Volume 1
Issue 1
May 2013
From the Vice President’s Desk
Greetings from mjunction! The global financial markets crisis and a lacklustre economic growth has led to a corporates focusing on optimising their working capital. The credit squeeze has highlighted the need for improved liquidity management by mitigating supply chain risk through new alternative finance models like supply chain funding. financejunction’s singular purpose is to make the client’s sales and distribution channel more robust by ensuring a steady cash flow. financejunction’s diverse supply chain finance solutions are designed to aid clients by providing credit to their supply chain partners at competitive rates. This allows buyers to extend their payment periods (increasing days payable outstanding) and shortens the payment collection period for suppliers (reducing days sales outstanding). Our quarterly newsletter, financejunction Connect is a product of that same enthusiasm. In its first issue we are bringing to you current economic & market analysis and RBI updates that would help you gauge the market situation. By integrating our case stories with in-depth analysis, financejunction Connect also aims to help businesses understand how we directly impact their bottom line and net realisation by improving the cash flow. We hope this newsletter will leave you richer by quite a few ideas and strategies for your business. Regards,
Vinaya Varma, Vice President, mjunction
GLOBAL ECONOMIC SCENARIO While predicting the year ahead, the World Economic Outlook report said, “Global prospects have improved again but the road to recovery in the advanced economies will remain bumpy.” Keeping with the trend, IMF has projected the global economy at 3.3% in 2013 in tune with the 3.2% growth seen in 2012. 2014 is projected to have a growth of 4%. In tune with the rising consumer demand, supportive macroeconomic policies, and a revival of exports, the economies of the emerging market and developing economies has already on the path to recovery. Growth in emerging market and developing economies is expected to remain robust, strengthening from about 5% in 2012 to 5¼% in 2013 and 5¾% in 2014.
Latest IMF Projections The IMF projects a bumpy recovery for advanced economies, while emerging markets and developing countries pick up steam (in percentage change)
GDP • International Monetary Fund (IMF) said that Asia’s Gross Domestic Product (GDP) is likely to be 5.7% in 2013 6% in 2014. • Projecting a modest pick-up in economic activity in the coming months, the Reserve Bank of India (RBI) pegged GDP growth rate for 2013-14 at 5.7%, significantly lower than the Finance Ministry's forecast of 6.1-6.7%. • In the third quarter of FY 13, India’s GDP growth was 4.5%, the lowest in around three years. India: Real gross domestic product (GDP) growth rate from 2003 to 2013 (Compared to previous years) GDP growth rate from 2003 to 2013 Compared to previous year
PART 1 ECONOMY & MARKET REVIEW
Vinaya Varma, Vice President, mjunction
12.50% 10% 7.50%
9.04% 9.53%
7.59%
6.9%
4.50%
0%
2003
2004
2005
-6
2010
2011
2012
2.2 -0.6
6
6.2
4 3
1.9
10 8
8.2 5.7
1.8 1.4
2013
Difference from January 2013 WEO projections
4
-2 -4
2009
Source: IMF
8
7.8
7.7
2
India
2008
Projections
4
China
2007
9.3
6
Euro Area
2006
India: International Monetary Fund
8
Unites States
5.90%
5.88%
2.5%
10
0
7.90%
6.58%
5%
10.09%
10%
2 1.1
-0.3
-0.2 -0.2 -0.1 -0.2
-0.1 0
0 -0.3 -0.1
-2 -4
2011
2012
2013
2014
2013
2014
-6