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| This Update also carries stories featured on Sunday, November 01, 2009 | ||||
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| INDUSTRY Tata Motors mulls letting assemblers brand Nano INTERVIEWS/FEATURES Domestic gains COMPONENTS Hinduja Foundries: Rs 1.78 cr net profit in Q2 ALLIED INDUSTRIES JK Tyre to supply tyres for small cars by Honda, Nissan FINANCE & INSURANCE Home, car loans to drive ICICI growth: Kochhar OIL, LUBRICANTS & ALTERNATIVE FUELS Oil prices sink after surging on US growth data | CARS, SUVs, MUVs GM India Oct sales up 15% COMMERCIAL VEHICLES Truck-trailers size is now an unwieldy issue Low-floor bus maintenance burns hole in Govts pocket CONSTRUCTION & AGRI MACHINERY Mahindra launches tractor for small farmers 2/3 WHEELERS Hero Honda October sales rise marginally; TVS posts 12% surge INTERNATIONAL NEWS Magna wants Demel to head Opel: Magazine ECONOMY & FINANCE India, along with Asia, will re-emerge after crisis: Y.V. Reddy | |||
 INDUSTRYS Kalyana Ramanathan Business Standard (Web & Print Edition) (Nov 02) London: Seven months after the launch of Nano, Tata Motors is toying with the idea of letting local garage assemblers put together the worlds cheapest car and also sell it under a brand of their own. The company, which is revisiting the concept of distributed manufacturing mooted by Chairman Ratan Tata when he first talked of the Rs 1 lakh car several years ago, will become the worlds first to attempt such a "federal" structure of manufacturing. Speaking at The Economist Innovation conference in London on Friday, Tata Motors Vice-Chairman and former managing director Ravi Kant said with the new Nano plant likely to start commercial production in the last quarter of this financial year ending March 2010, the company may allow enterprising assemblers to set up micro-assembly sites across the country, with each producing some 10,000 cars a year. "We call it Nano, they (assemblers) don't have to," said Kant, who received the The Economist Innovation award 2009 (for business process) on behalf of Tata for developing and rolling out the world's cheapest car. Experts, however, said handing over the branding power to small assemblers may not be easy. For one, the perceived and actual safety of a car has always been associated with the brand. Tata Motors will have to be extra careful about safety concerns after a small number of Nanos sold in India reported technical problems last month, forcing the company to conduct a preemptive audit of the quality of cars already shipped as well as those in the inventory. The Indian car market has still not come to this stage. Given that a car like Nano is three or four years investment, customers will still go for established brands from strong OEMs (original equipment manufacturers; in this case Tata Motors). So this idea may not fly very well, said Abdul Majeed, leader, automotive practice, with PricewaterhouseCoopers in India. There would also be concerns about after-sales services and spare parts, he added. Ratan Tata spoke of distributed manufacturing when he first went public with his desire to make a Rs 1 lakh car, as Nano was referred to for years until it was christened. Though this idea was never officially abandoned, the company spent the next few years absorbed in developing the car and setting up the new plant, which had to be shifted in a hurry from Singur in West Bengal to Sanand in Gujarat owing to problems over land acquisition. The Sanand plant is expected to go into commercial production in the January-March quarter of 2010 with an initial capacity of 250,000 a year, scalable to 350,000. Nano is expected to be launched in Europe in 2011. Although its price here is yet to be decided, Kant said it may well be the cheapest to hit these markets. On the potential competition to Nano, Kant said it might take a combination of a global car maker and an Indian one to mount a credible challenge. I am not saying it cannot be done alone, but we clearly have the first-mover advantage, he said. The Hindu Business Line (Web & Print Edition) (Nov 02) Kolkata: Tata Motors will not launch any new passenger car on a new platform in next two years. New models, however, may be launched by the Tata Motors-Fiat joint venture. Talking to newspersons here, Mr Nitin Seth, General Manager - Car Product Group, passenger car business unit, said that the company planned to roll out variants on the existing platforms during the next two years as development of new platforms would not be viable at this juncture. According to him, the company has adequate offerings in passenger car segment and was aiming to emerge as the second largest player in the sector in two years. | ||||
| Ram Prasad Sahu Business Standard (Smart Investor) (Nov 02) Mumbai: An economic rebound will boost Tata Motors revenues in the domestic market, but JLRs performance will decide its return to profitability. A revival of the economy has helped Indias largest commercial vehicle (CV) maker, Tata Motors, post a smart 21 per cent jump in CV volumes to 74,273 units in the September 2009 quarter. Consequently, revenues rose 12.7 per cent to Rs 7,979 crore. Rising sales in the current fiscal indicate that demand is picking up and the company having a dominant share in the CV market should be able to grab most of the upsides. Market share gains The company sold 5 per cent more medium and heavy CVs (M&HCVs) than the September quarter last year helping it improve its market share from 59.8 per cent to 63.5 per cent. The light CVs (LCVs), too, continued their strong showing for the second straight quarter and improved its share of the market by 300 basis points to 66.8 per cent. Passenger vehicle (PV) volumes also went up 13 per cent due to higher sales of Indica Vista and the Nano (small car segment). However, a lacklustre performance of its utility vehicle portfolio and the mid-size car segment led to a 110 bps drop in its market share to 11.6 per cent. Margin gains and funding Price hikes and a better product mix helped improve margins in the September quarter. The company expects price hikes and cost cutting measures to cancel out increases in commodity prices. The company has finally managed to pay the $3 billion (over Rs 14,000 crore) debt which it had taken to finance the Jaguar Land Rover (JLR) acquisition. These were financed by a rights offer in October 2008 and long-term rupee bonds (May 2009) of Rs 4,200 crore each, GDR and FCCN issue (October 2009) of Rs 3,500 crore and divestments (Tata Steel) which fetched it Rs 1,700 crore. Though the loans have been cleared by additional capital raised, the company is likely to continue to its divestments both of its investments as well as holdings in 100 per cent subsidiaries to deleverage its balance sheet, which currently has a net debt of Rs 18,600 crore and net debt-equity ratio of 1.34. Outlook Going ahead, on the domestic front and in the short-term, Tata Motors will be looking at the order for 5,000 buses under JNNURM