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| INDUSTRY Khattars new test-drive may hit Honda margins Dont sell bike without helmets, HC tells dealers INTERVIEWS/FEATURES CARS, SUVs, MUVs Mahindra looking for new launches for growth: Keshub Mahindra COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY 2/3 WHEELERS COMPONENTS Domestic sales lift Cummins Q1 income
| ALLIED INDUSTRIES Falcon Tyres registers Rs 12 crore net profit Amara Raja Q1 net up 185% INTERNATIONAL NEWS Obama expects GM, Chrysler to repay loans Renault drives into red with 2.7 bn H1 loss ECONOMY & FINANCE SBI show, derivatives rollover lift Sensex Inflation rate falls for 7th straight week to 1.54%
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| INDUSTRY Go To Top
The Times of India (Web & Print Edition)
Chennai: With the economy in recovery-mode, investors interest has propelled shares of Mahindra & Mahindra (M&M), Bajaj Auto, Maruti Suzuki India, Eicher Motors, TVS Motor, Ashok Leyland close to their 52-week highs (on closing prices). Be it a maker of two-wheeler, four-wheeler or commercial vehicles, major auto stocks are 2-10% less than their 52-week highs. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
KHATTARS NEW TEST-DRIVE MAY HIT HONDA MARGINS Chanchal Pal Chauhan
New Delhi: Jagdish Khattar vacated Maruti Suzukis corner room long ago, but theres a new reason why competitor Honda Motors should keep a tab on his every move. Khattars new firm, Carnation Auto, which services 28 models across brands, has started importing original Honda components at a cheaper price using Indias free trade agreement (FTA) with Thailand, a move that could potentially threaten Hondas Indian units lucrative component business and its authorised dealer workshops. We have imported some components from Thailand on a trial basis. There was some price benefit and we have kept our options open for the future. We are not aware of any issue on the matter, said Mr Khattar, who is the CMD of the firm. To counter the threat, Honda is planning to register its trademark in India for auto components, besides moving its Thailand unit to halt supplies to Carnation, according to two industry people familiar with the matter. Honda currently imports and distributes spares through its fully-owned subsidiary, Honda Motor India (HMI). A company spokesman said while the Thailand-based Asian Honda Motor Company does not export spares to any other Indian firm, it sells parts of phased-out models to stockists in Thailand. It is possible that Carnation has imported the parts from those stockists or wholesalers. We have not yet raised any issue with Carnation Auto, the spokesman said. Auto components is a very lucrative business for car companies, with margins as high as 50% on critical parts. A major portion of carmakers and dealers profits come from the service and spares business as profits on new car sales have been impacted by the discounts being rolled out to push up sales. The two industry experts who spoke to ET for this story said on condition of anonymity that Honda Siel can restrict imports as most of the spares are manufactured by Honda in partnership with local companies in Thailand besides controlling the distribution channel. Mr Khattar, with a Rs 75 crore revenue target this year, is targeting the components business. He is also exploring the possibility of importing spares from other countries, including the UAE and Taiwan. Carnation is also looking at private labeled parts under its brand in the near future. While Mr Khattars venture is yet to fully take off, other carmakers, including Maruti Suzuki, have already raised an alarm, keeping in view the threats to the profitable servicing business. Our cars are homologated for Indian conditions and the companys genuine spare parts available through our nationwide network suit them best. If a private player sells or distributes components, the OEMs (original equipment manufacturers) warranty cover will be violated, Marutis executive officer (service) Pankaj Narula said. Carnation currently handles all major manufacturers like Maruti, Honda, Tata, Hyundai, Toyota and General Motors through its 10 multi-brand service outlets across the country, which is likely to go up to 30 by the year-end. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
The Times of India
New Delhi: The Delhi High Court on Thursday directed all two-wheeler dealers in the capital to ensure that their customers take home their new vehicles only after they have bought helmets. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
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| INTERVIEWS/FEATURES Go To Top The Economic Times
Bharat Doshi, executive director and group finance officer in Mahindra & Mahindra spoke exclusively to ET Now's Abhinaba Das on range of issues including the benefits the company is reaping due to cost control measures, monsoon worries, and what Satyam needs to do.
