| INDUSTRY Go To Top PTI See this story in: The Economic Times (Web Edition), Business Standard (Delhi Print Edition)
Washington: India's top two car manufacturers are scouting for auto engineers at the World Congress of the Society of Auto Engineers (SAE) in Detroit next week.
TATA MOTORS NETS RS 15 CRORE ON 500,000 NANO FORMS Tinesh Bhasin & Abhijit Lele Business Standard (Web & Print Edition)
Mumbai: Within 15 days of opening the registration process for Nano, its Rs 1 lakh car, Tata Motors has sold nearly 500,000 application forms, raking in Rs 15 crore (at Rs 300 each). Distributors associated with the Nano bookings said most of the forms were likely to translate into bookings.
The sale of forms started on April 1, bookings began from April 9 and close on April 25. State Bank of India (SBI), which has now decided to offer loans at 10 per cent during the first year, against 11.75 per cent before, has already issued over 100,000 forms, sources close to the development said. Out of the total forms, one-fourth has been sold by SBI, a person familiar with the bookings process told Business Standard.
On the number of bookings so far, a Tata Motors spokesperson described the response as encouraging. The number of booking applications received will be announced after a few days of the closure of the booking process on April 25. All the booking applications will be subjected to a computerised random selection procedure. Within 60 days of the closure of bookings on April 25, Tata Motors will process and announce the allotment of 100,000 cars in the first phase of deliveries, the spokesperson said in an e-mailed response. Delivery of the car will begin from July, the statement added.
SBI has been distributing the forms since April 5 through its 1,350 branches in more than 850 cities. In all, Tata Motors is using around 30,000 outlets, including group-owned retail chains Croma and Westside, in about 1,000 cities for distribution of forms.
Other financiers with whom Tata Motors has tied up include Tata Motor Finance, ICICI Bank, Axis Bank and Punjab National Bank. The forms are also sold through 218 dealers. In the first lot, each dealer was given 2,500 forms. Almost all of them exhausted these by the end of the third day.
Nano car loans carry a maximum tenure of seven years, against five years for most car loans. Interest rates for Nano are in line with other car loans now, which is estimated at 10-11 per cent. In addition, most banks have also started providing a finance facility for the booking amount of Rs 3,000. http://www.business-standard.com/india/news/tata-motors-nets-rs-
Daily News & Analysis (Web Edition)
In the last few months, much has been said about the auto industry losing traction. But Arindam Chakrabarti, the practice head for the auto and engineering sectors at Tata Strategic Management Group (TSMG), begs to differ. In a chat with DNA, he scoffs at reports that the auto segment is losing steam. Excerpts from an interview:
The auto industry has been reeling under a slowdown. What is the way out for the industry?
What's wrong? There was a dip in December but in January this year, sales went up to 110 compared with 105 in January 2008. Who says sales have gone down? In the last six months, many months have shown better sales when compared with the same period a year ago. Where is the downturn?
Besides I don't know why automakers are saying they're losing money. They haven't passed on the benefit of lower inputs costs or even the benefits given by the government such as excise cuts, etc, to the customer. Their internal expenses haven't risen. Also, they get depreciation benefits on the factories every year. So where are they losing money?
But the figures that you quote look good because of exports. Why are the exports so strong? The global trend is smaller cars, or miniaturisation of cars. India as a country, if you look at our total production, is a small car market. About 80% of the market is small cars. They are world class cars -- Hyundai's i10 or Maruti's A-Star. If you have good price, good quality, low cost of production and a depreciated currency, the world will go for your cars. Most players are realising that India is a better manufacturing base than Japan or Korea. That is being reflected in their sourcing strategies. This is where India scores.
What is the scene with auto component makers? Many of them are struggling with lower volumes... If demand for cars will fall so will for auto components. It is their business strategy that was wrong. They never realised this when the industry was doing fine. If you get 5-8% at a net profit margin level, you are still making money.
Is there any sector that is relatively untouched within the engineering industry? The engineering sector is different from others. When I talk to players in this segment, especially in infrastructure engineering, they say -- what slowdown, what downturn? India has always been infrastructure deficient.
There are some delays, especially when the business is credit-driven. One of the biggest drivers is the government which is the only one that is still spending. http://www.dnaindia.com/report.asp?newsid=1248619
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| INTERVIEWS/FEATURES Go To Top Mumbai: The heat is on! Maruti Suzuki will add yet another small car to its range this summer and to add to the rising temperatures, the company decided to jet off to sweltering Malaysia to put together its commercial campaign for the new car. Back in India, the company was busy rolling out the first of its K12M engines that will power the new addition to its portfolio. In most countries it is called the Splash, but in India it will feature the Ritz moniker.
Based on the Swift platform, the Ritz is just 3.7 metres long. Designed to replace the Wagon-R in European markets, the Ritz is about 18 centimetres longer. The design of the car is in line with the current range of Suzukis and despite the tall boy approach, it looks less top heavy than the boxy Wagon-R. With the extra length, it has managed to liberate more interior room and this makes it a better environment to be in. Like always, there are bits and pieces of the Swift that can be found on the inside, but the overall quality is better than the Wagon-R.
With near similar underpinnings and the option of a petrol engine to begin with, the Maruti Ritz will take on the likes of the Hyundai i10 Kappa with its new K12M engine. This 1197cc four-cylinder uses a DOHC configuration just like the Kappa, but produces even more power. Rated at 84 bhp@6000 rpm, the power figure is just as impressive as the torque at 11.4 kgm@4500 rpm. So how come Maruti have managed to pull it off? Well, theyve adopted an all-aluminium engine with an innovative rocker-less DOHC camshaft, a distributorless ignition system, lighter pistons and nut-less conrods and a new silent timing chain to reduce NVH.
