INDUSTRY Auto sector expects Govt to continue with incentives Reduce excise duty on auto products: G. Nagapillai, MD, Pillai & Sons Motor Nano parts' suppliers still undecided on Sanand shift INTERVIEWS/FEATURES BMW, Audi race to take on Merc COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY Piaggio to make 2-wheelers in India Sintex arms second auto parts plant goes on stream | ALLIED INDUSTRIES OIL, LUBRICANTS & ALTERNATIVE FUELS Beijing Auto submitted offer for Opel, says GM Wiedeking's Porsche era runs on fumes of VW Backfire Chrysler completes board of directors ECONOMY & FINANCE
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INDUSTRY Go To Top PTI See this story in: Business Standard (Web Edition), The Times of India (Web Edition), The Economic Times (Web Edition) (July 06) New Delhi: Concerned over the downturn in the automobile industry, Heavy Industries Minister Vilasrao Deshmukh has asked the finance minister to cut excise duty on big passenger cars by more than half to 8 per cent. I met the Finance Minister and has recommended him..., Deshmukh said, while exuding confidence that his suggestions would get a favourable consideration. Besides, the minister also asked Finance Minister Pranab Mukherjee for imposing a 10 per cent duty on import of power plant equipment to overcome the dumping by Chinese producers. Deshmukh, who took the wishlist of auto industry and Bhel to the finance minister ahead of the Budget, said definitely, he was very sympathetic, when asked about Mukherjees response to his suggestions. The government reduced excise duties on cars smaller than 4 metres to 8 per cent in December 2008 as part of stimulus package, while duty on bigger cars left unchanged at 20 per cent. The industrys body Society of Indian Automobile Manufacturers (SIAM) has maintained that there should be uniformity of taxation across all segments. Unless and until we give some sops they (sales) cannot be revived, the minister told PTI in an interview. In addition to the 20 per cent excise duty for big cars, vehicles having engine capacities between 1500 cc and 1999cc attract a fixed duty of Rs 15,000, while those above 2000cc have to pay Rs 20,000 more. The fuel guzzlers have witnessed a fall in sales due to the impact of the slowdown. In May this year, sales of high-end cars declined by 7.59 per cent, though the total passenger cars market grew by 2.48 per cent compared with the same month in 2008. http://www.business-standard.com/budget/storypage.php?autono=363065&tp= AUTO SECTOR EXPECTS GOVT TO CONTINUE WITH INCENTIVES PTI See this story in: Hindustan Times (Web Edition) (July 06) New Delhi Auto companies are looking forward to the continuation of incentives, including excise duty cuts, given in the two stimulus packages in the Budget 2009-10. Major auto players are expecting that the government will continue with 4 per cent CENVAT cut and reduce excise duty further to 8 per cent from 10 per cent, as announced in the two stimulus packages in December and January. "Availability of finance at reasonable cost is important for the industry, without which sales of vehicles can't be revived," Maruti Suzuki India Chairman R C Bhargava said. On the commercial vehicle front, Bhargava said, "Better implementation of infrastructure will boost the sector. CV segment will grow if infrastructure projects like highways and power plants grow." Continuation of the benefits in the two stimulus packages is important as the auto sector has not fully recovered and withdrawal of the incentives could even push the sales into negative territory, he added. Bajaj Auto Chairman Rahul Bajaj said, "Export markets are severely hit due to global financial turmoil, so we need to improve the domestic demand... Banks should lend at reasonable rate to customers." Country's largest exporter Hyundai Motor India spokesperson Rajiv Mitra said the government should provide sops to boost overseas sales. Besides, the company expects the government to remove differential excise duties for different sizes and class of cars. General Motors India Vice-President P Balendran said his company would expect introduction of an uniform tax structure and said the additional excise duties of Rs 15,000 and Rs 20,000 on cars of 1500 cc and above should be removed. He added excise duty on large cars should be brought down from 20 per cent and uniform taxes should be implemented, apart from encouraging production of electric and hybrid vehicle projects. Automotive Components Manufacturers' Association (ACMA) Executive Director Vishnu Mathur said the priority should be to try to attract foreign investments into the country. "There should be some incentives attracting FDI for the component sector. Because of high incentives provided by their governments, global component makers are going to many other countries in this region, like Thailand," he added. http://www.hindustantimes.com/StoryPage/FullcoverageStoryPage.aspx?sectionName=BusinessSectionPage&id=0ead9feb-0ec1-4e72-b2eb-67773405a1ac_Special&Headline=Auto+sector+expects+Govt+to+continue+with+incentives REDUCE EXCISE DUTY ON AUTO PRODUCTS: G. NAGAPILLAI, MD, PILLAI & SONS MOTOR (July 05) Global financial crisis has affected number of automobile industries of advance countries. Many automobile giants such as General Motors are suffering due to financial crisis. India is a growing economy (per capita income and gross national income with simultaneous growth of demand for many goods including passenger cars). The present slowdown may affect the automobile industry. Most of the automobile industries are in the infant stage. To protect the automobile industry from recession and accelerate the growth, the Finance Minister should reduce the excise duty to a reasonable extent at least for the medium size cars in the 2009-10 Budget. Reduction in excise duty will definitely reduce the price of the vehicles and industry will continue to produce the same quantity. Infrastructure development: Global financial crisis is mainly responsible for negative growth in many advanced countries. In India, we expect 6-7 per cent growth in the financial year. To accelerate the growth and employment, the Government has to spend a large amount through public work programmes. India is in need of good infrastructure viz., road, transport, two wheeler lane and communication etc. Road development - National highways and State highways and the rural road should