Indian Automotive Industry News

Indian Auto Industry Update July 13, 2009

This Update also carries stories featured on Sunday, July 12, 2009

INDUSTRY

ONLY ONE OF THREE BUDGET SOPS FOR AUTO INDUSTRY IS SIGNIFICANT

New Delhi: Amongst the three excise duty cuts detailed in Budget 2009-10 for the auto industry, only one has benefited a large segment of the industry, say company executives. That was the cut of Rs 5,000 on large cars with engines of 2,000cc and above. Car companies like Hyundai, Honda and Hindustan Motors followed and lowered prices of their vehicles to the same extent.

The other two duty cuts benefit almost none. The excise duty cut on petrol engine-driven vehicles and on the chassis of such vehicles have no relevance, since not a single manufacturer straps a light commercial vehicle (LCV) in the goods carrier segment with a petrol engine. Its uneconomical for the fleet operator. All our LCV vehicles are either on diesel or on CNG if they ply inside Delhi, says an industry executive.

The Budget speech referred to petrol-driven lorries and trucks. An executive from the Society of Indian Automobile Manufacturers (Siam) says it actually means LCVs, which also includes three-wheelers that fall in this segment. Amongst the three-wheeler manufacturers in the goods segment, none manufacture vehicles kitted with petrol engines and hence do not qualify for any excise duty cuts. Like LCVs ,they are largely fuelled by diesel.

The duty cut on petrol-driven LCVs benefits just one single vehicle model, which is Maruti Suzukis Omni Cargo. Thats because the Omni (a multi purpose vehicle in Siams classification) is the only goods carrier vehicle in the country that runs on petrol. Post the excise duty cut from 20 per cent to 8 per cent, the price of the Omni Cargo now stands at Rs 1,97,000 (ex Delhi showroom).

Other manufacturers of LCVs include Tata Motors, Mahindra & Mahindra, Hindustan Motors, Piaggio Vehicles, and Force Motors. None have an LCV powered by a petrol engine.

The third duty cut pronounced in the budget provided an excise duty cut on the chassis of petrol-driven vehicles from 20 to 8 per cent, with the fixed component of Rs 10,000 remaining. An industry executive said LCVs, unlike heavy commercial vehicles, are sold as fully built units. Hence, they do not qualify for this excise duty cut on the chassis.
http://www.business-standard.com/india/news/only-onethree-budget-sops-for-auto-industry-is-significant/363719/
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GOVT, AUTO FIRMS HIT THE GREEN ROAD
Sindhu Bhattacharya
Daily News & Analysis (Web Edition)
(July 13)

New Delhi: The government and the automobile industry's efforts to develop environmentally friendly technologies could turn even greens green with envy. Whether it is introduction of hydrogen as fuel, studying driving habits like sudden speeding and braking to reduce emissions or extending the study on dismantling and recycling of vehicles to two-wheelers, no effort is being spared to cut emissions.

Take for example the ambitious 'Hithane' project, which seeks to develop an ideal mix of Hydrogen and CNG.

The world over, vehicle makers are looking for ways to use hydrogen fuel in new products, but this project seeks to develop for the first time ever, a CNG-hydrogen mixture for use in the existing on-road fleet of vehicles with minimum modifications in the engine and engine components.

The commercial testing for hithane on a range of vehicles is likely to begin early next year. Manufacturers such as Ashok Leyland, Bajaj Auto, Eicher Motors, Mahindra & Mahindra and Tata Motors have offered their vehicles for testing on Hithane.

Then, the Society of Indian Automobile Manufacturers (SIAM) has proposed a study of driving habits under Indian driving conditions which could lead to safety and better fuel efficiency. This study would be conducted across the four metros and data collected could come in handy for not just developing safety norms but also for purposes of road building and vehicle designing.

On the End of Life Vehicle (ELV) norms, industry and the government have joined hands to develop parameters for two-wheelers as well -- till now such norms were available only for four- and three-wheelers.

ELV norms specify how a vehicle which has reached the end of its life can be disposed off or recycled with minimum negative impact on the environment.

Maruti Suzuki has already brought the ELV concept to India by becoming the first manufacturer in the country to launch a car (A-Star) in which hazardous raw materials such as lead, mercury, cadmium and chrome have been replaced with more eco-friendly commodities. The car is 85% recyclable.

The government is also looking into other safety aspects such as the quality of the aftermarket automotive lighting and the light signalling components available in the country. Another study is being conducted to determine ways of designing tyres which make lesser noise and also improve fuel efficiency.

Idea highway Commercial testing for hithane -- a Hydrogen and CNG mix -- on a range of vehicles is likely to begin next year. SIAM has proposed a study of driving habits under Indian driving conditions which would help develop safety norms and aid vehicle design.
A study is being conducted will find ways to design tyres which make lesser noise and also improve fuel efficiency.
http://www.dnaindia.com/money/report_govt-auto-firms-hit-the-green-road_1273452
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MAHINDRA RENAULT VENTURE POSTS RS 490-CR LOSS
N. Ramakrishnan
The Hindu Business Line (Web & Print Edition)
(July 13)

Chennai: Following a 48 per cent fall in sales, Mahindra Renault Pvt Ltd has posted a loss of Rs 490.21 crore on a gross turnover of Rs 741.17 crore during 2008-09.
The company, a 51:49 joint venture between Mahindra & Mahindra (M&M) and Renault, of France, makes the Logan entry-level sedan at M&Ms Nashik plant.

Drop in sales
According to M&Ms 2008-09 annual report, the joint venture sold 13,423 cars during the year under review. In the previous year, the company sold 25,891 cars.
In the first three months of this financial year, sales of the Logan have fallen nearly 68 per cent to 1,478 units from 4,595 units in the corresponding period last year.
The annual report attributed the decline in Logans sales to increased competitive activity in its market segment.

Industry sales in the C-segment, where Logan competes, increased 12 per cent in financial year 2009, the annual report said.

The C-segment itself grew 12 per cent last financial year, totalling 2.46 lakh units. M&Ms share in this segment dropped from 11.8 per cent in 2007-08 to 5.5 per cent last year.

Light Commercial Vehicles
M&M manufactures light commercial vehicles for another joint venture Mahindra Navistar Automotives Ltd and the Logan for the joint venture with Renault, on a contract basis. It also distributes these LCVs and cars for the two joint venture companies respectively under a distribution contract for a fee.

Automobile industry experts say that Mahindra Renault Pvt Ltd will have to take a decision quickly on how long it is going to continue making the Logan.
M&M has a capacity to make 50,000 units of the Logan a year, but with falling sales that capacity will be largely unutilised, they say.