to be delivered between now and March 2010 to boost its revenues. Further, the company will be pinning its hopes on the demand and success of the small car, Nano, which has seen deliveries of 7,500 units so far, the Indigo Manza sedan launched in October 2009 and M&HCV models based on the World Truck platform to be unveiled shortly. But, unless the JLR operations see a marked improvement in sales, it will continue to be a drag on Tata Motors. At current levels, the stock is trading at nearly 20 times its consolidated 2010-11 estimated earnings and upsides in the short-term appear limited. Ram Prasad Sahu Business Standard (Smart Investor) (Nov 02) Mumbai: While Maruti had a stupendous quarter on the back of rising volumes, the stock price reflects these gains. Riding on tax breaks and festival demand, Indias largest passenger vehicle player, Maruti Suzuki post a 47 per cent year-on-year jump in sales to Rs 7,050 crore for the September 2009 quarter. Rising sales of new models such as the A-Star, Ritz and Zen Estilo helped boost sales volumes by 30 per cent to 2.46 lakh units. Demand drivers While the companys sales have been robust to the rural segment and government employees, urban demand is also looking up. The rural segment, which reported healthy growth during the quarter, has steadily grown and now accounts for 16 per cent of sales (up from 5 per cent a couple of years ago). On the other hand, urban demand has also seen a growth of about 8 per cent y-o-y during the quarter. Demand for its best selling models Dzire and Swift which have a waiting period of two months and exports is keeping realisations as well as margins higher. However, while the car maker is expected to achieve a 16 per cent y-o-y sales growth in 2009-10 to about 9.18 lakh units, expect the spike in sales due to festival demand to taper off over the next couple of quarters. Some models might continue to be on a waiting period given that the company is operating at full capacity and new capacities will come into play only in 2010-11. Margins, exports jump In addition to higher volumes, a better sales mix skewed towards high-margin products and exports helped improve operating profit margins by 350 basis points to 11.2 per cent. Export volumes jumped 109 per cent y-o-y and gross realisations on exports at Rs 3.5 lakh are much higher than domestic realisations. With exports now accounting for 15 per cent of turnover from 9 per cent from a year ago quarter, Maruti Suzuki is sitting pretty on this count. However, with the government subsidy on the purchase of a new car coming to an end, sustaining sales volume in the 18-country European market that it has created will become difficult. The company is eyeing 26 alternative non-European nations to maintain its sales growth. An area of concern would be the increase in raw materials costs which coupled with relatively lower volumes post festival season will make it difficult to maintain these margins. Outlook While on most counts the company is way ahead of competition there are certain concerns. The possibility of removal of excise breaks now that the domestic economic revival is strong could deflate demand. If interest rates go higher and considering that credit sales have increased from 62 per cent last year to 71 per cent now could have an impact on Marutis volumes going ahead. A stronger yen could also increase import costs though some of it is taken care of by higher export earnings and hedges. Considering that Marutis average forward P/E over the last six years is 14 and the stock at current levels is trading at 16 times 2010-11 estimated earnings, there is little upside expected from these levels. Yogima Seth The Financial Express (Editorial) (Nov 02) The automobile industry in India will likely show a new high when the numbers for October are released for public consumption. Earlier, in September, industry body Siam had revised its growth targets to double digits as against an earlier projection of 4-5% growth. With a conservative growth of 10%, the total automobile sales in the country are expected to be 1,06,95,730 units in 2009-10the highest ever in the history of the India automobile industryas against 1,01,23,988 units in 2006-07 when the sales crossed the 10 million mark for the first time or 97,23,391 units in the last financial year. This is indeed a reason for automobile players to cheer, more so when sales in the European Union are still growing at an average of 3-5% a month despite the scrappage incentives being doled out by various governments. However, what is going unnoticed is that the bare minimum of 10% growth in the current financial year is not anything great considering that sales were flat in 2008-09. This invariably means that the 10% growth of 2009-10 would really be seen over a two year horizon. For a country where penetration level is as low as nine cars per 1,000 people as against 500 cars per 1,000 people in the US, this is certainly moderate growth and doesnt call for a celebration. As commodity prices are hardening and fuel prices continue to be high, it remains to be seen whether the growth momentum of the last few months will sustain over the second half of this financial year as well. In any case, the focus of the industry players should be to continuously improve and upgrade their products and bring about an increase in efficiency in order to be globally competitive. And while car manufacturers in India do their bit by launching new products and upgrading the existing ones, the Centre might also have to play a bigger role by giving incentives for buying new cars, by encouraging users too discard their older ones, as is being done in government funded programmes in Europe and in the US. | ||||
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| Mamuni Das The Hindu Business Line (Web & Print Edition) (Nov 02) If, in the last few years, youve noticed an increasing number of long tractor-trailers bullying their way past your vehicle on the roads, here is the reason: More and more trucks and tractor trailers are increasing the dimensions of the body to accommodate more cargo, and thus make more money. This is despite the fact that there are rules under the Central Motor Vehicles Act, 1988, that specify not just the dimensions of vehicles but the weight as well. Moreover, the State Governments are supposed to implement these rules on dimensions particularly while issuing registration certificates and during annual inspections. But illegal body extensions do happen, according to a Government-funded study. Over 90 per cent of tractor trailers plying on Indian ro ads have higher dimensions than what is permitted by the Central Motor Vehicles Act, 1988, says a study of Central Road Research Institute, a Government research body. The study, commissioned by the Ministry of Road Transport and Highways, submitted its report to the Ministry in October 2008. The study surveyed 450 rigid body trucks and tractor trailers. Now, a look at some specifics. For tractor trailers, the Central Motor