| INDIAN AUTOMOBILE INDUSTRY | |
| INDUSTRY Volatile auto stocks give 100% return in 4 months Tatas to tighten management grip on JLR Tatas seek private sector bank guarantees RoadMin to extend deadline for BS-III compliancy IITs only Indian brand to gain global recognition, says Rahul Bajaj FTA with Asean should benefit India too: Bajaj INTERVIEWS/FEATURES CARS, SUVs, MUVs Honda, Toyota India operations decelerate with economy Mercedes-Benz, BMW fight it out for top slot BMW sales jump 14% in Jan-July, top in high-end segment COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY Auto component suppliers bet on spare parts market Srei Infrastructure hopes to complete land purchase for auto component SEZ by September | ALLIED INDUSTRIES Apollo to make Dutch designer car tyres in Chennai Dutch buy, capacity expansion positives for Apollo Tyres FINANCE & INSURANCE INTERNATIONAL NEWS VW to pay 3.3 bn euro for Porsche stake Swedish consortium eyes Volvo car unit ECONOMY & FINANCE Too early to act on inflation: Subbarao
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| INDUSTRY Go To Top Pawan Bali Asian Age (Web Edition) (Aug 15)
New Delhi: A deficient monsoon could hit the recovery of the auto sector. The Society of Indian Automobile Manufacturers (Siam), director-general, Mr Dilip Chenoy, said that historically, a weak monsoon has dented auto sales.
"It is too early to say what will be the impact of a weak monsoon on auto sales. It is only during the harvest season which is during the November-December period that the actual impact, if any, will be felt," said Mr Chenoy. He was hopeful that the coming festival season will be good for the auto sector.
After a bad 2008, car sales in July rose by 31 per cent, the fastest in two years helped by lower interest rates and the launch of new models by automakers.
This was the sixth consecutive monthly rise in car sales. Toyota Kirloskar Motors, deputy managing director (marketing), Sandeep Singh said that currently there is no problem.
However, he said that if the present situation persists till the end of August then it will be a cause for worry.
"We will have to wait for sometime to see how far the economy will be affected," said Mr Singh.
Our Chennai correspondent reports that the countrys second-largest bike manufacturer Bajaj Auto expects lower sales from the rural market because of bad draught situation.
Mr Rahul Bajaj, Bajaj Auto chairman, said, "Farming community are buyers of our two-wheelers. During a good harvest, our sales are always better. Now more than 150 districts have affected. If the monsoon is not improving in a couple of weeks, the sales of two-wheelers is going to be adversely affected." http://www.asianage.com/presentation/leftnavigation/news/business/drought-to-hit-auto-recovery.aspx
VOLATILE AUTO STOCKS GIVE 100% RETURN IN 4 MONTHS The Pioneer (Web & Print Edition) (Aug 15)
TATA MOTORS MAY BUY OUT THONBURI'S STAKE IN THAI JV PTI See this story in: The Economic Times (Web & Print Edition), Business Standard (Web & Print Edition), The Hindu Business Line (Web & Print Edition), The Pioneer (Web & Print Edition) (Aug 17)
New Delhi: The country's largest auto maker, Tata Motors, may buy the entire stake of its partner Thonburi Automotive in the Thailand venture in case the overseas entity is unable to raise fresh equity. http://www.thehindubusinessline.com/blnus/02161502.htm http://www.dailypioneer.com/196156/Snapshots.html
The Economic Times (Web Edition) See similar story in: The Statesman (Web Edition), Asian Age (Web & Print Edition) (Aug 15)
Indias largest auto maker, Tata Motors plans to spend around Rs 8,000 crore over the next 3-4 years on capital expenditure and getting new products in the car and truck and bus segments. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=264803
TATAS TO TIGHTEN MANAGEMENT GRIP ON JLR PTI See this story in: Business Standard (Web & Print Edition), The Times of India (Web & Print Edition) (Aug 17)
London: Having secured the much-needed funds for Jaguar Land Rover (JLR) without the UK government help, its Indian parent, Tatas, are now tightening their management control on the car maker, but are unhappy over the way their request for help was handled by the UK authorities, a report said.
Tata feels that it has not been well treated. It is one of the biggest inward investors in the UK and yet it has been made to feel like a company that would take the money and run, a report in the Sunday Times quoted one industry source as saying.
Tata executives are understood still to be fuming at how the government handled their request for assistance when the credit crunch and recession triggered a collapse in sales, the report said.
In the midst of global economic crisis, Jaguar Land Rover was also hit hard on its sales and consequently started looking for funds to support the car maker, leading to Tatas seeking UK governments help in terms of a loan guarantee.
After months of negotiations, during which Tatas are said to have made clear that it did not want any bailout but only a loan guarantee from the UK government, Tata Motors said that it has arranged for the required funds on its own.
With the positive trend in the external environment in financial markets and improvement in general liquidity, these arrangements (the funding requirements for Jaguar Land Rover) have been and are expected to be concluded without necessitating guarantees from the UK government, for which discussions had been ongoing for some time, Tata Motors said in a statement on August 11.
The Sunday Times report said Tata Motors was now set to take tighter management control of Jaguar Land Rover after withdrawing from talks over the government support. Tata Motors is understood to have brought in senior executives to work alongside JLRs team to improve cash management and bring down the companys break-even point, it added.
They will be helped by consultants from KPMG and Roland Berger, the German consulting group that specialises in the automotive industry. Sources close to Tata say that JLRs research and development programme and its plans for new models, including a new sports car and small Land Rover, will not be cut, it added. http://www.business-standard.com/india/news/tatas-to-tighten-management-gripjlr/367181/ http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=264898
TATAS SEEK PRIVATE SECTOR BANK GUARANTEES Sangita Mehta & Lijee Philip The Economic Times (Web Edition) (Aug 16)
Mumbai: Tata Motors, the countrys largest commercial vehicle maker, has sought guarantees from Indian state-owned banks to raise money to meet working capital needs and upgrade technology for the Jaguar and Land Rover facilities it acquired last year. Under the proposal, the London offices of the banks will issue guarantees to enable the company borrow 700 million ($1,156 million).
In a separate move, JLR has also finalised a 75 million, three-year loan for technology upgradation from Burdale, a subsidiary of Bank of Ireland. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/News-By-Industry/Auto/
Prashant Mahesh The Economic Times (Delhi Print Edition) (Aug 16)
Mumbai: The global financial turmoil has not made things easy for Tata Motors. On one hand, it had to finance the all cash $2.5 billion acquisition of Jaguar Land Rover (JLR), while on the other, the companys bread and butter commercial vehicle (CV) market was slowing down. The protest in Singur over the allotment of land for the Tata Nano project was a source of concern. If there was a worry on how Tata Motors would finance the JLR buyout, there was also apprehension on how it could sell the Nano at a price tag of Rs 1 lakh, when commodity prices, particularly that of steel, were moving upwards. All these factors together took a toll on Tata Motors with its stock dropping to Rs 122 in November 2008. The companys financial numbers were not any better. If Tata Motors on a standalone basis posted a profit of Rs 1001 crore for March 2009, on a consolidated basis it posted a net loss of Rs 2,505 crore. The JLR business alone reported a loss of Rs 1,777 crore. Early, this month, global rating agency, Standard & Poors cuts its long-term rating on the automobile majors senior unsecured notes from B to B+. Not something that made a pretty picture. This is a sign of confidence since institutions are comfortable lending to them without any guarantees, says Vaishali Jajoo, Automobile Analyst, at Angel Broking. With commercial vehicles, staging a turnaround in the last two months, Tata Motors has shown a sequential increases in volumes, indicating, better days ahead, she adds. The numbers do tell a story. For July, 2009, CV sales for Tata Motors stood at 30,313 as compared to 25,219 for July 2008 a 20% increase on a year-on-year basis. For the period April to July 2009, it sold a total of 1.07 lakh vehicles as compared to 1.04 lakh in the same period in the previous year, a marginal increase of 2%. For the quarter ended June 2009, profit after tax was Rs 513.76 crore, as compared to Rs 326 crore, in the same period in the previous year an increase of 57.5%. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
S Kalyana Ramanathan Business Standard (Issue & Insight) (Aug 17)
It is a fad amongst successful executives to plan an early retirement so that they can go angling or write a book. Ravi Kants case is slightly different. He turned 65 a couple of months ago and stepped down from the post of managing director of Tata Motors Indias largest automobile company to become its non-executive vice-chairman. Still, he is unlikely to get the time to fish for trout in mountain streams or pen his memoirs.
