Infosys Result Review

Results better than expected on sales and net profit front, ` guidance maintained

Stock down 2.9%

Infosys (CMP: `1,168/ TP: `1,306/Upside: 11.8%)

The company posted results better than expected on top-line and net profit, whereas the EBIT margins came in just in line with expectations.

The company posted a 6.0% sequential growth in USD revenues to US$ 2,392mn V/s US$ 2,339mn expected. In Constant Currency (CC) terms, the company posted a 6.9% qoq growth. The volume growth during the quarter came in at 3.7% qoq. In rupee terms, revenues came in at INR 15,635cr V/s INR 15,204cr expected, up 8.9% qoq. EBITDA margin came in 27.8% V/s 27.6% expected, an expansion of ~165bp qoq. The EBIT came in at 25.5% just in line with expectations, expansion of ~152bps. Consequently, PAT came in at INR 3,399cr V/s INR 3,345cr expected, a rise of 12.2% qoq.

In terms of geography, USA grew by 6.2% qoq CC, Europe grew by 8.3% qoq CC, India grew by 12.1% qoq CC and ROW grew by 7.1% qoq CC. In terms of domain, the FSI ( Banking & Financial Services) grew by 6.4% qoq CC, MFG (Manufacturing) grew by 5.8% qoq CC, RCL ( Retail and Life Sciences) grew by 8.2% qoq CC and ECS ( Energy, Utilities, Communication and Services) grew by 7.8% qoq CC.

On the operating matrix, the utilization rate excluding trainee was 81.3% V/s 80.2% in 1QFY2016, while including trainee was 75.4% V/s 75.7% in 1QFY2016. The attrition rates were 19.9% V/s 19.2% in 1QFY2016. Client additions during the quarter were 82. During the quarter, the company added 5 large deals with TVC of US$ 983mn.

In terms guidance for FY2016, on CC terms has been unchanged at 10-12% and dollar guidance has been revised downwards to 6.4-8.4% V/s 7.2-9.2% earlier. The revision in the US$, is mainly on the outlook of the company on the currency front. The company has also mentioned that it expects 2HFY2016 is weaker than 1HFY2016, and also that it is witnessing headwinds in some client accounts. We maintain our ACCUMULATE rating on the stock with a target price of INR 1,306.

Weekend Highlights – 10th October, 2015

Railway revenues rebound 4.3% in September 2015

The Indian Railway (IR) has posted 4.3% rise in revenues to Rs 12259.13 crore in September 2015 over September 2014, while snapping only decline in revenues of 2.3% recorded in August 2015 since we have data for last ten years. However, the revenue earnings continued to be below budget estimate of Rs 13812.14 crore for September 2015.The passenger earnings improved 7.9% to Rs 3622.25 crore, while the earnings from other coaching moved up 8.7% to Rs 344.01 crore in September 2015. The goods revenue, accounting for 64.9% of the total revenue, rose at subdued pace of 3.3% to Rs 7958.26 crore. The revenue from sundry activities dipped 11% to Rs 334.61 crore in September 2015.

In April-September 2015, the revenue earnings of IR has increased 9% to Rs 78950.65 crore driven by 10% rise in goods revenue to Rs 52541.85 crore. The passenger revenue moved up 8.5% to Rs 22479.2 crore, while other coaching increased 5.1% to Rs 2058.39 crore. However, the sundry earnings dipped 6.9% to Rs 1871.21 crore in April-September 2015.

GST to be implemented with effect from 01 April 2016: K.M. Mani

The GST, a much-awaited reform to replace multiple indirect taxes with one levy shall be implemented with effect from 01 April 2016 as all preparations including rules, legislation and others have been duly undertaken, said Mr K.M. Mani, chairman of the GST Empowered Committee at The Associated Chambers of Commerce and Industry of India (ASSOCHAM) event.The GST constitutional amendment shall be passed in the upcoming winter session of the Parliament, said Mr Mani.

GST will be a very efficient system of tax collection as there will be no scope for tax evasion, said Mr Mani who is also Kerala finance minister.