Vehicles Act permits a maximum length of 18 metres, maximum height of 4.75 metres and maximum width of 2.6 metres. The survey recorded that approximately 50 per cent of tractor-trailers survey had length between 19 meters and 22 meters and about 40 per cent of the tractor-trailers had length of over 22 metres. Car Carriers Even as there are so many violations, the Ministry of Road Transport has introduced another interesting aspect in this over-dimensioned vehicle issue. In July 2008, just after the transporters strike called by All India Motor Transport Congress (AIMTC), the Ministry bowed to one of the demands of transporters, says a Ministry official. It issued a notification permitting a new category of vehicles called the double-decked tractor trailer and double-decked rigid body truck with longer dimensions, for a limited period of six months. This was done because the Centre wanted to exempt vehicle carriers specially designed to meet the logistics requirements of the automotive industry from the Central Motor Vehicles Rules on dimensions. It allowed the double-decked rigid body trailer to have a length of 22 metres, width of 2.85 metres and height of 4.75 metres. Similarly for double-decked rigid body trucks, the Ministry allowed dimensions of 12 m (length), 4.75 m (height) and 2.85 m (width). Since July 18, 2008, when the Ministry brought in the notification for six months, the Ministry had been giving subsequent ad-hoc extensions. The last extension was till October 20. Until October 29, the Ministry had not granted any extension, though top officials say that the Ministry is in the process of issuing an extension of three months. But several sections both within and outside the Government concerned with the road transport and highways sector have expressed strong reservations over the purported move to allow longer dimension vehicles. Critics point out that as our highways pass through cities, these trailers are a threat to road safety. Traffic hazard As it is, Indian roads have been on the scanner because of poor safety records. The National Crime Records Bureau indicates that at least 13 people die every hour in road accidents in the country. In 2007, 1.14 lakh people in India lost their lives in road mishaps. What is the need to allow large vehicles to accommodate more automobiles? asks Mr S.P. Singh, Senior Fellow, Indian Foundation of Transport Research and Training. By not allowing larger dimensions, at the most a few less automobiles can be accommodated in a trailer. So, in effect, the profits of transporters or auto manufacturers will be impacted. But look at the overall cost to economy due to the Ministrys move. The highways get blocked as the turning radius (of the large vehicles) goes up significantly. You will have more cases overloading, leading to road safety issues, Mr Singh says. Business Standard (Web & Print Edition) (Nov 01) Eicher Motors reported a profit of Rs 27.40 crore for the third quarter ended September 30, 2009. In the year-ago period, the company had a profit of Rs 42.91 crore, Eicher Motors said in a filing to the Bombay Stock Exchange. Total income from operations stood at Rs 859.27 crore in the quarter under review, while in the year-ago period it was 494.85 crore. The Pioneer (Web & Print Edition) (Nov 02) New Delhi: The induction of modern low-floor (air conditioned and non-air conditioned) buses into DTC's fleet to augment public transport in the Capital is turning dearer for the Delhi Government. The Government would be spending an amount equivalent to the price of the bus for maintenance that would increase the total cost of these buses by about 100 per cent. The Government has placed order for 2,500 low floor buses with Tata Motors and Ashok Leyland whose maintenance and repair would also be carried out by the respective manufacturers. According to the Transport Department of the Delhi Government, non-AC low-floor buses supplied by Ashok Leyland are priced at Rs 47 lakh, whereas the total maintenance cost of a bus up to 7.5 lakh kilometers would amount to Rs 44 lakh, taking the total cost to Rs 91 lakh per bus. Similarly, AC low-floor buses would cost Rs 1.03 crore after spending Rs 46 lakh as maintenance in addition to Rs 57 lakh at which the buses are being procured by the Government. It is noteworthy that the DTC has handed over the maintenance and repair work of these buses to the manufacturers itself, as it's technical staff is not used to the modern low-floor buses. According to a DTC official, the department is also in the process of converting its technical staff into drivers and conductors. As per the Cabinet decision, DIMTS was appointed as bid process manager and consultant for the procurement of new CNG-propelled buses. The DTC had floated tenders in February last. Three companies, namely, Tata Motors, Ashok Leyland and JCBL Ltd, had submitted their bids. However, after evaluation of the bids, JCBL was disqualified. After the companies opened their price bids, the total cost of the buses were evaluated at Rs 91 lakh and Rs 1.03 crore for non-AC and AC buses, respectively. However, the DTC had raised objections with Ashok Leyland regarding the high price of buses on account of non-specifications in construction and design, reduced prices of aluminum steel and economy of scale. But the company refused to reduce the prices and justified the quoted rates as well as the maintenance cost. A comparison of the existing maintenance cost rate with that of the proposed rate shows that the DTC, which is currently spending Rs 3.20 per kilometer over maintenance, would be paying Rs 4.75 per kilometre, which is about 50 per cent more than the present rate. Similarly, the total maintenance cost of a bus up to 7.5 lakh km would go up by 20 per cent to Rs 44 lakh from the existing cost of Rs 35 lakh. http://dailypioneer.com/212850/Low-floor-bus-maintenance-burns-hole-in-Govts-pocket.html | ||||
| PTI See this story in: Daily News & Analysis (Nov 02) Rajkot: The farm equipment giant Mahindra and Mahindra, in a joint venture with a local company Deepak Diesels Pvt Ltd (DDPL) has launched a cost effective tractor "Yuvraj-215" in the Gujarat market for small farmers. While unveiling the product here Anjanikumar Chaudhary, president, Farm Equipment Sector, Mahindra and Mahindra said nearly 80 per cent farmers in the country have less than five acres of land and 99 per cent farmers are unable to purchase conventional tractors. He saidkeeping in mind the requirement of small farmers Mahindra joined hands with Rajkot based company to introduce cheaper tractors. The new product which carries all the features that a conventional tractors have, is prized at Rs 1.65 lakh against Rs 2.5 lakh onwards at which other tractors sell in the market. The "Yuvraj-215" has been initially introduced in Gujarat and would gradually be taken to other states of the country, he said. Yuvraj-215 will be manufactured in Rajkot with the capacity to produce around 10,000 tractors per annum, Chaudhary said adding Mahindra has entered into a contract manufacturing agreement with DDPL which will exclusively manufacture the yuvraj 215 in Rajkot, he added. | ||||