Kant has taken on what could possibly be the biggest challenge of his illustrious career turning around Jaguar Land Rover. He has promised to turn around Tata Motors most-debated acquisition in about two years from now.
Given that JLR was profitable until the first half of 2008, it might seem a bit of a stretch to call its turnaround a daunting challenge. But then the time frame Kant has promised surely makes it harder than what it seems. JLR CEO David Smith, in a recent interview to Business Standard, did not share Kants optimism. Smiths doubts are not about JLRs capabilities but have more to do with the state of the global economy. For the first time, after fifteen long months, the car industry in the United Kingdom posted growth in retail sales last month. But during this period, JLR sales continued to slip. One cannot look for a clearer sign that consumers are still not ready to splurge on luxury and premium cars.
JLR was not served to Tata Motors on a silver platter. The acquisition was sealed after nearly ten months of negotiation with Ford Motor Company. The price at $2.3 billion (Rs 11,000 crore in todays value) was not cheap either. JLR insiders now tell that even though it was Tata Motors Chairman Ratan Tatas vision to buy JLR, it was Kant who, from an executive standpoint (as the companys managing director), chased it to the finishing line and brought home two of the worlds most luxurious automobile brands. Kant had done similar work before. He played a key role in expanding Tata Motors global footprint the acquisition of Daewoo Commercial Vehicles in South Korea and Spanish bus and coach body manufacturer Hispano Carrocera. Tata Motors executives say that Kant has his turnaround strategy ready which will begin to unfold in the next few months. Of course, they are unwilling to share details.
He has already made the right moves, though. In 2008, as Tata Motors moved closer to bagging JLR, one the earliest milestones the team from India achieved was to convince the unions in the UK that they meant business. Union leaders play a proactive and constructive role in the UK and, therefore, management takes them very seriously. Tata Motors used this to its advantage. Even before Fords board could decide to sell JLR to Tata, the unions backed the Indian group. Kant met with workers at all the four locations of JLR in the UK. He went one step further. A team of union leaders from the UK visited India and met with their counterparts in Tata Motors. Des Quinn, the lead negotiator for the unions, now recollects how the unions from the beginning were convinced JLR would be safe in Tatas hands, something he couldnt say about other suitors for JLR.
Kants rise in the Tata Group was swift. He came to Tata Motors in 2000 when he was 57. Starting as the head of commercial vehicles division of Tata Motors, he became the managing director in 2005 around the same time that the Tata Nano had begun to take shape. Prior to this, his stint in the group was with Titan Industries. Apart from this, a good part of his career was spent with LML, Philips, Hawkins Cookers and Kinetic Engineering. Kant hit the limelight when he made LML a force in the scooter market which had for long been the monopoly of Bajaj Auto. He brought a new product line, spruced up the dealerships and revved up the advertising. Now, of course, the company has gone into oblivion.
History tells us that car makers around the world have had to toil for decades to put their luxury brands on the world map. Toyotas Lexus, BMW and Daimlers Mercedes have invested obscene amounts of money building quality, reliability and brand value. Tata Motors, which is one of the youngest car markers in the world, took a short cut to this elite world of luxury cars. Now it is time to see if Kant can help it hold on to the marquee brands. Even a seasoned car maker like Ford could not hold on to these two mega-brands for long it had bought Jaguar in 1989 and Land Rover in 2000. Kant has his task cut out. http://www.business-standard.com/india/news/s-kalyana-ramanathan-can-this-
ROADMIN TO EXTEND DEADLINE FOR BS-III COMPLIANCY Gayatri Verma & Gunjan Pradhan Sinha The Indian Express (Web & Print Edition) (Aug 17)
New Delhi: The government may not be able to push its policy for lower emissions across the country with the road transport and highways ministry thinking about postponing the date for ushering in Bharat Stage (BS) III norms across the country. The ministry plans to make all new vehicles across the country BS III-compliant by April 1, 2010. Eleven mega-cities are, however, supposed to graduate BS IV norms. The delay comes on the back of unwillingness of certain oil companies to supply the required fuel to the countrys northeast region.
Top oil companies have said they will not be able to supply the right fuel for BS III in the northeastern states. This is despite the fact that automobile companies have already geared their production lines towards BS III, a senior government official told The Indian Express on condition of anonymity. The government is considering extension of the date for BS III to kick in by at least six months.
Assam, Arunachal Pradesh, Mizoram, Nagaland, Manipur and Bihar rely on two major refineries at Guwahati in Assam and Barauni in Bihar. The upgradation of these refineries is likely to take some time and fuel supply would not kick in by the target date of April 1, 2010, a petroleum ministry official said. While suggestions have been made for supplementing supply with domestic imports, the logistics, however, need to be worked out, the official added.
As far as BS IV compliancy is concerned, the date may not be changed after all providing some respite to auto companies who have already geared their production line for the roll out. The ministry may allow the mega-cities, which include Delhi, Kolkata, Hyderabad and Bangalore, to role out BS IV-compliant vehicles, the official said.
The road map for the country was set out by the Mashelkar Committtee on emission standards in 2004. The report marks out Delhi, Kolkata, Mumbai, Chennai, Hyderabad, Ahmedabad, Surat, Pune, Bangalore, Kanpur and Agra for stricter emission standards due to the high levels of pollution in these cities. According to Mashelkars schedule, new vehicles in these cities were required to meet Euro III norms by 2005 and Euro IV emission norms by 2010. According to some industry sources, if the fuel is not available, companies may not offer warranties for Euro IV vehicles that are running on Euro III fuel. http://www.indianexpress.com/news/RoadMin-to-extend-deadline-for-BS-III-compliancy/502814
IITS ONLY INDIAN BRAND TO GAIN GLOBAL RECOGNITION, SAYS RAHUL BAJAJ Business Standard (Web Edition) See similar story in: The Pioneer (Web & Print Edition), The Times of India (Web Edition), Hindustan Times (Web Edition), The Financial Express (Delhi Print Edition), The Economic Times (Delhi Print Edition) (Aug 16)
Chennai: Bajaj Auto chairman Rahul Bajaj has said that IITs are the only Indian brand to gain global recognition and expressed hope that products manufactured in the country would be widely accepted throughout the world in future.
The Indian Institute of Technologies (IITs) are our only brand to have gained global recognition. Tatas may have brought the Jaguar. But for us, IITs are the only brand which has gained worldwide recognition, he said.
I hope that in future, Indian products would be widely accepted throughout the world, he said, speaking after inaugurating facilities for students of Great Lake Institute of Management at Manamai village, about 63 km from here on Friday. He stressed the need to take steps to provide jobs in the manufacturing sector, where there are many opportunities.
