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GE Capital plans to cut costs by $2 bn in 2009

Boston, November 19: General Electric Co said on Tuesday it planned to cut costs by $2 billion next year at its finance arm, GE Capital, which has dragged lower the US conglomerate's results as a result of the global credit crunch. GE said it would reorganize the GE Capital arm -- created in July when the company merged its commercial and consumer finance arms -- to focus on three regional centers in Europe, Asia and the Americas. The changes will take effect Jan. 1. News of GE's plans came at the end of a day when Chairman and Chief Executive Jeff Immelt acknowledged the year ahead would be "challenging." "Everybody's getting prepared for a challenging 2009," Immelt said at a GE briefing in New York on its health-care business. The company provided few details on how it would cut costs. A GE spokesman declined to say how many jobs would be eliminated at the unit that employs 75,000 people worldwide. "Over the last two months, we have acted decisively to improve our funding position," Michael Neal, chairman of GE Capital, said in a statement posted on one of Fairfield, Connecticut-based GE's websites, GEReports.com. "We reduced our leverage, successfully raised capital, and accessed government programs that level the competitive playing field for us in financial services." GE as a whole aimed to cut corporate costs by $3 billion this year, a target set in April after the company stunned Wall Street with an unexpected drop in first-quarter profit. GE shares were closed down 5 cents at $16.06 on the New York Stock Exchange. Businesses across corporate America -- but particularly in the finance sector -- have cut tens of thousands of jobs as they face a brutal credit crunch and prepare for what some economists fear could be a prolonged and deep recession. Earlier this week, Citigroup Inc said it planned to lay off some 52,000 workers. Other companies in the finance sector to recently cut jobs include Fidelity Investments and American Express Co. Source: Express India(19 Nov, 2008)

VW defers launch of two models

New Delhi: The launch of German auto major Volkswagen’s light commercial vehicles (LCV) the Craftar and the Caravalle, originally planned for the end of 2008, will be deferred to the middle of next year. The company attributes the delay to the slump in demand for commercial vehicles in the country since the beginning of the current year. “We’re very careful of the segments we’d target in the country. The overall slowdown in the automobile sector along with the prolonged market study we commissioned this year — both have contributed to the delay in the launch of our LCVs,” said a top executive of Volkswagen on the sidelines of the World Economic Forum today. The Craftar is a 3.5-tonne LCV sold as three variants — bus, goods carrier and pick-ups in the European markets, while Caravelle is a 9-seater bus, which also doubles as a goods carrier. The company says no decision has been taken on the variants for India. “Our plans for India is on track. There’s no slowdown in the construction of our manufacturing plant at Pune,” says Joerg Mueller, president & MD of Volkswagen India. The group has invested about Rs 3,600 crore in the Chakkan facility in Pune alone. Source: Business Standard(19 Nov,2008)

Industry says ‘no’ to FM’s plea to cut prices

NEW DELHI: Ruling out the proposition of any kind of price cut in the near future in response to Union Finance Minister P. Chidambaram’s plea, individual companies, including auto markers and real estate players, instead asked the government to make credit available at a cheaper rate. However, the apex chambers were quite forthcoming and promised lower prices of manufactured goods in response to the Finance Minister’s call. “The two-wheeler industry has a margin of about 4-5 per cent only and in the near future we do not see any price cuts,” leading auto company Chairman Rahul Bajaj told reporters here after the Finance Ministers interactive session at the Indian Economic Summit being held in the Capital. Hero Honda Motors Chairman Brij Mohan Munjalechoed the sentiment of Mr. Bajaj, stating that minimum wages were rising, fuel price had increased and electricity prices had also increased, so it was not possible to bring down the prices of their products. At the same time, both accused public and private sector banks of not lending to potential buyers of two-wheelers. Real estate leader DLF said there were no takers for the housing sector as the rate of interest was very high. Ideally, the interest rate should be around 7 percent,” DLP Chairman K. P. Singh said. But there were saner voices also who promised to keep the balance and undertake adjustments. “I am sure you will find newer set of prices in most product categories,” CII President K. V. Kamath said after his meeting with Mr. Chidambaram. Assocham Secretary General D. S. Rawat said corporates would positively respond to the call given by the Finance Minister. Mr. Chidambaram had stated that hotels must cut tariffs; airlines must cut prices; real estate must cut rates of apartments and homes they sell; car makers and two-wheeler makers must cut prices. Mr. Kamath further said that industry would take the initiative of price cut. “I think this is going to happen” the ICICI Bank Managing Director said. Asked if the company would cut prices of its products as suggested by Mr. Chidambaram, Godrej Group Chairman Adi Godrej said that in some of our businesses price cuts had already been implemented. The price cuts were across many segments in different ranges. Source: The Hindu(19 Nov, 2008)

Indian bond yields seen lower on rate cut hopes

MUMBAI, Nov 19 (Reuters) - Indian federal bond yields should ease for a second day on Wednesday, on expectations the central bank will ease monetary policy further to support growth. * "We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," Finance Minister Palaniappan Chidambaram said on Tuesday. [ID:nBOM420071] * Over the past month, the central bank has aggressively cut interest rates and lowered banks' reserve requirement and the proportion of deposits they must invest in bonds. * The benchmark 10-year bond yield ended at 7.46 percent on Tuesday, compared with Monday's close of 7.51 percent. (Reporting by Anurag Joshi) Source: Reuters India(19 Nov,2008)