The major driver of the results has been the tractor business and the merger of Punjab Tractors with Mahindra played a very critical role.
The Punjab Tractor merger and the synergy benefits have all reflected in our results. Last year's first quarter did not include Punjab Tractor results. So, if I add Rs 22 crore of Punjab Tractors quarterly profits last year, even then the growth is 120%. Because of the poor monsoon, do you think you will sustain this momentum?
In utility vehicles your market share has grown from 50% to almost 65%. What made it possible? Substantially on the auto business. On the tractor side, after acquisition of Punjab Tractor, capacity is not such a big issue. But on the auto side we are setting up a major facility in Jharkhand and that is one of the major reasons for the cost going forward. Any fund raising plans ahead? We don't see any need for fund raising . Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CARS, SUVs, MUVs Go To Top Business Standard (Web & Print Edition) See similar story in: The Financial Express (Web & Print Edition), The Economic Times (Web & Print Edition), The Hindu Business Line (Web & Print Edition), The Hindu (Web & Print Edition), The Indian Express (Web Edition), The Times of India (Web & Print Edition), Daily News & Analysis (Web Edition), The Tribune (Web Edition), Hindustan Times (Web & Print Edition)
Mumbai: Mahindra & Mahindra, Indias biggest utility vehicle (UV) manufacturer, posted an increase of 151.6 per cent in net profit for the first quarter, strongly aided by lower raw material prices and additional tractor numbers from Punjab Tractors (PTL), which it acquired two years ago.
Net profit for the period rose to Rs 400.85 crore as compared to Rs 159.3 crore in the same quarter a year earlier. While PTL was bought by M&M in 2007 it was only merged with the company last July.
In addition, strong demand and higher margins from the Xylo (multi-utility vehicle), which M&M had launched in January, also helped push overall margins. Absolute UV sales went up by 28 per cent to 48,720 units, as compared to 37,919 units in the domestic market during the quarter, marking a market share of 65 per cent as against 51 per cent. Pawan Goenka, president (automotive sector), said: The effect of various cost control measures during the quarter has reflected in the numbers. Cost of raw materials currently are as much as they were in the first quarter of last year. We do not expect a significant increase in demand for UVs this year, which should be in single digits.
Net sales of the company grew 26 per cent to Rs 4,675 crore as against Rs 3,704.6 crore in the corresponding quarter a year earlier. It recorded its highest quarterly sales at 42,130 units.
While sale of M&M branded tractors grew 8.3 per cent to 30,502 units (from 28,161 units), demand for Swaraj branded tractors (owned by PTL) grew by 32 per cent to 11,628 units (from 8,812 units) in the reporting quarter.
Due to the economic instability in many countries, says the company, its exports from India as well as its other international operations will continue to be under pressure. Mahindra makes tractors in the US and China.
Anjani Kumar Choudhari, president, farm equipment sector, M&M, said: Our business in the US is down by 35 per cent, but we are expecting a growth in the range of 6-10 per cent in the domestic market for tractors, which should largely come from the festive season of September.
The company, which will commence retail sales of its pick-up trucks in the US starting February next year has trimmed its capital outlay by 10 per cent to Rs 4,400-4,500 crore for the next three to four years. Commercial production of the US-bound vehicles will begin in December and sold through more than 300 dealers.
Further, it will launch a light commercial vehicle in the following quarter, followed by the launch of a medium and heavy duty commercial vehicle (MHCV) by January. The company will unveil its new branding and logo for the MHCV venture in December. M&M has already appointed 32 dealers for the MHCV venture, which it shares with International Truck and Engine Corporation (ITEC). This number will be increased to 45 dealers by the end of the year. LCVs will also be sold through these dealerships. http://www.business-standard.com/india/news/mahindra-net-surges-152-to-rs-400-cr/365436/ http://www.financialexpress.com/news/m&m-gains-from-stimulus-cheaper-inputs/496189/ http://www.thehindubusinessline.com/2009/07/31/stories/2009073151270200.htm http://www.hindu.com/2009/07/31/stories/2009073156011500.htm http://www.indianexpress.com/news/mahindra-&-mahindra-q1-net-at-rs-400-cr/496041/ http://www.dnaindia.com/money/report_m-and-m-net-soars-152pct-as-xylo-picks-up-speed_1278579 http://www.tribuneindia.com/2009/20090731/biz.htm#10
MAHINDRA LOOKING FOR NEW LAUNCHES FOR GROWTH: KESHUB MAHINDRA PTI See this story in: The Economic Times (Web Edition)
Mumbai: Automobile major Mahindra & Mahindra is looking for new launches for growth, chairman of the company Keshub Mahindra said here on Thursday.