We not only need to grow, but also be able to compete with other developing countries. Bajaj expressed concern over the low per capita income in India, which stands at $1,000 compared to USA, where it is $4,000 and said poverty should be eradicated and the minimum needs of an individual taken care of.
Later, Rahul Bajaj and his brother Mathur Bajaj, Vice Chairman of the company formally inaugurated an amphitheatre, a cafeteria and a student activity centre. http://www.dailypioneer.com/196054/IIT-only-Indian-brand-to-gain-global-recognition-Rahul-Bajaj.html http://www.hindustantimes.com/SectionPage/Business.aspx?SectionName=BusinessSectionPage
FTA WITH ASEAN SHOULD BENEFIT INDIA TOO: BAJAJ Deccan Herald (Web Edition) (Aug 17)
Chennai: The Free Trade Agreement (FTA) signed with the Association of South East Asian Nations (Asean) would make India more competitive and would be beneficial for both India and Asean, said the Bajaj Auto chairman, Mr Rahul Bajaj, said. Mr Bajaj said that the trade agreement with the leading industrial bloc would make Indian industries more competitive to enlarge its market share. He was speaking on the sidelines of the inaugural function of a management college here. It may be noted that Mr Bajaj was one of the prominent industrialists vehemently opposed to the liberalisation of Indian industry in early 90s. After five years of intense negotiations, India and the Asean signed the agreement on August 13. According to the agreement, both sides will reduce tariffs for 80 per cent of goods under trade by 2010 and will end tariff by 2012. For the remaining goods, 10 per cent of goods tariff will be reduced to five per cent by 2015. The agreement will take off from January 2010 and is expected to boost trade between the Asean countries and India. The Bajaj Auto vice-chairman, Mr Madhur Bajaj, said the companys proposed light commercial vehicle would hit the market next year. We have already a 3-wheeler pick up delivery vehicle. We are designing a one-tone vehicle considering the market demand and competition. It will hit the market next year, he said. http://www.deccanchronicle.com/business/fta-asean-should-benefit-india-too-bajaj-197
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| INTERVIEWS/FEATURES Go To Top Lets assume that I have an alter ego. One part of me is a loving husband, a dutiful father and a faithful employee. The other part is an insomniac, a rebel and a nutty explorer. The world is my terrain. I feel at home in a nightclub. I love ferrying my wifes silly shopping back home. And I also love my strong morning coffee in the lost recesses of Ladakh. So, what do I drive? No offence to any of the others. But I love my X3 20d. Its compact. Its got the badge that works in this country. And its simple. No confusing sophistication in the cabin, no big talk, no unnecessary accessories. And oh yes, it has a stereo that works just fine and a spirit that keeps pace with mine. So, last weekend, we both ran down to some far-flung place in Rajasthan. Barbatta. Thats how the locals pronounced it. Around 150 km of smooth tarmac, 50 km of off road, and 50 km of peak morning traffic. We feasted on some freshlycaught fish in the evening with howling jackals for company, and on our drive back played a few notes of Beethoven for effect. Actually, the blood moon made us do that. And even at 200 kph, the X3, which is supposed to behave like a SUV, held its line without whipping up sweat. Now, why am I praising a SAV (Sports Activity Vehicle), which behaves like one and costs much more than many bigger SUVs? Versatility is the answer. The X3 is small in comparison to some of the conventional SUVs here perfect for the cities that we stay in. It can seat five in comfort; four would have been ideal but five is not a big problem. It has a tall cargo area, which means stacking things such as golf bags, upright, is a breeze. It impressed me with its fuel efficiency, which I suspect to be 12-14 kmpl. It tackled the rough with the finesse of a mountain goat and carved corners like a thoroughbred. Now what makes the X3 do the things that it does so well? The secret lies in BMWs xDrive permanent all-wheeldrive system. The X3 20d is endowed with a 2.0 L four-cylinder oil burner that develops a maximum output of 177 bhp and peak torque of 350 Nm. The xDrive all-wheeldrive ensures fully variable front-to-rear power distribution. Translated, it means that power of the engine is directed precisely to where it can be used the best and with maximum effect. And the xDrive does this exceptionally fast. This results in better traction on all surfaces with the system counteracting any over or understeer in bends right from the start. Also, if you are interested in the details, the X3 comes with DSC (Dynamic Stability Control). One of the interesting features that I liked is that the DSC optimises the effect of the brakes by increasing brake pressure as required in response to even the slightest fading under extremely high brake temperatures. Also, Regular Dry Braking, in turn, a function activated automatically as soon as the driver switches on the windscreen wipers, optimises brake performance in the wet. Then, there is the Dynamic Traction Control (DTC), which intentionally allows the drive wheels to slightly spin in mud or snow to make the job easier for the driver in tight situations. But jargon apart, there are certain simple but thoughtful features that make the X3 a pleasure to drive. The perfectly placed drivers seat that provides a fantastic view of things around, the precise albeit heavy steering that makes high speed driving look easy and the huge sun roof which makes jungle safaris that much more exciting. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
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| CARS, SUVs, MUVs Go To Top Chanchal Pal Chauhan The Economic Times (Web & Print Edition) (Aug 17)
New Delhi: Small car major Maruti Suzuki India (MSI) will compete with big car makers, such as Honda and Toyota, when it launches the sports luxury car Kizashi in India in 2010. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
N. Ramakrishnan The Hindu Business Line (Web & Print Edition) (Aug 16)
Chennai: The two leading Japanese car-makers Honda and Toyota saw the fortunes of their Indian operations dip in 2008-09, with Honda Siel Cars India Ltd reporting a loss for the year, while Toyota Kirloskar Motor Pvt Ltd saw its profit fall 41 per cent.
The vehicle sales of the two companies fell, resulting in a drop in income. Both the companies have said in their annual reports that their operations were affected by the general economic slowdown, rising input costs and the weakening rupee.
Sedan models Last year, Honda Siel sold two sedan models the mid-size City and the luxury Accord and the SUV CR-V.
Toyota sold the Corolla sedan, the Camry luxury car, the Innova multi-purpose vehicle, and the Prado SUV.
This financial year, Honda has launched its premium hatchback Jazz, while Toyota has introduced the premium SUV Land Cruiser and plans to launch its small car towards the end of 2010.
Capacity plans According to the Honda Siel Cars 2008-09 annual report, the company postponed its plans to increase capacity through a new plant in the Tapukara industrial area in Rajasthan.
However, it began operations of its press (body) parts facility with an installed capacity of 1.70 lakh car sets a year and the powertrain facility, both at Tapukara, as scheduled in 2008-09.
The production at the Greater Noida plant in Uttar Pradesh was scaled down to maintain lean operations.
Weak rupee impact As a consequence of the lower demand, rising input costs, especially due to weakening of the Indian rupee, and restricted ability to pass on higher costs to the market, the companys financial results from operations, for the year 2008-09, were impacted, the annual report said.
The company said it was taking several steps, including increasing the local content levels in its cars, to mitigate the risk of currency fluctuations.
These will stand the company in good stead for the next upturn.
Honda Siel spent Rs 635 crore during the year on capital works, including land, building, plant and machinery, equipment for the Rajasthan plant. Capital works-in-progress as on March 31, 2009, were Rs 416 crore.
Three suppliers The company invested Rs 37 crore in picking up stakes in three suppliers Rajasthan Prime Steel Processing Centre Pvt Ltd (19 per cent stake), Global Auto Parts Alliance India Pvt Ltd (20 per cent) and Bestex MM India Pvt Ltd (6.7 per cent) that have set up facilities adjacent to the Honda Siel plant at Tapukara.