| The Financial Express (Nov 02) New Delhi: Buoyed by high demand during Diwali, easier availability of finance and introduction of new products, major auto manufacturers in the country reported an increase in sales in October. Hero Honda Motors, the countrys largest two-wheeler manufacturer, reported a marginal growth of 0.5% in sales last month at 3,54,156 units as against 3,52,449 units during the same month last year. Total sales of Chennai-based TVS Motors also went up by 12% in October this year at 1,31,029 units, against 1,17,101 units in the corresponding month of the previous year. Even car manufacturer General Motors India registered a jump of 15% in sales in October at 7,413 units, vis--vis 6,465 units in October 2008 on the back of its recently launched Chevrolet Cruze. This comes on the backdrop of new products introduced by these players in the market. While Hero Honda recently launched its new premium bike, the fuel-injected ZMR, along with a refreshed version of the best-selling Hunk in the premium segment and a special edition of Splendor+, GM India launched the Chevrolet Cruze to compete with Honda Civic and Corolla Altis. Hero Honda, which is also the worlds largest two-wheeler manufacture, registered an over 3% growth in retail sales during the festival period. Last year, since both Diwali and Dussehra fell in October, the companys total sales (retail as well as dispatch from company to the dealer) surpassed the six lakh unit mark. We are happy to have clocked a healthy sales number in October given the large base of the previous year. It comes on back of a record retail sales achievement during the just-concluded festival season. It is particularly satisfying as this has been possible despite several holidays during the month due to festivals and the assembly elections in Haryana, on account of which our two plants in the state were closed for a few days, said Anil Dua, senior vice-president (marketing and sales), Hero Honda Motors, in a statement. Domestic sales of TVS Motors went up by 18% at 1,18,563 units last month against 1,00,088 in the corresponding period of the previous year. While its motorcycle sales in the country declined by 4.6% in October at 56,465 units as compared to 59,217 units in October last year, its scooter sales went up by 20% at 28,301 units vis--vis 23,487 units in the corresponding month last year. Hero Honda reports marginal increase in October sales The Economic Times Hero Honda October sales rise marginally; TVS posts 12% surge Yahoo India PTI See this story in: Business Standard (Nov 02) Chennai: The company has sold 1.31 lakh units in October 2009 as compared to 1.17 lakh in the same month last year, a company press release here said. Over the last seven months, the company has seen sales growth of 6 per cent, selling 8.68 lakh units as compared to 8.19 lakh units in the same period last year. In the domestic market, sales witnessed 18 per cent growth at 1.18 lakh units in October as against 1 lakh units in the corresponding period last year. In addition, scooter sales have registered 20 per cent growth at 28,301 units in October as against 23,487 units in the same month last year. However, total motorcycle sales declined in the month of October at 56,465 units in October against 59,217 units in the same period last year, the release said. Exports also dipped at 12,466 units in October against 17,013 units in the corresponding period last year. The release said the company, in a bid to increase its presence in the three wheeler market, unveiled TVS King Arjun and TVS King LS in Kolkata and Bangalore in October. TVS reports 12 pc increase in sales in October The Economic Times TVS reports 12% increase in sales in October The Hindu Business Line TVS reports 12% increase in sales in October The Pioneer TVS sales The Statesman TVS reports 12% increase in sales in October Daily News & Analysis http://www.dnaindia.com/money/report_tvs-reports-12pct-increase-in-sales-in-october_1305737 TVS posts 12% rise in sales in October Mint Swaraj Baggonkar Business Standard (Nov 02) Mumbai: Bajaj Auto, the countrys second largest motorcycle manufacturer, has quietly discontinued two of its flagship products in the past three months to make way for more expensive models. The Pune-based company has discontinued the XCD 125, an executive segment motorcycle launched in September 2007, to make way for a model with a slightly bigger engine. This is the second model it has phased out within just three months. It also stopped producing the Pulsar 200, a premium segment motorcycle. The XCD 125 has been replaced with a slightly more powerful version of the same brand called XCD 135, launched this January. The latter is Rs 4,000-5,000 costlier and produces 10 per cent more power. Although the company did not initially expect severe cannibalisation of XCD 125, it was forced to re-think after demand for it fell to alarmingly low levels of under 20,000 units a month against the targeted 50,000 units a month. The XCD 135, however, sold 10,000 units in the first two weeks after the launch. A Pune-based Bajaj Auto dealer said, The XCD 125 was sold for Rs 46,000, while the XCD 135 is sold for Rs 49,000 (after a cash discount of Rs 2,000). The new bike has proved to be more fuel-efficient, despite the increase in engine size. Similarly, the Pulsar 200, one of many forms of the Pulsar brand created by Bajaj Auto and launched in January 2007, was discontinued after the price of the new Pulsar 220 was found to be too close to it. Bajaj had slashed the price of the Pulsar 220 by as much as Rs 15,000 after it launched a face-lifted version of the bike in June. The new price was Rs 70,000, the same as the Pulsar 200. Bajaj had launched too many models in the market without many differentiating factors between the bikes. The company always had the option to lower or even completely stop the production of one bike and increase the other, depending on the demand, said a city-based analyst tracking the company. According to senior executives at Bajaj, the company now wants to concentrate on promoting only the Discover and Pulsar brand in the entry to premium segment in the domestic market, while also containing other brands like XCD, Platina and Avenger in the process. After the rejig in the product portfolio, Bajaj Auto now has nine models Discover (100) Platina, XCD 135, Discover 135, Pulsar 150, Pulsar 180, Pulsar 220, Avenger and Kristal, down from 11 models earlier. The now phased out XCD 125 was positioned as an alternative to the traditional 100cc bikes from Hero Honda, pricing it on par with the models of the market leader. PTI See this story in: The Economic Times (Nov 01) Mumbai: Leading racing-inspired motorcycles manufacturer Ducati Motors is targeting a sale of around 100 bikes in the Indian market over the next one year, a top company official said. "We anticipate (selling) around 100 