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| INDUSTRY INTERVIEWS/FEATURES Indian venture scouts foreign shores for talent Bajaj-Renault small car plan hits a roadblock Hyundais LPG variant for Accent COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY Bajaj Auto to make scooter to take on the Honda Activa Bajaj Auto net rises 8% despite slump in sales Bajaj Auto Q4 net drops 50% to Rs 70 cr Bajaj draws up China strategy for bikes | ALLIED INDUSTRIES FINANCE & INSURANCE LUBRICANTS & ALTERNATIVE FUELS INTERNATIONAL NEWS GMAC to get $7.5 bn federal funds: Report Two versions of Fiat offer to GM: Report Kidder Named Chrysler Chairman SKorean auto workers strike over plan for mass layoffs ECONOMY & FINANCE Inflation rises to 0.61% on higher food prices
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| INDUSTRY Go To Top Murali Gopalan The Hindu Business Line (Web & Print Edition) Mumbai: Auto sales have been brisk over the last three-four months but Dr Pawan Goenka, President of Mahindra & Mahindras Automotive Sector, is not convinced that the turnaround has happened yet. He also reiterates that a lot more work needs to be done to revive the sector. All of us in the auto industry are sitting on the edge where we are closer to the start of the slope rather than halfway to the peak. A lot of effort is still required to go uphill because the way downhill is much faster, he told Business Line. And even as the new government gets ready to take charge, Dr Goenka cautioned that it was important that excise duty and interest rates did not move upwards while keeping an eye on the overall liquidity position. A slight improvement in any of these three areas is welcome but any move to reverse the direction could result in a collapse, he said. According to him, the biggest fear was this general feel-good air all around that the auto industry had turned the corner. If there is no additional help and if some of the recent incentives are removed, things can get really bad. At worst, we must maintain what we have and at best, we must get something more so that we move upwards, Dr Goenka said. Demand burst The reason for this outlook stems from the fact that sales during the last three months have been a result of the stimulus package, which included excise duty cuts, improvement in liquidity and other initiatives to spur demand. One must bear in mind that people did not buy in October, November and December last year. When things improved a bit (thanks to the incentives), there was a lot of movement from this category who had postponed purchasing vehicles, he said. In a nutshell, the momentum in the early part of 2009 was the pent up demand of October-December coupled with new customers coming in during February-April. The negatives of October-December could have gone but whether the positives have already come in will only be known in the second quarter of this fiscal. If we see a growth of 5-8 per cent in Q2, then one can say that the turnaround is happening and that industry is on the rebound, he said. Sustain Momentum Apart from keeping its fingers crossed that the new Government will not undo any of the recent initiatives, the auto sector is also hoping that there is greater parity in excise duty for small and mid-size cars, now at 8 and 20 per cent respectively. Similarly, companies say that it is high time that the additional excise levy of Rs 15,000-20,000 on vehicles of 1500cc-2000cc is removed. According to Dr Goenka, there was yet another risk from commodity prices despite the fact that they were a lot more stable now. The industry suffered so much last year that nobody has the ability to take the punch of another price spiral. Should it happen again, it will have to be passed on to the end-user, he said. In his view, it was important that industry and the Centre worked with the same kind of intensity seen during the last few months when the stimulus packages were prepared. In my view, this was a very good example of collaboration between the two to overcome the crisis. Together, we have created an environment for customers to buy products and the momentum must be sustained, Dr Goenka added. http://www.thehindubusinessline.com/2009/05/22/stories/2009052251590300.htm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| CARS, SUVs, MUVs Go To Top Nandini Sen Gupta The Economic Times (Web & Print Edition) Maruti Suzuki, for long Suzuki Motor Corps biggest overseas operation in volume terms, has emerged as the biggest driver of its Japanese parents profits, earning for itself greater freedom to take key commercial decisions and the promise of more cash to develop cars for the local market. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/Maruti-now-drives-Suzukis-profit/articleshow/4562211.cms INDIAN VENTURE SCOUTS FOREIGN SHORES FOR TALENT The Economic Times (Delhi Print Edition) Maruti Suzuki India Ltd (MSIL) is now looking at foreign shores for talent, reports Anirvan Ghosh from Bangalore. The company is planning to hire top Indian engineers from Detroit, who are now staring at a bleak future after big automakers like GM and Chrysler were dealt a crushing blow by the ongoing recession. Indians with good experience and speciality skills are looking to come back, said MSIL GM (corporate) Kanwaldeep Singh. Company top management, including chairman RC Bhargava, HR Head S Siddiqui, and R&D chief IV Rao were camping in Detroit last week to select some of the candidates who have super-speciality skill sets. These skills are missing here. A fresher has to be trained at least three years to develop them, Mr Singh added. He said that some such skills were in the sub-component category, like certain areas within the overall engine management, or braking systems. