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| INDUSTRY Auto makers gear up for another price hike INTERVIEWS/FEATURES COMPONENTS Hyundai plans ancillary units in AP ALLIED INDUSTRIES Due diligence on, SPV likely for SsangYong bid: Ruia Group FINANCE & INSURANCE Shriram equipment arm to start from Sept OIL, LUBRICANTS & ALTERNATIVE FUELS Oil Min: Seeking fuel price panel meet Thursday | CARS, SUVs, MUVs Maruti joins green drive, to roll out CNG variants soon M&M to pay more to Renault to reform Logan platform Ford India starts exporting petrol engines to Thailand 2/3 WHEELERS Using principles of homeopathy and yoga to drive Bajaj Auto INTERNATIONAL NEWS Honda says troubled China plant up and running Rupee edges down | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nandini Sen Gupta & Sumit Chaturvedi The Economic Times (Web Edition) New Delhi: Car companies are preparing to raise prices for the fourth time this year in July as raw material costs go through the roof, but are banking on strong pent-up demand to prevent sales from falling. Companies like M&M, General Motors, Ford, Toyota and Maruti are negotiating the extent of the hike with their vendors. If commodity prices continue to rise at the current rate, we will be forced to go in for a price hike, said Pawan Goenka, president, auto and farm division, M&M. Prices of commodities like steel and rubber have risen sharply since the second quarter of the previous financial year, with most of the increases coming in April-May. Overall, the commodity price curve has gone up by 20-25%, said Rajesh Jejurikar, chief of operations, auto division, M&M. But, with passenger vehicle sales rising 35% in April-May over last year, companies could pass on part of the commodity price hike to customers without worrying about losing market share. Toyota Kirloskar said it reviewed prices quarter, and like Honda and Maruti Suzuki, will take a final call next month. Car prices have already seen three mark-ups this year an input cost-driven hike in January, followed by a 2% excise duty hike in the Union Budget and another hike on account of the move to higher emission norms. Ford announced a 1-2% hike in the price of its small car Figo from June. The company too will decide on raising prices of its other brands by July. We will assess the effect of a rise in commodity prices on our products by the end of the current quarter, said Ford India president and MD Michael Boneham. Companies like Volkswagen and Honda, however, will not take a decision just yet. In addition to commodity prices, Honda will watch the yen-rupee exchange rate, said Jnaneswar Sen, vice- president (marketing), Honda Siel. Copyright 2010, Bennett, Coleman & Co. Ltd. All Rights Reserved" The Economic Times (Web & Print Edition) Mumbai/Chennai: Tata Motors is contemplating a price hike, ranging between Rs 5,000 and Rs 15,000 of the new Nanos from August-September this year, according to people familiar with the development. The Nano will be available off-the shelf, once full stream production starts at Sanand, in Gujarat. At the time of the launch, it was announced that the Mumbai-based auto major will take a call on price increase when it completes delivery of one lakh units. According to a company spokesman, Tata Motors has not made any decision on any price increase on the Tata Nano. As for the next phase of deliveries, Tata Motors will make appropriate announcements in due course of time. With Tata Motors planning to raise production of Nano cars to 1,200 a day at its brand-new factory in Sanand, by December, the company is likely to complete its initial one lakh bookings soon. It is operating on a single shift of eight hours and produces nearly 150 Nanos a day, or 4,500 a month, at Sanand. Its Pantnagar plant has a similar production schedule. Since it began its delivery in July 2009, Tata Motors has completed the delivery of 33,000 Nanos. Earlier this month, it also started delivery of the BS4 variant. An industry tracker, on condition of anonymity, said the projects viability and profitability depends on an imminent price hike. The increase has to be at least 20% for Tata Motors to sustain production and supply. By the year-end, customers will have to buy a Nano, paying 10-12% more than the launch price. There is no other choice. Suppliers are barely making margins. Many of them, including Bosch, have taken up the assignment from a strategic perspective so that they can face the challenges of supplying components for low-cost cars, he said. Globally, there is an alignment towards understanding the efficacy of low-cost models. Efficient pricing and doing things differently are the order of the day. While the vehicle manufacturer manages his cash flow well, it is the supply chain that takes the big impact. Copyright 2010, Bennett, Coleman & Co. Ltd. All Rights Reserved" PTI See this story in: The Economic Times (Web & Print Edition) New Delhi: Auto major Tata Motors said its global sales increased by 50 per cent in May to 79,819 units on robust demand for both commercial and passenger vehicles. Sales of luxury models from Jaguar Land Rover stood at 19,053 units during May, up 72 per cent from the same period last year, the company said in a statement. While sales of Jaguar brand luxury sedans jumped by 34 per cent last month to 5,120 units, Land Rover sales were 93 per cent higher at 13,933 units, it added. It said total passenger vehicles sales stood at 43,130 units in May, 2010, a growth of 54 per cent from the corresponding month last year. Commercial vehicles sales were also up by 45 per cent to 36,689 units from the same month last year, it added. The Tata Motors Group's global sales comprise the Tata, Tata Daewoo and Hispano Carrocera range of commercial vehicles; Tata passenger vehicles, along with distributed brands in India; and Jaguar and Land Rover. Tata Motors' global sales up in May The Hindu Business Line (Web & Print Edition) Tata Motors global sales grow by 50% The Indian Express (Web Edition) Tata Motors global sales for May up 50% Daily News & Analysis (Web Edition) Tata motors global sales grow by 50 pc in may Business Standard (Delhi Print Edition) Tata Motors global sales rise by 50% mint (Delhi Print Edition) Swaraj Baggonkar Business Standard (Web & Print Edition) Mumbai: The Rs 23,000-crore debt on its books notwithstanding, Tata Motors has charted a multi-focal approach for reviving the fortunes of its troubled British brands, Jaguar and Land Rover. The country's biggest automotive company has in mind a dozen-odd initiatives targeted at making the two British premium brands rediscover lost glory, including a re-entry of