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| INDUSTRY Tata Motors says eyeing Indonesian market Global car breakdown service launches operations in India INTERVIEWS/FEATURES New models power Maruti to 25% growth in profit
COMMERCIAL VEHICLES Slump-hit forging industry seeks check on domestic steel prices Balkrishna Steel takes over Kadvani Forge Rane Engine Valve achieves lower profit
| ALLIED INDUSTRIES Apollo Tyres Q1 net zooms 95%, declares dividend Luminous plans manufacturing base in the South FINANCE & INSURANCE Honda Motorcycle, Muthoot Capital Services tie up Shriram Transport Finance to set up subsidiary OIL, LUBRICANTS & ALTERNATIVE FUELS INTERNATIONAL NEWS Ford Motor drives into $2.3 bn Q2 profit
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| INDUSTRY Go To Top PTI See this story in: Business Standard (Web & Print Edition), The Economic Times (Web & Print Edition), mint (Web & Print Edition), The Financial Express (Web & Print Edition), Hindustan Times (Delhi Print Edition)
Milan/New Delhi: Tata Group Chairman Ratan Tata in an interview to Italian newspaper 'La Stampa' said both Tata Motors and Fiat are discussing plans to bring Nano into Latin America.
Ratan Tata, who is also an independent director at Fiat, said the two companies are also talking about many things, including plans for Iveco, Ferrari and Maserati. Nano touted as the world's cheapest car hit the Indian roads last week. The car, which was commercially launched on March 23 this year, has received 2.06 lakh bookings.
Tata Motors has already selected over 1.55 lakh customers for delivering the car. In India, Tata Motors and Fiat have a 50:50 joint venture Fiat Automobiles India, which manufactures engines, among others.
According to Ratan Tata, Nano passed the crash test for European safety standards last Friday. Nano is expected to be launched in Europe in 2011. http://economictimes.indiatimes.com/quickieslist/4227490.cms http://www.tribuneindia.com/2009/20090724/biz.htm http://www.livemint.com/2009/07/23123856/Fiat-Tata-to-sell-Nano-in-Lat.html http://www.financialexpress.com/news/Nano-to-roll-in-Latin-America/493385/
TATA MOTORS SAYS EYEING INDONESIAN MARKET Reuters See this story in: Yahoo India (Web Edition), mint (Web Edition)
Jakarta: Tata Motors Ltd, India's largest vehicle maker, is conducting a feasibility study to market its cars in Indonesia, a senior company official said on Thursday.
Indian vehicle manufacturers, including motorcycle-makers Bajaj Auto Ltd and TVS Motor Co Ltd, already have production plants in Indonesia.
"We have a whole spectrum of products. We'll see what the market requires. We plan to look at this market very seriously," said Amarjit Singh Puri, senior general manager for government affairs and collaborations, at Tata Motors.
"We need to identify which segment we should bring in and what products we should bring in. We've just started the feasibility study. It could take between three to six months."
Tata Motors has a plant in Thailand and has sold nearly 600 one-tonne pick-up trucks since entering the Thai market about a year ago.
Separately, Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers (SIAM), said there are several Indian car manufacturers who are interested in Indonesia because of the country's stable economy.
"Indonesia's economy is still positive. And it's a growing market," said Chenoy. Indonesia, along with China and India, posted positive growth in the first quarter of this year. The economy expanded 4.4 percent in the first quarter and is estimated to have grown by 3.7 percent in the second quarter.
Domestic car sales in Southeast Asia's biggest economy are expected to reach 450,000 units in 2009. http://in.biz.yahoo.com/090723/137/batxow.html http://www.livemint.com/2009/07/23185915/Tata-Motors-says-eyeing-Indone.html
GLOBAL CAR BREAKDOWN SERVICE LAUNCHES OPERATIONS IN INDIA IANS See this story in: Deccan Herald (Web Edition)
Mumbai: "Initially, the service will be available automatically to the 150,000 life members of the Western Indian Automobile Association (WIAA) in Mumbai and then we plan to introduce more such services in India," Europ Assistance (India) managing director Anil Vinayak said. The services offered would include minor spot repairs, towing for major breakdown or accidents, calling medical help, emergency fuel delivery and related issues. http://www.deccanherald.com/content/15413/global-car-breakdown-service-launches.html
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| MARUTI'S Q1 NET PROFIT VROOMS 25%
New Delhi: Maruti Suzuki, the countrys largest car manufacturer, posted a net profit of Rs 583.5 crore for the first quarter of the financial year 200910. This is a rise of 25.4 per cent against the Rs 465.9 crore earned for the same quarter last year.
Total sales for the period between April and June this year rose by 34 per cent, to Rs 6,340 crore. Given the gloomy outlook for the auto industry for this year, analysts say Marutis first quarter performance was extraordinary. Both the top line and the bottom line surpassed our expectations, says S Ramath, Analyst at IDFC SSKI Securities. Operating profit for the quarter ending June increased by about 45 per cent, to Rs 641 crore against the Rs 442 crore earned last year. The Ebitda (earnings before interest, taxes, depreciation and amortisation) margin inched up from 12.1 per cent last year to 12.5 per cent for the quarter ending this June.
While sales for the overall passenger vehicle industry for the AprilJune period grew by 3.8 per cent, Maruti Suzukis grew by an impressive 9.61 per cent, selling 197,415 units. The companys surge in sales revenue comes from both selling more units of vehicles and deriving better margins from new models like the A-Star and the Ritz in the domestic market.
Another reason is surging demand from European countries like Germany, which are offering incentives to customers to switch to more fuel-efficient compact cars.
Marutis exports for the first quarter of this financial year increased by 134.7 per cent to 29,314 units,with the A-Star model contributing 90 per cent to overseas sales. The company hopes to export 130,000 units of vehicles by March 2010.
Operating profit margins improved for the first quarter on five fronts. One, the lowering of commodity prices by about 240 basis points in the last quarter has improved margins. Two, better margin yield from the more expensive diesel models. Three, the localisation efforts initiated for its automobile components has resulted in cost reductions and reduced exposure to currency movements. Four, the favourable foreign exchange rate of around Rs 48 to the US dollar over the past three months, which contributed about 200 basis points to the OPM. Five, reduced expenses in sales promotion, advertising, freight and shipping also boosted profitability.