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" MARUTI LOOKS TO OVERHAUL PRODUCTION PROCESSES TO BOOST OUTPUT Sudha Menon Mint (Web & Print Edition) Pune: Faced with capacity constraints at its plant in Manesar, Haryana, as demand for its A-Star and Alto compact car models surges from buyers in Europe, Maruti Suzuki India Ltd is considering ways to increase car output from the plant by improvements in the production process. A decision to invest in expanding the 300,000 vehicles a year plant will be made only after demand exceeds the incremental output from such productivity enhancements, a company executive said. Such a decision will also hinge on demand for the cars continuing in European markets after September, when government incentives for buying smaller, environment-friendly cars expire, Marutis managing executive officer, production, M.M. Singh, said here late on Wednesday, on the sidelines of the launch of its Ritz compact car. We are not sure if the demand will continue after the governments withdraw incentive schemes and dont want to take decisions on expensive investment, based on two-three months of demand, Singh said. Demand for the Euro V, left hand drive Alto model that meets the Euro V emission standards has spiked across the UK, France, Germany and other countries where governments are offering coupons of 1,500 to buyers as an incentive to replace old cars, partly in an effort to prod a slowing economy. Productivity-enhancing measures at the Manesar plant include flexible assembly operations. Demand for models from the plant keep changing and introducing flexible body shops, flexible assembly lines that helps us to switch effortlessly to producing vehicles for which demand is increasing, is one way of working around a capacity constraint, Singh said. Last year the company introduced a flexible body shop (used to create body shells of cars) at Manesar that allows it to seamlessly manufacture vehicles of different dimensions. With the use of software and sophisticated electronics, it is now possible to (produce vehicles of different dimensions), Singh said, adding that his company plans to increase automation. The number of hours taken to produce a car has halved in the last five years at Maruti, he said, without giving details. Maruti commenced exporting the A-Star that sells for 7,500-8,000 in various markets, in January this year, selling 20,000 units up to 31 March. It plans to export 100,000 units of the car in fiscal 2010. Some 30,000 of these will be sold to Nissan Motor Co. that will sell it as the Pixo brand overseas. http://www.livemint.com/2009/05/21214543/Maruti-looks-to-overhaul-produ.html BAJAJ-RENAULT SMALL CAR PLAN HITS A ROADBLOCK The Economic Times (Web & Print Edition) Mumbai: Bajaj Auto and Renault's plans of launching an ultra small car to take on Tata Motors' Nano may get delayed once again as a new set of difference over branding crops up between the two partners. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Bajaj-Renault- HYUNDAIS LPG VARIANT FOR ACCENT The Hindu Business Line (Web & Print Edition) See similar story in: The Tribune (Web Edition), The Indian Express (Web Edition), The Hindu (Web & Print Edition), Deccan Herald (Web Edition) New Delhi: Hyundai Motor India Ltd on Thursday launched LPG variant of its sedan Accent. The LPG Accent is priced at Rs 5.34 lakh, nearly Rs 34,900 more than the existing petrol version. The new variant, which is named as Accent Eco, sports a 1.5-litre engine. It has a separate 45 litre petrol and a 27.2-litre LPG fuel tank. The factory-fitted LPG kit in the Accent enjoys a two-year manufacturer warranty, said Mr H.S. Lheem, MD, in a statement. http://www.thehindubusinessline.com/2009/05/22/stories/2009052251570300.htm http://www.tribuneindia.com/2009/20090522/biz.htm http://www.hindu.com/2009/05/22/stories/2009052256262000.htm http://www.deccanherald.com/content/3774/hyundai-launches-accent-eco.html | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMERCIAL VEHICLES Go To Top Deepa Jainani The Financial Express (Web & Print Edition) See this story in: The Indian Express (Delhi Print Edition) Lucknow: In order to ensure basic transport services to the urban areas of the state under the Jawaharlal Nehru National Urban Renewal Mission, the Uttar Pradesh government on Thursday finalised the purchase of a combination of 1310 state-of-the-art air conditioned and non A/C low floor buses, which would play across seven cities of the state. The seven cities include Lucknow, Kanpur, Allahabad, Varanasi, Agra, Meerut and Mathura. According to Navneet Sehgal, secretary to UP chief minister Mayawati, the government on Thursday sanctioned the deal and said that the majority of the buses would be purchased from Tata Motors. The government has decided to form seven shell companies and initially, the Uttar Pradesh State Road Transport Corporation would be running these buses, which would later be handed over to private parties through transfer. We have already invited private companies to come forward to run them and we expect that by the end of June, the first phase of the buses would have been launched, he said. The JNNURM aims at an integrated development of infrastructure services by providing adequate funds to meet the deficiencies in urban infrastructure services. This includes funding infrastructure projects relating to water supply and sanitation, sewerage, solid waste management, road network, urban transport, and redevelopment of old city areas. The programme lays special emphasis on urban renewal programme for the old city areas to reduce congestion. It also attempts to ensure planned development of cities including peri-urban areas, outgrowths and urban corridors leading to dispersed urbanisation. It may be mentioned that the