Jaguar into the racing arena of Le Mans. The two brands had posted a net profit after tax of 3 million (Rs 20.5 crore) last financial year, as against a net loss of 281 million (Rs 1,900 crore) for a 10-month period during 2008-09. About half of Tata Motors' consolidated revenue is generated from JLR operations. The initiatives include new models, engines, closer managerial and product co-operation between Tata Motors and JLR, substantial reduction in emission to meet new norms and moves into the electric vehicle and hybrid segments. There are cost management plans for components for the two brands, expansion of product development operations in India, streamlining of operations at the JLR plants in the UK and expansion in key markets like Russia and China. Tata Motors will spend Rs 10,000-12,000 crore over the next two to three years in both research and development costs and capital expenditure for the two high-maintenance brands. For a self-sustaining JLR Starting this year and extending till 2012, Tata Motors aims to transform the JLR business into a simpler, more flexible and lower cost operation, with a lower breakeven point. The two brands are to be able to reinvest the cash generated, putting less pressure on Tata Motors to raise external capital. From 2014, the two brands expect to achieve self-sustainable growth, with greater synergies with Tata Motors, stated a report from the company. New plans will also include laying greater significance on Range Rover, an upmarket sub-brand belonging to Land Rover. This will allow the luxury brand, also the most expensive in the Land Rover line, to promote an all-new, mid-size Range Rover that will come between the LRX and the Range Rover Sport. The LRX concept will be a production-ready model next year, to eventually make its way to India. The LRX will be the cheapest Land Rover model ever built and will compete with the likes of BMW X1, which BMW intends to launch in India by the year end, in the price band of Rs 25 lakh. Group CEO confirmed the management was exploring market space for a small Jaguar saloon, while working on a new XK roadster. In addition a new XE sports car, built on aluminium platform technology, which could perhaps be a small two-door coupe, is also being worked upon. Industry insiders say there will be improved integration of technology between Tata Motors and JLR in the coming period. This could mean sharing of engines for vehicles with commonalities. China hopes JLR had opened purchasing offices in India and China last year for vehicle components. The company intends to continue and increase the content of strategic low-cost sourcing of materials and parts from these to nations, the statement further acknowledged. China, especially, will hold a greater importance for the two brands, as it has been the fastest growing market for JLR in the world. Its share last year doubled to more than 8.8 per cent, while its sales are pegged to grow by nearly 50 per cent this year. Looking at the impressive demand for the JLR brands especially for Land Rover, Tata Motors plans to establish a national sales company in China this year, in addition to setting up an assembly unit at Nanchang in Jiangxi province in the near term. PTI See this story in: The Economic Times (Web Edition) Mumbai: Among the automobile majors, Bajaj Auto and Mahindra & Mahindra have come out with stellar performance in advance tax payment during the first quarter, while Tata Motors has paid less than what it had paid in the year-ago period, according to income tax sources. "Both M&M and Bajaj Auto have recorded over 100 per cent growth in advance tax this quarter which shows their profitability, while Tata Motors has recorded a drop in advance tax payment," an income tax source told PTI here. Bajaj Auto shelled out Rs 110 crore for this quarter as against Rs 50 crore it paid in the last fiscal same period, while M&M made a payment of Rs 63 crore against Rs 17 crore in the year-ago period. Tata Motors has paid Rs 60 crore for this quarter as compared to Rs 70 crore it paid last year. Meanwhile, other two Tata Group companies, TCS and Tata Steel, have upgraded their advance tax payment. While TCS has paid Rs 128 crore against Rs 53 crore in the year-ago period, Tata Steel shelled out Rs 300 crore as against its year-ago payment of Rs 250 crore. Yogima Seth Sharma Business Standard (Delhi Print Edition) New Delhi: The coming commonwealth games in New Delhi are going to be a big boost for car rental companies in this part of the country. Hertz India, Avis and Mega Cabs have each lined up investments of up to Rs.100 crore and more to enhance their fleets, as well as to train drivers, to maximize revenue during the peak demand in October. While Hertz India will invest nearly Rs.110 crore before the Games to add more cars, Mega cabs will double its investments in the country in 2010-11 to almost double its fleet size. Avis is looking at bringing in more vehicles from adjoining centers to cater to the demand in Delhi and the adjoining region.  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ajay Sukumaran The Financial Express (Web & Print Edition) Bangalore: Volvo Buses India witnesses demand for high-end buses in urban transportation growing rapidly with more cities in the country upgrading bus services. However, the company believes that growth in long distance travel will remain flat. The city bus market will see probably 30% growth year on year for modern buses, but the inter-city long distance, we feel, will remain at an average growth of about 5%, said Akash Passey, managing director, Volvo Buses India. The demand is very good from big cities. The smaller cities have taken in smaller volumes, and I think that for about 10-12 months they are going to experience this, said Passey. Now they are in discussions for more smaller quantities. So, India will see phenomenal growth in modern city buses in the next 3-5 years. The company, which sold 535 buses in the calender year 2009, expects sales to grow 10-15% this year. The Swedish bus maker has been among the early entrants into the air-conditioned, low-floor city bus segment beginning with Bangalore in 2006, but now faces an increase in the number of competitors. In addition to local rivals such as Ashok Leyland and Tata Motors, automobile maker Mercedes-Benz last week announced its plans to enter the Indian city bus segment to tap what it estimates is a market for at least 500 buses per year and which would grow 20% annually. Earlier we were the only one waving a flag for high quality vehicles, said Passey. Now we see others, including local manufacturers, doing the same. Why we are