Addressing the 63rd annual general meeting of the company, Mahindra said last fiscal was very difficult. Many internationally big automobile companies suffered heavily. However, Mahindra managed to augment its growth by launching new models and would be banking upon new products to maintain the sales momentum. http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Mahindra-looking-for-new-launches-for-growth-Keshub-Mahindra/articleshow/4839159.cms
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| ASHOK LEYLAND LAUNCHES NEW MULTIAXLE VEHICLE PTI See this story in: The Economic Times (Web & Print Edition), Business Standard (Web Edition), The Hindu Business Line (Web & Print Edition), The Hindu (Web & Print Edition), The Financial Express (Delhi Print Edition)
Hyderabad: Hinduja Group flagship and leading commercial vehicle manufacturer Ashok Leyland has launched the 3116 multiaxle vehicle (MAV) developed for high fuel efficiency. http://www.thehindubusinessline.com/2009/07/31/stories/2009073151841100.htm http://www.hindu.com/2009/07/31/stories/2009073156091500.htm
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| CONSTRUCTION & AGRI MACHINERY Go To Top The Hindu Business Line
New Delhi: Tractor and agri machinery maker Escorts net profit more than doubled to Rs 22 crore for the third quarter ended June 30, from Rs 9.30 crore for the same period last year. Net sales during the period grew 10 per cent to Rs 582 crore (Rs 527.29 crore). According to Mr Nikhil Nanda, Joint Managing Director, Escorts, the company has benefited from cost compression programmes and improved production mix. Cost-cutting measures have so far resulted in a saving of Rs 45 cr ore and should result in a saving of Rs 100 crore by the end of its financial year in September, said Mr Nanda. http://www.thehindubusinessline.com/2009/07/31/stories/2009073151801100.htm
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| 2/3 WHEELERS Go To Top Yogima Seth The Financial Express
Hero Honda Motors, the countrys largest two-wheeler company, which on Wednesday reported its best-ever quarterly results, is cautiously optimistic about the future as the credit situation remains the same, says the companys CFO Ravi Sud in an interview with Fes Yogima Seth.
Excerpts
Our operating margins in the quarter rose to 17% due to the 4% drop in input costs and the increase in the companys average realisation per motorcycle sale apart from continuous cost rationalisation and operating efficiencies. The consistent robust top line performance has been driven by constant product refreshes, volume growth across segments and markets, aggressive brand building initiatives and rapid network expansion, reflecting the strong brands and continued expansion of new markets. Cost rationalisation across the board, softening of commodity prices, and tax benefits also contributed to the bottomline and have helped to garner over 59% market-share in the domestic market .
What has been the growth strategy at Hero Honda and how do we see the next three quarters for the company vis-a-vis the industry performance? The Hero Honda value proposition stems from the companys deep understanding of the industry and the local market. The company has been successful in creating an efficient and customer-focused business that will continue to win in the marketplace and add value for all stakeholders.
We are driven by innovation in every sphere of activity and we will build on this path to keep up the growth momentum in the new financial year as well. So, does it mean that the two-wheeler industry is out of any slowdown blues? We continue to remain cautiously optimistic. There have been no changes in the overall credit situation; there is uncertainty over the monsoon and over the interest rates and the sluggish economic environment. Going forward, a lot will depend on changes in all these trends.
What is your sales target for 2009-10? We are confident of meeting the sales target of 4 million units, which we had set in mid March 2009 .
