Indian Auto Industry Update July 22, 2009

INDIAN AUTOMOBILE INDUSTRY Daily Updates on: Insurance...Banking...Metal & Minerals...Infrastructure....Energy
INDUSTRY TCS bags second deal from Volkswagen INTERVIEWS/FEATURES CARS, SUVs, MUVs Volvo to expand India footprint COMMERCIAL VEHICLES Tatas launch 407 Pick-up in Bengal DMRC to buy 300 low-floor buses CONSTRUCTION & AGRI MACHINERY 2/3 WHEELERS Two-wheeler sales may skid on weak monsoon Bajaj-Maha Scooters dispute heads for court Mopeds take the slow road to extinction COMPONENTS US car sales rev up auto parts biz Shanthi Gears declares lockout Rane Brake Linings Q1 net profit at Rs 2.66 crore Magna Intl mulls India entry Sundaram-Clayton posts loss Banco net at Rs 16 crore	ALLIED INDUSTRIES Tyre cos ready Rs 6k-cr radial push JK Tyre on prowl, may buy promters stake in rivals FINANCE & INSURANCE Customers now drive to public sector banks for vehicle loans Shriram Transport to raise Rs 1,000 cr via NCDs M&M in pact with SBT OIL, LUBRICANTS & ALTERNATIVE FUELS Public sector oil firms to lose Rs 2,880 cr in revenues in July Oil rises above $65, world equities hit yr high INTERNATIONAL NEWS Volkswagen to make new compact sedan in Mexico Porshe, VW may not reach merger this week Nissan to invest $700 mn in electric car venture Volvo Q2 loss worse than expected Delphi creditors vote against plan ECONOMY & FINANCE Rupee range-bound as dollar strengthens Sensex sheds 128 points
INDUSTRY                                                                                                                                  Go To Top   TCS BAGS SECOND DEAL FROM VOLKSWAGEN Adith Charlie The Hindu Business Line (Web & Print Edition)   Mumbai: Tata Consultancy Services has bagged an IT outsourcing contract to service automaker Volkswagen in Germany, according to a top company official.   According to the contract, TCS is to develop new applications that would help VW reduce the time to market its new cars and better the car buying experience for the customer.   This is the second engagement that TCS has bagged from the German company; earlier this year, it bagged a five-year IT outsourcing deal with Volkswagen (VW) Group UK. The new contract has been signed with Volkswagen AG, the parent company of the Volkswagen Group.   It is a new piece of development work which is specifically targeted at the new products that VW intends to launch. This initiative also gives its customers the ability to configure their online needs, Mr A.S. Lakshminarayanan, Vice-President & Head-Europe of TCS, told Business Line.   However, he did not give financial details of the pact. The company is developing applications for this contract at its centres in Germany. Mr Lakshminarayanan said that the deal had already gone live. TCS has other high profile auto clients such as Ducati and Ferrari in Europe. http://www.thehindubusinessline.com/2009/07/21/stories/2009072151390400.htm  Go To Top
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CARS, SUVs, MUVs                                                                                                                Go To Top   VOLVO TO EXPAND INDIA FOOTPRINT The Financial Express Hyderabad: Volvo Car India, the Indian arm of Swedish car major Volvo Car Corp, is upbeat about the Indian luxury car market and is gearing up to expand its footprint across the country. Volvo, which entered the Indian market in 2007, is planning to introduce new models in India from its global lineup, but is looking for right partners in big cities.  Go To Top
COMMERCIAL VEHICLES                                                                                                 Go To Top   TATAS LAUNCH 407 PICK-UP IN BENGAL The Hindu Business Line (Web & Print Edition)   Kolkata: Tata Motors has launched the all new Tata 407 Pick-up in West Bengal. The vehicle comes with a payload of 2.25 tonne which is nearly double the payload of any other pick-up vehicle in the market, says a press release. http://www.thehindubusinessline.com/2009/07/22/stories/2009072250421900.htm   Go To Top      DMRC TO BUY 300 LOW-FLOOR BUSES The Economic Times (Delhi Print Edition)   New Delhi: Delhi Metro Rail Corporation (DMRC) is planning to buy 300 low-floor buses to ramp up the public transport system for the upcoming Commonwealth Games in the Capital. These 26-seater coaches, each priced at Rs 20 lakh, will be supplied by Indo-Japanese auto company Swaraj Mazda and will come in batches of 75-buses each. The delivery of these new buses, carrying a provisional automatic ticket vending machine, is expected to start from January 2010. For Swaraj Mazda, the total order size of over Rs 60 crore will also include backend support like on-road maintenance and periodic servicing for these buses. We will press the new fleet into 76 new stations coming up in the new phase as well as utilise them in our 68 stations, where we currently operate, DMRC chief PRO Anuj Dayal said. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"  Go To Top
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2/3 WHEELERS                                                                                                                      Go To Top TWO-WHEELER SALES MAY SKID ON WEAK MONSOON Pankaj Doval The Times of India   New Delhi: Depleted monsoons threaten the revival of two-wheeler sales as poor rains could hit the income and sentiments in rural and semi-urban markets that account for a significant portion of demand in motorcycles and scooters. And while car sales appear to be more insulated, a significant shortfall in rains could impact demand in four-wheelers as well.   