Centre has sanctioned about Rs 4,000 crores as one time grant under the JNNURM for purchasing buses for public transport system by states as an economic stimulus package in February this year. States are allowed to purchase about 15,000 buses under the second economic stimulus package. Of the 1310 buses sanctioned, 300 buses have been allotted for Lucknow and Kanpur and 200 each for Varanasi, Allahabad and Agra. The other cities where these buses would ply are Mathura and Meerut. http://www.financialexpress.com/news/up-govt-in-pact-with-tata-motors-for-jnnurm-buses/463862/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSTRUCTION & AGRI MACHINERY Go To Top | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/3 WHEELERS Go To Top Reuters See this story in: mint Mumbai: Bajaj Auto Ltd expects new launches to drive double-digit growth in motorcycle sales in 2009-10 after volumes fell 11% in the last fiscal year, managing director Rajiv Bajaj said on Thursday. After the company reported a lower-than-expected March quarter profit, Bajaj said a line-up of only entry-level and premium bikes had hit sales, but the launch of a mid-tier bike in July should give it a better balance across segments. We see a greater growth for two-wheelers from the domestic market this year, he told reporters and analysts. We need to get the product right in the mid-segment. We need one solid success. Hopefully that will happen when the new launch takes place in July. Ahead of the launches in the second half of the year, Bajaj said there had been a marginal improvement in sales in May. Bajaj Auto said net profit for the quarter ended 31 March, its fiscal fourth quarter, rose 7.4% to Rs1.3 billion ($27.4 million). Sales dropped 9% to Rs18.83 billion. A Reuters poll of brokerage had forecast net profit of Rs1.72 billion on net sales of Rs19.22 billion. The company said it took a charge of Rs610 million for a voluntary retirement scheme and mark-to-market loss of Rs220 million on foreign exchange hedges. For 2009-10, which began on 1 April, the company has hedges worth $535 million in the range of 47 to 55 rupees per dollar. The rupee ended at 47.4 on Thursday, near its high for 2009. The company got some benefit from easing steel prices in the March, and said the the full benefit of reductions in steel and aluminium prices was expected in the current quarter. Unique Bajaj expected to launch in 2011 a small car being jointly developed with Frances Renault and Japans Nissan Motor Co, although there was no formal memorandum of understanding yet as negotiations were still on over branding. We continue to work with Renault and Nissan to develop this car, Bajaj said, adding since his company was a new entrant to the car market, it had to develop a unique vehicle. Bajaj is looking to establish a clear brand identity. Shares in Bajaj, which has a market value of $2.7 billion, rose 5.6% to Rs934.2 in a Mumbai market fell 2.3%. The stock has risen 139% so far this year. http://www.livemint.com/2009/05/21192652/Bajaj-Auto-sees-FY10-motorcycl.html BAJAJ AUTO TO MAKE SCOOTER TO TAKE ON THE HONDA ACTIVA PTI See this story in: The Economic Times, The Pioneer Mumbai: Bajaj Auto on Thursday said it is developing a scooter that would take on the Honda Activa but it is at least two years away from launch. "We are developing a new scooter. It is a couple of years away from launch," Bajaj Auto MD, Rajiv Bajaj, told reporters here. http://www.dailypioneer.com/177679/Bajaj-Auto-to-take-on-Activa.html BAJAJ AUTO NET RISES 8% DESPITE SLUMP IN SALES The Hindu Business Line See this story in: Business Standard Mumbai: Reduced raw material cost, a shift in focus to higher priced products and tax benefits helped Bajaj Auto post an eight per cent increase in standalone net profit at Rs 130 crore for the fourth quarter of 2008-09 against the year-ago period. This is despite a 22 per cent slump in two-wheeler sales at 3.75 lakh units and a seven per cent fall in three-wheelers during January-March. We are focusing on the domestic market and anticipate double-digit growth. Exports this year will be flat. We expect a significant increase in sales from August as we are launching a new product in July, said Mr Rajiv Bajaj, Managing Director, at a press meet to announce the results. The total income for the fourth quarter at Rs 1,883 crore showed a nine per cent fall. Reduced raw material costs, especially iron and aluminium, contributed to savings of Rs 248 crore. The company moved a significant part of production to its Pantnagar plant in Uttarakhand which reduced the tax outgo by Rs 8 crore. On the ultra low-cost (ULC) car project being commissioned with Renault and Nissan, Mr Bajaj said that issues regarding its branding had to be ironed out before signing the formal memorandum of understanding. The company is also working on a new scooter with an USP rooted in specific technology that will take a couple of years from now. Bajaj Auto is launching a product with KTM in India next year. This will be a platform for a bigger bike which will be launched in 2010. It will be designed in Austria and manufactured in India. The second platform will be ready in 2011, he said. On Thursday, Bajaj Autos share price was up 5.6 per cent on the BSE at Rs 934. http://www.thehindubusinessline.com/2009/05/22/stories/2009052252190100.htm http://www.business-standard.com/india/news/bajaj-auto-net8-to-rs-130-crore/358857/ BAJAJ AUTO Q4 NET DROPS 50% TO RS 70 CR The Financial Express See this story in: The Times of India, Daily News & Analysis, Deccan Herald, The Statesman, The Indian Express, The Hindu Mumbai: Low visibility in rural areas, coupled with the overall slump in the two-wheeler industry, pulled down profits of Pune-based Bajaj Auto Ltd to half in the quarter