inflation. The ministry of petroleum and natural gas said in a statement on Monday that the international crude oil price of Indian basket as computed by the petroleum planning and analysis cell was $88.23 per barrel on 10 October, compared with $90.50 per barrel on the previous publishing day of 9 October.

Slower growth and the fall in oil and commodity prices increase the chance for RBI to attain its challenging 6% consumer price inflation target by January 2016, JPMorgan said.

The International Monetary Fund last week said that monetary normalization in India should proceed gradually, given the high level of inflation in the country. “In India, with recent monetary tightening, disinflation should continue, but inflation overall will remain high at 7.8% in 2014, declining slightly to 7.5% in 2015,” IMF said in its report.

The inflation moderation is on the back of a significant statistical base effect, which should continue till November, said Rupa Rege Nitsure, chief economist at Bank of Baroda and a member of the RBI panel on monetary policy framework. “RBI will likely be looking for a durable reduction in inflation and will monitor the inflation trajectory for four-five months after December before taking a call on cutting rates.

As such, a prolonged pause can be expected from the RBI,” she said. photo Retail food inflation fell significantly to 7.67% in September from 9.35% a month ago. While the price rise in vegetables and cereals decelerated in September compared with August, prices of pulses rose at a faster rate. Encouragingly, core inflation, or non-food and non-fuel price inflation, slowed to 5.9% from 6.9% in August, suggesting that demand-driven price pressures are weakening.

Advance estimates for food production indicate substantial shortfalls in production of various kharif crops in 2014 as compared with 2013, according to Aditi Nayar, senior economist at Icra Ltd; these include pulses (14%), coarse cereals (14%) and oilseeds (12%), all of which point to the risk of hardening food prices in the near term. In a working paper on food inflation published on its website, RBI said empirical evidence shows that increasing real rural wages have played the most dominant role in determination of overall food inflation in India in the long-run. “Though statistically significant, the long-run impact of hikes in MSP (minimum support price) of food crops, namely, rice and wheat and input cost inflation (except wages) on food inflation were not as over-bearing as was generally perceived.

Similarly, the long-run impact of protein expenditure on food inflation, though significant statistically, was found to be weak,” it said. MSP is the price at which the government sources foodgrains from farmers for the public distribution system. RBI also ruled out any significant impact of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) on food inflation.

MGNREGS provides at least 100 days of manual labour every year to one member of every rural family.

The paper concludes that since the increase in real wages has the largest influence in driving food inflation, there is a need to raise agricultural productivity through enhanced investments and improved technology, in line with the increase in real wages to reduce food price pressures.

“Reducing the supply-demand gap in agriculture production in the long-run and improving supply logistics will be of utmost importance for moderating food price pressures and for sustaining the pace of economic activity by securing adequate food availability at reasonable prices,” it added. Anup Roy in Mumbai contributed to this story.

RANJAY KUMAR,

PGDM 2^ND YEAR,

SOURCE- MINT

I feel this is a bed for india it is not fulfill in this month.

CPI inflation falls in September; will RBI act?

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Reliance Industries: in refining lies strength The refining business has yet again emerged the saviour for RIL in the September quarter E-mailPrint Pallavi Pengonda Mail Me

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Reliance Industries: in refining lies strength

Reliance Industries: in refining lies strength The refining business has yet again emerged the saviour for RIL in the September quarter Pallavi Pengonda 0 Comments Subscribe to: Daily Newsletter Breaking News Latest News 11:37 AM IST Nearly 7 million Dropbox passwords said to be leaked 11:25 AM IST Powerful earthquake strikes off El Salvador, one dead 10:43 AM IST DLF shares tank 24% after Sebi order 10:31 AM IST Hurricane Gonzalo strengthens, nears British Virgin Islands 10:27 AM IST Sensex pares early gains; DLF, ITC, Hindalco fall Editor's picks RIL net profit up 4.5% on higher refining margins A prize for Jean Tirole CPI inflation falls in September; will RBI act? Government eyes Rs2 trillion from spectrum auction India betters its rank in Global Hunger Index The outlook on the core businesses continues to remain sluggish. The refining environment is expected to remain muted with margins expected to remain under pressure, thanks to lower demand. Photo: Reuters Nobody expected Reliance Industries Ltd’s (RIL’s) September quarter financial results to alter the outlook on the company materially. RIL shares have performed miserably so far this fiscal year. Since 31 March, the shares have risen by just 3%, while the S&P BSE Sensex has risen by as much as 18%. Of course, there are solid reasons for this—the main ones being the delay in gas price hike and the lack of traction in the company’s core businesses. In the quarter ended September, the refining business has yet again emerged the saviour for RIL, boosting the company’s overall performance. Consolidated refining revenue declined by about 6% on a year-on-year basis due to softer crude oil prices and lower crude oil processing. However, the segment reported smart Ebit (earnings before interest and tax) growth of 18.5%. That’s purely because RIL was able to report strong gross refining margin of $8.3 per barrel for the quarter, which is commendable given that Singapore complex refining margin dropped to $4.8 per barrel last quarter. The company’s premium over the regional benchmark widened to $3.5 a barrel compared with $2.5 a barrel in the corresponding period of the previous year, primarily aided by wider crude oil differentials and sourcing advantage, RIL said in a statement. The refining business’s Ebit accounted for the highest segment contribution at 52% for the September quarter in the total performance of the company. The petrochemicals business was the second major contributor. The oil and gas Ebit declined by 14.4% on a year-on-year basis on account of weak performance on the domestic front and weak prices for the US shale gas segment. The petrochemicals business delivered a satisfactory performance with revenue and Ebit declining marginally compared with the year-ago quarter. However, on a sequential basis, the petrochemicals segment showed a remarkable 26.7% improvement led by led by a strong rebound in margins of polymers, fibre intermediates and aromatics. The organized retail business’s Ebit improved, but the contribution from this business remains too small to make a meaningful impact. On an overall basis, RIL managed to report better (sequentially as well as on a year-on-year basis) operating profit margin of 8.9% last quarter. Stand-alone net profit beat estimates. Stand-alone net profit was Rs.5,742 crore, while a poll of Bloomberg analysts pegged the company’s net profit at Rs.5,596.5 crore. So far so good. What next? The outlook on the core businesses continues to remain sluggish. The refining environment is expected to remain muted with margins expected to remain under pressure, thanks to lower demand. For petrochemicals, shareholders would do well to keep a close tab on China, which is an important market, and on global capacity additions in the industry. RIL’s expansion plans are extremely critical for valuations to improve in the coming years. As Barclays Research pointed out in a note on 9 October, “There needs to be smooth execution of its US$14bn downstream expansions, which would drive EPS (earnings per share) growth in FY17-18E. RIL also needs to demonstrate a path for profitable growth in telecoms that would aid EPS post FY20E.” Other than that, careful capital allocation (where RIL has had a strong record for three decades, but a poor one in the last five years) will also be important as value appreciation rests on the premise of strong free cash flow, Barclays added. That will be challenging. But success on those fron

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reliance is to be benificial for the business sector

nagesh dubey