be the first priority for all round economic progress. Public spending / public-private participation for infrastructure development will automatically increase the demand for basic goods and overall employment in the country. Good infrastructure of international standards will attract more foreign investors to our country and pave the way for further development in the years to come. http://www.thehindubusinessline.com/2009/07/05/stories/2009070550970400.htm NANO PARTS' SUPPLIERS STILL UNDECIDED ON SANAND SHIFT Swaraj Baggonkar & Danny Goodman Business Standard (Web & Print Edition) (July 06) Mumbai: Delivery of the first Nanos by Tata Motors is set to commence this month. However, auto parts suppliers are still undecided on whether they will set up a manufacturing base in Sanand in Gujarat, where the Nano mother plant is being set up. The plant is expected to begin production of the first cars by year-end. Many vendors who had lost their investment in Singur, West Bengal, after being forced to abort production there, are yet to decide on relocating to Sanand. Most of these suppliers will address the demand for components from their existing plant locations to meet this years Nano production needs. Due to production constraints, Tata Motors will be making just 50,000 units of the Nano this year, with the balance of the committed and booked 100,000 Nanos next year. Deliveries are expected to conclude by the final quarter of 2010. Sulajja Firodia Motwani, Director, Kinetic Engineering, says: We are supplying parts to the Nano from our Maharashtra plant for the time being at the moment. We havent taken a call yet on Sanand. But we are with Tata Motors since the very start of this project and we believe the product has a long-term potential. Kinetic Engineering supplies transmission gears to the Nano. Tata Motors have also told its vendors to make a limited number of components for the time being. Koshy Varghese, V-P (marketing), MRF, says: We are currently supplying around 10,000 tyres per month to the Nano. It would continue at this level till such time Tata Motors ramps up its production. Others hope volumes will go up and so will margins. There is great excitement now that the real thing will be delivered to customers. For suppliers like us, it is a wait and watch situation, since the prices that we have agreed to is fixed for the first one lakh units of the Nano. So from now until next year, should prices of raw materials go up, then we take a hit on our margins. Once volumes pick up, only then can we reap the benefits of economies of scale, said a New Delhi-based component supplier. Production at the Sanand plant can be ramped up to 500,000 units from 250,000 units annually once demand picks up. Tata Motors has also set up an additional 50,000 unit capacity at Uttarakhand for the Nano. http://www.business-standard.com/india/news/nano-parts/-suppliers-still-undecidedsanand-shift/363052/ | |
INTERVIEWS/FEATURES Go To Top | |
CARS, SUVs, MUVs Go To Top Chanchal Pal Chauhan New Delhi: Indian carmakers are reaping the benefits of the incentives offered by the governments of Germany, France and the UK to people exchanging their old cars for new fuel-efficient ones. The countrys largest car exporter, Hyundai Motor India, recorded its highest export growth rate last month while Maruti Suzuki is raising its export target, as the scrappage policy in Europe that gives 750-5,000 (Rs 50,000-350,000) to people buying fuel efficient cars has led to an increase in demand for their small cars. The 11-year-old subsidiary of Korean carmaker Hyundai Motor recorded a 33% growth in exports in June to 24,241 cars over the same month last year. On a sequential basis, exports increased 21% in June from 20,125 cars in May. Marutis export rose 176% to 13,336 cars last month over 4,836 cars sold overseas in the same month last year. Month-on-month export increased 47% from 9,087 cars in May this year. Three small carsA-Star, i10 and i20are the biggest grossers in Europe as these fuel-efficient models emit low volumes of carbon dioxide per kilometer. Thanks to booming exports, Hyundais production schedule for exports is already booked for the next two months and the company is now looking at bagging orders for September and beyond, helping the company post handsome profits. This is likely to help the company that recorded a loss of Rs 87 crore in the quarter ended March due to currency fluctuations. Exports have jumped as monetary incentives for fuel-efficient and eco-friendly cars low on emission have gone up in Europe. We fit the bill as our new cars i10 and i20 adhere to such standards, Hyundais senior vice-president (sales & marketing) Arvind Saxena said. Germany, better known for its luxury marquees BMW, Audi and Mercedes, has set aside 5 billion to make the country ecofriendly by encouraging fuel-efficient cars. Those exchanging big cars for small fuel-efficient ones will get 2,500. Spain will barter two lakh cars by giving 2000 in cash to people exchanging fuel guzzlers. France offers an incentive of e1000 with deferred tax benefit of up to e5,000 on each car with carbon dioxide emissions less than 160 gm/km. Italy is extending a e3,000 payout for all new cars emitting carbon dioxide below 130 gm/km. Our parent Suzuki Motors distribution network in Europe is clogged with bookings, Marutis executive officer (sales & marketing) Mayank Pareek said. Maruti aims to export 2 lakh cars in FY 10 from the 70,000 cars it exported in FY 09. The spurt in demand for made-in-India cars is likely to be a major growth driver for other carmakers entering the small car space. Toyota, GM and Ford are looking at a possible debut in the compact car segment by next year. Eyeing the potential, Toyota Kirloskar Motor, the Indian unit of Japans Toyota Motor, has increased investment by an additional Rs 800 crore, taking it to Rs 4,000 crore till 2016 in its small car manufacturing facility near Bangalore. The Indian subsidiary will play a larger role in global operations. Besides the domestic market, our small car coming next year will also cater to several overseas markets, said a TKM executive, requesting anonymity. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" BMW, AUDI RACE TO TAKE ON MERC Hindustan Times (Web & Print Edition) (July 06) New Delhi: The battle for the top spot in the countrys top of the line luxury car segment is getting more intense and Mercedes Benzs near ten-year-old stranglehold in the market is under serious threat. While BMW is the odds on favourite having already steered ahead in the first quarter of this fiscal, Audi has emerged as the dark horse in the fight. The three German companies are now racing against each other to expand their presence in the hinterland. We started operations here in 2007 and currently have 11 dealerships. Going forward new dealerships would come up in tier II cities to make our products available to a wider customer base, said Benoit Tires, managing director, Audi India. Our involvement with tier II cities is growing at a fast pace and we are confident that these cities reflect the future growth pockets and offer good potential. We investing Rs 150 crore to expand to new cities as also to upgrade our existing network, said Dr Wilfried Aulbur, MD and CEO, Mercedes Benz India. http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=BusinessSectionPage&id=5bec62f3-df2d-4676-960f-26881e236f0e&Headline=BMW%2c+Audi+race+to+take+on+Merc The Hindu (Metro Plus) By hatchback standards, Marutis latest model has a lot going for it but does Maruti really need another hatchback? Look at the companys sales chart and you will see that Indias top car company already sells a staggering 50,000 hatchbacks a month. The buffet table is pretty full with everything from the very basic 800 to the bread-and-butter Alto, the stylish but not-so-successful Zen Estilo, the funky new A-star and of course the wildly popular Swift. Plus, theres the spiritual forerunner of the Ritz, the Wagon R, a car that uses space so efficiently that were still scratching our heads. But after driving it for a day, we believe the Ritz with its unique blend of practicality and style will find a dedicated set of customers. Tall boy designs are difficult to be made attractive as they are not only as tall as SUVs, but their tiny footprint means they often look more like a post-box. Though the Ritz is a good 90mm taller than the Swift, it suffers none of these maladies. Its steeply raked windscreen, sloping roof and prominent wheel arches prevent it from being a mere flat panel job. Striking details such as the prominent nose, the tipped-forward stance with its rising beltline and, of course, those boomerang-shaped tail-lights make for a jaunty angle. The Ritzs interiors are smartly styled as well and quality has taken a huge leap forward. Except for the hard plastics on the door pads, a few of the buttons and ordinary looking air-con controls, the materials and fabrics used inside are worthy of a premium hatch. The heavily textured effect on the dashboard feels rich and the silver-coloured piping around the centre console and the vents lifts the mood of the cabin. The dash has an oval theme and a subtle two-tone colour scheme. And the seats are blue as well, but we found them a touch garish. The ZXi gets the stereo integrated into the dash while the LXi/LDi have to make do with aftermarket sound systems. Youll also notice a lot of common Maruti bits-and-pieces in the car, such as the steering wheel and gear lever thats the same as the Swifts and SX4s, while the stand-alone tachometer pod has shared the A-stars, in the Ritz its moved to the left and doesnt obstruct visibility. Unique to the Ritz is the large, white circular speedo, which adds a lively feel to the dashboard. Up front, theres generous legroom, and forward visibility is excellent from the high seating position. However, the thick C-pillar causes a few blind spots, and the tailgates narrow glass area are a hindrance while reversing. Legroom in the rear isnt exactly generous, but the high-set seats, with good under-thigh support and generous headroom, compensate. The Ritzs cabin feels bigger than it actually is, thanks to the airy design, and unlike the Swift, theres no cramped feeling. The wide recess above the glovebox, a jewel case on top of the centre console and large door pockets provide more than adequate storage space. The 178-litre boot is disappointingly small and can hold a couple of soft bags at best. However, the 60:40 split rear seats do help. Suzukis new 84bhp K12M petrol and the Fiat-sourced 74bhp 1.3 Multijet diesel, known as the DDiS the pair of motors that power the Ritz will prove hard to beat. The talking point is the brand new K-series petrol motor, which is an all-aluminium, twin-cam, 16-valve design, which comes with a raft of technical advances normally reserved for more expensive cars. Idle is vibration-free and almost silent, with only a hint of the engine audible. The gearshift is direct and precise. The Ritz motor is Honda-like in its refinement. And, to top it off, this is the first Maruti to be Euro-IV compliant, which means its cleaner too. Dab the throttle and the Ritz moves forward effortlessly, the motor feeling refined and responsive. It cruises well too, the sound of the motor drowned out by air rushing by and the excessive tyre noise from the JK Vectras. However, let the revs drop, and the Ritz does take a while to get going again. If you are in a hurry, you will need drop down to a lower gear. However, once youre past 2500rpm, its always ready for action. The motor spins freely, loves to be revved hard, and performance and punch are strong towards the top end. Meanwhile, the Multijet diesel has also been re-tuned to meet Euro IV emission norms, and the remapped ECU has blunted the engines low end response. The Swift diesel with its pronounced turbo-lag always made you wait a bit before that spike in power came in, and the wait seems to be marginally longer here. You need to keep the motor above 2000rpm if you want to pass someone in the diesel Ritz, but once you have that engine speed, the car will simply run away from the other car. Compare the in-gear times with the petrol to see just how much quicker the diesel can be in real-world driving. Acceleration again is strong, and the diesel Ritz will get to 100kph in 14.3 seconds. It also revs high for a diesel motor, its 5100rpm or so redline allowing for a wider power-band. Again, the diesel Ritz feels more refined than the Swift diesel, thanks to better insulation. A comfortable ride and good ground clearance are essential for mass acceptance and Maruti has made sure both these are taken care of. The Ritzs suspension has been raised and softened to deal with our road conditions, which will make it appeal to a wider audience. Ride is much