happy is bacause we are not the only one promoting it, so the market size expands quite rapidly for our kind of vehicles. The growth in demand for low-floor buses in urban transportation has been driven by the central government's fiscal stimulus package in January 2009 which provides assistance to cities for purchase of buses under the Jawaharlal Nehru National Urban Renewal Mission. The scheme, meant for cities with a population of over a million, recommends that 20% of buses procured should be low-floor ones. Now present in 11 cities compared to two last year, Volvo counts states such as Karnataka, Andhra Pradesh, Kerala and Rajasthan among its larger customers. India's bus market is evolving and maturing. Passengers are seeking greater comfort from public transportation, said Kapil Arora, Partner, auto practice, Ernst & Young. Several cities and states are likely to streamline and expand their mass public transportation networks in the next few years. He added that in the bus market, the government has an important role to play as a catalyst as a large segment is controlled by state transport undertakings and also because of policy decisions such as excise duties and spending on road development. Volvo bullish on high-end buses, sees 15% sales growth in 2010 Yahoo India (Web Edition) PTI See this story in: The Financial Express (Web & Print Edition) New Delhi: The diversified Hinduja Group may ring in a major change at the helm of flagship firm Ashok Leyland as well as Hinduja Foundries by appointing Dheeraj Hinduja as their chairman. Dheeraj Hinduja, son of Gopichand Hinduja, is likely to replace R Shahaney as chairman of both Ashok Leyland and Hinduja Foundries, industry sources said. It is a natural progression and is likely to happen by August-end. Shahaney is 80-plus now and will retire, an inside source said. The proposal would be brought up for shareholders' approval at AGMs of the two firms. Hinduja The Statesman (Web Edition) Dheeraj may take over ALL reins Asian Age (Delhi Print Edition) New Ashok Leyland chief | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Murali Gopalan The Hindu Business Line Mumbai: Bajaj Auto has gone in for a revamp of its top management where Mr Pradeep Shrivastava has been elevated to Chief Operating Officer from CEO (Engineering). All other CEOs have been promoted to Presidents of their business units. Pradeep is a veteran who will take care of important functions like materials, engineering, plant and manufacturing, Mr Rajiv Bajaj, Managing Director, told Business Line. A product of IIT Delhi and IIM Bangalore, Mr Shrivastava has been with Bajaj Auto for nearly three decades and played a key role in the commissioning of the Chakan and Pantnagar plants. Similarly, the list of Presidents includes Mr Abraham Joseph (R&D), Mr S. Sridhar (Motorcycles), Mr R.C. Maheshwari (Commercial Vehicles), Mr Rakesh Sharma (International Business), Mr Eric Vas (New Projects), Mr K Srinivas (Retail Finance) and Mr Kevin D'sa (Finance). Mr Bajaj said the restructuring exercise would ensure greater delegation of functions. Bajaj Auto should also be an aspiration working place for people who would like to see themselves in top positions someday, he added. Rajiv Bajaj's role As for his own role in the new scheme of things, Mr Bajaj said he would now turn his attention to development of people and the organisation using the proven scientific principles of homeopathy and yoga. Both sciences, he said, have a profound influence on management which can be applied beyond their obvious uses in the health space. Homeopathy, for instance, finds the one unique remedy since its very core is the individual. This principle can also be extended to a company to manage the health of its people and ensure corporate wellness as a result. As Mr Bajaj said, it is pointless when companies are doing well but work conditions are stressful and there is constant uncertainty on the job. On the other hand, if a company like Bajaj Auto is successful and is also a less stressful place to work in, it shows we are doing things inside out. It is only when we are not clear about our goals that we put stress on the system, he said. This HR exercise, which will be top priority for Mr Bajaj over the next five years, will see some of the best doctors in homeopathy as well as top yoga practitioners work with employees in the new development centre being readied at the Akurdi facility near Pune. HR has become an archaic function and it is my endeavour to position Bajaj Auto as the best in organisation and people management, he said. The five-year' timeframe is relevant because over the 20 years he has been with the company, Mr Bajaj has allotted five years apiece on prioritising important activities. For instance, between 1990 and 1995, his focus area was manufacturing with a view to improving quality and lowering costs. Even while this goal was achieved, he realised that by 1995, nobody wanted to buy the company's geared scooter. The time had come to think afresh. By 1995, my focus had changed to R&D where the task on hand was to create something of our own. It was important to focus on new product development and this was the time when the creation plans for the Pulsar got under way, Mr Bajaj said. The five year period from 2000 was spent on marketing and sales. In 2005, this exercise was complete and coincided with Mr Bajaj taking over as MD. I realised that we now needed to work on a strategy, he said. This meant taking tough decisions such as the possibility of exiting scooters, improving three-wheelers, going in for alliances and focusing on a new brand strategy. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PTI See this story in: The Economic Times Hyderabad: Automobile major Hyundai is set to ink an MoU with Andhra Pradesh Government to set up a spare parts facility and other ancillary units in the state entailing an investment of over Rs 1,000 crore. According to a senior Government official, they had a series of meetings with Hyundai representatives and managed to convince the company to set up units at Nellore, a district bordering Tamil Nadu, where the South Korean giant has a manufacturing plant at Chennai. "The company said it will invest Rs 500 crore in the first phase and Rs 700 crore in the second phase. In turn the government will offer 50 acres of land at nominal price in the first phase and same size land in the second phase," B Sam Bob, Principal Secretary (Industries), told PTI here. He said they were yet to receive terms and conditions of the MOU from Hyundai and expect to close the deal before month end. "There is no major automobile-related