ended March 31, 2009 (Q4FY09). The consolidated net profit of the company was down to Rs 69.70 crore from Rs 137.46 crore, a drop of 49.29% for the said quarter. The company said it could not relish the benefits of the correction in the raw material costs in Q3FY09 since it had standing inventory and expects the benefits to show up in the April quarter. Further, it said that it was significantly impacted due to forex losses and voluntary retirement scheme (VRS) charges made during the financial year ended March 31, 2009 (FY09), which saw a drop of 28% in consolidated net profit to Rs 537.48 crore as against Rs 749.08 crore. This includes a loss of around Rs 300 crore before tax owing to the forex cover; Rs 205 core due to VRS charges and market-to-market loss of Rs 22 crore. Total consolidated income for year ending March 31, 2009 stood at Rs 8814.81 crore, down by 3%. The company spent Rs 140 crore on research and development (R&D) during FY09 and will be spending similar amount in FY10. The company has set a capital expenditure plan of Rs 300 core for FY10.The shares of the company closed at Rs 934.20, up 5.61% on Thursday on the BSE. Bajaj Auto MD Rajiv Bajaj said, We see a greater growth in the sale of two-wheelers in the domestic market and significant portion of the sale will come from the month of August this year. Bajaj added that the company is looking at a double-digit growth in FY10, predominately backed by domestic sales as exports are expected to remain flat. Reaching out to the remote areas is the main challenge, he said. Interestingly, it is the strong image in the rural areas and dealership network that supported Hero Honda, the market leader in two-wheeler segment, to garner robust growth with 32% in FY09. The company will be launching an upgraded version of Pulsar next month followed by a new motorcycle in the mid-segment by July this year. Also, on the launch pad are two semi new three-wheelers in each cargo and passenger space. The company will launch a four-wheeler cargo carrier by next year, said Bajaj. Bajaj Auto is also working on a new scooter which is expected to be ready for launch within two years time. When asked about the companys small car project with Renault-Nissan, Bajaj said, We continue to work with our partners and development is on schedule. Our single-mind object is to develop a car that no other global manufacturer can produce. He said the currently the project is stuck at the branding stage wherein the three companies are negotiating on the branding of the car. Further, the company will be also be launching two powerful bikes from KTM stable by next calendar year including KTM RC8 and KTM Duke. We are also working on two KTM platforms in association with KTM team, said Bajaj. The said platforms are expected to bring in multiple products starting 2010. Indicating that the company has incurred a loss of Rs 12 crore on cancellation of excess forward contracts, Kevin Dsa, vice president, finance, Bajaj Auto, said, Exports did not go as per our expectations and there were cancellations. We expect higher export realisation as the range forward cover has been taken with a bottom side protection of Rs 47 per US dollar to Rs 55 per US dollar. The company exported a total of 772, 519 units (in value terms Rs 2640 core) during FY09, a growth of 25% over last year. http://www.financialexpress.com/news/bajaj-auto-q4-net-drops-50-to-rs-70-cr/463917/2 http://www.livemint.com/2009/05/21234517/Bajaj-Auto8217s-Q4-consolid.html?h=B http://timesofindia.indiatimes.com/Business/Bajaj-Auto-Q4-net-dips-50/articleshow/4562376.cms http://www.dnaindia.com/report.asp?newsid=1257764 http://www.deccanherald.com/content/3777/bajaj-auto-q4-net-dips.html http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=255384 http://www.hindu.com/2009/05/22/stories/2009052256202000.htm BAJAJ DRAWS UP CHINA STRATEGY FOR BIKES The Hindu Business Line, Asian Age, Hindustan Times Mumbai: Bajaj Auto is working towards a long-term plan for China, which will see the country emerge as a key manufacturing hub for its motorcycles. The Managing Director, Mr Rajiv Bajaj, said at a press conference here on Thursday that a base of 54 new suppliers was being created as a first step in this direction. We will then increase this base over the years to launch Bajaj and KTM bikes in the country, he said. KTM is the Austrian sports bike maker in which Bajaj Auto has close to 32 per cent stake. Plans are under way to create two platforms for its motorcycles in the Chakan plant near Pune. These are expected to be ready in 2010 and 2011 respectively. Roadmap On the China roadmap, Bajaj has already manufactured and shipped out consignments of a basic motorcycle called the Boxer to Nigeria. Numbers are currently confined to 1,000 units a month but could be increased to 10,000 given the market potential in Africa. It is very likely that once the China strategy is in place, it could service other parts of Asia where demand for two-wheelers is buoyant. This could well include countries such as Taiwan, Thailand and Indonesia though any decision would eventually boil down to Chinas cost-competitiveness as a production hub. The fact also remains that India is equally critical from Bajaj Autos point of view as a manufacturing base. Over 40,000 bikes are shipped out to parts of Asia, Africa and Latin America every month and the company would have to ensure that China does not eat into Indias own role as an export hub, which means striking a balance between the two. Back home, Bajaj Auto is gearing up to launch a motorcycle in July which could help in boosting the numbers in the executive category. Though Mr Bajaj did not divulge details, indications are that this could be a sporty commuter bike at the premium end of the 125cc-150cc segment. As he put it, it would have to be something unique and relevant to appeal to the end-user while ensuring profitability too. Production of this motorcycle will be evenly split between the Chakan and Pantnagar plants. http://www.thehindubusinessline.com/2009/05/22/stories/2009052251250200.htm http://www.asianage.com/presentation/leftnavigation/news/business/bajaj-plans-
