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| INDUSTRY Tatas to finalise deal with Nano vendors at Singur M&M looks to drive into US market M&M may lose speed as rural India brakes on spend INTERVIEWS/FEATURES Maruti to invest Rs 1,000 cr in new R&D centre
COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY M&M to launch four tractors this fiscal 2/3 WHEELERS | ALLIED INDUSTRIES OIL, LUBRICANTS & ALTERNATIVE FUELS INTERNATIONAL NEWS Chrysler creditors sue Daimler, claim fraud GM, Koenigsegg ink stock purchase deal on Saab Honda profit rebound lures investors ECONOMY & FINANCE Sensex wipes off some losses; ends 250 pts higher Poor monsoon may put pressure on inflation: RBI
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| INDUSTRY Go To Top Swaraj Baggonkar Business Standard (Web & Print Edition)
Mumbai: After seeing the overwhelming response evoked by the cash for clunkers scheme in a number of western countries recently, Indian auto manufacturers have requested the government to launch a similar programme here.
The scrappage incentive scheme, popularly known as cash for clunkers, is a monetary scheme introduced to bring about a turnaround in the beleaguered Western auto industry, while simultaneously pulling older, more polluting and inefficient vehicles off the road. Under the scheme, the government provided incentives of $1,000-5,600 directly to those buyers who were willing to trade their old, gas-guzzling vehicles for new, fuel-efficient vehicles.
Indian auto bigwigs, including Tata Motors and Mahindra & Mahindra, among others, through the association of the Society of Indian Automobile Manufacturers (Siam), had approached the government to implement a similar programme. However, they are yet to succeed.
Mahindra & Mahindra President (Automotive Sector) Pawan Goenka said: It was something which we had dicussed with the government. We had made some proposals, which could ultimately help restore demand while, at the same time, take old vehicles off the road. There were, however, concerns over funding of the programme (by the government) which may have led to the delay.
Although demand for cars and other passenger vehicles has bounced back, as is evident from the auto companies sales performances in the past two months, sales of medium and heavy commercial vehicles (MHCVs) still appear in the red.
A senior executive from Siam said: In Kolkata, CVs which are over 15 years old have been stopped from operating. We believe the Centre can also do something along similar lines for the entire country. We have written to the ministry of environment to look into the matter. The need of the hour is to incentivise the CV industry to spur demand, while also taking care of emissions standards.
Sales of MHCVs, including trucks and buses, dropped by 30 per cent to 54,996 units in the April-July period, compared with 78,689 units recorded in the same period last year. Concurrently, sales of passenger vehicles rose by 9.45 per cent to 564,494 units during the same period.
Force Motors Chairman and Managing Director Abhay N Firodia said: The industry had made a comprehensive presentation to the government earlier in the year, where measures like duty rationalisation were also talked about. However, we have not received any indication from the government about any steps taken in this regard.
The industry argued that a scrappage scheme would bring about several positive steps in the market, including the fact that it will bring down the average age of an operational vehicle substantially, while improving overall reliability and safety. It will also result in improvement of fuel efficiency, thereby adding to profitability while adhering to the stringent emission control norms.
Buying a new truck would not be a big issue for the people who operate an old truck if they can avail of some financial support. However, there has not been much progress on this issue in India, even though this is something that is done in many countries. When the owner decides to scrap an old truck, which is 13-15 years old, he gets a tax credit overseas. But there is no such incentive in India, added Firodia.
According to latest estimates, more than a million trucks plying on Indian roads are at least 15 years old. These trucks are usually run by owners outside city limits due to their polluting nature. http://www.business-standard.com/india/news/auto-cos-want-packages-similar-to-/cash-for-clunkers/-in-west/367441/
TATAS TO FINALISE DEAL WITH NANO VENDORS AT SINGUR Sohini Das & Ishita Ayan Dutt Business Standard (Web & Print Edition)
Kolkata: The majority of vendors to the erstwhile Tata car plant at Singur in West Bengal, accounting for 95 per cent of supplies to the Nano project, have taken allotment of plots at Sanand in Gujarat, the new location. However, the vendor park there may not be ready before December, the internal production target for the Tata Motors plant.
The vendor park was directly linked to a mutually acceptable compensation package being worked out for the sunk cost at Singur, said some of the vendors. The package was in the final stages of discussion and though the details were yet to be worked out, a soft loan for the sunk cost was likely.