He also said that tax base would be widened and collection would be much higher under the GST regime for both the Centre and the states.

GST will promote ease of doing business and would boost the GDP by about two per cent, said Mr Mani.

Safety and security measures shall be taken care of as GST net has already offered the states to come up on information technology at par, he added.

With almost 90 per cent of villages without electricity in India, Mr Mani said that issue of rural electrification is being addressed to ensure smooth implementation of the GST.

He also said that there is consensus to impose purchase tax on agriculture produce and therefore it will come under the purview of the GST.

Mr Mani also emphasised upon the role of GST practitioners in GST implementation.

GST is necessary for Indias economic development, he said. Consumers are paying about 29 per cent both visible and invisible tax, hopefully GST will be on a lower side.

He also said that rate of service tax will go up from the existing 16 per cent but the exact percentage could be known only after the declaration is made.

India and Germany sign MoU on Security Cooperation

India and Germany have signed a Memorandum of Understanding (MoU) on Security Cooperation. The Minister of State for Home Affairs Shri Kiren Rijiju and the visiting German Parliamentary State Secretary at the Ministry of Interior, Dr. Gunter Krings signed the MoU. They have also signed the Joint Declaration of Intent on Cooperation in the field of Disaster Management.On this occasion, Shri Rijiju said that the MoU on Security Cooperation has created strategic initiative between India and Germany in the area of Security Cooperation. The MoU proposes to intensify the cooperation in countering terrorism in all its form, including recruitment, financing, terrorist propaganda, training and terrorist movements; countering organized crime, preventing and combating unlawful production/extraction of any narcotic and psychotropic substances.

The MoU also covers areas of border protection, aviation security, cyber crime, illegal migration and counterfeit currency. Under the umbrella of this MoU, there will be exchange of information, technological expertise and cooperation on basic and advanced training of security. The Joint Declaration of Intent on Cooperation in the field of Disaster Management seeks to deepen and develop cooperation in the field of Disaster Management through exchange of information, processing technologies and other Scientific/Technological expertise in the field of Disaster Management, as well as providing training and capacity building of First Responders in Civil Defence, urban search and rescue, Fire services and medical field. Shri Rijiju also expressed hope that Germany will overcome its reluctance on inking the bilateral Mutual Legal Assistance Treaty (MLAT) which will pave the way for the deportation of criminals.

Sun Pharmaceuticals : Absorica patent litigation settlement

This article has been authored by Ms. Sarabjit Kour Nangra.

Sun Pharmaceuticals announces Absorica patent litigation settlement: Sun Pharmaceutical Industries today announced that Ranbaxy Pharmaceuticals Inc. (Ranbaxy), a wholly-owned subsidiary, along with its partners, Cipher Pharmaceuticals Inc. (Cipher) and Galephar Pharmaceutical Research, Inc. (Galephar) have entered into a Settlement Agreement with Actavis Group (Actavis) that dismisses the patent litigation suit relating to Actavis’ Abbreviated New Drug Application (ANDA) for a generic version of Absorica® (isotretinoin capsules).

As part of the Settlement Agreement, Ranbaxy, Cipher, and Galephar have entered into a non-exclusive license agreement with Actavis under which Actavis may begin selling its generic version of Absorica® in the U.S. on December 27, 2020 (approximately nine months prior to the expiration of the patents in September 2021) or earlier under certain circumstances. The other terms of the agreement are confidential. The Settlement Agreement is subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice.

The US market size in 2015 is estimated to be around US$120mn for the said drug. Agreement will disallow generic competition till 2020. The company could in future do similar deals with other generic companies. We maintain our accumulate with a target price of `950.