Automotive vehicles
According to the annual report, the company maintained its automotive vehicles sales. It sold a total of 220,213 vehicles 44,533 three-wheelers, 8,603 LCVs and 13,423 cars recording a growth of 0.6 per cent over the previous year.

The company posted a consolidated profit after tax of Rs 1,405.41 crore down 10.5 per cent over the previous year. Its net revenue was up 10 per cent at Rs 26,919.8 crore.
M&M has been aggressive in overseas acquisitions in the last two-three years, particularly with regard to the auto component business. Information provided in its latest annual report shows that a number of these overseas subsidiaries, particularly in Europe in the forgings business, have reported losses.

The acquisitions completed last financial year include Engines Engineering, Italy a two-wheeler design company; Metalcastello S.p.A., a gear manufacturing company in Italy; and, a second tractor joint venture in China. M&M formed a Systech sector, under which its overseas auto component acquisitions fall into.

Farm-equipment
In 2008-09, Mahindra & Mahindras Farm Equipment Sector formed a joint venture Mahindra Yueda (Yancheng) Tractor Company Ltd in China with Jiangsu Yueda Yancheng Tractor Manufacturing Company Ltd. M&M holds a 51 per cent stake in this joint venture. This company and an earlier tractor joint venture in China, Mahindra (China) Tractor Company Ltd, posted losses.

According to the annual report, Mahindra (China) Tractor Company was able to grow by 21 per cent over the previous year despite the stagnant industry situation. This was made possible through the launch of Mahindra branded red tractors and expansion of the product range up to 40 HP segment on the current platform. In the last financial year, the company made the change over to selling tractors under the Mahindra Feng Shou brand.
http://www.thehindubusinessline.com/2009/07/13/stories/2009071351390300.htm
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TATA'S LAND ROVER PLANS LOW-PRICE ENTRY IN OCTOBER
Swaraj Baggonkar
Business Standard (Web & Print Edition)
(July 12)
Mumbai: Prospects for Tata Motors-owned Land Rover in India will get a boost when it launches its cheapest sports utility vehicle (SUV), the Freelander, in October for under Rs 35 lakh.

The Freelander, a compact yet premium 4X4 SUV, is sold in large European markets such as the United Kingdom, France, Italy and Spain as well as in China. According to informed sources, the SUV is in final stages of homologation at the Automotive Research Association of India in Pune.

The SUV will attract an import duty of more than 100 per cent as it will land in India as a completely built unit. The Freelander is sold at about Rs 17 lakh (21,295) in the UK. Its cost in India could thus go up to Rs 35 lakh. Higher variants of the Freelander could cost up to Rs 53 lakh. It will still be cheaper than the other Land Rover SUVs. Tata Motors currently sells three models of the Land Rover brand in the domestic market which includes Range Rover, Range Rover Sport and Discovery 3. The Discovery 3, the cheapest of these, carries a price tag of Rs 63 lakh.

This rate is not expected to come down as Tata Motors does not have any plan to manufacture Land Rover SUVs in India in the near future, though it may reconsider the decision once volumes pick up.

Jaguar-Land Rover officials said the idea behind bringing the Freelander to India was to gain volumes with its low price. No sale targets, however, were divulged by the official. Considering that the demand for premium SUVs is growing aggressively in the country, we consider Land Rover to be the best fit for the market, he said.

The size of the Indian premium SUV market currently stands at 6,000 with BMW leading the pack. Land Rover will compete with SUVs such as the Mercedes Benz M Class, Audi Q5 and Q7, Volkswagen Touareg, BMW X3, X5 and X6, Toyota Land Cruiser and Prado, Volvo XC90 and Mitsubishi Montero.

In the international market, the Freelander is available with a four-cylinder, 16-valve, 2,179 cc turbo-diesel engine, which produces 160 bhp of power. It can deliver a mileage of 12 km/litre in a city and 17.5 km on the highway under actual driving conditions. The SUV comes with manual as well as automatic transmission. The automatic version of course is priced higher. The Freelander, along with the other three Land Rovers, will initially be sold through two Mumbai dealers.
http://www.business-standard.com/india/news/tata/s-land-rover-plans-low-price-entry-in-october/363640/
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JLR PLANS EXTENDED SHUTDOWN
PTI
See this story in: Business Standard (Web & Print Edition), The Economic Times (Web & Print Edition), The Indian Express (Web Edition), Deccan Herald (Web Edition), mint (Web & Print Edition)
(July 13)

London: The Tatas-owned Jaguar Land Rover (JLR) plans an extended shut down of its UK plants and a new round of staff layoffs as it struggles to cope with the slump in the world car market, a media report said.

Executives at JLR, the Midlands carmaker, are drawing up plans for an extended shutdown of its UK plants and a new round of staff layoffs, UK daily The Sunday Times reported on its online edition.

Preparation for the closures come just days after the company released its new flagship, the latest version of the Jaguar XJ beloved by Prime Ministers and top British executives, the report said.

The car was launched at a glitzy party in Londons Saatchi Gallery on Thursday, to critical acclaim.

Jaguar Land Rover, which employs some 15,000 people in the UK, has so far avoided the lengthy shutdowns that some other carmakers have used to save money and run down stock. Honda, for example, closed its plant at Swindon for three months.

Last month, Tata Motors stated that mounting losses at the UK carmaker had pushed it into its first annual loss of $522 million in seven years, and warned drastic cost-cutting should be expected. It said sales at its British subsidiary had fallen by a third.
http://www.business-standard.com/india/news/jlr-plans-extended-shutdown/363720/
http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Automobiles/Jaguar-Land-Rover-plans-extended-shutdown-and-job-cuts/articleshow/4768330.cms
http://www.indianexpress.com/news/jlr-plans-extended-shutdown-and-job-cuts/488353/
http://www.deccanherald.com/content/13414/jlr-cut-jobs-extend-closure.html
http://www.livemint.com/2009/07/12114129/JLR-plans-extended-shutdown-an.html Go To Top

INTERVIEWS/FEATURES Go To Top- - - - -
CARS, SUVs, MUVs Go To TopMARUTI'S SPLASH TURNS RITZ, THANKS TO FORD PTISee this story in: Business Standard (Web & Print Edition), The Economic Times (Web & Print Edition), The Hindu Business Line (Web Edition), Asian Age (Web & Print Edition)(July 13)

New Delhi: Suzuki was forced to rechristened its small car Splash when it came to launch in India, as the name was already registered as a brand here by rival Ford Motor, which says it may or may not even use the name for its products.