To assemble this marvel of an engine, Maruti Suzuki has localised most of the engine components to keep costs in check. This means when the engines roll out from Marutis Gurgaon drivetrain facility, they will be priced competitively enough to ensure the Ritz stays in the hunt of its competition. While the car is also available internationally with the 1.3-litre DDiS engine, we wont get it for now, until Maruti can satisfy the demands of the Swift and Swift Dzire with its limited production capacity.
While Maruti is tight-lipped about prices just yet, we think itll be priced around the i10 Kappa, which puts it in the Rs 4.25 to 5.25 lakh range. Given its slightly larger dimensions and better interior room, it could be a probable winner in the Indian market when it rolls out in May. A sizzling battle for your wallets is in the offing. http://www.business-standard.com/india/news/ritz-blitz/355419/
Srinivas Krishnan Business Standard (Motoring)
Mumbai: One of the pearls of wisdom that filtered through Groucho Marxs thick moustache is this: Time flies like an arrow, but fruit flies like a banana.
Yes, thats right. It hits you after a few moments, depending on the speed of the processor in your head. But have you ever heard something so exquisite, so profound, in the English language?
I have no legitimate reason to start this story with this immortal line other than the fact that this is a banana-shaped car that flies like an arrow. Tenuous link maybe, but what the hell, its true. After AMG has been through Mercedes-Benzs oxymoronically named four-door coupe, it has become even more slippery than the slipperiest banana and cuts through the wind to touch 100 kph in a ridiculous 4.5 seconds and 200 kph in 15.1 seconds. And an electronically limited top speed of 250 kph. Remember, it weighs close to two tonnes. And is a luxury car, mind you.
Its so well-built and well-appointed that the AMG 6208cc V8 and the related exhaust note, which in the SL 63 AMG sounds like Satan clearing his throat, sounds like distant thunder in the CLS. So much so that you check the rear view mirror expecting to see dark clouds. There is this muscular burble that emerges from the four oval exhaust pipes even when you are just puttering about, and when you rev the engine, it barks like er, Satans three-headed dog or even Cerberus. And its this soundtrack that makes you feel that you are in a special car and not in an ordinary CLS, if there was one. But does the CLS, which is a genteel car (and the very reason for its existence is to just look good), need AMG to fettle it? Its a bit of overkill, dont you think? Well, I do think so, but thats not going to stop me from going for several hot laps in it. Because its no use arguing about such trivial stuff when you have 507 bhp at 6800 rpm and 64 kgm at 5200 rpm from a naturally aspirated 6208cc eight-cylinder motor waiting to explode.
Explode it does. One moment, its just standing there, looking pretty and calling attention to itself like a dazzling woman, and then, in what feels like microseconds, its doing some crazy three-digit speeds like a hound from Hades (Cerberus!). At this moment, all I can do is hold the steering wheel tight, try not to look like a dribbling village idiot and whip it some more. The shift from crazy three-digit speeds to highly ridiculous three-digit speeds is instantaneous, the power delivery just does not flag. It is at moments like these when the surrounding scenery is blurring rapidly, when the road sign becomes road signed and when the car in front is the car at the back when I ponder about various inconsequential things in life. Like: wonder whats for dinner, when do I fit a new battery in my Tintin watch? Hope the raddi-wallah comes tomorrow, et cetera.
Maybe its caused by this immense rush of adrenaline that you detach yourself from the madness and think of other harmless aspects of your life. But the point I am making is that unlike in the SL 63 AMG (in our May 2009 issue), in the CLS 63 AMG, you can think. It is frighteningly fast, but doesnt feel so simply because you are so cosseted inside, except of course for the howl from the exhausts. Just dont look at the speedo, thats all. And when trying to break the sound barrier in the CLS, dont even by mistake look at the dial on the left of the speedo. Its a clock and in that speed buzz you may mistake it for something else and slam on the brakes in alarm. Just joking. For a car that revs like kingdom come, its not a handful in traffic and is actually pretty docile. The reason is that about 80 per cent of the torque 51 kgm is available at as little as 2000 rpm. Theres something about V8s, I tell you.
However, the best part I liked about the CLS is not its straightline acceleration, but when its time to corner hard. Matching every beat of the V8 is that AMG Speedshift Plus 7G-Tronic. You have both Comfort and Sport mode in automatic and the M manual override function. And while you are in M mode, you can hold the revs and it doesnt upshift or downshift automatically.
This gearbox has been tuned by the magic-makers at AMG to handle the performance available on tap. And they have gone one further. Like in the Nissan 370Z (only in the manual), the transmission actually blips the throttle automatically when you are downshifting in preparation of tackling a corner. While it just takes the entire experience a notch higher, what it does is allow you to keep the same intensity before you approached the corner. Without this function, the CLS would have perhaps balked and taken away the smoothness of exiting a corner.