Weekend Highlights – 3rd October, 2015

Govt launches Green Highways Policy

Union Minister of Road Transport & Highways and Shipping Nitin Gadkari launched the Green Highways (Plantation, Transplantation, Beautification & Maintenance) Policy, 2015 at a function organized in New Delhi on 29 September 2015. The aim of the policy is to promote greening of Highway corridors with participation of the community, farmers, private sector, NGOs, and government institutions.Speaking on the occasion, the Minister said that 1% of the total project cost of all highways projects will be kept aside for the highway plantation and its maintenance. He said that about Rs. 1000 crore per year will be available for plantation purpose. He also said that this policy will generate employment opportunities for about five lakh people from rural areas. He added that there will be strong monitoring mechanism in place by using ISROs Bhuvan and GAGAN satellite systems. Every planted tree will be counted and auditing will be done. The agencies performing good will be awarded. He called for suggestions from people for smooth implementation of the policy. He also asked the state governments to start programmes on similar lines.

Nitin Gadkari said that 1200 road side amenities will also be established. The Green Highway Policy will help in making India pollution free, the minister added. It will also help in curtailing the number of road accidents in India. He said that the vision of the policy is to provide dignified employment to local people and communities.

Addressing the conference, Minister of State for Road Transport & Highways and Shipping Pon. Radhakrishnan said that it is a historic occasion and a noble initiative that depicts the Governments concern for conservation of environment. He said the present Government has taken various initiatives to cut pollution by promoting bio-fuel and e-rickshaws, and now the Green Highways Policy has been launched for roadside plantation in this respect.+

RBI reduce repo rate by 50 bps to 6.75%

The Reserve bank of India (RBI) has reduced repo rate by 50 bps to 6.75% with immediate effect, at fourth bi-monthly monetary policy review released on 29 September 2015. The RBI has kept CRR unchanged at 4.0%.Assessment

* Since the third bi-monthly statement of August 2015, global growth has moderated, especially in emerging market economies (EMEs), global trade has deteriorated further and downside risks to growth have increased.

* In India, a tentative economic recovery is underway, but is still far from robust. In agriculture, southwest monsoon is currently deficient. Rural demand, however, remains subdued as reflected in still shrinking tractor and two-wheeler sales.

* Manufacturing has exhibited uneven growth in April-July. Weak external demand is contributing to continuing domestic capacity under-utilisation, decelerating new orders and a rising ratio of finished goods inventories to sales.

* In the services sector, construction activity is weakening as reflected in low demand for cement and the large inventory of unsold residential houses in some localities.

Eight core infrastructure sector output rises 2.6% in August 2015

The eight core industries, comprising nearly 38% of the weight of items included in the Index of Industrial Production (IIP), has shown an output growth of 2.6% in August 2015 over August 2014. Its cumulative output growth during April to August, 2015-16 was 2.2% compared with 5.6% growth in the corresponding period of last year.Coal production (weight: 4.38%) increased by 0.4% in August 2015 over August, 2014. Its cumulative index during April to August, 2015-16 increased by 4.6% over corresponding period of previous year.

Crude Oil production (weight: 5.22%) increased by 5.6% in August, 2015 over August, 2014. Its cumulative index during April to August, 2015-16 increased by 0.5% over the corresponding period of previous year.

The Natural Gas production (weight: 1.71%) increased by 3.7% in August, 2015. Its cumulative index during April to August, 2015-16 declined by 2.7% over the corresponding period of previous year.

Petroleum Refinery production (weight: 5.94%) increased by 5.8% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 4.3% over the corresponding period of previous year.

Fertilizer production (weight: 1.25%) increased by 12.6% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 5.9% over the corresponding period of previous year.

Steel production (weight: 6.68%) declined by 5.9% in August, 2015. Its cumulative index during April to August, 2015-16 declined by 0.03% over the corresponding period of previous year.

Cement production (weight: 2.41%) increased by 5.4% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 1.8% over the corresponding period of previous year.

Electricity generation (weight: 10.32%) increased by 5.6% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 2.8% over the corresponding period of previous year.

Weekend Highlights – 26th September, 2015

BIS to develop standards for 43 products under Make in India programme

Bureau of Indian Standards (BIS) has taken up development of standards for 43 products identified by Department of Industrial Policy & Promotion (DIPP) for manufacturing quality products in the country under Make in India programme. It has also decided to develop or upgrade standards for basic consumer services like potable water and waste collection & disposal besides revising National Building Code to promote safe and environment friendly construction in the country.
This was informed during the meeting of Governing Body of BIS chaired by Ram Vilas Paswan, Minister of Consumer Affairs, Food and Public Distribution, here today. The meeting was attended by Members of Parliament, representatives of various central ministries and technical experts from different sectors.

