Indian Auto Industry News: 5/24/09

INDIAN AUTOMOBILE INDUSTRY
Saturday May 30, 2009

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Business Standard (Web & Print Edition)

See similar story in: The Pioneer (Web & Print Edition), The Hindu Business Line (Web Edition), The Times of India (Delhi Print Edition)

Mumbai: Soon after Tata Motors posted a whopping decline of 50 per cent in its net profit, its board of directors in a meeting held named Prakash M Telang as the company's next managing director.

Telang, currently the executive director (commercial vehicles), will replace the present managing director, Ravi Kant, after he retires from the post on June 1. Telang will take charge from the next day.

"Ravi Kant, the managing director of Tata Motors, will retire from his executive position on June 1, 2009, on reaching the retirement age of 65 years as per the company's policy.The board of directors of the company has decided to retain Ravi Kant on the board as the non-executive vice-chairman of the company," stated a media release.

Kant, who joined the company in July 2000 as executive director (commercial vehicle business unit), was appointed managing director on July 29, 2005.

Senior officials, on the sidelines of the results' announcement, refused to comment as to who will head the commercial vehicle division. The announcement of Telang as the new MD was expected, along with similar replacements at other Tata Group companies, like Tata Consultancy Services (TCS) and Tata Steel.

Telang has been at the forefront of the race for quite some time now and he seemed prominently ahead of other Tata Motors executives, including Rajiv Dube who currently heads the passenger car division. Under Telang, Tata Motors will see the roll out of the Nano, the World Truck, launch of models from the Jaguar and Land Rover stable, new Indigo, new Safari and a range of new commercial vehicles.

Telang (now 61) has over 35 years of experience in the automotive industry and machinery manufacturing. He spent the first three years of his career with Larsen & Toubro. He joined the Tata Group more than 37 years ago through the Tata Administrative Services (TAS). He is currently on the boards of Tata Daewoo Commercial Vehicle Company (TDCV), a highly profitable South Korean subsidiary unit of Tata Motors, Tata Motors (Thailand), Telco Construction Equipment Company and Automobile Corporation of Goa.

He is also on the board of the company's joint venture with Fiat, Fiat India Automobiles Pvt Ltd. "He has anchored Tata Motors through its roughest patch and has been the architect of the company's cost reduction drive," further stated the release.

"By championing the use of e-procurement and other innovative approaches, he has played a vital role in initiating a complete makeover in the company's operations and leveraging domestic and international growth opportunities. He has led the team for many prestigious offerings under the Tata brand, including the mini-truck, Ace," it added.

http://www.business-standard.com/india/news/prakash-telang-to-replace-kant-as-tata-motors-md/359577/

http://www.dailypioneer.com/179437/Ravi-is-new-Non-Exec-VC-of-Tata-Motors-Telang-India-MD.html

http://www.thehindubusinessline.com/2009/05/30/stories/2009053051750200.htm

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TATA MOTORS NET HALVES TO RS 1,001 CRORE IN FY09

Business Standard (Web & Print Edition)

See similar story in: The Hindu Business Line (Web & Print Edition), The Tribune (Web Edition), The Telegraph (Web Edition), The Statesman (Web Edition), Yahoo India (Web Edition), The Times of India (Web & Print Edition), Deccan Herald (Web Edition), The Economic Times (Web Edition)

Mumbai: Tata Motors, India's largest automobile company by revenue, posted a drop of 50 per cent in net profit for the last financial year as demand for heavy trucks, its high margin segment, contracted drastically.

This is the lowest net profit reported by the company in the past five years. In 2003-04, the company had posted Rs 810 crore as net profit.

The company, which chose not to disclose its fourth quarterly results separately, posted a net profit of Rs 1,001 crore for the year ended March 31, 2009 as against Rs 2,028 crore reported in the previous year.

Owing to the downturn, Tata Motors has also shrunk its capital expenditure (capex) by about 37 per cent to Rs 2,500 crore for the next two years, from Rs 4,000 crore.

Ravi Kant, managing director, Tata Motors, said, "None of the vehicle development programmes have been significantly impacted, but there are a few projects that have been put on the back-burner for the time being."

Net sales of the company for the reporting year dipped by 14 per cent to Rs 28,292 crore, as compared to Rs 32,885 crore posted in the previous year.

Commercial vehicles like trucks and buses contribute 60 per cent to the top line of the company, while passenger vehicles like cars and utility vehicles contribute the balance 40 per cent.

Raw material consumption and other similar expenses were reduced by a considerable extent following plant shutdowns in Jamshedpur, Lucknow and Pune last year.

Company executives said that some revival is expected in the upcoming months based on improved conditions during the last few months.

"Barring heavy trucks, all segments have done very well recently and we are hopeful that the trend will continue," Kant told reporters.

For reducing the burden on the books of the company, it will reduce its vehicle finance portfolio on stand-alone books, but it will continue with disbursals from its other subsidiaries, like its vehicle finance company Tata Motors Finance (TMFL).

Senior executives said that the vehicle finance size has been reduced to Rs 7,400 crore, of which Tata Motors has a share of Rs 2,000 crore, while TMFL has Rs 5,400 crore.

In addition, the company will reduce its costs by Rs 1,000 crore over a period of three years. It also hopes that raw material costs will roll back to 2008 levels.

Regarding the small car Nano, the company reiterated that deliveries will take place in July as per schedule. Production of the car is being carried out at Pantnagar plant in Uttarakhand currently.

Kant added, "The Sanand plant (in Gujarat) will start its trial production by the end of this (calendar) year while commercial production will commence by the first quarter of next calendar year."

Thereafter, production will be ramped up, possibly to the plants' initial full capacity of 250,000 by the second or third quarter of the next financial year.

Furthermore, the company is also focusing on unlocking the value of its holding in some of its companies to reduce the debt component. Presently the debt to equity ratio is almost 1:1. C Ramakrishnan, chief financial officer, Tata Motors, said, "Volumes had reduced in domestic as well as in the export market. Input prices peaked last year although a softening was seen recently. The slowdown and liquidity crisis had put pressure on working capital requirement."

The company further hopes that newer launches in the commercial vehicle and passenger vehicle segment will revive demand. New vehicle emission norms (Bharat Stage IV), set to kick in by April 2010, will also prepone sales, company officials said. Demand for inter-city as well as intra-city buses is also expected to go up due to the JNNURM programme initiated by the government.

Tata Motors will launch the new Indigo, Fiat Grande Punto and the Jaguar and Land Rover (JLR) range during this financial year. The company aims to have dealerships for JLR in five-six key cities in the coming period.

The company also said that it is in discussions with the government to supply armoured Land Rovers to the armed forces. Technical teams of both Tata Motors and Land Rover have held discussions on the issue already.

It will also present the consolidated results of JLR by the end of next month.

http://www.business-standard.com/india/news/tata-motors-net-halves-to-rs-1001-crore-in-fy09/359578/

http://www.thehindubusinessline.com/blnus/02291501.htm

http://www.tribuneindia.com/2009/20090530/biz.htm#3

http://www.telegraphindia.com/1090530/jsp/business/story_11040296.jsp

http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=256119

http://in.biz.yahoo.com/090529/50/batnkh.html

http://timesofindia.indiatimes.com/Business/India-Business/Tata-Motors-net-skids-51-in-2008-09/articleshow/4595056.cms

http://www.deccanherald.com/content/5211/tata-motors-net-dips-507.html

http://economictimes.indiatimes.com/News-by-Industry/Tata-Motors-net-halves-to-Rs-1k-cr/articleshow/4595874.cms

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TATA MOTORS Q4 NET UP 10% AT RS 591 CR

The Hindu Business Line (Web & Print Edition)

Mumbai: Tata Motors has reported a 10 per cent growth in net profit at Rs 591 crore for the quarter ending March 31, 2009 as against Rs 536 crore in the corresponding period last year. Net income dropped 21 per cent to Rs 6,895 crore (Rs 8,750 crore).

Net profit for the fiscal fell 51 per cent to Rs 1,001.26 crore (Rs 2,028.92 crore) while revenue was down 11 per cent to Rs 25,660.79 crore (Rs 28,739.41 crore).

High input costs and interest rates in the first half of the fiscal coupled with tight liquidity and low consumer sentiments in the latter half impacted margins, said Mr C. Ramakrishnan, Chief Financial Officer, at a press conference here on Friday. Tata Motors overall vehicle sales dropped 13 per cent to 5.06 lakh units (5.85 lakh units).