Consequently, Maruti Suzuki launched the global car, presented as a concept car in Paris Motor Show in 2006, in India as Ritz earlier this year. Sources said the name Splash had been registered with the Controller General of Patents Designs and Trademarks Registry since August 16, 2002, with the US carmaker Ford Motor Company. Later Japans Suzuki Motor Corporation also approached the trademarks authorities for introducing its fifth global model Splash in India through its subsidiary Maruti Suzuki India (MSI). Suzuki had applied for the trademark registration on December 22, 2005, which was eventually withdrawn.

It was a big setback with MSI saying at the time of launch that it could not bring in the car as Splash as it was already registered with an automobile company here.

Ford India President and MD Michael Boneham said, We had registered Splash long time ago ... There is nothing specific about Splash at this moment. In the future we may or may not launch a product, named Splash.http://www.business-standard.com/india/news/maruti/s-splash-turns-ritz-thanks-to-ford/363718/ http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Automobiles/How-Maruti-Ritz-got-its-name/articleshow/4768400.cms http://www.thehindubusinessline.com/blnus/02121206.htmhttp://www.asianage.com/presentation/leftnavigation/news/business/budget-hits-state-firms%E2%80%99-market-cap.aspx
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LUXURY CAR IMPORTS ENTER THE SLOW LANE
Chanchal Pal Chauhan
The Economic Times (Web Edition)
(July 13)

New Delhi: Customers will now have to wait longer to get behind the wheel of imported luxury cars, with carmakers such as Honda, Toyota, BMW and Mercedes-Benz deciding to import vehicles only against confirmed bookings. Popular models such as the BMWs flagship sport utility vehicle (SUV) X6 and the 7Series saloon, Mercedes Benzs SL-Class and SKL-Class sports cars, Toyotas Land Cruiser & Prado, Mitsubishis Montero and Hondas CR-V have delivery lags of three months or more. Declining demand and fluctuation in currency rates have forced Japanese carmaker Honda to stop imports of its CR-V sports utility vehicle, once the largest-selling petrol SUV in India. It is now shipped to India against confirmed orders from customers who have to wait for up to three months to drive the car home. Honda did not sell a single vehicle in the April-June period. The changes in currencies have worked against imports. It led to an increase of almost Rs 3 lakh in the price of a CR-V forcing us to change our policy and to bring cars for a few guaranteed bookings, said Masahiro Takedagawa, president and chief executive of Honda Siel Cars India.

Similarly, Toyotas hot-selling Camry and its two SUVs, Prado and Land Cruiser, come only on direct customer booking as the company is avoiding inventory buildup of SUVs priced at Rs 40-80 lakh. These vehicles are fully imported and carry a high custom duty. We avoid inventory at our warehouses or the dealer level, Toyota Kirloskar Motors deputy managing director (marketing) Sandeep Singh said. The global downturn has impacted the sale of luxury cars in India. Most of these vehicles come in the price range of Rs 25 lakh to Rs 1.5 crore. The most expensive cars such as the Bentley and the Rolls Royce have a longer waiting period. These customised vehicles take six months to reach the customer. Sluggish domestic market has made a dent on the sales of high-value sedans and SUVs. Sales of such vehicles fell 22% to 1977 units in the first three months of the fiscal year. Companies have already burnt their fingers by selling the inventory at a discount. In past, we have sold piled up stocks at a discount. We are avoiding that situation now, a BMW India spokesperson said. Mercedes-Benz India has opted to keep its MClass, the sportier SL-Class and SKL-Class under the customer orders category. Troubled American car maker General Motors imports its Captiva SUV only when the customers pay for the vehicle.
Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
http://economictimes.indiatimes.com/News-by-Industry/Luxury-car-imports-enter-the-slow-lane/articleshow/4770614.cms
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FORD PLANS TO INTRODUCE MORE HATCHBACK MODELS
Business Standard (Web & Print Edition)
(July 12)

Kolkata: US-based car maker Fords Indian subsidiary, Ford India, will start making engines at its Tamil Nadu plant for its facilities in the Asia Pacific and Africa regions in the first half of 2010. It also plans to bring in more hatchback models from the Ford stable to India in the coming years.

The company plans to position India as a strategic hub for low-displacement powertrains for Ford facilities in the region. We will make six to eight types of power trains. The volumes will depend on demand, said Ford India President and Managing Director Michael Boneham. He added the company would be ready to produce 250,000 engines per year together with its small car, ready for launch in the first half of next year. It is in the process of investing $500 million on its small car project and its engine plant in Maraimalainagar near Chennai. We should complete our investments within the end of this year, Boneham said.

It will make sub-1.2 litre petrol and sub-1.4 litre diesel engines at this plant. We have currently started producing 60,000 diesel engines at the power-train plant and will eventually ramp up to 250,000, Boneham said.

As for its small car, the company is looking at markets in the Asean, Africa and Australia, besides India. We sell the Ikon in South Africa and Mexico, but are looking at a much broader market for our small car, Boneham said. The company plans to export around 10 per cent of its production in the first year but has not yet set any specific target for exports as of now. Boneham declined to give the intial production planned. He, however, confirmed that trial production had started.

The Ford small car will have around 85 per cent localisation.
Ford India sold around 30,000 vehicles in India last year and expects to end this year flat. It, however, is betting big on its small car, a segment where it is currently not present, to increase sales manifold in 2010. It is also in the process of expanding its dealership network from around 90 in 2008 to over 153 by the end of this year. Boneham said, India is primarily a small car market where around 85,000 such cars are sold per month. We plan to bring in more small cars from the Ford stable to India in the coming years".
http://www.business-standard.com/india/news/ford-plans-to-introduce-more-hatchback-models/363627/
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MITSUI WINS BID FOR TRANSPORTING NISSAN CARS
T.E. Raja Simhan
The Hindu Business Line (Web & Print Edition)
(July 12)
Chennai: Mitsui O.S.K. Lines Ltd has won the bid for transporting Nissan Motor Co Ltds cars produced at its Chennai plant to the port. The bid is also for handling port operations for export of the cars, such as storage and preparation for loading.

Mitsui will transport the cars to the Ennore port for exports.
In November 2008, the Japanese shipping company established MOL Auto Logistics (India) Pvt Ltd as a wholly- owned subsidiary based in Chennai and began inland transport of completed cars in April 2009.

The new plant of Nissan will start manufacturing in early 2010 and begin exporting vehicles mainly to Europe in late 2010. It will also produce vehicles for the countrys domestic market, Mitsui said.