However, the average discount the company currently offers on its cars has increased from Rs 9,000 per vehicle to Rs 12,000.
In the coming quarters, the company hopes to maintain a growth of about five per cent on an annualised basis. The company says demand will come from many quarters. One, from its current and new fuel-efficient models that have found good acceptance in the domestic market. The newly launched Ritz has sold about 15,000 units. Two, from the rural market. Rural sales contributed about nine per cent to the companys total sales last year and now stand at 12 per cent. Three, from higher consumer spending as a result of attractive vehicle loans.
Maruti has earmarked Rs 2,100 crore for capital expenditure this year. Its cash reserves are Rs 4,700 crore. The shares gained by 6.44 per cent, to close at Rs 1,295.55 on the Bombay Stock Exchange. http://www.business-standard.com/india/news/maruti/s-q1-net-profit-vrooms-25-per-cent/364776/
NEW MODELS POWER MARUTI TO 25% GROWTH IN PROFIT Manas Chakravarty, Mobis Philipose & Ravi Krishnan mint (Web & Print Edition)
Shares of Maruti Suzuki India Ltd have risen by almost 150% this calendar year compared with a 57% rise in Sensex. It seems the firm has justified the markets faith with a better-than-expected set of financial numbers for the three months ended June. The reported net profit of Rs583 crore is way higher than the consensus estimates of Rs425 crore of analysts polled by Bloomberg. According to an analyst, the reported profit has even beaten the most bullish estimate on the street of about Rs500 crore. Given the high degree of outperformance, analysts would now be busy revising profit estimates for the year.
The big surprise was the companys average price realizations, which rose by 14% on a year-on-year basis to Rs2.79 lakh per unit in the quarter ended June 2009. According to an analyst with a foreign brokerage, no one on the street got their estimates right on realizations. Maruti has benefited from higher sales of new models such as the A-Star and Ritz, which have relatively high realizations compared with the firms average.
Maruti has been able to drive sales of these new models thanks to its ability to take advantage of the revival in vehicle financing. Besides, in the overseas market, the so-called scrappage incentive of European governments, where they pay consumers to junk old vehicles for new ones, has helped push up exports by 134%. Now, every one in seven cars the company sells is exported. These new cars, more expensive compared with previous favourites such as the Maruti 800 and Alto that made up the bulk of sales, have helped improved realizations.
The company has done well on the expenditure front, too, reducing sales and marketing expenses while benefiting from softening prices of key commodities such as steel and rubber. The company also plans to source more raw materials and components locally, which will add to savings. Perversely, the global slowdown has helped in reducing other costs such as shipping, freight and port expenses, said analysts.
As a result of the cost containment and the higher realizations, the companys operating margins rose by 106 basis points and operating profit grew 47% to Rs597 crore.
The stock is now valued at a rich price-earnings multiple of 18 times estimated fiscal year 2009-10 profit. In a conference call, the company said it was cautiously optimistic about growth prospects, but some concerns such as monsoons that are key to rural sales (which make up nearly 12% of total sales) and interest rates pressure still remain. Still, given the lack of credible alternatives in the auto space and the strong growth recorded by the firm, interest in the stock should sustain. http://www.livemint.com/2009/07/24004713/New-models-power-Maruti-to-25.html?h=A2
Shobhana Subramanian Business Standard (The Compass)
Mumbai: Given the strong turnaround in profitability, it wasnt surprising that the Maruti Suzuki stock surged 6 per cent on Thursday. A better product-mix with a good share of diesel vehicles and higher exports have resulted in Indias biggest car company turning in a strong revenue growth of 34 per cent to Rs 6,340 crore in the June 2009 quarter.
The Rs 20,455-crore firms vehicles have clearly fetched it good realisations though volumes were up just under 18 per cent. With costs under control, the operating profit margin, at 12.2 per cent, is back to the levels where it was a year back, while there has been a jump in the margin of nearly 400 basis points sequentially.
With a pan-India presence and more than a 50 per cent market share, its possible Marutis volumes could increase by about 11-12 per cent in the current year, driven by models such as the Ritz and the Swift in the home market and the A Star in the export market. While there is no doubt competition from multinationals across segments, the company enjoys strong brand loyalty and has managed to cash in on the growing demand in semi-urban markets.
In the process, it has gained market share in the passenger car segment of over 250 basis points in the last few months. Since Maruti is clearly able to earn good realisations, especially on diesel cars, its possible, its revenues could grow by about 20 per cent in the current year.
With raw material costs expected to stabilise, it should not be too difficult for the company to sustain operating profit margins at levels of 12 per cent though adverse movements in the currency could hurt. The stock has run up sharply in the past few months gaining 66 per cent since April. At the current price of Rs 1,296, it trades at just over 20 estimated 2009-10 earnings and is not cheap. http://www.business-standard.com/india/news/maruti-margins-swing-up/364751/
HYUNDAI UNION THREATENS STRIKE TE Narasimhan Business Standard (Web & Print Edition)
Chennai: More labour trouble may be in store for Hyundai Motor India Ltd (HMIL) here, with the company saying it had signed a pay agreement with its recognised workers union, the Hyundai Workers Committee.
The rival Hundai Motor Employees Association, which claims majority support, denounced the announcement and threatening a sit-down strike at the factory here from tomorrow.
We have decided to start a sit-in strike at the companys Irungaatukottai facility and will disturb the production starting from 8.30 pm Thursday, K Thanga Pandian, vice-president, HMEU, said. The next course of action will be decided tomorrow, he told Business Standard.
HMEU members went on a strike in April-May, stating that the company management had not recognised the union, a registered body formed in 2007, and had dismissed and suspended various personnel for enrolling with them.
