The industrial slowdown has little to do with the global economic crisis. It is the result of an indifferent investment climate and the absence of reforms.
A growth of 7.7 per cent in GDP in the first quarter of the current fiscal year (2011-12) is a continuation of the slowdown that descended on our economy in the third quarter of the previous fiscal year (2010-11).
The pace of growth has been decelerating since then, though the decline in GDP growth to 7.7 per cent is only marginally lower than in the fourth quarter of 2010-11, at 7.8 per cent. The inflationary pressure, however, continues unabated, in spite of serial tightening of the monetary policy, exposing the economy to the risk of stagflation.
We have been saved a sharper slowdown in Q1 of FY'12, thanks to a rebound in the GDP of the services sector , that registered 10 per cent growth, up from 8.7 per cent in Q4 of 2010-11. Agriculture, too, has helped with 3.9 per cent growth, compared with 2.4 per cent in Q1 of FY'11.
The slowdown in Q1 of FY'12 is entirely due to the industrial sector, which has been witnessing a consistent decline in growth since Q2 of 2010-11. It can be counted as a comforting factor that ours isn't a case of an economy-wide slowdown, but one that is confined to the industrial sector.
DOMESTIC FACTORS
Also, contrary to general perception, the industrial slowdown has little to do with the state of the global economy, but more to do with domestic turmoil, that is hampering the investment climate and the economic environment in the country.
Those who believe that the external economic environment is responsible for the current slowdown should take note that our external economy has remained exceptionally buoyant, amidst an adverse global economic environment. The performance of the external economy has been completely at variance with the domestic economy.
One should take note of the performance of exports, in relation to the performance of the industrial, and mainly manufacturing, sector as a whole. Let us briefly look at the scenario during 2008-09 to 2010-11 — the period of global financial-cum-economic crisis and subsequent recovery.
During this period, our GDP growth had fallen to 6.8 per cent and then recovered to 8.5 per cent, while growth in manufacturing output had dropped to 2.5 per cent and later recovered to 8.9 per cent. Export growth, too, had suffered. It was negative 3.5 per cent in 2009-10, but had immediately recovered to a record high of 37.5 per cent in 2010-11, even as the global economy was in the midst of doubtful recovery.
In recent months, growth in our exports has been extraordinarily high, which is neither in tandem with the deteriorating global economic scenario nor with the state of our domestic economy, especially the falling growth in industrial output. Interestingly, export growth and GDP growth are moving in opposite directions. Export growth is galloping, while output growth is decelerating.
There are two inconsistencies here — between export growth vis-à-vis the state of the global economy, and export growth and growth in manufacturing output.
GOVERNANCE ISSUES
The Indian economy tends to benefit, rather than suffer, from the global economic crisis, by way of higher capital inflows from global investors and non-resident Indians.
Our foreign exchange reserves are consistently rising, though not as fast as China. The rupee is undergoing some implicit depreciation, helping exports to grow and narrowing the trade gap in the process. However, the real economy sectors are bearing the full brunt of anti-inflationary measures. Low growth in agriculture and industrial output is both a cause and effect of inflationary pressures in the economy.
It is imperative for the government to rejuvenate the real economy sectors at this time, when the global economic outlook is uncertain. The problem is that we often tend to neglect sustained growth in agriculture and industry, and allow all sorts of hurdles to come in the way.
Slowdown in industrial growth in the first quarter is mainly on account of want of governance, or rather, inaction on the part of the government, and absence of economic reform. We had started well on the path of inclusive growth, but didn't support it with the reform process.
We have indeed missed a great opportunity on the industrial front, by way of delays in implementation of key infrastructural projects, besides stalling of some big-ticket investment plans that could have changed the growth outlook in a big way.
With two consecutive years of good monsoon, the time was also ripe for major agricultural reforms and initiatives that could have put our agriculture on the path of sustainable high growth. We could have really ushered a new growth paradigm in agriculture and rural economy.
(The author is Economic Advisor, J .K. Organisation, New Delhi. The views are personal.)
India to soon to have a formal auto recall policy in place
With the Indian automobile industry set to break into the league of top five car markets by 2016, the government is working on a formal auto recall policy to improve manufacturing standards in the country, a top government official said.
“We are setting up a National Automotive Board (NAB), which is already on the anvil and will be formed in two-three months, that will be able to take action on a recall,” said Ambuj Sharma, joint secretary, department of heavy industries.
“We are still examining its prospects and discussions have happened on the set of guidelines to be adopted. We are also considering whether to penalize a manufacturer in such a case.” He declined to give a timeframe.
Sharma said NAB will have representation from all the nodal ministries and automotive bodies such as the Automotive Research Association of India (ARAI).
Projects such as the one on National Automotive Testing and the R&D Infrastructure Project (Natrip) will fall under its purview.
Sharma said that a recall policy would have to be included under the Motor Vehicles Act as it requires consent from other transport-related institutions in the country.
Another official in the department of heavy industries, who did not want to be named, said that the government was trying to draw up a policy similar to that of the US-based National Highway Traffic Safety Administration that requires for a manufacturer to issue a public notice if a manufacturing defect is confirmed.
The Society of Indian Automobile Manufacturers, an industry lobby, was not aware of the development.
The move comes at a time when auto makers in the country, especially the home-grown ones, add safety features to their cars or motorcycles after receiving complaints from customers while insisting that such efforts do not constitute a recall.
In November last year, Tata Motors Ltd decided to install additional safety features in at least 70,000 Nanos if the owners wanted them following instances of the car catching fire.
Since the Nano’s high-decibel launch in March 2009, there have been six such known incidents. The company said that these “efforts do not constitute a recall”.
Similarly, Mahindra and Mahindra Ltd, which entered the motorcycle segment in September last year with its 110cc Stallio, had to suspend production as certain parts of the bike required fine-tuning and adjustments were needed to some of the bikes on the road.
Such incidents have increased in the Indian market. Honda asked owners to bring their City sedans back twice in a year.
Maruti Suzuki India Ltd, the country’s largest car maker, did so for some of its diesel vehicles to check and replace a faulty engine part, the second such step by the company in about 18 months.
The move will make the market more mature, experts said.
However, they are sceptical about consumer acceptance of the concept.
Recalls have both a positive and a negative impact, said Surjit Arora, a sector analyst with Mumbai-based brokerage Prabhudas Lilladher Pvt. Ltd.
“In India, while such actions are perceived as negative, globally, it is the other way around,” he said. “People take these incidents positively. They are happy with the fact that the company reviews the products, which it sold two-three years ago.”
Such processes are backed by a proper legal framework in the West, said an expert with a leading consultancy.
“It’s the coming of age of the Indian market. It will give customers a right to go back to the manufacturers and ask questions,” the expert said, requesting anonymity.
Earlier this year, the Sunder committee tasked to update the Motor Vehicles Act 1988, had recommended in its report “punishment for offences relating to manufacturing of faulty vehicles” of imprisonment of up to three months and/or a fine of up to Rs. 1 lakh.
“We are setting up a National Automotive Board (NAB), which is already on the anvil and will be formed in two-three months, that will be able to take action on a recall,” said Ambuj Sharma, joint secretary, department of heavy industries.
“We are still examining its prospects and discussions have happened on the set of guidelines to be adopted. We are also considering whether to penalize a manufacturer in such a case.” He declined to give a timeframe.
Sharma said NAB will have representation from all the nodal ministries and automotive bodies such as the Automotive Research Association of India (ARAI).
Projects such as the one on National Automotive Testing and the R&D Infrastructure Project (Natrip) will fall under its purview.
Sharma said that a recall policy would have to be included under the Motor Vehicles Act as it requires consent from other transport-related institutions in the country.
Another official in the department of heavy industries, who did not want to be named, said that the government was trying to draw up a policy similar to that of the US-based National Highway Traffic Safety Administration that requires for a manufacturer to issue a public notice if a manufacturing defect is confirmed.
The Society of Indian Automobile Manufacturers, an industry lobby, was not aware of the development.
The move comes at a time when auto makers in the country, especially the home-grown ones, add safety features to their cars or motorcycles after receiving complaints from customers while insisting that such efforts do not constitute a recall.
In November last year, Tata Motors Ltd decided to install additional safety features in at least 70,000 Nanos if the owners wanted them following instances of the car catching fire.
Since the Nano’s high-decibel launch in March 2009, there have been six such known incidents. The company said that these “efforts do not constitute a recall”.
Similarly, Mahindra and Mahindra Ltd, which entered the motorcycle segment in September last year with its 110cc Stallio, had to suspend production as certain parts of the bike required fine-tuning and adjustments were needed to some of the bikes on the road.
Such incidents have increased in the Indian market. Honda asked owners to bring their City sedans back twice in a year.
Maruti Suzuki India Ltd, the country’s largest car maker, did so for some of its diesel vehicles to check and replace a faulty engine part, the second such step by the company in about 18 months.
The move will make the market more mature, experts said.
However, they are sceptical about consumer acceptance of the concept.
Recalls have both a positive and a negative impact, said Surjit Arora, a sector analyst with Mumbai-based brokerage Prabhudas Lilladher Pvt. Ltd.
“In India, while such actions are perceived as negative, globally, it is the other way around,” he said. “People take these incidents positively. They are happy with the fact that the company reviews the products, which it sold two-three years ago.”
Such processes are backed by a proper legal framework in the West, said an expert with a leading consultancy.
“It’s the coming of age of the Indian market. It will give customers a right to go back to the manufacturers and ask questions,” the expert said, requesting anonymity.
Earlier this year, the Sunder committee tasked to update the Motor Vehicles Act 1988, had recommended in its report “punishment for offences relating to manufacturing of faulty vehicles” of imprisonment of up to three months and/or a fine of up to Rs. 1 lakh.
HC for joint trial of TVS, Bajaj dispute
The Madurai Bench of Madras high court on Friday ordered a joint trial on a patent dispute between TVS Motor Company and Bajaj Auto.In December 2007,Bajaj filed a civil suit accusing TVS of infringing its patent on DTS-i (digital twin spark plug ignition) in TVS Flame.TVS,however,has denied the allegations.
Allowing the applications from both parties,Justice S Palanivelu of the Madurai Bench said it is desirable to make an order for joint trial.The documents to be produced by both the parties could be common for both the suits.It would facilitate both parties to advance arguments jointly in both the suits and the court to render a common judgment.In such view of this matter,an order for joint trial is inevitable which has necessarily to be passed and hence,joint trial application has to be allowed.
Allowing the applications from both parties,Justice S Palanivelu of the Madurai Bench said it is desirable to make an order for joint trial.The documents to be produced by both the parties could be common for both the suits.It would facilitate both parties to advance arguments jointly in both the suits and the court to render a common judgment.In such view of this matter,an order for joint trial is inevitable which has necessarily to be passed and hence,joint trial application has to be allowed.
Yamaha to focus on rural markets,more low-end models in offing
Having achieved a strong presence in the urban markets, the Japanese two-wheeler major Yamaha now plans to tap the rural markets by launching more models in the affordable price range, a top company official has said.
"We have so far seen good sales in urban areas, mainly in the big cities due to our image as a premium bike-maker. Now to further accelerate growth, we will strengthen our presence in the rural markets," India Yamaha Motor National Business Head Roy Kurian told PTI.
The Japanese two-wheeler giant sold 3.8 lakh units in 2010 and is planning to sell 5.2 lakh units this year.
"Currently, about 40 per cent of our sales come from rural areas and we want to increase this further in the coming days," Kurian said, adding, the company will launch more models in the affordable price range.
In this regard, the company also plans to strengthen its network in tier III towns. "Currently, we have around 400 dealers and plan to increase this in the coming days," he said.
The firm claims its low-end model, the Crux, already enjoys a good demand in the rural market. "Our main product, the Yamaha Crux, is well accepted in the rural markets and the YBR 110 also contributes significantly to our sales," he said.
The company is also looking to increase its market share in the deluxe segment to 20 percent from the present 15 per cent by March. In the premium segment, it eyeing a 15 per cent market share from the present 10 per cent.
"We expect to sell 25,000 units in the deluxe segment and 35,000 units in the premium segment by March," Kurian said.
Yamaha has an installed annual capacity of 6 lakh units at its two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and plans to further strengthen production to 1 million units by 2013.
"We have so far seen good sales in urban areas, mainly in the big cities due to our image as a premium bike-maker. Now to further accelerate growth, we will strengthen our presence in the rural markets," India Yamaha Motor National Business Head Roy Kurian told PTI.
The Japanese two-wheeler giant sold 3.8 lakh units in 2010 and is planning to sell 5.2 lakh units this year.
"Currently, about 40 per cent of our sales come from rural areas and we want to increase this further in the coming days," Kurian said, adding, the company will launch more models in the affordable price range.
In this regard, the company also plans to strengthen its network in tier III towns. "Currently, we have around 400 dealers and plan to increase this in the coming days," he said.
The firm claims its low-end model, the Crux, already enjoys a good demand in the rural market. "Our main product, the Yamaha Crux, is well accepted in the rural markets and the YBR 110 also contributes significantly to our sales," he said.
The company is also looking to increase its market share in the deluxe segment to 20 percent from the present 15 per cent by March. In the premium segment, it eyeing a 15 per cent market share from the present 10 per cent.
"We expect to sell 25,000 units in the deluxe segment and 35,000 units in the premium segment by March," Kurian said.