According to the annual report, Honda Siel paid a royalty of Rs 156 crore (previous year Rs 181 crore) and a technical guidance fee of Rs 34 crore (Rs 23 crore) to Honda Motor Company, Japan.
Honda Motor Company has a 99 per cent stake in Honda Siel Cars and Shriram Industrial Enterprises Ltd the balance.
Toyota Kirloskar Motor, in which Toyota Motor Corporation of Japan holds an 89 per cent stake and the Kirloskar group the balance, paid a dividend of Rs 30 crore for the year, and a royalty of Rs 72 crore to the Japanese company. http://www.thehindubusinessline.com/2009/08/16/stories/2009081650780200.htm
MERCEDES-BENZ, BMW FIGHT IT OUT FOR TOP SLOT Shally Seth mint (Web & Print Edition) (Aug 17)
Mumbai: After a gap of five months, Mercedes-Benz India Pvt. Ltd overtook BMW India Pvt. Ltd in July, selling 297 units against BMWs 261, according to data released by the Society of Indian Automobile Manufacturers (Siam).
Although a months numbers are not quite indicative of a trend reversal, its a breather for the Indian arm of German car maker Daimler AG, which had been losing ground to its younger rival BMW India in the Indian market.
Mercedes-Benz and BMW are the market leaders in the foreign luxury car segment. Although the segment is small and accounts for just 2.5% of total cars sold every year in India, it has not deterred new firms from entering the market at regular intervals.
Mercedes-Benz India, which in 1994 became the first foreign car maker to enter the Indian luxury car market when it set up a plant in Chikhali-Pimpri near Pune in Maharashtra, had a headstart over Bayerische Motoren Werke AG and Audi AG, which entered in 2006 and 2007, respectively. The latest entrants are Jaguar and Land Rover, now part of Tata Motors Ltd.
However, both BMW and Audi, as well as others such as Volvo, Porsche, Rolls-Royce and Bentley, have been present in the Indian market through direct imports.
Despite the fewer number of cars sold in July, BMW continues to lead with overall numbers. In the seven months to July, it sold 2,008 cars against Mercedes 1,712. In 2008, Mercedes sold 3,625 units, while BMW sold 2,908.
In 2008, its first full year of operations, Audi, the third German car maker after Mercedes and BMW to enter India, sold 1,050 cars. Sales numbers for Jaguar and Land Rover are unavailable since they were launched in India on 28 July.
Wilfred Aulbur, managing director and chief executive officer at Mercedes-Benz India, said, The sales are in line with our expectations. I would not like to comment on a single months performance.
In 2008, despite the global economic slowdown, sales of luxury cars defined as cars with a minimum ticket price of Rs25 lakh continued to grow in India with an estimated 7,000-7,500 units sold, or 70% more than 2007 sales.
Most car makers in India report wholesale figures or sales to dealers instead of end-user purchases, a practice that according to Peter Kronschnabl, president, BMW India, skews the numbers against his firm. BMW, unlike Mercedes, reports sales to customers. After seven months, we are clearly the No. 1 in India, he said.
By the time BMW started assembling its 3-Series and 5-Series cars in India, the E-Class Mercedes introduced in 2002 was midway through its lifecycle, typically about six years.
In India, the C and E classes of the Mercedes stable make up 35-40% of its sales. As the E-Class is nearing the end of its lifecycle, consumers have been postponing their buying decisions, thereby pulling down the sales volume.
Hormazd Sorabjee, editor, Autocar India magazine, finds BMWs line-up of models more nimble and aggressive. It has managed plugging in the niches by offering multiple variants, he said.
At the same time, Sorabjee is not yet ready to say Mercedes has lost the race. According to him, the new E-Class may change the equation between Mercedes and BMW and things may tilt back in favour of Mercedes.
Mercedes introduced the new C-Class in India in 2008 and will bring in the new E-Class by December this year.
It does not have any offering in the luxury sport utility vehicle segment that can compete with the X3 of BMW, but thats because it doesnt have a right-hand drive model as yet, according to Aulbur.
With the buyers in the luxury car segment being status-conscious and well-travelled, they readily accepted a brand (BMW) that was new and gave a greater boost to their status, said Neeraj Bandhu, Gurgaon-based director, India, at CSM Worldwide, a forecasting services and strategic advisory firm.
Exclusivity is very critical for a luxury car buyer, said Deepesh Rathore, managing director at IHS Global Insight, a forecasting and marketing intelligence firm, explaining why BMW and Audi have been successful.
While the glass is half full for Kronschnabl, who expects the segment to register a 20% growth, it is half empty for Aulbur, who is cautiously optimistic when he projects a flat to marginally positive growth.
New model launches will expand the market (to) 8,500-9,000 units, said Kronschnabl.
While the second half of the year will be better than the first, a healthy growth is expected only in 2010, said Aulbur.
According to the latest world wealth report released by Capgemini-Merrill Lynch in June, the number of high net-worth individuals (HNIs) in India contracted 31% to 84,000 in 2008. The report describes HNIs as individuals with net assets of at least $1 million (Rs4.8 crore), excluding their primary residence and consumer durables.
Aulbur said while the number of HNIs might have contracted, it will be compensated for by the presence of those who are willing to buy a luxury car. Besides, the overall car penetration ratio in India continues to be lownine per 1,000 individualsand can only go up.
For a majority of our customers, it is the passion for luxury cars which drives them to go ahead with their dream even when the market is underperforming, said Ashish Chordia, chief executive officer of Shreyans Automobiles, which sells Audi and Porsche cars. http://www.livemint.com/2009/08/16235126/MercedesBenz-BMW-fight-it-ou.html?h=B
BMW SALES JUMP 14% IN JAN-JULY, TOP IN HIGH-END SEGMENT PTI See this story in: The Economic Times (Web Edition), The Hindu Business Line (Web Edition), mint (Web Edition), The Financial Express (Web Edition) (Aug 17)
New Delhi: German luxury carmaker BMW has posted a 14 per cent jump in sales in India during January-July, taking it to the top position in the high-end segment, with two more proposed launches in the next two months. http://www.thehindubusinessline.com/blnus/02161432.htm http://www.livemint.com/2009/08/16125346/BMW-sales-jump-14-in-JanJuly.html http://www.financialexpress.com/news/bmw-india-sales-jump-14-in-janjul/502803/
The Hindu, Metro Plus (Aug 17)
From the moment you take your foot off the clutch in the Grand Vitara, it is clear that the 2.4-litre petrol engine is now a force to reckon with. Its got a massive 43bhp up in a package that weighs only 20kg more enough to make it bound past the 100kph mark in 11.7 seconds, a nice 2.3seconds faster than the now-discontinued 2.0-litre Vitara.
But first, a bit of history. The previous Vitara was never managed to actually shine on the showroom floors. It wasnt very quick, had an interior that didnt quite live up to its price and also had the unenviable reputation of being a guzzler. This new Vitaras got a bigger 2.4-litre engine, makes 163bhp and 23kgm of torque, and has disc brakes on all four wheels. This comes at a price of Rs. 16.5 lakh (ex-showroom, Mumbai), Rs 2.5 lakh more than the earlier car. As there is very little in terms of extra equipment or features, it is safe to say that the price increase is mostly for the engine. But is this actually worth paying for?
The new engine is a step above the earlier 2.0-litre unit. It also gets variable valve timing and the balancer shaft is now built into the oil pump to save space. Its brisk, its got a strong midrange, a frantic top-end and performance that is sure to put a smile on your face.