The strike came to an end on May 17, after a settlement involving the governments labour commissioner. A Sounderrajan, honorary president of the union and the Tamil Nadu president of CITU, the Marxist labour union, said the strike was called off after the management agreed on various issues, including an assurance on wage settlement. He alleged the labour department had asked the management to enter into an agreement only with the HMEU, whereas the company went ahead and signed the agreement without their knowledge. http://www.business-standard.com/india/news/hyundai-union-threatens-strike/364796/
HYUNDAI SIGNS WAGE PACT WITH WORKERS' PANEL The Economic Times (Web Edition) See similar story in: Business Standard (Web Edition), The Times of India (Web & Print Edition), mint (Web & Print Edition)
Chennai: India's second largest car maker, Hyundai Motor India on Thursday signed a three year wage revision accord (April 1, 2009 to March 31, 2012) with the seven members workers committee representing different sections of workmen. http://www.business-standard.com/india/news/hyundai-union-threatens-strike/364796/ http://www.livemint.com/2009/07/24001757/Hyundai-signs-3year-wage-deal.html?h=B
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| COMPONENTS Go To Top Swaraj Baggonkar Business Standard
Mumbai: Indian automotive component makers are getting back into top gear, with European car companies showing a demand revival.
They either supply parts to car makers in Europe or to Indian manufacturers for exports there, and have recorded a steady rise of 10-12 per cent in demand during the past two-three months.
Earlier, the domestic auto component industry suffered a lot when some of the biggest companies like Tata Motors and Ashok Leyland announced plant shutdowns. In addition, car making companies had also announced production cuts to align with demand.
The European turnaround follows the decision of 10 European countries to go in for massive car purchases by their respective governments. These are the UK, Germany, France, Austria, Italy, Romania, Spain Portugal, Cyprus and Luxembourg.
Also, under a new scheme from this year, each European Union government provides 750-4,000 (Rs 51,000-274,000) as scrappage incentive to encourage buyers to dispose of their older, more polluting vehicles in favour of new, low emission and fuel-efficient ones.
According to the Brussels-based European Automobile Manufacturers Association (ACEA), new car registrations reported a growth of 2.4 per cent to 1,461,859 units, for the first time in 14 months in Europe in June. Germany, Europes largest auto market, reported a growth of 40.5 per cent.
Vishnu Mathur, executive director, Automotive Component Manufacturers Association, said, We are seeing a revival because of the stimulus packages announced by several European governments. The vehicles sales data in Europe has improved during the past few months and we expect the trend to continue.
The biggest beneficiaries of the turnaround are those component companies which directly supply to these regions from India or have a subsidiary company in Europe. Besides, major Indian small-car exporters like Maruti Suzuki and Hyundai Motor India have benefitted.
Pankaj Mital, chief operating officer, Motherson Sumi, said: The European region is showing signs of recovery. Key markets like Germany, France and a couple of other countries have found support and have reported growth in the past few months.
Motherson Sumi is a Delhi-based auto component company which supplies to Europe from India, as well as its plant in Sharjah, UAE. It had bought the UK-based Visiocorp Plc, a rear-view mirror making company in January.
Nirmal K Minda, managing director of the Rs 1,000-crore N K Minda Group said: The European market is finally on the growth track, but it is at a very early stage. So far, we have seen a 10-12 per cent increase in exports, quarter-on-quarter.
Likewise, the Rs 3,000-crore Delhi-based JBM Group, which supplies parts to Maruti Suzuki for the A-Star, as well as Pixo (for the Nissan made by Maruti) has seen an encouraging rise in demand from the market leader. Exports of Maruti zoomed by 134 per cent to almost 30,000 units during April-June this year. Nishant Arya, executive director, JBM Group, said: Our supplies to Maruti Suzuki have gone up following increased demand in the European region for their cars. http://www.business-standard.com/india/storypage.php?autono=364794
SLUMP-HIT FORGING INDUSTRY SEEKS CHECK ON DOMESTIC STEEL PRICES The Financial Express See this story in: Asian Age
Chennai: Battered by slump in exports, dip in commercial vehicle segment (CV) and high cost of input steel, the Association of Indian Forging Industry (AIFI) has pleaded the government to undertake relief measures like reining in steel prices in domestic market and declare the year 2008-09 as a holiday for any computation relating to export performances. In a media release, AIFI has said that steel prices in India still remain out of sync with international prices and are priced about Rs 5,000 above ex-factory prices when compared to pricing of other countries.
Even though the international prices for scrap, coke and iron ore have plunged by around 50%, price of steel in India has not had a corresponding drop, making the Indian forging companies uncompetitive in both the national and international market, adds the AIFI release. Making the demand for export relief, AIFI argues that due to poor market conditions and the resultant drastic decrease in export performance of around 50% to 60%, companies could not maintain the average export levels stipulated for EPCG (export promotion credit guarantee) licence.
In addition to this, AIFI points out that forging industry was heavily impacted due to the nose diving of demand in CV segment especially heavy commercial vehicle and medium commercial vehicle. It adds that import of cheap forgings from other countries for this segment has heavily burdened Indian forging companies.
Speaking to media regarding AIFI turnaround agenda, president of the association Vidyashankar Krishnan said, though price of a tonne steel since April has dropped from Rs 34,000 to Rs 24,000 the price in the local market is found to be Rs 5,000 high a tonne at the ex-factory gate. The domestic steel prices should be at par with international pricing, he added.
Out of the total 60 million metric tonne per annum domestic steel consumption by various industries like construction, Railways and automobiles, the forging industry consumes around 2.4 mm tonne, he said.
Clamouring for imposing a safeguard duty on auto component OEMs forging import, Krishnan said every year about Rs 1,500 crore worth of forged auto component is being imported by major OEM players reducing the domestic business scope in local forging units.
Speaking about the revival of demand from CV segment, he said: In the last fiscal, the growth of the HCV(heavy commercial vehicle)/MCV (medium commercial vehicle) sector was negative. However, considering the large outlay provided for infrastructure projects in the Union budget 2009-10, this segment can be expected to show a growth of up to even 30% with a good monsoon. http://www.asianage.com/presentation/leftnavigation/news/business/forging-sector-cuts-jobs.aspx
BALKRISHNA STEEL TAKES OVER KADVANI FORGE Vimukt Dave Business Standard
Mumbai/ Rajkot: Balkrishna Steel Forge, a manufacturer of pipes used for transporting petroleum products, has acquired Rajkot-based forging company Kadvani Forge Ltd (KLF). The company is an indirect supplier of gearbox parts used in Tata Motors Nano car.