Have you managed to improve margins by full utilisation of tax benefits available for the Haridwar plant? We have been able to stick to our plan and have been gradually scaling up the production at our Haridwar plant. Currently, the daily output is a little more than 4,000 units per day. During the FY09, we produced 6,22,000 units at the Haridwar plant and this year we plan take the number up to 1.22 million units. Currently, all our three plants are working at full capacity to meet the growing demand for our products.
What are companys capex plans for FY10 and how do you plan to fund this? We plan to spend about Rs 350 crore during the year as capital expenditure and it will be funded from internal sources. While Rs 100 crore will be spent in expanding the capacity at Haridwar, Rs 100 crore in will be pumped in existing plants for replacement/ balancing equipment, Rs 50 crore on energy generation and Rs 60 crore on major IT projects.
How do you foresee the demand for Hero Honda bikes in overseas markets? Exports constitute very little of our overall sales.
What is the contribution of rural markets in quarterly sales and what is the current share of urban to rural sales vis-a-vis same quarter last year? We have an equally strong presence in both urban as well as rural markets and our focus will continue on further expanding our presence in both these markets. We have always had innovative rural programmes, which have now been brought under a single umbrellaHar Gaon Har Aangan. Currently 40% of our sales come from rural markets.
What is the current finance scenario for two-wheelers? Has there been any improvement and can you quantify it. From the two-wheeler industry perspective, our concern has always been that banks are not really extending loans to the customers. We strongly feel that the risk aversion by banks remains a major concern. In an environment dogged by income freezes, salary cuts and job losses; banks are unlikely to go on a lending spree for loan seekers especially in the lower category.
The company has been mulling to set up its own finance arm. There is nothing concrete at this stage. http://www.financialexpress.com/news/risk-aversion-by-banks-remains-a-key-concern/496157/2
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| GOVT TO SHED 74% IN HMT BEARINGS PTI See this story in: Deccan Herald
New Delhi: The government is planning to offload stake in HMT Bearings Ltd (HBL) and is scouting for joint venture partners in some other state-owned firms in a bid to revive sick units.
http://www.deccanherald.com/content/16850/govt-shed-74-hmt-bearings.html DOMESTIC SALES LIFT CUMMINS Q1 INCOME The Hindu Business Line
Pune: Sales in the domestic market lifted the income of Cummins India Ltd (Cummins) as the diesel engine makers exports recorded a sharp decline during the first quarter of 2009-10.
The company posted revenue of Rs 626 crore during the quarter and earned a net profit of Rs 90 crore.
The sales revenue and PAT during the first quarter of 2008-09 were Rs 707 crore and Rs 88 crore respectively.
However, there can be no direct comparison of these with the FY 2010 performance as the latter includes Cummins Sales and Service which merged into Cummins with effect from April.
To pay 130% The company has announced a final dividend of 130 per cent (Rs 2.60), taking the total dividend in 2008-09 to 450 per cent on every share of Rs 2 face value.
Comparing Cummins results during the last two quarters, Mr Anant Talulicar, Managing Director, said that quarter-on-quarter, exports had dipped 75 per cent, while domestic sales had risen by 32 per cent.
Exports declined by over Rs 200 crore, while the domestic business grew by Rs 104 crore in the last two quarters, he said, adding that he expected the decline in top line to continue.
The picture was positive domestically, but tough for exports, he remarked. http://www.thehindubusinessline.com/2009/07/31/stories/2009073151182000.htm | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALLIED INDUSTRY Go To Top The Hindu Business Line See similar story in: Daily News & Analysis
Chennai: Dunlop India Ltd plans to restart operations at its Chennai factory from August-end. Dunlop Factory Employees Union representatives said the union has entered into an understanding with the management on Thursday to commence production at the factory in Ambattur.
An agreement was signed between the DFEU led by its President, Mr A. Krishnaswamy, and the management representatives led by Mr Damodar Dani, Executive Director and Chief Executive Officer, Dunlop India.