Yamaha has an installed annual capacity of 6 lakh units at its two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and plans to further strengthen production to 1 million units by 2013.
ROYAL ENFIELD TO SET UP SECOND PLANT BY 2013
If you have been amongst Royal Enfield lovers and aspirants who have been disappointed by the long waiting periods that the thumpers demand,things look like they are about to change for the better.Eicher Motors,which owns Royal Enfield,recently announced that it will be setting up a new manufacturing facility for its motorcycles at Oragadam near Chennai,which will be able to churn out about 1.5 lakh bikes every year.The facility is expected to be ready by March 2013.
The proposed 50-acre facility is likely to see a total investment of up to Rs 350 crore over the next five years.Tamil Nadu Chief Minister Jayalalithaa officially allotted land for construction of the plant at the Oragadam SIPCOT Industrial Park,near Chennai.
He said the new facility will have an initial installed capacity of 1.5 lakh units per annum,which could be expanded later,depending upon demand."With addition of new capacities,we will be able to reduce the waiting periods of our bikes.It currently about 6-8 months,"Royal Enfield CEO Siddharth Lal said.
Following operationalisation of the new plant,Royal Enfield will shift its entire vehicle assembly line here.At present,it has another facility in the state that produces 70,000 bikes every year.
The proposed 50-acre facility is likely to see a total investment of up to Rs 350 crore over the next five years.Tamil Nadu Chief Minister Jayalalithaa officially allotted land for construction of the plant at the Oragadam SIPCOT Industrial Park,near Chennai.
He said the new facility will have an initial installed capacity of 1.5 lakh units per annum,which could be expanded later,depending upon demand."With addition of new capacities,we will be able to reduce the waiting periods of our bikes.It currently about 6-8 months,"Royal Enfield CEO Siddharth Lal said.
Following operationalisation of the new plant,Royal Enfield will shift its entire vehicle assembly line here.At present,it has another facility in the state that produces 70,000 bikes every year.
Brakes on at Manesar
On June 17 this year, the management of India’s largest car manufacturer, the Rs 37,522-crore Maruti Suzuki Ltd, buckled under pressure to buy peace with workers at its Manesar unit in Haryana. They had been on strike for 13 days demanding the recognition of a new but yet-to-be registered union, Maruti Suzuki Employees Union, that was to be different from the Maruti Udyog Kamgar Union at its Gurgaon mother plant. At the end of the 13-day strike, the company reinstated 11 workers who had been earlier sacked for indiscipline. A precedent had been set, something that returned to haunt the management barely 45 days later.
On August 29, as workers at the Manesar manufacturing unit lined up for their 7 a.m. shift, they were told they would be let in only if they signed a ‘good conduct bond’. The management said it had put up with the workers’ indiscipline for too long. The workers claimed that the bond allowed the company to dismiss them for indiscipline without any notice. The same morning, the management announced the sacking of five workers, dismissal of six trainees and suspension of another 10 workers. This triggered the second strike, now on for close to a month. Between August 29 and now, the management has taken disciplinary action against 62 workers—29 dismissed and 33 suspended.
The current fracas at Maruti Suzuki’s Manesar threatens to damage the not-so-robust fabric of industrial relations in the larger industrial belt in Haryana. The belt’s proximity to Delhi, the national capital, lends itself to high visibility and such events only erode India’s attractiveness as a big market and an investment destination. There cannot be a more negative signal than a three-decade-old foreign investor, Suzuki, being made to suffer such a prolonged labour unrest.
But this time round, the management had made up its mind—that it would take a long-term view and not just think about this year’s bottomline, though the Manesar unit accounts for just a fifth of the company’s output of 1.11 million cars. The company has fortified Gate 2, the main entrance to the Manesar plant, with 7-foot-high corrugated tin sheets and heavy security following repeated incidents of alleged sabotage and a ‘go-slow’ tactic.
“We were putting up with the go-slow, thinking things will get better. Up to August 23, it was go-slow. After that, sabotage. Car bodies were found deliberately scratched, wiring harnesses were cut. There were 150 incidents in five days—fixing of wrong components, hoses cut, car keys misplaced, air conditioning coolant not fixed, gas not filled. All this meant no production,” says R C Bhargava, Chairman, Maruti Suzuki Ltd.
Sensing they could have their way given their June experience, workers decided not to resume work unless all those against whom disciplinary action had been taken were reinstated. The management too hardened its stance.
THE LOSS
The first phase of the strike resulted in a loss of production of 12,600 units valued at Rs 550 crore. The Manesar unit, that started production in 2007 and has about 2,500 workers, produces the Swift and A-Star hatchbacks and the SX4 sedan. In the second phase of the strike, though operations are on, the company lost out on production to the tune of some 16,000 units, or about Rs 700 crore. In the last three-and-a-half months, the Maruti Suzuki scrip has lost almost 12 per cent to close at Rs 1,086.55 on Friday, September 23. The company’s market share in the highly competitive car market has also seen a sharp decline. “The June-August numbers show its market share has dipped 200-300 basis points. With festival season in the offing, it will be challenging for the company,” says Yaresh Kothari, an auto analyst at Angel Broking. “Also, rivals are bringing in new products. Chevrolet has launched the diesel Beat, Toyota the diesel version of Etios and Liva. Hyundai plans to launch a new car,” he says. Clearly, the strike is not helping the company.
POLITICS ON SHOP FLOOR
In the Manesar-Gurgaon belt, 300 vendors, employing some 50,000 workers, cater to three big auto companies—Maruti Suzuki, Honda and Hero. For any political party, this is a captive audience. Add to this, the workers in these three big companies.
The Maruti Udyog Kamgar Union at Maruti’s Gurgaon plant, which has some 5,000 workers, is an independent union or one with no political affiliation. But the All India Trade Union Congress (AITUC), which is affiliated to the Communist Party of India and is now seen to be backing the Manesar workers, claims the Gurgaon union is a management co-opted one.
“We are with the Manesar unit workers only in an advisory role. They do not understand how a union is formed, the registration process etc,” says D L Sachdeva, Secretary, AITUC.
On June 12, during the first phase of the strike at the Manesar unit, CPI Member of Parliament Gurudas Dasgupta had met Prime Minister Manmohan Singh to seek his intervention. The Prime Minister had then referred him to Haryana Chief Minister Bhupinder Hooda. The AITUC’s interest is apparent. Also, the Articles of Association of the proposed Maruti Suzuki Employees Union for the Manesar unit has provisions that allow outsiders to be office bearers, something the company’s management doesn’t want. “We always tell the worker that if you have a political union, it is going to be against your interest in the longer term. It will lead to strikes and problems,” says Maruti Suzuki’s chairman Bhargava.
“Legally, there is no bar on outside office bearers,” counters Sachdeva.
TVS Motors’s Venu Srinivasan says the union in his company has been affiliated to the Congress’s trade union wing INTUC for 60-70 years now. According to Srinivasan, managements need to have a far greater sense of ownership when the union is internal. “They must wear the hat of both the management and worker,” he says.
Bajaj Auto, on the other hand, has mostly had independent unions in its plants, says Rahul Bajaj. “The management has to be firm, but also fair. Workers cannot be unreasonable. A strike hurts the company, its workforce and the nation at large.”
Till the Maruti strike in 2001, there were no major incidents of labour unrest in the belt. That year, the Maruti management, with Jagdish Khattar at its helm, quashed the strike and broke the union’s back. According to a former top management executive of Maruti, almost 1,500 workers were identified and given handsome voluntary retirement packages. “The company enjoyed a trouble-free environment for 10 years because of the tough call we took then,” he says.
While Maruti was spared, labour problems hit Honda in 2005. CPI’s Dasgupta boycotted Parliament to oppose the lathi charge on Honda workers. Honda had terminated four workers, including Suresh Gaur, who is now the AITUC president of the Gurgaon-Manesar belt. But Hooda intervened and asked Honda to reinstate the four workers. Honda did, but not before asking all its workers to sign a good conduct bond. The work culture in the belt has not been the best ever since.
“What is making matters worse in the case of Maruti Suzuki is the nature of the workforce. Almost 80 per cent of the workers are unmarried and under 25 years. Naturally, they are not very mature and don’t trust anybody,” says a senior state labour ministry official, who is trying to reconcile the differences between the management and the workers.
“The leadership at Manesar is immature,” admits Sachdeva.
THE TRACK FORWARD
At Manesar, registration of a union with a likely political affiliation has become the sticking point. The state labour department has rejected the union’s registration application on “flimsy grounds”, claims Sachdeva of AITUC. Some members mentioned in the application are also members of Maruti’s Gurgaon Union (MUKU). This, the department has said, violates the proposed union’s own constitution. Two, signatures of some members don’t tally with the company’s records.
The good conduct bond is an irritant too, but not a deal-breaker anymore. The first draft of the bond reiterated Clause 25(3) of the Standing Orders that allowed Maruti Suzuki to dismiss workers without any notice. A Standing Order refers to conditions of employment mutually agreeable to the management and workers and certified by the state government. “There have been three drafts so far; the latest says the company may take disciplinary action. We can persuade workers to sign a modified version of a good conduct bond,” says Sachdeva. The management too may be willing to take back some, but not all, workers against whom disciplinary action has been taken. This will be a face-saver for both the sides.
Haryana Labour Minister Shiv Charan Lal Sharma is confident of a solution by Monday. “Workers who are involved in criminal activities or have FIRs slapped against them, cannot be taken back. The management has agreed to take back 18-20 workers,” he said. Of the Left’s influence in industrial relations, Sharma says, “We have told them (the Leftist trade unions) not to interfere. This is different from West Bengal.”
On August 29, as workers at the Manesar manufacturing unit lined up for their 7 a.m. shift, they were told they would be let in only if they signed a ‘good conduct bond’. The management said it had put up with the workers’ indiscipline for too long. The workers claimed that the bond allowed the company to dismiss them for indiscipline without any notice. The same morning, the management announced the sacking of five workers, dismissal of six trainees and suspension of another 10 workers. This triggered the second strike, now on for close to a month. Between August 29 and now, the management has taken disciplinary action against 62 workers—29 dismissed and 33 suspended.
The current fracas at Maruti Suzuki’s Manesar threatens to damage the not-so-robust fabric of industrial relations in the larger industrial belt in Haryana. The belt’s proximity to Delhi, the national capital, lends itself to high visibility and such events only erode India’s attractiveness as a big market and an investment destination. There cannot be a more negative signal than a three-decade-old foreign investor, Suzuki, being made to suffer such a prolonged labour unrest.
But this time round, the management had made up its mind—that it would take a long-term view and not just think about this year’s bottomline, though the Manesar unit accounts for just a fifth of the company’s output of 1.11 million cars. The company has fortified Gate 2, the main entrance to the Manesar plant, with 7-foot-high corrugated tin sheets and heavy security following repeated incidents of alleged sabotage and a ‘go-slow’ tactic.
“We were putting up with the go-slow, thinking things will get better. Up to August 23, it was go-slow. After that, sabotage. Car bodies were found deliberately scratched, wiring harnesses were cut. There were 150 incidents in five days—fixing of wrong components, hoses cut, car keys misplaced, air conditioning coolant not fixed, gas not filled. All this meant no production,” says R C Bhargava, Chairman, Maruti Suzuki Ltd.
Sensing they could have their way given their June experience, workers decided not to resume work unless all those against whom disciplinary action had been taken were reinstated. The management too hardened its stance.
THE LOSS
The first phase of the strike resulted in a loss of production of 12,600 units valued at Rs 550 crore. The Manesar unit, that started production in 2007 and has about 2,500 workers, produces the Swift and A-Star hatchbacks and the SX4 sedan. In the second phase of the strike, though operations are on, the company lost out on production to the tune of some 16,000 units, or about Rs 700 crore. In the last three-and-a-half months, the Maruti Suzuki scrip has lost almost 12 per cent to close at Rs 1,086.55 on Friday, September 23. The company’s market share in the highly competitive car market has also seen a sharp decline. “The June-August numbers show its market share has dipped 200-300 basis points. With festival season in the offing, it will be challenging for the company,” says Yaresh Kothari, an auto analyst at Angel Broking. “Also, rivals are bringing in new products. Chevrolet has launched the diesel Beat, Toyota the diesel version of Etios and Liva. Hyundai plans to launch a new car,” he says. Clearly, the strike is not helping the company.
POLITICS ON SHOP FLOOR
In the Manesar-Gurgaon belt, 300 vendors, employing some 50,000 workers, cater to three big auto companies—Maruti Suzuki, Honda and Hero. For any political party, this is a captive audience. Add to this, the workers in these three big companies.
The Maruti Udyog Kamgar Union at Maruti’s Gurgaon plant, which has some 5,000 workers, is an independent union or one with no political affiliation. But the All India Trade Union Congress (AITUC), which is affiliated to the Communist Party of India and is now seen to be backing the Manesar workers, claims the Gurgaon union is a management co-opted one.
“We are with the Manesar unit workers only in an advisory role. They do not understand how a union is formed, the registration process etc,” says D L Sachdeva, Secretary, AITUC.