The CLS is actually a big car. Its made to look like a coupe, but its a four-door coupe, remember. Mercedes-Benz did a clever thing by using the last-gen E-Class platform and creating this one of a kind (before the others got into the act) and priced it close to the S-Class. Still, the AMG CLS does not feel that large, it is, er, coupe-like and cosy. What that translates to is a large car that you can actually feel one with, its built around the driver and shrinks around him. The reason is that AMG sports suspension that does this shrinking trick. Based on the Airmatic air suspension with an adaptive damping system, the whole shebang adjusts to the road conditions and the speed automatically. You can keep it in any mode that you want depending on your mood, including a showboating comfort setting (hey, its a Mercedes-Benz and comfort is its middle name). The sport setting obviously lowers the body of the car and stiffens the suspension even more. It is best felt while you are cornering the CLS, it becomes nimble and gives the car a degree of precision thats frankly brilliant. Combined with the superb steering setup and grippy 19-inch rubber (255/35 at the front and 285/30 at the rear), you can apex corners as if you were a racing driver. Yes, the CLS 63 AMG makes you feel like one, despite, as I have mentioned earlier, its bulk.
In this test car especially, we had the optional AMG performance steering wheel, which is smaller in diameter compared to the regular one and the bottom section of the wheel is flattened. This is a must-tick on the options list and completes the sensory experience. What I however dont like about the CLS, even if its the AMG version, is the vast panel of wood on the dash that wont be out of place in a 1930s Merc. Mercedes-Benz may say its classy and stylish, but I feel that its more of an after-thought to fill up the acres of dash with something other than HDPE or PVC or whatever they use in dashboards nowadays. Suggestion: instead of wood (let it be in the regular CLS), use brushed aluminium, black metal or maybe even real carbon fibre in the AMG CLS.
As far as the cars looks are concerned, it still remains the best-looking of all the production Mercs around, despite being over five years old now. Maybe its that eternal banana shape. Time really flies like an arrow, doesnt it?
For even more AMGs and many more performance machines, do look out for our May 2009 issue its our Summer of Speed special! http://www.business-standard.com/india/news/going-bananas/355418/
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| The Hindu Business Line (Web & Print Edition) See similar story in: Daily News & Analysis (Web Edition), The Indian Express (Web Edition)
Hyderabad: After successfully tapping into urban and semi-urban markets, Hyundai Motor India Ltd (HMIL) has embarked upon a mission to tap the rural parts of the country through a new marketing initiative Hyundai Utsav.
The focus of this initiative is to step up sales in rural areas and tier-III cities across Andhra Pradesh and Punjab initially. Beginning April 18, the Hyundai Utsav initiative will be kicked off in over 50 venues in Andhra Pradesh and Punjab markets. The local wholesale marketplace or the Mandi which witnesses a large daily congregation of people will be the venue in many places.
The Senior Vice-President (Sales & Marketing), HMIL, Mr. Arvind Saxena, in a statement said We feel that 50 per cent of the 220 million rural households are potential car buyers and to tap this vast unexplored market we have launched the Hyundai Utsav campaign. We have tied up with banks offering a deeper network in rural villages. http://www.thehindubusinessline.com/2009/04/18/stories/2009041851121700.htm http://www.dnaindia.com/report.asp?newsid=1248562 http://www.indianexpress.com/news/hyundai-drives-into-rural-india-with-hyundai-utsav/448182/
Shweta Bhanot The Financial Express (Motobahn)
From the looks of it, Volkswagen Group Indias (VGI) days of waiting and watching are over. At the launch of Volkswagen Groups new plant in Indiaat the Chakan industrial park near Punelast month, Jochem Heizmann, member of the board of management of Volkswagen Aktiengesellschaft with responsibility for group production, said, With the start of production at our new plant in Maharashtra, the Volkswagen Group has conclusively arrived on Indias emerging market.
The message was clear. Simply put, VGI wants a bigger share of the Indian automobile market. To be precise, it wants to have a 8%-10% share of the Indian automobile market, where in now has a minuscule 2%. By next year, when the new Polo mid-luxury hatchback goes for production, the company plans touch 50% in terms of localisation, which will be gradually increased to 80% in two years. If all goes well, India will be VGIs regional hub for sourcing components and for exporting its products to the South East Asian countriesto begin with.
The groups newly opened Chakan plant near Punewhich has a capacity of 1,10,000 unitswill play a decisive role in following through the plan. With a total financial commitment in India amounting to 580 million euros, the Pune plant represents the largest investment to date by a German company, in the country.
The Pune plant is among the most modern in the Volkswagen Group. It has a high level of vertical integration and a large share of local suppliers. It is the only production plant operated by a German automaker in India that covers the entire production process, from press shop through body and paint shop to final assembly.
Volkswagen plans to employ some 2,500 people at the Pune plant by the end of 2010. The investment agreement to build the new plant was signed in November 2006just over two years before todays inauguration ceremony. Says Pinaki Mukherjee, lead analyst, Datamonitor India, The brand has been very aggressive worldwide and has the pulse of the Indian market too. Now the biggest challenge before it will be to build customer support and become a volume player in the Indian market.
VGIs line-up currently includes Bentley and Lamborghini (Rs 3 crore-plus) in the super-luxury segment. At the Aurangabad plant, VGI makes part of the luxury car Audi (Rs 28 lakh-Rs 50 lakh), besides the Skoda cars (Rs 5 lakh - Rs 24 lakh) including Fabia, New Superb, Laura and Octavia. It also sells Volkswagen Passenger Cars (range Rs 13 lakh-Rs 22 lakh) including Jetta and Passat. Porsche, that holds more than 50% of VW shares, is also present in India and sells cars in the range of Rs 50 lakh-Rs 1.3 crore.
The Chakan plant will roll out an entire range of compact cars it has lined up for the Indian market: Skoda Fabia, and the upcoming VW Polo and VW Up. The plant will produce cars in the Rs 3 lakh-Rs 6 lakh band. In precisely two years, when all three cars are in production, VW will have an entire spread in the Indian market.