Shobhana Subramanian & Ram Prasad Sahu Business Standard (The Compass) Mumbai: It is possible that Bajaj Autos profitability will improve in the current year because of better volumes expected to be up 10 per cent, a product mix thats more in favour of high-priced bikes as also the full impact of falling raw material costs. Moreover, the bottom line should get a boost from a weaker rupee given that exports account for around 30 per cent of the turnover. At the current price of Rs 934 the stock rallied 5.6 per cent on Thursday the stock trades at 13.5 times estimated 2009-10 earnings (ex-financial and ex-VRS). Even if the earnings are better, the stock would be only slightly cheaper at 13 times, which is higher than the historical average. For perspective, rival Hero Honda trades at 15 times estimated 2009-10 earnings. For sure, things may be looking up for Bajaj Auto with the XCD 135cc doing well so far to clock an average of 20,000 bikes a month and the run rate likely to improve in the coming months. But a re-rating of the stock isnt justified and can only happen if the next launch in the executive segment, scheduled for July, is a winner. At the end of the day, Bajaj Auto needs to prove that it can deliver volumes, on a sustained basis in the executive segment. Having decided to vacate the entry segment (100cc), it needs to get a grip on the executive segment, which industry watchers believe would account for over a third of the market. Currently, this space has a share of around 28-29 per cent, and given that the consumers do have purchasing power, the executive segment could see momentum. In the premium space, in which Bajaj Auto has been the leader, the Pulsar has yielded some share to Yamaha but a Pulsar variant is being launched next month. In any case, the premium segment accounts for just about 10-12 per cent of the motorcycle market, and although its a profitable space to be in, its in the executive space that Bajaj Auto needs to sell volumes. http://www.business-standard.com/india/news/bajaj-auto-executive-search/358821/ SUCCESS OF LAUNCHES CRUCIAL FOR BAJAJ AUTOS GROWTH S. Hamsini Amritha The Hindu Business Line Notwithstanding a 20 per cent drop in sales volume compared with year-ago numbers and a 10 per cent decline in standalone net sales in the last quarter of FY-09, Bajaj Auto has managed to end the March quarter with an 8 per cent increase in net profits. A 16 per cent decline in raw material costs, primarily on accounts of lower prices of raw materials such as steel, aluminium and rubber aided the companys operating profits, which registered a 9.2 per cent growth. A stiff working capital environment resulted in interest costs almost tripling to Rs 5.2 crore. The interest coverage nevertheless remained comfortable. Forex losses amounting to Rs 21.8 crore that did not qualify under Accounting Standard 30 for hedge contracts along with expenses incurred under a voluntary retirement scheme limited the net profits to growth. While the latest quarter ended on a slightly optimistic note, rough patches witnessed in the earlier quarter restricted annual performance. Sales volume was down by 10 per cent in FY-09, while net profits declined by 13 per cent as a result of lower revenues. The year ahead Though Bajaj Autos sales volumes were still subdued compared to a year ago, numbers have been steadily picking up in recent months Compared with vehicles sold in January 2009, the company has managed to increase sales by 27 per cent in April. Further, the management has stated that its joint venture with Nissan to produce small cars is well on track and the company expects to roll them out by 2011. Since Bajaj Auto has already derived the benefit of softening commodity prices, performance of their launches will be a key driver of sales. The new variants of Pulsar in the 150 and 180 DTSi ranges launched earlier this month and XCD-135 will remain crucial for Bajaj Autos growth in FY 2010. The companys ability to regain its market share ceded to Hero Honda in the less than 125cc segment and to Honda Motors in the above 125cc segment would also determine growth in the coming year. http://www.thehindubusinessline.com/2009/05/22/stories/2009052251101000.htm
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| COMPONENTS Go To Top Shobhana Subramanian & Ram Prasad Sahu Business Standard Mumbai: As if last year wasnt difficult enough, Baba Kalyani has said quite clearly that the current year would remain a challenging one for his company. The chairman and managing director of Bharat Forge believes it could be a while before inventories are cleared and sales revive, especially in the commercial vehicle (CV) space. The auto parts maker, a victim of the severe depression in the world automobile markets, saw consolidated sales rise just under 3 per cent last year to Rs 4,774 crore. That meant profits were badly dented down 81 per cent to Rs 58 crore. The numbers werent really surprising given that the US and European markets bring in about three-fourths of the Pune-headquartered firms revenues. Not that the home markets provided much succour in the March 2009 quarter for instance, domestic commerical vehicle volumes fell 61 per cent leaving the ancillary maker with little business. Unfortunately, the company could do little about the high fixed costs and as a result, consolidated margins came off by 12 percentage