Part of the interest rate will be borne by Tata Motors and part by us, said a vendor. At a recent meeting, the vendors indicated the sunk cost at Singur would have to be compensated for, or they would supply from the existing location.
A Tata Motors spokesperson said, The company has been in discussions with vendors who are moving from Singur to Sanand to support them with mutually acceptable terms, which will be implemented.
Some of the vendors, like Tata Ryerson and Caparo Engineering, had almost completed their facility at Singur, when the decision to pull out was announced last October. The original investments at Singur roughly involved the 55 suppliers paying Rs 15 lakh an acre for land, with an additional Rs 23 lakh an acre payable to Tata Motors towards provision of infrastructure such as roads and electricity. The 290 acres became the bone of contention during the protests led by Trinamool Congress chief Mamata Banerjee. Each supplier spent Rs 7-10 crore on land and buildings. Only a handful had installed machinery, but the majority had completed land filling at the site.
Vendors like Exide Industries Ltd, that has developed customised batteries for the Nano, were an exception. Exide booked land but did not invest in installing machinery at the site, preferring to feed the plant from its nearby Shyamnagar facility. Exides director, automotive, Paban K Kataky told Business Standard it now wanted to return the land to the West Bengal Industrial Development Corporation (WBIDC). The company had paid Rs 80 lakh for its plot in the ancillary park in Singur and had signed a direct lease agreement with WBIDC.
State government sources said, only a couple of vendors had asked for return of land. Most of them had renewed the land for the year. http://www.business-standard.com/india/news/tatas-to-finalise-dealnano-vendors-at-singur/367442/
M&M LOOKS TO DRIVE INTO US MARKET Nandini Sen Gupta The Economic Times (Web Edition)
Cars to -software conglomerate Mahindra & Mahindra (M&M) will spend around Rs 2,000 crore to augment capacity at its Chakan plant that is expected to be operational in October, as the $6.3-billion company looks to crack the US car market that accounts for more than a fifth of all cars sold globally. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
M&M MAY LOSE SPEED AS RURAL INDIA BRAKES ON SPEND Murali Gopalan The Hindu Business Line (Web & Print Edition)
Mumbai: Mahindra & Mahindra has had a good run in the first quarter of this fiscal, thanks to its utility vehicles and tractors notching up good numbers, but the company not entirely sure if this can be sustained through the year.
The second quarter will be good because of the early festival season and this will prop up sales. In our group, we are fortifying ourselves for what might be a flattening of rapid growth in the third quarter. I hope it does not happen though, Mr Anand Mahindra, Vice-Chairman and Managing Director, M&M, told Business Line.
From the companys point of view, any failure of the monsoon will directly impact rural Indias ability and willingness to buy. My concern is that the rural buyer has a different psychology. It has taken three-four good monsoons and crop years to convince him to take money out of the mattress and actually spend it. However, during these times, he will be a lot more cautious about spending and we will see the effects of that from the third quarter onwards, he said.
Though a section of experts reiterate that there is far less dependence on agriculture (based on the fact that it is only 18 per cent of the GDP), this does not mean that the rural economy is not dependent on agriculture or the monsoons.
This is because the non-agricultural incomes in the rural areas are actually sustained and nurtured by agricultural incomes. In short, the services business set up in rural areas are catering to farm income which means that they are not mutually exclusive, Mr Mahindra said.
Ground realities M&M has, interestingly, been getting an update on the ground realities of rural India from an initiative in-house. The groups finance arm, Mahindra Finance, has 500 branch offices across the country. A system was put in place where, on a daily basis, a panel of farmers spoke about the rains and whether they were adequate to help them in their sowing efforts. The inputs were then converted into a crop efficiency index and made accessible to the top management everyday.
This helps us get an on-the-ground feeling about what is happening in the farming areas. Every farmer tends to be pessimistic but despite that, over the last three to four weeks, it is clear that every passing day looks dismal. In the process, we were getting worried because of this real time feedback, he said.
Despite this grim outlook, Mr Mahindra said there was cause for cheer in the first quarter thanks to a nice point of convergence where the tractor and auto businesses had done extremely well. When the two happen together, that is when you get this multiplier effect at M&M, he said.
The fact that commodity prices also got back to a point of stability was welcome though the biggest thing that really helped was volumes.