Throttle responses have improved over the entire rev range and the Vitara now feels gutsier than the old one ever did. In fact, its more traffic-friendly than the old Vitara too. Itll pull cleanly away from 1000rpm in third gear but there is an irritating boom in the cabin as the engine works its way to 2000rpm. The engine is quiet enough at idle and when cruising, noise levels are respectable but the engine becomes vocal when it crosses 3500rpm. The gearshift is notchy it works better when eased through the gate and hesitates when you try and rush it. And, we dont expect economy to be any better than the 2.0-litre, because its still got that full-time four-wheel-drive system.
The Vitara is stiff-kneed in town and there are a lot of sharp vertical movements over bumps and potholes. The suspension is unrefined too. Dont get us wrong, its never extremely uncomfortable but its not entirely settled either. In other words, it makes the CR-V seem like a cool breeze on a hot summer day.
The Vitara handles very well though, especially in the wet. That full-time 4WD system gives it a vice-like grip on the road and it never threatens to catch you out.
The hydraulically assisted steering is nicely weighted and linear and theres good body control. Its pretty capable off-road too, with its low range transfer case and the centre locking differential.
The rest of the Vitara we know well. Its a clean, slightly muscular, handsome design and now with the bigger 17-inch wheels, looks taller and beefier than the CR-V.
Apart from the wheels, theres little to distinguish it from the discontinued 2.0-litre Vitara. The other telltale signs are VVT badges and a very slightly updated grille. Interior quality is not what youd expect in a Rs. 16-lakh car. The plastic quality is not great and it borrows too many bits from its less expensive sibling, the SX4.
The Grand Vitaras ergonomics are generally fine though, with nice touches including reclining rear seats that also split and fold 50:50. The front seats are very comfy. A new climate control system and a trip computer, and an in-dash CD-changer round off the interior upgrade. There are a few gripes though. Theres more black in the cabin than there is darkness at 3 a.m., the boot space is pretty decent and theres no AUX input port. So, should you buy one? Well, the new Vitara costs a whopping Rs. 7 lakh less than the CR-V and is much cheaper than the Outlander too.
Its the stepping stone into the small petrol SUV segment. Its still no CR-V beater but at this price, its the more affordable and practical option.
Technical data Price Rs 16.5 lakh (ex-showroom Mumbai) Length 4500mm Width 1810mm Height 1695mm Wheelbase 2640mm Turning circle 11m Ground clearance 200mm Kerb weight 1614kg
Engine 4-cyls in-line, 2393cc petrol Installation Front, longitudinal
Power 163.5bhp at 6000rpm Torque 23kgm at 4000rpm
Gearbox 5-speed manual
Fuel tank 66 litres Brakes F/R Ventilated disc/discs Tyre size 225/65 R16 http://www.thehindu.com/mp/2009/08/12/stories/2009081260010200.htm
The Hindu (Metro Plus) (Aug 16)
Volkswagen bagged top honours at the International Engine of the Year Awards 2009, with its 1.4-litre TSI Twincharger petrol engine. The turbocharged and supercharged engine also won the 1-litre to 1.4-litre category and was also voted the Green Engine of the Year, beating both Toyota and Hondas new electric-hybrid power plants.
This is the first time in the companys history that it has won this award. The engine, which is not available in India as yet, powers much of VWs global model range including the Golf, Scirocco and Eos models.
According to Dean Slavnich, Editor of Engine Technology International and co-chairman of the International Engine of the Year Awards, The VW engine is a masterstroke of downsizing technology and a real engineering showcase. Although losing out on the top award this year, BMW once again secured success at the awards with its mighty M Power 4-litre V8 topping the 3-litre to 4-litre category and its 3-litre DI Twin Turbo judged to be the best 2.5-litre to 3-litre engine. The company also shared a third category win with PSA Peugeot Citroen for its 1.6-litre Turbo engine in the 1.4-litre to 1.8-litre category, an outstanding engine that was developed by the two companies joint powertrain development venture.
Mercedes-Benz took three category wins with its 2.1-litre diesel winning the 2-litre to 2.5-litre category and its powerhouse, the AMG-developed, 6.2-litre V8 won the above 4-litre category, with the same unit also judged to be the Performance Engine of the Year.
The awards, which are judged by a panel of 65 motoring journalists from 32 countries, including Autocar India Editor Hormazd Sorabjee, also rewarded a variety of other manufacturers for engine excellence in a number of different categories. http://www.hindu.com/mp/2009/08/17/stories/2009081750440300.htm
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| BAJAJ AUTO PLANNING 1-TONNE COMMERCIAL VEHICLE M. Ramesh The Hindu Business Line (Web & Print Edition) (Aug 15)
Chennai: Bajaj Auto Ltd intends to go ahead with its proposal to produce commercial vehicles but only after tweaking the originally-proposed product to bring it more in line with the market needs, according to Mr Madhur Bajaj, Vice-Chairman, Bajaj Auto Ltd.
Mr Bajaj had said in April that the company may not get into commercial vehicles and that it was flexible enough in its outlook to give up a proposal if that did not make sense.
However, speaking to Business Line on the sidelines of the inauguration of some facilities at the Great Lakes Institute of Management here, Mr Bajaj said that the company has now decided to go ahead with the proposal.
He said that the current thinking in the company is to produce a one-tonne truck. (Earlier, other senior officials of the company, like Mr R.C. Maheshwari, CEO, Commercial Vehicles, had said that Bajaj Auto would produce a 3.5-tonne vehicle.)
Mr Madhur Bajaj said the details regarding the location and investments were being finalised. However, he hinted that the company may not put up the commercial vehicles plant at Chakan (as was initially planned). He added the product could come out about a year from now.
Drought to hit sales Both Mr Madhur Bajaj, as well as Mr Rahul Bajaj, Chairman of the Bajaj group, said the drought would hurt sales. Mr Rahul Bajaj, who was also present at the Great Lakes Institute of Management, noted that around 60 per cent of Bajaj Autos sales came from rural India.
Mr Madhur Bajaj said that the Government could chip in and help by doing the environmentally-right thing of mandating the scrapping of vintage three-wheelers in cities.
This, he said, would help clean up the air, save fuel because these vehicles are guzzlers and also help sales of companies that produce three-wheelers.
Financial services Mr Rahul Bajaj told Business Line that the group intends to form a company, to be called Bajaj Financial Services Ltd, for distribution of third party financial products.
He said that the group would also get into the mutual funds business, in collaboration with Allianz of Germany, the groups partner in the insurance business.
An application for setting up the asset management company is pending with the Securities and Exchange Board of India, Mr Bajaj said. http://www.thehindubusinessline.com/2009/08/16/stories/2009081650840200.htm
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| CONSTRUCTION & AGRI MACHINERY Go To Top | |
| 2/3 WHEELERS Go To Top | |
| COMPONENTS Go To Top Hemamalini Venkatraman & V Balasubramanian The Economic Times (Aug 16)
Chennai: Sunny days are back for auto ancillary companies. The production is on a recovery path buoyed by the pick-up in sales of passenger cars and two-wheelers. Alongside, the investment climate has improved since January this year, according to a review by the Centre for Monitoring Indian Economy (CMIE). Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Auto-
AUTO COMPONENT SUPPLIERS BET ON SPARE PARTS MARKET Manu P. Toms The Hindu Business Line (Aug 17)
Mumbai: The auto component industry, which has just started seeing revival after a lull in the business, relies on the retail market of auto spare parts for better growth.
The impact of slowdown is much less in spare parts business. The size of the Indian auto spare parts market is estimated to be around Rs 36,000 crore and is growing, said Mr R. Bhurat, Chief Executive, Mahindra Spares Business.
Mahindra Spares, part of the groups aftermarket business that sells spares for utility vehicles, cars and light commercial vehicles, expects a 20 per cent growth in revenue this fiscal.