Vitthalbhai Dhaduk, KFLs new chairman, confirmed that the company had been taken over. He, however, refused to divulge further stating that the takeover process was still on. According to sources close to the development, the deal size was about Rs 34 crore. It is good deal for us as KFL is a big name in forging industry. We will not take up any new projects for KFL as the slowdown has affected the overall industry. However, we will not disturb its ongoing projects at the same time, he added.
Balkrishna Steel is yet to decide if it would merge KFL with itself. Our prime focus is to make ourself safe from recession. KFL has been affected by it and we will have to chalk out a recovery path for the company, said Dhaduk.
KLF technical director Jayant Jamuar said the company had faced difficulties in last two years due to the slowdown as its international clients were been hit by the recession. As compared with this, the domestic market is pretty safe. We are upgrading our software, which will further help the company in its research work, he said.
The company posted a turnover of about Rs 70 crore in 2008-09. Kadvani Forge started its operations in 1997 with a manufacturing capacity of 50 tonnes per month. It currently has a capacity to manufacture 3000 tonnes of forgings per month. http://www.business-standard.com/india/news/balkrishna-steel-takes-over-kadvani-forge/364704/
RANE ENGINE VALVE ACHIEVES LOWER PROFIT The Hindu Chennai: Rane Engine Valve has reported a lower net profit of Rs. 12.07 lakh for the quarter ended June 30, 2009, against Rs. 1.21 crore in the same period in 2008-09. Total income for the period was Rs. 54.46 crore against Rs. 54.90 crore. http://www.hindu.com/2009/07/24/stories/2009072460921700.htm
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| CURB ON CHEAP TYRES FROM CHINA HELPS INDUSTRY LOG FLAT Q1 GROWTH Yogima Seth Yahoo India
Replacement market for truck and bus tyres in India is reaping benefit from restriction on import of cheap radial tyres from China. Consequently, even while the commercial vehicle sales have declined by 12.8% in the domestic market and 42.4% in overseas markets in the first quarter (April-June), the tyre industry has managed to fare well and has remained flat vis-a-vis first quarter of 2008-09, which has been one of the best quarter for the industry.
According to the Automotive Tyre Manufacturers Association (Atma), while sales of truck and bus tyres remained at nearly 11 lakh units a month between April and June this year, sales of passenger car tyres declined by 1.4% at 13.8 lakh tyres a month as compared to average monthly sales of 14 lakh tyres a month in the first quarter of last year.
Under the Foreign Trade Practices Act, import of radial tyres have been restricted against actual user licence since November last year as a result of which the import has come down from 1.3 lakh units earlier to a mere 30,000 to 35,000 units now. While bias tyres for commercial vehicles (the older technology tyres, which are not radial) in India cost between Rs 10,000 to Rs 12,000, those imported from China are available at Rs 8,000 to 10,000. Likewise, the imported radial tyres cost between 12,000 to 14,000 while the Indian radial tyres costs between Rs 14,000 and Rs 16,000.
"In November last year, the government had imposed restriction on import of cheap radial tyres from China which has helped to increase the sales of bias tyres in the country. Moreover, though demand from original equipment manufacturers (OEMs) and global markets continue to be low in the first quarter despite the stimulus packages from the Centre, the better utilisation of existing vehicle population has helped increase demand from the replacement market," says Rajiv Budhraje, director general, Atma.
According to Budhraje, share of replacement market to the total truck and bus tyre sales in the country has gone up from 60% in 2008-09 to 78% in the first quarter of the current financial year. On the other hand, share
of OEMs to total sales has come down from 13% in the last financial year to 10% during April-June this year and contribution of exports has also come down from 15% in 2008-09 to 12% now.
However, the advantages of restricted import from China seems to have had its impact as the sales are expected to be flat even in the second quarter vis- -vis first quarter because of uncertain weather conditions, feels Atma.
"The second quarter looks very difficult for the tyre industry as weather related disruptions are now showing up. While excessive rains at some part of the country has hit the movement of trucks, the drought conditions in other parts will impact demand in coming days," says Budhraje, adding that it's only when the infrastructure projects starts off in a big ways that there could be some hope for a spin off in the commercial vehicle category. http://in.biz.yahoo.com/090723/203/batxre.html
APOLLO TYRES Q1 NET ZOOMS 95%, DECLARES DIVIDEND PTI See this story in: Business Standard, The Economic Times, The Hindu Business Line
Kochi: Apollo Tyres has recorded a net profit of Rs 94.7 crore from its India operations during the April-June quarter of 2009-10 fiscal.
This was a 95 per cent increase during the same period last year when the net profit was Rs 48.6 crore, a company press release said.
Operating profit was Rs 194.8 crore in the first quarter. The board also approved the 45 per cent dividend at the company's 36th annual general meeting. The first quarter net sales touched Rs 1,180 crore from Rs 1,076 crore during the same period last year.
Speaking on the results, Apollo Group Chairman Onkar S Kanwar said: "Revival in India's economic health has resulted in 5 per cent higher production in India, compared to the same quarter last year. We hope this trend will continue."
"But what is heartening is a bettering of internal efficiencies and improved current asset management, leading to a healthy bottomline. Throughout the year we have been working on our cash and cost management, which is finally showing in the results.
Consolidated first quarter revenues from its India and International operations grew 24 per cent to reach net sales of Rs 1,635 crore as against Rs 1,322 crore the previous year. Kanwar said the company's continuing attention to increase efficiencies across the board and re-aligning costs to protect margins have paid high dividends. This has assisted in improving margins and to remain competitive, he said.
In specific terms, Apollo Tyres India Operations has reduced the number of days of raw material inventory by 37 per cent and finished goods stocks by 15 per cent and a 40 per cent decrease in the number of days for current debtors, he said.
Efficient inventory and cash management,along with higher production and offtake in both institutional and replacement sales in the first quarter of the year has enabled the company make a positive beginning in the 2010 fiscal, he said.