VG Ramakrishnan, director, automotive & transportation, Frost & Sullivan, South Asia & Middle East, said, The role of VW in India will be defined by the kind of products it gets to India and at what price. VW has already given a feel of its product range to the market and its brands like Audi and Skoda have attained visibility.
India fits in snugly with Volkswagens global ambitions. VW is the worlds fourth-largest car maker after Toyota, GM and Ford. In Europe and China it is at the No 1 position. Joerg Mueller, president & managing director, VGI, has said, in so many words, that the company wants to become No 1 player globally. In Europe, the group is looking at a growth rate of 2-3%. In Asia, the growth prospects look better and the group is convinced this growth will come from India.
In times when the demand in the developed economies is saturating, any original equipment manufacturer (OEM) looking for growth will have to be in emerging markets, including India, because vehicle ownership levels are still low, leaving open great opportunities to grow, points out Abdul Majeed, auto analyst & partner, PricewaterhouseCoopers. He adds that greater visibility with well-priced models is the best way to attain growth and market share in the new markets.
In the immediate future, VW groups strategy will be to keep up the excitement with the launch of new products in various segments and by strengthening its dealership and the sales service network. In addition, it will look at bringing down cost and making its products affordable to a larger audiencewhich it hopes to achieve by pushing on greater localisation.
In the final analysis, VGI does not plan to confine itself to passenger cars and has talked about entering the light commercial vehicles segment. At present, our focus is passenger cars; but we are preparing to sell LCVs in the market too. We showed the T5 and the Caddy at the Auto Expo last year. We feel these two models are feasible for the Indian market. However, the volumes in this segment will be limited to start with, says Mueller
The Financial Express (Motobahn)
Designed for low speed, congested and urban conditions, the Reva electric car is currently sold in 10 countries and is being test-marketed in another 10. Chetan Kumar Maini, deputy chairman & chief technical officer, Reva Electric Car Company, spoke to FEs Malabika Sarkar about the companys expansion plans in domestic and export markets and about its upcoming launches.
What is the potential of the market segment in which Reva operates?
Its niche, but the potential is large. Our target is to be chosen as the second car in a household. Last year 40% or 40,000 cars of the total cars sold in India were second cars.
With the second car, the consumer does not need to ride 500 km a day or carry huge luggage. About 95% of the consumers drive less than 40 km per day. For this, the consumer will consider cars that have features like easy drivability, ease of parking and economy. For this kind of usage, Reva can save around Rs 4,000-Rs 5,000 a month, or around Rs 2 lakh over a period of five years. Plus there are no maintenance charges. So when you look at the market, there is an expanding second car segment that was not there 10 years ago.
Last year, the Government announced a 29.5% discount on the purchase of electrical vehicles. Has the company increased its production after that?
The discount of 29.5% is only for Delhi. The Delhi government has basically created an ambient air-quality fund, where it refunds 12.5% VAT, 2% road tax and gives a subsidy of 15%. Only after this announcement, the company has forayed into Delhi in July last year. The price of Reva is lower in Delhi than, say, Bangalore. In Delhi, Revas on-road price is Rs 2.99 lakh, compared to Rs 3.6 lakh in Bangalore. Now slowly the company is getting corporate orders from Delhi, for example, from MTNL. Right now we have showrooms in Delhi and Bangalore and are selling through Reliance Digital in Hyderabad and have appointed agents in regions like Mumbai. We have service centres in six-seven places like Pune, Mumbai and Goa. We plan to expand the companys sales network to about 15 cities in 10-12 states by the end of this year.
Reva is launching its new L-ion model in May this year. What improvements can we expect to see? Do you see India becoming a major manufacturing or export hub, since you... are planning to set up the second local manufacturing unit in the country?
The L-ion gives 120 km against 80 km of the current Reva-I model. With L-ion, 90% charging can be done in one hour. The current Reva-I owners can upgrade their cars with this technology. The company expects more sales for its L-ion in Europe, where the demand for more speed and range is high. India has a very strong R&D capacity. The production capacity at the companys existing plant stands at 6,000 units per annum. The upcoming second plant, which is expected to be operational by the end of this year, will have an additional 30,000 units capacity. We expect higher sales in the next three years and so we will require capacity additions to meet the demand.the companys manufacturing plants to meet such demand. We will launch one new model every year http://www.financialexpress.com/news/we-will-launch-one-new-model-of-reva-every-year/448220/2
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| COMMERCIAL VEHICLES Go To Top The Telegraph (Web Edition)
Calcutta: Swedish commercial vehicles major Volvo is eyeing about 25 per cent increase in bus sales this year. The company is banking on institutional purchases, especially orders from states.
The market is affected badly due to the current economic scenario. Business is coming mainly from institutional purchase and the state government orders under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), managing director of Volvo Buses India, Akash Passey, said.
The company sold 450 buses last year registering 100 per cent growth. Volvo is targeting a bigger pie of the city transport segment with low-floor air-conditioned buses.
Volvo which has already captured the city-bus markets in Bangalore, Chennai, Pune, Hyderabad and Mysore plans to enter the cities in the north and the east, including Calcutta. Under JNNURM, the Centre will fund buses for 63 cities to improve urban transport. Passey said Volvo expected to make a dent with its low-floor AC buses. Volvo buses have a higher life cycle than others.