The original equipment (OE) manufacturers, including Mahindra, control 18-25 per cent of the market, OE suppliers 30-40 per cent and grey market operators, the rest , according to Mr Bhurat.
The leading clutch manufacturer Setco says 60 per cent of its revenue comes from spare parts market while the rest is from OEs. OE business is now picking up as fresh orders are coming in. But, spare parts business remained largely unaffected by the slowdown. In fact, it helped us at least partially offset the downturn when the orders from OEs dried up, said Mr Harish Sheth, Managing Director of Setco Automotive that sells clutches under the brand name Lipe.
Although OE orders went up in the recent months, the spare parts business grew even faster. For us, it is 10-15 per cent better this year, said Mr Pradeep Kapse, CEO, Eicher Engineering Components. The company sells Demm-branded gears. However, the auto spares market is not without challenges.
Slowdown has not affected the demand for spares, but the retail spare parts outlets are facing problems in stocking parts due to lack of finance availability, said Mr Bhurat. Also, the auto parts suppliers face the growing menace of counterfeiting. http://www.thehindubusinessline.com/2009/08/17/stories/2009081750790200.htm
SREI INFRASTRUCTURE HOPES TO COMPLETE LAND PURCHASE FOR AUTO COMPONENT SEZ BY SEPTEMBER Business Standard (Aug 17)
Kolkata: Srei Infrastructure Development, which is developing an auto component special economic zone at Guptamoni near Kharagpur, in a joint venture with the Industrial Infrastructure Development Corp (WBIIDC) expects the process of land purchase for the project, to be over by September-end.
The government had recently granted Srei Infrastructure Development an extension till June next year to acquire land for an auto component special economic zone in Bengal. We expect the land purchase process to be over by September, after which we will invite auto ancillary companies to set up units there, said Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance Limited.
So far the special purpose vehicle has purchased 33.47 hectares of land, out of the planned development over 100 hectares. Sources close to the development said, Srei had already initiated talks with both domestic and international auto ancillary companies for roping in an anchor investor.
Recently, Sabyasachi Sen, principal secretary, commerce and industries department, West Bengal, on his visit to Malaysia in March-April 2009, had assessed the possibility of Malaysian automobile and auto component companies investing in Bengal Integrated Auto Industrial Park Pvt. Ltd (BIAIPPL), the joint venture company between Srei and the West Bengal government.
The delegation had met leading auto and auto component manufacturing companies like Proton, Perodua, Bufori, and DRB HICOM in Malaysia, apart from various government organizations in Malaysia including Ministry of International Trade and Industry (MITI), Malaysian Industrial Development Authority (MIDA) and Malaysia External Trade Development Corporation (MATRADE).
As a first step towards investigating the possibility of recommending Malaysian companies to set up shop in the state, MITI had agreed to instruct MIDA for investigating the possibility of sending a Fact Finding Mission to West Bengal later this year. The delegation had also met representatives of Ranhill, a premier Malaysian engineering and construction company. The auto ancilliary project is of significance, as it will be a major automobile sector project after the Nano pullout from Bengal. http://www.business-standard.com/india/news/srei-infrastructure-hopes-to-complete-land-purchase-for-auto-component-sez-by-september/367186/
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| ALLIED INDUSTRY Go To Top The Hindu Business Line (Aug 15)
The company, according to its Managing Director, Mr Neeraj R. S. Kanwar, has maintained 12-14 per cent growth in volume and 6-7 per cent in value in the heavy commercial vehicles tyre sales in the current quarter, despite nearly 20 per cent drop in original equipment sales in the segment vis--vis the corresponding period of last year. The truck-bus segment contributes to nearly 70 per cent of the companys profits.
Apollo Tyres posted 80 per cent growth in profit before depreciation and tax against 10 per cent growth in turnover in the April-June quarter.
Replacement sales are bullish primarily due to fall in Chinese imports from as high as 1.5 lakh to 5,000-10,000 tyres a month. The market realisation is also up, making us hopeful of maintaining the growth during the current quarter, Mr Kanwar told Business Line.
He, however, pointed out that the recent rising trend in prices of natural rubber and crude oil (impacting the price of rubber chemicals) was causing concern. We will consider price increase if the current trend in raw material cost continues for long, he added.
Raw material price, as he informed, moved up 5-10 per cent during the quarter, compared to last year.
H2 may be difficult Mr Kanwar said lower rainfall impacting agriculture might also affect the companys growth in the second half of the year.
The second half will be challenging. It is apprehended that the road movement of agricultural commodities will be on a low key, making it difficult for us to maintain the growth rate. However, we are confident of overcoming the challenge through better operational efficiency. We are also expecting growth in manufacturing and infrastructure sectors, compensating part of the loss that might be caused by lower road movement of farm products, he added.
According to the Indian Foundation of Transport Research and Training, the cargo movement by road is down by 20-30 per cent due to lower movement of agri-commodities. http://www.thehindubusinessline.com/2009/08/15/stories/2009081550590200.htm
APOLLO TO MAKE DUTCH DESIGNER CAR TYRES IN CHENNAI Pratim Ranjan Bose The Hindu Business Line (Aug 15)
Apollo has acquired Vredestein and a number of other brands through its acquisition of the Netherlands-based Vredestein Banden BV (VBBV) in May.
The company also plans to market Apollo brand high-performance tyres produced by its Chennai facility in Europe beginning January 2010.
Brand positioning In terms of brand positioning, Vredestein will be the premium, to be followed by Apollo and VBBV-owned second tier fighter brands like Maloya.
Part of the Chennai factorys production will be marketed in Europe, Mr Neeraj R S Kanwar, Managing Director of Apollo Tyres, told Business Line.
VBBV produces five million tyres a year at its Netherlands facility. The company was previously importing a part of its total European sales from the former parent Amtel-Vredestein NV (AVNV) of Russia.
No more acquisitions According to Mr Kanwar, Europe consumes approximately 300 million tyres a year. While the original equipment (OE) sales have been badly hit by the meltdown, the replacement market is doing relatively better when compared with the US market. Ruling out any more acquisitions in near future, Mr Kanwar said the focus was now on consolidation.
Dunlop South Africa Referring to Dunlop South Africa, he said the OE sales were hit in the African market. Also the volatile Rand led to increasing imports in the country thereby impacting the prospects of domestic tyre makers.
We are just above water in South Africa as the facility is maintaining sales at the last years level.
We have already expanded the facility and are now investing for specific technology upgradation, he said. The companys Zimbabwe facility is not operational.
Supply for Polo After having entered into an OE supply agreement for Volkswagen supermini Polo in the Indian market, Apollo is now negotiating with Volkswagen for OE supply agreement for Europe. The Polo is scheduled to be launched in India at the Delhi Auto Expo in January. http://www.thehindubusinessline.com/2009/08/15/stories/2009081550600200.htm
DUTCH BUY, CAPACITY EXPANSION POSITIVES FOR APOLLO TYRES Ujjval Jauharri Daily News & Analysis (Aug 17)
Mumbai: After three decades of consistent growth, Apollo Tyres Ltd, a Gurgaon-based tyre manufacturer, has emerged as one of the premier tyre manufacturers in India. Starting with one plant and an installed capacity of 4,20,000 each of tyres and tubes, Apollo currently has eight plants in the country. A ninth plant in south India, with a capacity of 2.4 million radial truck tyres, will be added soon. The company is credited with India's first radials and first range of high-speed tubeless passenger car tyres. It has spread its wings internationally too. Apollo has grown inorganically to establish its market presence across 30 African countries. A recent acquisition adds Europe as its third crucial market.