The board also reviewed the progress of the Chennai greenfield project, where production is expected to begin towards the end of this calendar year. The plant capacity is 8,000 passenger car radials and 3,000 truck-bus radial tyres per day. Apollo Tyres would also increase the production capacity of its largest facility in Baroda to 16,000 units per day by the end of the fiscal from the current figure of 11,000 units, Sarkar said.
Asked about the company's recent acquisitions of Dutch tyre maker Vredestein, Sarkar said: "The formal take over was completed on May 15 and the integration process is currently on. We are looking at achieving the correct synergy to plan some project roll outs from Vredestein."
He said the company is focusing on consolidation of the acquisition and not looking for any more deals in the near future.
"Our priority is to consolidate in the three major markets where we exist India, Europe and Africa. As part of it, we are looking at launching the Apollo brand in Europe and the Vredestein brand in India," he added.
Sarkar, however, refused to disclose the investment made by Apollo in the acquisition of the Netherlands-based company.
Besides, Apollo Tyres is targeting a total turnover of Rs 6,000 crore in this fiscal, he said. The company had a consolidated net sales of Rs 4,984.07 crore in 2008-09. http://www.business-standard.com/india/news/apollo-tyres-q1-net-zooms-95-declares-dividend/68672/on http://www.thehindubusinessline.com/blnus/26231606.htm
LUMINOUS PLANS MANUFACTURING BASE IN THE SOUTH The Hindu Business Line
Hyderabad: Luminous Power Technologies is considering setting up a manufacturing base for its inverters and batteries in the South with an investment of about Rs 250 crore. It is in the process of finalising the location.
The Luminous Power Vice-President, Mr Alankaar Mittal, said the companys plants at Baddi and Gagret were being used to their expanded capacity, along with its overseas plant in China. Therefore, we are exploring another manufacturing base in the South, he said.
Speaking to Business Line, Mr Mittal said, The company is also considering setting up a diesel genset manufacturing unit; the company expects to locate this by the year-end. The company believes that it will be complementary to its line of business and help serve the small- and medium-size enterprises in need of power.
Mr Mittal said that the company is rolling out its recently unveiled electric bike range being sold under the brand name Lectrix. These bikes, assembled in India, are powered by battery and some electrical components, including chargers, made in the companys manufacturing facilities in India. Most of the e-bike makers are currently sourcing batteries from China.
We are also in the process of developing three more higher-capacity bikes, which will be rolled out later in the year. These bikes will be offered through some of the existing chain of distributors of inverters and batteries, he said. http://www.thehindubusinessline.com/2009/07/24/stories/2009072451500300.htm
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| FINANCE & INSURANCE Go To Top T. Murrali The Hindu Business Line
Chennai: Bussan Auto Finance India Private Ltd, the finance arm of India Yamaha Motor Private Ltd, is set to increase its loan book by 33 per cent to Rs 100 crore.
The two-year-old Bussan Auto Finance is a joint venture of Mitsui Corporation of Japan (64 per cent), Axis Bank (26 per cent) and India Yamaha.
Mr P. Kosalairam, Regional head, Bussan Auto, told Business Line on the sidelines of the Yamaha Fazer launch on Monday that the increase in disbursals is possible with growing sales and ramp up in product portfolio by India Yamaha.
In addition to the Fazer, India Yamaha also introduced an upgrade in its 150-cc model R15. Its portfolio includes Gladiator, Gladiator Graffiti, Alba, Crux, FZ-S, FZ16 and YZF-R15. It also sells MT01 and YZF-R1, imported as completely built units. India Yamaha is also working on introducing an automatic scooter this year. Besides, the company has introduced referral and students schemes for FZ 16 and FZ-S. These initiatives will help improve sales.
In 2008-09, the India Yamaha sold 1.62 lakh units, registering 45 per cent per cent over the previous year. Currently, close to 80 per cent of the vehicles sold by India Yamaha is on cash since most of them are in the power and performance segment that are primarily not used for commuting alone.
HDFC Bank funds a small portion, by offering loans to its customers. As part of its initiative, Bussan Auto Finance India plans to double its sales points to 300 by March 2010. It is present at 165 of the 400 India Yamahas dealerships. The focus will be on rural areas, he said. http://www.thehindubusinessline.com/2009/07/24/stories/2009072451891700.htm
HONDA MOTORCYCLE, MUTHOOT CAPITAL SERVICES TIE UP The Hindu Business Line
Kochi: Honda Motorcycle and Scooter India Pvt Ltd has tied up with Muthoot Capital Services Ltd (MCSL), a division of Muthoot Pappachan Group, to offer instant need-based financial services for its two-wheeler customers. The tie-up will enable HMSI to penetrate deep into the semi-urban and rural markets using the services of MCSLs retail outlets and dedicated manpower at every HMSI sub-dealer point.
HMSI has a strong dealer network in Kerala and Tamil Nadu, where the financing options will be available initially. The two companies will work closely to bring in operational efficiency, optimise the turn around time (TAT) and enhance customer satisfaction. The financing option will be offered to customers purchasing two wheelers at the authorised Honda retail outlets on an equated monthly instalments under the innovative flexi repayment options. http://www.thehindubusinessline.com/2009/07/24/stories/2009072451171900.htm
SHRIRAM TRANSPORT FINANCE TO SET UP SUBSIDIARY The Hindu Business Line
Chennai: Shriram Transport Finance expects to invest Rs 300 crore in its new subsidiary - Equipment Finance Company. Mr R. Sridhar, Managing Director, Shriram Transport Finance, said that the board has given the approval for setting up the wholly-owned subsidiary. The company is expected to be incorporated in a couple of months. Initially, Shriram Transport Finance would invest about Rs 100 crore as capital and later another Rs 200 crore depending on the business requirement.
Mr Sridhar, said, "Two factors led us to actively consider entering the infrastructure equipment finance business." First, the opportunities in the infrastructure sector and, second, to take advantage of the vacuum created by global players exiting the segment. The equipment financing company will finance small segments players in buying crushers, loaders and tippers in the price range of Rs 5 lakh to Rs 25 lakh. Demand revival?
