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Wednesday,26-January-2022

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Hotels, malls gearing up as Chennai’s IT corridor set to reboot

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With the IT firms calling upon their employees to report for duty at offices, the restaurants, malls and paying guest accommodations are gearing up for the expected business.

In the Old Mahabalipuram Road (OMR), the hub of IT industry of Chennai, several restaurants are expecting a good footfall as IT firms are slowly opening their premises. The increase in vehicular traffic through the OMR stretch has also caught up and according to transport officials, the traffic increase is due to the opening-up of firms and other business establishments on the stretch.

Restaurants and Paying guest accommodations are also preparing themselves for the opening of the IT firms as these two categories will be in high demand on the stretch.

Murugan Pandyan who runs a paying guest accommodation near the OMR stretch said that he has already conducted three-four rounds of cleaning of his premises and has prepared for the IT employees to return.

While speaking to IANS, Murugan said, “Most of the IT employees have informed us that their offices would start functioning in a couple of weeks and some have already commenced operations. Our old customers are coming back and we have already given a few rooms on rent and people have come in. Most prefer non-ac rooms as there are apprehensions over living in air-conditioned rooms. Also, we have reduced the number of people in a room from four to two and most are converted as single rooms.”

The restaurants on the stretch at Old Mahabalipuram Road are also preparing for the reopening of IT firms as most of them were shut down following the closing of IT firms.

Kuruvila John, an employee of an IT firm and hailing from Pathanamthitta in Kerala told IANS, “I have already reached my office and in a few days we will be fully functional. The first thing I was searching was the restaurants as I need good non-vegetarian food and luckily most of our old joints are reopening and I think things will be normal in a few weeks from now.”

With most of the IT firms conducting vaccine drives and private firms taking steps to inoculate the employees, opening of IT firms would give a fillip to the dormant areas of OMR after the lockdown.

KT Srinivasa Raja, Honorary President of Chennai Hoteliers Association and Managing Director of restaurant chain, Adyar Ananda Bhavan told IANS, “Our restaurants are open and several people, mostly IT employees have dined at our premises but still the footfalls are much less than what the earlier business was.”

He however was optimistic that with the IT firms opening again and the employees coming back to work, business would soar and that profit margin would increase in the days to come.

Several malls are also opening their outlets and Niranjan Kumar, who is the manager of a shop in a mall in OMR, said that people are coming and only genuine buyers are reaching the malls after the Covid-19 pandemic. He said, “Earlier, a majority of visitors came for just window shopping but now only genuine buyers are reaching the malls and this is a welcome trend. We expect the rush to increase in the days to come.”

The opening of IT firms is giving a morale booster to several shops, restaurants, malls and other essential services and the OMR area of Chennai, which is the hub of the IT industry of the city, is slowly but surely witnessing the rush it had in pre-Covid days.

Business

Equities settle high after crash on Monday; Sensex up over 350 pts

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After a bloodbath in the Indian equity segment on Monday due to continued selling-off pressure by foreign institutional investors, the market on Tuesday recovered its losses, though marginally.

Sensex settled 0.6 per cent or by 366 points higher at 57,858 points, whereas Nifty is 0.8 per cent up or by 128 at 17,277 points.

Barring Nifty IT index, all the others traded in the green during the intra-day trade. Nifty bank, auto, media, PSU bank, and realty indices rose the most, NSE data showed.

On the stocks front, Maruti Suzuki India, Axis Bank, SBI, Indusind Bank, and UPL were the top five gainers, rising 7.4 per cent, 6.5 per cent, 3.9 per cent, 3.6 per cent, and 3.5 per cent, respectively. Wipro, Bajaj Finserv, Titan, Ultratech Cement, Tech Mahindra were the top five losers during the session.

“After a week-long consolidation, domestic indices took a breather supported by low-level buying. Western markets also supported staging recovery following correction in oil markets, and as uncertainties over Fed policy and geopolitical tensions eased,” said Vinod Nair, Head of Research at Geojit Financial Services.

“However, volatility is expected to linger as investors await the Fed’s final policy statement, providing clarity on the timeline of rate hikes. If the statement is as hawkish as anticipated, we cannot ignore a bounce in the market.”

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Budget 2022: Increase in custom duty on Aluminium scrap from 2.5 to 10% is key expectation

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Steel Industry

Steel Industry.