Rural and semi-urban markets, fast-emerging as key growth drivers for two-wheeler sales, stare a contraction in demand if monsoon rains continue to play truant, companies said, adding that it was too early to make concrete forecast. "A weak monsoon is a matter of concern as the industry looks a lot to rural markets for growth," Anil Dua, marketing head for country's biggest two-wheeler maker Hero Honda Motors, told TOI. Hero Honda, that has an over 50% share of the domestic two-wheeler market, realises a big 40% of its sales through rural and semi-urban markets - most of which depends on agriculture income. Dua, however, said it was too early to call it a failed monsoon. "We are only talking about a delayed monsoon as of now. So it is early to say anything concrete," he said. Also, one bad monsoon in isolation would not mean a complete failure in rural markets. "At the most, it will make a dent in the growth momentum in these markets," he said. Milind Bade, marketing GM at Bajaj Auto, also said that poor monsoon will hit demand for two-wheelers. However, he added that Bajaj would not be impacted much, considering that its portfolio comprises of high-end bikes that are not big sellers in rural areas. H S Goindi, president (marketing) at TVS Motors, also said the company was concerned about poor rains, but was waiting for a clearer picture to emerge before deciding on any counter strategy. Naresh Rattan, sales and marketing head for scooter major Honda Motorcycle and Scooter India, disagreed that poor rains would have an adverse impact on demand. "One season of bad monsoon does not make a very big difference. And in any case, we have to remember that farmers would have already taken this into consideration and made alternative arrangements for irrigation," he said. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://timesofindia.indiatimes.com/NEWS/Business/India-Business/Two-wheeler-sales-may-skid-on-weak-monsoon/articleshow/4805118.cms   Go To Top     BAJAJ-MAHA SCOOTERS DISPUTE HEADS FOR COURT Neha Rishi Daily News & Analysis   Mumbai: The long-drawn battle over Maharashtra Scooters between the state government and Bajaj Auto is set to be fought in the court. The first hearing of the petition filed by Western Maharashtra Development Corporation (WMDC) over disagreement of valuation of the company would be held before the Bombay High Court on July 30.   WMDC, a state government arm, holds a 27% equity stake in Maharashtra Scooters and Bajaj Holdings 24% stake. The rest is public holding.   The arbitrator had awarded Rs 151 per share for Bajaj Auto to take over WMDC's stake in Maharashtra Scooters, which used to manufacture Priya, Chetak and Super brands. "Unhappy with the price awarded by the arbitrator, which is Rs 151 per share, the WMDC has taken the matter to the court for a better valuation. We have no problems with the arbitrated price," Ravi Kumar, vice president, business development, Bajaj Auto Ltd, said. It's been close to a decade that Bajaj has been trying to buy out WMDC stake in Maharashtra Scooters.   Kumar said that the company is hopeful that the court will decide in Bajaj Auto's favour. "The board of directors will decide the fate of Maharashtra Scooters once the court process is over and Bajaj will hopefully acquire the 51% stake," he said.   Maharashtra Scooters has shares of Bajaj Auto Ltd, which was demerged into three companies -- Bajaj Holdings, Bajaj Auto and Bajaj FinServ, and has good investment value in it, an analyst, who did not wish to be named, said.   Maharashtra Scooters is cash rich with investments close to Rs 201 crore as on March 31, 2009, of this, the quoted investments to the tune of Rs 105 crore are in Bajaj Auto Finance, Bajaj Auto, Bajaj Finserv, Bajaj Hindustan and Bajaj Holdings. Unquoted investments of about Rs 96 crore are in some debenture bonds.   The company assembled geared scooters, but due to non-availability of completely knocked down packs from Bajaj Auto it ceased production of geared scooters in April 2006. Maharashtra Scooters has managerial and technical agreement with Bajaj Auto for production of scooters. The company has its plants in Waluj and Akurdi.   The present activity of the company is limited to the manufacture of pressure die casting, die jigs and fixtures primarily for the two- and three-wheeler industry.   Maharashtra Scooters, which was formed in 1975 under the horizontal transfer of technology policy of the state government, is a debt-free company. http://www.dnaindia.com/money/report_bajaj-maha-scooters-dispute-heads-for-court_1276146   Go To Top     MOPEDS TAKE THE SLOW ROAD TO EXTINCTION Pranav Nambiar Daily News & Analysis   Bangalore: It does not quite fit the bill as the archetypal dinosaur of the auto sector, but industry insiders acknowledge that mopeds are on the road to extinction.   The "Chal meri Luna" call that embodied the coming of age of this pre-liberalisation era relic has literally been silenced by the drone of modern speed demons. Companies that exited from the business include the Hero Group and most recently Kinetic, which dumped the product from its portfolio this year after its acquisition by M&M. In effect, there is just one remaining manufacturer of mopeds in the country - the TVS Group, with its XL Super priced at around Rs 21,000. It sold about 4 lakh mopeds last fiscal and has no plans for the segment in terms of new launches or brand revival.   "The market has been shrinking progressively as people prefer trendier two wheelers. We are just maintaining the line as there is a small segment of users," said H S Goindi, senior vice-president of sales, TVS Motors.   Goindi added that most of the users of the mopeds are from rural areas who use it for commuting and load carrying. After constituting close to 40% of the two wheeler market in the mid 80's and early 90's, mopeds constitute only around 5% of the 74 lakh units two wheeler market.   According to analysts at Credit Analysis & Research Ltd, mopeds made a beginning in 60s with Mopeds India launching Suvega. Moped sales surpassed motorcycle and scooter sales by mid 1980s.   The industry then saw many new players entering the fray with Kinetic introducing 'Luna' and TVS introducing the TVS-50 model, the first two-seater moped in India.   