Corporates Disappointed

Mumbai, Nov 3: | Updated: Nov 4 2003, 05:30am hrs
India Inc was disappointed on Monday on learning that there was no Bank Rate cut by the Reserve Bank of India (RBI) in its mid-term monetary policy. However, this did not dampen the hopes of corporate India, which was happy to hear that projections of a low inflation rate would finally usher in the required boost to the economy.

Gujarat Ambuja Cements Ltd whole-time director Anil Singhvi said: The review of the mid-term monetary policy has practically skipped all the developments that took place during the past 6 months. The Review statement by and large kept the same stance of monetary policy in April 2003.

Mr Singhvi said that though it was expected that the RBI would announce some more policy announcements, taking into consideration the developments in the domestic markets as well as international markets, more importantly, since it is now headed by a new Governor, but it is disappointing that many of the expectations from the mid-term monetary policy have not yielded.

Congratulating the RBI governor for taking innovative steps aimed at integrating the Indian banking system with global standards, Wockhardt chairman Habil Khorakiwala said that the decision to allow corporates to write off export credit up to 10 per cent without referring it to RBI is welcome.

It will benefit Indian companies that are increasingly looking out of the country for growth. The move to introduce real time gross settlement is very positive and in keeping with global practices. It will improve the efficiency of cash management in the corporate sector, he added.

Asian Paints (India) Ltd vice-chairman and managing director Ashwin Dani said, The revised GDP growth of 6.5-7.0 per cent projected by the RBI reflects the healthy state of the economy. However, corporates to a certain extent have been disappointed, as RBI has not lowered the bank rate. Corporates were expecting a 25-50 basis point reduction in the bank rate to further boost the economy. This is because they are beginning to plan their next phase of investments in capacity creation, to capture growth in the economy. He added that the rising inflation is a concern, however, RBI projects a downward trend for inflation, which is a good sign for the economy. However, one will have to wait and watch. Since the RBI has not altered the bank rate, the rupee should further strengthen due to additional forex inflows, throwing a new challenge to corporates on managing a strengthening rupee, Mr Dani said.

According to Jindal Iron and Steel Company Ltd joint managing director and chief executive officer Raman Madhok: The credit policy has not announced any rate cuts which is not very good for companies like ours who are exporters, as no rate cut is not positive for us. He, however, said that the indication of a lower inflationary rate is a relief, as this will usher in investment of funds into projects.

Firstcall India Equity Advisors Pvt Ltd country head Dr VVLN Sastry said, The caveat put forward by Dr Reddy to review the policy initiative as the time warrants gives rise to the fact that, henceforth, one need not just wait for the credit policy day for any kind of major announcement and such kind of announcement can take place at any time, thus making the rates more dynamic as the time warrants.