They did not come from the environment which makes me very proud of the team. This is because if you look at the utility-vehicle industry, both last year and in the first quarter of this fiscal, it had not grown without M&M. It was not a large pie, which was expanding on which we piggybacked, Mr Mahindra said.
Product launches As he pointed out, volumes came due to product launches such as the Xylo and also scaled up as there was zero cannibalisation between the three brands: the Scorpio, the Bolero and the Xylo.
We had been expecting the Scorpio to be cannibalised to some extent, as also the Bolero, which has been around longer. The good thing is that the Bolero is getting stronger and is still the largest selling SUV. Demand for the Scorpio has also shot up which means that the Xylo is truly incremental demand. When you put all this together, naturally we have had a very good quarter, Mr Mahindra said. http://www.thehindubusinessline.com/2009/08/19/stories/2009081951200200.htm
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| CARS, SUVs, MUVs Go To Top
New Delhi: The country's largest car maker Maruti Suzuki India (MSI) has firmed up plans to roll out its small car Zen Estilo on August 25 which is equipped with the latest KB-series engines.
MARUTI TO INVEST RS 1,000 CR IN NEW R&D CENTRE See this story in: The Financial Express (Web Edition), Business Standard (Web Edition), The Indian Express (Web Edition), The Tribune (Web Edition)
New Delhi: Japanese auto giant Suzuki Motor Corp will set up an India specific research and development centre spread over 700 acre, which could entail an investment of over Rs 1,000 crore.
The land for the R&D centre at Rohtak (Haryana) is to be handed over to the company by Haryana Chief Minister Bhupender Singh Hooda on August 21.
According to sources, the company is going to make an investment of over Rs 1,000 crore in the R&D centre, which will be the largest one outside Japan built by Suzuki Motor Corp.
"The two parties will sign the pact for handing over the land in the presence of the Haryana Chief Minister on August 21. The company will be investing over Rs 1,000 crore for the facility, including the costs of the land," a source said.
When contacted, a spokesperson of Maruti Suzuki India (MSIL), the Japanese auto giant's India venture, declined to comment on the investment figures.
MSIL had recently requested the Haryana Government for 700 acres in IMT Rohtak for setting up the R&D facility, test course and accommodation of ancillaries. http://www.financialexpress.com/news/maruti-to-invest-rs-1-000-cr-in-new-r&d-centre/503552/
FORD TO START FULL EXPORTS FROM CHENNAI PORT NEXT YEAR The Economic Times (Web Edition) See similar story in: The Financial Express (Web & Print Edition), The Hindu (Web & Print Edition), Asian Age (Web & Print Edition), Deccan Chronicle (Web Edition)
Chennai: Car manufacturer Ford intends to accelerate exports even as it gears up for the small car launch in 2010. Ford, which presently uses Mumbai port to route exports, proposes to use Chennai port as its transit point to commence complete exports early next year, according to a top company official. http://www.financialexpress.com/news/ford-looks-at-india-as-export-hub/503681/ http://www.hindu.com/2009/08/19/stories/2009081961831400.htm http://www.asianage.com/presentation/leftnavigation/news/business/ford-bets-big-on-india.aspx http://www.deccanchronicle.com/business/ford-bets-big-india-859
VW APPOINTS KELLER AS HEAD OF SALES IN INDIA Bloomberg See this story in: mint (Delhi Print Edition)
New Delhi: German car maker Volkswagen on Tuesday announced the appointment of Armin Keller as its new Head (Sales) for India and the Far East. Keller succeeds Adrian Michael Hallmark who is leaving the company, Volkswagen Group said in a statement.
Rachna Tyagi Daily News & Analysis (Web Edition)
Mumbai: Most carmakers have realized that they cannot stay away from diesel engines, while some are consciously trying to steer clear of the diesel debate citing reasons that locally available diesel is not quite up to the mark for their diesel engines, it won't be too long before they too will have to succumb and introduce diesel options for the Indian buyers who are thirsting for diesel power.
The i20 which has enjoyed tremendous success in India going by the 72,000 units they've sold so far in India alone as well as more overseas, now has come up with a diesel model as well as an automatic model, making Hyundai the only carmaker offering automatics across its range in India.
In this review we will look at the Hyundai i20 diesel which we drove in Mumbai. The new i20 diesel which has been designed at Hyundai's European Centre in Russelheim, Germany, comes with a 1.4-litre CRDi, DOHC, 16-valve, VTVT engine which belts out 90bhp and is all set to take on Maruti Suzuki's Swift and Skoda's Fabia.