better than the sportier setup of the Swift, and the Ritz takes to our potholed roads with a greater sense of calm. You dont need to steer around rough patches, the suspension taking the punches silently and its only the larger bumps that unsettle the Ritz. The tyres on the Ritz are identical to those on the Swift, 165s for the L and V versions and 185s for the Z. The softer setup, however, means that the Ritz lacks the Swifts sporty edge. Straightline stability and roadholding are good but the rear tends to pitch on an undulating surface at speed. The softer suspension settings and tall stance result in considerable body roll but you always have a sense of control, at any speed. Key to the secure feeling the Ritz imparts is the steering that has none of the dead feel around the straight-ahead position you find in the Swift. The Ritzs steering feels linear, precise and shows how electric steering (EPS) has dramatically improved. With prices starting at Rs. 5.02 lakh (ex-showroom, Mumbai) for the petrol, Maruti has assured the Ritz a strong start. A super combination of stellar engines with greater space, comfort and practicality, the Ritz is a great product with great pricing and threatens to decimate a wide range of competitors. TECHNICAL DATA ENGINE Fuel Petrol, Diesel Installation Front, transverse Type 4-cyls in-line, 1197cc, 1248cc Power 84bhp at 6000,74 bhp at 4000rpm Torque 11.5kgm at 4500rpm, 19.37kgm at 2000rpm Power to weight 81.55 bhp per tonne, 66.6bhp per tonne Torque to weight 11.16kgm per tonne, 17.45kgm per tonne Gearbox 5-speed manual CHASSIS & BODY Construction Five-door, monocoque Weight1030kg, 1110kg Tyres 185/70 R14, 165/80 R14, tubeless Front Independent, MacPherson Strut, coil springs Rear non-independent, torsion beam, coil spring Steering Type Power-assisted rack and pinion BRAKES Front Ventilated discs Rear Drums Anti-lock Std on ZXi, Opt on VXi/VDi http://www.hindu.com/mp/2009/07/06/stories/2009070650710300.htm | |
COMMERCIAL VEHICLES Go To Top PTI See this story in: Business Standard (Web & Print Edition), The Economic Times (Web Edition), The Hindu Business Line (Web Edition), The Statesman (Web Edition), The Pioneer (Web & Print Edition), Asian Age (Web Edition), mint (Web Edition), Hindustan Times (Delhi Print Edition) (July 06) New Delhi: Diversified business house Hero Group has shelved plans to enter the commercial vehicle (CV ) segment, for which it had partnered German firm Daimler to produce trucks, due to the economic slowdown. Last year, Hero Group had formed a joint venture with CV maker Daimler to make trucks in India, envisaging an investment of Rs 4,400 crore, but withdrew from it due to the market slowdown. We have no further plans of entering into commercial vehicle (CV) segment. Things (CV business) are shelved for the moment... We do not have any plan (on this) for the future, Sunil Kant Munjal, chairman, Hero Corporate Services, told PTI. After Hero Group pulled out of the JV, which planned to set up a manufacturing plant in Chennai at Rs 4,400 crore, Daimler would now run the business independently. The company (intended JV for making trucks) is still there and going ahead; only we have stepped out of it, Munjal said. Earlier, Munjal had said Hero Group would disengage from the JV due to the current economic slowdown and we would not like to commit such big investment in the circumstances, and the group would maintain a conservative profile. Daimler had decided to buy out Hero Groups 40 per cent stake in the JV at 16 million (about Rs 105 crore). It has said that its plans in India are on track and the proposed plant in Chennai would be opened as scheduled in 2010. While Daimler, with a 60 per cent stake, was supposed to put in Rs 1,368 crore, Hero was to pump in Rs 900 crore in the JV. The upcoming plant, spread over 400 acres, will have an initial production capacity of 70,000 units. http://www.business-standard.com/india/news/hero-group-shelves-plans-to-enter-cv-segment/363030/ http://www.thehindubusinessline.com/blnus/02051212.htm http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=260167 http://www.dailypioneer.com/187196/Hero-Group-shelves-plans-for-commercial-vehicles.html http://www.asianage.com/presentation/leftnavigation/news/business/slowdown-hits-hero http://www.livemint.com/2009/07/05111230/Hero-Group-shelves-plans-for-c.html The Hindu (Metro Plus) Piaggio has been anointed as the Commercial Vehicles manufacturer of the year at the NDTV Profit Car & Bike Awards 2009, announced recently. The award comes as recognition of Piaggios pioneering contributions to the development of economical and efficient light transportation solutions in India. Piaggio with a 42 percent market share has been leading the three-wheeler segment since 2008 and has sold over seven lakh vehicles in the India since its launch here. The company last year entered the four-wheeler sub-ton category with the launch of Ap Truk. Commenting on the award, Ravi Chopra, Chairman and Managing Director, Piaggio Vehicles Private Limited, said, Being recognised amongst the automobile fraternity is indeed a proud moment for us. I am delighted that Piaggios consistent efforts towards meeting the diverse and changing needs of the Indian entrepreneurs and SME segments has been recognised. We have always believed in providing highly economical, reliable and cost effective transportation solutions that add significant value to the users business. http://www.hindu.com/mp/2009/07/06/stories/2009070650700300.htm | |
CONSTRUCTION & AGRI MACHINERY Go To Top | |
2/3 WHEELERS Go To Top John Sarkar The Economic Times (July 05) New Delhi: Herbert James 'Burt' Munro, the 'world's fastest Indian', was an insomniac. A New Zealand motorcycle racer, he worked as a motorcycle salesman during the day and at night he would spend hours working on his 1920 Indian Scout, which then had a top speed of 110 kph. Well, there are smirks being passed all around with companies trying to showcase their technology in the highly competitive domestic two-wheeler market. Just a week before the launch of the Pulsar, TVS Motor Company, Indias third-largest two-wheeler manufacturer also launched a bigger variant of its premium bike, the Apache RTR. PIAGGIO TO MAKE 2-WHEELERS IN INDIA (July 05) Milan/New Delhi: Italian auto maker Piaggio is planning to manufacture two wheelers in India in the coming years, as part of the company's growth plans for Asia.