On June 12, during the first phase of the strike at the Manesar unit, CPI Member of Parliament Gurudas Dasgupta had met Prime Minister Manmohan Singh to seek his intervention. The Prime Minister had then referred him to Haryana Chief Minister Bhupinder Hooda. The AITUC’s interest is apparent. Also, the Articles of Association of the proposed Maruti Suzuki Employees Union for the Manesar unit has provisions that allow outsiders to be office bearers, something the company’s management doesn’t want. “We always tell the worker that if you have a political union, it is going to be against your interest in the longer term. It will lead to strikes and problems,” says Maruti Suzuki’s chairman Bhargava.
“Legally, there is no bar on outside office bearers,” counters Sachdeva.
TVS Motors’s Venu Srinivasan says the union in his company has been affiliated to the Congress’s trade union wing INTUC for 60-70 years now. According to Srinivasan, managements need to have a far greater sense of ownership when the union is internal. “They must wear the hat of both the management and worker,” he says.
Bajaj Auto, on the other hand, has mostly had independent unions in its plants, says Rahul Bajaj. “The management has to be firm, but also fair. Workers cannot be unreasonable. A strike hurts the company, its workforce and the nation at large.”
Till the Maruti strike in 2001, there were no major incidents of labour unrest in the belt. That year, the Maruti management, with Jagdish Khattar at its helm, quashed the strike and broke the union’s back. According to a former top management executive of Maruti, almost 1,500 workers were identified and given handsome voluntary retirement packages. “The company enjoyed a trouble-free environment for 10 years because of the tough call we took then,” he says.
While Maruti was spared, labour problems hit Honda in 2005. CPI’s Dasgupta boycotted Parliament to oppose the lathi charge on Honda workers. Honda had terminated four workers, including Suresh Gaur, who is now the AITUC president of the Gurgaon-Manesar belt. But Hooda intervened and asked Honda to reinstate the four workers. Honda did, but not before asking all its workers to sign a good conduct bond. The work culture in the belt has not been the best ever since.
“What is making matters worse in the case of Maruti Suzuki is the nature of the workforce. Almost 80 per cent of the workers are unmarried and under 25 years. Naturally, they are not very mature and don’t trust anybody,” says a senior state labour ministry official, who is trying to reconcile the differences between the management and the workers.
“The leadership at Manesar is immature,” admits Sachdeva.
THE TRACK FORWARD
At Manesar, registration of a union with a likely political affiliation has become the sticking point. The state labour department has rejected the union’s registration application on “flimsy grounds”, claims Sachdeva of AITUC. Some members mentioned in the application are also members of Maruti’s Gurgaon Union (MUKU). This, the department has said, violates the proposed union’s own constitution. Two, signatures of some members don’t tally with the company’s records.
The good conduct bond is an irritant too, but not a deal-breaker anymore. The first draft of the bond reiterated Clause 25(3) of the Standing Orders that allowed Maruti Suzuki to dismiss workers without any notice. A Standing Order refers to conditions of employment mutually agreeable to the management and workers and certified by the state government. “There have been three drafts so far; the latest says the company may take disciplinary action. We can persuade workers to sign a modified version of a good conduct bond,” says Sachdeva. The management too may be willing to take back some, but not all, workers against whom disciplinary action has been taken. This will be a face-saver for both the sides.
Haryana Labour Minister Shiv Charan Lal Sharma is confident of a solution by Monday. “Workers who are involved in criminal activities or have FIRs slapped against them, cannot be taken back. The management has agreed to take back 18-20 workers,” he said. Of the Left’s influence in industrial relations, Sharma says, “We have told them (the Leftist trade unions) not to interfere. This is different from West Bengal.”
POWER TO THE PEOPLE! Boxer 150
WE GOT OUR HANDS ON THE LATEST OFFERING FROM BAJAJ AUTO, THE BOXER 150 AND TOOK IT FOR SPIN AROUND THE COUNTRYSIDE. VARAD MORE DECIPHERS HOW COMFORTABLE IT WAS AND HOW WELL THE NEW BOXER HOLDS UP FOR THE RURAL PUBLIC
After a successful stint with the CT Boxer motorcycle which went on to become one of the bestselling products to roll out of the Bajaj factory, the Punebased bike maker is back again in the commuter game with the new Boxer 150, which aims to lure the Splendor-crazy populace of rural India with its capacity hike and long-standing legacy of the Boxer brand. And by the first impression of the new Boxer, the new kid on the block certainly has the potential to rattle the cages of existing rulers of the commuter regime.
Looks
Practical and functional are the first words that come to the mind looking at the new Bajaj Boxer 150. No frills styling with a mishmash of the previous generation Boxer and the Splendor overtones are clearly visible on this new budget Bajaj. The large-ish fairing up front keeps the air out of the rider's way, while the curvy tank is neatly drawn to accommodate short or lanky riders alike. For the rural public, the utility of the carrier is of far greater value than the need for something that looks good but doesn't serve much purpose.
Ergonomically friendly
The raised commuter friendly handlebars on the Boxer 150 make no fuss and offer decent comfort especially when riding over bad roads. As soon as you swing a leg over the bike, the striking bit on the Boxer 150 is the XXXL-sized saddle that comfortably seats two large adults and still has room for a third one before the fourth one spills over the steel cradle on the back. Not that we condone such law-breaking practices; it is just an indication of how spacious the Boxer's saddle is. Also it is soft, cushy and suggests that spending hours on it won't really transform into fatigue or exhaustion. No fancy tid-bits on this one to lure the village folk but just a very approachable and familiar set of wheels that they find comfort with.
Motor-Mouth
The idea behind plonking a 150cc mill into a hardcore efficiency friendly commuter is to not only offer added value but also a better ride and power delivery thanks to increased capacity. And this is what sets apart the bigger Boxer from its competition of 100cc commuters. The 144.8cc motor borrowed from the Discover 150 comes minus the twin-spark plug head unit and replaces it with a single spark plug set-up. Pumping out 12.01PS of power at 7,500rpm and an impressive torque output of 12.26Nm peaking at 5,000rpm, the engine is mated to a conventional alldown shift pattern 4-speed transmission which has been a favourite trend amongst the rural markets for generations.
The thoughtful approach of trashing all unnecessary parts around the bike has helped the maker to limit the weight of the Boxer to just 123kg, which transforms into a killer power-to-weight ratio of 97.64PS/tonne. Lesser weight to lug around combined with added disposable torque from the 144.8cc motor means significant improvement in the vehicle's performance with regards to fuel consumption as well as pick up.
Handling and dynamics
What many will explore is the comfort and ease of riding the Boxer 150 on the bumpy, bouncy village roads in our country. The steering is light and easy, swiftly responding to minor inputs from the rider without any twitches or drama. The upright sitting posture makes it very comfortable for quick and effective maneuvering without having to fight the handlebars and the rider finding himself in control of the machine at any given point. The front suspension duties are managed by 125mm travel telescopic forks while Bajaj-patented SNS suspension looks after the rear end.
Final say
With the Boxer 150, Bajaj Auto has certainly pulled a fast one but even more important is the company's straightforward attitude to correctly position the brand in a segment where nononsense and no-frills products make the cut above all the unnecessary jazz. The switchgear quality is bare basic but well made, while the twinpod instrument console up front houses the speedometer, fuel gauge and the usual telltale lights. And being Bajaj Auto, the new Boxer has been radically priced too at just Rs 42,000 (exshowroom, Pune), which is cheaper than most of the 100cc commuters on offer in the Indian market, which will unquestionably work in the Boxer's favour.
India's second largest two-wheeler company, Bajaj Auto, has taken the challenge to claim the number one spot in the market and the key for it to achieve this goal is to infiltrate the colossal rural India which has been Hero MotoCorp's (formerly known as Hero Honda) playground for over sixteen long years with its 100cc offering, the Splendor. Bajaj Auto's top boss Rajiv Bajaj recently made a very interesting statement when he said that the numbers are not as important as profitability. He also added that for a product, especially a motorcycle, to be doing well in our markets it is important to create a brand and correctly position it.
A clear example being the Splendor brand which established itself as an icon of reliable commuting and efficiency especially in the price-conscious rural India. So is Bajaj Auto trying to re-do a Splendor with the new Boxer 150? One can say that, but this is a whole new era and whole new market than what it was in the nineties when the Splendor happened. Bajaj Auto certainly has a winner on its hands with the new Boxer 150 but if it will revive the magic of Splendor in today's date and time, that only time shall tell.
SPECIFICATIONS
Engine: 144.8cc, SOHC, air-cooled Power: 12.01PS @ 7500rpm Torque: 12.26Nm @ 5000rpm Transmission: 4-speed Wheelbase: 1285mm Length: 2016mm Width: 740mm Height: 1055mm Price (ex-showroom, Pune): Rs 42,000
After a successful stint with the CT Boxer motorcycle which went on to become one of the bestselling products to roll out of the Bajaj factory, the Punebased bike maker is back again in the commuter game with the new Boxer 150, which aims to lure the Splendor-crazy populace of rural India with its capacity hike and long-standing legacy of the Boxer brand. And by the first impression of the new Boxer, the new kid on the block certainly has the potential to rattle the cages of existing rulers of the commuter regime.
Looks
Practical and functional are the first words that come to the mind looking at the new Bajaj Boxer 150. No frills styling with a mishmash of the previous generation Boxer and the Splendor overtones are clearly visible on this new budget Bajaj. The large-ish fairing up front keeps the air out of the rider's way, while the curvy tank is neatly drawn to accommodate short or lanky riders alike. For the rural public, the utility of the carrier is of far greater value than the need for something that looks good but doesn't serve much purpose.
Ergonomically friendly
The raised commuter friendly handlebars on the Boxer 150 make no fuss and offer decent comfort especially when riding over bad roads. As soon as you swing a leg over the bike, the striking bit on the Boxer 150 is the XXXL-sized saddle that comfortably seats two large adults and still has room for a third one before the fourth one spills over the steel cradle on the back. Not that we condone such law-breaking practices; it is just an indication of how spacious the Boxer's saddle is. Also it is soft, cushy and suggests that spending hours on it won't really transform into fatigue or exhaustion. No fancy tid-bits on this one to lure the village folk but just a very approachable and familiar set of wheels that they find comfort with.
Motor-Mouth
The idea behind plonking a 150cc mill into a hardcore efficiency friendly commuter is to not only offer added value but also a better ride and power delivery thanks to increased capacity. And this is what sets apart the bigger Boxer from its competition of 100cc commuters. The 144.8cc motor borrowed from the Discover 150 comes minus the twin-spark plug head unit and replaces it with a single spark plug set-up. Pumping out 12.01PS of power at 7,500rpm and an impressive torque output of 12.26Nm peaking at 5,000rpm, the engine is mated to a conventional alldown shift pattern 4-speed transmission which has been a favourite trend amongst the rural markets for generations.
The thoughtful approach of trashing all unnecessary parts around the bike has helped the maker to limit the weight of the Boxer to just 123kg, which transforms into a killer power-to-weight ratio of 97.64PS/tonne. Lesser weight to lug around combined with added disposable torque from the 144.8cc motor means significant improvement in the vehicle's performance with regards to fuel consumption as well as pick up.
Handling and dynamics
What many will explore is the comfort and ease of riding the Boxer 150 on the bumpy, bouncy village roads in our country. The steering is light and easy, swiftly responding to minor inputs from the rider without any twitches or drama. The upright sitting posture makes it very comfortable for quick and effective maneuvering without having to fight the handlebars and the rider finding himself in control of the machine at any given point. The front suspension duties are managed by 125mm travel telescopic forks while Bajaj-patented SNS suspension looks after the rear end.
Final say
With the Boxer 150, Bajaj Auto has certainly pulled a fast one but even more important is the company's straightforward attitude to correctly position the brand in a segment where nononsense and no-frills products make the cut above all the unnecessary jazz. The switchgear quality is bare basic but well made, while the twinpod instrument console up front houses the speedometer, fuel gauge and the usual telltale lights. And being Bajaj Auto, the new Boxer has been radically priced too at just Rs 42,000 (exshowroom, Pune), which is cheaper than most of the 100cc commuters on offer in the Indian market, which will unquestionably work in the Boxer's favour.
India's second largest two-wheeler company, Bajaj Auto, has taken the challenge to claim the number one spot in the market and the key for it to achieve this goal is to infiltrate the colossal rural India which has been Hero MotoCorp's (formerly known as Hero Honda) playground for over sixteen long years with its 100cc offering, the Splendor. Bajaj Auto's top boss Rajiv Bajaj recently made a very interesting statement when he said that the numbers are not as important as profitability. He also added that for a product, especially a motorcycle, to be doing well in our markets it is important to create a brand and correctly position it.
A clear example being the Splendor brand which established itself as an icon of reliable commuting and efficiency especially in the price-conscious rural India. So is Bajaj Auto trying to re-do a Splendor with the new Boxer 150? One can say that, but this is a whole new era and whole new market than what it was in the nineties when the Splendor happened. Bajaj Auto certainly has a winner on its hands with the new Boxer 150 but if it will revive the magic of Splendor in today's date and time, that only time shall tell.
SPECIFICATIONS
Engine: 144.8cc, SOHC, air-cooled Power: 12.01PS @ 7500rpm Torque: 12.26Nm @ 5000rpm Transmission: 4-speed Wheelbase: 1285mm Length: 2016mm Width: 740mm Height: 1055mm Price (ex-showroom, Pune): Rs 42,000
Bajaj Auto scores over Hero in valuations, margins
Though Hero MotoCorp has posted strong volume gains, challenges on R&D, branding and inferior margins don’t justify its valuation premium.