Nissan plans to export around two lakh cars a year. On its part, the Ennore Port Ltd will invest Rs 110 crore on creating a multi-purpose berth to handle exports of the cars.
http://www.thehindubusinessline.com/2009/07/12/stories/2009071251340300.htm
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COUNTRY'S 2ND ELECTRIC CAR UNIT NEAR CHENNAI
Business Standard (Web & Print Edition)

Chennai: Bavina Cars India Ltd plans to set up an electric car manufacturing unit near Chennai at an investment of Rs 300 crore. The first car is expected to be rolled out from the factory in 2011. The facility will be the second battery-powered car production unit in the country. The project is likely to create employment for around 1,500 people.

The companys promoter, S Rajasekar, received the land allocation document for 100 acres from Tamil Nadu Deputy Chief Minister M K Stalin on Friday. The facility is coming up at the special economic zone (SEZ) owned by Tamil Nadu State Industries Promotion Corporation at Ranipet, near Chennai.
http://www.business-standard.com/india/news/country%5Cs-2nd-electric-car-unit-near-chennai/363721/
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THE TECH-N-STYLE DEAL
Nasreen Ghani
The Hindu (Metro Plus)(July 13)

Hyundai Motor India Ltd. (HMIL) has taken the Indian compact car market by storm with its new offering of the i20. Powerful yet fuel-efficient, the Hyundai i20 diesel version comes with a 1.4L CRDi engine with a maximum power of 90PS@4000rpm and a pe ak torque of 22.4kgm@1750~2750 rpm. It is contemporarily styled, and has high rated interiors.

H.S. Lheem, Managing Director, Hyundai Motor India Limited was present at the event. He said, The i20 is also available now with an automatic transmission, a first in the premium compact car segment. Both the variants, while offering the much needed fuel-economy to our customers, will also provide superior technology and best-in-class performance. The large and powerful 1.4 litre diesel engine represents a great the ultimate in fuel efficiency, safety, driving pleasure and economy. The immaculate performance and safety feature of the i20 has made it the first India produced car to meet the stringent European safety norms and in fact enjoys a 5 Star Euro NCAP rating making it the safest car available in this segment.

With the launch of i20 diesel, Hyundai plans to tap the vast potential that exists in the diesel car segment in India. The powerful, CRDi power plant boasts of state-of-the-art technological innovations like the Electrical EGR (Exhaust Gas Re-circulation) with EGR cooler and eco-friendly oil filter that reduces pollution and the maintenance cost.

Compact segment
For the first time in the premium compact segment, Hyundai also introduces the i20 Automatic Transmission (AT) with the power-packed 1.4L GAMMA petrol engine. The engine uses a DOHC, 16 Valve, VTVT technology that ensures quick acceleration, smooth drivability, low emissions and optimum fuel mileage. Its impressive power of 100PS@5500 rpm, the highest in the segment and a maximum torque of 13.9 kgm@4200 rpm makes for a comfortable city driving. The revolutionary Automatic Transmission i20 uses a 4-speed gearbox with an overdrive lock switch.

The i20 is the only car which was awarded the 5 Star Euro NCAP rating by the Euro New Car Assessment Programme (Euro NCAP). The i20, boasting of a high array of safety features, is the first car in its segment to offer six airbags, rear disc brakes with ABS and EBD which are standard equipment on the diesel and the automatic variant. To enhance the driving experience a panoramic sunroof is also offered as an option across all variants.
http://www.hindu.com/mp/2009/07/13/stories/2009071350150300.htm Go To Top

COMMERCIAL VEHICLES Go To Top- - - - -
CONSTRUCTION & AGRI MACHINERY Go To Top- - - - -
2/3 WHEELERS Go To TopHMSI SELLS 21 HIGH-END BIKES COSTING RS 12.5-RS 9.5 LAKH
PTI
See this story in: The Economic Times
(July 12)
Chandigarh: Honda Motor Company subsidiary, Honda Motorcycle & Scooter India on Saturday said it has been able to sell as many as 21 high speed imported bikes, coming at a premium of Rs 12.5 lakh and Rs 9.5 lakh within three months of their launch in the country. "We have been able to sell 21 our super speed bikes within three months of their launch into the country," HMSI Head Sales Y S Guleria told reporters here. The company eyes selling 100 such bikes in the current fiscal, mainly in the metros. "We have seen the potential of these bikes in big cities like Mumbai, Kolkata, Bangalore, Chennai, Delhi and Pune and we aim to sell 100 units of these bikes in this fiscal," he said. HMSI rolled out its superbikes Honda CBR1000RR and CB1000R imported from Japan into Indian market at a price of Rs 12.5 lakh and Rs 9.5 lakh respectively. The company plans to launch a new bike in 100 CC segment in 2009-10 to capture sizeable share in the segment. "We have plans to enter 100 CC segment and we will launch our new model this fiscal," he said without divulging about the price of motorbike.
http://economictimes.indiatimes.com/News/News-By-Industry/Auto/HMSI-sells-21-high-end-bikes-costing-Rs-125-Rs-95-lakh/articleshow/4767085.cms
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HERO HONDA AIMS FOR 25% GROWTH
Swaraj Baggonkar
Business Standard
(July 12)
Mumbai: Indias largest motorcycle maker, Hero Honda Motors, is looking to sell more than a million units in each of the next three quarters, even though market conditions may not be in favour of the two-wheeler market.

The New Delhi-based two-wheeler company, also the worlds largest, is aiming for an overall growth of about 25 per cent in sales by the end of the financial year, which will take its tally to about 4.5 million units, up from 3.64 million units last year.

However, according to industry experts, the two-wheeler industry itself is expected to register less than double-digit growth due to continued lack of focus by financiers such as banks.

The two-wheeler industry, comprising motorcycles, scooters, mopeds and electric bikes, witnessed sales of 7.43 million units last financial year.

Hero Honda is heavily banking on the current quarter to make up for any dip in demand in the last quarter, when sales are generally sluggish. At present, every second two-wheeler sold in the domestic market is by Hero Honda (see table).

Anil Dua, V-P (sales and marketing), said: We expect the first half of the current fiscal to be better than the second half on the back of the commencement of the festive season. The industry will record a high single-digit growth of about 9 per cent but we will post about 25 per cent growth in the fiscal.

The companys thrust is on new model launches, most of which will debut in the current and the next quarter. In all, the company will launch nine models, of which one or two will be new while the rest will be face-lifts.