Business
Apollo has worked on its product range and tuned it to customer needs. It followed successful marketing strategies for growth, such as its tyre loyalty programme and by establishing customer contact programmes.
It produces truck tyres under the brand name Apollo and Kaizen. In truck tyres, it has a market share of more than 30%.
One of its brands, XT7 is the largest selling truck tyre brand in India. It has significant market share and presence in the light truck tyre segment, passenger cars and jeep tyre segments besides tractor tyres. Apollo's overall range comprises automotive tyres for ultra and high-speed passenger cars, trucks, buses and tractors, off-the-road, industrial and specialty applications like mining, retreaded tyres and retreading material.
Apollo ventured overseas through strategic acquisitions. In 2006, it acquired Dunlop Tyres International Pty Ltd in South Africa. The new entity, now named Apollo Tyres South Africa Pty Ltd, holds rights for the Dunlop brand across 30 African countries. Apollo is the biggest manufacturer of tyres in South Africa.
To add Europe as its third crucial market, it acquired Vredestein Banden BV in the Netherlands in May. With this, it markets the Apollo, Dunlop, Kaizen, Maloya, Regal and Vredestein brands across these markets.
In South Africa, its branded outlets are named Dunlop Zones, while in India, it has Apollo Tyre Worlds for commercial vehicles and Apollo Radial Worlds for passenger cars. Its exports reach more than 70 countries in the geographies of Europe, Africa, the Middle East and South-east Asia.
Investment rationale
The first quarter of this fiscal has seen substantial improvement in operating margins leading to a multi-fold improvement in profits for Apollo Tyres. While rubber prices are currently seeing volatility, they are much below their highs. The government's stimulus in the form of a reduction in rubber excise duty by 6% since second half of FY09 also had a positive impact. If rubber and crude prices remain comfortable, they will continue to boost operating margins and profits.
Apollo's demand comprises 80% from replacements market and 20% from original equipment manufacturers (OEMs).
There was a sharp dip in sales to OEMs during the second half of FY09. However, passenger car sales have seen a revival in growth. The ban on imports of bus and truck radials since November 2008 has helped improve demand for domestic manufacturers. Chinese imports have plunged about 78%. Other factors as lower interest rates have worked favourably for the demand.
Volumes have also contributed significantly to the turnaround in profitability. Apollo is working on new greenfield facility in Chennai. This will increase its capacity in India from 850 tonne per day to 1,000 tonne per day. Growing demand in passenger car and truck radials will be taken care of by this new plant, likely to be commissioned by 2009 end. The new Dutch acquisition in May helped Apollo gain access to European market and grow.
This acquisition besides increasing capacities to 1,200 tonnes per day would also act as a hub for products manufactured at other locations. The funding for this acquisition was done partially through internal accruals and debt. However the debt-equity ratio remains at 0.7-0.8, which is comfortable.
Concerns
Valuations http://www.dnaindia.com/money/report_dutch-buy-capacity-expansion-positives-for-apollo-tyres_1282869
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| FINANCE & INSURANCE Go To Top | |
| OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top The Economic Times (Aug 16)
New Delhi: In a move that may eventually help Indraprastha Gas Ltd, the citys sole CNG supplier, speed up plans to roll out similar services in towns contiguous to the capital, the Delhi High Court recently restrained oil marketing regulator from issuing any licence for launching piped gas supplies. Chief Justice A P Shah and Justice Manmohan passed the restraint order after the petroleum ministry told the court that the Petroleum and Natural Gas Regulatory Board did not have licensing powers since the government has not notified the pertinent Section in the regulatory Act. The court asked the regulator not to issue any letters of intent (LoI) or authorization for retailing of CNG to automobiles and piped gas to households and industries till such time that the matter was heard. It, however, said the regulator can undertake preparatory work and process applications till the stage of issuing LoI for city gas licence. In an affidavit, filed in connection with a petition by an NGO, Voice of India, the ministry told the court the government had not notified Section 16 of the PNGRB Act, which pertains to licensing powers. The ministry has been at loggerheads with the regulator for asking CNG service providers, who were already in business under government permission before the regulatory board came into being, to seek fresh licences. The regulator had earlier asked IGL to stop its expansion work in Delhi, citing dissatisfaction with the 10-year-old government letters and notifications that led to formation of IGL and launching of piped gas service. But the ministry later stepped in to make it clear that the regulator had no authority to scrap mandates given before it came into being. Recently, the Supreme Court-appointed environment authority too had complained to the ministry against the regulator for jeopardizing introduction of CNG service in Delhis neighbourhood, particularly Ghaziabad, and warned that this will hold up seamless travel of public transport across NCR towns. IGL had the mandate for Ghaziabad from the ministry when the Centre was also playing a regulatory role before the board was set up under a new law. The company also has permission from the UP government to set up CNG stations and lay pipelines. It had started work on setting up the distribution network. The regulatory board, however, has questioned the validity of permissions and invited bids after asking IGL to stop work. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
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| INTERNATIONAL NEWS Go To Top See this story in: The Pioneer (Aug 16)
Washington: The Obama administrations pay czar is embarking on a review of proposed compensation packages for the top employees at seven companies that are on Government life support, marking the first time a federal official will have veto power over how much private-sector executives are compensated. http://www.dailypioneer.com/196053/Obama-pay-czar-to-review-compensation-plans.html
GM, GERMAN GOVT SAY OPEL DEAL NOT IMMINENT Angelika Grueber & Gernot Heller/Reuters See this story in: Yahoo India (Aug 16)
Frankfurt/Berlin: General Motors and the German government played down hopes on Friday of a quick decision on the sale of the carmaker's Opel unit, and Berlin reiterated its support for Canadian bidder Magna.
German Chancellor Angela Merkel, speaking at a news conference with Russian President Dmitry Medvedev in the Black Sea resort of Sochi, said talks on Opel's future had reached a decisive phase but reaching a quick deal would be tough.
"Such negotiations are sometimes difficult and you need patience," Merkel said. "Therefore I am not able to say when they will be concluded -- we would like this to be as soon as possible."
She reiterated her support for a bid from Magna, an auto parts group whose bid is backed by Russian investors.
GM's top negotiator for the sale, John Smith, said his company still needed to compare a new offer it received from Magna on Thursday with an "attractive proposal" from rival bidder, Belgium-based financial investor RHJ.
Although Germany has made clear it is up to GM to decide the victor in the bidding showdown, Berlin is being asked to cough up billions of euros in finance guarantees to the winner and so it wields considerable influence.
Some GM executives are believed to favour the RHJ offer over Magna's but Berlin, the four German states where Opel has plants and Opel unions all favour Magna.
GM's Smith said on a blog that the U.S. carmaker was awaiting input about what state aid it could expect from European countries that host Opel plants before management presents its findings to GM's board of directors next week.
"After the GM board makes its recommendation, the Opel Trust Board will be asked for its approval. So, there is more to consider, and more to do, before an agreement for Opel is reached," Smith said.
A spokesman for the German Economy Ministry confirmed that the government's Opel task force would meet on Monday to examine the offers from Magna and RHJ, but was vague about when decisions could come.
"It is primarily up to GM to evaluate the offers," Steffen Moritz said at a news conference. "We will look at the contracts but I can't say when this process will be finalised."
Hopes for a swift deal between Magna and GM grew on Thursday when the Canadian company said that it had reached an agreement in principle with GM management over a contract to buy 55 percent of Opel, together with Russian partner Sberbank. http://in.biz.yahoo.com/090814/137/bau1jt.html
VW TO PAY 3.3 BN EURO FOR PORSCHE STAKE See this story in: The Financial Express, The Economic Times (Aug 15) Volkswagen AG's supervisory board on Thursday approved absorbing Porsche into VW by the end of 2011, with an initial stake to be acquired this year for euro 3.3 billion ($4.72 billion), the Wolfsburg-based company said in a statement. Under the agreement, the merger is to be fully completed in the next two years, and Volkswagen's solid financial base and Porsche's independence will be preserved, VW said.