units from India. However, as the Indian market develops faster than any one expects, we are optimistic and hope to do more than that," Ducati Motor Holding's Vice President (Sales), Christiano Silie, told PTI here. The company also opened its first showroom in India in Mumbai and has plans to set up similar showrooms in the major matros in the next calender year, Silie said. The showroom in Mumbai has been set up in association with Precision Motor India Private Limited. Delhi is next on the agenda with the location most likely to be Gurgaon, Silie said. "We hope develop fast in the next few years globally as well as in India along with China, Brazil and some other markets in South-East Asia," he said. Super bike maker Ducati sets shop The Times of India Ducati to sell 100 bikes by next year Hindustan Times Neha Rishi Daily News & Analysis (Nov 02) Italian superbike maker Ducati is entering the premium bike segment in India. Yamaha and Honda are already present in the 500-unit market. Suzuki and Harley Davidson will enter next year.Aspirations are high at Ducati, which launched its first showroom in Mumbai on Sunday. Globally, the company sells 40,000 bikes annually. And while all global automotive giants are foraying into the Chinese market as well, Ducati, which opened its showroom in Shanghai last week, is banking big on the Indian market. It will offer five bikes -- HyperMotard, Monster, Fighter, SBK and Sport Classic -- in 16 variants. The price will be in the range of Rs 9-43 lakh. Neha Rishi spoke to Cristiano Silei, vice-president (sales), Mirko Bordiga, chief operating officer (Ducati Asia-Pacific), and Ashish Chordia, CEO of Precision Motor India, which holds Ducati dealership, about the bike maker's India plans. Excerpts: How many bikes have you sold since May? Your target was 50 bikes per year... Silei: We haven't sold a bike yet. When we announced our entry in the market last year, we set a target of 50 units. We made a conscious decision to not start deliveries until we had our network in place, which can support the after-sales service and also support the customer. We have received a lot of enquiries in this period -- close to 300 -- despite the fact that we did not do any marketing of the product. Only we announced that we will be present in the Indian market. We will not stick to our target of 50 units because our target is a moving target. But starting from now to December 2010, we are looking at selling a minimum of 100 units. Given the competition, is 100 units a realistic target? Silei: In a market like India, which is a developing one for motorsports, competition actually helps the market to grow and we hope to reach our sales target, thanks also to the work other manufacturers are putting in to promote the development of the industry. What sort of volumes justify bringing this product as a completely knocked-down unit? Silei: We do not have plans for that. We are not thinking of a CKD. Right now, we are thinking of entering the market and bringing our product, services, community, clubs. What's the import duty one will have to pay on the completely-built unit? Silei: Duties and tariffs come to 114%, which is very high and we hope things will change in future as we are not paying such high tariffs anywhere we distribute. But we wanted to bring brand Ducati into the Indian market. There is not much difference in the global pricing of the product with India, the only difference is the high taxes that an Indian customer has to pay. Is it a conscious decision to enter India at around the same time as Harley Davidson? Silei: I think we were the first ones to believe in India as a market and hence we came here a year go, well before the crisis and the economic meltdown. Our coming here was not a reaction to the conditions outside, it was a clear strategy. We believe that the Indian market will be interesting and develop faster than any other market. Bordiga: We have our whole product range in India, it's same as what is selling in the US and Europe. In comparison, Harley Davidson will enter the Indian market with only 4-5 products. So, we clearly have a different strategy. Who are the Indian partners you've tied up with to source components from India? Silei: We are working with some Indian partners and also with TCS on a multi-year contract. The duration of the contract still remains under discussion. There is also a possibility to source engine components from India, though we are not doing it at the moment. Is there a possibility of tying up with an Indian partner? Silei: No, we don't have such plans. Ducati wants to go solo. Being a large manufacturer, we are finding our own dimension in being a volume-based strong global brand. Would we see all the latest models of Ducati in India as and when they are globally launched? Bordiga: Yes, there will be simultaneous launches. Unlike others players, we have the entire model range in India as you would get globally. Ducati has set up a showroom in China last week, what sort of demand do you anticipate from that market? Bordiga: We expect more or less similar demand in China as in the Indian market. However, the sales target will be more easily achievable in the Indian market as the culture of big bikes is far more developed here than in China. India is a more interesting market than China where we can cater to only two cities, namely, Beijing -- where we will open a showroom by the end of the year -- and Shanghai. How long will the delivery of the product take? Chordia: That would depend on the model that is most sought after. So, accordingly, we will adjust our production to meet the demand from the next quarter onwards. The bike will take around 3-4 weeks on the higher side for delivery. Within six months, we will get a clear picture as to which product should be produced more for the Indian customer. How many dealerships of Ducati will we see and what is the cost of setting up a dealership? Chordia: In Phase I, we will look at Mumbai and Delhi and by the end of the next year, we will cover the remaining metros and also look at Hyderabad and Bangalore. The cost of setting up a dealership is around Rs20 crore. PTI See this story in: The Hindu Business Line (Nov 02) New Delhi: Electric vehicle maker Ultra Motor Company has entered into a distribution network sharing tie up with battery manufacturer Okaya Power to enhance reach across the country. Under the agreement, Ultra Motors and Okaya will retail each other's products through 450 retail exclusive outlets, Ultra Motor Co (UMC) said in statement. UMC has the choice to utilise Okaya's existing network, which currently stands at 9,000 outlets, it added. This partnership is a major step towards strengthening the electric vehicle and renewable energy business, the statement said. Currently, UMC sells its electric scooters through 180 outlets. While UMC sells two models of electric scooters, Ultra Fun an d Ultra Shakti, Okaya is known for its Microtek brand of inverter batteries. Ultra Motor, Okaya power ink pact Business Standard The Hindu (Metro Plus) (Nov 02) Yamaha has come up with the price list of performance parts to bolt onto its YZF-R15, FZ-16 and FZ-S motorcycles. To be sold through the companys authorised dealer network, these performance-enhancing parts are meant for track use only. The YZF-R15 engine kit, which includes a reworked ECU, high-lift camshaft and performance exhaust will retail for Rs. 31,000 (ex-showroom, India). A tuned length exhaust system can also be bought as a standalone for Rs. 16,000. The body kit, featuring a large-size 298mm front petal disc, upgraded front brake master cylinder, braided brake hoses and HID headlamp will set you back by Rs. 20,000. The FZ-16 and FZ-Ss sole performance add-on a tuned length exhaust will cost Rs. 16,000 while a body kit can be bought for Rs. 20,000. | ||||