While the automobile sector is experiencing growth hurdles, the stocks of India’s largest two-wheeler companies have been trading near their lifetime highs. Hero MotoCorp (HMC), on the back of robust rural sales which account for 45 per cent of its volumes, added 11 per cent to its shareholders’ wealth, while Bajaj Auto propped these by 14 per cent over the past month. The broader indices saw lower returns of six per cent during the period.
While analysts believe the interest rate rises may not impact sales, as about 70 per cent are on cash, the consistent petrol price hikes are likely to impinge on volume growth. “The 10th hike in over a year adds nearly Rs 11 to the cost of a litre of petrol and could impact volumes in the price-sensitive (two-wheeler) space,” says Nikhil Deshpande of Pinc Research.
While volume growth outlook for the two companies is healthy, analysts prefer Bajaj over HMC due to various reasons. Analysts have a sell rating on HMC due to the jump in stock valuations. The stock is trading at 16.7 times its 2012-13 earnings estimates, much higher than the average of 14.3 times for the past five years. Bajaj Auto trades at 14.8 times its 2012-13 earnings estimates and analysts believe the discount vis-à-vis HMC is not justified, given the uncertainties for the latter in terms of technology, branding, export sales and higher competition in the rural markets. Besides, Bajaj’s margin profile is also better. A majority of analysts have a ‘buy’ on the Pune-based company, Bajaj Auto.
HMC HOLDS TURF
HMC has stood out, with sales recording a jump of 21 per cent to 2.52 million units in the first five months of 2011-12 (till August), compared to the period in 2010-11. The company is on target to reach the six-mn mark by the end of 2011-12. Bajaj Auto has recorded sales growth of 16.7 per cent to 1.6 mn during the period. After losing market share to its smaller rival in FY10 and FY11, robust volume growth from the rural segment helped HMC gain 200 basis points in market share to 56.5 per cent in calendar year 2011 (till July), as compared to 150-bps drop for Bajaj Auto to 25.4 per cent during the period. HMC has a relatively higher exposure than Bajaj to rural markets, where demand has been good due to higher incomes and rising aspirations.
Despite the break-up in the joint venture with Honda Motors in December 2010, HMC has been able to improve its position in the market place. Though the recently launched Boxer 150 (of Bajaj) at a competitive price (Rs 43,000) and the Honda bike (100cc) to be launched towards the beginning of next fiscal year could pose problems, HMC’s strengths in the medium term, be it strong brands such as Passion and Splendor, and the unparalleled distribution reach will be difficult to dislodge, says an analyst.
BAJAJ LEAD TO STAY
After trailing HMC in 2008-09, Bajaj’s changed sales mix (higher share of executive and premium bikes) helped it to surpass HMC’s volume advantage and post superior margins in 2010-11. The margin gap (540 bps in FY11), mainly due to higher royalty and advertising costs (for HMC), is likely to continue in the medium term, believes Deutsche Bank’s auto analyst, Srinivas Rao. While the technology transfer agreement runs out in 2013-14, HMC will have to increase its research and development spend to maintain the edge over competition, say analysts.
R&D expenses at about Rs 32 crore for 2010-11 are much lower as compared to Rs 100-130 crore for Bajaj Auto. The expenditure is 0.2 per cent of sales for FY11 and could be ramped up by HMC to 1-1.5 per cent of sales in 2011-12, believe analysts.
EXPORTS, TAXES
For Bajaj Auto, the reduction in export benefits from nine per cent to 5.5 per cent could impact net profits by about Rs 150 crore. However, analysts believe the price hikes from October 1, as well as the currency weakness (seven to eight per cent depreciation of the rupee since August) offer the company leeway to gradually increase prices and will support margins.
HMC and Bajaj Auto are likely to lose tax concessions for their Hardwar and Pantnagar plants in 2012-13 and 2011-12, respectively. While the impact on Bajaj would be minimal, as about five to eight per cent of profits are contributed from the plant, tax rates after 2012-13 for HMC are likely to go up to 22 per cent from the current 17-18 per cent.
While the automobile sector is experiencing growth hurdles, the stocks of India’s largest two-wheeler companies have been trading near their lifetime highs. Hero MotoCorp (HMC), on the back of robust rural sales which account for 45 per cent of its volumes, added 11 per cent to its shareholders’ wealth, while Bajaj Auto propped these by 14 per cent over the past month. The broader indices saw lower returns of six per cent during the period.
While analysts believe the interest rate rises may not impact sales, as about 70 per cent are on cash, the consistent petrol price hikes are likely to impinge on volume growth. “The 10th hike in over a year adds nearly Rs 11 to the cost of a litre of petrol and could impact volumes in the price-sensitive (two-wheeler) space,” says Nikhil Deshpande of Pinc Research.
While volume growth outlook for the two companies is healthy, analysts prefer Bajaj over HMC due to various reasons. Analysts have a sell rating on HMC due to the jump in stock valuations. The stock is trading at 16.7 times its 2012-13 earnings estimates, much higher than the average of 14.3 times for the past five years. Bajaj Auto trades at 14.8 times its 2012-13 earnings estimates and analysts believe the discount vis-à-vis HMC is not justified, given the uncertainties for the latter in terms of technology, branding, export sales and higher competition in the rural markets. Besides, Bajaj’s margin profile is also better. A majority of analysts have a ‘buy’ on the Pune-based company, Bajaj Auto.
HMC HOLDS TURF
HMC has stood out, with sales recording a jump of 21 per cent to 2.52 million units in the first five months of 2011-12 (till August), compared to the period in 2010-11. The company is on target to reach the six-mn mark by the end of 2011-12. Bajaj Auto has recorded sales growth of 16.7 per cent to 1.6 mn during the period. After losing market share to its smaller rival in FY10 and FY11, robust volume growth from the rural segment helped HMC gain 200 basis points in market share to 56.5 per cent in calendar year 2011 (till July), as compared to 150-bps drop for Bajaj Auto to 25.4 per cent during the period. HMC has a relatively higher exposure than Bajaj to rural markets, where demand has been good due to higher incomes and rising aspirations.
Despite the break-up in the joint venture with Honda Motors in December 2010, HMC has been able to improve its position in the market place. Though the recently launched Boxer 150 (of Bajaj) at a competitive price (Rs 43,000) and the Honda bike (100cc) to be launched towards the beginning of next fiscal year could pose problems, HMC’s strengths in the medium term, be it strong brands such as Passion and Splendor, and the unparalleled distribution reach will be difficult to dislodge, says an analyst.
BAJAJ LEAD TO STAY
After trailing HMC in 2008-09, Bajaj’s changed sales mix (higher share of executive and premium bikes) helped it to surpass HMC’s volume advantage and post superior margins in 2010-11. The margin gap (540 bps in FY11), mainly due to higher royalty and advertising costs (for HMC), is likely to continue in the medium term, believes Deutsche Bank’s auto analyst, Srinivas Rao. While the technology transfer agreement runs out in 2013-14, HMC will have to increase its research and development spend to maintain the edge over competition, say analysts.
R&D expenses at about Rs 32 crore for 2010-11 are much lower as compared to Rs 100-130 crore for Bajaj Auto. The expenditure is 0.2 per cent of sales for FY11 and could be ramped up by HMC to 1-1.5 per cent of sales in 2011-12, believe analysts.
EXPORTS, TAXES
For Bajaj Auto, the reduction in export benefits from nine per cent to 5.5 per cent could impact net profits by about Rs 150 crore. However, analysts believe the price hikes from October 1, as well as the currency weakness (seven to eight per cent depreciation of the rupee since August) offer the company leeway to gradually increase prices and will support margins.
HMC and Bajaj Auto are likely to lose tax concessions for their Hardwar and Pantnagar plants in 2012-13 and 2011-12, respectively. While the impact on Bajaj would be minimal, as about five to eight per cent of profits are contributed from the plant, tax rates after 2012-13 for HMC are likely to go up to 22 per cent from the current 17-18 per cent.
Welfare wizards: Giving tribals a title role
Measuring the impact of empowerment and advocacy campaigns can be tough. But the eminent jury, chaired by Bihar CM Nitish Kumar, made the task look all too easy.
While all finalists in the NGOs section were appreciated for their work, Dhas Gramin Vikas Kendra was declared the winner. Dhas, based in Alirajpur district 399 km from Bhopal, has been working with Bhil tribals since 1982.
The work of the other finalists was commended as well. People's Watch, nominated for educating children in classes VI-VIII on human rights issues had done significant work. The third NGO, Setu Charitable Trust, works in improving the lives of sex workers and provides them with free ART.
But eventually, the jury concluded that the Dhas initiative deserved kudos for their consistent work through two decades. As Sunita Narain said, they've put in "solid work" .
The three finalists in the corporate sector — RTINation, Svayam and Srinivasan Services Trust — work in important areas. While RTINation uses technology to help file RTI queries online, Svayam — promoted by the Sajjan Jindal Charitable Trust — works towards creating access to public places for the disabled.
In the end, Srinivasan Services Trust (SST) won over the jury. Rural development minister Jairam Ramesh chose to "put his money on SST" and the jury supported his choice.
Started by TVS Motor chairman Venu Srinivasan in 1996, the Trust supports self-help groups in income generation, agri-extension , skill training, literacy and nutrition programmes. It has extended its services to include garbage collection, constructed toilets, improved infrastructure for schools and helped in access to potable water. When SST started, it began welfare work by building roads and water tanks, renovating schools and organising health camps. But soon it realized that it wasn't really helping generate means for livelihood. "We gave and they took," SST chairman Ashoke Joshi told TOI.
That's when SST decided to empower women through grassroots development. They facilitated bank loans for women to set up their own small enterprise. The first such project was a chapati-making initiative near TVS's Hosur factory. The women earned up to Rs 2,000 a month by preparing chapatis that were bought by the factory canteen. "The women strengthened our will, too," said Joshi, who joined the NGO post-retirement . SST now has 130 staff and works in 1,000 villages in Tamil Nadu, Karnataka , Maharashtra and Himachal.
Choosing a winner in the government category turned into an interesting debate. Contenders were DM of Singrauli, P Narahari and a World Bank-funded water sanitation project (Swajal) in Uttaranchal. The jurors wondered if the initiatives were not essential governance. Should government be rewarded for doing its job? The jury chose not to award this category yet. As Aruna Roy said, "Government is doing well in several areas but word of the award is yet to reach."
While all finalists in the NGOs section were appreciated for their work, Dhas Gramin Vikas Kendra was declared the winner. Dhas, based in Alirajpur district 399 km from Bhopal, has been working with Bhil tribals since 1982.
The work of the other finalists was commended as well. People's Watch, nominated for educating children in classes VI-VIII on human rights issues had done significant work. The third NGO, Setu Charitable Trust, works in improving the lives of sex workers and provides them with free ART.
But eventually, the jury concluded that the Dhas initiative deserved kudos for their consistent work through two decades. As Sunita Narain said, they've put in "solid work" .
The three finalists in the corporate sector — RTINation, Svayam and Srinivasan Services Trust — work in important areas. While RTINation uses technology to help file RTI queries online, Svayam — promoted by the Sajjan Jindal Charitable Trust — works towards creating access to public places for the disabled.
In the end, Srinivasan Services Trust (SST) won over the jury. Rural development minister Jairam Ramesh chose to "put his money on SST" and the jury supported his choice.
Started by TVS Motor chairman Venu Srinivasan in 1996, the Trust supports self-help groups in income generation, agri-extension , skill training, literacy and nutrition programmes. It has extended its services to include garbage collection, constructed toilets, improved infrastructure for schools and helped in access to potable water. When SST started, it began welfare work by building roads and water tanks, renovating schools and organising health camps. But soon it realized that it wasn't really helping generate means for livelihood. "We gave and they took," SST chairman Ashoke Joshi told TOI.
That's when SST decided to empower women through grassroots development. They facilitated bank loans for women to set up their own small enterprise. The first such project was a chapati-making initiative near TVS's Hosur factory. The women earned up to Rs 2,000 a month by preparing chapatis that were bought by the factory canteen. "The women strengthened our will, too," said Joshi, who joined the NGO post-retirement . SST now has 130 staff and works in 1,000 villages in Tamil Nadu, Karnataka , Maharashtra and Himachal.
Choosing a winner in the government category turned into an interesting debate. Contenders were DM of Singrauli, P Narahari and a World Bank-funded water sanitation project (Swajal) in Uttaranchal. The jurors wondered if the initiatives were not essential governance. Should government be rewarded for doing its job? The jury chose not to award this category yet. As Aruna Roy said, "Government is doing well in several areas but word of the award is yet to reach."
Bajaj Auto will hike prices on Oct 1
Bajaj Auto Ltd will increase the prices of its vehicles across categories on October 1 to compensate for lower export benefits when the duty entitlement pass book scheme expries on September 30 and the proposed drawback scheme is implemented ,managing director Rajiv Bajaj said on Monday. The move is margins in a highly competitive market, he said in an interview to CNBC - TV18. Bajaj, however, said the 5.5% rate under the proposed drawback scheme was in line with expectations. He was confident the company would meet its sales growth target of 20% for this fiscal.