However, note that while the i20 undoubtedly looked fresh and contemporary when it hit the roads several months ago, with the launch of numerous other car models later in the year, the i20 has suddenly started to look dated. Even the once beautiful headlamps, a stylish bonnet, and attractive grille aren't able to do much with the newer looking cars such as the Maruti Suzuki Ritz, Fiat Punto and Honda Jazz with their stylish designs have made the i20 look very last decade.
On the driving front,maneuvering the i20 through the maddening city traffic was indeed a pleasure because of the light steering and not only did it soak in all the bumps effortlessly but it also glided over the potholed roads of Mumbai remarkably well but try reving the engine hard and you'll begin to take notice of things that could've been better.
You'll know exactly what we're talking about once you accelerate. Thecar's mid-range is perhaps the only place where it actually shows its true colours. Otherwise the Hyundai i20 drives in a very ho-hum manner.
The audio system in the i20 diesel, comes with a 2 DIN integrated music system which includes a CD and MP3 player with an auxiliary and USB audio input so that you can drive on for miles and miles to destination unknown.
Hyundai has equipped the car with plenty of safety equipment. The i20, boasts of being the first car in its segment to offer 6 airbags, rear disc brakes with ABS and EBD which are standard equipment on the diesel.
Don't be deceived by what the car looks like from the outside. Inside, the car is really big on space. Even the boot is large enough and with the rear seats which can be split 60:40 you can really shove in loads of stuff.
The fit and finish on the i20 is great and now the diesel i20 comes with a lustrous gear knob, which is a nice touch.
With a fuel tank capacity of 45 litres the i20 diesel, just like the petrol is available in three different variants starting with Magna, Asta and the Asta Option which comes with a panoramic sunroof. Starting at Rs. 6,19,800, it isn't cheap but gets the job done in premium hatch style. http://www.dnaindia.com/money/report_advantage-diesel_1283453
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| BLUELINES HERE TO STAY AS CORPORATIZATION PUT OFF Megha Suri The Times of India (Delhi Print Edition) See this story in: Hindustan Times (Delhi Print Edition)
New Delhi: Delhis dream of getting rid of killer Bluelines has been put on the backburner. The state government has put the corporatization plan on hold for now to ensure that about 3,100 buses ordered by Delhi Transport Corporation (DTC) arrive before the Commonwealth Games 2010. Sources said the process of appointing an operator for the first cluster has been put on hold, but the scheme will take off again after a sizeable part of buses ordered by DTC arrives. The two bus manufacturers in the country Tata Motors and Ashok Leyland are utilizing their entire capacity to deliver DTCs order for about 3,125 low-floor buses and another 1,100 semi-low-floor buses in time for the Commonwealth Games. The deadline for making the delivery of these orders is March 2010, but the first lot of buses is yet to arrive from any of the two companies. However, Tata Motors is expected to deliver about 25 buses by this month-end. Delhi government is also planning to place order for more buses with the funds from urban development ministry under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme to promote public transport. In such a scenario, if the corporates to whom each of the 17 clusters, which the city is divided into, will be awarded the corporatization scheme also start placing orders for buses, it is feared that the delivery of the DTC orders will get affected. The government is of the opinion that if the corporates also approach the manufacturers with orders for more buses, it will add to the strain. Corporates may be given faster delivery of buses as they can disburse funds more quickly than the government, which has to follow certain process for making payments, sources said. The option of importing buses from other countries was also looked into, but the rates being quoted were much higher than those offered by the Indian manufacturers. Transport minister Arvinder Singh Lovely confirmed that the first cluster has not been awarded yet. The corporatization scheme has been put on hold for now. Once the DTC bus order starts rolling, the first cluster will be awarded to the identified bidder, Lovely told TOI. Sources said the phase-out of Bluelines will continue as per schedule, and by the end of the year another 700 buses will be taken off the roads. If the delivery of new DTC buses is delayed, the Bluelines phase-out process may be slowed down. The transport department has also stopped issuing new permits for Blueline buses, and even extensions of permits are temporary. With the corporatization process having been delayed now, it seems unlikely that Delhi will meet the requirement of 11,000 buses on capital roads by 2010, as prescribed by the Supreme Court. At present, there are about 5,800 buses, including 2,700 Bluelines and 3,100 DTC buses, operating on Delhi roads. Over 1,000 Bluelines have been phased out this year. But the government says the gap is being made up by increasing the efficiency of DTC buses, which are now making 20,400 trips as against 16,000 trips earlier. Officials, however, said the city will not face shortage of buses before the Games. The 11,000 mark for buses may not be reached by 2010, but there will be over 6,000 DTC buses and another 2,000-odd Bluelines plying in the city till next year. The number of trips made by DTC buses are being increased and people will not feel inconvenienced, sources said. So far, DTC has just got the first order of 625 low floor buses. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
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| CONSTRUCTION & AGRI MACHINERY Go To Top Shweta Bhanot The Financial Express
Mumbai: Indian tractor makers have started readying their retail strategies as the biggest season of tractor buying in the country is expected to go dry this year. The period, starting from September to November, sees close to 60% of the total sale of tractors. However, this year the period is expected to be affected by the delay in the monsoons. Tractor makers have thus set their eyes on the expected demand from non-agricultural sectors, including construction and haulage, arising out of the increased government investments announced in infrastructure to make up for the lowered agricultural demand. At present, more than 50% of a tractors use is employed in non-agri work.