Over 660 employees on its rolls will benefit from this agreement. The agreement provides for a special allowance to employees, compensating for an earlier cut in wages. The factory will work seven days a week and the management has the freedom to recruit contract labour to keep costs down. The sources said the management hopes to collaborate with sister concern Falcon Tyres to manufacture two-wheeler tyres. Dunlop, which has surplus capacity in its rubber compound mixing plant, can supply raw material to Falcon. This is expected to provide readymade work order and augment cash flow for the company.
This is a turnaround for the company, which suspended commercial production in April 2008. The management and the union were in discussions for a final settlement to pay off all the workers and shut down operations at Ambattur. However, they could not arrive at a consensus. http://www.thehindubusinessline.com/2009/07/31/stories/2009073151781100.htm http://www.dnaindia.com/money/report_dunlop-may-suspend-work-at-shahgunj_1278573
FALCON TYRES REGISTERS RS 12 CRORE NET PROFIT Deccan Herald
Bangalore: Falcon Tyres Ltd declared a net profit of Rs 12.03 crore for the quarter ended June 2009 as against Rs 0.54 crore for the same quarter in the last year.
The jump in profit can be attributed to a drop in the purchase of traded goods to Rs 8.18 crore in the quarter from Rs 48.83 crore in the previous fiscal and increase in stock in trade from Rs 0.61 crore to Rs 8.90 crore. The company has also worked on cost-cutting measures. http://www.deccanherald.com/content/16857/falcon-tyres-registers-rs-12.html
The Hindu See similar story in: The Telegraph
Kolkata: The board of Falcon Tyres has recommended the splitting of shares followed by the issue of bonus shares. About 14 per cent of the shares of the company are now in the market. The P. K. Ruia group acquired this erstwhile Manu Chhabria group company in 2005 and now holds 86 per cent of the shares which it wants to bring down.
Shares of Rs. 10 each will be split into two shares of Rs. 5 each and bonus shares will be issued in the ratio of two shares for every share held. However, these bonus shares would not be entitled to dividend out of the profits for 2008-09, the company said.
Encouraged by the improved results during the first quarter, the company has decided to introduce continuous operations at its Mysore plant. The agreement to this effect was signed with the workers on July 15.
The company has chalked out a Rs. 300-crore expansion plan for the unit that will take the capacity from 7.5 lakh tyres to 9 lakh units and then to 14 lakh a month within this fiscal.
Falcon Tyres ended the first quarter with improved margins, reporting a net profit of Rs. 12.54 crore against Rs. 54 lakh in April-June 2007-08. Mr. Ruia said this was due to restructuring of operations and phasing out of un-remunerative products. This also led to a dip in net turnover, but margins have improved, he said. http://www.hindu.com/2009/07/31/stories/2009073156081500.htm http://www.telegraphindia.com/1090731/jsp/business/story_11303593.jsp
The Economic Times
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| FINANCE & INSURANCE Go To Top
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| OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top See this story in: The Indian Express Singapore: Oil prices extended their losses in Asian trade amid renewed worries about energy demand in the United States where data showed an unexpected jump in national crude reserves, analysts said.
New York's main contract, light sweet crude for September delivery fell 29 cents to USD 63.06 a barrel.
Brent North Sea crude for September delivery was off eight cents to USD 66.45 a barrel. Both contracts had closed weaker yesterday after the weekly energy reserves report from the US Department of Energy (DoE) surprised market watchers who predicted a drawdown in crude reserves.
Investor sentiment continued to remain under pressure from the DoE figures released yesterday, analysts said. "Inventories are extremely high, demand is weak and we are still in a recession," said Tim Evans, an analyst with Citi Futures Perspective in New York. "Why would you want to buy a commodity that is this abundant?" he said. The DoE said US crude oil inventories surged 5.1 million barrels in the week ended July 24.
Most analysts had expected a decline of 1.2 million barrels and the huge increase highlighted surprisingly weak demand in the recession-mired US, the world's largest energy user.