While MIL was the initial market leader, Kinetic, TVS and Hero became major players by the mid 1980s. However since the early part of this decade when mopeds commanded around 20% of the market (when over 6 lakh units were sold), it has been a steep downhill. The rising affluence of Indian's and easy access to credit meant that mopeds turned began turning antique towards mid 2000.   "The growing popularity of motorbikes in the 90's started the decline of mopeds. But the success of gearless scooters this decade in a sense put the final nail in the coffin," said Revati Kasture, Head CARE Research.   "Maintenance of mopeds is very expensive and people cannot carry much load on it. Other alternatives like scooters have superior mileage and are more powerful than 75 cc mopeds," said, Atul Gupta, vice-president, sales and marketing, Suzuki Motorcycle India.   Officials from other players like Bajaj and Yamaha agree that there is no meaning in looking at the segment as the low volumes makes it unviable to manufacture. It's anyone's guess when mopeds will finally run out of gas. However one thing's for certain the slow pedal down the slope is getting painfully obvious. http://www.dnaindia.com/money/report_mopeds-take-the-slow-road-to-extinction_1276159  Go To Top
COMPONENTS                                                                                                                      Go To Top US CAR SALES REV UP AUTO PARTS BIZ Danny Goodman Business Standard   New Delhi: India auto parts suppliers to the Big 3 of Detroit General Motors (GM), Ford and Chryslerhave witnessed a steady increase in demand for components from these car manufactures. Sales of light passenger vehicles, comprising cars and trucks, began to increase from March this year.   We are seeing a slow but steady pick-up in demand for auto components from GM, USA. As retail sales increase, companies like GM are stepping up production of cars since the available inventory has been cleared up, Deep Kapuria, CMD, Hi-Tech Gears Ltd, which is a GM vendor, said.   In 2009, Chrysler and GM, which filed for bankruptcy, closed production plants across the US, leading to a steep drop in car production.   Auto companies in the US sold about 920, 000 units of both cars and light trucks to American consumers in May. Rico auto industries, which manufactures engine, transmission, suspension and braking systems for both Ford and GM in North America, has also seen an increase in demand over the last few months.   The 1, 200 units of components we supplied per day to cater to demand from GM has now gone up to 2, 500 units per day. This signals a revival in demand for cars in the US market, Arvind Kapur, MD, Rico Auto Industries Ltd, said.   Chennai-based Sundram Fasteners, which supplies radiator caps to GM, has not had much of an impact on its business.   Analysts say the pick-up in the American market has resulted because of many factors. One, a surge of confidence among retail consumers. Two, increasing disposable incomes. Three, the steep dealership discounts on brands like Pontiac and those from SAAB. And four, new exchange programmes wherein American car owners could exchange old cars for new and get rebates of up to $4, 500 (Rs.2.17 lakh).   Go To Top      SHANTHI GEARS DECLARES LOCKOUT The Hindu Business Line   Coimbatore: Industrial gear manufacturer, Shanthi Gears Ltd (SGL), Coimbatore, has declared a lockout in all its units from 6 p.m. on Monday. In a notification to the NSE, the company said that it has done so for the safety of the properties of the company and for the safety of the employees.   In mid-May, Shanthi Gears Ltd informed the stock exchanges that it was in the process of revamping and restructuring the entire operational and organisational structure, which might lead to slowdown in production in all units for a short tenure.   Earlier plans Earlier, a company source had told Business Line that it had planned to rationalise manufacturing facilities by bringing down the number of production facilities from six units to two units. It believed that such a move would help cut down cost and increase productivity. Though the source had claimed then that there were no plans to cut the size of the workforce, there were reports of employee down sizing which created tension among the workers.   So far, the company has not made it clear to the stock exchanges the details of its plans. There had been reports of company promoters planning to divest part of their stake, though this has been denied. The promoter and the promoter group hold 44.70 per cent stake in the equity capital of the company of Rs 8.17 crore.   The turnover last year was Rs 252 crore. Shanthi Gears share price closed at Rs 38 (face value Re 1) at the NSE and 2.79 lakh shares were traded. http://www.thehindubusinessline.com/2009/07/22/stories/2009072251650200.htm   Go To Top     RANE BRAKE LININGS Q1 NET PROFIT AT RS 2.66 CRORE PTI See this story in: The Hindu Business Line   Chennai: Rane Brake Linings, a part of the Rane Group, has reported a net profit of Rs 2.66 crore for the quarter ended June 30. The company reported a net profit of Rs 80.13 lakh during the same period last year, RBL said in a filing to the BSE.   For the financial year 2008-09, the company's audited net profit stood at Rs 2.89 crore, the filing said. The total income of the company was 53.09 crore for the quarter ended June 30, 2009, against Rs 50.36 crore in the same period last year. In the l ast fiscal, the audited total income of the company stood at 191.34 crore.   The company said that it has re-appointed Mr L Lakshman and Mr S Sandilya as Directors. Shares of the company were trading at Rs 58.30 up by 10 per cent at BSE this afternoon. http://www.thehindubusinessline.com/blnus/26211765.htm   Go To Top     MAGNA INTL MULLS INDIA ENTRY PTI See this story in: The Hindu Business Line, The Telegraph   New Delhi: Canada-based contract auto maker Magna International on Tuesday said it is mulling setting up a manufacturing facility in India to produce multiple vehicles from a single site.   