The company, however, improved its performance from the third quarter ending December 2008 when it reported a Rs 262-crore loss. The October-December quarter was bad but each successive month turned out to be better. Barring heavy commercial vehicles, all segments have sprung back, said Mr Ravi Kant, Managing Director, Tata Motors.

Capex cut

Mr Ramakrishnan said the company would go in for a substantial capital expenditure cut in the medium term. Given our wide product portfolio, we have a capex plan of Rs 10,000 crore for 2-3 years. We are planning a cutback of about Rs 2,500 crore. Our product development plan will go on and the cutback will mainly be in capacity expansion, he added.

The capex last fiscal was around Rs 4,000 crore and is expected to be in the range of Rs 3,000-3,500 crore in the next couple of years. Besides this, Tata Motors plans a cost reduction of Rs 1,000 crore for the next three years.

The board has recommended a dividend of Rs 6 on ordinary share and Rs 6.50 on A share. The companys shares closed 1.20 per cent up on the NSE at Rs 336.85.

New MD

Mr Prakash M. Telang (61) is the new Managing Director of Tata Motors. He takes over from Mr Ravi Kant who steps down on June 1. Mr Kant will, however, continue as non-executive Vice-Chairman.

http://www.thehindubusinessline.com/2009/05/30/stories/2009053051910100.htm

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TATA MOTORS: A LONG STRETCH AHEAD

Shobhana Subramanian

Business Standard (The Compass)

Mumbai: The home market may be looking better, but JLRs sales need to gather some momentum before Tata Motors problems are over The first bit of good news at Indias biggest auto maker, Tata Motors, is that it has managed to re-finance the $3 billion that it had signed on to buy the Jaguar and Land Rover (JLR) business. Even if it was forced to sell its equity cheap for a song in a rights issue last September, the company has succeeded in finding lenders for another $2 billion, though the money may not have come cheap.

The other piece of good news is that the Indian economy seems to be on the mend and the management says things seem to be looking better with each month; apart from the heavy trucks for which there seem to be few takers even now, there are certainly more buyers now for the smaller trucks, like the Ace, than there were six months back. In fact, the companys March 2008 sales numbers reflect the improvement sales were down just under 23 per cent, compared with a fall of about 34 per cent in the December 2008 quarter.

However, raw material costs continue to hurt badly, resulting in some very weak operating profit number. Nevertheless, the company may have seen off the worst in the home market, even if takes a while to get back the momentum.

However, the story with JLR isnt as encouraging ---the management says theres been some pick-up in demand, though its still a bit of a mixed picture, with some markets such as China and Russia looking up but others such as the Middle East in a slump. In fact, Tata Motors exports have slipped sharply because of poor demand in markets such as South Africa.

The stock has almost doubled since the start of the year to the current levels of Rs 337 and has outperformed the benchmark indices by a wide mark. However, while the picture is not as bleak as it was in January, its not yet rosy, given that demand is yet to move up to pre -2008-09 levels, the high 1:1 net debt to equity ratio for the stand-alone company and a possible equity dilution somewhere along the way.

http://www.business-standard.com/india/news/tata-motorslong-stretch-ahead/359587/

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FORD SET TO SIGN MOU WITH TAMIL NADU GOVT

Vidhya Sivaramakrishnan and Samar Srivastava

mint (Web & Print Edition)

Chennai / New Delhi: Auto maker Ford Motor Co.s India unit is close to signing an agreement with the Tamil Nadu government on a long-proposed Rs2,365 crore ($500 million) investment in expanding its factory near Chennai, making it clear that troubles at its US parent are not yet coming in the way of its plans here.

A state government official, who did not want to be identified, said Ford India Pvt. Ltd is going to sign a memorandum of understanding, or MoU, with the Tamil Nadu government some time next month for the expansion of the existing facility.

An MoU is an expression of intent of the signatories and not a binding document to execute.

No additional land is being given to the auto maker for the expansion to take place at Ford Indias 350-acre facility at Maraimalai Nagar, around 45km from Chennai.

Ford India had earlier announced that it would look at investing around Rs2,000 crore to double its capacity to 200,000 units, launch its engine-making unit and build a small car by 2010.

Confirming the planned MoU, Ford Indias president and managing director Michael Boneham, said in an email response, We are awaiting advice from the government with regard to the signing of the MoU. We are hoping for news with regard to agreement and signing soon.

Ford Motor in the US, battling a drop in car sales in the worlds biggest economy and a stressed balance sheet, is the only car maker in the US that has not taken government aid this far.

In April last year, Ford India launched its diesel engine plant with a capacity of 60,000 engines per annum. The $26 million plant makes engines for use in its Fiesta and Fusion brands.

A part of the committed investment would be utilized to ramp up the capacity to 200,000 engine units per annum by 2010.

http://www.livemint.com/2009/05/29202816/Ford-set-to-sign-MoU-with-Tami.html?h=B
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INTERVIEWS/FEATURES Go To Top

MANAGE SUPPLY CHAIN, SAVE TAX
Srirupa Tandon, Vinesh Kriplani
The Financial Express (Motobahn)

The current unprecedented market conditions pose strategic and financial challenges-and opportunities-for automakers. In these circumstances, lean is in for all.

Tax-efficient supply chain management (TESCM) is a process that teams supply chain (logistics, manufacturing, distribution, inventory) efficiencies with tax (direct and indirect) to develop and implement a business model, wherein the functions and risks within the multinational group are allocated in such a way that higher profit attribution (from a transfer pricing perspective) can be made to lower tax jurisdictions.

Take the case of an auto MNC with manufacturing facilities in India and customers across the European regionserved by subsidiary distributor companies set up in a couple of countries (say countries A and B) in the region. The tax rate in India is, say, 35%, whereas the tax rate for A and B is 38% and 40% respectively. The effective tax rate (ETR) of the group is around 38%. If it implements the toll manufacturing model, it could achieve considerable savings by centralisation of functions and risks and optimisation of tax costs.

Conceptually, a toller converts raw material into finished product for a service fee on behalf of a principal company located in a low-tax jurisdiction. The MNC could identify a suitable jurisdiction, having regard to commercial and tax considerations that could act as the principal company for the group in the region. The tax rate of the principal company could be, say, 25%.

The principal company will undertake key strategic func-tions, own critical intangibles and largely assume the risks of the business. It would also act as a distributor for sales to the entities in A and B, make marke- ting efforts and bear the credit/ sales risks. The entities in coun- tries A and B would act as limi- ted distributors undertaking some distribution functions and associated insignificant risks. Thus, while the manufacturing and distribution entities will have limited profits, taxed at local tax rates (35%, 38% and 40%), the residual income would accrue to the principal company situated in a jurisdic- tion enjoying a comparatively lower tax rate (25%). Effective implementation of a TESCM model is likely to bring down the ETR and thereby rationalise the tax cost of the MNC group.

TESCM can be a useful mechanism to have a lean and efficient business structure geared to achieve significant economies by centralisation of functions, avoidance of duplication and tax-cost optimisation. For some in the auto sector it could be the antidote for the current crisis.

The authors are senior professionals at Ernst & Young, India ...

http://www.financialexpress.com/news/manage-supply-chain-save-tax/460352/2

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OFFENCE IS THE BEST DEFENCE

Arun Jaura

The Financial Express (Motobahn)

Many thought and still think that the internal combustion engine (ICE) era will be history with the advent of alternative energy propulsion systems. The ICE is hygiene in our day to day mobility life. There is testimony of tremendous amount of time and energy that has been spent in advancing ICE to make it more fuel efficient, enhance power density, improve combustion techniques and material options, and make it compact so they can be used in smaller automobiles.

Designing and developing engines that are modular and flexible to adapt to various fuels with minimal changes to the vehicles architecture, control systems, exhaust systems and above all seamless to the customer when it comes to cost of ownership will help leapfrog most of the alternate fuels. Though there is a lot of talk about electric, hybrids, CNG, LPG, hydrogen and bio-fuels becoming game changers, there is a small percentage of these deployed in mass market mobility solutions worldwide. The paradigm shift is in having a menu of flexible fuel and modular ICE solutions for customers, as they walk into a dealership. The technology savvy customer should, by the click of a button on the internet or in a conversation with the sales agent, be able to order an ICE that is relevant to the fuel availability in the region, meet emissions standards, personal driving habits and above all, affordable. With a globally mobile world, when a customer changes a work location or residence, the flexibility to swap the ICE from under the hood depending on the local emissions/CO2 regulations and fuel availabilityis a winning idea.