The sentiments will be low in the coming season of tractor buying, due to the delay in monsoons. It will all depend on how tractor makers push retail strategies to make the farmers buy tractors. The farmer will, in turn, look at postponing its buy to the next season (March-June), said Gopal Krishna, head, marketing and exports, Same Deutz-Fahr Group. He added that since 80-85% of the buying is through financing, tractor makers would do well to make easy financing options available to farmers.
Typically, in the first quarter, banks are busy recovering the loans. Also, this year general elections had forced the banks on a rather less active mode. Therefore, it will be cracking the financing bit that can make the makers convert some potential buyers into actual ones, he added. The sale in October (around Navratri) is seen as a benchmark for the industry.
Indicating that a reduction in prices is unlikely, Anjanikumar Choudhari, president, farm equipment sector, Mahindra & Mahindra, said that like all manufacturers of goods, including consumer durables, there may well be attractive promotions, including limited and temporary price offs, during the festival period ahead. There has been a fairly good stability in material prices in the last few months but there are signs of hardening in prices of commodities used as tractor components. The raw material costs for the tractor industry may therefore, move upwards to some extent in the second half of this fiscal, said Choudhari. The prices of tractors are expected to remain stable at the current levels, which hover between Rs 3.5 to Rs 8 lakh. Choudhari, also the president of Tractors Manufacturers Association, also added that the delay in monsoons will have a marginal affect on the sales of the tractors, while for the whole fiscal it would be reasonable to expect a year-on-year growth of 6-8%.
The Indian tractor industry has seen a growth of 16% in the April July period this year on the back of a better-than-expected growth in agri output. The 30% increase in MSPs of major crops, significantly increased investments by the government in the rural sector and agriculture, through a variety of schemes in irrigation, rural employment, education and infrastructure, as well as an improved availability of credit and lower interest rates. India has the worlds largest tractor market, with a total sales volume of 3,04,000 units in 2008-09, compared with 1,60,000 tractors in 2003. Relatively young as compared to other countries, it has expanded at a spectacular pace in the last four decades. In the last six years, the tractor market has grown 89% and the industry is expected to see a growth of anything between 5% and 8% in 2009-10.
M&M TO LAUNCH FOUR TRACTORS THIS FISCAL PTI See this story in: Business Standard
New Delhi: Mahindra & Mahindra (M&M) will launch four tractors in the current fiscal and expects 10 per cent growth in its farm equipment sales by March 2010.
"We have already launched six variants in the last four months. We will launch four more tractors, comprising variants as well as new models, in this financial year," M&M Farm Equipment Sector Senior Vice-President (Marketing) Sanjeev Goyle told PTI on the sidelines of CII Marketing Summit.
The tractor market is expected to grow by 6-7 per cent in this fiscal and the company is aiming a 10 per cent growth, he said. M&M has witnessed 14 per cent growth in its sales in the first quarter of this financial year, Goyle added.
Speaking on the monsoons, he said the effect of a bad monsoon would be felt mainly in the next financial year. "Usually there is a lag effect of 6-8 months of a bad monsoon, surely it is going to affect sales in agri business... About 55 per cent of our tractor sales come from the agriculture sector," Goyle said.