Magna is only evaluating the possibility of setting up an integrated manufacturing facility in India to produce multiple products from a single plant in the country, Magna International spokesperson said.   The company is exploring possibilities to set up the plant to cater to different auto makers, the spokesperson added.  Such a facility would be fully dependent on the needs and requirements of our customers, the official said.   The spokesperson, however, declined to give details saying it would be premature to comment any further on this at this time.  Magna is the world's largest contract auto maker with product development, engineering and sales operations across 25 countries with 82,000 employees. Among Magna's clients are global auto giants such as Fiat, Chrysler, Volkswagen, Peugeot and BMW. http://www.thehindubusinessline.com/blnus/14211508.htm http://www.telegraphindia.com/1090722/jsp/business/story_11266785.jsp   Go To Top     SUNDARAM-CLAYTON POSTS LOSS The Hindu Business Line Chennai: Sundaram-Clayton Ltd has reported a net loss of Rs 2.08 crore on an income of Rs 93.68 crore for the first quarter ended June 30, 2009. During the corresponding period in the previous year, the company reported a net profit of Rs 6.25 crore on an income of Rs 127.41 crore. http://www.thehindubusinessline.com/2009/07/22/stories/2009072251630200.htm   Go To Top     BANCO NET AT RS 16 CRORE The Financial Express   Banco Products India Ltd, a manufacturer of automotive components, has reported net sales of Rs 86 crore for the quarter ended June 30, 2009, registering a growth of 2%, compared to Rs 84 crore posted in the same period of the last fiscal. Net profit for the first quarter of FY10 was at Rs 16 crore as compared to Rs 14 crore in the year-ago period. EPS for the quarter worked out to Rs 2.3 compared to Rs 1.04 for the same period last fiscal. http://www.financialexpress.com/news/ultratech-net-up-58-dr-reddys-net-at-rs-227-crore/492299/2  Go To Top
ALLIED INDUSTRY                                                                                                               Go To Top TYRE COS READY RS 6K-CR RADIAL PUSH Chanchal Pal Chauhan The Economic Times   New Delhi: Indian tyre makers are rolling out investment plans worth Rs 6,000 crore, as rising popularity of radial tyres in the commercial vehicles (CV) segment is making international brands sit up and take notice. Currently, after a ban on Chinese radial tyres, only two international players Michelin and Bridgestone have a stake in the $10-million domestic market, but thats set to change with the expected entry of companies such as Goodyear, Continental, Kumho, Pirelli, Yokohama and Hankook in the high-profit truck and bus radial tyre segment this year. Incidentally, Indias CV segment remains a weak spot in the auto industry, with sales dipping 33% to 1.83 lakh units in FY09. And the search for more bang to the buck is making consumers move towards high mileage, fuel-efficient radial technology from the conventional cross-ply technology. As of now, radials make up only 9% of the Indian CV market against the world average of 65-70%. The industry estimates it to grow to 25% in the next three years. Indian companies are working on plans to compete against the rising import of foreign tyres by increasing the domestic radial tyre production as well as improving product quality, said Automotive Tyre Manufacturers Association (ATMA) chairman RP Singhania. As per ATMA, Indian truck and bus tyre makers have lined up Rs 6,000 crore investments for greenfield facilities and for increasing capacity at existing plants for new-age tyres. Mr Singhania, who owns JK Tyres & Industries, is investing Rs 700 crore at its Mysore plant to enhance truck and bus radial capacity to 12 lakh tyres from 3.68 in the next three years. Birla Tyres is setting up a dedicated CV radial plant and Apollo Tyres, a fringe players in the radial segment, has set up a new truck and bus radial plant at Baroda. Kolkata-based Dunlop Tyres is also entering the radial tyre segment, while MRF is investing Rs 600-Rs 800 crore to increase capacity across its product portfolio. These investments come on the back of the governments restrictions on imports of Chinese tyres late last year. The government has also come up with a rule that every importer of tyres must have a licence. Every month, over a lakh CV radial tyres were coming from China, but after this diktat, only MNC companies are importing 70,000-80,000 radial tyres. Japanese tyremaker Bridgestone and French tyre company Michelin import CV tyres in small quantities. Goodyear, Kumho, Yokohama, Continental, Hankook and Pirelli, which import car tyres and have established distribution network, now plan to tap the high-margin CV tyre market. There is massive shift towards radial tyres with the dual-benefit of better mileage and improved fuel-efficiency over the conventional cross-ply tyres. Like cars, 97% of which use radial tyres, the bus and truck segment will also witness a major shift in the next few years and foreign companies are likely to have a major pie, said ATMA director general Rajiv Budhiraja. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Tyre-cos-ready-Rs-6k-cr-radial-push/articleshow/4804957.cms   Go To Top     JK TYRE ON PROWL, MAY BUY PROMTERS STAKE IN RIVALS Nandini Sen Gupta The Economic Times   JK Tyre is on the lookout for consolidation opportunities in the domestic market and is not averse to buying out the promoters of rival firms such as MRF, Apollo and Ceat. (Consolidation) would make sense and thats the trend globally. It will depend on opportunity though ... the moment one or two of the promoters say they want to sell out. Of course we will be on the watch out for that, said JK Tyre vice-chairman and managing director Raghupati Singhania. He, however, ruled out another overseas deal till JKs Mexican acquisition is fully digested . JK Tyre had bought Mexican company Tornel for Rs 270 crore last year. Overseas M&As depends on the cost of production and the markets and territories they serve, Mr Singhania said. We will start