Reviewing the performance of BIS, Ram Vilas Paswan directed that labs of the Bureau in each state should be upgraded on priority basis and facilities for testing of more products should be arranged. He also asked the BIS to develop or revise standards regarding street food and products of day to day. Mass awareness campaign should also be launched to make people quality conscious, he stressed.

Government IT Spending in India to Reach $6.88 Billion in 2015: Gartner

The government in India will spend $6.88 billion US Dollars (USD) on IT products and services in 2015, an increase of 5.2% over 2014, according to Gartner, Inc. This forecast includes spending on internal services, software, IT services, data center, devices and telecom services. Government comprises state and local governments and national government.
IT services (which includes consulting, implementation, IT outsourcing and business process outsourcing) is expected to grow 10% in 2015 to reach $1.6 billion USD – with the business process outsourcing sub-segment growing by 21%.

Telecom services will also be a $1.6 billion USD market, with the mobile network services sub-segment recording fastest growth of 3% in 2015 to reach$787 million USD.

Reservoirs water storage rises to 60% of total capacity as on 23 September 2015

The water storage available in 91 major reservoirs of the country as on 23 September 2015 was 95.313 billion cubic meters (BCM), which is 60% of total storage capacity of these reservoirs. This storage is 75% of the storage of corresponding period of last year and 77% of storage of average of last ten years.The total storage capacity of these 91 reservoirs is 157.799 BCM which is about 62% of the total storage capacity of 253.388 BCM which is estimated to have been created in the country.

Lupin has taken price rise in Fortamet

This article has been authored by Ms. Sarabjit Kour Nangra

Lupin has taken price rise in Fortamet:
Lupin has been reported to have taken 200% price increase in Fortamet. This has come after, a huge price hike in competing product Glumetza. After the hike also, Fortamet is still 75% cheaper than Glumetza. Though the sustenance of price hike can’t be predicted as other Fortamet is genericised & can see additional competition. The product should have an estimated market size of around US$100-130mn and Lupin sales according to our estimates should be around US$43mn, with a price hike the product should be grossing sales of US$70-80mn. Even after the hike the product contribution to the overall sales would be around ~3% of the overall sales in FY2017E. However given the huge price hike, the OPM’s could see an expansion of 225bps and result in the EPS expansion of 13% and 12% in FY2016E and FY2017E respectively. However, even after the upgrade, if the earnings growth sustains, the valuations are too rich for any upgrades, thus maintaining our neutral stance on the stock.

Weekend Highlights – 19th September, 2015

CPI inflation flat at 3.7% in August 2015

The all-India general CPI inflation was nearly flat 3.66% in August 2015 (new base 2012=100), compared with 3.69% (revised) reading in July 2015. The corresponding provisional inflation rate for rural area was 4.5% and urban area 2.7% in August 2015 as against 4.4% and 2.9% in July 2015. The core CPI inflation declined to 3.8% in August 2015 from 4% in July 2015.Among the CPI components, the inflation for food and beverages rose to 2.9% in August 2015 from 2.8% in July 2015. Within the food items, the inflation moved up for vegetables to (-) 6.4%, pulses & products 25.8%, cereals & products 1.2%, and oils & fats 3.1%. On the other hand, inflation eased for milk & products to 5.3%, meat and fish 5.8%, spices 8.4% and prepared meals, snacks, sweets etc. to 7.3% in August 2015.

The inflation of the pan, tobacco & intoxicants group declined to 9.3%, while inflation for clothing and footwear also declined slightly to 5.8% in August 2015.

The inflation for miscellaneous items dipped to 3.1% in August 2015 from 3.4% in July 2015, driven by fall in inflation for transport & communication to (-) 1%, education 6.1%, education 6.1%, health 5.4% and personal care 2.2% in July 2015.

However, the housing inflation rose to 4.7%, while the CPI inflation for fuel and light also moved up to 5.7% in August 2015.

