INSUBCONTINENT EXCLUSIVE:
From Mercedes-Benz AG to Unilever, companies in India are finding power to pass on higher costs to consumers, a sign that demand in the
world's fastest-growing major economy is well-entrenched.After the twin shocks of a cash ban in 2016 and the chaotic introduction of a
consumption tax last year, India's economic recovery is gaining momentum
Businesses are taking advantage of the solid demand to raise prices, lifting profits, but also fanning inflation at a time of higher oil
prices and a currency slump.More than 1,200 manufacturing firms -- both small and large -- polled by the Reserve Bank of India reported
input price pressures and an increase in selling prices
The central bank raised interest rate twice since June to the highest in two years to curb price pressures and support the rupee amid a
sell-off in emerging market currencies."There is a sense that the economy has come out of the difficult phase," Harsh Pant, a professor of
international relations at King's College in London, said, referring to the pick up in manufacturing activity as consumer confidence
The decision of companies to raise prices "seem to be reflecting this underlying reality," he said.Here's a look at sectors that have got
their pricing mojo back and others on the cusp of rediscovering it:AutomobilesWith double-digit growth in monthly vehicle sales for most of
the year so far, companies including Suzuki Motor Corp.'s India unit, Ashok Leyland Ltd
and Mercedes-Benz are raising prices
increased prices last week by up to 6,100 rupees a unit ($88) across models citing higher commodity prices, distribution costs and adverse
Mahindra and Mahindra Ltd
also plans to hike prices by up to 2 percent from August.SteelA surge in global steel prices has given Indian steelmakers, including JSW
Steel Ltd., Tata Steel Ltd., and Steel Authority of India Ltd
the ability to raise product prices by 8 percent to 10 percent this year
China's curbs on steel output, global trade protection measures and robust domestic demand will keep prices firm going forward
Steel futures in Shanghai were at the highest in seven years on Tuesday.Consumer GoodsFast-moving consumer goods, which is ranked as the
fourth-largest sector in the economy by think-tank India Brand Equity Foundation, is a bright spot in terms of demand
That's given companies such as Hindustan Unilever Ltd., the local unit of Unilever, room to raise prices in some goods.Godrej Consumer
Products Ltd., a homegrown FMCG company, has already increased prices of some products and plans more in hair colors, toiletries and air
fresheners with the impact likely to be reflected from this quarter
has hinted at a 3 percent to 4 percent price increase in product prices to mitigate inflationary pressure.CementIt's a mixed bag for cement
Rising input costs are squeezing profit margins of cement makers and the monsoon season is a dampener, but higher government spending on
building houses for the poor ahead of elections could jack up sales."While the demand momentum is healthy, rising supplies have not resulted
in a significant increase in the cement prices," said Sabyasachi Majumdar, senior vice president and group head at ICRA Ltd., the local unit
of Moody's Investors Service.Besides the cost-push shock arising from elevated oil prices, companies are also facing a rising cost of
borrowing -- be it bank credit or corporate bond issuance
Looking ahead, the cost-push shock is already on its way out with oil prices now stabilizing at current levels of under $75 per barrel
Also, growth is likely to lose support of favorable base effects going ahead
Inflation has already started surprising to the downside.-- Abhishek Gupta, Bloomberg Economics.AviationSome businesses aren't in a position
Airlines haven't increased fares despite higher fuel costs and a double-digit growth in passenger traffic
InterGlobe Aviation Ltd., which operates IndiGo, the budget carrier with almost two-fifths of India's domestic market, reported a 97 percent
drop in its quarterly profit.Current fare levels are "not sustainable," yet IndiGo has "no choice" but to keep offering them amid an intense
pricing war, Chairman Rahul Bhatia told analysts in July
Debt-ridden Jet Airways India Ltd
has postponed announcement of its first-quarter results as a budget-flight boom crimps margins of full-service carriers.