Already we have a couple of hundred orders from the state governments. We are also in talks with three private transport operators in Bengal besides the state government, he said. http://www.telegraphindia.com/1090418/jsp/business/story_10838373.jsp
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| CONSTRUCTION & AGRI MACHINERY Go To Top Shally Seth mint
Mumbai: Two among three Indian tractor makers active in the US have stopped or pared production in the worlds second largest market for farm machinery by volume after demand fell due to a recession.
Tractors made by Escorts Ltd, Mahindra and Mahindra Ltd (M&M), and Tractors and Farm Equipment Ltd (Tafe) compete in the entry segment ranging from 35 to 80hpin the US, a market where demand by volumes is dominated by tractors in this range.
While Faridabad-based Escorts has stopped production in its North Carolina factory, M&M, which is Indias largest farm equipment maker by volume, has cut back production in one of its three plants in the US, according to executives at the two companies.
Rohtash Mal, executive director and CEO of Escorts agri-machinery group, said his firm is selling in the US, but not producing given that it has some 2,000 tractors in its inventory in that country. As soon as the situation improves, we will reassess and we will feed the market with more, he said.
Elsewhere, M&M has pulled back production at its Georgia factory, which Anjanikumar Choudhari, president of the Mumbai-based firms farm and equipment business, said was in line with the market situation there. He added the firm had retrenched some 30% of its employees and several daily wage earners in Georgia.
We have, however, managed to protect our market share, Choudhari said. Tractor exports at M&M from India, too, have marginally declined in the fiscal year ended 31 March from 4,500 to 5,000 the firm sold in fiscal 2008, he added. Exports contracted by 19% to 7,013 in 2008-09. Other tractor firms such as International Tractors Ltd, which makes the Sonalika brand, also exports to the US but in small numbers. India is the worlds largest market for tractors by volume.
Not all tractor makers selling to the US, however, have suffered. Chennai-based Tafe, an Amalgamation group firm that sells the Massey Ferguson brand tractors with its collaborator AGCO Corp. in the US, said its exports to that country in fiscal 2009 had increased from the previous year. Tafe director Mallika Srinivasan declined figures for the US, saying only that the firms overall exports had grown by 11.4% to 8,835 units in the fiscal year.
In the US, we have managed to grow and strengthen our market share because of newer products, which have been well accepted, she said. Tafe sells tractors ranging from 35hp to 75hp in the US.
Tractor exports, excluding production at international factories, from India are estimated to have declined 12% to 39,000 units in fiscal 2009, according to M&Ms Choudhari. The size of the tractor market in the hobby farming segment is estimated to have sales of 50,000 to 60,000 a year, accounting for at least 70% of the total tractor market there, Choudhari said.
Such tractors are owned by people who farm on the weekends more as a hobby than an occupation, Choudhari said. Owing to the meltdown, lot of these farmhouses have been sold and leisure activities have come down, he said.
The news of contraction in demand for M&M and Escorts products comes at a time of flat growth of domestic tractor sales. In fiscal 2009, tractor demand in India is estimated have been 303,882, which represents a growth of 0.5% over the previous year, according to Choudhari, who is also the president of industry body Tractor Manufacturers Association. He estimates domestic tractor sales will grow between 5% and 8% in fiscal 2010. http://www.livemint.com/2009/04/18003328/Indian-tractor-makers8217-U.html
'OVERALL FUNDAMENTALS OF THE TRACTOR INDUSTRY ARE STRONG': ANJANI KUMAR CHOUDHARI, PRESIDENT, FARM EQUIPMENT SECTOR & GROUP MANAGEMENT BOARD MEMBER, M&M The Financial Express
With tractor ownership in India being less than 10%, the lower penetration is expected to boost the domestic tractor industry, which has seen a flat growth last year. Anjani Kumar Choudhari, president farm equipment sector and group management board member, Mahindra & Mahindra Limited (M&M), spoke about the industry drivers and the company's China strategy in an exclusive interview with FE's Shweta Bhanot. Excerpts:
What are the key drivers for the Indian tractor market?
The tractor industry has a certain cyclical nature and depends heavily upon what happens in the general rural economyinvestments by the government, monsoons and availability of credit at affordable rate. Over the last few years, the government has been encouraging the extension of rural credit. Last year, the target was at Rs 2.8 lakh crore, which has been boosting the growth. In the last six years, the tractor market has grown by 89%. For FY09, the domestic market was about 3,04,000 tractors compared with 1,60,000 tractors in 2003. The year (FY09) saw a pretty good first half at a time when commodity prices were going up; lot of high minimum support prices and big credit waiver was announced by the government. However, then came the global meltdown and its impact on India. There was a general economic drop in sentiments despite a third consecutive great monsoon last year. The banks clamped down on credit as they were worried. And since 80%-85% of the tractors are bought on loan, making credit available at affordable interest rates is crucial. The industry took a hit. It ended with almost a flat growth.
How do you think the industry would fare this year?
Owing to the general elections this year, there could be some uncertainty. However, overall fundamentals of the tractor industry are strong as we have nowhere reached the maturity in the market. In India, tractor ownership is very low. If you look at all farming households, the ownership is less than 10%. However, at the same time the usage is as high as 35%. This means a large number of farmers hire tractors. There is clearly a lot of scope for more ownership and greater penetration in the market. I expect the industry to grow at 5%-8% this year. At M&M, we do hope to grow more than the industry this year and in the long term are looking at a compounded average growth rate (CAGR) of 6%-8%...