prospecting for overseas deals after a while, but we first need to consolidate Tornel, he said. However, that may not stop the company from looking at a Chinese venture, given the success of its sourcing strategy. JK sourced tyres worth Rs 100 crore from its Chinese partners last year, which were then branded as JK and exported. The company has also lined up investments worth nearly Rs 800 crore spread over 18 months. These include Rs 300 crore spend for a brand new 2.5 million unit passenger radial factory and another Rs 250 crore to increase truck radial capacity from 8 lakh units to 12 lakh units. Another Rs 120 crore will go into a new factory in Mysore to make off-the-road tyres. The company will also spend Rs 50 crore to increase passenger radial capacity from 4.5 to 5 million units. Both projects will be completed by early 2010. The new spend is over and above the Rs 340 crore capex already on stream to raise truck radial capacity to 8 lakh units. Including these investments , the total capex planned by the company is Rs 1,100 crore. The capex spread had slowed down last quarter due to the demand skid, but is now back on track, Mr Singhania said. JK is betting big on truck and bus radials which are expected to clock 25% growth in the next 36 months. The segment grew at 9% in FY09. Mr Singhania also talked about his succession plans involving nephew Anshuman Singhania, son of JK Lakshmi Cement CEO Vinita Singhania. My nephew Anshuman is going through his training in the company, he said. Anshuman will be groomed to take over from his uncle when he moves on to bigger and better things. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"  Go To Top
FINANCE & INSURANCE                                                                                                   Go To Top CUSTOMERS NOW DRIVE TO PUBLIC SECTOR BANKS FOR VEHICLE LOANS Shobha Kannan The Hindu Business Line   Kolkata: Mr Sanjay Mukherjee, a government employee based in Kolkata, got his four-wheeler loan sanctioned in a couple of hours by United Bank of India and that too at a more competitive interest rate than that offered by many private sector banks.   Mr Mukherjee is not alone; customers who earlier thronged the private banks for vehicle loans are now approaching public sector banks not just for the low interest rates but also for the ease of operations and transparency.   Direct interaction In the case of a public sector bank, we can directly deal with the branch manager or the bank employee who is well versed with the various schemes, whereas in the case of private banks, it is the intermediary, usually an agent who has very limited information, said a customer of State Bank of India who did not wish to be identified.   The increasing customer preference for public sector banks is evident by the rise in their market share by more than 10 per cent over the last one year, according to an analysis by Crisil Research.   According to Mr Manoj Mohta, Head-Research, Crisil Research, Earlier, PSBs accounted for about 25-30 per cent of the total vehicle finance portfolio and private banks had 50 per cent share, but now the share of PSBs has moved up by more than 10 per cent to almost 40 per cent of the total finance in the sector.   PSBs to push growth Spurred by the role of public sector banks and the growth in underlying asset, the vehicle finance industry is set to grow by 8-10 per cent in 2009-2010, Mr Mohta said. Earlier, PSBs preferred financing only their own customers or on a reference basis, but now they have become aggressive and have simplified the norms to a great extent. They have also entered into tie-ups with various manufacturers; the rise in market share is a definite proof of customer satisfaction, according to Mr Tanuj S. Sandhu, Zonal Head-East, Honda Siel Cars India Ltd.   The PSBs have a greater reach in the eastern and northeastern regions, making them the natural choice for vehicle finance in these regions, Mr Sandhu said. PSBs share of the total Honda vehicles financed, which earlier was 4-6 per cent, has now risen to more than 16 per cent, he pointed out.   Many of these public sector banks registered 35-40 per cent growth in the portfolio in 2008-09 and are hopeful of registering similar growth this year.   The growth usually picks up post-August and the momentum continues till January. We have witnessed a reasonable growth in the auto loan portfolio so far during this year, said Mr Vijayendra, General Manager, Retail, Union Bank of India.   Most of the PSBs have a wider reach and long association with their customers. They maintain a track record of their customers, which makes loan disbursal easier, said a senior official at a car manufacturing company.   Private banks virtually exited the vehicle finance segment due to the increasing default rates . PSBs, however, do not anticipate a rise in non-performing assets. Gross NPA in car loans were at 2.5-2.75 per cent in 2008-09, it could rise to about 4-4.5 per cent in 2009-2010, Mr Mohta said. However, this rise in NPAs would be mainly on account of the loans sanctioned during 2007-08 and early part of 2008-09, he observed. The recent origination might reflect lower NPAs partly due to tightening of the underwriting norms and reduction in interest rates. http://www.thehindubusinessline.com/2009/07/22/stories/2009072251310600.htm   Go To Top     SHRIRAM TRANSPORT TO RAISE RS 1,000 CR VIA NCDS Business Standard See similar story in: The Times of India, The Hindu Mumbai: Commercial vehicle financier Shriram Transport Finance Company, plans to tap the debt capital markets for up to Rs 1,000 crore through a public issue of secured non-convertible debentures and has filed a prospectus to that effect.   The issue aggregates to Rs 500 crore and the company will retain the option to raise an additional Rs 500 crore. The issue opens on July 27 and will close on August 14 and has five different investment options.   The NCDs will be of three years, four years and five years duration and the coupon varies from 10.75 to 11.25 per cent. The NCDs will be listed on the National Stock Exchange (NSE). Enam Securities, A K Capital Services, ICICI Securities and Kotak Mahindra Capital Company are lead managers to the issue. http://www.business-standard.com/india/news/shriram-transport-to-raise-rs-1000-cr-via-ncds/364586/ http://timesofindia.indiatimes.com/NEWS/Business/India-Business/STFC-mops-up-Rs-1000-crore/articleshow/4805173.cms http://www.hindu.com/2009/07/22/stories/2009072256551300.htm   Go To Top     M&M IN PACT WITH SBT The Financial Express   Mahindra & Mahindra (M&M), one of Indias leading auto brands, has signed an MoU with the State Bank of Travancore (SBT) for vehicle finance. As per MoU, SBT will be a preferred financier for Mahindra vehicles, encompassing both commercial vehicles and passenger vehicles.  Go To Top