The new tractors would be launched with 35-60 horsepower engines, he added. The company has 900 sales point across the country for selling various farm equipment. http://www.business-standard.com/india/news/mm-to-launch-four-tractors-this-fiscal/71086/on
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| BHARAT FORGE UP 8.5% ON FUND-RAISING PLAN Business Standard See similar story in: The Hindu Business Line, Yahoo India, mint
Mumbai: Bharat Forge shares spurted 8.5 per cent to Rs 229.7 on fund-raising plans for expansion. The worlds second largest forgings maker would raise upto $150 million via issue of equity or equity linked securities.
The company may use the funds to strengthen manufacturing capabilities in the non-automotive sector in India. The stock made an intraday high of Rs 233.95 and a low of Rs 210. Total traded volumes in Tuesdays trade stood at 4.8 lakh shares. http://www.business-standard.com/india/news/bharat-forge85fund-raising-plan/367374/ http://www.thehindubusinessline.com/2009/08/19/stories/2009081951330200.htm http://in.biz.yahoo.com/090818/50/bau1zt.html http://www.livemint.com/2009/08/18164604/Bharat-Forge-to-raise-up-to-1.html
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| ALLIED INDUSTRY Go To Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCE & INSURANCE Go To Top PTI See this story in: The Economic Times, The Financial Express, The Hindu Business Line, Daily News & Analysis, The Statesman, The Pioneer, The Indian Express, mint
Mumbai: Leading private sector lender, ICICI Bank, plans to focus more on growing its home and car loan portfolios in the months ahead and said its rates are competitive in the industry. http://www.financialexpress.com/news/icici-bank-to-focus-on-home-car-loans-ceo/503543/ http://www.thehindubusinessline.com/blnus/17181907.htm http://www.dnaindia.com/money/report_icici-bank-to-focus-on-home-car-loans-says-ceo_1283413 http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=265107 http://www.dailypioneer.com/196738/ICICI-Bank-to-focus-on-home-car-loans-CEO.html http://www.indianexpress.com/news/icici-bank-to-focus-on-home-car-loans-ceo/503543/ http://www.livemint.com/2009/08/18180205/ICICI-Bank-to-focus-on-home-c.html
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| OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top PTI See this story in: Daily News & Analysis
New York: Oil prices rebounded with major European and Asian stock markets after a huge sell-off that began the week.
Still, energy prices swung early in the day with so much uncertainty about the pace of an economic recovery. Benchmark crude for September delivery gained 66 cents to $67.41 a barrel on the New York Mercantile Exchange. On Monday, the contract fell 76 cents to settle at $66.75, the second consecutive day of declines that dropped the price of crude by 5%.
Prices still linger near monthly lows and natural gas prices fell for the ninth straight day. That is a reflection of the doubts over a quick rebound for the economy. Major industries are not making products in great numbers because consumers are still skittish. That lack of demand for the energy needed to produce goods has pushed natural gas prices to seven-year lows.
That could lower utility bills for millions of Americans, depending on state regulations and contracts signed by power providers. Consumers are still staying away from stores, though some retailers did better than expected. http://www.dnaindia.com/money/report_oil-rises-above-67-on-mixed-economic-signals_1283508
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| INTERNATIONAL NEWS Go To Top Agencies See this story in: The Economic Times
Dearborn: Ford Motor Co. said Tuesday its future electric cars will ``talk'' to power grids across the U.S., part of an effort to drive interest in alternative energy vehicles.
CHRYSLER CREDITORS SUE DAIMLER, CLAIM FRAUD Reuters See this story in: The Economic Times
New York: Creditors of Chrysler LLC are suing Daimler AG, accusing it of fraudulently stripping the US automaker of "billions of dollars in assets prior to its 2007 sale of the US carmaker to private equity firm Cerberus Capital Management LP.
GM, KOENIGSEGG INK STOCK PURCHASE DEAL ON SAAB Reuters See this story in: The Financial Express
Stockholm: Swedens Koenigsegg and US-based General Motors said on Tuesday they had inked a deal for the niche sports car maker to buy loss-making Saab Automobile. The agreement comes after weeks of uncertainty concerning the level of support for the bid from Koenigseggs backers, after a preliminary deal for the sale was struck in June. Questions regarding the financing of the deal remain, however, and a statement from GM Europe was vague about the agreed terms beyond calling the deal a stock purchase agreement.