Two-wheeler firms to face margin pressure
Approaching end of tax holidays for factories in excise-free zones, new duty drawback scheme to affect companies
Two-wheeler makers have managed to grow briskly despite rising fuel prices and interest rates, but their run may now be hobbled as tax and export incentives are taken away.
Two-wheeler sales grew almost 16% to 5.3 million units in the five months to August over a year earlier, even as the pressure of fuel prices and interest rates dented car sales by 1.3% to 743,000 units, according to lobby group Society of Indian Automobile Manufacturers.
Fiscal benefits in the form of export incentives and tax-free manufacturing locations propped up the robust earnings of Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd, India’s biggest two-wheeler makers, between 2008 and 2011, analysts Mohan Lal and Pooja Sharma of Elara Securities India Pvt. Ltd wrote in a 12 September report.
“However, with excise duty now bottoming out, tax (free) period lapsing and export incentives likely to come down, we believe earnings growth from here on would be driven by volume growth and competitive positioning in the market,” the report said.
On 30 September, the government will abolish the duty entitlement pass book (DEPB) scheme, under which exporters are reimbursed on customs duty paid on an imported input as a percentage of the export price. The government said on Friday that a transitional duty drawback scheme will replace DEPB.
But the duty drawback rate is kept at 5.5% compared with the DEPB rate of 9%, which means exporters will still be at a disadvantage.
Bajaj Auto, the largest exporter of two-wheelers from India, will be hurt the most, said Mahantesh Sabarad, analyst at Fortune Equity Brokers India Ltd.
Exports account for 36-40% of the company’s total volume. In August, it exported 138,225 two-wheeler and three-wheer units.
Bajaj Auto earned a revenue of around Rs.500 crore from export incentives last year, Sabarad said. If computed to its so-called free on board (FOB) value of exports, it comes down to about 5% from 11%, after the DEPB scheme is withdrawn. FOB means the seller’s responsibility is up to the loading port, after which all freight, carriage and insurance costs are carried by the buyer.
This means the company will lose Rs.200-220 crore in revenue and Rs.130-150 crore in profit, according to him.
“The company can offset the loss by certain market link incentives,” Sabarad said.
S. Ravikumar, senior vice-president of business development at Bajaj Auto, declined to comment on the impact of the new export scheme, saying he still has to study the programme.
TVS Motor exports 15% of its total volume; it exported 29,984 units in August. H.S. Goindi, the company’s president of marketing, also declined to comment, saying the firm is yet to study the new policy thoroughly.
For domestic sales-driven Hero MotoCorp, the impact is negligible, chief financial officer Ravi Sud said.
But he criticized the timing of the move, saying that coming alongside hardening interest rates and fuel prices, the decrease in export benefits will hurt the industry.
The company, following its split with Honda Motor Co. Ltd, has drawn up an aggressive exports strategy to sell a million bikes and scooters overseas in five to six years. The approaching end of tax holidays for two-wheeler factories in excise-free zones will also hit these companies hard. The income tax holiday for Hero MotoCorp’s plant in Haridwar, Uttarakhand, which started operations in April 2008, comes to an end in March 2013.
For Bajaj Auto’s Pantnagar factory in Uttarakhand, which started production in 2007, the benefits will last only until the end of the current fiscal.
“Profits from both Bajaj Auto and TVS’ tax-exempt plans would start attracting corporate tax from fiscal 2013 (estimate) as the five-year period comes to an end, leading to an overall effective tax rate rising from the current levels, going forward,” Elara’s Lal and Sharma wrote. But while Hero MotoCorp draws 30-35% of its profits from the Haridwar units, only 5-8% of Bajaj Auto’s profits are generated from Pantnagar. So the impact for Bajaj Auto will be limited, Fortune Equity Broker’s Sabarad said.
Hero MotoCorp’s Sud said at his company’s Haridwar factory, when the 100% tax holiday gets over in the fiscal ending March 2013, only 30% of the firm’s profit from the unit will be exempt from tax. This will effectively increase the company’s tax rate from the current 17-18% to 22%, he said.
Income tax benefits have served as a cushion against rising raw material prices, Sud said, and their reduction will put margins under some pressure.
Two-wheeler makers have managed to grow briskly despite rising fuel prices and interest rates, but their run may now be hobbled as tax and export incentives are taken away.
Two-wheeler sales grew almost 16% to 5.3 million units in the five months to August over a year earlier, even as the pressure of fuel prices and interest rates dented car sales by 1.3% to 743,000 units, according to lobby group Society of Indian Automobile Manufacturers.
Fiscal benefits in the form of export incentives and tax-free manufacturing locations propped up the robust earnings of Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd, India’s biggest two-wheeler makers, between 2008 and 2011, analysts Mohan Lal and Pooja Sharma of Elara Securities India Pvt. Ltd wrote in a 12 September report.
“However, with excise duty now bottoming out, tax (free) period lapsing and export incentives likely to come down, we believe earnings growth from here on would be driven by volume growth and competitive positioning in the market,” the report said.
On 30 September, the government will abolish the duty entitlement pass book (DEPB) scheme, under which exporters are reimbursed on customs duty paid on an imported input as a percentage of the export price. The government said on Friday that a transitional duty drawback scheme will replace DEPB.
But the duty drawback rate is kept at 5.5% compared with the DEPB rate of 9%, which means exporters will still be at a disadvantage.
Bajaj Auto, the largest exporter of two-wheelers from India, will be hurt the most, said Mahantesh Sabarad, analyst at Fortune Equity Brokers India Ltd.
Exports account for 36-40% of the company’s total volume. In August, it exported 138,225 two-wheeler and three-wheer units.
Bajaj Auto earned a revenue of around Rs.500 crore from export incentives last year, Sabarad said. If computed to its so-called free on board (FOB) value of exports, it comes down to about 5% from 11%, after the DEPB scheme is withdrawn. FOB means the seller’s responsibility is up to the loading port, after which all freight, carriage and insurance costs are carried by the buyer.
This means the company will lose Rs.200-220 crore in revenue and Rs.130-150 crore in profit, according to him.
“The company can offset the loss by certain market link incentives,” Sabarad said.
S. Ravikumar, senior vice-president of business development at Bajaj Auto, declined to comment on the impact of the new export scheme, saying he still has to study the programme.
TVS Motor exports 15% of its total volume; it exported 29,984 units in August. H.S. Goindi, the company’s president of marketing, also declined to comment, saying the firm is yet to study the new policy thoroughly.
For domestic sales-driven Hero MotoCorp, the impact is negligible, chief financial officer Ravi Sud said.
But he criticized the timing of the move, saying that coming alongside hardening interest rates and fuel prices, the decrease in export benefits will hurt the industry.
The company, following its split with Honda Motor Co. Ltd, has drawn up an aggressive exports strategy to sell a million bikes and scooters overseas in five to six years. The approaching end of tax holidays for two-wheeler factories in excise-free zones will also hit these companies hard. The income tax holiday for Hero MotoCorp’s plant in Haridwar, Uttarakhand, which started operations in April 2008, comes to an end in March 2013.
For Bajaj Auto’s Pantnagar factory in Uttarakhand, which started production in 2007, the benefits will last only until the end of the current fiscal.
“Profits from both Bajaj Auto and TVS’ tax-exempt plans would start attracting corporate tax from fiscal 2013 (estimate) as the five-year period comes to an end, leading to an overall effective tax rate rising from the current levels, going forward,” Elara’s Lal and Sharma wrote. But while Hero MotoCorp draws 30-35% of its profits from the Haridwar units, only 5-8% of Bajaj Auto’s profits are generated from Pantnagar. So the impact for Bajaj Auto will be limited, Fortune Equity Broker’s Sabarad said.
Hero MotoCorp’s Sud said at his company’s Haridwar factory, when the 100% tax holiday gets over in the fiscal ending March 2013, only 30% of the firm’s profit from the unit will be exempt from tax. This will effectively increase the company’s tax rate from the current 17-18% to 22%, he said.
Income tax benefits have served as a cushion against rising raw material prices, Sud said, and their reduction will put margins under some pressure.
Indonesian venture poses a challenge for TVS Motor
TVS Motor Co. Ltd seems to have got its act together in the domestic market. As the third largest two-wheeler maker in the country, monthly sales have revved up across its portfolio of products—be it motorcycles, mopeds, scooters or three-wheelers.
But its subsidiaries’ performance continues to cast a shadow on its overall performance.
While its stand-alone net profit for fiscal 2011 (FY11) was Rs194.6 crore, losses in the subsidiaries trimmed the consolidated net profit to around Rs127.9 crore.
Of the lot, its Indonesian unit, PT TVS Motor Co. Indonesia, continues to bleed. Six years after setting up operations, the firm registered an operating loss of Rs39.8 crore, lower than the Rs64.2 crore incurred a year ago.
Although the management stated in Wednesday’s annual general meeting that the Indonesian operations would break-even by FY13, analysts remain sceptical. Against the required run rate of around 5,000 vehicles per month, the firm sells around 7,000 vehicles a quarter (June numbers).
In fact, on a capacity of around 300,000 units a year, the firm has so far managed cumulative sales of barely half a million units in all these years. Of course, the management’s optimism has led to consistent infusion of money into this venture, which totals around Rs330 crore from inception till date.
One reason could be that despite its pioneering feat in mopeds, TVS’ growth trajectory has been one of caution rather than aggression in motorcycles and scooters when compared with some of its peers. Besides, the Indonesian market is not an easy terrain despite being the third largest two-wheeler market in the world after India and China.
“In Indonesia, four Japanese manufacturers account for 99.7% of the market, among which Yamaha, being the largest, accounted for 46.9% of the market as at the end of 1QCY11,” Abhishek Banerjee of Asian Market Securities Pvt. Ltd said in a report. This explains why TVS is making this operation an export hub.
Fortunately, TVS is gaining ground in the domestic market. Overall sales volumes in August rose 15% from a year ago. So has its stock price, which caught up with the BSE Auto index in the last few trading sessions.
The kicker was the June quarter net sales of stand-alone operations—up about 24% from the year ago period. Of course, here again the management has signalled caution due to the rising cost of ownership of vehicles.
Another concern is that the firm’s advertising spend, at around 7% of sales, is by far the highest in the industry, with peers such as Bajaj Auto Ltd and Hero Motorcorp Ltd spending around 1.5-2%. This eats into operating margin, which is less than half that clocked by rivals.
For now, TVS shares trade at around Rs59.55, discounting estimated FY13 earnings by around 11 times.
Although the outlook for the medium term does not promise a big upside, good tidings from the Indonesian operations could well be a shot in the arm.
But its subsidiaries’ performance continues to cast a shadow on its overall performance.
While its stand-alone net profit for fiscal 2011 (FY11) was Rs194.6 crore, losses in the subsidiaries trimmed the consolidated net profit to around Rs127.9 crore.
Of the lot, its Indonesian unit, PT TVS Motor Co. Indonesia, continues to bleed. Six years after setting up operations, the firm registered an operating loss of Rs39.8 crore, lower than the Rs64.2 crore incurred a year ago.
Although the management stated in Wednesday’s annual general meeting that the Indonesian operations would break-even by FY13, analysts remain sceptical. Against the required run rate of around 5,000 vehicles per month, the firm sells around 7,000 vehicles a quarter (June numbers).
In fact, on a capacity of around 300,000 units a year, the firm has so far managed cumulative sales of barely half a million units in all these years. Of course, the management’s optimism has led to consistent infusion of money into this venture, which totals around Rs330 crore from inception till date.
One reason could be that despite its pioneering feat in mopeds, TVS’ growth trajectory has been one of caution rather than aggression in motorcycles and scooters when compared with some of its peers. Besides, the Indonesian market is not an easy terrain despite being the third largest two-wheeler market in the world after India and China.
“In Indonesia, four Japanese manufacturers account for 99.7% of the market, among which Yamaha, being the largest, accounted for 46.9% of the market as at the end of 1QCY11,” Abhishek Banerjee of Asian Market Securities Pvt. Ltd said in a report. This explains why TVS is making this operation an export hub.
Fortunately, TVS is gaining ground in the domestic market. Overall sales volumes in August rose 15% from a year ago. So has its stock price, which caught up with the BSE Auto index in the last few trading sessions.
The kicker was the June quarter net sales of stand-alone operations—up about 24% from the year ago period. Of course, here again the management has signalled caution due to the rising cost of ownership of vehicles.
Another concern is that the firm’s advertising spend, at around 7% of sales, is by far the highest in the industry, with peers such as Bajaj Auto Ltd and Hero Motorcorp Ltd spending around 1.5-2%. This eats into operating margin, which is less than half that clocked by rivals.
For now, TVS shares trade at around Rs59.55, discounting estimated FY13 earnings by around 11 times.
Although the outlook for the medium term does not promise a big upside, good tidings from the Indonesian operations could well be a shot in the arm.
Yamaha to focus on rural markets
Having achieved a strong presence in urban markets, Japanese two-wheeler major Yamaha now plans to tap rural markets in the country by launching more models at affordable prices, a top company official has said.
"We have so far seen good sales in urban areas, mainly in the big cities, due to our image as a premium bike-maker. Now to further accelerate growth, we will strengthen our presence in rural markets," India Yamaha Motor National Business Head Roy Kurian told PTI.