Underscoring the weakness of US demand, the DoE said that consumption fell 4.1 per cent over the past four weeks compared with the same period in 2008. http://www.indianexpress.com/news/oil-slips-to-usd-63.06-a-barrel/495956/
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| CAR, TRUCK MAKERS CLOCK WEAK RESULTS Reuters See this story in: The Financial Express
Automakers in Europe and Japan unveiled weak results for the first half of the year on Thursday and are set to keep tight control over costs, but most predict an improvement in conditions for rest of 2009. Europe's largest car maker Volkswagen said Thursday second-quarter profit sank sharply as France's Renault swung into a first half loss, but said it would increase production as the outlook had improved. In Japan, automakers Mazda Motor Corp and Mitsubishi Motors Corp also posted losses for a third straight quarter, but kept their annual forecasts unchanged, relying on cost cuts to offset the weak demand.
Volkswagen's net profit for the three months to June 30 was 283 million euros ($399 million), down 83% from the same period a year ago. Operating profit fell 56% to 928 million, but far exceeded average analyst expectations for 628 million profit.
Renault, which has a 44% stake in Japanese carmaker Nissan Motor Co, said its first half net loss was 2.712 billion euros against a net profit for the same period in 2008 of 1.467 billion and forecasts for a 2.36 billion loss. The DJ Stoxx European Autos index was up 1.09% at 10.56 GMT.
Automakers have seen sales crumble in the past 12 months due to global economic downturn and tight credit markets that have already driven US rivals General Motors and Chrysler to bankruptcy and restructuring.
Renault now expects the world automotive market to fall 12% in 2009 compared with last year to over 57 million units, an improvement over its earlier forecast of a 15% contraction this year.
Renault said it aimed to produce 164,000 more cars than it originally intended this year. This means Renault can sell 15% more cars in the second half than the first half, and can continue the claw back of free cash flow and further reduce debt, said analysts at Morgan Stanley in a research note.
Volkswagen, meanwhile, reported a surge in free cash flow of 4.3 billion euros during the first half leaving automotive net cash at 12.3 billion by the end of June, a war chest that would enable it to easily buy sports car maker Porsche.
However, Renault still expects Europe's car market to finish the year with an 8% decline, after a 13.7% fall in the first six months. Renault itself is showing resilience, chief executive Carlos Ghosn said, adding it was preparing for the post-crisis period with zero emission vehicles, expansion of its entry-level range and a move to expand synergies with partner Nissan.
The group said that despite the effects of incentive schemes to scrap older cars in major European markets, Europe made up half the total revenue decline. Group revenues fell 23.7% to 15.99 billion euros in the period.
French carmaker PSA Peugeot-Citroen on Wednesday posted a first-half loss and said it did not see a recovery in Europe starting before the end of 2010 but said it saw good potential from the Chinese and Brazilian markets.
Car parts maker Valeo on Wednesday posted a 54 million euros second-quarter net loss, but forecast a rebound in auto production in the third quarter.
German truck maker MAN SE said on Thursday it saw no sign of an upturn as it posted a plunge in second-quarter operating earnings in line with market expectations. Truck makers such as MAN and its Swedish rivals Volvo and Scania have equally been hit hard by plummeting demand over the past year as the economic downturn has run its course. German peer Daimler Trucks, the world's biggest truck maker, this week reported a 1.1 billion euros deterioration in second-quarter EBIT, swinging to a substantial loss after unit sales fell 56%. http://www.financialexpress.com/news/car-truck-makers-clock-weak-results/496169/2
OBAMA EXPECTS GM, CHRYSLER TO REPAY LOANS See this story in: The Indian Express Washington: President Barack Obama said on Wednesday that General Motors and Chrysler Group were companies worth saving, but he expects both to repay their government loans.
Obama's comments in Raleigh, North Carolina, came as his administration released preliminary figures showing dealers sold more than 16,000 vehicles in the first days of a government-sponsored program aimed at spurring auto sales and lifting US automakers financially.
The impact on GM, Chrysler and Ford Motor was not immediately clear with passenger car sales outpacing those of pickups and sport utilities. More specific information was expected to be released next week by the US Transportation Department.
In a speech on the economy, Obama defended the decision for the government to extend GM and Chrysler roughly $64 billion in direct aid and facilitate their bankruptcies this spring.
"If GM and Chrysler were willing to do what was necessary to make themselves competitive and if taxpayers were repaid every dime they put on the line, it was a process worth supporting," Obama said in Raleigh, North Carolina.