Going forward, to maximise on the benefits of advanced ICE, integrate it with an electric powertrain (EP). The EP will become the heart of mobility solutionsexperts and analysts have predicted that with battery costs and technology options expanding on a larger canvass, the battery costs will reduce, and with reduction of copper quantity in highly efficient electric drives and controllers, it will exponentially propel economies of scale resulting in affordable EPs. That will in turn accelerate investment in infrastructure and customer interest. Fast forward holistically, integrate and synergise the flexible ICE that will work on any fuel, with EP as mainstay, offering a smorgasbord to customers (private and public), environmentalists, energy providers, carbon trading businesses and the policy makers. Some may argue that this effort needs an impetus from the larger ecosystem stakeholderssuch as investors, governments,... OEM strategic partnerships, IPR sharing platforms and PPP programmes. It is only prudent to step out of the box and think with a different mindset to ensure synergy in deployment of such offerings at a sustainable level. There is a need to change the wave since an ICE and support infrastructure will very much be a part of our everyday life for a foreseeable future. The energy nirvana for our future generations is in deploying engine ingenuity to meet customer aspirations via integrated but flexible solutions that are scalable.

The author is vice-president technology & head, Eaton India Engineering Centre, Eaton Corporation

http://www.financialexpress.com/news/ice-is-on-fire/468179/2
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CARS, SUVs, MUVs Go To Top

FORD, TOYOTA RANK HIGHEST IN VEHICLE DEPENDABILITY SEGMENTS

The Economic Times (Web Edition)

New Delhi: Ford models rank highest in the entry midsize and SUV segments, and Toyota models rank highest in the premium midsize and MUV/MPV segments, according to the 2009 J D Power Asia Pacific India Vehicle Dependability Study released on Friday. Honda and Maruti models also earn highest-ranking achievements in other segments.

The study, which measures the dependability of three-year-old vehicles, ranks vehicles in 10 segments and examines more than 150 problem symptoms across nine categories: vehicle exterior; driving experience; features, controls and displays; audio and entertainment; seats; heating, ventilation and cooling (HVAC); vehicle interior; engine; and transmission. Overall dependability is based on the number of problems reported per 100 vehicles (PP100), with lower scores indicating a lower rate of problem incidence and higher long-term vehicle quality.

The Ford models lead in two segments, with the Ikon ranking highest in the entry midsize segment and the Endeavour leading in the SUV segment. The Toyota models also lead in two segments, with the Corolla ranking highest in the premium midsize segment and the Innova ranking highest in the MUV/MPV segment. The Maruti Suzuki Zen leads in the compact segment and the Honda City ranks highest in the midsize car segment.

At the nameplate level, Honda performs particularly well, receiving a score of 159 PP100. Honda leads the industry in three of nine problem categories: vehicle exterior, driving experience and engine. Toyota follows Honda at the nameplate level with 173 PP100, which is a 96 PP100 improvement from 2008.

The study finds that in 2009, vehicle dependability across the auto industry in India averages 290 PP100, which is an improvement of 41 PP100 from 2008. Although improvement is evident across most problem categories, the improvement is primarily driven by fewer reported problems with the driving experience and engine categories.

Fewer owners have experienced dependability problems this year, which enhances their perceptions regarding the reliability and durability of their vehicle, said Mohit Arora, senior director at J D Power Asia Pacific, Singapore.

An owners perception of their vehicle is important because it strongly impacts their intent to recommend or repurchase the same vehicle make. This can be extremely beneficial to manufacturers in increasing loyalty and recommendations and, thus, new-vehicle sales, he added.

Among the key problems experienced by owners, the most frequently reported problem is doors squeak/abnormal noise. Additionally, even though excessive fuel consumption remains among the top 10 problems across all vehicle segments, the industry has improved most in this problem area compared with 2008.

The study also finds that nearly 50 per cent of luxury-vehicle owners are covered under an extended warranty or service contractup 12 percent from 2008. Conversely, only 28 per cent of small-vehicle owners and 31 per cent of midsize-vehicle owners are covered under an extended warranty or service contract.

http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Automobiles/Ford-Toyota-rank-highest-in-vehicle-dependability-segments/articleshow/4593535.cms
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COMMERCIAL VEHICLES Go To Top

SWARAJ MAZDA Q4 NET DIPS 54%

PTI

See this story in: The Hindu Business Line (Web Edition)

Mumbai: Commercial vehicle maker Swaraj Mazda on Friday reported a 54 per cent decline in its net profit at Rs 3.09 crore in the fourth quarter ended March 31, 2009 as compared with a net profit of Rs 6.70 crore in the fourth quarter ended March 31, 2008 .

(The) global financial turmoil has caused sudden and unprecedented credit squeeze and virtual stoppage of funding of commercial vehicles beginning October 2008. This has adversely affected (the) company's performance in the second half of fiscal 2008-09 ,'' the company said.

The total income from operations declined to Rs 135.95 crore in the quarter ended March 31, 2009, from Rs 174.92 crore in the same quarter last fiscal.

In the year ended March 31, the company posted a net profit of Rs 4.79 crore, while the same was at Rs 25.20 crore in the corresponding period the previous fiscal. The board of the company declared a dividend of Rs 1.50 per share, subject to the approva l of

shareholders.

In another BSE filing, Swaraj informed K Machida and M Sato have ceased to be directors of the company and M Tabuchi, T Hashimoto and H Yamaguchi have been appointed as additional directors with effect from May 28.

http://www.thehindubusinessline.com/blnus/26291105.htm

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SWARAJ MAZDA BOARD ANNOUNCES RS 1.50 DIVIDEND

The Hindu Business Line (Web Edition)

Mumbai: Swaraj Mazda Ltd has informed the BSE that the Board of Directors of the company at its meeting held on May 28 has recommended a dividend of Rs 1.50 per share, subject to the approval of the shareholders at the Annual General Meeting

http://www.thehindubusinessline.com/blnus/33291030.htm
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CONSTRUCTION & AGRI MACHINERY Go To Top

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2/3 WHEELERS Go To Top

'150-CC SEGMENT NOT HIT BY THE ECONOMIC SLOWDOWN': SANJAY TRIPATHI

Malabika Sarkar

The Financial Express (Motobahn)

Despite the over automobile market slowdown, Yamaha Motor India has improved its showing in India after the launch of the YZF-R15 and FZ16 bikes in India. The company is expecting 100% growth sales in 2009. In this interview to FEs Malabika Sarkar, Sanjay Tripathi, division head, product planning and brand management, Yamaha Motors, talks about the companys plans for the domestic market.

- How does the two-wheeler market in India differ from the markets in the US and Japan?

The US or Japan have a very mature two-wheeler markets. The various segments are clearly defined on the basis of usage purpose. For example, super sports, touring, super motard, commuter, retro, custom, naked etc. Also the public transport system is well developed. Many people in these countries use two-wheelers for pleasure riding also.

But in India the two-wheeler market is still evolving. It is very price and mileage conscious. For most of the people buying a two-wheeler it is the only mode of transport. But there is no doubt it is a very dynamic market with a big potential as the penetration of two-wheelers is still low in India. We want to bring our internationalbrand heritage to India, bring the Yamaha lifestyle. This would include products, accessories and innovate marketing methods et al.

-Yamaha sold 107 units of the R1 and the MTO1 in 2008, beating its own target. Do you see the market for high-end bikes picking up in India?

We didnt anticipate such a good response for these bikes YZF-R1 and MT01 when they were launched in December 2007 in the Indian market. We have ended up selling more than what we estimated. We were the first to have launched the world-renowned super sports YZF-R1 and the torquesports MT 01 in the Indian market. Both bikes retail for Rs 10.5 lakh (ex-showroom, all-India). But this segment is niche. It has potential given the improving income levels and infrastructure, and international exposure. It will remain a small market for some years.

-Do you think sales of high performance bikes are immune to the overall automobile market slowdown?

The 150-cc segment has shown growth as this segment is not influenced much by the economic slowdown. Customers in this segment have enough economic power to buy the bike on cash.

-Though your global market share in the two-wheeler category is around 25%, your market share in India comes to a minuscule 4%. What are your plans... to increase it?

Yamaha is planning to reinforce its international brand image in India and enhance the riding experience for Indian customers. We will make full use of the expertise and technologies gained from long years of product development. Our focus is to rebuild the Yamaha brand by winning the trust of the customers.

-Do you think that the Nano is a threat to the two-wheeler market?

It will not have much impact as the cost of ownership of the Nano will be much more than a motorcycle....

http://www.financialexpress.com/news/150cc-segment-not-hit-by-the-economic-slowdown/468178/2

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ON WINGS AND A PRAYER

Kartik Ware & Kyle Pereira

Business Standard (Motoring)

HONDA CB1000R

Can you stare at it all day long?