As the Indian economy pushes forward to grow at 9 per cent and above over the next few years, a key challenge for the country would be to rebalance its energy needs in favour of renewable sources by 2030 to 50 per cent as per the Paris agreement.

This is where the Aluminium sector will play a greater than ever before role. Extensive growth in electric vehicles, renewables, modern infrastructure, energy efficient consumer goods and greater dependence on strategic sectors such as aerospace and defence, will drive Aluminium consumption to grow at CAGR of 10 per cent or more. For example, Aluminium usage in EV battery is 40-50 per cent more than a normal ICE. Being 3 times lighter than steel it aids in fuel efficiency making it an efficient choice for EVs.

However, the Indian aluminium industry is struggling to revive itself over the last two years following the unprecedented Covid pandemic. The declining domestic producers market share with surging imports coupled with significant cost escalation for primary producers due to a rise in input costs of critical raw materials, escalating ocean freights & logistics costs due to container shortage, current coal crunch situation etc, is restricting the industry’s ability to support the future of the country at a time when India cannot rely on import sources alone to fuel this growth.

To give relief to the sector, there is a need for urgently looking at the duty structure. The basic custom duty on Aluminium and Aluminium scrap is not in line with other non-ferrous metals like Zink, lead, nickel and tin which is a huge disadvantage for domestic Aluminium producers. The industry expects increase in tariff rate of basic custom duty or peak custom duty rate from existing 10 per cent to 15 per cent. Currently custom duty on Primary Aluminium is 7.5 per cent, Downstream Aluminium is 7.5 per cent to 10 per cent and Aluminium scrap is only 2.5 per cent. This is the reason why despite having significant presence of primary Aluminium capacity and potential to generate sufficient domestic scrap, India’s consumption of scrap is 100 per cent import dependent. The way forward is to increase custom duty on Aluminium srap from 2.5 to 10 per cent.

Primary aluminium industry is facing severe threat from the increasing import of Aluminium scrap. The share of scrap in total imports increased from 52 per cent in FY-16 to 66 per cent in FY-21. resulting in Forex Outgo of $2 billion (Rs 15,000 crore).

What is also affecting the Indian industry is China’s renewed measures to restrict Scrap imports through National Sword Policy, which is leading to greater inflow of scrap into India. China imposed 25 per cent duty on Aluminium Scrap imports from USA, and classified Aluminium Scrap in restricted import list from July, 2019, with plan to completely ban all scrap and waste imports. Post that the share of import from the US in China’s total Aluminium scrap imports has declined from 53 per cent in 2017 to just 16 per cent in 2019. India has overtaken China as world’s largest aluminium scrap importer due to Chinese measures. As a result, entire global scrap chain is shifted to India in absence of any quality or BIS standards for scrap recycling/ usage and imports in the country. A major threat is from US scrap imports, as US is diverting large volume of scrap to India, since EU and other developed countries have stringent standards for scrap. The import from US as share of India’s total scrap imports increased from 8 per cent in FY16 to 24 per cent in FY21.

This precarious situation can be resolved by safeguarding the domestic industry against these non-essential imports in the upcoming union budget.

The industry demands increasing the basic custom duty on Chapter-76 (Aluminium & articles).

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Maruti Suzuki’s Q3FY22 net profit down 47.90%

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Automobile major Maruti Suzuki India’s Q3FY22 net profit declined by over 47 per cent on a year-on-year basis, falling to Rs 1,011.3 crore from Rs 1,941.4 crore in Q3FY21.

The automobile major cited lower sales volume along with high commodity prices and lower non-operating income on account of mark-to-market impact as factors behind the net profit decline.

Net sales for the quarter under review fell to Rs 22,187.6 crore from Rs 22,236.7 crore earned in Q3FY21.

“The company sold a total of 430,668 units during the quarter, lower than 495,897 units in the same period, previous year,” the auto major said in a statement.

“Production was constrained by a global shortage in the supply of electronic components because of which an estimated 90,000 units could not be produced.

“In the domestic market, the sales stood at 365,673 units in the quarter, against 467,369 units in Q3FY21.

“There was no lack of demand as the company had more than 240,000 pending customer orders at the end of the quarter. Though still unpredictable, the electronics supply situation is improving gradually. The company hopes to increase production in Q4, though it would not reach full capacity.”

Besides, in the quarter under review, the company clocked its highest ever exports at 64,995 units as compared to 28,528 units in Q3FY21. “This was also 66 per cent higher than the previous peak exports in any Q3.”

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