The agreement calls for Volkswagen to take an initial 42% stake in Porsche AG by the end of 2009, the statement said. It gave a euro 12.4-billion price tag for Porsche, including the expected synergy effects. While Porsche is to retain its independence and its headquarters, the family shareholders are to sell their Porsche Holding Salzburg automobile trading business to Volkswagen for euro 3.55 billion, starting in 2011. Volkswagen said in July it would pursue a merger with Porsche, but vowed the sports car maker would not lose its independence.
Since then, observers have been anxious to hear what plans the supervisory boards have and what sort of financial commitments are being made in their efforts to form closer ties. Under the agreement, the Porsche and Piech family shareholders will retain the largest stake in VW, the company said.
In addition, the state of Lower Saxony will remain the second largest shareholder, able to appoint two members to the supervisory board, and retaining its existing blocking minority, the statement said.
No mention was made of potential investors. A Qatar investment fund, for example, has been named as an interested party. VW is Europe's largest carmaker by sales, is based in Wolfsburg, while Porsche, famous for sport scars the world around, is based in Stuttgart. http://www.financialexpress.com/news/vw-to-pay-3.3-bn-euro-for-porsche-stake/502268/
SWEDISH CONSORTIUM EYES VOLVO CAR UNIT Reuters See this story in: Business Standard, The Economic Times
Stockholm: A consortium dominated by Swedish owners plans to bid for Ford Motor Co's Volvo car unit, a Swedish business daily reported on Saturday without disclosing its sources.
Dagens Industri said the group, Konsortium Jakob AB, had intensified efforts recently to raise enough capital to make an offer in light of reports Ford was getting ready to intensify talks with China's Geely, which according to sources is among the suitors for the Ford unit up for sale.
The U.S. carmaker put money-losing Volvo cars up for sale in December last year as it looked to cut costs and raise cash amid industry wide record-low vehicle sales. The firm said in July it was in discussions with a number of parties on the car maker.
The engineers' trade union at Volvo cars had taken the initiative to the consortium, which would aim at listing the car maker, Dagens Industri said.
It said representatives for the consortium this week met with representatives for Ford's management, according to sources.
Dagens Industri said, referring to a source, that Swedish truck maker Volvo may join Konsortium Jakob AB. But the truck maker denied that
"We take an interest in what happens with Volvo cars since we share their brand, but that's where it ends," Volvo spokesman Marten Wikforss told Reuters. "We don't see ourselves as investors in the car industry."
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| GOVT WILL GO ALL-OUT TO GET BACK TO 9% GROWTH: PM The Hindu Business Line See similar story in: The Financial Express (Aug 16)
New Delhi: The Prime Minister, Dr Manmohan Singh, said on Saturday the Government will take every possible step to restore annual economic growth to nine per cent.
Restoring our growth rate to nine per cent is the greatest challenge we face. We will make every necessary effort to meet this challenge whether by increasing capital flows into the country, or by encouraging exports or increasing public investment and expenditure, he said in his address to the nation on its 63rd Independence Day.
Dr Singh, delivering his fifth Independence Day speech as the Prime Minister, indicated that despite the deficient monsoons, things were looking up.
We expect that there will be an improvement in the situation by the end of this year, but till that time we will all have to bear with the fallout of the global economic slowdown, he said in his 40-minute address from the ramparts of the Red Fort, after unfurling the tricolour.
Some people question whether India will ever be able to attain its true potential, Dr Singh said, as a slight drizzle accompanied his first Red Fort speech since the UPA Government was voted back to office in May. I have no doubt about this.
The economy grew at an average of around 9 per cent in the four years ended March 2008, but the pace of growth declined to 6.7 per cent in the last fiscal year due to the global economic crisis, he said. It is only a result of our policies that the global crisis has affected us to a lesser extent than many other countries, he said in his speech in Hindi.
Dr Singh said the deficient rains would have an adverse impact on crops, but the country would be able to deal with the situation.
We have adequate stocks of foodgrains. All efforts will be made to control the rising prices of foodgrains, pulses and other goods of daily use, he said.
Announcing support to the drought-hit farmers, Dr Singh said, We will provide all possible assistance to our farmers to deal with the drought. In view of the deficiency in the monsoon, we have postponed the date for the repayment of bank loans of our farmers. We are also giving additional support to farmers for payment of interest on short-term crop loans.
The South-West monsoon this year is likely to be 87 per cent of the long-term average, the Meteorological Department said earlier this week.
Our goal is 4 per cent annual growth in agriculture and I am confident that we will be able to achieve this target in the next five years, Dr Singh said.
He also appealed to the business community to fulfil its social obligations by joining the Governments efforts to ensure inclusive growth. To ensure that no one goes hungry, he said the Government is working to bring a food security law that provides for supply of 25 kg of rice or wheat at Rs 3 a kg to families living below the poverty line.
Hoarders warned He appealed to all State governments to exercise their statutory powers to prevent hoarding and black-marketing of essential commodities. Dr Singhs warning to black-marketers comes in the wake of a sharp rise in prices of pulses, sugar and other food items.
Underlining the need for expansion of secondary education in the country, Dr Singh said funds would not be a constraint and disabled children would get special attention.
He said the Centre would take steps to solve soon the problems faced by ailing national carrier Air India. We are giving careful attention to the problems of Air-India and will resolve them soon, Dr Singh said.
He also urged the nation to not panic over the outbreak of swine flu and assured that India was well equipped to deal with the pandemic. http://www.thehindubusinessline.com/2009/08/16/stories/2009081651000100.htm http://www.financialexpress.com/news/9-growth-biggest-challenge-says-pm/502478/
TOO EARLY TO ACT ON INFLATION: SUBBARAO Reuters See this story in: The Financial Express, The Statesman (Aug 16)
Hyderabad: The outlook for farm output in India is a concern and price pressures could build up at some stage but it is too early to take action on inflation, the Reserve Bank chief said on Friday.
"The agriculture situation is disturbing, there would be pressure on food prices," Reserve Bank of India (RBI) Governor Duvvuri Subbarao said.
"We are monitoring the situation and will take appropriate action but it is still too early to be concerned about inflationary pressures," he said.
Although the widely watched wholesale price index fell an annual 1.74 per cent at the start of August, its ninth straight drop, prices of food items have been rising on a weekly basis.
In its July review, the RBI revised its inflation forecast to around 5 per cent by the end of March 2010 from 4 per cent projected earlier. Poor rainfall are expected to affect farm output and put upward pressure on inflation.
"You have to be sensitive to inflation. It is still too early to be taking action on inflation," Subbarao said.
Monsoon rains were 56 per cent below normal over the past week, government data showed on Thursday, painting an increasingly grim picture for the farm sector and fuelling talk of a full-blown drought.
Since the start of the four-month monsoon season on June 1, rains are 29 per cent below normal, denting agriculture outlook and threatening to slow a burgeoning economic recovery and sending food prices 10 per cent higher during the week ended Aug. 1 from a year earlier.
"I am unable to say how the drought situation will translate into crisis and what action will have to be taken at what point of time," Subbarao said. http://www.financialexpress.com/news/too-early-to-act-on-inflation-subbarao/502179/ http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=264799
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Sunday, August 16, 2009
Indian Auto Industry Update August 17, 2009
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