OIL, LUBRICANTS & ALTERNATIVE FUELS                                                         Go To Top PUBLIC SECTOR OIL FIRMS TO LOSE RS 2,880 CR IN REVENUES IN JULY PTI See this story in: The Economic Times   New Delhi: The Rs 4 a litre hike in petrol and Rs 2 per litre increase in diesel prices notwithstanding, public sector oil firms will lose Rs 2880 crore in revenues during July as retail prices were still lower than cost, Petroleum Minister Murli Deora said. Responding to a Call Attention Motion in Rajya Sabha on the recent price hike, Deora said the July 2 increase had helped IOC, BPCL and HPCL cut their revenue losses for July from Rs 4,870 crore to around Rs 2,880 crore. "Even after the price increase, the oil marketing companies are still suffering under-recoveries on petrol and diesel of Rs 1.01 per litre and Rs 0.02 per litre respectively," he said. The retail selling price of petrol in Delhi at Rs 44.63 per litre after the price hike, was lower than the price prevailing in June 2006 - Rs 47.51 a litre. The retail selling price of diesel is more or less at the level of June 2006. Explaining the rational behind raising fuel prices, Deora said the price of the basket of crude oil India imports had jumped by about 70 per cent to USD 69.12 a barrel in June from USD 40.61 per barrel in December. "Although the international oil prices have shown a small reduction during the first fortnight of July, the prices have again started rising during the second fortnight and the average price of the Indian basket during July is USD 63.22 a barrel," he said. Deora said the Government has been modulating the retail prices of petrol, diesel, domestic LPG and PDS kerosene to protect consumers from the inflationary impact of rising international oil prices. The revenue loss to state-run firms arising because of keeping retail prices below cost is borne by the Government by way of issue of bonds and upstream firms like ONGC. "During 2008-09, the Government sanctioned oil bonds of Rs 71,292 crore and the upstream oil PSUs contributed Rs 32,000 crore by way of discounts (oil crude oil they sell to IOC, BPCL and HPCL)," he said. In addition, Oil and Natural Gas Corp (ONGC) and Oil India Ltd contributed Rs 943 crore through price discounts to oil marketing companies (OMCs) to compensate them for their import losses.   "The OMCs' financial health is a matter of concern to the Government. The OMCs' under-recoveries (revenue loss on fuel sale) have compelled them to borrow heavily, to meet their cash requirements," Deora said adding total borrowings had ballooned to Rs 1,07,115 crore on December 31, 2008 against Rs 66,900 crore as of March 2008. During 2008-09, the OMCs' interest burden increased to Rs 8,201 crore as against Rs 3,016 crore during the previous year, making a serious dent on their profitability, he said. Deora said the Government has not increased retail prices of PDS kerosene and domestic LPG to provide relief to poor and the middle classes.   The Government is bearing a subsidy burden of Rs 15.26 a litre on PDS kerosene and Rs 92.96 per 14.2-kg domestic LPG cylinder. "To ensure uninterrupted supply of these two products at subsidised prices, Government's subsidy burden (considering an average crude oil price of USD 70 per barrel), is projected to be over Rs 30,000 crore in 2009-10," he said adding the retail price of PDS kerosene had not been revised since March 2002. Deora said state governments are levying very high rates of sales tax/VAT on petrol and diesel. "The Ministry of Petroleum and Natural Gas has recently requested all Chief Ministers and the Finance Minister of West Bengal, as the Chairman of the Empowered Committee of State Finance Ministers, on the urgent need to rationalise sales tax on petrol and diesel, so as to reduce the impact of rising international oil prices on the consuming public," he said. Government, he said, was monitoring the international oil prices closely and would take appropriate pricing decisions to protect the interest of the common man. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/Economy/Indicators/Public-sector-oil-firms-to-lose-Rs-2880-cr-in-revenues-in-July/articleshow/4802549.cms?curpg=2   Go To Top     OIL RISES ABOVE $65, WORLD EQUITIES HIT YR HIGH Reuters See this story in: The Times of India   London: Oil rose to a two-week peak above $65 a barrel on Tuesday, boosted as world equities forged to their highest levels this year. But analysts cautioned the next figures on supply and demand from the United States, the world's largest energy consumer, would show stocks of refined products have risen again, while Iraq's oil exports in July could hit their highest level since the 2003 invasion. By 1401 GMT, US crude futures were trading up $1.12 at $65.10 and Brent crude was up 94 cents at $67.38. Tuesday's gains followed a 69 cent rise in the previous session. The session's peak of $65.53 is the highest since July 6 The front-month August U.S. contract expires at close of trade on Tuesday and will replaced by the September contract, which rose 84 cents to $66.13 a barrel. Expectations the world economy was recovering helped to drive oil to a peak above $73 a barrel at the end of