The cumulative CPI inflation eased to 4.5% in April-August 2015 compared with 7.6% in April-August 2014. Core CPI inflation has declined to 4.2% in April-April 2015 from 7.1% reading in the corresponding period last year.

RBI grants In-principle Approval to 10 Applicants for Small Finance Banks

The Reserve Bank of India (RBI) has granted in-principle approval to the following 10 applicants to set up small finance banks under the Guidelines for Licensing of Small Finance Banks in the private sector (Guidelines) issued on 27 November 2014.Names of selected applicants

1. Au Financiers (India) Ltd., Jaipur

2. Capital Local Area Bank Ltd., Jalandhar

3. Disha Microfin Private Ltd., Ahmedabad

4. Equitas Holdings P Limited, Chennai

5. ESAF Microfinance and Investments Private Ltd., Chennai

6. Janalakshmi Financial Services Private Limited, Bengaluru

7. RGVN (North East) Microfinance Limited, Guwahati

8. Suryoday Micro Finance Private Ltd., Navi Mumbai

9. Ujjivan Financial Services Private Ltd., Bengaluru

10. Utkarsh Micro Finance Private Ltd., Varanasi

The in-principle approval granted will be valid for 18 months to enable the applicants to comply with the requirements under the Guidelines and fulfil other conditions as may be stipulated by the RBI. On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of in-principle approval, the RBI would consider granting them a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949.

Going forward, the Reserve Bank intends to use the learning from this licensing round to appropriately revise the Guidelines and move to giving licences more regularly, that is, virtually on tap.

Revival of Additional 5 Partly Stranded Gas Based Power Generation Plants with an Installed Capacity of 3,455.64 MW

The Government is delighted to announce the revival of an additional 5 partly stranded gas based power generation plants with an installed capacity of 3,455.64 MW which have successfully bid through a transparent and competitive reverse e-auction process. These plants would generate 1.43 billion units of electricity which will be supplied at or below Rs 3.39 per unit to the purchaser Discoms during the period from 1st Oct 2015 to 31st Mar 2016. This will involve government support of Rs. 278.38 crore from the Power System Development Fund. In the auction held today, 11 plants with a cumulative installed capacity of 5,858.67 MW participated in the Technical Bid round and all were declared as Technically Qualified.The two separate auctions held yesterday (for fully stranded gas based plants) and today (for partly stranded gas based plants) have resulted in revival of a cumulative gas based generation capacity of 11,717.72 MW resulting in generation of additional 12.47 billion units of electricity during the period from 1st Oct 2015 to 31st Mar 2016.

Government of India is committed to the revival of such stranded power plants as a measure to ensure 24X7 power to all.

Weekend Highlights – 12th September, 2015

Real economy to guide growth in times of market volatility

ZyFin Research, a leading financial research and analytics company, today announced its Business Cycle Indicator (BCI) for the month of September 2015. The index, which is a lead indicator to the Index of Industrial Production (IIP) trend stood at 8.6 during September as compared to 7.9 during August. The index had scored 8.1 during same period previous year. The IIP is expected to rise marginally during November, the official data for which will be available in January, 2016.The marginal uptick in the index affirms a better placed real economy vis-n++-vis market volatility. However, growth of the real economy is constrained by ambiguity in policy decisions and legislations, irrational tax structures and weak demand in domestic markets. Also, efforts to propagate private investments are restrained by underutilized capacity in the wake of sluggish demand prospects globally.

Giving his views on Business Cycle Indicator (BCI) for the month of September 2015, Debopam Chaudhuri, Chief Economist, ZyFin Research, said, n++The overall weakness in BCI since early FY 15-16 presents a case for the need to cut interest rates. Consumer and investment sentiment need a shot in the arm to ensure the economy continues to strengthen in the near term.n++

The ZyFin Business Cycle Indicator is a forward looking composite indicator of the Indian business cycle with a one month lead on the Index of Industrial Production (IIP). In current scenario, when world growth remains uncertain, lead indicators like the BCI can provide timely signals regarding the future course of local economies. The journey from the bottom of a business cycle to its peak has two parts, recovery and growth. In case of the BCI, a score between 5 till 12 is a reflection of a recovering cycle while growth cycle can be identified once the score breaches 12. Data analysts usually take a three month moving average of the BCI scores to comment on evolving trends.