points to 5.34 per cent. The management believes the domestic passenger car market is showing signs of revival. But that cant help much because the bulk of Bharat Forges revenues come from the CV space. There isnt much happening in this segment though and that means the firms overseas subsidiaries could continue to run below breakeven levels of 50-55 per cent for some more time. The hope lies in the non-auto parts business the share of which is tipped to go up from 28 per cent of its standalone revenues to 40 per cent by 2012. Thats still some time away. In the meanwhile, at Rs 157, the stock looks way too expensive at 22 times the estimated 2009-10 earnings. http://www.business-standard.com/india/news/bharat-forge-it/s-partlife/358814/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALLIED INDUSTRY Go To Top Business Standard See similar story in: The Hindu Business Line Chennai: MRF, the Chennai-based tyre manufacturer, has decided to shift tyre production temporarily from its Arakkonam factory in Tamil Nadu to its Medak factory in Andhra Pradesh. The companys move comes after production at the Arakkonam factory came to a halt for the last 12 days due to strike called by the MRF United Workers Union (MUWU), which claims the support of a majority of the companys workers. The union is demanding reinstatement of workers who were dismissed following unionisation, recognising the union and that the company should come forward to discuss about the wage revision with MUWU instead of the other union MRF Arakkonam Worker Welfare Union (MAWWU), which is claimed to be a pro-management union. The company announced a lock-out at the Arakkonam factory with effect from May 17 on a no-work, no-pay basis due to the labour issues. In a statement, the company said that ...several vehicle manufacturers depend on MRF for supply of OE tyres. MRF has made all efforts to ensure regular supply of OE tyres from its factory at Medak in Andhra Pradesh. T V Paramasivam, president of MUWU, said that ...workers were arrested on Wednesday evening after police gave an order for lathi charge. He claimed that all the workers were forcibly brought out from the factory by the police and were taken to a wedding hall and kept under their custody till midnight before they were released. http://www.business-standard.com/india/news/mrf-to-shift-workarakkonam-to-andhra/358860/ http://www.thehindubusinessline.com/2009/05/22/stories/2009052251610300.htm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCE & INSURANCE Go To Top Abhineet Kumar Business Standard See similar story in: The Hindu, mint Mumbai: Tata Motors, the countrys largest truck maker which raised Rs 4,200 crore on Wednesday through issue of secured non-convertible debentures (NCDs), is raising another Rs 4,750 crore ($ 1 billion) through the external commercial borrowing (ECB) route. Last June, the automaker availed of a $3-billion (around Rs 14,217 crore at todays exchange rate) bridge loan to finance its acquisition of Jaguar and Land Rover brands the two marquee brands from the Ford Motor Company. In January, it said that it had repaid $1.11 billion from the proceeds of the rights issue and stake sale in Tata Steel and Tata Teleservices to other group companies. The remaining $1.89 billion (about Rs 8,956 crore) is due for repayment on June 1. With the company raising Rs 4,200 crore through NCDs, its remaining requirement is that of Rs 4,756 crore. The remaining amount is being raised as a foreign currency loan, said a banker familiar with the development, without disclosing the terms of the loan. Foreign currency borrowings had completely dried after the collapse of Lehman Brothers in September. It would be the first large borrowing, of about $1 billion, by an Indian company since the debacle. Citigroup and JP Morgan were the lead managers to the $3-billion loan, which was raised with the help of other banks, such as SBI, Standard Chartered, BNP Paribas and Tokyo Mitsubishi UFH. Citigroup is expected to be the lead managers of this issue as well. According to investment banking sources, the best rate available for a credit-worthy company is 6 per cent in the ECB market. That translates into a 550-basis-point spread over the benchmark London Interbank Offered rate (Libor). The Libor rate for three-month dollar loans touched a historic low of 66 basis points on Thursday. Most loans in the overseas capital markets are priced at Libor plus a risk premium, known as a credit spread. The ECB is expected to be finalised by middle of the next week. http://www.business-standard.com/india/news/tata-motors-to-raise-1-bn-viaecbs/358859/ http://www.hindu.com/2009/05/22/stories/2009052256272000.htm http://www.livemint.com/2009/05/21095918/Tata-Motors-raises-Rs4200-cr.html | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LUBRICANTS & ALTERNATIVE FUELS Go To Top See this story in: The Indian Express The market will study weekly US jobless claims and April leading indicators due later in the day for more clues on the pace of demand recovery in the world's top energy consumer. US crude for July delivery fell 59 cents to $61.45 a barrel by 0240 GMT. It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity. London Brent was down 59 cents to $60.00. "The market is in a technically bullish mode right now -- $62 was one target, and now that we've attained that, a new range of $55 to $62 is in play, and we're now trading at levels people were predicting for the end of the year," said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo. "But we might see a sell-off towards the end of the month as the driving season in the US begins only in June after Memorial Day, and if the reality of summer demand is not as strong as the market has anticipated." Crude oil and gasoline