The Swedish government is negotiating with Koenigsegg on a possible guarantee for a loan to Saab from the European Investment Fund, a pre-condition for the deal.
This contract is an important step in the journey to a potential deal, said Carl-Peter Forster, head of GM Europe, in the statement. The closure of the deal is contingent on the funding commitment from the European Investment Bank, guaranteed by the Swedish government.
Koenigsegg spokeswoman Halldora von Koenigsegg told Reuters on Tuesday the firm expected to close the deal within about a month, while GM said it saw the deal closing by the end of the year.
As part of the proposed transaction, GM and Saab will continue to share technology and services during a defined time period. This will be managed through licenses and service agreements, GM Europe said.
Swedish daily Dagens Industri reported on Tuesday that Koenigsegg Chairman Augie Fabela said 3 billion Swedish crowns ($413.6 million) of financing were still required in addition to the EIB loan. http://www.financialexpress.com/news/gm-koenigsegg-ink-stock-purchase-deal-on-saab/503644/
HONDA PROFIT REBOUND LURES INVESTORS Bloomberg See this story in: Business Standard
Tokyo: Japanese companies are returning to profit just three months after reporting record losses in the nations deepest post-war recession, luring overseas investors at the fastest pace in two years.
Companies from Honda Motor Co, the nations No 2 automaker, to Hitachi Chemical Co, the top maker of carbon anodes for lithium ion batteries, swung to profit following 8.6 trillion yen ($1.3 trillion) of losses in the previous quarter. Net income for the biggest companies on the Tokyo Stock Exchange reporting first-quarter results totaled 1.09 trillion yen, according to data compiled by Bloomberg. Analysts are boosting profit forecasts for the first time since September 2007, according to Nomura Holdings Inc. We expect a lot of analyst upgrades coming through after the earnings results, said Diane Lin, who helps oversee about $1 billion at Sydney-based hedge fund Pengana Capital. This could spur a bit of interest back to the market.
Reduced spending on payrolls and capital investments, combined with the fastest expansion in factory production in five decades, led to the recovery. The economy expanded at a 3.7 per cent annualised rate last quarter, the government said on Monday, after a record 14.2 per cent contraction in the first three months of 2009.
The Nikkei 225 Stock Average rallied 46 per cent from a 26- year low on March 10. It fell 3.1 per cent on Monday to 10,268.61. Factory output rose 8.3 per cent last quarter, the fastest since 1953 and a rebound from the record 22 per cent plunge in the January-March period.
Nomuras revision index, a measure of whether analysts are lifting or reducing profit estimates, rose to a 10-year high of 37 per cent in July on an unprecedented number of positive earnings surprises, according to an August 7 report. On July 31, Nomura boosted its pretax profit estimate for the nations largest companies by 3.3 per cent from its June forecast. The recovery in profits prompted international fund managers to snap up 445.2 billion yen of Japanese shares in the week to July 31, according to the exchange, the most since July 2007. The next weeks purchases totaled 286 billion yen.
Still, a net 9 per cent of investors outside the country remain underweight the market, according to a July fund manager survey from Merrill Lynch & Co, down from the more than 30 per cent at the start of the year.
Of the companies that changed first-half forecasts, 63 per cent raised their estimates, according to a Shinko Securities Co report dated August 14, and some investors are anticipating an increase in the number of buy calls on Japanese equities as more upgrades emerge. Analysts buy ratings hovered around 29 per cent of all recommendations each month this year, compared with 43 per cent in January 2008, according to Bloomberg data. The number of sells fell to 8.85 per cent last month from close to a three- year high of 10.06 per cent in January.
The Topix indexs 1,693 stocks trade at an average 1.2 times book value, the cheapest among Asian benchmark gauges. The Standard & Poors 500 Index is valued at 2.1 times book, while the Dow Jones Stoxx 600 Index in Europe is at 1.5 times.
Penganas stock purchases through the end of July have given Japan the most long positions of any market in the firms Asian long-short hedge fund, Lin said. Japanese equities are cheaper than other Asian markets that have rallied more this year, she said. The fund has bought Toyota Motor Corp, the worlds biggest automaker, Ibiden Co, which supplies chip packages to Intel Corp, and Elpida Memory Inc, Japans largest maker of computer memory, she said.
Efforts by companies to reduce costs may slow an economic recovery, as job losses and salary reductions damp consumer demand. Monthly wages slumped 7.1 per cent in June from a year earlier, a government survey released August 3 showed. The jobless rate rose to a six-year high of 5.4 per cent the same month.