The growth of the BCI was confined by dim growth in bank credit, slowing exports, weaker than expected monsoons and price instability. Although India demonstrates slow growth prospects in the near term; the economy is better placed in the medium term. A large consumption base backed by purchasing power, inherent natural resources and rich human resource augur well for the Indian economy. Also, slackening prices of coal, cement and steel shall back creation of infrastructure thereby generating growth.

Online filing of Income Tax Returns rises 26.1% to 2.06 crore in 2015-16

The taxpayers have come forward in greater numbers for e-filing of returns in the current year. In the Financial Year (F.Y.) 2015-16, the Department has received 2.06 crore returns on the e-filing portal as on 07 September 2015 which is an increase of 26.12% over the corresponding period of the preceding the F.Y. 2014-15, when 1.63 crore returns were e-filed. The peak filing rate in the F.Y. 2015-16 touched 3,475 returns per minute as compared to 2,901 returns per minute in the F.Y. 2014-15.To facilitate the taxpayers by providing end-to-end e-enabled services and reduce compliance burden, the Department offered the facility of electronic verification of Income Tax Return for the A.Y. 2015-16 through an electronic verification code (EVC). In the short period since its introduction, 32.95 lakh e-returns have been verified through EVC. Use of EVC has dramatically reduced the time taken for processing of e-filed returns for the A.Y. 2015-16.

As on 07 September 2015 Central Processing Centre Processed 45.18 Lakh Returns Relating to the A.Y. 2015-16 and issued refunds to 22.14 lakh tax payers who had claimed refunds for the A.Y.2015-16.

FAO Food Price Index drops 5.2% in August 2015 over July 2015

The FAO Food Price Index averaged 155.7 points in August 2015, down 8.5 points (5.2%) from July, the sharpest monthly drop since December 2008. In addition to ample supplies, a number of other factors contributed to the decrease, including the slump in energy prices and concerns about Chinas economic slowdown and its negative consequences on the global economy and financial markets. The decline affected all the commodities tracked by the index, except for meat, the prices of which remained generally steady.The FAO Cereal Price Index averaged 154.9 points in August, down 11.6 points (7.0%) from July and 27.6 points (15.1%) from last year. The decline in August, which reversed two consecutive months of modest increases, brought the index down to its lowest level since June 2010. Falling wheat and maize prices were the main factors for the downturn although rice prices also weakened in August. Abundant wheat supplies, supported by larger than anticipated harvests in the northern hemisphere, where the season is coming to a close, pushed down wheat values. Maize prices dropped too, mainly on improved production prospects in the United States and expected larger sales from Brazil this season. Rice quotations also subsided over the month, albeit marginally, reflecting strong competition among exporters.

The FAO Vegetable Oil Price Index averaged 134.9 points in August, down 12.7 points (8.6%) from July and the lowest level since March 2009. The protracted slide in the index primarily reflects developments in palm oil markets. International palm oil prices have hit a six-and-a-half year low, as a result of slowing import demand, notably by India and China amid expectations of rising production. The prospect for ample global soybean supplies in 2015/16, sliding mineral oil prices and concerns about the economic slowdown in China also put palm and other edible oil prices under downward pressure.

Infosys Cleared of Visa Violation Charges in US

This article has been authored by Ms. Sarabjit Kour Nangra

Infosys Cleared of Visa Violation Charges in US: The US government has found no visa violations by IT major Infosys. The US had initiated the investigation against Infosys and its rival Tata Consultancy Services for possible violations of H1-B visa rules in June 2015. The investigation came on the back of a complaint by two US Senators, who alleged that the two companies used a US visa programme to “replace hundreds of American workers” at a power company. Indian outsourcers are among the biggest recipients H-1B visas, which are intended for highly skilled workers. We maintain our buy with a price target of `1306 and remain positive on the IT space.