Mumbai: Hell yeah! The CB1000R is stunning. Theres no doubt about that. Its instantly recognisable and Im betting a bloke on the naked Honda has more chances of landing up a date than a guy whos in a car double the price. There is no way the CB1000R can be mistaken for anything else on the road and if youre the kind who hates attention, this isnt the bike for you. Thats because youre treated like a rockstar everywhere you go and suddenly, everybody wants to be your friend. Fully-faired sports machines are for wimps, this machine seems to say. And Im listening.

What about brag value with your mates at the pub?
Plenty! You can go on and on about the CB1000R and there always will be much more to brag about the next time you and the blokes meet over a few chilled ones. The CB1000R engine is straight off the 07 CBR1000RR Fireblade and thats saying something. It has been retuned for incredible low and mid-range grunt with an ample 123.4 bhp of power. The torque is where the CB scores top honours, with a gigantic output of 10.2 kgm at 8000 rpm. Yes, youre now going to be the big shot at the watering hole all right.

Will you need a spine of high tensile steel to ride it?

If youre expecting to glide over potholes with the grace of a flying-carpet, you will be disappointed. But on faultless tarmac, its another story. The CB1000R glides with a surreal calm and composed air so there is no way you can be dissatisfied with the Hondas ride on good asphalt. Its the potholes and road irregularities that might rattle you silly while aboard the CB1000R. Although the CB1000R is a chick magnet, its unlikely that the girl would last a 100 km ride, perched at the back. The seat is barely adequate and sustained riding could result in an appointment with her friendly chiropractor. But up front, its a whole different story. The flat handlebars and the comfortable riding position are spot-on for long rides and daily commutes alike. So, the riders well taken care of. But for the pillion, a spine of something harder than steel might help something like titanium alloy.

What about corners?

Its naked as sin and its wide as a barge. But make no mistake of assuming that the CB1000R handles like a sack of potatoes. Its a surgical corner carving tool that is sharp yet pretty much forgives your fumbling inputs. You can lean into a corner and put everything youve got into it and yet, theres a very slim chance the Honda will wash out and spit you off. The ferocity that the CB tackles corners and the twisties is phenomenal. Its agile and nimble and loves being banked this way and that. Despite its ungainly kerb weight of 217 kg, the manner in which the CB1000R filters through traffic is pretty much the same as a 150cc motorcycle thats barely half of its weight.

What can it do?
Well, how does 187 kph with plenty left in store, in the blink of an eye, sound to you? And what about lean angles that would make a physics lecturer begin to doubt his faith in the subject? This is precisely the domain of the CB1000R one thats out of this world yet real enough to touch with your own two hands. When you gun that throttle, the CB will happily scare you silly, increase your heart-rate five-fold and then surge on till youre well past sanity.

However, the motor is just as happy puttering around at city traffic speeds in top gear as it is setting the open highway on fire and this makes it pretty versatile and much more practical when compared to super sports machines. I really think the CB1000Rs mill is the main aspect that makes the Honda a good daily runabout and if I had one, riding to work everyday would be a very distinct possibility. The frame is a gravity cast mono-backbone aluminium unit thats perhaps as rigid as Gandhian principles themselves, which endows the bike with fantastic handling characteristics.The CB is glued to the road with some very wide and sticky rubber 120/70-ZR17 up front and 180/55-ZR17 at the rear.

Okay, but how far can you push it in India?

Quite a lot but not enough to put it across as briefly as possible. With the kind of performance that the CB1000R is capable of, its highly unlikely that you can put to use more than a quarter or so of what it can do (which is a lot, really) on public roads in India. The greedier lot will have to head to the two race-tracks in the country to realise the true potential of the bike.

Is it worth robbing a bank for?

Well, with a Mumbai ex-showroom price tag of Rs 10.21 lakh, the CB1000R doesnt come cheap. Thanks to our archaic laws, we Indians have to shell out nearly double of what the Honda would cost in Europe, for example. But what you get after digging deep into your pockets is tonnes of thrills and an instant fan following, in addition to a warranty and company service back up through select centres. It just boils down to how much of a motorcycle person you are to justify the cost of plonking a CB1000R into your garage. Too bad I wont be able to afford this Honda any time soon and with the state that the market is in presently, I doubt banks have that kind money in their vaults either. Sigh!

HONDA CBR1000RR FIREBLADE

Can you stare at it all day long?

If it is raining outside, then yes, I would rather stare at it all day long. But I have a feeling that I would fall asleep sooner or later. You see, the Fireblade is not exactly eye-wateringly gorgeous as say, the 2009 Yamaha R1. The only people who give it the second look are those on other motorcycles, especially in this dull black colour. The cues are all there the angry-looking twin headlights, sculpted tank, minimalistic rear section that shows off the fat rear tyre and so on. But somehow, it does not evoke a sense of occasion each time you look at it.

What about brag value with your mates at the pub?

Now were talking. Well, the Fireblade is still the best litre-class sportsbike that money can buy. The 999cc liquid-cooled 16-valve four-cylinder motor puts out 175.67 bhp at 12,000 rpm while twisting out 11.42 kgm of torque at 8500 rpm. These numbers should shut up all of your mates except those who ride the latest Hayabusa. But even they will have nothing to counter you with when you mention the Combined Anti-lock Braking System that will be standard fitment on the Indian Fireblade. In addition, there is also the Honda Electronic Steering Damper that endows the Fireblade with good handling manners and prevents nasty head shakes at high speeds. Then there is also the Unit Pro-Link rear suspension derived from Hondas MotoGP racing programme to add to the cool quotient. All in all, the Fireblade is loaded with all the right ammunition and then some.

Will you need a spine of high tensile steel to ride it?

Yes and no. Confused? Well, if you plan to commute in the city during peak hours where you will have to manoeuvre this front-heavy sportsbike, you better be ready for aches and pains. The ergonomics are tailor-made for high-speed riding and on the highway, most people will be comfortable enough in the saddle to continue riding for at least a few hours. Even the suspension is so sorted, it is difficult to believe that this is a machine with a pure racing track focus. Really bad bumps will make themselves known,but anything less than that is effectively absorbed by the adjustable upside down front forks and the rear shock.

What about corners?

This is what its all about! The Fireblades handling will put most jet fighters to shame when it comes to agility. Whatever the surface, whatever the radius and whatever the camber of a corner, the Fireblade is so planted, it will convince you that you are as good as it makes you look. But if you are smart, you will know that it is actually the bike thats the hero here. And it has every reason to be. At 199 kg with its compact dimensions, the Fireblade is almost like a 600cc supersport motorcycle that has somehow gained substantially more power. Besides, the 120/70 front and 190/50 rear Bridgestone tyres are very good at gripping the road regardless of the surface and conditions. And the steering damper works brilliantly to keep the Fireblade pointed in the exact direction that you aim at.

What can it do?

Oh, around three seconds to 100 kph and a 290 kph top speed, thats all. The Fireblade is a rocketship compared to the CB1000R. Those numbers might make you think that this is one madcap of a motorcycle, and it is, but only if you want it to be. All of that prodigious power is concealed under a thick veil of good manners this is a Honda after all. It is a baby to ride in town without feeling like it is about to burst at the seams and when you do decide to let it rip, the Fireblade goes for it without making you feel like you are going to die. It is a reassuring motorcycle to ride even at high speeds, which makes it a good choice for those who are new to superbikes. But it has to be treated with the respect it deserves for sure!

Okay, but how far can you push it in India?

Good question. More pertinent, in any case. While you will never get close to the Fireblades stratospheric limits, it will allow you to explore them safely and that is reason enough to buy it, never mind the holy cows and holier people that dot our roads. If anything, the Fireblades awesome brakes and handling will save you from all that our roads throw at a motorcyclist. If you do feel inclined to test how adept you are at handling the bike, I suggest that you head to Chennai or Coimbatore and ride at the race track.

Is it worth robbing a bank for?

At Rs 13.37 lakh, ex-showroom Mumbai, to say that the Fireblade is expensive is an understatement. Thanks to the duty structure, Indian bikers have the privilege of paying almost twice of what fellow motorcyclists pay elsewhere. And while that is unfair, if I had the money, I would definitely run into the nearest Honda showroom at the drop of a helmet. After all, its not every day that the best litre-class sportsbike comes to India, right?

http://www.business-standard.com/india/news/on-wingsa-prayer/359527/
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COMPONENTS Go To Top

GM IMPACT MINIMAL: SUNDRAM FASTENERS

The Economic Times

Chennai: When reports of General Motors filing for bankruptcy trickled in, it deepened the worries of Indian auto-component makers, who were already coping with low demand in the domestic market. But TVS group company Sundram Fasteners, which has been supplying radiator caps to GM for the last fifteen years is not worried as it has gradually reduced exposure to the carmaker over the years, a top official said.