Piaggio said it would start the production of new 1000 cc and 1200 cc diesel and turbo diesel engines. The company would develop four-wheel product range, with new Ape Mini Truk, new Ape Truk Maxi Cargo..., in India. According to its website, the company produces three and four wheelers at the Baramati plant in Maharashtra.
Meanwhile, as per the strategic plan, Piaggio looks to make investment to the tune of 90 to 100 million euros annually. At the end of the plan period (2012), it is expected that the group will have reached a consolidated turnover of about 1,880 million euros with sales volumes of about 750,000 units, the statement said. http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=260069 | |
COMPONENTS Go To Top Anirvan Ghosh & Ravi Teja Sharma The Economic Times (July 06) Bangalore/New Delhi: Difficult times continue to chase auto makers. Indian part suppliers are now demanding they be waived from an annual contract to lower prices by a certain fixed amount. Hectic parleys are still on, say many auto suppliers, as carmakers face their own set of financial woes and any reduction in costs is welcome in these tough times. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" SINTEX ARMS SECOND AUTO PARTS PLANT GOES ON STREAM The Hindu Business Line (July 05) Chennai: Bright AutoPlasts, a subsidiary of Sintex Industries Ltd, has commenced production at its second plant for automotive components in Kanchipuram, about 60 km from Chennai. According to a press release, the 5,500-sq. m production facility was inaugurated recently by Mr H.J. Shin, Executive Director, and Mr Amit Patel, Managing Director, Sintex Industries. Moulding facility A company release said the new plant would initially manufacture under the hood components for automotive clients, initially using injection moulding facility. It will also introduce a blow moulding facility to expand the product portfolio. The new plant is strategically located to service a host of vehicle manufacturers including Ford, Hyundai and Nissan and major Tier-1 suppliers such as Hanil, Mobis and Visteon. Besides, it will also be a manufacturing base for Tier-1 companies in Europe. The new plant will also commence manufacturing electrical products that are currently made by its subsidiary - France Nief Plastic. http://www.thehindubusinessline.com/2009/07/05/stories/2009070550700200.htm CNG KIT MAKERS UP PRODUCTION ON EXPECTED SURGE IN DEMAND Danny Goodman Business Standard (July 05) New Delhi: Manufacturers of compressed natural gas (CNG) kits are stepping up production to meet the expected surge in demand in the coming months. The reason is a notification by the Delhi government that light commercial vehicles (LCVs), both three-wheelers and sub-one tonne four wheelers, have to convert to CNG by September 30 to ply in the city. According to industry estimates, there are about 25,000 LCVs, both three-wheelers and sub-one tonne four wheelers, that run on diesel in the capital. These will have to shift to CNG by September 30, failing which they will be prevented from entering the capital. Those with national transport permits need not comply with this. Volume-wise, this could be the single-largest order for CNG kits we have seen so far, said Nirmal K Minda, CMD of Minda Industries Ltd, the largest supplier of CNG kits to original equipment manufaturers (OEMs) or vehicle manufacturers. The last mass conversion of vehicles to CNG was in 2001 when, following a Supreme Court order, around 5,000 diesel-run buses were retro-fitted with CNG kits. It costs about Rs 1.5 lakh to convert a diesel LCV to CNG. So, the total business for manufacturers of CNG kits due to the Delhi governments directive is estimated at around Rs 375 crore in the coming months. However, an industry executive said only 200 vehicles had complied with the first deadline so far. In case of buses, only 50 per cent of the 10,000-strong fleet converted. The rest were sold to operators outside the city. Worse, some bus operators quit the business since the conversion proved uneconomical, said SP Singh, senior fellow of Indian Foundation of Transport Research and Training, or IFTRT. We expect 15,000 LCVs to convert. The rest will be sold to truck operators outside the city,said an executive from DD Industries, which supplies CNG kits exclusively for the after sales market. The biggest hurdle to CNG conversion is the perception of the fuels availability. There have always been long queues. The CNG infrastructure in the capital has to improve, said Mukesh Garg, proprietor of New Delhi-based Ecogas. Despite these difficulties, industry executives say there are obvious benefits from converting to CNG fuel. Apart from the reduced pollution, CNG-fuelled vehicles are less costly to maintain. Factoring in the cost of CNG, which is about Rs 9 cheaper than diesel, and the cost of maintenance, which is about 50 per cent less than for a diesel vehicle, CNG is a winner, said the executive from DD Industries. Manufacturers and retro-fitters of CNG kits are hopeful of posting a robust growth in the coming months. Last year, on a low base, we grew by 20 per cent. This year, with more car companies like Maruti Suzuki preparing to roll out models with factory-fitted CNG kits, we expect to grow 100 per cent, said Minda. http://www.business-standard.com/india/news/cng-kit-makersproductionexpected-surge-in-demand/362946/ BHARAT FORGE OVERSEAS ARMS HIT BY SLOWDOWN N. Ramakrishnan The Hindu Business Line (July 06) Chennai: Seven out of 12 overseas subsidiaries of the Pune-headquartered Bharat Forge Ltd made a loss last financial year. The auditors of two subsidiaries Bharat Forge Scottish Stampings Ltd and Bharat Forge America Inc expressed a possibility of these subsidiaries inability to continue as going concerns, including the potential closure of Bharat Forge Scottish Stampings, according to Bharat Forges 2008-09 annual report. These two companies, according to the directors report, have implemented various measures to adapt themselves to lower volumes, including a significant headcount reduction, a tight control on costs, development of new products and an efficient working capital management. It is expected that these steps, along with the support provided by the parent company, will enable these subsidiaries to survive the present downturn and report good performance when the markets recover. According to the annual report, the year gone by was a catastrophic