Weekend Highlights – 5th September, 2015

CEA: Overall, Economic Growth is Moving in the Right Direction, Although its Pace is Still Below What the Economy Needs

The Chief Economic Adviser Dr Arvind Subramanian in a Statement with regard to recently released First Quarter GDP Data of the Current Financial Year 2015-16 said that:n++At a time of sharp declines in the price of oil, which led to sharp changes in Indirect Tax Collections and subsidy payments, national income data have to be interpreted with care.

There are two measures of aggregate economic activity: gross value added at basic prices (GVA) and gross domestic product at market prices (GDP). Essentially, GDP at market prices is the value of goods and services that are paid for by consumers which is allocated between: (i) the factors of production (measured by GVA); and (ii) government. Hence the basic national income identity: GDP = GVA + net indirect taxes (NIT), which is equal to indirect taxes less subsidies.

The issue that arises is how to derive estimates of NIT at constant prices given that the data are collected at current prices. The procedure followed by the Central Statistics Office (CSO), which is entirely consistent with recommended international practice for quarterly estimates, can be intuitively understood as follows. Under this procedure, indirect taxes are assumed to grow in line with the relevant tax base, which consists of the value of imports, manufacturing, and services. (In the case of subsidies, the CSO uses the GDP deflator to arrive at constant price estimates.)

Employees Pension Scheme, 1995 gets Rs. 2,250 crore

The Union government has released a sum of Rs. 2,000 crore to Employees Pension Scheme, 1995 as its contribution for the year 2015-16. Shri Bandaru Dattatreya, Union Minister of State for Labour & Employment (Independent Charge) said this in a statement. This contribution is in addition to Rs. 250 crore contributed by the Central Government as grant-in-aid in the Employees Pension Scheme, 1995 for providing minimum pension of Rs. 1,000/- to the pensioners of Employees Pension Scheme, 1995, the Minister further said. Since September, 2014, EPS pensioners have been assured of a guaranteed minimum pension of Rs. 1,000/- p.m. and it is necessary to infuse such additional amounts as grants-in-aid by the Central Government to sustain the continuance of the minimum pension of Rs. 1,000/- p.m.Under the provisions of Employees Pension Scheme, 1995, the contribution of Central Government is calculated @ 1.16% of the monthly wages of the members contributing to the Employees Pension Scheme, 1995. This is in addition to the funding made available by the employers covered under the Act who contribute 8.33% of the monthly wages of the members to the scheme.

Bank credit growth remains subdued at 9.5% as on 21 August

The credit growth for Scheduled commercial banks (SCBs) continues to remain steady for the eight straight month, while moving in the range of 9-9.5%. The bank credit increased 9.5% to Rs 66662.41 billion as on 21 August 2015 over a year earlier, compared with 10.4% growth in August 2014. The credit growth remained in single digit for eighth straight month.Non-food credit, accounting for 98.5% of the share of the total credit, grew 9.8% to Rs 65635.59 billion as on 21 August 2015 as against a rise of 10.5% a year ago. The overall credit-deposit ratio declined to four years low of 74.4% as on 21 August 2015 from 75.8% a year ago, while eased from 74.9% in June 2015.

Aggregate deposits growth of the scheduled banks has shown marginal pick up 11.9% to Rs 89597.01 billion as on 21 August, compared with 11.7% increase in July 2015, while growth has decelerated from 12.9% in August 2014. The deposits growth was also at 10-months high, while it continues to be above 11% for fifth straight month in August 2015. The time deposits moved up 11.8% at Rs 81454.38 billion, while demand deposits increased 13.2% to Rs 8142.6 billion as on 21 August 2015 over a year ago.

Banks investment in government and other approved securities that qualify for treatment of statutory liquidity ratio (SLR) increased 14.0% to Rs 26816.46 billion as on 21 August 2015 over a year ago, showing acceleration in the pace of growth from 10.6% growth in August 2014. The investment-deposit ratio increased to 29.9% as on 21 August 2015, compared with 29.4% a year ago. The investment-deposit ratio remains much higher above the statutory liquidity ratio of 21.5%.

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