"Last year, of our total sales of Rs 1,260 crore, GM contributed Rs 11 crore. At one point, the supply was huge but now it's less than 1% of revenues. We have diversified our exposure over the years," Sundram Fasteners chairman and managing director Suresh Krishna told ET NOW on Friday.

The auto-component business has been going through a rough patch, as it is directly dependent on the auto segment, which has seen sales dwindling in the last year. Auto-component companies have seen inventories pile up as sales fell because of weak economic sentiment.

On the industry outlook, Mr Krishna said, "Last year, while the first half was very good, October onwards, the entire industry took a dive. But, now, with revenues inching upwards and a stable government, we should get better."

Also, though the passenger vehicle segment is growing, the commercial vehicle or CV segment hasnt shown growth yet and there is always a lag of at least a quarter or more between the two.

A recent result note by IDFC SSKI India research said Sundram Fasteners' domestic revenues would remain muted in 2009-10, as commercial vehicle volumes are not expected to recover over the next 6-8 months.

Further, exports are also expected to slow down going forward. While raw material prices have softened, the auto-ancillary companies may be forced to pass on most of the benefits to the original equipment manufacturers (OEMs).

http://economictimes.indiatimes.com/News/News-By-Industry/Auto/GM-impact-minimal-Sundram-Fasteners/articleshow/4595009.cms

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AUTO VOLUMES WILL NOT RETURN TO EARLIER LEVEL

Sudha Menon

mint

For Baba Kalyani, chairman of the $2.4 billion, or around Rs11,352 crore (by revenue for the year ended March), Kalyani Group that owns Bharat Forge Ltd, venturing into global business through the 2004 acquisition of CDP Aluminiumtechnik GmbH of Germany, was part of a carefully charted strategy. The acquisition turned the company from a low-cost supplier of auto components into a multinational that could compete globally.

Over the next three years, the group made two more acquisitions in Germany, and one each in Sweden, Scotland, the US and China, becoming one of the worlds largest forging companies. In an interview, Kalyani spoke about his firms investments and acquisitions in Europe and the way ahead in what is one of the worst times for the auto industry .

On going global

The decision to get into acquisition mode and acquire a global presence was a very clearly thought-out strategy. At Bharat Forge, we knew in early 2000 that despite the big growth in the domestic auto industry, it was not enough to give us the kind of growth we wanted. The only way to grow rapidly was through establishing a global footprint, especially in Europe. We realized early on that it is not enough to be a mere low-cost supplier of components. A company has to be in the local market (in the world market) to get local business. Our overall acquisition strategy has played out very well. Going global meant that our image changed from being a low-cost Indian supplier to a global MNC (multinational company), which got us the same opportunities that other global MNCs got. Even our Indian operations benefited from our European experience, in that our entire business model changed; our exports went up dramatically and that put us way ahead in the business.

On managing buys

We decided it would be strategically right to keep the management of all subsidiaries with local people. There was the usual initial resistancethe tug-of-war between white and non-whitebut in the end, people respect hard work and, talent and intelligence, and now there are no issues. We now have strong cross-functional teams in India and European subsidiaries, but management is local.

On the hard times

Nobody anticipated the meltdown, and we are going through the same tough time that the entire manufacturing industry is. While the global auto industry has witnessed recessionary phases earlier, this time the scale is completely different. The US, which was running on (sales of) 16.5 million light vehicles (cars and vans) annually, is down 60% to 9.5 million in just one year. Europe has come down from 15 million units to 11 million units. Can you imagine the havoc it is playing with the suppliers and the system?

Volumes will never come (back) to the same level, and both the auto manufacturers and suppliers will have to restructure to the new realities. But we are taking steps that will help tide over difficult times; we are right-sizing operations, cutting costs, freezing capex (capital expenditure) and bringing down manpower across locations.

In Europe, across the board, we have reduced manpower. By 2010, we will be a leaner organization, and the bright side of the recession, I think, is that companies, which survive this recession will emerge stronger.

Our US subsidiary is a different challenge altogether and unless the Chrysler and General Motors saga unfolds completely, we cant put any strategy in place for this market.

On overseas acquisitions

With the depressed business scenario that we are going through now, it is easy for people to say in hindsight that it could have been avoided. But, like I said, for us it was a conscious decision and a very successful journey. We invested prudently. On a total 57 million (around Rs377 crore) investment for all our acquisitions, we have made a 25% return, which I consider as reasonable. It is not a great RoI (return on investment) but then the entire cost structure abroad is different, and it is not possible to have the same level of RoI as in India.

On profitability abroad

You cant compare foreign operations with Indian operations. The cost structure is completely different. The cost of manpower there is very big. Average Ebitda (earnings before interest, tax, depreciation and amortization, a measure of profitability) margins in Europe are between 8% and 12%, but analysts want everything to be the same as in India. It does not work that way.

We are also told things would be better if we shifted production to India. Yes, it would be cheaper and we might better our margins but this is not the time to do so. It has to be done strategically, in the medium term, with planning. It would be suicidal to take up something drastic when morale is so down all around you.

On 2010 priorities

It is not a good time for mergers and acquisitions (M&As) just now. Distressed companies are possibly available almost for free, but there are too many imponderables, you just dont know what liabilities these firms come with.

M&As in the US are out of the question. In Europe, valuations will come down even more after a couple of months. Our priority is to secure our companies so that by 2010 each one of them is back on track and in the black.

Samar Srivastava contributed to this story.

http://www.livemint.com/2009/05/29205243/Auto-volumes-will-not-return-t.html
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ALLIED INDUSTRY Go To Top

MRF UNIT TO REACH FULL CAPACITY SOON

The Hindu Business Line

Chennai: MRFs Arakonam unit, which was under lock-out between May 17 and 27, expects to reach full capacity of production within a couple of days, according to a press release from the company.

This is good news for two-wheeler manufacturers such as Hero Honda and passenger car manufacturers such as Maruti, tyres for which are produced at the unit.

After the lock-out was lifted an overwhelming number of workmen reported for work, in spite of a small dissident group trying to prevent them from joining, says the release.

The workmen are quite upbeat about the settlement recent signed by the management with the recognised union of MRF Arakonam, as they stand to gain substantially, it says.

http://www.thehindubusinessline.com/2009/05/30/stories/2009053050840300.htm

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3 RUIA GROUP FIRMS UNDER LENS IN SALES TAX CASE

Khushboo Narayan & Aveek Datta

mint

Mumbai / Kolkata: The Maharashtra sales tax department is probing at least three firms owned by Kolkata-based businessman Pawan Kumar Ruia for allegedly running a hawala racket to reduce sales tax liability, according to a media release.

Kolkata-based Ruia Group is not connected with the Mumbai-based Ruia family, which owns the Esssar Group and has interests in telecom, shipping and logistics, and oil, among others.

The firms under investigation are Dunlop India Ltd, Falcon Tyres Ltd and Monotona Tyres Ltd, all of which make and supply tyres and rubber products.

The investigation branch of the department began its enquiry in January and the sales tax liability on the companies is Rs23 crore. However, the tax liability could increase as the matter is still under investigation, said two sales tax officials. They declined to be identified because the investigation is still on.

The investigation wing of the sales tax department had on 15 January raided the premises of Adhirath Commercial Pvt. Ltd at Malad, a western suburb of Mumbai, that houses five Ruia Group companiesGirish Commercial Pvt. Ltd, Chandani Commercial Pvt. Ltd, Perfect Vinimay Pvt. Ltd, Teerth Traders Pvt. Ltd and Jessop and Co. Ltd. The release did not not divulge further details of the case.

According to officials, all these five firms belong to the Ruia Group. The group took over Jessop in 2003, and Dunlop in 2005.

Ruia could not be contacted because he was travelling. Calls made to his mobile phone were not answered or returned. The groups spokesperson Dhrubajyoti Nandi said he didnt have any comments to offer because Ruia was not around.

Sales tax is levied on the sale of a commodity, which is produced or imported and sold for the first time. If the product is sold subsequently without being processed further, it is exempt from sales tax.

The modus operandi followed by the companies involved in the racket was to issue sales and purchase bills to each other without actually carrying out the transactions in order to avail of the input tax credit running into huge amounts, said the release, dubbing the system as hawala.

Input tax credit is the amount of tax paid by the dealer on purchases for which credit can be claimed. Input tax credit thus sets off the input tax paid against the amount of output tax plus a value-added tax collected from the buyer.