"We saved hundreds of thousands of jobs as a result and expect to get our money back." Nearly $20 billion of the $50 billion extended to GM was pre-bankruptcy bailout funding that dated to the Bush administration. The balance included loans and other aid granted for court restructuring and exit financing. GM sought Chapter 11 protection in June. Chrysler received more than $3 billion in bankruptcy financing and roughly $6 billion in loans for operations post- Chapter 11. Chrysler, which is operating in an alliance with Italy's Fiat SpA, received more than $4 billion in bailout financing before seeking court protection in April.
Government stakes in GM and Chrysler include debt-to-equity conversions of initial bailout balances they owed Treasury.
A payoff for that equity is uncertain, but the administration's autos task force says an initial public offering (IPO) for GM could come as soon as 2010 and could include some combination of new shares and the sale of government-held stock.
The US Senate defeated an amendment on Wednesday that would have limited any additional aid to GM and Chrysler under the Treasury Department's corporate bailout initiative, the Troubled Asset Relief Program (TARP).
The Republican-sponsored proposal also would have required Treasury to issue common stock to taxpayers, representing the government's 60 per cent stake in GM and 8 per cent holdings in Chrysler.
Outside experts question whether the government will recoup its investment. A Rasmussen Reports national survey released this week found that most respondents opposed the auto bailouts, with only 26 per cent saying it was a good idea for the government to take ownership of GM. Eighty per cent want the government to sell its stake in GM and Chrysler as soon as possible.
The ability of GM and Chrysler to repay their loans hinges significantly on whether the sagging US auto sales market rebounds and whether they capture a healthy share of the business. http://www.indianexpress.com/news/obama-expects-gm-chrysler-to-repay-loans/495965/2
RENAULT DRIVES INTO RED WITH 2.7 BN H1 LOSS PTI See this story in: The Hindu Business Line, Hindustan Times
We anticipated the crisis from July 2008 and made the first decisions necessary to weather it. Renault is showing resilience, as illustrated by our significant positive free cash flow, Renault Chairman and CEO Mr Carlos Ghosn said.
During this period, the company sold 11.07 lakh vehicles as against 13.26 units in the year-ago period, down 16.53 per cent. The company has generated a positive cash flow of 848 million in H1 on account of various cost-cutting measures, power investmen t and lower working capital requirements.
R&D spend fell by 25 per cent in the first-half of 2007, ahead of the 15 per cent reduction target initially set for the period 2007-2009. In light of this performance, the objective has been revised to a 20 per cent reduction, the company said. http://www.thehindubusinessline.com/blnus/10301820.htm
AFP See this story in: The Hindu Business Line
Tokyo: Japans Mazda Motor Corp on Thursday posted a net loss of 21.52 billion yen ($227 million) in the first quarter but cheered glimmers of recovery in US demand and record sales in China. Mazdas net loss compared to a profit of about 15 billion yen in the same period last year.
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| ECONOMY & FINANCE Go To Top The Hindu Business Line
Mumbai: The rupee gained marginally by 8 paise against the dollar, tracking the Sensex which gained in the last hour of trade. The domestic currency opened at 48.54 and strengthened to close at 48.34, as against the previous close of 48.42. The rupee opened weak as month-end dollar demand from companies exerted pressure on the rupee, said a dealer with a private bank. However, dollar inflows into the country helped the rupee appreciate, the dealer added. In the overseas markets, t he dollar slightly weakened against the pound but was stable against other currencies. In the forward premia market, the six month ended higher at 2.45 per cent (2.25 per cent) and the one-year was at 2.28 (2.17 per cent). http://www.thehindubusinessline.com/2009/07/31/stories/2009073151000600.htm
SBI SHOW, DERIVATIVES ROLLOVER LIFT SENSEX PTI See this story in: The Hindu Business Line
Mumbai: The rolling over of positions to the August series on the last day of the July derivatives contract helped the benchmark Sensex to snap a three-day losing streak and ended up by 214.50 points on firm Asian and European cues.