industry in the state. This will become a model for other automakers. Carmakers may show interest to set up manufacturing facility once basic infrastructure is in place," Sam Bob said. Hyundai CEO Mong Koo Chung has reportedly met Chief Minister K Rosaiah and held discussions in this regard. Hyundai has a research and development centre in Hyderabad, which supports all back-end operations across the company's car line-up. Hyundai plans ancillary units in Andhra The Statesman Hyundai plans ancillary units in Andhra Business Standard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PTI See this story in: The Economic Times Kolkata: City-based P K Ruia Group, which has started due diligence on SsangYong Motor, said a special purpose vehicle, which will include Dunlop India and Falcon Tyres, will be formed if it were to go ahead to bid for the ailing Korean automaker. The group and Mahindra & Mahindra are the two Indian entities that have expressed interest in acquiring SsangYong Motor, which has been undergoing court-led restructuring since 2009, after suffering heavily due to the downturn in the auto industry in 2008-09. "Due diligence has started and KPMG, on behalf of SsangYong Motor, has sent us data on June 7 and we are analysing the same and we have have one month's time," Ruia Group Chairman P K Ruia told reporters here on the sidelines of Dunlop's AGM. "If we feel we can turnaround the company and the valuations are right, then only we will move ahead," he added. Asked if Dunlop India and Falcon Tyres would participate in the bid for the Korean automaker, he said the group will form a special purpose vehicle (SPV) in which the two listed firms would be a part. "Now our interest in SsangYong Motor is through one of the group's investment companies and if the group moves ahead further toward acquiring the company (SsangYong), then other companies (of the group) will also join in the SPV to acquire the shares," he said. Asked about price the group was willing to pay, Ruia said he cannot speak on valuations, but whatever is making rounds in the media is 'too high' and the liabilities are also very high at USD 700 million. Yesterday, M&M had also confirmed that it will start due diligence in a day or two on SsangYong Motor, depending on the outcome of which it would decide the bid amount. SsangYong Motor, which is mainly into manufacturing of sports utility vehicles (SUV) and recreational vehicles (RV), has SUV models like 'Rexton', 'Kyron' and 'Actyon' and sedan 'Chairman'. China's SAIC Motor Corp owns 10 per cent in the troubled automaker and about 70 per cent is held by creditors, led by state-owned Korea Development Bank. Ruia Group shows interest in Korea's SsangYoung Motor The Hindu http://www.hindu.com/2010/06/16/stories/2010061664501700.htm Dunlop eyeing SsangYong The Statesman On SsangYong The Hindu Business Line Ruia Group commences due diligence on Korea's Ssangyong Daily News & Analysis http://www.dnaindia.com/money/report_ruia-group-commences-due-diligence-on-korea-s-ssangyong_1396765 The Financial Express Kolkata: Pawan Ruia-controlled Ruia Group will only bid for Koreas Ssangyong Motors (SM) if, after completing due diligence, it finds the company can be revived. Ruia said on Tuesday that the group has only issued an expression of interest, and this doesnt make any commitment to bid. He was speaking to reporters after the 83rd annual general meeting of Dunlop India in Kolkata. I am neither committing that we will bid for Ssangyong Motors nor am I declaring that we will not bid, Ruia said. We will only bid if after due diligence we find that the company can be revived, he added. Ruia Group, the Rs 3000-crore conglomerate of 89 companies, has started due diligence on June 7, and so far, according to Ruia, it has received a number of data which the groups management is currently analysing. Ssangyong, which is undergoing a court-led restructuring since 2009, has provided the interested parties with KPMG data prior to the start of due diligence by the interested parties. According to Ruia, SM has liabilities worth $700 million. Though the present SM management claimed that it was capable of catering to the European market, the state of the plant and the level of technology that existed at present have to be verified. We have one months time from the date we have started our due diligence and we will be very cautious in our steps and decision. If required, we will visit the plant in Korea and find out every detail, Ruia said. He said since SM already has a huge liability, there was no point in giving it a high value. SM can be worth up to $500 million and the deal value might run up to $600-800 million, according to market observers. But according to Ruia, the valuations coming out in the papers are too high and his group was not going to compete in such valuations. We will have a fixed pricing for ourselves and if the value matches our pricing, then only we are going to bid, Ruia clarified. Ruia commences due diligence on Ssangyong mint Ssangyong bid only if revival possible: Ruia Yahoo India The Financial Express Pawan Ruia-controlled Ruia Group has firmed up plans to invest Rs 850 crore to build its Falcon brand of two and three wheeler tyres, while looking to stabilise production at 30 tonnes per day in its units under Dunlop India. Ruia after the 83 rd annual general meeting of Dunlop India on Tuesday said the funds will be used to make 1 million additional two and three wheeler tyres per month from two facilities one at Uttranchal and another at Mysore. While the Uttranchal facility would be a greenfield project to be implemented by Falcon Tyres and Rubbers Pvt Ltd to make 500,000 tyres per month, the Mysore project would be an expansion of its existing unit of Falcon Tyres Ltd to make another 500,000 tyres per month. As a greenfield unit, the Uttranchal plant would require an investment of Rs 550 crore but the Mysore expansion would require an investment of Rs 300 crore. We have already tied up with banks for a Rs 200 crore loan to implement our Mysore project, Ruia said. For implementing the Uttranchal project, Falcon Tyres and Rubber Pvt Ltd have already proposed a rights issue to take care of the promoters equity portion, he added. The Uttranchal project, according to Ruia, would come up to mainly cater to the needs of Hero Honda motor cycles and the makers of Hero Honda have been the main facilitators of the project. Falcon Rubbers & Tyres have 60 acres in their possession and expects to complete the project by 2010-2011 end. The expansion in Mysore would also be completed within the same period, Ruia said. He said once the new capacities