One of the officials said that the total amount of fake purchase bills issued by the firms is about Rs1,200 crore.

Hawala is an informal money or value transfer system for remitting money in which a financial obligation between two parties is settled by transferring it to a third party.

Typically, a debtor passes on the responsibility of payment of his debt to a third party.

Since hawala is a paperless mechanism for settling international accounts, and operates largely through cash transfers on the basis of trust, it is hard to investigate.

According to its website, the Ruia Group is a fast emerging industrial conglomerate with interest in infrastructure and engineering, tyre and rubber products, sugar and electronics.

The Ruia Group has a workforce of about 9,000 skilled, committed and qualified professionals, the website said.

It has manufacturing facilities at Kolkata and Sahaganj (West Bengal), Chennai, Mysore, Kamlapur (Uttar Pradesh) and Hirakud (Orissa), and offices in New Delhi, Mumbai, Chennai, Bangalore and Bhubaneswar.

The group also has offices in New York, Kuala Lumpur, Singapore and Guangxhou (China), and manufacturing units in London and Kuala Lumpur.

http://www.livemint.com/2009/05/29211804/3-Ruia-Group-firms-under-lens.html
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FINANCE & INSURANCE Go To Top

SUNDARAM FINANCE POSTS RS 150-CR NET; TO PAY 25% FINAL

The Hindu Business Line

See similar story in: Asian Age

Chennai: Sundaram Finance Ltd has reported a net profit of Rs 150.73 crore for 2008-09 compared with Rs 212.54 crore for the previous year. However, the net profit for the previous year included a one-time profit of Rs 77 crore.

At a press conference here Sundaram Finances Managing Director, Mr T.T. Srinivasa Raghavan, said that the companys net profit from continuing operations, therefore, grew 11 per cent.

He said that it was a matter of satisfaction that the company was able to turn in a growth in a particularly difficult year.

The companys board of directors recommended a final dividend of Rs 2.5 a share (25 per cent), taking the dividend for the year to Rs 6.5 a share (65 per cent). Last year, the company had issued bonus shares, one for every share held.

Sundaram Finance is in the business of asset-financing, mainly commercial vehicles, passenger cars and construction equipment. Credit disbursements in 2008-09 were lower at Rs 4,540 crore (Rs 5,109 crore), reflecting the difficult market conditions.

Net non-performing assets as at end March 2009 stood at 0.75 per cent compared with 0.49 per cent a year ago.

He said that the company expects the current year to be also difficult considering that there is an overcapacity of commercial vehicles in the market. He also does not expect interest rates to come down. On Friday, Sundaram Finances share price on the NSE rose 10.23 per cent to Rs 304.35.

http://www.thehindubusinessline.com/2009/05/30/stories/2009053051440600.htm

http://www.asianage.com/presentation/leftnavigation/news/business/sundaram-posts-11%-profit-rise.aspx
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LUBRICANTS & ALTERNATIVE FUELS Go To Top

GOVT TO CONSIDER FREEING PETROL, DIESEL PRICES

The Hindu Business Line

See similar story in: The Times of India

New Delhi: The Government will consider deregulating petrol and diesel prices, Mr Murli Deora, said on Friday after taking over as Minister of Petroleum and Natural Gas for a second term.

The issue of deregulation is being discussed and it will be put up to the Cabinet for a decision, he said, adding that a decision on the issue would be taken in about six weeks.

Mr Deoras announcement met with an almost immediate response in the stock market, with the prices of oil company shares rising. On the NSE on Friday, IOCs shares closed the day nearly 7 per cent up, BPCL 4 per cent, HPCL 8 per cent, ONGC 4 per cent, GAIL (India) 5 per cent, Cairn India 7 per cent and Reliance Industries 2 per cent. Both IOC and BPCL also announced their results.

Earlier in the month, Oil Ministry sources had said that draft Cabinet notes have been readied for giving state-run oil marketing firms IndianOil, Bharat Petroleum and Hindustan Petroleum the freedom to fix petrol and diesel prices when crude oil rules below $75 a barrel.

Once deregulation takes place, fuel retailers will be able to fix petrol and diesel prices periodically it could be once a fortnight or once a month. The draft note also included the proposal of raising rates of natural gas produced by ONGC and Oil India Ltd from fields given to them on a nomination basis.

RURAL LPG SCHEME

In his first interaction with the media after taking charge, Mr Deora also expressed his intention to introduce a rural LPG distributorship system in the first 100 days of the UPA Government. At present, 9,350 LPG agencies cover only 50 per cent of the population. We want to extend the coverage to every nook and corner. The Gramin LPG Vitrak scheme would be launched at locations with potential of up to 1,000 refills a month, he said.

RELAUNCH NELP VIII

The Petroleum Minister said that another agenda before the Government was to consider deregulating prices of natural gas sold under the Administered Pricing Mechanism. Besides, it would focus on intensifying oil and gas exploration and re-launching the VIII New Exploration Licensing Round (NELP VIII) shortly.

During the next 100 days road-shows will be held. But before that the issue of applicability of tax holiday to commercial production of natural gas needs to be resolved, he said.

Earlier, the Government had deferred the auction of oil and gas blocks under NELP VIII as the issue on tax holiday for natural gas production had not been resolved.

It may be recalled that in Budget for 2008-09, the Finance Ministry had left out natural gas and defined mineral oil only as crude oil, causing some confusion. According to the prevailing tax policy, companies engaged in commercial production of mineral oil are eligible for a 100 per cent tax break for a period of seven consecutive assessment years, including the initial year.

Commenting on domestic energy production, Mr Deora said oil production from the Rajasthan block being carried out by Cairn India and the on going gas production from Reliance Industries Ltds D6 block in the Krishna Godavari Basin will reduce the countrys dependence on imports to some extent and save it foreign exchange. Currently, India imports around 75 per cent of its crude oil requirement.

Mr Jitin Prasad, a member of Mr Rahul Gandhis youth brigade, also took over on Friday as Minister of State for Petroleum.

http://www.thehindubusinessline.com/2009/05/30/stories/2009053051860100.htm

http://timesofindia.indiatimes.com/Business/Oil-prices-to-be-freed-in-6-8-weeks/articleshow/4595700.cms

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OIL HITS 6-MONTH HIGH ABOVE $66 ON ECONOMIC OUTLOOK

Christopher Johnson, Reuters

See similar story in: The Times of India, Yahoo India

London: Oil rose to a six-month high above $66 per barrel on Friday, on track for its largest monthly percentage gain in more than a decade, after Japanese and U.S. data suggested the economic downturn may be moderating.

Oil prices have jumped around 30 percent this month, buoyed by expectations of a global economic recovery later this year and a bullish price outlook from key OPEC member Saudi Arabia. It is the largest monthly price rise since March 1999.

U.S. crude oil for July delivery was up 90 cents at $65.98 per barrel by 1419 GMT, after reaching a high of $66.47, its highest level since early November last year.

London Brent crude gained 65 cents to $65.04.

Data on Friday showed Japanese industrial production rose 5.2 percent in April on a monthly basis, and the government said it expected continued gains through June.

U.S. growth data on Friday also reinforced the sense that the global economic slump might be abating.

The Commerce Department said the world's largest economy contracted slightly less than initially estimated in the first quarter, dropping at a 5.7 percent annual rate, rather than the 6.1 percent fall published by the government last month.

The revision was nevertheless below market expectations for a 5.5 percent contraction for the January-March quarter.

"Oil prices are rising despite weak current fundamentals," said David Hufton, managing director of brokers PVM in London.

"They are going up because speculators are hopeful that a bottom has been reached and an economic recovery is about to take place which will be V rather than W, U or L-shaped."

U.S. stocks

Another supportive influence was Thursday's report by the U.S. Energy Information Administration on U.S. crude oil stocks, which fell 5.4 million barrels in the week to May 22, way above analysts' expectations in a Reuters poll for a 700,000 barrel decline.

Gasoline inventories also fell for the fifth week in a row as demand rose in the week preceding the Memorial Day holiday, which traditionally marks the start of the summer driving season in the United States.

"The market has reacted to the headline figures," said Harry Tchilinguirian, analyst at BNP Paribas in London. "That has helped extend technical buying as we moved above the psychologically important 200-day moving average (MA)."

The front month for U.S. crude oil futures crossed up through its 200-day MA on its daily price chart on Tuesday and it is now acting as a strong support, according to technical analysts who track prices on charts.