We are constantly increasing our market share both in the motorcycle space as well as the scooter segment. Our target for the year will ride on the success of the new launches as well as our top models, added Dua.

The two-wheeler space, unlike the passenger car segment, has witnessed the worst consumer finance crunch along with the commercial vehicle segment. Although banks have only recently relaxed their stand, industry players say the demand for finance far exceeds supply.

Finance has become available once again, but at a costlier rate than before. In addition, new norms set by banks are more stringent than earlier. Two-wheeler buyers are price-sensitive, said an auto analyst.

Meanwhile, growth for Hero Hondas traditional rivals such as Bajaj Auto and TVS Motors has been minimal, largely due to their absence in the rural and semi-rural sector.

Bajaj Autos marketing focus has been on the urban buyer, while TVS Motors has been strong only in the southern market.

Bajajs recent launch of the face-lifted Pulsar 220 (dubbed as the fastest production bike in India), and TVS Motors Apache 180 are in the premium range and may not become volume drivers.

Hero Hondas dominance may come under pressure later during the year due to increased aggressiveness by Japanese giants Honda Motorcycle and Scooter India and Yamaha Motor India.

Both have seen double-digit growth on the back of strong product line-up and powerful brand value.
http://www.business-standard.com/india/news/hero-honda-aims-for-25-growth/363626/ Go To Top

COMPONENTS Go To Top- - - - -
ALLIED INDUSTRY Go To TopAPOLLO TYRES SEES NOV ROLLOUT FROM CHENNAI PLANT
The Hindu Business Line
(July 12)
Chennai: Apollo Tyres expects its greenfield facility near Chennai to go on stream from November. The plant will make top-of-the-line truck and bus radials and ultra-high-performance passenger car radial tyres.

According to the companys 2008-09 annual report, work on the plant that will cater to the growing small car segment is going full steam ahead. The technical standards are ready and product development plans have been finalised. Wet commissioning of equipment has also been undertaken.

The plant will have a capacity to produce 8,000 tyres a day, according to the annual report.

Apollo Tyres signed an agreement in August 2006 with the Tamil Nadu Government for setting up the plant at Oragadam, an industrial suburb to the west of Chennai, at an investment of over Rs 500 crore. The company had said the plant would go on stream in June 2009.

Run on Flat technology
The companys annual report also says that it has commenced development of Run on Flat technology tyres and winter tyres, in the passenger car radial segment.

Run on flat tyres allow a vehicle to be driven even when a tyre has been deflated because of a puncture, at reduced speeds for a limited distances. These tyres have stiffer side walls that can bear the vehicles weight even when the air pressure is reduced. They are widely used in luxury cars.

For commercial vehicles, the company has conducted extensive tests on the Endurance premium radial truck tyre and it hopes to launch the product by next year.

The passenger car radial tyre capacity at the Baroda plant has been expanded to 16,500 tyres a day.

The plant will concentrate on high-end, premium products. The company has also commissioned its off the road tyre plant with an initial capacity of 7,400 tonnes a day.

Hungary project deferred
According to the annual report, the project planned in Hungary has been deferred due to the economic slowdown. The company was to invest Euro 200 million in a greenfield plant in Hungary. It recently acquired premium European tyre manufacturer Vredestein Banden of the Netherlands.

Apollo Tyres posted a standalone net profit of Rs 108 crore on an income of Rs 4,071 crore in 2008-09.

The annual report says that the company has come out with a new corporate identity designed by Wally Olins, a leading global practitioner in corporate identity and branding, who has advised companies such as Prudential, Renault and Volkswagen.
http://www.thehindubusinessline.com/2009/07/12/stories/2009071250970200.htm
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MRF BLAMES MILITANT GROUP FOR UNREST AT ARAKKONAM PLANT
The Economic Times
(July 13)

Chennai: Indian tyre major, MRFs Arakkonam plant, re-opened on May 27, 2009 after a lock out, is still caught in the grip of labour unrest mainly due to the agitation by a section of workmen led by a splinter group. Recently, the State Labour Minister, T M Anbarasan informed the Assembly, following the efforts of labour department, 904 workmen had returned to work by accepting the bipartite settlement with MRF workers welfare union. However, 494 workmen belonging to MRF-ULF have not resumed work. The plant has a total workforce of 3262 including contract labour and trainees. The Minister said a case is pending before Madras High court on the petition filed by MRF-ULF. It has been pressing for recognition as per ILO recommendations and insisting on signing a wage settlement with it. Stating the Government is keenly watching the development, the Minister told the house depending on the court order, Government will take further action. Meanwhile, MRF in a statement on Saturday said the Arakkonsm unit always had good industrial relations. It blamed a militant splinter group for carrying out a vilification and misinformation campaign against the industrial climate prevailing in Tamil Nadu and against MRF and Arakkonam factory. It said despite a popular wage settlement reached with recognised unions offering substantial benefits to the workmen, the splinter militant group, in the garb of trade union activities, had indulged in violence and tried to scuttle the accord. It had shown disrespect to the advice of Government and courts. The company said majority of the workmen, who saw the malafide intentions of the group, had resumed work. Thus, near normalcy has been restored in the production and supplies to OEs, dealers and other undertakings. The company said, " The management of MRF sincerely believes the misled workmen, the general public and the Government agencies should not be influenced by vilification campaigns, being relentlessly carried by the splinter group and their leaders."
Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
http://economictimes.indiatimes.com/News/News-By-Industry/Auto/MRF-blames-militant-group-for-unrest-at-Arakkonam-plant/articleshow/4769652.cms
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DISAPPOINTMENT FOR TYRE INDUSTRY
The Hindu Business Line
(July 13)

While the thrust on infrastructure and rural economy is welcome, the tyre industry is somewhat disappointed that the long overdue correction in the anomaly of inverted duty structure remains unresolved. The Customs duty on natural rubber (principal raw-material) is 20 per cent and while that duty on tyres (finished product) is at 10 per cent (or even lower under various trade agreements). Likewise, several other tariff inconsistencies in Customs duty on raw-materials of ty re industry which are not manufactured domestically or in cases where domestic production is inadequate to meet the , have remained unaddressed.

The tyre industry is optimistic that its concerns to arrest the declining trend in exports from India and on accelerating growth momentum will be addressed by appropriate policy interventions.

Stepping up allocation for National Highways Development Programme (NHDP) will provide the much-needed impetus to the developmental pace of national highways.
On the whole, the expectations from the Budget were high and the Finance Minister has tried to do a balancing act.