June. Nervousness that confidence was overdone pushed prices back below $60 last week. Analysts were divided over whether the latest gains, inspired by what they describe as exogenous or external factors, can be sustained in a fundamentally oversupplied market. "The current bullish backdrop is reminiscent of what we saw during the first half of June when most markets were similarly pushing higher on the back of the weaker dollar, rising equities, and expectations that the recovery was picking up steam," MF Global analyst Edward Meir said. "This time around, better-than-expected corporate earnings (as opposed to hopes for a strong macro rebound) seem to be dominating sentiment in equities. However, apart from that, the two periods feel very much alike, which is why we remain wary." The MSCI world equity index rose 1 percent on Tuesday to its highest level since last October. "As long as the equities are gaining on the belief that the worst is over, then it also translates into higher consumer confidence, higher disposable income through the equity pick-up and that ultimately impacts demand," said Olivier Jakob of Petromatrix. In the near term, demand has stayed weak even though the US driving season, traditionally a time of peak demand, is close to its busiest period as Americans hit the road for their summer vacations. Weekly U.S. inventory data released at 2030 GMT on Tuesday and 1430 GMT on Wednesday will be in focus. Analysts have predicted a drop in overall fuel inventories, but stocks of refined products, including gasoline and diesel are expected to have risen. Oil stocks in industrialised countries equated to 62.5 days of demand cover at the end of May, according to the latest figures from the International Energy Agency -- around 10 days more than the Organization of the Petroleum Exporting Countries considers comfortable. Algerian Energy and Mines Minister Chakib Khelil on Monday predicted prices would stay in a $65-$70 dollar range this year as long as the market remained oversupplied and said OPEC could cut output when it next meets in September. In OPEC member Iraq, oil supplies have been rising. Iraqi oil exports have averaged 2.08 million barrels per day (bpd) in July and could yet top the levels around 2.2 million bpd predating the 2003 ouster of Saddam Hussein, the head of Iraq's State Oil Marketing Organisation said on Tuesday. Iraq is not subject to OPEC production quotas as it attempts to rebuild following years of war and sanctions. http://timesofindia.indiatimes.com/NEWS/Business/International-Business/Oil-rises-above-65-world-equities-hit-yr-high-/articleshow/4804004.cms  Go To Top
INTERNATIONAL NEWS                                                                                               Go To Top VOLKSWAGEN TO MAKE NEW COMPACT SEDAN IN MEXICO Agencies See this story in: The Economic Times, Hindustan Times Mexico City: Volkswagen says it will begin manufacturing a new compact sedan at its plant in Mexico, with a launch date of 2010. Volkswagen's head of Mexico operations, Otto Lindner, says engineers are developing the model. Lindner made the announcement Monday at the automaker's plant in the city of Puebla. He said Volkswagen will invest $1 billion to increase plant capacity, modernize production lines and develop and produce the new model. He did not give details about the vehicle. President Felipe Calderon called the announcement ``a reason to be happy for Mexico'' and its auto industry, which has been hit hard by sagging demand from the US amid the economic crisis. http://economictimes.indiatimes.com/News/International-Business/Volkswagen- to-make-new-compact-sedan-in-Mexico-/articleshow/4801468.cms http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName= BusinessSectionPage&id=b2ba1253-f5f8-4a85-87a6-90e6cfca28df&Headline=Volkswagen+to+make+new+compact+sedan+in+Mexico   Go To Top     PORSHE, VW MAY NOT REACH MERGER THIS WEEK Andreas Cremer & Aaron Kirchfeld/Bloomberg See this story in: mint Berlin: Porsche SE may not make a decision this week on a plan to merge with Volkswagen AG as the sports car makers controlling families cant agree on measures to reduce debt, three people familiar with the situation said.   Porsches supervisory board may delay a decision on a proposed stake sale to Volkswagen until 29 July at the earliest, said the people, who asked not to be identified because the negotiations are private. A board meeting scheduled for 23 July may yield no decision among the members of the Porsche and Piech families, the people said.   Volkswagen, whose supervisory board also meets 23 July, plans to discuss a proposal to take over Porsches operating unit in two steps valuing the company at 8 billion as part of a transaction that would involve an investment by Qatar, people familiar with the talks have said. The negotiations are hindered by a possible tax charge if VW completely takes over Porsche AG, one of the people said.   This drama doesnt seem to end, said Stefan Bratzel, head of the Center of Automotive Research Institute in Bergisch Gladbach, Germany. Neither Porsche nor Volkswagen can afford any further distraction.   Spokesmen at Volkswagen and Porsche declined to comment.   