Bloomberg News

Welspun’s Jindal Says Rate Cut to Boost Manufacturing Projects

April 17, 2012

Akhil Jindal, director for group corporate affairs at Welspun Corp., comments after India’s central bank reduced interest rates for the first time since 2009. Jindal spoke in a phone interview today.

The BSE India Sensitive Index (SENSEX), or Sensex, advanced 0.4 percent to 17,213.80 at 12:15 p.m. in Mumbai, poised for its highest close since April 12.

On liquidity:

“There was a big liquidity crunch in the money markets and this should help ease it.”

“I expect financing costs will now go down by at least 50 bps, if not more. For a group like us which has 100 billion rupee plus borrowings, it’s 500 million rupees less a year.”

The Reserve Bank of India lowered the repurchase rate to 8 percent from 8.50 percent and highlighted inflation risks that limit the scope for future rate cuts. The outcome was predicted by three of 25 economists in a Bloomberg News survey. Seventeen expected a 0.25 percentage-point cut.

On new investments:

“The rate cut will boost investments in projects by companies and expansion in manufacturing especially because new investments are very interest rate sensitive.

‘‘In the last three years, financing costs for manufacturing based companies like us has spiraled, from about 9 percent in 2009 to over 12 percent now.

‘‘The government has now signaled an easing off on interest costs. This will give a boost to the industry,’’ he said.

On GDP growth:

‘‘It will boost GDP growth. The RBI target on growth was quite welcome. It means there could be more rate cuts going forward, possibly in the October policy.’’

Welspun Corp. (WLCO), based in Mumbai, is the Welspun Group’s flagship company and makes pipes used by global oil and gas companies. Its shares rose 0.3 percent to 133.60 rupees at 12:15 p.m. local time.

To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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