The Bombay Stock Exchange 30-share barometer touched a low of 15,065.48 only to bounce back to end the day at 15,387.96, a rise of 1.41 per cent over its previous close. After early hesitancy the weak Asian markets recovered in late-morning deals.
Dealers attributed the recovery mainly to short-coverings and the rolling over of positions to the August series on the last day of July contracts of the futures and options segment. The 50-share Nifty of the NSE rose 57.95 or 1.28 per cent at 4,57 1.45 from its last close.
IT shares rose on excellent Q1 results announced by some major companies in the past few days. Bank scrips also were in keen demand after SBI's net profit in the first quarter rose 42 per cent.
Bonanza Portfolio Assistant Vice-President, Mr Avinash Gupta said: The market is displaying signs of strength. It opened with the weakness noticed yesterday. The Nifty recovered quickly on good Asian cues followed by strong European markets. This brought the market back in the range of 4,500 to 4,600. http://www.thehindubusinessline.com/blnus/05301901.htm
INFLATION RATE FALLS FOR 7TH STRAIGHT WEEK TO 1.54% The Hindu Business Line
New Delhi: The annual Wholesale Price Index fell for a seventh straight week, declining 1.54 per cent in the week to July 18 after falling 1.17 per cent on a year-on-year basis in the previous week, the Government said on Thursday.
Inflation was recorded at 12.54 per cent during the corresponding week of the previous year. The official WPI for All Commodities for the latest reported week rose by 0.04 per cent to 236.8 points from 236.7 points for the previous week.
Primary articles On a disaggregated basis, the Primary Articles group index rose by 0.3 per cent as the index for the Food Articles group rose by 1.2 per cent due to higher inflation in case of mutton (14 per cent), arhar (9 per cent), gram (4 per cent), moong, jowar, fruits and vegetables, and masur (3 per cent each), bajra and urad (2 per cent each) and maize and ragi (1 per cent each). However, the prices of condiments and spices (1 per cent) declined.
Non-food articles The index for Non-Food Articles group rose by 1.7 per cent due to higher prices of logs and timber (35 per cent), copra (3 per cent), raw silk (2 per cent) and rape and mustard seed, raw cotton and gingelly seed (1 per cent each). However, the prices of sunflower (1 per cent) declined.
Minerals The index for Minerals group declined by 16.8 per cent due to lower prices of iron ore (24 per cent) and felspar (3 per cent). However, the prices of vermiculite (86 per cent), manganese ore (77 per cent), silica sand (4 per cent) and barytes (2 per cent) moved up.
Fuel and power The Fuel and Power group index declined by 0.1 per cent due to lower prices of aviation turbine fuel (7 per cent).
Manufactured products The Manufactured Products group index declined by 0.1 per cent as the index for Food Products group declined by 0.4 per cent due to lower prices of oil cakes (3 per cent) and cottonseed oil (1 per cent). However, the prices of imported edible oil (4 per cent) and rice bran oil, coconut oil, sugar, butter, ghee and gur (1 per cent each) moved up.
Beverages, tobacco The index for Beverages Tobacco and Tobacco Products group rose marginally due to higher prices of soft drinks (all kinds) (1 per cent). The index for Textiles group declined by 0.2 per cent due to lower prices of hessian cloth (3 per cent) and hessian and sacking bags (2 per cent).
Chemicals and products The index for Chemicals and Chemical Products group rose marginally due to higher prices of acid (all kinds) (1 per cent). The index for Non-Metallic Mineral Products group declined by 0.1 per cent due to marginal fall in cement prices.
Basic metals The index for Base Metals Alloys and Metal Products group rose marginally due to higher prices of foundry pig iron and basic pig iron (1 per cent each). However, the prices of other iron steel, steel ingots and lead ingots (1 per cent each) declined.
For the week ended May 23, the final WPI for All Commodities stood at 234.3 points compared with the provisional estimate of 232.3 points and the annual rate of inflation based on final index, calculated on point-to-point basis, stood at 1.34 per cent compared with 0.48 per cent. http://www.thehindubusinessline.com/2009/07/31/stories/2009073151031000.htm
Last Financial closing
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Saturday, August 1, 2009
Indian Auto Industry Update July 31, 2009
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