Asked about the revival in the commercial vehicles segment, Mr Sridhar said that there has not been a clear indication on the revival of commercial vehicles sales as the freight levels have not increased dramatically, which are linked to the growth of the economy. Truck owners are, therefore, postponing purchases of new vehicles. Shriram Transport Finance, whose advances portfolio predominantly consists of loans given for purchase of used vehicles, has not seen a fall or a pick up in sales over the last two quarters. Generally, in a slowdown there is a pick up in sales of used commercial vehicles but the company, fearing delinquencies, is choosy in lending, he said. Bad loans, Mr Sridhar said, it had risen to 2.1 per cent in March 2009 compared with 1.75 per cent in September 2008. http://www.thehindubusinessline.com/2009/07/24/stories/2009072451280601.htm
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| OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top See this story in: The Indian Express Oil was higher in Asian trade on Thursday as investors focused on Federal Reserve chairman Ben Bernanke's comments about the US economy, analysts said. New York's main contract, light sweet crude for September delivery, put on 27 cents to USD 65.67 per barrel.
Brent North Sea crude for September delivery rose 9 cents to USD 67.30.
Bernanke told Congress in his semi-annual testimony on Tuesday and yesterday the US economy was on the mend but the recovery was still fragile.
For the moment, investors are focusing on the upbeat portion of Bernanke's assessment of the world's biggest economy and number one energy user, analysts said. "Fed chairman (Bernanke) said that recent data was encouraging and that it was premature to increase fiscal stimulus," said Dariusz Kowalczyk, chief investment strategist with SJS Markets financial firm.
"This should further calm down market doubts in the green shoots' theory," he said. A drop in US crude stocks, as expected by the market, was also lending some support to prices with the decline seen as suggesting demand was picking up in the US economy. The US Department of Energy (DoE) said in its weekly report on Wednesday crude oil inventories sank 1.8 million barrels in the week ending July 17. http://www.indianexpress.com/news/oil-spikes-to-usd-65.67-per-barrel/493081/
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| INTERNATIONAL NEWS Go To Top Reuters See this story in: The Financial Express
Stuttgart: Sportscar maker Porsche conceded a months-long power struggle to mass-market rival Volkswagen by axing its chief executive and said it would raise at least 5 billion euros in equity as the two prepared for a merger.
After an all-night meeting of its board of directors, Porsche said Wendelin Wiedeking, Germany's best-paid executive and its CEO for the past 16 years, along with finance chief Holger Haerter, would quit the group immediately.
Their hasty exit will be sweetened by payoffs of 50 million euros and 12.5 million euros, respectively. Wiedeking, who had opposed selling Porsche to Volkswagen, which would have helped the company reduce the debt he had run up in a botched attempt to take over VW, will be succeeded by Porsche's production head Michael Macht, the board said in a statement early on Thursday.
The meeting of the non-executive directors, which include the Piech and Porsche families that between them control Porsche, approved Wiedeking's proposal to raise fresh equity -- either in cash or through a contribution in kind -- and endorsed talks to sell a stake to the Gulf state of Qatar.
"This should lay the foundations for the creation of an integrated automobile group consisting of Porsche SE and Volkswagen," Porsche said.
It was unclear from Porsche's statement who would contribute to the capital increase and whether it would be taken up by Qatar. A Porsche spokesman declined to comment further.
The board's unanimous approval signals that the powerful Porsche and Piech clans may be open to surrendering some of their influence at the maker of the 911 sports coupe. Between them they control 100 per cent of Porsche's voting shares and have resisted selling a stake to an outsider.
At 0820 GMT, Porsche shares were up 1 per cent, while Volkswagen's were down around 3 per cent, compared with a 0.8 per cent fall in the DJ Stoxx auto index and a flat German market.
Joining Forces A source at Volkswagen, speaking on condition of anonymity, said it was still open whether oil-rich Qatar would take a stake in the Porsche SE holding company or directly in Volkswagen, or in both groups.
The issue was due to be discussed by Volkswagen's own board of directors, which gathers for an extraordinary session on Thursday in Stuttgart, where Porsche's Zuffenhausen headquarters are based, rather than its own headquarters in Wolfsburg. Volkswagen, Europe's biggest carmaker, declined to comment.
The moves came as Porsche enters the final stretch of negotiations with Volkswagen to create what both sides have called an "integrated" auto group, in which Porsche would essentially become the 10th brand in Volkswagen's sweeping automotive empire. Porsche SE, the holding company that controls sportscar maker Porsche AG, needs to bolster its finances after accumulating more than 10 billion euros in debt through its botched attempt to seize control of VW.
Porsche was forced to abandon attempts to win control over 75 per cent of VW, leaving it with a stake of nearly 51 per cent. The failed takeover attempt opened the door to Ferdinand Piech, VW's powerful chairman and himself a part-owner of Porsche, to turn the tables on Porsche.
The Porsche and Piech families had been at loggerheads for months over how to resolve the company's debt woes and the role VW would play. Piech has pushed for VW to take over Porsche, on condition that Porsche fixes its finances first.... http://www.financialexpress.com/news/porsche-volkswagen-prepare-ground-for-merger/493209/2
FORD MOTOR DRIVES INTO $2.3 BN Q2 PROFIT PTI See this story in: Business Standard
New York: One of the leading American car makers Ford Motor posted a second quarter profit of $2.3 billion even as its competitors are fighting hard to survive the global economic turmoil.
Unlike its peers General Motors and Chrysler Ford refused to take Federal funds to tide over the crisis, which has resulted in falling demand and sales. In the year-ago period, the auto maker incurred a loss of $8.7 billion, it said in a statement.
For the Q2, Ford raked in revenues of $27.2 billion, down $11 billion from the June quarter of 2008.
"The results for the second quarter 2009 include a special items net gain totaling $2.8 billion..., which includes a $3.4 billion gain related to Ford and Ford Credit's recent debt-reduction actions," the company said.