The next step of a recovery in final demand is going to depend on factors outside of Japans control, said Hiroshi Motoki, managing director at the Japanese unit of AIG Global Investment Corp, which has $688 billion in assets.
Some of Japans biggest companies are raising forecasts. Toyota, based in Toyota City, narrowed its full-year loss estimate to 450 billion yen from 550 billion yen on August 4. Tokyo-based Honda lifted its full-year profit forecast on July 29 as it slashed expenses.
Hitachi Chemical, also based in Tokyo, more than tripled its profit forecast and boosted its sales estimate on July 28. The maker of materials for liquid-crystal displays has reported improving monthly sales figures since March, powered by demand for semiconductor and LCD components. Hitachi Chemical shares have more than doubled this year.
Companies that have been able to rein in costs and produce profits are catching the eye of the market, said Takeshi Osawa, a senior fund manager in Tokyo at Norinchukin Zenkyoren Asset Management Co. The stocks to focus on are the ones that are seeing top-line growth coupled with restructuring to create bigger-than-expected profits. Earnings announcements helped the Topix index rise for 13 consecutive days through August 4, the longest winning streak since March 1988. The gauge has gained 11 per cent this year, still the worst performance among Asias major stock indexes.
As far as Japanese equities are concerned, the only thing lacking is a bit of momentum, said Nader Naeimi, a Sydney- based strategist at AMP Capital Investors, which manages about $95 billion. http://www.business-standard.com/india/news/honda-profit-rebound-lures-investors/367448/
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| ECONOMY & FINANCE Go To Top
See this story in: The Times of India
Mumbai: The rupee turned stronger after a two-day slide, appreciating by 16 paise to 48.79/80 against the dollar, on Tuesday on exporters selling dollars and a smart recovery in local stocks amid a weak US currency abroad.
SENSEX WIPES OFF SOME LOSSES; ENDS 250 PTS HIGHER PTI See this story in: The Hindu Business Line
Mumbai: The Bombay Stock Exchange benchmark Sensex on Tuesday surged over 250 points after the market dropped 4.07 per cent yesterday. The Sensex, which had lost 626.71 in yesterday's trading, bounced back to end with a gain of 250.34 points at 15,035.26.
The key index touched the day's high of 15,134.51 and a low of 14,740.26 as trading remained choppy because of funds and general investors adjusting their portfolios. Similarly, the 50-share National Stock Exchange index Nifty rose 71 points at 4,458.90, after rising to 4,491.45 and touching the day's low of 4,372.65.
Recovery in Asian as well as European stocks this afternoon further boosted trading sentiment following reports of a hike in new house sales data in the US and rising hopes of stability in the weakening global economies.
Major supporter to the markets were stocks in the capital goods, realty, metal, power and auto segments. Overseas funds bought a net Rs 1,030 crore ($211 million) of stocks on August 14, the Securities & Exchange Board of India said on its Web site.
The funds have bought stocks of Rs 37,600 crore this year, compared with record net sales of Rs 53,000 crore for the whole of 2008. http://www.thehindubusinessline.com/blnus/05181901.htm
POOR MONSOON MAY PUT PRESSURE ON INFLATION: RBI Newswire18 See this story in: Business Standard
New Delhi: Reserve Bank of India Deputy Governor K C Chakrabarty said the weak southwest monsoon could put upward pressure on inflation.
The expectation is there (of upward pressure on inflation). The erratic monsoon may put pressure on inflation, Chakrabarty said on the sidelines of a meeting of regional rural banks. India is facing a severe drought situation as the southwest monsoon has been way below normal. As on August 12, the overall rainfall in the country was 29 per cent below normal.
RBI has projected the headline inflation rate based on Wholesale Price Index (WPI) to rise to around 5 per cent by March. Indias headline inflation rate is currently at an over three-decade low of (-)1.74 per cent. The RBI deputy governor said the impact of weak monsoon on the economy could be offset, to some extent, by adequate steps. Everybody needs to take precaution. It depends on how we utilise the existing irrigation potential and bring the short-duration crops, he said. http://www.business-standard.com/india/news/poor-monsoon-may-put-pressureinflation-rbi/367379/
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Wednesday, August 19, 2009
Indian Auto Industry Update August 19, 2009
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