| PTI See this story in: Daily News & Analysis (Nov 02) Chennai: Hinduja Group comapny Hinduja Foundries reported a net profit of Rs 1.78 crore for the quarter ended September 30, 2009, against Rs 1.07 crore registered in the corresponding period last year, a company release said here. Net sales for the quarter stood at Rs 100.69 crore as against Rs 119.85 crore in the same period of last year. However, for the half year period the company reported a net loss of Rs 8.65 crore, it added. "In line with the revival in the manufacturing industry, the demand for casting is picking up and the company has started utilising the additionally created capacity and made a positive bottom line in the second quarter," Hinduja Foundries MD, V Mahadevan said. On their investments in Sriperumbudur unit, he said the units were being commissioned as per plans to meet the committed schedules of customers. "The offer document for the proposed Rights Issue has been filed with SEBI and approval is awaited," he added. | ||||
| ALLIED INDUSTRIES JK TYRE TO SUPPLY TYRES FOR SMALL CARS BY HONDA, NISSAN PTI See this story in: The Hindu Business Line (Nov 02) Mysore: JK Tyre & Industries is working with Honda and Nissan to supply tyres for their small cars, expected to be launched in the country, a top company official said. JK Tyre, which supplies 30 per cent of Maruti Suzuki's requirements, will also supply original equipment tyres to Volkswagen's Polo, expected be launched early next year. We are working with Honda and Nissan for their upcoming small cars in India, JK T yre Marketing Director Mr A S Mehta said. While Nissan plans to launch a global compact car in India by May 2010, Honda is expected to drive in its small car in the next three years. Mr Mehta said JK Tyre had recently become the exclusive supplier for General Motors' sedan 'Cruze' in India. Besides we will also be one of the suppliers for Volkswagen's Polo. Volkswagen is planning to bring in its compact car Polo early next year, which will be followed by the sedan version. Original equipment supplies to carmakers is the major business of JK Tyre and in view of the expected increase in demand, the company is already planning to set up a new tyre manufacturing plant. Out of our current total annual capacity of 45 lakh units, 60 per cent is for original equipment supplies, JK Tyre Finance, Director, Mr A K Kinra said. The company is planning to invest Rs 850 crore to set up the proposed plant in South India that wil l have an annual capacity of 25 lakh radial car tyres. JK Tyre aims to cash in on small cars The Hindu Business Line (Nov 02) New Delhi: On the back of rising demand for tyres, JK Tyre and Industries has posted a net profit of Rs 59.5 crore for the quarter ended September 30. The company had recorded a net loss of Rs 32.37 crore in the corresponding period last year. Net sales during the quarter were up 7.7 per cent to Rs 937.7 crore, from Rs 870.76 crore last year. Attributing the turnaround to better cost management and operating efficiencies, Mr Raghupati Singhania, Vice-Chairman and Managing Director, JK Tyre, said, Our operating profit has improved to 14.6 per cent compared with 0.6 per cent for the corresponding period last year. Our expansions are well on course. OTR tyre and car radial expansion projects shall be completed as per schedule early next year. Expanding capacity He added that the companys plans for further increasing the TBR capacity from eight lakh tyres to 12 lakh tyres, and adding a 25-lakh tyres capacity for passenger car radials are also progressing well. The new site selection is expected to be completed shortly and construction of a new plant shall begin thereafter, he said. The Times of India (Nov 01) Mysore: J K Tyre opened its state-of-the-art truck/ bus radial plant in the city on Friday. The plant, expanded at an estimated cost of Rs 315 crore, was dedicated to Chairman of J K Tyre Hari Shankar Singhania. It has a capacity to manufacture eight lakh tyres per annum against 4 lakh previously. To the rising consumer demand, the company has invested Rs 1,100 crore in the Mysore plant alone. The Hindu (Nov 01) Chennai: The Cabinet on Saturday cleared two projects, envisaging an investment of Rs.5,600 crore, for the production of radial tyres. While one approval pertained to the project proposed by French company Michelin for setting up a facility in Thiruvallur district at a cost of Rs.4,000 crore, another related to the increase of investment by Apollo Tyres from Rs.500 crore to Rs.2,100 crore for its plant in Oragadam in Kancheepuram district. Chief Minister M. Karunanidhi chaired the meeting. The execution of the two projects would reinforce the position of Chennai as a leading automobile hub, according to an official of the Industries Department. In the case of Apollo Tyres, commercial production was expected in six months. In two years, the enhanced quantum of investment would be made. Of the original approval for Rs.500 crore, the company till now invested around Rs.300 crore. As for the French company, the rollout of the first stock of tyres would be in two years, the official said. The Cabinet also discussed the subject of transfer of land in Melkottaiyur and Nallambakkam villages in Kancheepuram for the establishment of the Indian Institute of Information Technology Design and Manufacturing. | ||||
| PTI See this story in: The Hindu Business Line (Nov 01) New Delhi: ICICI Bank on Saturday said home, car and corporate loans would drive credit growth in the second half of 2009-10. Growth drivers are going to be housing loan, car loans and the entire corporate finance, project finance and infrastructure as there is a pick up in economic activity, ICICI Bank managing director Ms Chanda Kochhar said on the sidelines of HT Leadership Summit. In these specific sectors, we are expecting double digit (credit) growth, though overall credit expansion was likely to be in single digit, she said, adding, the increase in loan portfolio should be seen in the backdrop of bank's decision to reduce uns ecured loans. Advance of ICICI Bank at the end of September 2009 stood at Rs 1,90,860 crore against Rs 2,21,985 crore at the end of September 2008, registering a decline of 14 per cent. For the quarter ended September 2009, ICICI Bank reported 2.6 per cent jump in net profit at Rs 1,040 crore from Rs 1,014 crore in the same period a year-back. Consolidated net profit rose 76 per cent in the quarter to Rs 1,144.57 crore on lower losses in life insurance business and higher profits in other subsidiaries. However, the total income declined to Rs 14,595.85 crore during the July-September quarter f rom Rs 15,590.46 crore in the same period a year ago. Home, car loans to drive ICICI's growth, says Kochhar The Economic Times | ||||