stockpiles in the United States tumbled sharply last week, according to the US Energy Information Administration's report on Wednesday, with crude declining 2.1 million barrels and gasoline falling 4.3 million barrels. Data due later is expected to reflect a mildly positive outlook for the US economy. First-time claims for jobless benefits for the week ended May 16, due at 1230 GMT, are expected to slip to 630,000 from 637,000 in the previous week, a Reuters poll of economists showed. US leading indicators -- due at 1400 GMT -- are forecast to rise 0.8 per cent in April, compared with a 0.3 per cent decrease in March, according to another survey of economists by Reuters. Oil was also boosted by the US currency's weakness. The dollar fell to a two-month low against the yen on Thursday, extending the previous day's slide when optimism about the US economy reduced safe-haven demand for the greenback. Further price support came from unrest in OPEC member Nigeria, Africa's top oil and gas exporter. Shooting broke out in the Nigerian oil port city of Warri on Wednesday following days of military helicopter and gunboat raids on militant camps in the surrounding creeks. http://www.indianexpress.com/news/oil-spikes-to-usd-61.45-a-barrel/463320/2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTERNATIONAL NEWS Go To Top Reuters See this story in: The Economic Times, mint Detroit: General Motors Corp and the United Auto Workers have reached an agreement on contract changes and restructuring $20 billion in debt owed to a trust fund for retiree healthcare, the union said on Thursday. By winning a new labor deal with the consent of its major union and the Obama administration, GM is in a position take a plan for creditor concessions into a bankruptcy filing even if it fails to win support from bondholders, analysts said. http://www.livemint.com/2009/05/21222914/GM-UAW-reach-deal-with-US-gov.html GMAC TO GET $7.5 BN FEDERAL FUNDS: REPORT The Hindu Business Line See similar story in: The Times of India Washington: General Motors' former financing arm, GMAC, is likely to get funds to the tune of USD 7.5 billion from the US, says a media report. The New York Times has said that with the latest funding, the total federal assistance given to the company, which is reeling under the broader credit crisis as well as losses from subprime mortgages, would be over USD 12 billion. The US Treasury Department has decided to provide $7.5 billion to GMAC, which would bring its total federal assistance to more than USD 12 billion, the daily said quoting people familiar with the discussions. "The deal is expected to close on Thursday and comes two weeks after federal regulators concluded from a stress test on GMAC that it needed an additional USD 11.5 billion in capital to weather a severe downturn in the economy,'' the report said. Last year, the Federal Reserve allowed GMAC to convert itself into a bank holding company, a move that allowed the entity to apply for funds from the Troubled Asset Relief Programme (TARP). Attributing to individuals who were briefed on the discussions, the daily said that GMAC continues to provide crucial financing for car sales by GM and Treasury officials recognised that its survival was essential to the http://www.thehindubusinessline.com/blnus/10211860.htm TWO VERSIONS OF FIAT OFFER TO GM: REPORT Reuters See this story in: The Economic Times Milan: Italian car maker Fiat SpA submitted two versions of its offer for General Motors Corp's Opel and Vauxhall units, one with and another without a bid for GM's Latin American operations, a news report said. http://economictimes.indiatimes.com/News/International-Business/Two-versions-of- KIDDER NAMED CHRYSLER CHAIRMAN Alex. P. Kellogg & Sharon Terlep / WSJ See this story in: mint Detroit: Chrysler LLC said C. Robert Kidder, lead director at Morgan Stanley, will replace Robert Nardelli as chairman after the company completes its reorganization in bankruptcy court and seals its alliance with Fiat SpA. Mr. Kidder, 64 years old, was selected by the U.S. Treasury Department, which had the right to select four of the nine members of Chrysler's new board, a Treasury spokeswoman confirmed. He will help select other members of the board that will oversee the restructured company, which will be called Chrysler Group LLC. Separately, dealers and analysts said Chrysler's auto sales are faring surprisingly well in May following its April 30 bankruptcy filing. Chrysler sales are down but the decline is not out of line with the industry's overall drop in sales through the first part of May, according to J.D. Power and Associates data to be released Thursday. General Motors Corp. fared worse as it heads for an increasingly likely bankruptcy filing by June 1. Bargain hunting is likely driving the sales traffic, as consumers hope to score big discounts from dealerships going out of business as part of the auto maker's plan to eliminate about one-quarter of its sales outlets. That the decline in Chrysler sales hasn't dramatically worsened suggests that the Chapter 11 proceedings may not rattle consumers, as many in the industry had feared. It also bodes well for GM if it reorganizes in bankruptcy court. The selection of Mr. Kidder, a Michigan native and former chairman of Borden Chemical Inc. and of Duracell International Inc., paves the way for the departure of Mr. Nardelli, who has been Chrysler's chairman and CEO since August 2007, when Cerberus Capital Management LP acquired the company. Chrysler had previously said he will be replaced as chief executive when it exits bankruptcy protection. Chrysler's new CEO will be Fiat boss Sergio Marchionne. Mr. Kidder was not available for interviews Wednesday, according to a company spokeswoman. Separately Wednesday, Fiat