OPEC's decision to hold oil production steady also helped prop up prices. The producer group on Thursday kept its output targets unchanged as expected, betting on a strengthening world economy and tentative signs of increased demand.

Analysts said Saudi Arabia's statement this week that the global economy could now cope with $75-80 a barrel oil was a shift from the world's largest oil producer, which has until recently hinted it would be happy with a lower price to help the world economy back on its feet.

http://in.biz.yahoo.com/090529/137/batnj9.html

http://timesofindia.indiatimes.com/Business/Oil-hits-new-6-month-high-above-65/articleshow/4594410.cms
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INTERNATIONAL NEWS Go To Top

GM TO BUILD COMPACT CARS IN US; UAW OKS CONTRACT

Agencies

See this story in: The Economic Times

Detroit: The reformation of General Motors Corp. is in high gear. The automaker said Friday that it plans to reopen a shuttered U.S. factory to build subcompact cars that will be the smallest vehicles GM has ever produced here. An element of the company's shift from hulking SUVs to more gas-sipping microcars, the move comes as GM's prepares to announce the fate of the poster child for gas guzzlers, the Hummer brand.

Meanwhile, as expected, the United Auto Workers ratified a package of concessions designed to reduce the automaker's labor costs.

In Germany, the government and GM agreed on the framework of a deal for Magna International Inc. to take a majority stake in GM's Opel unit, a person briefed on the negotiations said.

With an expected bankruptcy filing looming, GM's shares sunk below $1. The stock is expected to become worthless when GM reorganizes in bankruptcy court. GM's filing for bankruptcy protection is expected Monday, when GM also plans to announce it will close 14 more factories, including four assembly plants.

A person briefed on GM's plans said the small cars would be built at one of those plants. The person, who requested anonymity because of the sensitive nature of the plans, said GM has not determined which plant will get the new cars.

The retooled factory will be able to build 160,000 cars per year, GM said. It would create 1,200 jobs, the person said, offsetting some of the 21,000 that will be lost when GM closes the 14 factories by the end of next year.

The move to build the subcompact in the U.S. follows a firestorm caused by GM's plans to produce up to 51,000 subcompacts per year in China and ship them to the U.S. starting in 2011, disclosed in documents submitted to Congress.

GM already builds the compact Chevrolet Cobalt and Pontiac G5 at a plant in Lordstown, Ohio, and it plans to retool that plant to start making a new small car, the Chevrolet Cruze, next year. It also jointly manufactures the Pontiac Vibe, a rebadged Toyota Matrix, at a factory in Fremont, California.

In an interview with The Associated Press on Thursday, UAW President Ron Gettelfinger said GM will not import the cars from China and had agreed as part of a concession deal to build them in the U.S.

On Friday, Gettelfinger said at a news conference that 74 percent of GM's 54,000 U.S. production and skilled-trade workers voted in favor of the deal. Reaching a deal with the union was one of the conditions imposed on GM by the Obama administration's auto task force. Originally meant to help keep the automaker out of bankruptcy court, bankruptcy experts say having the labor agreement in place will help move the process through court more quickly.

The UAW says the cuts will save GM $1.2 billion to $1.3 billion a year.

GM has received $19.4 billion in federal loans and likely will get another $30 billion from the U.S. government as it makes its way through the bankruptcy court process.

In Berlin, negotiators were working out the final details of the Opel deal and an announcement could come within hours, said the person familiar with the negotiations, who did not want to be identified because talks had not yet finished.

Magna would provide short-term financing to become the preferred negotiating partner for Opel. The German government would put up a euro1.5 billion ($2.1 billion) bridge loan that would be repaid when the deal is closed.

Germany is looking for an agreement that will shield Opel _ which employs 25,000 people in Germany, nearly half GM Europe's work force _ from a looming GM bankruptcy court filing in the U.S. and extensive restructuring.

The government wants to make it legally independent under a trustee so that any taxpayer assistance does not go to the U.S., then would provide bridge financing while Opel looks for a new, permanent owner.

http://economictimes.indiatimes.com/News/International-Business/GM-to-build-compact-cars-in-US-UAW-OKs-contract/articleshow/4595770.cms

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GM, MAGNA REACH TENTATIVE DEAL ON OPEL: SOURCES

Reuters

See this story in: The Economic Times

Frankfurt: General Motors and Canadian auto parts group Magna International have reached an agreement in principle that could rescue ailing German car maker Opel, sources close to the negotiations said on Friday.

The two sides have been trying to agree on a memorandum of understanding that would serve as the basis for bridge financing of 1.5 billion euros ($2.10 billion) as well as a trustee solution that would protect Opel from creditors in case parent GM files for Chapter 11 in US bankruptcy court.

"A framework agreement has been reached. The goal is to work out as many of the details as possible before the meeting with (Chancellor Angela) Merkel in order to sign a memorandum of understanding," one source with knowledge of the talks said.

http://economictimes.indiatimes.com/News/International-Business/GM-Magna-reach-tentative-deal-on-Opel-Sources/articleshow/4594823.cms

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CANADA'S MAGNA WINS BID FOR OPEL

Agencies

See this story in: The Economic Times

Berlin: Germany reached a deal in talks with Canada's Magna, General Motors and governments to save Opel, German government leaders said on Saturday after a marathon six-hour meeting in the chancellery.

Finance

Minister Peer Steinbrueck and Economy Minister Karl-Theodor zu Guttenberg told journalists outside the chancellery shortly after 2 a.m. that a deal on bridge financing and a trustee model for the German carmaker Opel were agreed.

"We have an agreement," Steinbrueck told reporters following marathon talks between top German politicians, US government officials and executives from GM and Magna.

http://economictimes.indiatimes.com/News/International-Business/Canadas-Magna-wins-bid-for-Opel/articleshow/4596398.cms

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MAGNA SUBMITS NEW PROPOSALS FOR GM'S OPEL, GUTTENBERG SAYS

Bloomberg

See this story in: Business Standard

Berlin: Magna International Inc has submitted new proposals to help rescue General Motors Corps Opel unit, German Economy Minister Karl-Theodor zu Guttenberg said. Rival bidder Fiat SpA fell in Milan trading.

Its unclear whether an agreement with Magna, the Canadian car-parts maker, can be reached on Friday, Guttenberg told reporters in Berlin. A meeting at the German Chancellery to decide on Opels future will resume at 6 pm, two hours later than scheduled, a government official said. The gathering wont include GM or Magna executives as talks between the companies continue, the official said.

Fiat Chief Executive Officer Sergio Marchionne said in a statement earlier on Friday that he was perplexed by Opels financing needs and that he would skip todays Berlin meeting scheduled to decide on a 1.5 billion ($2.1 billion) short- term government loan for the Ruesselsheim, Germany-based carmaker. Chancellor Angela Merkel told Der Spiegel magazine that Germany still aims to avoid forcing Opel into insolvency as its Detroit-based parent prepares a June 1 bankruptcy filing.

Im pretty certain that Magna and GM will agree, Hendrik Hering, the economy minister of Rhineland-Palatinate, said in an interview on Friday. His is one of the four states where Opel has assembly plants that participated in Opel talks hosted by Merkel earlier this week.

Fiat fell as much as 42.5 cents, or 5.4 per cent, to 7.41and traded at 7.54 as of 4.33 pm, giving the Turin, Italy-based carmaker a market value of 9.1 billion.

GM wants an upfront payment of 450 million from Germany to keep Opel in operations, about 350 million more than the German government had thought, GM CEO Fritz Henderson said in an interview on Thursday.

German officials want bidders to submit letters of intent for Opel, Thomas Steg, a government spokesman, said at a news conference on Friday.

Negotiations involving the German government, the US Treasury, GM and the bidders may resume only if the companies have something substantial to present, Steg said.

Financing Opel on an interim basis would lead to unnecessary risks, Marchionne said in a statement on Friday. Describing negotiations as complicated and uneven, he reiterated interest in buying Opel.

http://www.business-standard.com/india/news/magna-submits-new-proposals-for-gms-opel-guttenberg-says/359568/

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FIAT CEO SAYS FOCUS STILL ON CHRYSLER DEAL

Reuters

See this story in: The Economic Times

Montreal: Fiat Chief Executive Sergio Marchionne said on Friday that his main focus right now is on Chrysler, shrugging off reports that General Motors and Canadian auto parts group Magna International have reached an agreement in principle that could rescue ailing German carmaker Opel.

"I think we will just keep on focusing on what we have, and we're in the final days of restructuring of the Chrysler transaction, and I think that our objective is to close that deal," he told reporters.