| Agencies See this story in: The Financial Express (Nov 01) London: Oil prices sank, mirroring losses on global stock markets, after surging the previous day on news that the United States had emerged from recession. New York's main contract, light sweet crude for December delivery, slid USD 1.76 to USD 78.11 a barrel. London's Brent North Sea crude for December dived USD 1.66 to USD 76.38 per barrel. "Crude prices slid back amid profit-taking, following impressive gains on the back of positive US data, as concerns over poor fundamentals (of supply and demand) continue to linger," said analysts at the Sucden brokerage in London. Wall Street sank as the market digested a sharp rally the day before on news of stronger-than-expected economic growth in the third quarter. Many analysts noted that the GDP expansion was mainly due to exceptional government measures to stimulate growth that would eventually expire. | ||||
| Reuters See this story in: The Economic Times (Nov 02) Frankfurt: Canadian auto parts maker Magna wants Herbert Demel, the head of its Austrian car development and assembly plant to become head of Opel, a German magazine said, citing sources. Carl-Peter Forster, the current head GM Europe, had been touted to become the head of Opel's operating business with Demel assuming management of the Opel holding company, WirtschaftsWoche said on Sunday. The magazine said Forster wants to leave the company. Demel presently heads Magna-Steyr Fahrzeugtechnik in Graz, Austria. Top officials from Magna and Opel said last week they were confident General Motors would go through with the sale of Opel to Magna despite being held up by last-minute EU competition concerns. See this story in: The Times of India (Nov 01) Detroit: Ford Motor Co's US factory workers moved a step closer late Friday to delivering a landslide rejection of proposed concessions while the United Auto Workers leadership said the union would not return to talks with the automaker until 2011. Workers at Ford's truck assembly plant near the automaker's Dearborn, Michigan headquarters voted 93 percent to reject the deal and workers at two Kentucky assembly plants voted 84 percent against it, adding to a growing number of rank-and-file workers lining up against the proposed contract changes. A "no" vote in the closely watched ratification would represent a major setback for Ford as it seeks to bring its costs in line with US rivals. UAW President Ron Gettelfinger, who had supported the proposed concessions to Ford, said on Friday that union leadership would not restart talks with the automaker if the contract changes failed in the ratification vote. "I trust our membership," Gettelfinger said on the sidelines of an event in Detroit. At the Dearborn truck plant, where eight union local leaders signed a petition urging rejection of the tentative deal, the vote was 1,263 against and only 101 in favor, bargaining committee member Gary Walkowicz said. Workers at at least a dozen of Ford's US plants and facilities have now voted against the deal. Walkowicz said the national tally was running at more than 70 percent against the deal, which included a "no-strike" provision on wages and benefits and other cuts. "It's all over," Walkowicz said. At Local 862, which represents about 5,400 Ford UAW workers at the Louisville assembly and Kentucky truck plants, the vote was 84 percent against and 16 percent in favour. The tightening of tensions over the labour contract in the United States came as leaders of the Canadian Auto Workers union announced a tentative pact with Ford that gives workers production commitments in exchange for concessions. Canada weekend vote planned The CAW agreement, which is up for ratification this weekend, would freeze wages for some 7,000 Canadian workers into September 2012 in exchange for protecting some factory jobs in Canada. Momentum has been building among UAW local units to reject a proposed agreement with Ford announced earlier in October to change the 2007 contract and bring the automaker's labour costs in line with rivals General Motors Co and Chrysler. The UAW concessions would be the second major revision of the four-year contract this year. The UAW would remain free to strike on issues other than wages and benefits. The UAW gave GM and Chrysler the "no strike" provision in their bankruptcies. Approval of the contract requires a majority of votes cast by the roughly 41,000 US factory workers represented by the UAW. Results were due on Monday. Gettelfinger said he did not believe that Ford's relative health had created opposition to the contract changes. Ford reports third-quarter results on Monday. "We're looking for Ford to have a good quarter when they announce their results," Gettelfinger said. "We knew that going into it. We know we're looking long-term for product commitment to give us long-term job security." A Ford spokeswoman declined to comment. Ford is the only large US automaker to avoid bankruptcy in 2009, but it posted losses totaling $30 billion from 2006 through 2008 and remains saddled with a much heavier debt load than GM or Chrysler. Gettelfinger and CAW President Ken Lewenza both have cited Ford's heavy debt load as a factor in reaching the concessions agreements with the automaker. "Ford is not in good financial shape," Lewenza told reporters at a briefing in Toronto on Friday. GM and Chrysler in their restructurings supported by the US government both reached deeper concessions with the UAW than Ford. Ford has said that it needs the further cuts from the UAW to avoid a cost disadvantage over the long term. Ford to close Canada plant in 2011, shed 1,400 jobs: union The Financial Express plant-in-2011-shed-1400-jobs-Union/articleshow/5182820.cms The Indian Express See this story in: The Indian Express (Nov 01) Detroit: Ford Motor Co. workers have overwhelmingly rejected contract changes that would have allowed the automaker to cut labor costs, leaving Ford at a disadvantage to its Detroit rivals as it continues its struggle to return to profitability. The United Auto Workers union had given local unions until Monday to complete voting. But a person briefed on the voting said Saturday that the contract changes have been rejected by large margins. The person asked not to be named because the UAW hasn't announced the results yet. The UAW and Ford agreed to the contract changes several weeks ago, but Ford workers needed to ratify them. Ford has 41,000 UAW-represented workers. Two