Volkswagen rose 1.45, or 0.6%, to 237.95 as of 9.44am in Frankfurt trading. The carmakers stock fell 5.4% on Monday. Porsche was down 0.5% at 48.53 after declining 6.1% on Monday, the steepest slide since 13 May. http://www.livemint.com/2009/07/21235322/Porsche-VW-may-not-reach-merg.html   Go To Top     NISSAN TO INVEST $700 MN IN ELECTRIC CAR VENTURE Reuters See this story in: The Economic Times   London/Lisbon: Car manufacturer Nissan said on Monday it will invest almost $700 million in two plants to make batteries for electric cars in  Britain and Portugal after securing financial support from their governments. Automakers around the world are exploring plans for mass electric car production as the industry seeks to haul itself out a devastating downturn. The Nissan news comes less than a week after Toyota said it would produce its first European-built hybrid car in Britain from 2010. Nissan will invest more than 200 million ($328.6 million) in the plant near Sunderland, north east England. The two governments (UK and Portugal) have offered to extend financial assistance and other support to ensure that Nissan locates the proposed plants within their respective countries, Nissan said in a statement. http://economictimes.indiatimes.com/News/News-By-Industry/Auto/ Automobiles/Nissan-to-invest-700-mn-in-electric-car-venture/articleshow/4800945.cms   Go To Top     VOLVO Q2 LOSS WORSE THAN EXPECTED Reuters See this story in: The Indian Express, Deccan Herald   Stockholm: World number two truck maker Volvo posted a deeper-than-expected second-quarter operating loss on Tuesday and stood by its forecast of sharp declines in its main markets this year.   The Swedish company skidded to a quarterly operating loss of 6.9 billion crowns ($885.7 million). Volvo made a profit of 7.2 billion in the year-ago quarter. http://www.indianexpress.com/news/volvo-q2-loss-worse-than-expected/492139/ http://www.deccanherald.com/content/15093/volvo-reports-q2-loss-kronor.html   Go To Top     DELPHI CREDITORS VOTE AGAINST PLAN Bloomberg See this story in:  Business Standard   Fifteen of 17 classes of Delphi Corps creditors voted against the auto-parts makers turnaround plan, which proposes to transfer its steering business and various liabilities to former parent General Motors Corp and selling other assets to Platinum Equity LLC. The company provided the vote total in a filling on Monday with the US Bankruptcy Court in New York.  Go To Top
ECONOMY & FINANCE                                                                                                   Go To Top RUPEE RANGE-BOUND AS DOLLAR STRENGTHENS The Hindu Business Line   Mumbai: The rupee weakened against the dollar on Tuesday and traded in a narrow range as the greenback gained overseas. The rupee was also tracking the domestic stock market which was volatile, said forex dealers.   The rupee opened at 48.25/26 and closed at 48.42/43, lower by 22 paise against the previous close of 48.20. During the day, it traded between 48.25 and 48.46. There were some dollar inflows; but as the rupee does not have any inherent strength, it is likely to weaken, said a forex dealer with a private bank.   Currently, the trigger for the rupee is the overseas movement, just as it is for the domestic equities. In fact, todays weaker opening was because of the dollar strengthening against other currencies in the overseas market, the dealer said. In the forward premia market, the six-month closed at 2.36 per cent (2.34 per cent) and the 12- month was unchanged at 2.22 per cent. http://www.thehindubusinessline.com/2009/07/22/stories/2009072251290600.htm   Go To Top     SENSEX SHEDS 128 POINTS PTI See this story in: The Hindu Business Line   Mumbai: The Bombay Stock Exchange Sensex on Tuesday fell over 128 points on profit-booking at existing higher levels amid concerns of the monsoon being less than average this year.   The Sensex, which had gained nearly 13 per cent in the last five-day rally, fell 128.52 points at 15,062.49, after moving between 15,234.21 and 14,955.88 points. The decline pared the Sensex gains this year to 56 per cent, the fifth-best performer worldw ide. The 50-share National Stock Exchange index Nifty also shuttled between 4,524.00 and 4,436.60, before winding up at 4,469.10, showing a net loss of 33.15 points.   Selling pressure gathered momentum as stocks led by Tata Consultancy attracted brisk profit-booking. TCS lost 4.65 per cent to Rs 477.40.   The benchmark stock index fell most in more than a week after the government expressed concerns that below average monsoon rain could reduce farm output.   Mahindra and Mahindra, a Sensex firm and the countrys largest maker of tractors, lost 2.59 per cent. Deficient rain has caused a decline in the acreage of all major crops over last year's levels, denting prospects for bigger harvests of rice, oilseeds a nd sugarcane. Agriculture accounts for about 20 per cent of the Indian economy. http://www.thehindubusinessline.com/blnus/05211901.htm   Go To Top      Last Financial closing   Sensex 15,062.49 US$ spot Rs.48.38 US$ Y.94.1989 US$ 6 months Rs.49.02 Yen Rs.0.51 Euro spot Rs.68.78 LIBOR 6 months % Call % GOI sec. 10 years - - - -     Aluminium (per kg) Rs. Aluminium Ingot Rs. Copper (per kg) Rs. Gold (10gm) Rs.14,920 Lead (per kg) Rs. Mild Steel Ingots (Mumbai) Rs. Nickel (per kg) Rs. Nickel Cathode Rs. Silver (1kg) Rs.22300 Sponge Iron (per tonne) Rs.13370.00 Steel Flat (per tonne ) Rs.29990.00 Steel Long GVD (per tonne) Rs. Steel Long BVN (per tonne) Rs.21330.00 Tin (per kg) Rs. Zinc (per kg) Rs. Zinc Ingot Rs.- - - -     Crude Oil (WTI) $- - - - Crude Oil (Brent) $66.70     Automobile Scip on BSE Face Value (Rs) Last traded Value (Rs) Apollo Tyres 1 36.90 Asahi Ind 1 53.55 Amara Raja B 2 111.45 Ashok Leyland 1 33.40 Bajaj Auto 10 1188.80 Bharat Forge 2 152.70 Denso 10 56.90 Eicher Ltd 10 - - - - Eicher Motor 10 330.05 Escorts 10 61.65 Exide Ind 1 76.85 Force Motors 10 116.75 Gabriel India 1 12.65 Hero Honda 2 1644.90 Hind Motors 10 18.80 Hi-Tech Gear 10 53.75 Jay. Bh. Maruti 5 41.60 Jamna Auto 10 30.95 JK Tyres & Inds 10 91.30 Kinetic Motors 10 12.10 Kinetic Engg 10 40 KOEL 2 91.90 Kirloskar Br: 2 180 LML Ltd 10 8.80 L&T 2 1471.30 Lumax Ind 10 100.50 Lumax Tech 10 27.45 M&M 10 776.25 Maruti Suzuki 5 1239.90 Motherson SS 1 77.30 Minda Inds 10 151.50 MRF 10 3381.60 MICO 10 - - - - Omax Auto 10 30 Perfect Circle - - - - - - - - - - Rico Auto 1 17.10 Sona Koyo St 2 10.15 SKF Bearing 10 - - - - SRF 10 121.70 Swaraj Mazda 10 215.70 Tata Motors 10 327.15 TVS Motor 1 49.35 Metals Scrip on BSE Face Value(Rs) Last traded Value (Rs) Bhushan Steel 10 711.90 Essar Steel 10 - - - - Hindalco 1 88.55 Hind Zinc 10 667.80 Ispat Inds 10 21.60 Jindal Iron 10 - - - - Jindal Stain 2 - - - - Jindal Steel 5 2802.50 National Aluminium 10 293.95 SAIL 10 171.90 TISCO 10 411.75 Visa Steel 1 27.90