"If the Opel transaction is not available to Fiat, life will move on."

http://economictimes.indiatimes.com/News/International-Business/Fiat-CEO-says-focus-still-on-Chrysler-deal/articleshow/4594975.cms

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RENAULT, NISSAN TO STRENGTHEN TIES
AFP
See this story in: The Hindu Business Line

Paris: Auto makers Renault of France and Nissan of Japan said they planned to tighten their 10-year-old billion) this year. Renault-Nissan said it had formed a team to accelerate and strengthen the ties that have linked the two companies since 1999. Today, we must go further, said alliance Chairman, Mr Carlos Ghosn. The search fro synergies is no longer optional it is an obligation.

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VOLVO CANCELS 600 LAYOFFS
AFP
See this story in: The Hindu Business Line

Stockholm: Swedens Volvo Group has cancelled plans to lay off 600 employees after striking a deal with Swedish unions to reduce their working hours instead, the company said in a statement. The Swedish company, which makes trucks, buses and construction equipment, issued a notice a just over 1,500 employees on April 22, saying they would lose their jobs owing to the collapse in global demand for its products.
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ECONOMY & FINANCE Go To Top

FOREX RESERVES RISE $6.432 B

The Hindu Business Line

Mumbai: The countrys foreign exchange reserves increased by $6.432 billion for the week ended May 22 to $260.639 billion, according to the Reserve Bank of Indias Weekly Statistical Supplement.

In the week ended May 15, forex reserves had declined by $1.734 billion to $254.207 billion. The rise in reserves is due to the weakness of the dollar against other currencies such as euro and the RBI purchasing dollars to help exporters, said a forex dealer with a public sector bank.

The week under consideration saw the rupee appreciating on the positive sentiment after the Congress UPA won the general elections with a decisive mandate and tracking the huge gains made by the Sensex. The domestic currency had even touched 46.90 against the dollar.

The foreign currency assets increased by $6.411 billion to $250.165 billion. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies, such as yen, sterling and euro.

The euro gained from $1.3436 at the beginning of the week to $1.3916 at the end of the week, against the dollar. During the week, the euro touched a five-month high of $1.3957.

Gold and SDRs were unchanged at $9.231 billion and $1 million respectively.

The countrys reserve position in the IMF increased by $21 million to $1.242 billion.

http://www.thehindubusinessline.com/2009/05/30/stories/2009053051380600.htm

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SENSEX SOARS 329 PTS; REALTY, OIL&GAS IN DEMAND

The Hindu Business Line

Mumbai: The stock markets indices rose 2.30 per cent on Friday, tracking higher Asian peers and led by Reliance Industries a day after oil prices surged past $65 a barrel to a fresh six-month high.

The BSE index surged 329.24 points to close at 14,625.25 points against its yesterdays close of 14,296.01.

Realty, Consumer durables, capital goods and PSU stocks were in good demand. The BSE Realty surged nearly 7 per cent at 3,819.89, Oil & Gas gained 3.30 per cent at 10,419.47, PSU climbed 3.30 per cent at 8,427.44 and Capital Goods was up 4.10 per c ent at 11,921.39.

On the NSE, the S&P CNX Nifty index was up 111.85 points at 4,448.95.

http://www.thehindubusinessline.com/blnus/05291901.htm

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ECONOMY UP 6.7% DESPITE SLOW INDUSTRIAL GROWTH
PTI

See this story in: The Tribune

New Delhi: Braving the global recessionary trends, India managed 6.7 per cent economic growth in 2008-09 despite the manufacturing sector recording a dismal performance. A 5.8 per cent growth rate during the last quarter of the fiscal, at a time when most developed economies have shrunk, puts India among the top-most growing nations.

Commenting on the growth figures released by the government, Planning Commission deputy chairman Montek Singh Ahluwalia said: It is on the expected lines. The growth rate during 2008-09 is lower than the 9 per cent in the preceding fiscal, but that is not as low as expected by certain analysts and quite in the range projected by the RBI: 6.5-7 per cent.

The slowdown is attributed to poor performance by manufacturing sector despite robust growth in some service sectors. The manufacturing output has expanded by a mere 1.4 per cent adding a cause of worry to the already sagging economy. As per statistics released, the higher-than-expected growth came about despite the farm sector logging a mere 2.4 per cent growth.

The main reason why the overall growth got a boost was the 13 per cent jump in the expansion of community services, 9 per cent in transport and communications sectors, and 7.8 per cent in financial and other services sector.

Expansion in construction activities was also higher than the overall growth at 7 per cent. This apart, mining output was up 3.6 per cent and electricity and fuel production grew by 3 per cent, the fresh data showed.

The major reason for the slippage, therefore, was due to the sharp slide in both industrial and agricultural growth, which fell from 8.2 per cent and 4.9 per cent, respectively, in 2007-08.

Vehicle sales and the production of cement, electricity and refined petroleum are showing signs of revival. Indias passenger-car sales increased 4.2 per cent in April from a year earlier, after a 1 per cent gain in March. Cement production jumped 10.1 per cent in March and electricity output rose 5.9 per cent from a year ago, according to government data.

This shows resilience of the economy against the background of global recession during the later part of last year, said industry chamber Federation of Indian Chambers of Commerce and Industry.

With the reversal of the contractionary monetary policy and fiscal stimulus measures, the growth rate should now show improvement in the current fiscal, said the chamber president Harsh Pati Singhania.

While the policy stimulus should take care and give a boost to manufacturing sector, the monsoon pattern this year would very critically determine the farm economy, he said.

http://www.tribuneindia.com/2009/20090530/biz.htm#1

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Last Financial closing

Sensex	14,625.25
US$ spot	Rs.47.14
US$	Y.95.8333
US$ 6 months	Rs.47.93
Yen	Rs.0.49
Euro spot	Rs.66.48
LIBOR 6 months	%
Call	%
GOI sec. 10 years	- - - -

Aluminium (per kg)	Rs.
Aluminium Ingot	Rs.
Copper (per kg)	Rs.
Gold (10gm)	Rs.14925
Lead (per kg)	Rs.
Mild Steel Ingots (Mumbai)	Rs.
Nickel (per kg)	Rs.
Nickel Cathode	Rs.
Silver (1kg)	Rs.23300
Sponge Iron (per tonne)	Rs.14340.00
Steel Flat (per tonne )	Rs.29170.00
Steel Long GVD (per tonne)	Rs.24205.00
Steel Long BVN (per tonne)	Rs.24110.00
Tin (per kg)	Rs.
Zinc (per kg)	Rs.
Zinc Ingot	Rs.- - - -

Crude Oil (WTI)	$- - - -
Crude Oil (Brent)	$64.30

Automobile

Scip on BSE	Face Value (Rs)	Last traded Value (Rs)
Apollo Tyres	1	31.35
Asahi Ind	1	61.55
Amara Raja B	2	84.40
Ashok Leyland	1	32.45
Bajaj Auto	10	1028.60
Bharat Forge	2	180.10
Denso	10	53.95
Eicher Ltd	10	- - - -
Eicher Motor	10	284.30
Escorts	10	65.55
Exide Ind	1	70.70
Force Motors	10	100.85
Gabriel India	1	16.25
Hero Honda	2	1340.90
Hind Motors	10	23.15
Hi-Tech Gear	10	74.05
Jay. Bh. Maruti	5	43.20
Jamna Auto	10	22.80
JK Tyres & Inds	10	70.35
Kinetic Motors	10	11
Kinetic Engg	10	- - - - -
KOEL	2	90.15
Kirloskar Br:	2	177.35
LML Ltd	10	11.25
L&T	2	1405.60
Lumax Ind	10	127.50
Lumax Tech	10	31.35
M&M	10	675
Maruti Suzuki	5	1021.55
Motherson SS	1	77.95
Minda Inds	10	165.75
MRF	10	3161.90
MICO	10	- - - -
Omax Auto	10	34.05
Perfect Circle	- - - - - -	- - - -
Rico Auto	1	20.45
Sona Koyo St	2	13.55
SKF Bearing	10	- - - -
SRF	10	123.50
Swaraj Mazda	10	192
Tata Motors	10	336.70
TVS Motor	1	44.75

Metals

Scrip on BSE	Face Value(Rs)	Last traded Value (Rs)
Bhushan Steel	10	637.85
Essar Steel	10	- - - -
Hindalco	1	84.70
Hind Zinc	10	582.10
Ispat Inds	10	24.72
Jindal Iron	10	- - - -
Jindal Stain	2	- - - -
Jindal Steel	5	2092.40
National Aluminium	10	354.40
SAIL	10	172.85
TISCO	10	406.30
Visa Steel	1	30.05

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Saturday, May 30, 2009

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