The Japanese two-wheeler giant sold 3.8 lakh units in 2010 and plans to sell 5.2 lakh units this year.
"Currently, about 40 per cent of our sales come from rural areas and we want to increase this further in the coming days," Kurian said, adding that the company will launch more models with an affordable price tag.
In this regard, the company also plans to strengthen its sales network in Tier-III towns. "Currently, we have around 400 dealers and plan to increase this in the coming days," he said.
The firm claims its low-end model, the Crux, already enjoys good demand in the rural market. "Our main product, the Yamaha Crux, is well accepted in rural markets and the YBR 110 also contributes significantly to our sales," he said.
The company is also looking to increase its market share in the deluxe segment to 20 per cent from the present 15 per cent by March. In the premium segment, it is eyeing a 15 per cent market share, up from 10 per cent at present.
"We expect to sell 25,000 units in the deluxe segment and 35,000 units in the premium segment by March," Kurian said.
Yamaha has an installed annual capacity of 6 lakh units at its two manufacturing units located at Surajpur, in Uttar Pradesh, and Faridabad, in Haryana, and plans to further strengthen production to 1 million units by 2013.
"We have so far seen good sales in urban areas, mainly in the big cities, due to our image as a premium bike-maker. Now to further accelerate growth, we will strengthen our presence in rural markets," India Yamaha Motor National Business Head Roy Kurian told PTI.
The Japanese two-wheeler giant sold 3.8 lakh units in 2010 and plans to sell 5.2 lakh units this year.
"Currently, about 40 per cent of our sales come from rural areas and we want to increase this further in the coming days," Kurian said, adding that the company will launch more models with an affordable price tag.
In this regard, the company also plans to strengthen its sales network in Tier-III towns. "Currently, we have around 400 dealers and plan to increase this in the coming days," he said.
The firm claims its low-end model, the Crux, already enjoys good demand in the rural market. "Our main product, the Yamaha Crux, is well accepted in rural markets and the YBR 110 also contributes significantly to our sales," he said.
The company is also looking to increase its market share in the deluxe segment to 20 per cent from the present 15 per cent by March. In the premium segment, it is eyeing a 15 per cent market share, up from 10 per cent at present.
"We expect to sell 25,000 units in the deluxe segment and 35,000 units in the premium segment by March," Kurian said.
Yamaha has an installed annual capacity of 6 lakh units at its two manufacturing units located at Surajpur, in Uttar Pradesh, and Faridabad, in Haryana, and plans to further strengthen production to 1 million units by 2013.
Two-wheeler firms to face margin pressure
Two-wheeler makers have managed to grow briskly despite rising fuel prices and interest rates, but their run may now be hobbled as tax and export incentives are taken away.
Two-wheeler sales grew almost 16% to 5.3 million units in the five months to August over a year earlier, even as the pressure of fuel prices and interest rates dented car sales by 1.3% to 743,000 units, according to lobby group Society of Indian Automobile Manufacturers.
Fiscal benefits in the form of export incentives and tax-free manufacturing locations propped up the robust earnings of Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd, India’s biggest two-wheeler makers, between 2008 and 2011, analysts Mohan Lal and Pooja Sharma of Elara Securities India Pvt. Ltd wrote in a 12 September report.
“However, with excise duty now bottoming out, tax (free) period lapsing and export incentives likely to come down, we believe earnings growth from here on would be driven by volume growth and competitive positioning in the market,” the report said.
On 30 September, the government will abolish the duty entitlement pass book (DEPB) scheme, under which exporters are reimbursed on customs duty paid on an imported input as a percentage of the export price. The government said on Friday that a transitional duty drawback scheme will replace DEPB.
But the duty drawback rate is kept at 5.5% compared with the DEPB rate of 9%, which means exporters will still be at a disadvantage.
Bajaj Auto, the largest exporter of two-wheelers from India, will be hurt the most, said Mahantesh Sabarad, analyst at Fortune Equity Brokers India Ltd.
Exports account for 36-40% of the company’s total volume. In August, it exported 138,225 two-wheeler and three-wheer units.
Bajaj Auto earned a revenue of around Rs.500 crore from export incentives last year, Sabarad said. If computed to its so-called free on board (FOB) value of exports, it comes down to about 5% from 11%, after the DEPB scheme is withdrawn. FOB means the seller’s responsibility is up to the loading port, after which all freight, carriage and insurance costs are carried by the buyer.
This means the company will lose Rs.200-220 crore in revenue and Rs.130-150 crore in profit, according to him.
“The company can offset the loss by certain market link incentives,” Sabarad said.
S. Ravikumar, senior vice-president of business development at Bajaj Auto, declined to comment on the impact of the new export scheme, saying he still has to study the programme.
TVS Motor exports 15% of its total volume; it exported 29,984 units in August. H.S. Goindi, the company’s president of marketing, also declined to comment, saying the firm is yet to study the new policy thoroughly.
For domestic sales-driven Hero MotoCorp, the impact is negligible, chief financial officer Ravi Sud said.
But he criticized the timing of the move, saying that coming alongside hardening interest rates and fuel prices, the decrease in export benefits will hurt the industry.
The company, following its split with Honda Motor Co. Ltd, has drawn up an aggressive exports strategy to sell a million bikes and scooters overseas in five to six years. The approaching end of tax holidays for two-wheeler factories in excise-free zones will also hit these companies hard. The income tax holiday for Hero MotoCorp’s plant in Haridwar, Uttarakhand, which started operations in April 2008, comes to an end in March 2013.
For Bajaj Auto’s Pantnagar factory in Uttarakhand, which started production in 2007, the benefits will last only until the end of the current fiscal.
“Profits from both Bajaj Auto and TVS’ tax-exempt plans would start attracting corporate tax from fiscal 2013 (estimate) as the five-year period comes to an end, leading to an overall effective tax rate rising from the current levels, going forward,” Elara’s Lal and Sharma wrote. But while Hero MotoCorp draws 30-35% of its profits from the Haridwar units, only 5-8% of Bajaj Auto’s profits are generated from Pantnagar. So the impact for Bajaj Auto will be limited, Fortune Equity Broker’s Sabarad said.
Hero MotoCorp’s Sud said at his company’s Haridwar factory, when the 100% tax holiday gets over in the fiscal ending March 2013, only 30% of the firm’s profit from the unit will be exempt from tax. This will effectively increase the company’s tax rate from the current 17-18% to 22%, he said.
Income tax benefits have served as a cushion against rising raw material prices, Sud said, and their reduction will put margins under some pressure.
Two-wheeler sales grew almost 16% to 5.3 million units in the five months to August over a year earlier, even as the pressure of fuel prices and interest rates dented car sales by 1.3% to 743,000 units, according to lobby group Society of Indian Automobile Manufacturers.
Fiscal benefits in the form of export incentives and tax-free manufacturing locations propped up the robust earnings of Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd, India’s biggest two-wheeler makers, between 2008 and 2011, analysts Mohan Lal and Pooja Sharma of Elara Securities India Pvt. Ltd wrote in a 12 September report.
“However, with excise duty now bottoming out, tax (free) period lapsing and export incentives likely to come down, we believe earnings growth from here on would be driven by volume growth and competitive positioning in the market,” the report said.
On 30 September, the government will abolish the duty entitlement pass book (DEPB) scheme, under which exporters are reimbursed on customs duty paid on an imported input as a percentage of the export price. The government said on Friday that a transitional duty drawback scheme will replace DEPB.
But the duty drawback rate is kept at 5.5% compared with the DEPB rate of 9%, which means exporters will still be at a disadvantage.
Bajaj Auto, the largest exporter of two-wheelers from India, will be hurt the most, said Mahantesh Sabarad, analyst at Fortune Equity Brokers India Ltd.
Exports account for 36-40% of the company’s total volume. In August, it exported 138,225 two-wheeler and three-wheer units.
Bajaj Auto earned a revenue of around Rs.500 crore from export incentives last year, Sabarad said. If computed to its so-called free on board (FOB) value of exports, it comes down to about 5% from 11%, after the DEPB scheme is withdrawn. FOB means the seller’s responsibility is up to the loading port, after which all freight, carriage and insurance costs are carried by the buyer.
This means the company will lose Rs.200-220 crore in revenue and Rs.130-150 crore in profit, according to him.
“The company can offset the loss by certain market link incentives,” Sabarad said.
S. Ravikumar, senior vice-president of business development at Bajaj Auto, declined to comment on the impact of the new export scheme, saying he still has to study the programme.
TVS Motor exports 15% of its total volume; it exported 29,984 units in August. H.S. Goindi, the company’s president of marketing, also declined to comment, saying the firm is yet to study the new policy thoroughly.
For domestic sales-driven Hero MotoCorp, the impact is negligible, chief financial officer Ravi Sud said.
But he criticized the timing of the move, saying that coming alongside hardening interest rates and fuel prices, the decrease in export benefits will hurt the industry.
The company, following its split with Honda Motor Co. Ltd, has drawn up an aggressive exports strategy to sell a million bikes and scooters overseas in five to six years. The approaching end of tax holidays for two-wheeler factories in excise-free zones will also hit these companies hard. The income tax holiday for Hero MotoCorp’s plant in Haridwar, Uttarakhand, which started operations in April 2008, comes to an end in March 2013.
For Bajaj Auto’s Pantnagar factory in Uttarakhand, which started production in 2007, the benefits will last only until the end of the current fiscal.
“Profits from both Bajaj Auto and TVS’ tax-exempt plans would start attracting corporate tax from fiscal 2013 (estimate) as the five-year period comes to an end, leading to an overall effective tax rate rising from the current levels, going forward,” Elara’s Lal and Sharma wrote. But while Hero MotoCorp draws 30-35% of its profits from the Haridwar units, only 5-8% of Bajaj Auto’s profits are generated from Pantnagar. So the impact for Bajaj Auto will be limited, Fortune Equity Broker’s Sabarad said.
Hero MotoCorp’s Sud said at his company’s Haridwar factory, when the 100% tax holiday gets over in the fiscal ending March 2013, only 30% of the firm’s profit from the unit will be exempt from tax. This will effectively increase the company’s tax rate from the current 17-18% to 22%, he said.
Income tax benefits have served as a cushion against rising raw material prices, Sud said, and their reduction will put margins under some pressure.
Car major rejig growth plan after fuel, rate hikes
The double whammy of Thursday's petrol price increase and key policy rate hike by the Reserve Bank of India (RBI) on Friday has come as a shock for the auto industry. Some stakeholders have already revised the growth rate to single digits for the year, down from 30 per cent last year.
Though companies had used discounts and other offers to push sales, many feel that they may now be left with very few measures to mitigate the impact of poor market sentiment.
The bad news comes especially with the festive season demand boom around the corner, which was expected to bring cheer to an industry already burdened by dipping sales.
“It will definitely dampen the spirit in the festive period. I don't think any measures taken by a company can fully mitigate the impact,” said Mr Arvind Saxena, Director, Marketing and Sales, Hyundai Motor India.
Tamp growth
The 25-basis point repo and reverse repo increase was the 12th such move since March 2010. Petrol prices, up by Rs 3 a litre on Friday, marked the ninth increase since June 2010.
General Motors India (GMI) plans to continue its discount schemes on vehicles, which it started about two months back when the market started heading south.
“We expected that they (RBI) would put a pause (on policy rate increases) considering the slowdown of the economy … this would further bring down growth. In any case, the petrol price increase would lead to an increase in inflation,” Mr P Balendran, Vice-President, GMI told Business Line.
He added, “Normally there is an incremental growth of 15-20 per cent during the festive season. This time we were expecting only a 5 per cent growth, but even this will be impacted.”
Industry body SIAM has said that it would review the growth numbers for the first half of 2011-12 in October and decide on revising its official forecast for the entire fiscal. Earlier this year, the growth forecast was at 16-18 per cent, but was revised to 12-13 per cent a few months ago.
Maruti Suzuki's Chief General Manager of Marketing, Mr Shashank Srivastava said an expectation of 12-13 per cent industry growth rate has long been abandoned and most automobile manufacturers have revised it to single-digits.
Moreover, it will be tough to better the high growth seen in the second half of last year, largely because of new model launches.
“This year, (only) those companies will grow fast that have a high percentage of diesel vehicles and are launching new models. The power of sentiment in the market is the main issue, especially for small cars which forms 75 per cent of the market,” he said.
Though companies had used discounts and other offers to push sales, many feel that they may now be left with very few measures to mitigate the impact of poor market sentiment.
The bad news comes especially with the festive season demand boom around the corner, which was expected to bring cheer to an industry already burdened by dipping sales.
“It will definitely dampen the spirit in the festive period. I don't think any measures taken by a company can fully mitigate the impact,” said Mr Arvind Saxena, Director, Marketing and Sales, Hyundai Motor India.
Tamp growth
The 25-basis point repo and reverse repo increase was the 12th such move since March 2010. Petrol prices, up by Rs 3 a litre on Friday, marked the ninth increase since June 2010.
General Motors India (GMI) plans to continue its discount schemes on vehicles, which it started about two months back when the market started heading south.
“We expected that they (RBI) would put a pause (on policy rate increases) considering the slowdown of the economy … this would further bring down growth. In any case, the petrol price increase would lead to an increase in inflation,” Mr P Balendran, Vice-President, GMI told Business Line.
