Crisis After Crisis

17 Nov,2012 07:41 IST

Crisis After Crisis

Euro zone slips into recession; BP pays $4.5 billion penalty for oil spill; and more
Crisis After Crisis

RED ZONE: Amid rising worker strife, the euro zone slips into another recession (AFP)

IT’s recession time again in the euro zone. The 17-member currency bloc, at least four of whose members have been battling sovereign debt crises, saw gross domestic product fall 0.1 per cent in the third quarter, after shrinking 0.2 per cent in the previous three months. A recession means two consecutive quarters of negative growth in GDP. And the event is expected to bring in more uncertainty to a region that has been battling massive trade union strikes against austerity measures on the one hand and dipping investor confidence on the other. And it was not just Portugal, Italy, Greece and Spain that posted disappointing results. A shock was the triple-A rated Netherlands; its economy shrunk by 1.1 per cent in the third quarter, which many expected to fall only 0.2 per cent. Austria’s GDP also shrank by 0.1 per cent. Even though France and Germany have continued to show a little growth, that’s not enough to help matters as of now.  

Payback Time
London-based oil giant BP has agreed to pay a record fine of $4 billion over five years in a settlement with the US Justice Department over the 2010 oil spill in the Gulf of Mexico. This is the biggest criminal penalty in the history of the US. BP will also pay $525 million over three years to settle claims with the Securities and Exchange Commission. The settlement is subject to US federal court approval. 
Mixed Fortunes
Vodafone India’s revenues grew 13.3 per cent during the six months ended 30 September, even though the country’s second largest telecom player’s profit numbers continued to be in the ‘negative’ region. Vodafone posted Rs 17,581 crore in revenues, against Rs 15,512 crore a year ago. But its Ebitda margin, which shows operating profitability, widened to 28.4 per cent in the six months, from 25.6 per cent a year ago.
Capital Matters
Finance minister P. Chidambaram said the government would decide soon on how much additional capital needs to be injected into state-run banks. But the amount would not exceed Rs 15,000 crore provisioned in the last budget, he said.

Driving In
EASY RIDE: Tata Motors’ global vehicle sales rose 6 per cent in October
Swedish truck maker Volvo said it would be investing Rs 3,800 crore in India over the next few years. Of this, Rs 1,800 crore would be invested in its joint venture with Eicher Motors, said Volvo CEO Olof Persson. The rest would go into the world’s No. 2 truck maker’s own operations. 
Shrinking Output
In its second contraction in the quarter, the Index of Industrial Production fell 0.4 per cent in September, due to falling output in capital goods and consumer durables (12.2 and 1.7 per cent, respectively). That eight core industries, with a weightage of 38 per cent on the IIP, grew 5.1 per cent, did not do it much good. 

Power Performance
Tata Motors’ global vehicle sales, including that of subsidiary Jaguar Land Rover, rose 6 per cent to 100,660 units to dealers (wholesale) in October from a year ago. The cumulative wholesales (April to October) for the fiscal rose 7 per cent to 679,051 units from the same period in
LOGGING OUT: Windows chief Steven Sinofsky quits Microsoft
2011-12. The company’s global wholesales for Jaguar Land Rover, which fell in September, rose 7 per cent to 27,897 vehicles in October. 
Out Of The Window
It’s a big exit. After serving Microsoft for more than 20 years, president of Windows and Windows Live operations, Steven Sinofsky, quit the IT giant. The exit comes just two weeks after Microsoft launched its flagship Windows 8. Sinofsky, widely tipped to be the next CEO, did not cite any solid reason for the move. But observers say Sinofsky is the latest casualty in an ongoing power struggle.

Losing Morale
A survey jointly conducted by industry body CII and consultancy McKinsey & Co among 32 top CFOs saw 67 per cent of the respondents saying India’s GDP will grow at less than 6 per cent in 2012-13. The respondents said corruption and bureaucracy were among the “big concerns”. 

(This story was published in Businessworld Issue Dated 26-11-2012)


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