Raghupati Singhania, Chairman, ATMA
http://www.thehindubusinessline.com/2009/07/13/stories/2009071350440200.htm Go To Top

FINANCE & INSURANCE Go To Top- - - - -
OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top
DEREGULATION OF OIL PRICES WITH HUMAN FACE: DEORA
PTI
See this story in: Business Standard
(July 13)

Mumbai: The government has been making periodic changes in the prices of petrol and diesel depending upon international prices which effectively is as good as deregulation, Union Petroleum Minister Murli Deora said.

However, he indicated that overall deregulation of petroleum products, which includes kerosene and LPG used by the poorer section of the society, need to have human face.
Speaking to reporters after inaugurating International Dawoodi Bohra Trade Exhibition here, Deora said the recent Budget has provided as much as Rs 30,000 crore towards subsidies for kerosene and LPG.

The government has not raised kerosene prices for 10 years, he said and indicated that the fuel of the poor people would continue to be subsidised. He said the government has been making periodic changes in petrol and diesel prices depending upon international prices and it is as good as deregulation.

Responding to a query on whether the government has dropped plans for overall deregulation of petroleum prices, he said, deregulation need to have a human face.
As a policy, petroleum prices are regulated by the government which results in huge subsidy burden on the government.

While Deora tended to be soft on kerosene and LPG, he justified the recent increase in the prices of petrol and diesel arguing the oil companies fall under the Navaratna category and they cannot sell at a loss.

He pointed out the domestic prices were raised only when the international prices went up from about $50 a barrel to $75 a barrel.

He said the government could consider to reduce the prices if the international prices fall and stabilise at that level for 4\5 weeks. Deora said the government had earlier reduced the domestic prices of petrol by as much as Rs 10 per litre when there was a sharp fall in international prices.

Meanwhile, the minister announced that the entire city of Mumbai would get piped gas for cooking over the next two years. At present only about 380,000 homes in the city have been given piped gas connection.
http://www.business-standard.com/india/news/deregulationoil-priceshuman-face-deora/363760/
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BIO-DIESEL COS-OMC NEGOTIATIONS FACE PRICE ROADBLOCK
Ajay Modi
Business Standard
(July 13)

New Delhi: Bio-diesel companies are demanding a higher price than the government-mandated price for their product. Bio-diesel allows oil marketing companies (OMCs) to sell blended diesel. Cleancities Biodiesel, a Hyderabad-based company, with production capacity of 250,000 tonnes of bio-diesel at its Visakhapatnam plant, is in talks with a public sector OMC to supply 5 million litres of bio-diesel, but the deal is stuck on price.
Cleancities is seeking a significantly higher price than Rs 26.50 per litre fixed by the government in its biofuel policy. OMCs cannot enter a purchase agreement at higher than govt-mandated prices.

At the current price of Rs 26.50 a litre, we are not even able to cover the raw material cost. We are not in a position to supply at an ex-factory price less than Rs 32 a litre, said Srinivas Prasad Moturi, chairman and CEO. He said OMCs should buy at a price which is market-determined, the way they buy crude oil.

Blending of bio-diesel on commercial scale has not picked up. Indian Oil Corporation (director) marketing Daga said, Blending can be done only if it is commercially feasible for us and at a higher price it is not viable for us.

Moturi said his firm could supply biodiesel at Rs 1-2 a litre cheaper than diesel. The average diesel price is Rs 36.15 and even if the OMCs buy at a landed cost of Rs 34-35, they would save money and promote green energy, he added.

Some of the companies that have invested in setting up biodiesel facilities include Emami Group, Garware Chemicals, Naturol and Universal. Some like Emami has not begun commercial production due to lack of blending, while others like Cleancities and Naturol have ventured into the export market, where demand is high.

In the Buget, Finance Minister Pranab Mukherjee had announced reduction in Customs duty on bio-diesel from 7.5 to 2.5 per cent. The Budget also abolished dual taxation on bio-diesel.

The Union Cabinet approved the National Policy on Biofuel on September 12 last year. The policy aims to raise blending of biofuels with petrol and diesel to 20 per cent by 2017. Currently, only ethanol blending (at 5 per cent) with petrol is being implemented and there is no blending of bio-diesel. The use of biofuels, which is regarded as a green energy, in petrol/diesel, is aimed at reducing the countrys demand for fossil fuels.
http://www.business-standard.com/india/news/bio-diesel-cos-omc-negotiations-face-price-roadblock/363767/ Go To Top

INTERNATIONAL NEWS Go To TopGM FIGHTER PILOT LUTZ AT 77 LOOKS TO SALVAGE AUTOMAKER'S BRANDS
Bloomberg
See this story in: Business Standard
(July 13)

Michigan: General Motors Co Vice Chairman Bob Lutz waived his plan to retire at age 77 to reprise his ultimate car guy role at the reincarnated automaker and return to his marketing roots.

Marketing is my occupational specialty, its what I was trained in, its what I did the first 20 years of my career, said Lutz, who has worked at all three US automakers over the past four decades. I was in product development almost illegally.

The new GM on Saturday emerged from bankruptcy protection after 39 days, focusing on four brands in a bid to return to profitability after $88 billion in losses since 2004. Chief Executive Officer Fritz Henderson called Lutz critical and joked that the company had to retain the former Marine fighter pilot to prevent him from recycling through another set of automakers.

Lutz will be responsible for crafting the images for GMs four remaining brands, Chevrolet, Cadillac, Buick and GMC. As the leader of design at GM, his stamp has been on cars such as the Chevrolet Malibu and Cadillac CTS sedans, both of which were greeted with praise from auto critics. Hes also the champion of the electric Chevrolet Volt, a car that GM plans to sell by the end of next year.

We have to be much bolder, much less risk-averse, Lutz said. Very frequently the General Motors way is to sanitize the message to the point where no one is offended. But when no one is offended, theres no interest in the message anymore.

Lutzs primary job will be advertising, communications and marketing, areas that previously fell under several different officers. Hell still have an advisory role with product development, which will be led by Tom Stephens, who was named as the replacement in February when Lutz first announced his intention to retire.

Marketing the remaining brands using traditional messages wont work for Lutz, said John Grace, president of consulting firm BrandTaxi in Greenwich, Connecticut.
The minute that I see an ad with a car driving around the bend in a mountain with someone saying Theres nothing like a Chevy I am going to throw up, Grace said. From a positioning standpoint, honesty works. Theyd sell a lot of cars if they just said: Its cheap, but its good.