The government has realised that if we want the GDP to grow at 9%-10% then the agriculture sector will have to grow at 4%. In addition, with two-third of people living in rural areas, the rural economy will be of priority for any party that comes into power.
The company is making its presence felt strongly in China via joint ventures. What is the path ahead?
China is a very high priority market for us. We have formed two joint ventures in the marketMahindra China Tractor Company Limited and Mahindra Yueda Yancheng Tractor Company-in the last few years. We plan to attain a market share of 15% in the next two to three years. It will be a disappointed if we sell less than 35,000 (inclusive of exports) between the two JVs. We have a three-pronged strategy for the Chinese market. One is to develop business via JVs and use the brands that have come with them to export out of China. Secondly, we plan to set up product development centre in a bid to enhance product development capabilities which might become big in the years to come. We find complementary strengths between us and our JV partners. The designs capabilities and fuel efficiency of the engine are better here while there the speed of development is faster and have advantage of material cost. So, we plan to take some of our export models currently produced here and see how we can develop those by enhancing product development resources in China and try to make China as our export hub. In the next 5-10 years, one would see much larger export operation out of China not only with the tractors currently exported but also some of the products we export from India and whether we can start co-developing them in China. Also, we plan to source components from China. We have started in a small way around Rs 2-3 crore sourced. Many of these are proprietary items like front axle, bulbs and fasteners. With our larger JVs we will get economies of scale and enhance our buying from there.
How do you see at Chinese market?
Till recently, China was a small market for geared tractor. In 2003, the industry, including exports, was 54,000 tractors and in 2008 it grew to 2,25,000 tractors. It has grown at 307% in five years. There are couple of reasons behind...
it. In China, there use to be huge communes and there was collective ownership. Even the land/property cannot be owned by an individual and also tractors were collectively owned. About 5 years ago, we all know how fast the Chinese economy grew. There was much growth in the city and rural economy was not growing as rapidly. Like India, even in China two-third of the population stays in rural areas and there became huge potential of social unrest. And then the Chinese government realised there was a need for more equality. They took steps to encourage agriculture.
They allowed government-owned land to be leased by individuals for 5-15 years. Further, to encourage people to stay on the farm and not migrate they waived off income tax on agriculture. In order to modernise the agriculture, they have announced subsidy on the farm equipment. In 2008, the subsidy was around $ 500 million). So 1/3rd of the cost of the tractor is covered by the subsidiary or 35%. This has been the reason for the growth of the industry.
How is the performance of export market?
There has been an overall drop of 20% in the exports of the industry. Our exports to US, too, were majorly hit. However, in the long run the US is a strong market. Our focus will remain on markets including the US, China and Africa.
Which range of tractors is expected to see major growth? Any new launches planned?
We see the fastest growth in the above 50 horse-power (hp) segment and plan to introduce tractors in this range. The tractors are classified into less than 30 hp, 30-40 hp, 40-50 hp and above 50 hp. We have tractors up to 75 hp. Also, we are modernising and improving our range of 30-40 hp tractors. We are working on launching below 30 hp tractors which offer very good value for money. In the below 30 hp segment, there is a small Chinese tractor in field testing right now from our JV. We have also launched bio-diesel tractors in Maharashtra and have CNG tractors ready for the market.
How has been the journey after the acquisition of Punjab Tractors Ltd?
We have been able to postpone an investment of around Rs 300 crore in new capacity which M&M Tractors Division would have required. This is because the two Mohali plants of PTL provided
us additional capacity of 65,000 tractors, expandable up to 75,000. Since our FY09 production of Swaraj tractors is about 35,000 we have no need for additional capacity for a few years.
The low cost supplier base of PTL in North India is being used by M&M now for sourcing many components. The larger scale of the combined business has given us significant savings via economies of scale in sourcing from common suppliers, in stockyard and logistics arrangements.
(Swaraj and Mahindra now share the same service providers) http://www.financialexpress.com/news/overall-fundamentals-of-the-tractor-industry-are-strong/448297/1
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| 2/3 WHEELERS Go To Top Bloomberg See this story in: mint
Mumbai: Hero Honda Motors Ltd, Indias biggest motorcycle maker, expects sales this year to climb 7.5% to a record as it boosts output to meet demand from the countrys growing middle class.
Hero Honda plans to sell at least 4 million motorcycles and scooters in the year ending 31 March, compared with 3.72 million a year earlier, chief financial officer Ravi Sud said in an interview on Friday. The company will double production at its Haridwar factory. Shares of the company surged 2.81% to Rs1110.55, their highest since at least 1991 after the company forecast higher sales. http://www.livemint.com/2009/04/17233932/Corporate--Hero-Honda-sees-re.html
HONDA UNVEILS NEW ACTIVA IN BANGALORE Deccan Herald
Bangalore: Honda Motorcycles & Scooter India Pvt Ltd (HMSI), 100 per cent owned two-wheeler subsidiary of Honda Motor Company, Japan, on Friday, announced the Bangalore launch of New Honda Activa Standard variant in the City. Briefing reporters, Honda Motorcycles & Scooter India General Manager Finance Kabra said we believe in constant innovation and providing the best quality products for our customers. We are confident of the southern market as South India accounts for 34 per cent of the total sales of the company. Priced at Rs 41, 336 ex-showroom Bangalore, the new Activa is powered with a 110 cc engine and enhanced features including increase in storage capacity. The company claims it comes with 15 per cent increased mileage capacity and will be available in six colours Candy Lucid Red, Pearl Sunbeam White, Wild Purple Metallic, Space Silver Metallic, Geny Grey Metallic and Black. http://deccanherald.com/Content/Apr182009/business20090417130842.asp
MUNJAL SHOWAS NEW UTTARAKHAND PLANT The Hindu Business Line
Mumbai: Munjal Showa Ltd has informed the BSE that the company has inaugurated new plant in Uttarakhand on April 13.