Ford noted that while the business environment remained extremely challenging around the world, the company made significant progress on its transformation plan. "Our underlying business is growing progressively stronger as we introduce great new products that customers want and value, while continuing to aggressively restructure our business and strengthen our balance sheet," Ford President and CEO Alan Mulally said. In the Asia Pacific region and Africa, the car maker recorded a loss of $25 million in the said quarter compared to a pre-tax profit of $50 million in 2008. http://www.business-standard.com/india/news/ford-motor-drives-into-23-bn-q2-profit/68737/on
GM NAMES DESIGN EXECUTIVE TO HEAD CADILLAC Agencies See this story in: The Economic Times
Detroit: GM has named one of its top design executives as the new head of its Cadillac brand. Bryan Nesbitt, who currently serves as GM's North America vice president for design, will become the brand's general manager effective Aug. 1.
DEALER LEGISLATION COULD FORCE LIQUIDATION: CHRYSLER See this story in: The Indian Express Washington: Chrysler Group could again face the prospect of liquidation if legislation aimed at reversing its decision to terminate contracts with 789 dealers becomes law, a company executive said on Wednesday.
Louann Van Der Wiele, a senior company lawyer, told a House Judiciary subcommittee that Chrysler faces a "tough road ahead" and efforts to restore dealer franchise rights "will simply take Chrysler back to the future" without the same options for survival that it had this spring. "Complete liquidation, with all of its dire consequences" could follow," Van Der Wiele said.
Chrysler was on the brink of extinction when it entered bankruptcy on April 30, emerging a month later in an alliance with Italy's Fiat and billions in US government financing to help it retool its product lineup and better compete with leaner rivals.
General Motors Corp sought court protection on June 1, also emerging several weeks later with lower debt, new labor concessions, billions in government aid and a plan to shave 1,300 dealers from its retail network. Automakers say they will save money and streamline retail operations with fewer dealers, who are separate businesses that purchase the vehicles they sell directly from the manufacturers.
Congress is considering legislation to force GM and Chrysler to address assertions from dealership executives that their franchise rights were trampled on during the automakers' bankruptcies.
Dealer lobbyists and prominent showroom owners have waged an aggressive campaign to force government action, saying more jobs were at stake amid a deep recession. "We all want the auto manufacturers to succeed but it's wrong to condone the abuse of bankruptcy law and the spending of taxpayer dollars to needlessly eliminate 169,000 jobs," said Jack Fitzgerald, owner of Fitzgerald Auto Malls.
The dealer measure easily cleared the House of Representatives as part of a larger must-pass annual spending bill but it faces an uncertain fate in the Senate where support at the moment is less robust.
Senate Majority Leader Harry Reid has said dealer legislation is not a top priority. The Obama administration's autos task force, which facilitated much of the more than $60 billion in aid extended to GM and Chrysler and positioned them for bankruptcy, opposes congressional intervention.
But some lawmakers are using the threat of legislation to pressure the parties to reach a settlement, which the Obama administration has said it would not oppose.
GM has begun paying dealers $600 million as part of dealer wind-down agreements through 2010, Michael Robinson, the company's senior corporate counsel for North America, told the Judiciary subcommittee.
Chrysler has no similar financial arrangement in place for dealers but has redistributed most of the unsold inventory and special tooling at terminated franchises. http://www.indianexpress.com/news/dealer-legislation-could-force-liquidation-chrysler/493046/2
TOYOTA TO LIQUIDATE JOINT VENTURE WITH GM AFP See this story in: mint
Tokyo: Japans Toyota Motor said Thursday it plans to liquidate its joint venture with General Motors in the US state of California by the end of August.
GM said last month it would drop its ownership stake in the 25-year-old joint venture, New United Motor Manufacturing Inc. (NUMMI), as it restructures its operations under bankruptcy protection.
We will negotiate with MLC (Motors Liquidation Company) on our intention to withdraw from NUMMI, Toyota spokeswoman Ririko Takeuchi said. MLC is the new name of GM.
We would like to reach a conclusion by the end of August, depending on the course of negotiations, she added.
Toyota is expected to talk with MLC and its unions on the timing of the firms closure and treatment of its workers, the business daily Nikkei said. The plant produces cars such as the Corolla compact car and the Tacoma pick-up truck. http://www.livemint.com/2009/07/23180053/Toyota-to-liquidate-joint-vent.html
HYUNDAI POSTS RECORD Q2 PROFIT, GAINING SHARE Jong-woo Cheon, Reuters See this story in: Yahoo India, The Times of India
Seoul Hyundai Motor Co is likely to struggle to replicate its record quarterly profit as the benefits from a weaker won and government stimulus fade but the popularity of its small, cheap vehicles will help it gain share in a weak global market.
South Korea's largest automaker expects overall sales to rise 8 percent this year and its U.S. market share to grow further in the second half, buoyed by an improving brand image and heavy spending on marketing.
That throws down the gauntlet to larger competitors such as Toyota Motors Corp, whose market share has been trending down and who reported a 35 percent drop in overall U.S. sales in June.
But with the global economy still struggling, the won edging higher and automakers reliant on government stimulus packages to boost demand, analysts questioned whether Hyundai's strong performance could be replicated in the second-half.
"Hyundai's earnings came out quite strong, but that was also helped by government's stimulus plans," said Nara Lim, a market analyst at Hanwha Securities.
"As global economies, including that of the United States, are still weak, investors are wondering if second half numbers will post as strong as seen in the second quarter." Hyundai shares fell 3 percent, having jumped more than a third in the quarter ended on June 30, outpacing the wider market's 15 percent gain.
Stimulus, China Help As with governments elsewhere, South Korea has introduced measures such as tax incentives and easier consumer financing to boost domestic car sales, where Hyundai dominates and achieves higher margins.
Hyundai, the world's No.5 car maker with its Kia Motors Corp unit, said contributions from overseas affiliates, especially in China and India, helped the strong numbers. China and India are two bright spots in an otherwise grim auto market and earlier this month, Hyundai raised it 2009 sales target in China for a second time.
Also on Thursday, Maruti Suzuki, India's top carmaker, reported an unexpected 25 percent rise in quarterly net profit as it rode on higher sales, new product launches and a drop in raw material prices. Japan's Suzuki Motor Corp holds 54.2 percent of Maruti. To support its ambitions, Hyundai is counting on older standby models along with newer cars such as the i30 wagon and the Genesis coupe.