one for the global automotive industry, with sales falling drastically in the second half. It is clear that 2009-10 will be an even more challenging year and the markets are going to be much more volatile, the annual report says. Bharat Forge reported consolidated 2008-09 revenues of Rs 4,744 crore, up 2.6 per cent over the year, with profit after tax falling 81 per cent to Rs 58 crore. Nearly 52 per cent of its consolidated revenues come from Europe, 16 per cent from the US, 22 per cent from India and 10 per cent from Asia-Pacific. The company has four plants in India, three in Germany, two in China, and one each in Sweden, Scotland and the US. Bharat Forges Chairman and Managing Director, Mr Baba Kalyani, said in the annual report that the company, in the short run, focussed on cutting costs, reducing working capital and aligning capacities with demand. It also put a freeze on capital expenditure. Capex holiday An earnings update presentation made after the results were announced in May, a copy of which is available on the companys web site, mentions a capex holiday for 2009-10 as one of the measures to counter the downturn. According to Mr Kalyani, the companys strategy in the long term is to more aggressively grow its non-automotive business, which now makes up 21 per cent of consolidated revenues. The companys aim is to grow this to 40 per cent by 2011-12. Non-auto shift Our move to non-auto is not a defensive move of de-risking the company from automotive business cycles. It is a proactive move to be a significant player in the high growth areas of the future, he has said in the annual report. He has identified this as the third strategic shift made by the company, the first being the move in the second half of the 1990s to increase exports and the second being the move to acquire overseas facilities. As part of its thrust on the non-automotive business, Bharat Forge has formed joint ventures with: NTPC Ltd for balance of plant for the power sector; Alstom to make turbines and generators for sub- and super-critical power plants; and, Areva to manufacture heavy forgings for power sector applications. The company has set up facilities for the non-auto business at Mundhwa and Baramati, in Maharashtra. Full-fledged production at these facilities will begin this year. A lesson of 2008-09 is that we must move even more swiftly into the non-auto space, Mr Kalyani has said in the annual report. According to the earnings update, the start of production at these two plants coincided with the global economic recession and credit freeze, which has affected demand in the non-auto business too. In FY10, the facilities may not ramp up at a rate expected previously. This is likely to result in lower than expected capacity utilisation from these facilities. The company is now aggressively identifying additional customers and product segments for the new non-auto facilities to speed up the ramp up. http://www.thehindubusinessline.com/2009/07/06/stories/2009070651620300.htm | |
ALLIED INDUSTRY Go To Top | |
FINANCE & INSURANCE Go To Top PTI See this story in: Business Standard, The Financial Express, The Hindu Business Line, Yahoo India (July 06) New Delhi: Commercial vehicle financier Shriram Transport Finance Company (SFTC) seeks to raise up to Rs 1,000 crore through the issue of debentures to augment its financial capabilities. "The company has filed its draft prospectus with the National Stock Exchange (NSE) for its proposed public issue of secured non-convertible debentures (NCD), aggregating to Rs 500 crore with an option to retain over-subscription up to Rs 500 crore for issuance of additional NCDs," SFTC said in a statement. According to the company, it intends to use the funds raised through the issuance of NCDs for various financing activities, including lending and investments. The company has appointed four firms ENAM Securities, A K Capital Services, ICICI Securities and Kotak Mahindra Capital Company as the lead managers to the issue, while Integrated Enterprises (India) would be acting as the registrar to the issue. STFC is a part of the Shriram conglomerate which has presence in various financial services like commercial vehicle financing business, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products. The company is one of the largest asset financing NBFCs in India with a niche presence in financing pre-owned trucks and small truck owners. http://www.financialexpress.com/news/shriram-transport-fin-to-raise-rs-1k-cr-via-ncds/485448/ http://www.thehindubusinessline.com/blnus/02051708.htm http://in.biz.yahoo.com/090705/50/batu8d.html | |
OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top | |
INTERNATIONAL NEWS Go To Top Reuters See this story in: The Economic Times (July 06) Frankfurt: General Motors Europe President Carl-Peter Forster expects to sell German unit Opel to Canadian auto parts supplier Magna soon, he told a German newspaper. BEIJING AUTO SUBMITTED OFFER FOR OPEL, SAYS GM Bloomberg See this story in: Business Standard, Deccan Herald, The Times of India, mint (July 05) General Motors Corp said Beijing Automotive Industry Holding Co. submitted an offer for its Opel division, giving the bankrupt US auto maker more options in the event negotiations with Magna International Inc fail. Beijing Automotive made the non-binding proposal after examining Opels books, Chris Preuss, a GM spokesman in Zurich, said, declining to provide details. The Chinese companys bid is being reviewed, he said, adding that talks with Aurora, Ontario-based Magna remain on track. Magna, Canadas biggest auto-parts manufacturer, was chosen in May by the German government as the preferred bidder for Opel, which has its headquarters in the Frankfurt suburb of Ruesselsheim. Progress has been slowed by disagreements over rights to use Detroit-based GMs technology and engineering designs, people familiar with the talks have said. The deal is unlikely to help Beijing Auto substantially unless the company buys designs and brings them back to China, Zhang Xin, an automobile analyst at Guotai Junan Securities Co. in Beijing, said on Saturday. SAIC Motor Corp, Chinas largest car maker and the Chinese partner of General Motors, bought the design rights to MG Rover Group Ltds Rover 25 and 75 models for $116 million in 2005. The UK, where Opel owns two factories making vehicles under the Vauxhall brand, may lend money to help complete the sale to Magna, Business