The company has gone for an expansion of its plant to meet the increasing demand of shock absorbers by the Original Equipment Manufacturers (OEMs). http://www.thehindubusinessline.com/blnus/02171251.htm
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| COMPONENTS Go To Top Chanchal Pal Chauhan The Economic Times
New Delhi: Delhi-based auto component maker Ashok Minda Group, plans to set up a new manufacturing facility in Uzbekistan with an initial investment of $25 mn (Rs 125 crore) to feed Russian and CIS markets, said the group chairman. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
THE LONG HAUL FOR AUTO COMPONENTS Abdul Majeed The Financial Express (Motobahn)
The Indian auto component industry has come a long way and the extraordinary growth has been driven by a buoyant economy, continuous increase in purchasing power, especially of the middle class, new product launches and attractive financing schemes. It has emerged as one of the faster growing Indian manufacturing sectors and the compounded annual growth rate (CAGR) for the last five years was over 25%.
The industry has adopted a growth strategy which mainly includes market expansion, product portfolio enhancement and continuous improvements in quality and efficiency. Over the last 10 years, from 1996-97 to 2007-08, the auto component production has increased from $3.3 billion to $8 billion, exports have increased from $330 million to $3.6 billion and the overall investment has increased from $2.3 billion to $7.2 billion. The domestic vehicle market has also grown significantly over the same period with the total volume (including two- and three-wheelers) of 10.7 million in 2007-08 compared to 3.9 million in 1996-97.
In case of exports, historically the industry was more focused on after-market sales and supplies to after-market segment were around 70%; now this has changed. The supplies now are approximately 75% to original equipment manufacturers (OEM) and tier-1 suppliers and the balance is to after market segment. This key development indicates increasing reliance of global OEMs and tier-1 suppliers on the capability of Indian auto-component manufacturers with regard to meeting the set technical standards as well as meet stringent quality norms.
The industry is gradually evolving as a world-class industry and many Indian component players are implementing stringent quality norms and modern shop floor practices such as 5-S, 7-W, Kaizen, TQM, TPM, 6-sigma and lean manufacturing. The Indian auto-component industry is highly fragmented, lacks scale to achieve the efficiency. Organised players constitute about 75% of the production and are geographically spread throughout the country, especially in the auto-hubs such as NCR, Tamilnadu, Karnataka and Maharashtra (Pune and Mumbai). It is now recognised that India is the base for compact car manufacturing and with the launch of Tata Nano, the dynamics in the small-car segment will change and this also helps to establish the credential of India as a leader in the small car segment that will in turn help significantly the Indian auto-component industry.
To achieve the set goals and reach this global ambition, there is a need for large-scale manufacturing facility in India which requires investments as well as further consolidation in the Indian... auto-component industry. Issues such as high cost structures should be addressed compared to other low-cost manufacturing countries. The author is auto analyst, PricewaterhouseCoopers... http://www.financialexpress.com/news/the-long-haul-for-auto-components/448223/2
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| ALLIED INDUSTRY Go To Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CORP BANK PACT WITH TVS MOTORS The Hindu Business Line
Mangalore: Corporation Bank has signed a memorandum of understanding with TVS Motor Company for financing TVS King (passenger auto-rickshaw). A bank release said here on Friday, that under the agreement, customers will have to pay 15 per cent of the on-road price to avail themselves of the loan with low interest rate options. The rate of interest for a three-year loan period would be 11 per cent on a diminishing balance, and 11.25 per cent for a five-year loan period. T he processing fee will be 0.5 per cent on the loan amount, the release added. http://www.thehindubusinessline.com/2009/04/18/stories/2009041851550600.htm
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| LUBRICANTS & ALTERNATIVE FUELS Go To Top Reuters See this story in: The Times of India
London: Oil prices fell below $50 a barrel on Friday as traders focused on brimming crude inventories, although equities markets provided a modicum of support. http://timesofindia.indiatimes.com/Business/Oil-dips-below-50-equities-lend-modest-support-/articleshow/4414706.cms
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| INTERNATIONAL NEWS Go To Top The Financial Express
Detriot: US automaker Chrysler, already operating under government emergency aid, would cede control of its board and ultimately senior leadership if it completes a planned alliance with Italys Fiat SpA.
The US government and Fiat would appoint a board of directors for Chrysler, with a majority of them independent and not employed by either automaker, Chrysler chief executive Bob Nardelli said on Thursday in an internal memo to staff.
The board will have the responsibility to appoint a chairman, Nardelli said in the memo, a copy of which was obtained by Reuters. The board also will select a CEO with Fiats concurrence.
That could mean the end of Nardellis tenure at Chrysler, where he was named chairman and CEO in 2007 shortly after Cerberus Capital Management acquired its 80.1% stake in the automaker from Daimler AG.
Chrysler and Fiat have been in talks to complete a partnership by the end of April to meet the requirements of US government emergency aid and avoid a bankruptcy filing. The US autos taskforce rejected Chryslers turnaround plan in late March and gave the company until the end of April to cement the Fiat alliance and reach agreements with its unions to slash labor costs and with its lenders to cut debt.
We continue to review the status of all stakeholder discussions with Fiat, as the achievement of concessions is a condition of the alliance, Nardelli said.