come up Falcon's total capacity would go up to 2.3 million pieces per month. For Dunlop the company has adopted a go-slow strategy and would only like to stabilise production at 30 tonne per day at both its units at Sahaganj and Ambattur though the target is to take the production up to 70 tonnes per day during the fiscal end, Ruia said. While Falcon makes only two and three wheeler tyres, Dunlop makes four wheelers and off-the-road Tyres (OTRs). The market is responding to the situation of Dunlop and all our production are getting sold, Ruia said. Dunlop is on the track of cost optimisation by arranging for captive power and has planned Rs 250 crore investment for setting up a 50 mw co-generation unit at Sahaganj. The company's application for clearances is pending with the state government, Ruia said. Setting up another 50 mw co-generation unit at Ambattur was also on the cards though a final decision is pending, he added. Ruia Group to invest Rs 850 cr to boost 2-3 wheeler tyres Yahoo India The Telegraph Calcutta: Dunlop hopes to make yet another attempt this year to kickstart meaningful operations at its plants in Bengal and Tamil Nadu. Chairman Pawan K. Ruia said the company was expected to clock Rs 550-crore turnover this fiscal by scaling up production. It plans to increase tyre manufacturing at its troubled Sahaganj plant in Bengal to 60-70 tonnes a day later this year, up from 30 tonnes. Ruia plans to start the production of two- and three-wheeler tyres simultaneously at Ambattur in Chennai. Right now, we are breaking even with the production. Once scaled up, the business will turn profitable, he said at the companys 83rd annual general meeting here. Ruia had taken over the ailing company in 2005-end. Since then repeated attempts to get it going have yielded little result. However, during this period, he took Dunlop out of BIFR and managed to lift the eight-year-long suspension in the trading of the stock. On whether the political situation in Bengal has impacted business at Sahaganj unit, he said, Industry is apprehensive. But I am not worried, as the industry has to be boosted notwithstanding whoever comes to power. PTI See this story in: The Economic Times Kolkata: Leading two wheeler tyre-maker Falcon Tyres expects to begin commercial production in its Rs 550 crore greenfield Uttaranchal plant by the end of current fiscal. "We are yet to get land from Hero Honda, but it will be handed over soon and construction is expected in two months. We hope to begin commercial production, may be in a small way, from the end of the current fiscal," P K Ruia chairman of the group said. The plant with a capacity of five lakh pieces a month would supply to Hero Honda and also meet the demands of other companies in the North India, he said. Ruia said the company is simultaneously also expanding capacity at the existing site in Mysore at a cost of Rs 300 crore. "Once both expansions are over we will have combined capacity of 2.3 million tyres per month to become the world's largest two wheeler tyre company," he said. Falcon Tyres would make a rights issue, the size of which has not been finalised, to raise resources to fund the expansion. Falcon Tyres plans Rs 550-cr facility The Hindu Business Line Falcon Tyres to expand Mysore facility Business Standard Falcon Tyres to promote two units Asian Age Sohini Das Business Standard Mumbai/ Ahmedabad: The margins of domestic tyre manufacturers are in likely come under pressure as the restrictions pertaining to import of Chinese truck radials have been relaxed recently following demand from original equipment manufacturers (OEMs) who were facing supply shortage in the country. Tyre manufacturers are already grappling with the rising raw material prices and have recently hiked prices to partially pass it on to the consumers. The Chinese truck tyres are on an average cheaper by around 20 per cent compared to Indian truck radials. A trader or importer earlier had to obtain a license for importing tyres, which has now been made open by the Centre following demand from OEMs. Rajiv Budhiraja, director general, Automotive Tyre Manufacturers Association (ATMA) said, "The license scheme was intended to regulate import and restrict it to actual users, like OEs and large transporters. With the opening up of imports, bulk of the trade would now be through traders". The total tyre market in the country is around 15 lakh tyres per month and is expected to grow by around 10-11 per cent this fiscal. Nearly, 70 per cent of the net production is of truck radials. In value terms, the overall industry size is around Rs 30,000 crore, of which around Rs 3000 crore comes from exports. The size of the domestic truck tyre industry is close to Rs 18,900 crore considering the net domestic tyre industry size to be around Rs 27000 crore. "Nearly, 60-70 per cent of the Chinese truck tyres goes into the replacement market which is also the biggest market for the indigenous tyre manufacturers. Around 78 per cent of their production is consumed by the replacement market, 10-12 per cent goes to the OEMs and the remaining for exports," informed Budhiraja. The relaxation of import regulations, hence, would hurt domestic tyre manufacturers dearly. He feels that even the OEMs have been caught unawares in terms of the rising demand, while a 15 per cent growth was expected last fiscal, there was a demand escalation of around 28 per cent. Now, however, the domestic tyre industry is in for a huge scaling up of capacity. "The overall capacity of the truck tyre industry will double from 90,000 tyres per month to around 1.8 lakh truck tyres per month within the next six months and will further rise to 2.5 lakh truck tyres per month within a year's time as all major producers including CEAT, Birla Tyres, Apollo Tyres and JK Tyres have chalked out major expansion plans", said A S Mehta, marketing director, JK Tyres, a market leader in the truck tyres segment. OEMs will then reduce dependence on imports and source domestically, he added. On being asked whether the opening up of Chinese imports would put pressure on domestic truck tyre prices, Mehta said,"There would definitely be some pressure on the prices of the cheaper domestic variety of truck tyres. The premium brands are likely to be relatively immune". An industry insider who did not want to be identified said that prices could be down by around 5-10 per cent in the wake of cheaper substitutes, or the tyre-makers would hold their plans to raise prices next quarter. A Delhi based importer-trader of truck tyres R B Rubber Traders said that the Centres move could further boost sale of Chinese tyres in the replacement