Secretary Peter Mandelson said yesterday. We are prepared to financially underwrite that deal, Mandelson told reporters after meeting business, political and labor officials at Vauxhalls factory in Luton, England. Potential government aid would include loans and loan guarantees for which we have to have interest paid and some securities. GM is selling a majority of Opel as part of a global reorganisation that includes the bankruptcy of its US operations, closing or idling 15 factories in that country and cutting thousands of salaried and union jobs to return to profit. http://www.business-standard.com/india/news/beijing-auto-submitted-offer-for-opel-says-gm/362947/ http://www.deccanherald.com/content/11808/chinas-beijing-auto-bids-opel.html http://www.livemint.com/2009/07/05224839/Chinese-carmaker-bids-for-GM.html?h=B WIEDEKING'S PORSCHE ERA RUNS ON FUMES OF VW BACKFIRE Bloomberg See this story in: Business Standard (July 06) Berlin: Wiedeking, hailed as the man who outfoxed the market by Fortune magazine in January, is fighting to save Porsche SE and his job as a strategy to take over Volkswagen AG unravels. Wiedeking transformed the 911 sports-car manufacturer, almost bankrupt when he became chief executive officer in 1993, into the automaker with the highest profit margins for the industry. In 2005, he began using cash from the luxury-vehicle business to acquire shares of Volkswagen, a company that builds more cars in a week than Porsche does in a year. The David-bests-Goliath tactics worked until Wiedekings efforts to topple power structures at VW, Europes largest carmaker, failed and the economic crisis thinned profits and spooked banks. That left Stuttgart-based Porsche with more than 9 billion ($12.6 billion) in debt. A deal with Qatar may be the CEOs last chance to preserve Porsches control over VW, and may cost Germanys best-paid manager his job, analysts say. Wiedekings era at Porsche is likely over, said Ulrich Viehoever, author of a German book whose title translates to The Porsche Chief: Wendelin Wiedeking - With Edges and Elbows to the Top. He cant hold out long after asking the controlling families to accept a new investor. Porsche is in talks with Qatar about selling a stake as well as some options that can be converted into VW shares. Porsche, which controls 51 per cent of Wolfsburg-based Volkswagen, needs 5 billion to ease its financial crunch, a person familiar with the situation has said. An investment by the Persian Gulf state may give Wiedeking, 56, leverage to negotiate a deal to merge with VW. The Porsche and Piech families, which own all of Porsche SEs voting shares, agreed in May with VW to pursue a merger to create a 10-brand behemoth that would include VW marques such as the Audi luxury division as well as the Seat and Skoda mass-market units. Wiedeking declined to be interviewed, according to his spokesman, Albrecht Bamler. Bamler called contentions that the CEO may step down should Porsche fail to find an investor or be forced to sell its car-making unit to VW pure speculation. The CEO, who was initially welcomed in Wolfsburg, fell short of winning support from VW union chief Bernd Osterloh, who asked to quit negotiations with Porsche only two weeks after a May 6 agreement among the families. He also alienated Christian Wulff, the premier of VWs home state of Lower Saxony, by trying to scuttle Germanys so-called Volkswagen Law, which gives the state a blocking minority. During the tussle, Osterloh said in April last year that Wiedeking bore the arrogance of an autocrat. The resistance from Lower Saxony prevented Porsche from realizing its plan to acquire 75 per cent of Volkswagen, a holding that could have given it access to VWs cash. Wiedekings strategy was very, very audacious, said Christoph Stuermer, an automotive analyst with IHS Global Insight in Frankfurt. Porsche banked everything on the fact the Volkswagen Law would fall in its entirety. Wiedeking, whos spent all but five of his 26 years in the auto industry with Porsche, also butted heads with Ferdinand Piech, Volkswagens powerful chairman and a member of the clan that controls Porsche. In September 2007, the Porsche CEO said there would be no sacred cows after Porsche takes over VW, suggesting he may seek to unravel some of the legacy of Piech, VWs CEO until 2002. In May, with merger talks between Porsche and VW in their early stages, Piech made a rare public appearance at a Volkswagen event in Sardinia and openly criticised Wiedeking and Porsche Chief Financial Officer Holger Haerter for creating Porsches problems. He said at the time that Wiedeking had his support for the time being. Piech doesnt like it at all that Wiedeking aims to dictate things at Volkswagen, Viehoever said. Wiedeking also soured relations with regulators by scoffing at rules to reduce auto emissions and refusing to report Porsches earnings on a quarterly basis. When Wiedeking took the helm in 1993, Porsche posted a net loss of 122 million on sales of 978 million. Last year, profit was 6.29 billion, boosted by gains from the VW options, while sales reached to 7.47 billion. Porsche, which has made more money on every car it sells than any other automaker since at least 2002, generated an operating margin of 13 per cent last year, compared with 1.5 per cent at BMW AG and VWs 5.9 per cent, data compiled by Bloomberg show. Porsche has lost 51 per cent in the past year, compared with a 14 per cent decline of the Bloomberg Europe Autos Index. The stock fell 59 cents, or 1.3 per cent, to 45.27 on Sunday in Frankfurt trading. Volkswagen shares rose 2.1 per cent to 233.69. Porsche has a market capitalisation of 7.87 billion and VW is valued at about 74.2 billion. Wiedeking turned around Porsche by streamlining production with the help of experts from Toyota Motor Corp to have components delivered on time and in the order of assembly. Shortly before he became CEO, Wiedeking shocked production workers by sawing down parts shelves to demonstrate the change. Wiedeking also focused Porsche on the iconic 911 sports car and then added the Boxster roadster in 1996 and Cayenne sport- utility vehicle in 2002 to broaden the brands appeal. The costs of those two models were kept low by outsourcing Boxster production to Valmet Corp in Finland and partnering with Volkswagen on development and parts for the Cayenne. The father of two, who drives a vintage Porsche tractor in his spare time, invested 10 million