It can take heart from the successful launch of its Genesis sedan, which J.D. Power and Associates ranked as the most smoothly launched vehicle for this year. Hyundai also launched successful incentive programmes in the U.S., such as the deal allowing buyers who lost their jobs to return just-purchased new cars.
The maker of the Elantra compact sedan doubled its overseas marketing expenses to 3.6 percent of its sales in the first half.
Hyundai posted a net profit of 811.9 billion won ($649.9 million) in the second quarter, soundly beating a 456 billion won forecast by 10 analysts in a Reuters poll. Its operating profit during the quarter ended on June 30 was 657.3 billion won, well above a forecast for a 496.5 billion won profit. The company's operating profit margin was 8 percent, its highest level in 5 years, it said.
The average value of the won in the second quarter was down 20.8 percent against the dollar from a year earlier although it rose 10.3 percent from the first quarter, according to Reuters calculations.
Sales in the April-June period rose to 8.08 trillion won from 6.03 trillion won in the prior quarter but fell from 9.11 trillion won a year before.
For the whole of 2009, Hyundai's net profit is expected to fall 5 percent to 1.38 trillion won, a Reuters Estimates poll of 20 brokerages shows.
Japanese makers are faring worse, struggling with weaker demand and a firmer yen . Toyota is seen reporting a 354 billion yen ($3.76 billion) net loss in fiscal 2009/10. http://in.biz.yahoo.com/090723/137/batxoq.html
TYRES MADE FROM TREES CHEAPER, MORE FUEL EFFICIENT: RESEARCH PTI See this story in: The Economic Times
New York: Automobile owners around the world in the near future might drive on tyres that are partly made out of trees - which could cost less, perform better and save on fuel and energy. http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Tyres/Tyres-made-from-trees-cheaper-more-fuel-efficient-Research/articleshow/4812266.cms
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| ECONOMY & FINANCE Go To Top PTI See this story in: The Hindu Business Line
Mumbai: Impressive infrastructure growth and good corporate earnings by ITC and Maruti Suzuki helped the market snap its two-day losing streak as the benchmark Sensex bounced back by a whopping 388 points on Thursday amid strong Asian cues. Regaining the psychological 15,000 level, the Bombay Stock Exchange 30-share barometer ended the day at 15,231.04, netting a rise of 387.92 points or 2.61 per cent over its previous close. Infrastructure sector output grew 6.5 per cent in June compared to 2.8 per cent in May, showing distinct signs of economic recovery.
Stocks from the Sensex pack such as Maruti Suzuki, ITC and ACC beat analysts' estimates and reported good first-quarter performance. The rise would have been more but for the fact that India's largest listed cellular services provider Bharti Airtel lost early gains and was down 1.09 per cent after the company announced its first-quarter results. Bharti Airtel reported 22.21 per cent growth in net profit but the company's average monthly revenue per user was lower than in the corresponding quarter. Market sentiment was boosted by the Reserve Bank's decision to allow foreign companies to raise fun ds from Indian stock markets through Indian Depository Receipts. http://www.thehindubusinessline.com/blnus/05231901.htm
INFLATION REMAINS IN NEGATIVE ZONE The Hindu Business Line
New Delhi: The annual Wholesale Price Index-based inflation continued in the negative, dipping 1.17 per cent in the week ended July 11 after falling 1.21 per cent in the previous reported week. The year-on-year inflation was recorded at 12.13 per cent during the corresponding week of the previous year.
According to data released by the Ministry of Commerce and Industry, the official WPI for all commodities for the latest reported week rose 0.1 per cent to 236.7 points from 236.4 points for the previous week.
On a disaggregated basis, the primary articles group index rose by 0.7 per cent as the index for food articles group rose by 0.9 per cent due to higher prices of fish-marine (9 per cent), fruits and vegetables (3 per cent) and condiments and spices, maize and rice (1 per cent each). However, the prices of tea and wheat (1 per cent each) declined. The index for non-food articles group rose by 0.3 per cent due to higher prices of copra (3 per cent), raw silk (2 per cent), soyabean, raw cotton and linseed (1 per cent each). However, the prices of raw wool (2 per cent) and sunflower, raw rubber and gingelly seed (1 per cent each) declined.
The fuel, power, light and lubricants group index rose by 0.1 per cent for the previous week due to higher prices of aviation turbine fuel (7 per cent). The manufactured products group index declined by 0.1 per cent as the index for food products group declined by 0.4 per cent due to lower prices of imported edible oil (6 per cent), oil cakes (2 per cent) and rice bran oil and gingelly oil (1 per cent each). However, the prices of gur and groundnut oil (1 per cent each) moved up.
The index for textiles group rose by 0.1 per cent due to higher prices of texturised yarn (5 per cent). However, the prices of hessian cloth and hessian and sacking bags (1 per cent each) declined.
The index for rubber and plastic products group rose by 0.2 per cent due to higher prices of PVC fitting and accessories and PVC pipes and tubings (3 per cent). However, the prices of plastic items (6 per cent) declined.
The index for chemicals and chemical products group declined marginally due to lower prices of liquid chlorine (2 per cent) and caustic soda (sodium hydroxide) and acid (all kinds) (1 per cent each).
The index for basic metals alloys and metal products group rose marginally due to higher prices of brass sheets and strips (28 per cent). However, the prices of steel ingots (2 per cent) and lead ingots (1 per cent) declined.
The index for machinery and machine tools group rose by 0.1 per cent due to higher prices of other cables and rubber insulated cables (1 per cent each). For the week ended May 16, the final WPI for all commodities stood at 234.6 points compared with 232.2 points. The annual rate of inflation based on final index, calculated on point-to-point basis, stood at 1.65 per cent compared with 0.61 per cent points reported provisionally. http://www.thehindubusinessline.com/2009/07/24/stories/2009072451710100.htm
Last Financial closing
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Thursday, July 23, 2009
Indian Auto Industry Update July 24, 2009
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