market. We see a growth in demand for Chinese truck tyres in the replacement market, the trader added. With natural rubber prices hovering around Rs 170 a kilogram (kg), major tyremakers like JK Tyres and Apollo Tyres have raised prices in June first week. JK Tyres has raised prices thrice since January, in equal installments of 4 per cent each time. "We have raised our prices by around 12 per cent during this calendar year as rubber prices have almost doubled from Rs 90 per kg at the same time last year to around Rs 169 per kg now," Mehta said. Raw material costs have risen in the range of 20-25 per cent over the last one year including natural rubber and crude based raw material for tyres. Raw material costs account for around 70 per cent of the cost of tyre production. Of this, around 45 per cent is natural rubber and the remaining are crude based products like nylon,carbon black and certain chemicals. Competition from Chinese tyres might further impact the margin of tyre makers that are already struggling to absorb the rising raw material prices. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| T E Narasimhan Business Standard Chennai: Shriram Transport Finance Companys (STFCs) new equipment finance subsidiary, Shriram Equipment Finance Company, will start operations from September 1, 2010, with an initial capital of Rs 50 crore. The new companys promoter said the company would be listed and partners, including private equity, would come on board. Speaking to Business Standard on the sidelines of the companys 31st annual general meeting here, STFC Managing Director R Sridhar said STFCs assets under management (AUM) were to the tune of around Rs 30,000 crore, of which seven-eight per cent was contributed by the equipment business, which was a division in STFC. According to market sources, the new equipment finance segment is estimated around Rs 10,000 crore. We see good potential in this space to tap the market and have decided to focus on scale. Thus, the new company has been floated, said Sridhar. The company would not only focus on new equipment finance but also used equipment finance. It would also focus on middle and lower segments, that is, small-time contractors, said Sridhar. Our target for the new company is Rs 6,000 crore AUM by the end of March 31, 2013, said Sridhar. The initial capital of Rs 50 crore will be infused by STFC and going forward the company will raise money through debt for both lending and capital requirements. We will also list the company and rope in partners, which can be private equity players, said Sridhar. He did not give any time-frame for this. Sridhar said GE had earlier shown an interest in taking 20 per cent but pulled out due to the financial crisis. Going forward, we will certainly look for partners, possibly a PE partner also, he added. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reuters See this story in: Yahoo India New Delhi: India's Oil Ministry is seeking a meeting of a panel of ministers on Thursday to discuss fuel pricing, Oil Minister Murli Deora told reporters on Tuesday. "Better to have it on Thursday as the cabinet is there," Deora said. The decision to free up fuel prices is a tough test of the government's ability to carry out reforms. Freeing up prices will help beleaguered state-run oil firms and improve the country's fiscal health as fuel accounts for a quarter of an estimated subsidy bill of $25.6 billion. Shobha Roy The Hindu Business Line Kolkata: With Emami Biotech's biodiesel sale plan running into rough weather following the Petroleum Ministry's ban on selling the fuel for use in passenger and goods vehicles, the company is now mulling other viable options for pushing the product into the market. The company is looking at alternatives such as earth moving equipment, construction equipment, generator owners and vehicles among others, for probable use of the fuel, according to Mr Aditya Agarwal, Director, Emami Group. Emami Biotech had entered into a memorandum of understanding with Calcutta Tramways Company (CTC) for the supply of 250 kilo litre of bio diesel a month in February 2009. However, the MoU could not be executed due to the ban. We had moved the court against that order and we have already received a stay order. We are again initiating talks with the State transport corporation but things are at a standstill at present, Mr Agarwal told Business Line. Emami Biotech had invested around Rs 150 crore to set up the biodiesel production facility at Haldia, which has the capacity to produce 300 tonnes a day. However, the company is currently selling only about 400-600 tonne of biodiesel on a monthly basis. We have been currently selling biodiesel to generator owners and for some personal use. We are also looking for other avenues such as earth moving equipment, construction equipment and vehicles, he said. The Government needs to take some concrete measures in order to encourage the use of biodiesel in the country, he pointed out. The Government has been subsidising normal diesel but it is hardly taking any active measure when it comes to biodiesel, he observed. Worldwide, bio-diesel is considered a safe alternative to fossil fuels, but due to absence of right policies in the country, restrictions placed on companies selling it and ill-defined regulations, the sales have not picked up here, he pointed out. The price of biodiesel was lower as compared with normal diesel. The price of normal diesel typically ranges between Rs 37-40 per litre depending on the States while the cost of biodiesel was typically in the range of Rs 35-36 per litre, he said. Emami Biotech, Mr Agarwal said, was currently selling bio-diesel at a lower price compared to normal diesel. This is contrary to international practice where consumers buy bio-diesel at a premium to use it in their vehicles. Unless the Government modifies its price mechanism on bio-diesel, its production will become unviable, he added. The bulk of the production equipment at the plant has been supplied by Desmat Belstra, an Italian Belgian joint venture company. The company has also invested an additional amount of Rs 100 crore at the same facility for producing edible oil. The production residue of edible oil would be used for preparing bio-diesel. Agencies See this story in: The Hindu Business Line Mumbai: Oil prices fell slightly in the Asian trade on Tuesday as Greeces credit crisis suffered another setback, which offset positive European industrial production figures. New Yorks main futures contract, light sweet crude for delivery in July, fell seven cents to $75.05 a barrel. Brent North Sea crude for July delivery was down a cent to $75.19. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| See this story in: The Times of India Tokyo: Operations at a Honda parts factory in southern China returned to normal on Tuesday after nearly a week of disruption over a pay dispute, the company said, vowing to continue talks with dissatisfied workers. The Honda Lock factory in the southern province of Guangdong was one of a string of factories in China -- and the third in the Honda family -- hit by a wave of industrial unrest in the so-called "workshop of the world". Limited work resumed at the plant on Monday, but some employees had refused to return to their posts, demanding improved pay. "Operations at the plant have returned to normal," said Hirotoshi Sato, a Honda Lock spokesman based in Miyazaki in southwestern Japan. Most of the subsidiary's 1,500 employees had agreed to an undisclosed pay rise, he said. For those still seeking a higher salary, the spokesman said the company "promised to continue talks". Honda Lock supplies car locks and key sets for Japan's number two automaker. The company last week offered a pay rise of 100 yuan (15 dollars) a month from the current salary of around 1,700 yuan, but workers were demanding more than 2,000 yuan, a local Chinese official said. The trouble at Honda came after a spate of suicides among Chinese assembly line workers for Taiwanese IT giant Foxconn -- which shone the global spotlight on conditions for China's millions of factory workers. Honda's auto assembly lines run by its Chinese joint venture Guangqi Honda Automobile have been stalled several times in recent weeks because of labour disputes at its parts manufacturers. Two other disputes -- at the company's main engine parts plant in Guangdong and at a factory making exhaust and muffler components in the same province -- have been resolved. Honda has a production capacity of 650,000 vehicles a year in China. Shares in Honda Motor edged up 0.51 percent in early afternoon trade in Tokyo on Tuesday. Honda says troubled China plant up and running Hindustan Times http://www.hindustantimes.com/News-Feed/auto/Honda-says-troubled-China-plant-up-and-running/Article1-557975.aspx Reuters See this story in: Business Standard Bratislava: Kia Motors, South Korea's second-largest automaker, on Tuesday announced a recall of 56,000 Kia Cee'd models made in 2008-2009 in Slovakia because of problems with the brake unit, the firm's Slovak subsidiary said. Kia Motors, which operates an assembly plant in the northern Slovak town of Zilina that makes the Cee'd and Sportage models, has sold more than 300,000 of the Cee'd model over the past three and a half years. Kia Motors recalls 56,000 cars due to brake fault Yahoo India Bloomberg See this story in: Business Standard Toyota Motor Corp.s U.S. finance unit sold $2 billion of 5- and 10-year notes, the first such sale in the U.S. by the worlds largest automaker in four years. Toyota Motor Credit Corp. yesterday issued $1.25 billion of five-year notes that yield 120 basis points more than similar- maturity U.S. Treasuries, and $750 million of 10-year debt with a spread of 130 basis points, Bloomberg data show. A basis point is 0.01 percentage point. We always try to keep a diverse source of funding, said Justin Leach, a spokesman for the finance unit in Torrance, California. It had been a while since we were in the market, and the timing was right. The sale is Toyotas first benchmark offering of dollar- denominated debt since 2006 and comes after the Toyota City, Japan-based company recalled more than 8 million vehicles worldwide this year to fix sticky gas pedals and misshapen floor mats. The Economist See this story in: The Financial Express Ever since the forging of Renaults alliance with Nissan in 1999, Carlos Ghosn, the boss of both carmakers, has been on the lookout for new partners. He passionately believes that the alliance model he has created is superior both to the full mergers the car industry has often mucked up and to the limited co-operation deals that are two a penny. But attracting others to his big tent has taken time. In 2002 Nissan launched what has proved to be a successful joint venture in China with Dongfeng: it has become the leading Japanese brand in China, now the worlds most important car market. In late 2007 Nissan beat out General Motors to become a strategic partner of AvtoVaz, a big but sickly Russian carmaker, taking a 25% stake. Since then, Russian car sales have nearly halved. But Mr Ghosn believes that the tie-up with AvtoVaz will bring his alliance a 40% share of a market that was briefly as big as Germanys and probably soon will be again. Earlier this year Ghosn brought Daimler, a German maker of trucks and luxury cars, into a three-way alliance with Renault and Nissan. Daimlers Dieter Zetsche, anxious to find a way to cut the cost of developing the firms lossmaking small cars, had held lengthy but fruitless discussions with, among others, Volkswagen, BMW and Fiat. The alliance will focus on sharing resources in four main areas: platforms for small cars and light commercial vehicles; small petrol and diesel engines; technology for fully electric and hybrid cars; and bigger diesel engines. Eventually Ghosn is hoping for a bigger cross-holding than the tiny stakes in each other that Zetsche agreed to. A successful alliance, Ghosn says, really is like a marriage. Renault owns 44% of Nissan, which in turn holds 15% of Renault. They purchase most of their parts jointly, and have gradually learned to share engineering expertise, such as Renaults strength in diesel engines and Nissans in petrol ones. The alliance, Ghosn argues, has also made Nissan more daring and Renault more cosmopolitan. But Ghosn believes that further scale is needed for three reasons. First, under pressure from legislators anxious to boost fuel efficiency and cut carbon emissions, carmakers are spending huge sums on developing a range of sophisticated new powertrains. Second, there is a pressing need for investment in substantial new manufacturing capacity and dealer networks in the emerging markets that are generating nearly all the industrys growth. Finally, Ghosn says, you can no longer survive as a niche player specialising in small cars or luxury vehicles. To cover overheads, big car manufacturers must cover every segment. Whether Ghosns web of alliances can deliver all this is unclear. Even where full mergers have taken place, as with the disastrous union between Daimler and Chrysler, savings have proved elusive because engineers from one side are unwilling to share ideas and resources with the other. After 11 years and much effort, some argue, Renault and