large union locals in Kentucky and Ford's home city of Dearborn rejected the contract Friday, sealing its fate. Those unions together represent 13,000 Ford workers. Exact tallies weren't available, but at least 12 UAW locals representing about 27,500 workers so far have vetoed the deal, many overwhelmingly. Only about four locals with a total of 7,000 members favored the pact. Ford sought the deal to bring its labor costs in line with Detroit rivals Chrysler Group LLC and General Motors Co., both of which won concessions from the union as they headed into bankruptcy protection earlier this year. Under pattern bargaining, the three automakers usually match pay, benefits and other contract provisions. But workers weren't convinced they should make more concessions, since Ford avoided bankruptcy and is considered healthier than its rivals. At least two Wall Street analysts are predicting that Ford could report a profit Monday when it announces third-quarter earnings. Rocky Comito, president of UAW Local 862 in Louisville, said Friday that workers felt they were being asked to sacrifice more than the company's executives. Ford CEO Alan Mulally made $17.7 million last year, although that was down 22 percent from the year before. "Some want to see management give more at the upper level," Comito said. Ford was offering workers a $1,000 bonus if they ratified the contract. But the contract also would have frozen entry-level pay, changed some work rules and limited workers' ability to strike. A message seeking comment was left Saturday for the UAW. UAW President Ron Gettelfinger said Friday that there wouldn't be a revote if the contract changes failed. "If it fails, there would be no reason to go back to the bargaining table," Gettelfinger said at a community event in Detroit. "We have a democratic process in place. People have a right to express themselves. We recognize there's a lot of misinformation about it out there, but that is what it is." Factory-level union leaders have known for several days that the deal would be defeated, said one Detroit-area official who asked not to be identified because the voting is not completed. The union did a poor job of explaining the need to preserve jobs and keep Ford competitive with GM and Chrysler, the official said. He doesn't believe members will approve any more changes until the 2011 contract, which will leave Ford at a disadvantage and has the potential to knock the company from its position as the strongest financially of the Detroit Three. "Our goal should be to keep Ford Motor Co. going in the right direction," he said. Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass., said the vote was a slap to UAW leadership. It's extremely rare for union members to oppose the union's recommended vote. Chaison said the vote damages the reputation of UAW Vice President Bob King, the chief Ford negotiator, who has been mentioned as a successor to Gettelfinger when the union elects a new president in 2010. "The sign of a good leader is that you can agree to something and then sell it to the membership," Chaison said. Chaison said Ford asked for too much too soon after workers already agreed to concessions earlier this year. He also said Ford lacked credibility because its financial situation wasn't as dire as GM's or Chrysler's. "They made such a strong case about not going to bankruptcy court and turning the corner, so they couldn't go to the workers and say, 'We need this to turn the corner,'" he said. The no votes came even as Ford reached a similar cost-cutting agreement with the Canadian Auto Workers union Friday. The CAW has agreed to cuts in benefits in exchange for product guarantees, but that agreement must be ratified by Canadian workers. In addition to the plants in Louisville and Dearborn, workers at factories in Chicago; Claycomo, Mo.; and Livonia, Plymouth, Sterling Heights, Flat Rock, Ypsilanti Township, Mich., rejected the deal. Locals in Wayne, Mich.; Cleveland; Indianapolis and St. Paul, Minn., voted in favor. http://customwire.ap.org/dynamic/stories/U/US_UAW_FORD_VOTE?SITE= IXPRS&SECTION=BUSINESS&TEMPLATE=DEFAULT&CTIME=2009-10-31-14-52-25 Reuters See this story in: The Economic Times (Nov 01) Frankfurt: German carmaker BMW will end its its programme on shorter work hours in the coming weeks, weekly Automobilwoche said on Saturday, citing board member Frank-Peter Arndt. BMW has reduced the work hours of 26,000 employees in Germany early this year as the financial crisis forced consumers to curtail their spending on items such as cars. With the rate of decline in car sales slowing down in recent months, BMW has also gradually reduced those participating in the short hours programme. Automobilwoche said BMW has started to re-employ part-time employees in plants located in Leipzig and Regensburg. | ||||
| ECONOMY The Hindu Business Line (Nov 02) Hyderabad: India, along with Asia will re-emerge as a major player in the aftermath of current global financial crisis, according to Dr Y.V. Reddy, former governor of Reserve Bank of India. Asias prospects Delivering the Justice Konda Madhava Reddy Memorial Lecture on Global Financial Crisis and Asia here on Friday, Dr Reddy said there was a broad agreement that the global financial crisis had reaffirmed the prospects of Asia re-emerging as a dominant region within a decade or two. I call it re-emergence because, according to a study by Mr Angus Maddison, India accounted for 24.4 per cent of the world gross domestic product in A.D. 1700, China for a similar share and Japan, a fifth of Indias share. Thus, Asia accounted for a major part of worlds economic activity three centuries ago, he said. Asian resilience After the crisis and noticing trends in growth and resilience of Asian economies, there is a view that Asia would re-emerge to dominate the world economy soon, he added. Already by 2007, Asia (including Japan) accounted for 67 per cent of the worlds official forex reserves, 55 per cent of worlds population and 25 per cent of worlds Gross Domestic Product, Dr Reddy said. According to a projection of Mr Maddison in 2007, China would overtake the US by 2018 as the largest economy, with India as number three. Asia would account for 53 per cent of the world GDP. Asia will restore its position in the global economy to its level of there hundred years ago, the noted economist had said. Note of caution While the world could not marginalise India in the journey towards normalcy after the global financial crisis, India, if it chooses can marginalise itself, Dr Reddy cautioned. More than any developing countries, India was in a position to wrest significant gains from globalisation. However, we must voice our concerns and in cooperation with other developing countries modify the international trading arrangements to take care of the special needs of such countries. | ||||
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Sunday, December 13, 2009
Indian Auto Industry Update November 02, 2009
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