Lutz said he has plenty of fight left, fueled by optimism about the auto industrys future. His dad, a Swiss banker, worked regularly until just weeks before his death at age 94. Lutz said hes in much better shape than his father was.

As long as I can function physically and mentally, whats the point? Lutz said on Saturday in an interview in Detroit. I vastly enjoy working more than not working.
Lutz prides himself on speaking bluntly both to reporters and to the public. In his 1998 book Guts, he spelled out his laws of business including the customer isnt always right. Lutz in 2005 told a group of auto analysts that Pontiac and Buick were damaged brands.

He will usually come up with a great quote and sometimes its to the detriment of Detroit-based GMs reputation, said Maryann Keller, president of auto consulting firm Maryann Keller & Associates in Stamford, Connecticut.

Reporters like him a lot, but sometimes because he says things he shouldnt, she said. It will be interesting to see how he fares in that role. I find it odd.
Lutz said that his candor isnt about to change.

He seems to have the ultimate car guy job now, said Aaron Bragman, an analyst with IHS Global Insight Inc in Troy, Michigan. Hes responsible for making sure that GMs stuff is cool and that customers are thrilled.

Grace, of BrandTaxi, said he expects Lutz to be successful. They have been whacked upside the head, Grace said. They have their marching orders.
http://www.business-standard.com/india/news/gm-fighter-pilot-lutz-at-77-looks-to-salvage-automaker/s-brands/363729/
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VW SWEETENS BID FOR HALF OF PORSCHE AG: REPORT
Reuters
See this story in: The Economic Times
(July 12)
Frankfurt: Volkswagen has sweetened its bid to purchase almost half of sports car maker Porsche AG and is prepared to offer considerably more than 4 billion euros ($5.58 billion), Germany's Der Spiegel reported. The weekly magazine wrote on Saturday that Wendelin Wiedeking, the chief executive of heavily indebted parent Porsche SE, still considered the amount insufficient in talks over the possible sale of a 49.9 percent stake in its healthy, wholly-owned manufacturer of 911 Carrera coupes. Wiedeking prefers a rival concept to reduce debt that entails the aid of Sheikh Hamad bin Khalifa al-Thani, ruler of the natural gas-rich Gulf state of Qatar. Der Spiegel wrote the sheikh has stated his willingness, via an investor agreement, to offer 7 billion euros for both a stake of just over 25 percent in the listed holding and Porsche SE's cash-settled options in VW stock that Wiedeking used to hedge the cost of his failed stealth takeover of VW. An industry source told Reuters on Saturday the 7 billion euros was a realistic amount. Separately Spiegel's closest rival Focus reported that Volkswagen was working on a legal concept of how to save the Porsche and Piech families that own Porsche SE some 1 billion euros as part of a sale to VW, money that otherwise would be lost as tax revenue for the finance ministry. The news emerged as the rival Porsche and Piech clans get set for a supervisory board meeting on July 23 that should decide on the future of the company. Unanimity in advance German newspapers Frankfurter Allgemeine Zeitung and Stuttgarter Zeitung both reported that because of a contractual agreement between the two factions not to split their votes at board meetings, the families would meet in advance to decide. Porsche and Volkswagen declined to comment. Volkswagen reportedly originally bid between 3 billion and 4 billion euros for the stake, in a deal that would reverse the balance of power following Wiedeking's ambitious attempt to acquire 75 percent of VW's voting stock. In the process, his automotive holding company racked up about 9 billion euros of net debt by the end of January, trying to swallow its much bigger rival Volkswagen before the financial crisis turned the tables on the would-be predator. Now that its gamble to take over VW has backfired, Porsche is fighting for influence in a potential union with the world's No.3 car company and its stable of brands spanning Bugatti and Lamborghini to the Volkswagen Golf.
http://economictimes.indiatimes.com/News/International-Business/VW-sweetens-bid-for-half-of-Porsche-AG-Report/articleshow/4767883.cms
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TOYOTA MAY CLOSE CALIFORNIA PLANT VENTURE
Bloomberg
See this story in: Business Standard
(July 13)

Tokyo: Toyota Motor Corp, the worlds largest automaker, may close New United Motor Manufacturing Inc, the California venture abandoned by General Motors Co, as its US sales slump amid the recession.

Were considering various options on the plant including whether its economically feasible to build cars alone without GM, the company said in a statement released on Saturday. We regrettably must seriously consider dissolving the venture under the current business environment.

Toyotas response came after GM emerged from bankruptcy to become majority-owned by the US government. The Toyota City, Japan-based automaker aims to decide by the end of July whether to become sole operator of New United Motor, also known as Nummi, after GM quit the venture June 29, a person familiar with the plan said earlier this month.

Nummi, shared by GM and Toyota since 1984, was Toyotas first US auto-assembly factory and helped the company answer US critics objections to imports. Nummi, the only large auto- assembly plant on North Americas West Coast, has the capacity to make 420,000 cars and pickups each year.

Recession and rising unemployment pushed down auto sales by 35 per cent in this years first six months, to the lowest since at least 1976, according to Bloomberg data. Toyotas US sales slipped 38 per cent in the first half.
http://www.business-standard.com/india/news/toyota-may-close-california-plant-venture/363731/
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TOYOTA MAY DROP US JOINT VENTURE WITH GENERAL MOTORS Reuters
See this story in: The Economic Times
(July 12)
Detroit: Toyota Motor Corp said on Friday it would consider liquidating its stake in a California-based joint venture with General Motors Corp after the U.S. automaker pulled out of the venture.
Toyota has been mulling options for the Fremont, California auto plant commonly known by its acronym NUMMI for the New United Motor Manufacturing Inc since GM cut operating ties to the plant in late June. GM and Toyota had been 50-50 partners in the northern California auto plant since 1984.
We need to determine whether it can be economically feasible to contract with NUMMI without GM, Toyota said in a statement. Under the current business circumstances, Toyota regrettably must also consider taking necessary steps to dissolve the joint venture. Toyota spokesman Steve Curtis said the automaker hoped to make a decision on NUMMI as soon as possible.
The news came as a new General Motors emerged from bankruptcy protection on Friday , by completing the sale of its best assets to a company funded by the U.S. Treasury. The plant, which employees over 5,000 workers, builds the Corolla sedan and the Tacoma compact pickup truck for Toyota. The Pontiac Vibe the only GM vehicle built at the plant will go out of production in August under a previously announced plan by GM. NUMMI has been a model of U.S.-Japan industry collaboration as long as 25 years, but GMs decision to abandon NUMMI and discontinue its production of the Pontiac Vibe have prompted a set of difficult and complex decisions for Toyota, Toyota said.
Toyota, which surpassed GM as the worlds top automaker in 2008, previously said it wanted to keep the joint venture and expressed disappointment at GMs decision , and said it would consider whether to continue operating the plant on its own.
GM and Toyota set up the joint venture 25 years ago when both sides had a clear stake in its success. The U.S. automaker was hoping to learn from Toyotas lean manufacturing techniques, which minimises waste and inventory to keep costs down. Toyota, meanwhile, needed a local production base at a time when Japans export boom was under scrutiny.
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OPEL PURCHASE UNLIKELY BY MID-JULY: REPORTAFP
See this story in: The Hindu Business Line
(July 12)
Berlin: Canadian auto parts maker Magna is unlikely to meet its target of mid-July for taking over Opel from General Motors, a press report said on Saturday, quoting a source in the Economy Ministry. Too many issues are still unresolved and the likelihood of a contract being signed next week is extremely low, the daily Bild quoted its source as saying.