Nissan have yet to equal the efficiencies of the various arms of VW Group or Toyota, which are both tightly integrated and centrally managed. Ghosn admits that it is hard to overcome the engineering bias that is often the enemy of efficient scale in the industry. We are autonomous, but little by little we can commonise engines, transmissions and platforms, he says. Although other carmakers have not fully embraced Ghosns model, variations of it are spreading fast. VW sees the 20% stake it took late last year in Suzuki, which is strong in India and in small cars, as a critical step towards surpassing Toyota as the worlds biggest car company. PSA Peugeot Citron and Mitsubishi, while balking at big cross-shareholdings, are keen to deepen their ties. And although Fiat has in effect taken control of Chrysler despite owning only 20% of the American firm, it is adopting a similar management structure to Ghosns at Renault and Nissan. Ghosn has long believed that knowing how to run an alliance is a big competitive advantage. It seems that he is no longer a prophet without followers. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Hindu Business Line Mumbai: The rupee opened lower against the dollar on Tuesday, but recovered some of its losses to close marginally down. The rupee opened at 46.59, weakened to an intra-day low of 46.75 and ended the day at 46.56, against the previous close of 46.50. The rupee wastracking global markets which were down after Moody's Investors Service cut Greece's credit rating to junk.' The falling euro also hurt sentiment.The currency recovered after the euro , said a dealer with a private bank. The six-month forward premia ended higher at 3.20 per cent (3.04 per cent) and the one-year premium closed at 2.7 per cent (2.60 per cent). PTI See this story in: The Hindu Business Line Mumbai: Recovering from early losses, the Bombay Stock Exchange benchmark Sensex on Tuesday ended 74 points higher at a fresh six-week high on fag-end buying by funds in blue chips, particularly RCom and Sterlite Industries. The 30-share index extended gains for the fifth straight session rising by 74.66 points to close at 17,412.83 points. The barometer had opened lower and further fell to an intra-day low of 17,249.46 points due to profit booking. Anil Ambani group company RCom rose to a four-month high after it decided to demerge its telecom infrastructure unit, Reliance Infratel, to create an independent entity. The stocks surged by 4.27 per cent to Rs 186.65. Brokers said fresh buying mainly in realty and PSU sectors on the back of disinvestment news coupled with recovery in European markets boosted the market sentiment. The government has approved disinvestment of 10 per cent each in Coal India Ltd and Hindustan Copper Ltd, as it pushes its agenda to raise Rs 40,000 crore this fiscal through stake sales in PSUs. The broad-based National Stock Exchange index Nifty closed at 5,222.35 points, showing a gain of 24,65 points. In 30 BSE index components, 21 stocks closed with gains. The heaviest on the benchmark, Reliance Industries, rose by 0.19 per cent to Rs 1,065.45, Sterlite Industries rose by 3.41 per cent to Rs 675.35 and DLF Ltd rose by 2.99 per cent to Rs 272.25. The three carry nearly 19 per cent weightage on the Sensex. MMTC Ltd, a state-run trading company, rose by 20.86 per cent to Rs 34,476.60, the most since July 2002, after saying it will consider a proposal on June 29 to issue free shares and split its stock. Suresh P. Iyengar The Hindu Business Line Mumbai: The quantum jump in advance tax payment made by companies based in Maharashtra for the first quarter of this fiscal shows that the economy is clearly on the high growth path. Details from the Income-Tax Department on Tuesday (the last day for advance tax payments) show that 1,720 corporate houses paid higher tax compared with last year while 475 paid less. An analysis of the tax payment by top 77 companies shows 58 companies that paid more than what they did last year while 19 paid less. The net gain in tax collection was Rs 1,251 crore. Maharashtra accounts for nearly 45 per cent of the country's tax revenue. The Centre plans to mop up Rs 3.01 lakh crore as corporate tax this fiscal, 20 per cent more than last year's collection of Rs 2.5 lakh crore. Banking sector The banking sector showed a mixed trend in advance tax payment. While State Bank of India and Bank of India paid lower tax of Rs 869 crore (Rs 1,068 crore) and Rs 158 (Rs 231 crore) respectively, ICICI maintained last year's level of Rs 350 crore. Union Bank increased its outgo by 62 per cent to Rs 168 crore (Rs 104 crore) and Bank of Baroda to Rs 225 crore (Rs 210 crore), while Oriental Bank and YES Bank doubled their payments to Rs 140 crore (Rs 70 crore) and Rs 50 crore (Rs 27 crore). Insurance, housing In the insurance space, Life Insurance Corporation paid 14 per cent more at Rs 534 crore (Rs 469 crore) and GIC nearly thrice as much at Rs 46 crore (Rs 17 crore). Reflecting the robust demand for housing loans, HDFC's advance tax payment was up 20 per cent to Rs 215 crore (Rs 175 crore). The asset management arm increased its payment five-fold to Rs 60 crore (Rs 10 crore), while M&M Finance's outgo was up marginally at Rs 26 crore (Rs 22 crore). In the manufacturing sector, Reliance Industries doubled its tax payment to Rs 653 crore (Rs 314 crore). Larsen & Toubro paid more at Rs 130 crore (Rs 110 crore). Aditya Birla Group flagship Hindalco Industries' outgo was up 22 per cent to Rs 55 crore (Rs 45 crore) while Grasim Industries' was down 37 per cent to Rs 40 crore (Rs 64 crore). As for the oil majors, IndianOil paid Rs 225 crore (Rs 130 crore), Bharat Petroleum Corporation Rs 126 crore (Rs 40 crore) while Hindustan Petroleum Corporation forked out four times more at Rs 61 crore (Rs 15 crore). Holcim group companies ACC and Ambuja Cement had a lower outgo at Rs 50 crore (Rs 60 crore) and Rs 65 crore (Rs 70 crore) respectively. In the Tata group, Tata Motors paid Rs 65 crore (Rs 30 crore), Tata Consultancy Services Rs 128 crore (Rs 53 crore) while Tata Chemicals' payment was lower at Rs 29 crore (Rs 26 crore). Mahindra & Mahindra's payout was nearly four times more at Rs 63 crore (Rs 17 crore) while Bajaj Auto paid twice as much at Rs 110 crore (Rs 50 crore). Fast moving consumer goods company Hindustan Unilever maintained its tax payment at the last year's level of Rs 75 crore while GlaxoSmithKline Pharmaceuticals paid a tad more at Rs 42 crore (Rs 39 crore).
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Wednesday, June 16, 2010
Indian Auto Industry Update June 16, 2010
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