The deal with Fiat hinges on Chrysler securing concessions from unions in the United States and Canada, as well as agreement with those who hold Chryslers first-lien loans, which includes a group led by JPMorgan Chase & Co (JPM.N) and others.
Fiat Chief Executive Sergio Marchionne has criticised the Canadian union, saying that a lack of progress in talks between it and Chrysler had hurt the chances of securing an alliance.
But Fiat Chairman Luca Cordero de Montezemolo denied on Friday a news report that the Italian car maker could look at General Motors German unit Opel as an alternative. Reuters http://www.financialexpress.com/news/us-fiat-to-name-chrysler-board-ceo-in-alliance/448244/
VOLKSWAGEN SNAPPING AT TOYOTA HEELS TO TURN CARMAKER NO 1 Reuters See this story in: The Economic Times
Tokyo/Frankfurt: Volkswagens global vehicle sales fell by 11.4% in the first quarter but its market share gains may have let it overtake Japans Toyota Motor as the worlds top-selling automaker.
CHRYSLER CHIEF TO BE JOINTLY PICKED BY FIAT, US GOVT Bloomberg The Economic Times
Southfield: Chrysler LLCs proposed alliance with Fiat SpA would usher in a new chief executive officer and a largely independent board picked by the Italian automaker and the US government.
GM CEO WARNS BANKRUPTCY MORE PROBABLE Reuters See this story in: The Economic Times, The Financial Express
Detroit: General Motors Corp Chief Executive Fritz Henderson said on Friday the automaker could still restructure out of court, but warned it was more probable GM may need to seek bankruptcy protection to complete that process. http://economictimes.indiatimes.com/News/International-Business/GM-CEO- http://www.financialexpress.com/news/gm-will-require-quick-bankruptcy/448246/
FIAT NOT LOOKING AT OPEL: FIAT CHAIRMAN Reuters See this story in: The Economic Times
Rome: Fiat Chairman Luca Cordero de Montezemolo denied on Friday the Italian car maker was looking at General Motor's German unit Opel.
Italian newspaper Corriere della Sera said earlier in the day Fiat could be looking at Opel as an alternative to Chrysler LLC, with which it is talks to form a partnership. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ECONOMY & FINANCE Go To Top The Hindu Business Line
Mumbai: The countrys forex reserves declined by $2.183 billion to touch $252.977 billion during the week ended April 10, according to the Reserve Bank of Indias Weekly Statistical Supplement. In the earlier week ended April 3, forex reserves had increased by $2.834 billion to touch $255.160 billion.
The fall in the reserves was on account of currencies such as the yen and the euro depreciating against the dollar in the overseas market.
In the week under consideration, foreign currency assets fell by $2.174 billion to $242.423 billion. Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen held in reserves. Gold and SDRs were unchanged at $9.577 billion and $1 million respectively. The reserve position in the IMF fell down by $9 million to $976 million. http://www.thehindubusinessline.com/2009/04/18/stories/2009041851510600.htm
PTI See this story in: The Hindu Business Line
Mumbai: Riding on a rally in realty, banking and IT stocks, the Bombay Stock Exchange benchmark index on Friday ended higher by over 75 points to resume its winning ways. Aggressive buying by foreign institutional investors saw the bellwether index rising by close to 400 points before profit selling in the last session ahead of the weekend washed out the lion's share of initial gains.
Realty, banking and IT counters bucked profit-booking to help the benchmark Sensex cut short its steep losses overnight and settle the day higher by over 75 points.
The 30-share barometer touched a high of 11,339.47, a rise of about 392 points from yesterday's close. However, profit-booking pulled it down to settle the day at 11,023.09, still a rise of 75.69 points or 0.69 per cent over its last close.
Similarly, the 50-issue Nifty of the National Stock Exchange also recovered by 14.90 points or 0.44 per cent to 3,384.40 from its previous close.
FIIs were said to be net buyers to the tune of Rs 479.09 crore while domestic funds sold shares worth Rs 1,124.24 crore on Thursday as per provisional data. Asian indices ended mixed while European markets resumed higher, partly helping the bellwether i ndex to land in positive terrain at close. http://www.thehindubusinessline.com/blnus/05171901.htm
PMS PANEL PEGS GROWTH AT OVER 7 PC PTI See this story in: The Tribune
New Delhi: Prime Minister's Economic Advisory Council (PMEAC) said it expects the country's economy to grow at over seven per cent in the current fiscal as it has already started showing signs of recovery.
"Seven per cent plus is what my 2009-10 overall forecast is...I think it has already started recovering in my own assessment," PMEAC chairman Suresh Tendulkar told on the sidelines of a conference on broadband here.
He further said it expects rebound in the economy after September as the worst was over. "I have been maintaining that the worst is already over, (I expect) good recovery after September," Tendulkar added.
Asked if the contracting industrial production worried him, he said the revised industrial production numbers were higher than the provisional ones, so it did not bother him much. Despite three stimulus packages announced by the government, the Indian economy grew by 5.3 per cent in the third quarter of the last fiscal, its lowest rate in over five years, against a whopping 8.9 per cent a year ago.
In the first nine months of last fiscal, the economy grew by 6.9 per cent. For whole of 2008-09, the advance estimates of Central Statistical Organisation (CSO) pegged the economic growth at 7.1 per cent, which seems a tough task in the wake of dismal industrial growth numbers. http://www.tribuneindia.com/2009/20090418/biz.htm#4
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Sunday, April 19, 2009
Auto Industry News
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