Magna General Director, Mr Siegried Wolf, told Thursdays edition of the daily Rheinische Post, We are aiming for the date of July 15 to present documents that would seal a deal.
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RHJ SET TO SUBMIT NEW OFFER FOR OPEL
Reuters
See this story in: The Economic Times

Berlin: Belgian holding company RHJ International is readying an improved offer for General Motors unit Opel which foresees preserving all of its German plants, a newspaper reported on Sunday.
Without citing its sources, Germanys Bild am Sonntag said RHJ would require 3.8 billion euros ($5.3 billion) in government guarantees under its new plan and would cut just under 10,000 Opel jobs across Europe. An RHJ spokesman was not immediately available to comment on the report. The company has yet to confirm or deny ever having bid for Opel.
Canadian auto parts supplier Magna International Inc is leading contender for Opel after signing a preliminary memorandum of understanding with GM in May. But the German government, which agreed to supply 1.5 billion euros in bridge financing to Opel while a deal was finalised, has said the race remains wide open. It has encouraged rival bidders, such as RHJ, Chinas Beijing Automotive (BAIC) and Italy's Fiat SpA, to come back with improved offers, raising the pressure on Magna. Reuters obtained a non-binding offer document from BAIC last week in which the group lays out a plan to use Opels brand and technology to tap the huge Chinese market. Despite noise from rivals, Magna has pressed ahead with talks on securing a framework deal with GM, which itself emerged from bankruptcy on Friday.
The head of Magnas European business said last week his company was on track to reach an agreement with GM and was targeting July 15 as a date for a preliminary deal. But industry sources have told Reuters that Magna could delay a board meeting to approve the Opel deal.
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CHINA OVERTAKES US AS WORLD'S LARGEST AUTO MARKET
PTI
See this story in: The Economic Times, The Financial Express, The Tribune, The Pioneer, The Times of India, mint
(July 13)

Beijing: China has for the first time overtaken the United States as the worlds largest auto market with sales of locally-made vehicles surging 17.7% to 6.1 million units in the first six months this year. Sales of Chinas domestically-made automobiles topped 1.14 million units in June, up 36.5% over the figure a year earlier, the fourth month in a row surpassing the 1.1 million units mark, the China Association of Automobile Manufacturers (CAAM) said. Chinas vehicle sales in June rose to 1.14 million, the second-highest month to date after Aprils 1.15 million units, out of which passenger car sales hit a monthly record of 872,900 units, it said. Total auto sales for the first half of the year (January-June) rose to 6.1 million, up 17.7% from a year earlier, out-pacing the US market, where passenger car sales in the same period plunged to 4.8 million amid the economic slowdown. CAAM said June sales of such automobiles represented an increase of 36.5% on the year.

China manufactured 15.2% more automobiles in the first half of the year as compared to 2008, an increase CAAM said is due to a government stimulus package to boost domestic spending. The good performance by the automobile industry in the first half of this year is mainly because of the efficient measures China had put in place to counter the financial crisis, and the different stimulus policies targeting the automobile industry, CAAM said in its report. China unveiled a $585 billion stimulus package last November and 10 specific industry stimulus plans for autos, iron and steel, petrochemicals and other sectors this year to shore up the Chinese economy, Xinhua news agency noted. The association also said that while exports of automobiles remained in decline, it was cautiously optimistic about Chinese-made auto sales on the domestic market in the second half of 2009. It forecast that sales will exceed 11 million vehicles for the whole year, topping its earlier forecast of 10.2 million vehicles.
http://economictimes.indiatimes.com/International-Business/Chinese-auto-market-overtakes-US/articleshow/4770230.cms
http://www.financialexpress.com/news/china-becomes-worlds-largest-auto-market/488433/
http://www.tribuneindia.com/2009/20090713/biz.htm#4
http://www.dailypioneer.com/188659/China-overtakes-US-to-become-worlds-largest-auto-market.html
http://timesofindia.indiatimes.com/NEWS-Business-International-Business-China-overtakes-US-to-become-worlds-largest-auto-market/articleshow/4769638.cms
http://www.livemint.com/2009/07/12145604/China-beats-US-in-world8217.html Go To Top

ECONOMY & FINANCE Go To Top
PM CONFIDENT OF 8-9% GROWTH DESPITE CRISIS
The Financial Express
(July 12)
Prime Minister Manmohan Singh on Saturday said he was confident that India would be able to sustain a growth rate of 8 to 9% this fiscal and come out of the current crisis stronger.

He, however, warned that the road ahead was going to be difficult. It is not going to be easy but I am convinced that Indias savings rate, which is as high as 35% with a normal capital output ratio of 4:1, we should be able to sustain, with a little bit effort, a growth rate of about 8 to 9% notwithstanding the difficulties on the international front, Singh told reporters accompanying him on his way back home from a four-day visit to Italy.

Against the backdrop of the world attempting a recovery from the recession caused by the financial crisis in the heart of the developed world, the Prime Minister said he had discussions with the leaders of G-8 and G-5, Egypt and African countries and while there are some signs of recovery, the world economy is still a long way from recovering the earlier growth momentum and there must be questions whether that will soon be possible for the global economy.

He said in his statement at the G-8 summit, he mentioned that all available indicators for 2009 pointed to a deceleration in the US economy and the EU economies, which would affect the global environment for the development of the third world countries. (However) I am confident that our domestic economic strengths will enable us to return to our earlier path of rapid and inclusive growth, he added.
http://www.financialexpress.com/news/pm-confident-of-89-growth-despite-crisis/488197/ Go To Top