He added, “Normally there is an incremental growth of 15-20 per cent during the festive season. This time we were expecting only a 5 per cent growth, but even this will be impacted.”
Industry body SIAM has said that it would review the growth numbers for the first half of 2011-12 in October and decide on revising its official forecast for the entire fiscal. Earlier this year, the growth forecast was at 16-18 per cent, but was revised to 12-13 per cent a few months ago.
Maruti Suzuki's Chief General Manager of Marketing, Mr Shashank Srivastava said an expectation of 12-13 per cent industry growth rate has long been abandoned and most automobile manufacturers have revised it to single-digits.
Moreover, it will be tough to better the high growth seen in the second half of last year, largely because of new model launches.
“This year, (only) those companies will grow fast that have a high percentage of diesel vehicles and are launching new models. The power of sentiment in the market is the main issue, especially for small cars which forms 75 per cent of the market,” he said.
StaR City limited Edition
Two-wheeler manufacturer TVS Motor Company has launched limited edition of its executive bike "StaR City" bearing the signature of its brand ambassador and Indian cricket team captain Mahendra Singh Dhoni.
The limited edition bike is equipped with new graphics, contemporary design and is being launched along with a new festive based advertisement for the first time featuring Dhoni and his wife Sakshi, a company statement here said.
The commercial was directed by US based Indian film makers Raj Nidimoru and Krishna DK which would feature Dhoni and his wife Sakshi, it said.
"It is the first time that they have been cast together in any advertisement. We needed to bring in the element of toughness while portraying festivity, which is so much a part of our culture," TVS Motor Company President (Marketing) H S Goindi said.
Besides the new graphics and colours, the bike comes with a five-year warranty, the statement added.
The limited edition bike is equipped with new graphics, contemporary design and is being launched along with a new festive based advertisement for the first time featuring Dhoni and his wife Sakshi, a company statement here said.
The commercial was directed by US based Indian film makers Raj Nidimoru and Krishna DK which would feature Dhoni and his wife Sakshi, it said.
"It is the first time that they have been cast together in any advertisement. We needed to bring in the element of toughness while portraying festivity, which is so much a part of our culture," TVS Motor Company President (Marketing) H S Goindi said.
Besides the new graphics and colours, the bike comes with a five-year warranty, the statement added.
Bajaj relaxes financing options to boost sales
Expecting a boost to its sales in the ensuing festive season, two-wheeler maker Bajaj Auto has started offering vehicle finance options even to buyers with no bank accounts. The company offers loans on its vehicles through Bajaj Finance, its finance arm.
Launching its Boxer 150 cc here on Thursday, Bajaj Auto, general manager (marketing and sales), R Chandrasekar said, “The product is targeted at the rural and sub-urban areas. Considering the cash flows in these areas, we will offer two-wheeler loans to those who do not even have a bank account. They will come to a payment point to pay their EMI every month.”
“We believe the customers will be as punctual with monthly payments as they are with their utility bills,” he added.
The company is hopeful of selling about 30,000 units per month from October. The vehicles will be made at its two plants in Aurangabad for southern markets and Uttarakhand for northern markets.
The two-wheeler segment in the country is growing around 16 per cent. The high interest rates has not affected the sale of two wheelers, which augurs well for the segment as many were putting off their plans for a four-wheeler due to high interest rates.
Launching its Boxer 150 cc here on Thursday, Bajaj Auto, general manager (marketing and sales), R Chandrasekar said, “The product is targeted at the rural and sub-urban areas. Considering the cash flows in these areas, we will offer two-wheeler loans to those who do not even have a bank account. They will come to a payment point to pay their EMI every month.”
“We believe the customers will be as punctual with monthly payments as they are with their utility bills,” he added.
The company is hopeful of selling about 30,000 units per month from October. The vehicles will be made at its two plants in Aurangabad for southern markets and Uttarakhand for northern markets.
The two-wheeler segment in the country is growing around 16 per cent. The high interest rates has not affected the sale of two wheelers, which augurs well for the segment as many were putting off their plans for a four-wheeler due to high interest rates.
TVS to take on Chinese brands in LatAm, Africa
Backed by its strong R&D and right product range, two-wheeler maker TVS Motor Company vows to penetrate faster into several export markets, particularly developing nations where the two-wheeler industry is dominated by Chinese and Japanese brands.
With its Indonesian experience, the company is confident of achieving faster growth in other export markets. TVS claims to have learnt a lot about quality from the Indonesian market, where it is struggling hard to increase sales of its two wheelers amid stiff competition from Japanese brands.
“Unlike other developing nations, Indonesian market is unique. With a strong focus on quality — be it in two wheelers or commercial vehicles or cars, Japanese brands have major chunk of share in the auto market there. In two wheelers, about 98 per cent of the Indonesian market is Japanese. Thus, it takes a little longer time for the customers to shift to other brands,” said KN Radhakrishnan, president and chief executive, TVS Motor.
However, with over 50,000 customer base in Indonesia, TVS’ Indonesian arm PT.TVS Motor Company Indonesia has been increasing its two wheeler sales over the past 15 months. The Indonesian subsidiary has reported 23 per cent growth in sales at 7,000 units during the Q1 of this fiscal. “The encouraging news for us is that all the models we launched there are doing well. We are now looking at some restructuring and regional launches to boost sales,” he added.
With increasing sales and proposed restructuring, the PT.TVS is expected to achieve cash break-even next fiscal. During 2010-11, the Indonesian arm reduced its operating losses to about Rs 40 crore when compared with Rs 64 crore in the previous year.
Meanwhile, TVS Motor is gearing up to strengthen its presence in the markets it has recently entered, while contemplating entering into more markets in African and Latin American regions. The company has launched its three-wheelers in Egypt and two-wheelers in Columbia, while it is in the process of launching its two-wheelers in Argentina soon. “Most of these markets are dominated by Chinese brands and we are able to penetrate faster in markets where Chinese brands are present,” said Radhakrishnan
TVS Motor’s increasing focus on exports comes close on the heels of tapping huge opportunity in the global two-wheeler market, which registered total sales of 50 million last year and has been growing at 10-15 per cent.
With its Indonesian experience, the company is confident of achieving faster growth in other export markets. TVS claims to have learnt a lot about quality from the Indonesian market, where it is struggling hard to increase sales of its two wheelers amid stiff competition from Japanese brands.
“Unlike other developing nations, Indonesian market is unique. With a strong focus on quality — be it in two wheelers or commercial vehicles or cars, Japanese brands have major chunk of share in the auto market there. In two wheelers, about 98 per cent of the Indonesian market is Japanese. Thus, it takes a little longer time for the customers to shift to other brands,” said KN Radhakrishnan, president and chief executive, TVS Motor.
However, with over 50,000 customer base in Indonesia, TVS’ Indonesian arm PT.TVS Motor Company Indonesia has been increasing its two wheeler sales over the past 15 months. The Indonesian subsidiary has reported 23 per cent growth in sales at 7,000 units during the Q1 of this fiscal. “The encouraging news for us is that all the models we launched there are doing well. We are now looking at some restructuring and regional launches to boost sales,” he added.
With increasing sales and proposed restructuring, the PT.TVS is expected to achieve cash break-even next fiscal. During 2010-11, the Indonesian arm reduced its operating losses to about Rs 40 crore when compared with Rs 64 crore in the previous year.
Meanwhile, TVS Motor is gearing up to strengthen its presence in the markets it has recently entered, while contemplating entering into more markets in African and Latin American regions. The company has launched its three-wheelers in Egypt and two-wheelers in Columbia, while it is in the process of launching its two-wheelers in Argentina soon. “Most of these markets are dominated by Chinese brands and we are able to penetrate faster in markets where Chinese brands are present,” said Radhakrishnan
TVS Motor’s increasing focus on exports comes close on the heels of tapping huge opportunity in the global two-wheeler market, which registered total sales of 50 million last year and has been growing at 10-15 per cent.
TVS Motor hopes Indonesian arm will break-even next year
TVS Motor Company hopes its Indonesian subsidiary, which has been reeling under losses, will achieve cash break-even next year.
PT.TVS Motor Company Indonesia, set up in 2007,“continues to have losses,” said Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor.
“We plan to restructure the business and bring down losses by the second half of this year and achieve cash break-even next year.”
The turnover of the subsidiary rose 25 per cent to Rs 85.36 crore in 2010-11.
Operating losses were Rs 39.84 crore, compared with a loss of Rs 64.23 crore in FY10. Net loss was Rs 62.33 crore.
At the company's 19th AGM, Mr Srinivasan said TVS continues to repose faith in Indonesia as the “quality improvements seen in India in terms of styling and durability are driven by experiences in Indonesia, which is highly quality conscious.”
The way to do well in Indonesia is by selling quality products, said Mr K.N. Radhakrishnan, CEO, TVS Motor.
“About 98 per cent of the Indonesian market is dominated by Japanese brands. It is difficult for people to move to new brands. It will take time.”
TVS has 50,000 customers in Indonesia. The company also exports to the Philippines from Indonesia.
On overall market conditions, Mr Srinivasan said TVS Motor is cautious about the next six months.
“We are controlling costs. But salaries are high in the auto industry, growing at 12-15 per cent.”
Domestic business
TVS Motor has planned a capex of Rs 150 crore for FY11-12 on product development, R&D and capacity enhancement in India.
“This year, we will capitalise on last year's launches. Significant launches will happen only by the end of this year or early next year,” said Mr Srinivasan.
In FY10-11, TVS' two-wheeler business grew 32 per cent. The company expects to cross sales of 2.5 million two-wheelers this year (2 million FY11).
The company hopes the restructuring of its finance arm (TVS Credit Services) will give a fillip to two-wheeler sales.
“Last year, we suffered due to poor availability of finance to consumers,” said Mr Srinivasan.
TVS Motor, which has a 15 per cent share in the two-wheeler market in India, is aspiring for number two position, Mr Srinivasan said.
Exports
Exports grew 37 per cent in FY11, driven by South Asia, Africa, Brazil and Mexico. Three-wheelers significantly strengthened exports.
TVS Motor recently entered Egypt (three-wheelers) and Columbia (two-wheelers).
It is in the process of entering Argentina.
PT.TVS Motor Company Indonesia, set up in 2007,“continues to have losses,” said Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor.
“We plan to restructure the business and bring down losses by the second half of this year and achieve cash break-even next year.”
The turnover of the subsidiary rose 25 per cent to Rs 85.36 crore in 2010-11.
Operating losses were Rs 39.84 crore, compared with a loss of Rs 64.23 crore in FY10. Net loss was Rs 62.33 crore.
At the company's 19th AGM, Mr Srinivasan said TVS continues to repose faith in Indonesia as the “quality improvements seen in India in terms of styling and durability are driven by experiences in Indonesia, which is highly quality conscious.”
The way to do well in Indonesia is by selling quality products, said Mr K.N. Radhakrishnan, CEO, TVS Motor.
“About 98 per cent of the Indonesian market is dominated by Japanese brands. It is difficult for people to move to new brands. It will take time.”
TVS has 50,000 customers in Indonesia. The company also exports to the Philippines from Indonesia.
On overall market conditions, Mr Srinivasan said TVS Motor is cautious about the next six months.
“We are controlling costs. But salaries are high in the auto industry, growing at 12-15 per cent.”
Domestic business
TVS Motor has planned a capex of Rs 150 crore for FY11-12 on product development, R&D and capacity enhancement in India.
“This year, we will capitalise on last year's launches. Significant launches will happen only by the end of this year or early next year,” said Mr Srinivasan.
In FY10-11, TVS' two-wheeler business grew 32 per cent. The company expects to cross sales of 2.5 million two-wheelers this year (2 million FY11).
The company hopes the restructuring of its finance arm (TVS Credit Services) will give a fillip to two-wheeler sales.
“Last year, we suffered due to poor availability of finance to consumers,” said Mr Srinivasan.
TVS Motor, which has a 15 per cent share in the two-wheeler market in India, is aspiring for number two position, Mr Srinivasan said.
Exports
Exports grew 37 per cent in FY11, driven by South Asia, Africa, Brazil and Mexico. Three-wheelers significantly strengthened exports.
TVS Motor recently entered Egypt (three-wheelers) and Columbia (two-wheelers).
It is in the process of entering Argentina.
Middle class bike users worst hit by price hike
The latest hike in petrol prices, the second major rise in four months, has not only created a significant skew in automobile demand but also pinched the poor and middle-class consumer who cannot afford to fork out more for a diesel vehicle.
Although the government's logic in increasing petrol prices at the cost of diesel is that the former is a rich man's fuel, increasingly, it is the more expensive compact cars, not to mention sedans and SUVs, that are offering diesel variants in order to benefit from the more than Rs 20 differential between the two fuels. Ironically, the lowest rung in the auto ladder – two-wheelers and entry-level small cars – are the ones that now run only on petrol. So, the petrol hike has ended up hitting the middle and lower middle class consumer, say industry experts.
One look at how the car demand has behaved of late gives the picture. For example, in all models where Maruti offers a diesel variant, the diesel percentage of total sales has gone up from 65% a year ago to 85% now. But that also means the petrol-only segments have suffered. "The diesel option is not there in most small cars so those customers are simply staying away from the car market," says Mayank Pareek, managing executive officer (marketing and sales) at Maruti Suzuki. "This is causing a fundamental shift in car demand which is why the car industry has clocked just 1% growth."