submitted a bid to General Motors and the German government, proposing to merge Fiat's auto unit with GM's European operations, including Opel of Germany and Vauxhall in the U.K. Fiat didn't submit a bid for GM's Latin American operations, a person familiar with the matter said. But it remains in talks with GM about those operations, as well as GM's Swedish brand, Saab. Under the terms of the offer, GM could take a minority stake in the new company, which would also assume some of Opel's hefty pension liabilities, said a person familiar with the matter. The bid, however, didn't include any cash, the person said. SKOREAN AUTO WORKERS STRIKE OVER PLAN FOR MASS LAYOFFS AFP See this story in: Hindustan Times Assembly lines at its plant in Pyeongtaek, south of Seoul, stopped at 1:30 pm, union spokesman Lee Chang-Geun told AFP. "Management should come to talk with the union on avoiding the proposed massive job cuts," Lee said, adding that the duration of the strike would be decided ono Friday. Debt-stricken Ssangyong in February won court protection from creditors. The court told its Chinese majority owner, Shanghai Automotive Industry Corp (SAIC), to give up management control. Court-appointed managers have since struggled to turn the company around through job cuts and cost savings. The programme calls for the sacking of 2,646 workers or 36 percent of the workforce, in what would be the country's first mass layoffs since the onset of the global economic crisis in September. The programme also proposes the firm take out a new bank loan of 250 billion won (200 million dollars) by offering its factory as collateral. Union leaders representing 7,100 workers immediately rejected the job cuts and demanded managers minimise sackings through job-sharing. Ssangyong, which specialises in sport-utility vehicles and luxury sedans, posted a net loss of 709.7 billion won last year on sales of 2.5 trillion won. In the first three months of this year, its sales nosedived 76 percent to 6,471 units. SAIC still holds a 51 percent stake in the firm. http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=NLetter&id=f8e05de0-aacd-42a5-8855-02f32ae0352b&Headline=SKorean+auto+workers+strike+over+plan+for+mass+layoffs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ECONOMY & FINANCE Go To Top The Hindu Business Line Mumbai: The rupee continued to be in a strengthening mode and gained against the dollar on the back of inflows. Inflows are from both foreign investors and domestic companies, raising money overseas for their capital expansion, said a forex dealer with a private bank. The rupee opened at 47.50 and closed at 47.40, against the previous close of 47.48. In the overseas market, the dollar was weak against other currencies in the first half. But it started strengthening against the pound in the second half due to negative rating for the UK, the dealer said. In the forward premia market, there was movement of barely 2 paise, with the six-month closing at 2.90 per cent (2.88 per cent) and the one-year at 2.35 per cent (2.36 per cent). http://www.thehindubusinessline.com/2009/05/22/stories/2009052251460601.htm PTI See this story in: The Hindu Business Line Mumbai: Vanquishing the euphoria over a stable UPA government, weak global cues and profit-booking brought the benchmark Sensex on BSE down by over hefty 320 points on Thursday amid worries that the market will be volatile and may test the lower end in t he coming days. Led by fall in banking and capital goods shares, the 30- share index on the Bombay Stock Exchange closed below psychologically important 14K-level at 13,736.54, lower by 324.12 points, or 2.31 per cent. The National Stock Exchange's 50-share Nifty dropped by 59.40 points, or 1.39 per cent, to close at 4,210.90. Market men said a sharp fall in European markets adversely impacted the market in late afternoon trade. European bourses were down 1.70 per cent to 2.36 per cent in early trade. It was correction induced by profit-booking, said Bonanza Portfolio Assistant Vice President, Mr Avinash Gupta, adding that going forward the market is expected to be volatile and may test the lower end. Stocks of oil companies escaped the selling pressure while banking and capital goods shares were battered. In today's market, the exception was the oil sector PSU's. This was on account of appreciation that the there could be deregulation of oil and petroleum products. This could reduce subsidy burden enabling companies to generate resources to pursue the growth, Mr Gupta said. ONGC, BPCL, IOC and HPCL notched up smart gains in the range of 8-15 per cent. http://www.thehindubusinessline.com/blnus/05211901.htm INFLATION RISES TO 0.61% ON HIGHER FOOD PRICES The Hindu Business Line New Delhi: Inflation edged up in early May on account of higher food prices, but held near a three-decade low, giving more freedom to the RBI to take steps to support a slowing economy. The annual Wholesale Price Index-based inflation rose 0.61 per cent during the week ended May 9, higher than 0.48 per cent during the previous week. The increase in headline inflation was primarily on account of food articles, with year-on-year inflation in items such as vegetables (21 per cent), cereals (12 per cent) and pulses (15 per cent) continuing to remain in double digits. Wholesale prices may exhibit a declining trend for a few weeks in the coming months, though that does not mean India is in the grip of deflation, the RBI Governor, Mr D. Subbarao, had said last week. Headline inflation has held below 1 per cent for two months, after reaching a 16-year high of 12.91 per cent last August. http://www.thehindubusinessline.com/2009/05/22/stories/2009052252230100.htm Last Financial closing
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