in two foundations that provide lunches and day-care for children in Beckum, said Karl-Uwe Strothmann, the mayor of Wiedekings hometown, about 70 miles (113 kilometers) northeast of Cologne. Wiedeking is totally natural, exactly the opposite of a slick businessman who only thinks about filling his pockets at the expense of his staff, said Strothmann, who regularly dines with Wiedeking at the Porsche chiefs restaurant Pulverschoppen, where a schnitzel dinner costs 7.90, including salad and a side. The Cayenne, Porsches cheapest model, starts at $45,000. Wiedekings salary contract stipulates that he earns 0.9 per cent of Porsches pretax profit, spokesman Bamler said. Based on the 8.57 billion-euro pretax income reported for the year through July 2008, the CEO received about 77 million, making him better paid than any leader of the 30 companies in Germanys benchmark DAX Index, which includes VW and not Porsche. Wiedeking, with the aid of CFO Haerter, backed his swoop for Volkswagen with share options that allowed Porsche to profit from increases in VWs share price. The gains were so robust that profits of 5.62 billion exceeded sales of 3.04 billion in the six months ended January 31. While the options were a coup for Porsche, they created animosity in the financial community, contributing to Porsches difficulties to renew a 10 billion credit line this year. Wiedeking clearly misjudged the problems in financial markets that arose after the crisis took hold, said Claus Schmiedel, leader of the Social Democratic Party in the state parliament of Porsches home state of Baden-Wuerttemberg. Market rules have changed completely since then, Porsches credit worthiness isnt what it used to be. Investors betting on a falling VW share price were forced to cover positions in October 2008 after Porsche revealed that its options gave it control of 74 per cent of VWs shares. The historic short squeeze, which briefly made VW the most valuable company in the world, caused German financial regulator BaFin to investigate Porsche for market manipulation. While Porsche was cleared of those allegations, another inquiry was opened in May and is pending, according to Anja Engelland, a BaFin spokeswoman in Bonn. Porsche turned to the German government for help, applying to the state-owned development bank KfW Group for a 1.75 billion loan. The request was rejected last month, and Porsche is now seeking to tap its current lenders for more funds, a person familiar with the situation said June 30. While Wiedekings strategy is collapsing, the Porsche boss is credited with having the foresight that the manufacturer is too small to survive alone for long in the global auto industry. The strength of Wiedeking was to recognise that the sports-car business was challenged, while they were still successful, said Philippe Houchois, an analyst at UBS AG in London. Hes done a fantastic job for the wealth of the family. Only a few months ago, Wiedeking thought the acquisition of a majority in VW was enough to ensure the carmakers future amid the worst crisis in the auto industry in decades. Can you imagine what would be happening now if we hadnt done this? he told Fortune. Imagine the discussion that would be going on about Porsches ability to survive! http://www.business-standard.com/india/news/wiedeking/s-porsche-era-runsfumesvw-backfire/363037/ CHRYSLER COMPLETES BOARD OF DIRECTORS Reuters See this story in: The Economic Times (July 06) New York: Chrysler Group LLC, which emerged from bankruptcy last month by selling most of its assets to a company led by Italy's Fiat Spa, completed its board of directors with the appointment of five new members on Sunday. The Fiat tie-up was a key step in the Italian carmaker's ambitious plan to create a global player to ride out the worldwide auto sales downturn. http://economictimes.indiatimes.com/International-Business/Chrysler-completes-board-of-directors/articleshow/4742251.cms | |
ECONOMY & FINANCE Go To Top (July 05) New Delhi: The challenge for Finance Minister Pranab Mukherjee in the upcoming Budget will be to restore the economy to a high growth path without increasing inflation. The Budget will announce what policy of the government will be in terms of maintaining price stability, managing inflationary expectations and sustaining growth momentum. Economy watchers say though the numbers look benign on paper, inflation at local vendors is very high and will continue to gain an upward momentum from here on. The government. by increasing in the price of fuel, has unleashed the spiral of inflation. Add to this, if the government increases minimum support price (MSP), like it has done for sugar recently, it will mean that the consumer will have to pay much more at retail level. High MSP means that the farmer will sell at government fixed price or more, middleman will add his commission, add to it storage and transport cost and retailers commission. With prices increasing every year, the common man is bound to face hardships without a consequent increase in his salary or income. Much of this will be felt even harder if jobs continue to shrink and the economy does not revive in the next 6-8 months. Those in small and medium business will also face this problem because the cost of raw material, like steel, cement and iron, will show an increase and most of it will be difficult to pass on to the consumers as there is dip in demand. On the supply side, there are concerns that production of wheat, rice, pulses and edible oils depends on rains. But forecasts predict deficient rainfall this monsoon. This means production of most crops will be below target. Though we have sufficient amount of buffer stock of wheat and rice, but the production for the year after this will have to depend on the next monsoon. However, less rains will mean that edible oil and pulses production that is already low will dip further resorting India to import. Whenever India shops for pulses and oils, global prices shoot up by 10-15 per cent. Much of this is because of the large quantities that India buys, leading to importing inflation in the economy, say traders. High inflation is still prevalent in vegetables, pulses, fruits, sugar and edible oils. In pulses, fruits and sugar inflation continues to remain high and is currently at around 8- 8.5 per cent levels. | |
Monday, July 6, 2009
Indian Auto Industry Update July 06, 2009
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