Pareek says only five models have clocked any growth in recent months. These are Alto, WagonR, Santro, Omni and Eeco. "This despite the fact that there are 20 models in the A2 segment and even in these five models the growth is marginal," Pareek says.
While the small car buyer is staying away, the motorcycle and scooter consumer is being pinched really hard. Says TVS Motor president marketing HS Goindi, "These successive petrol price increases are hurting the middle and lower middle class bike user. The fuel price increase along with rising interest rates and food inflation has led to a severe pinch. And the worst thing is that this diesel shift is due to an artificial price gap which is not necessarily based on fuel quality, fuel efficiency or operating cost."
Industry experts feel it's time the government laid out a well thought out fuel policy for the automobile industry without which companies are wary of investing any further in either petrol or diesel technology. "Setting up fresh capacity (for diesel engines) means huge investments for which you need clarity from the government on their future auto fuel policy," says Pareek.
Agrees Goindi, "You can't cross-subsidise a fuel for ever. So the government needs a proper fuel policy in the long run."
Although the government's logic in increasing petrol prices at the cost of diesel is that the former is a rich man's fuel, increasingly, it is the more expensive compact cars, not to mention sedans and SUVs, that are offering diesel variants in order to benefit from the more than Rs 20 differential between the two fuels. Ironically, the lowest rung in the auto ladder – two-wheelers and entry-level small cars – are the ones that now run only on petrol. So, the petrol hike has ended up hitting the middle and lower middle class consumer, say industry experts.
One look at how the car demand has behaved of late gives the picture. For example, in all models where Maruti offers a diesel variant, the diesel percentage of total sales has gone up from 65% a year ago to 85% now. But that also means the petrol-only segments have suffered. "The diesel option is not there in most small cars so those customers are simply staying away from the car market," says Mayank Pareek, managing executive officer (marketing and sales) at Maruti Suzuki. "This is causing a fundamental shift in car demand which is why the car industry has clocked just 1% growth."
Pareek says only five models have clocked any growth in recent months. These are Alto, WagonR, Santro, Omni and Eeco. "This despite the fact that there are 20 models in the A2 segment and even in these five models the growth is marginal," Pareek says.
While the small car buyer is staying away, the motorcycle and scooter consumer is being pinched really hard. Says TVS Motor president marketing HS Goindi, "These successive petrol price increases are hurting the middle and lower middle class bike user. The fuel price increase along with rising interest rates and food inflation has led to a severe pinch. And the worst thing is that this diesel shift is due to an artificial price gap which is not necessarily based on fuel quality, fuel efficiency or operating cost."
Industry experts feel it's time the government laid out a well thought out fuel policy for the automobile industry without which companies are wary of investing any further in either petrol or diesel technology. "Setting up fresh capacity (for diesel engines) means huge investments for which you need clarity from the government on their future auto fuel policy," says Pareek.
Agrees Goindi, "You can't cross-subsidise a fuel for ever. So the government needs a proper fuel policy in the long run."
TVS Motor in pact with HDFC bank for dealer funding
TVS Motor Company has entered into a memorandum of understanding with HDFC Bank for inventory funding for its dealers.
The agreement has features such as online fund transfers, online repayment and real-time viewing of account status.
As part of this arrangement, HDFC will provide funding to over six hundred dealers of TVS Motor Company, across the country. This will enable them to increase their working capital, boost vehicle stocks and, consequently, enhance retail sales, said a release.
This association provides an opportunity for dealers to “strengthen their working capital,” said Mr H. S. Goindi, President-Marketing, TVS Motor Company. “Easy access to funds at attractive interest rates will help in growing their business and in turn offer better retail services to our customers.”
Mr Ashok Khanna, Senior Executive Vice-President–Vehicle Loans, HDFC Bank, said: “This MOU also opens the doors for a new segment of entrepreneurs to experience the services of HDFC.”
The agreement has features such as online fund transfers, online repayment and real-time viewing of account status.
As part of this arrangement, HDFC will provide funding to over six hundred dealers of TVS Motor Company, across the country. This will enable them to increase their working capital, boost vehicle stocks and, consequently, enhance retail sales, said a release.
This association provides an opportunity for dealers to “strengthen their working capital,” said Mr H. S. Goindi, President-Marketing, TVS Motor Company. “Easy access to funds at attractive interest rates will help in growing their business and in turn offer better retail services to our customers.”
Mr Ashok Khanna, Senior Executive Vice-President–Vehicle Loans, HDFC Bank, said: “This MOU also opens the doors for a new segment of entrepreneurs to experience the services of HDFC.”
Festive cheer unlikely for auto firms
Companies draw up strategy to fight demand slowdown; automobile body SIAM hints at paring growth target.
The coming festive season is unlikely to bring cheer for the automobile companies. Leading manufacturers today said they did not expect consumer demand to rev up sales substantially this October, due to uncertainties over increasing lending rates and fuel prices.
“Market conditions are tough. The fundamental economics related to increased interest rates and fuel prices have impacted affordability of buyers. The festive season may bring in sales, but I doubt it will rev up the market,” said Arvind Saxeana, director (marketing and sales), Hyundai Motor India Ltd (HMIL).
Concurred Neeraj Garg, member of board and director (passenger cars), Volkswagen India. “Initially, we were expecting the industry would grow by 16-17 per cent. But now it seems the industry would achieve single-digit growth numbers. So far in September, sales have not grown and with the ‘shradh’ period setting in, volumes are not likely to pick up this month,” he said.
On the back of strong demand during the festive season automobile sales had touched a record high last October, with the industry growing 46 per cent to report sales of 14,60,655 units during the month.
HMIL, the country’s second-largest car maker, which had earlier announced plans to cut down on exports to cater to demand in the domestic market, is now taking a re-look at its exports strategy and pushing sales overseas to counter the slowdown in the domestic industry.
Over the last two months, HMIL’s volumes in the domestic market declined by nine per cent to 52,319 units as compared to the corresponding period last year. Exports have grown by 11 per cent to 48,378 units.
Tata Motors, too, which reported a decline of 15 per cent in sales at 98,187 units in the first four months this year, confirmed the company was slashing production across passenger and commercial vehicle segments.
“We have adjusted production to align with the demand. The production cuts vary across models,” said P M Telang, managing director (India operations), Tata Motors.
The coming festive season is unlikely to bring cheer for the automobile companies. Leading manufacturers today said they did not expect consumer demand to rev up sales substantially this October, due to uncertainties over increasing lending rates and fuel prices.
“Market conditions are tough. The fundamental economics related to increased interest rates and fuel prices have impacted affordability of buyers. The festive season may bring in sales, but I doubt it will rev up the market,” said Arvind Saxeana, director (marketing and sales), Hyundai Motor India Ltd (HMIL).
Concurred Neeraj Garg, member of board and director (passenger cars), Volkswagen India. “Initially, we were expecting the industry would grow by 16-17 per cent. But now it seems the industry would achieve single-digit growth numbers. So far in September, sales have not grown and with the ‘shradh’ period setting in, volumes are not likely to pick up this month,” he said.
On the back of strong demand during the festive season automobile sales had touched a record high last October, with the industry growing 46 per cent to report sales of 14,60,655 units during the month.
HMIL, the country’s second-largest car maker, which had earlier announced plans to cut down on exports to cater to demand in the domestic market, is now taking a re-look at its exports strategy and pushing sales overseas to counter the slowdown in the domestic industry.
Over the last two months, HMIL’s volumes in the domestic market declined by nine per cent to 52,319 units as compared to the corresponding period last year. Exports have grown by 11 per cent to 48,378 units.
Tata Motors, too, which reported a decline of 15 per cent in sales at 98,187 units in the first four months this year, confirmed the company was slashing production across passenger and commercial vehicle segments.
“We have adjusted production to align with the demand. The production cuts vary across models,” said P M Telang, managing director (India operations), Tata Motors.
Electric Vehicle market to touch five million units by 2020: Study
Demand for electric and hybrid vehicles in India, the world’s second fastest growing automobile market, is estimated to increase 50-fold to 5 million units by 2020, according to two people involved in a study funded by the government.
“We have found that while in other countries people pay a small premium to buy an electric vehicle, in India people’s desire to buy an electric vehicle revolves around the cost of ownership,” said one of the official involved in the study, who declined to be named.
Around 100,000 electric vehicles were sold in the country in 2009-10, according to the latest numbers available with the Society of Manufacturers of Electric Vehicles.
The survey was conducted by Booz & Allen and Society of Indian Automobile Manufacturers to determine the demand for electric and hybrid vehicles in the nation. It was funded by the department of heavy industries, a government official said, requesting anonymity.
The study is a part of a national plan to develop electric and hybrid vehicles that was proposed in the Union budget for the current fiscal. The study suggests collaboration between the government and industry on research and development to build fuel-efficient vehicles. The government will, however, be solely responsible for creating infrastructure for the development of the market for electric vehicles such as charging stations.
The survey was done across 16 cities and with 7,000 respondents to check demand for such vehicles, the government official said.
The study expects demand for electric two-wheelers and buses to rise sharply. “A major chunk of these five million vehicles would come from motorcycles and buses. We have also found that consumers are very sceptical about battery operation. So, the government will have to do the needful as far as the infrastructure is concerned,” said the first person cited in the report.
The study proposes that the government provide incentives to companies to develop the technology locally and help the industry with proper policy, while the industry will have to put in the investments to make this project a success.
The study will be released by heavy industries minister Praful Patel on Wednesday and will be submitted to a minister-level national council for electric vehicles for a review.
The government’s national mission plan for electric and hybrid vehicles aims to promote their use and cut dependence on fossil fuels.
Under the plan, the government has set up a minister-level national council for electric vehicles, headed by Patel, and a secretary-level board to ensure uniformity of regulations across all states.
The policy is aimed at removing hurdles such as the need to obtain the consent of all concerned ministries for various measures. Setting up a charging station, for instance, requires the approval of the roads and power ministries among others.
“The idea is to have a strong political will to implement a uniform tax structure and infrastructure plans across the country,” said the government official cited above. “We want to see at least eight lakh electric vehicles on Indian roads by 2015. We will introduce it as a pilot project in some of the major cities.”
In November, the ministry of new and renewable energy offered incentives to electric vehicle makers in the current and the next fiscal years to boost sales of the vehicles.
Delhi provides the best incentive with a rebate on value added tax amounting to a 29.5% reduction in price.
The ex-factory price of electric two-wheelers ranges from Rs.26,000 to Rs.43,000, while electric cars made by Mahindra Reva Electric Vehicles Pvt. Ltd, India’s only maker of such vehicles, start at Rs.3.5 lakh.
“We have found that while in other countries people pay a small premium to buy an electric vehicle, in India people’s desire to buy an electric vehicle revolves around the cost of ownership,” said one of the official involved in the study, who declined to be named.
Around 100,000 electric vehicles were sold in the country in 2009-10, according to the latest numbers available with the Society of Manufacturers of Electric Vehicles.
The survey was conducted by Booz & Allen and Society of Indian Automobile Manufacturers to determine the demand for electric and hybrid vehicles in the nation. It was funded by the department of heavy industries, a government official said, requesting anonymity.
The study is a part of a national plan to develop electric and hybrid vehicles that was proposed in the Union budget for the current fiscal. The study suggests collaboration between the government and industry on research and development to build fuel-efficient vehicles. The government will, however, be solely responsible for creating infrastructure for the development of the market for electric vehicles such as charging stations.
The survey was done across 16 cities and with 7,000 respondents to check demand for such vehicles, the government official said.
The study expects demand for electric two-wheelers and buses to rise sharply. “A major chunk of these five million vehicles would come from motorcycles and buses. We have also found that consumers are very sceptical about battery operation. So, the government will have to do the needful as far as the infrastructure is concerned,” said the first person cited in the report.
The study proposes that the government provide incentives to companies to develop the technology locally and help the industry with proper policy, while the industry will have to put in the investments to make this project a success.
The study will be released by heavy industries minister Praful Patel on Wednesday and will be submitted to a minister-level national council for electric vehicles for a review.
The government’s national mission plan for electric and hybrid vehicles aims to promote their use and cut dependence on fossil fuels.
Under the plan, the government has set up a minister-level national council for electric vehicles, headed by Patel, and a secretary-level board to ensure uniformity of regulations across all states.
The policy is aimed at removing hurdles such as the need to obtain the consent of all concerned ministries for various measures. Setting up a charging station, for instance, requires the approval of the roads and power ministries among others.
“The idea is to have a strong political will to implement a uniform tax structure and infrastructure plans across the country,” said the government official cited above. “We want to see at least eight lakh electric vehicles on Indian roads by 2015. We will introduce it as a pilot project in some of the major cities.”
In November, the ministry of new and renewable energy offered incentives to electric vehicle makers in the current and the next fiscal years to boost sales of the vehicles.
Delhi provides the best incentive with a rebate on value added tax amounting to a 29.5% reduction in price.
The ex-factory price of electric two-wheelers ranges from Rs.26,000 to Rs.43,000, while electric cars made by Mahindra Reva Electric Vehicles Pvt. Ltd, India’s only maker of such vehicles, start at Rs.3.5 lakh.
Mahindra hikes vehicle prices by up to 2%
Auto major Mahindra & Mahindra hiked the prices of its entire range of products, such as the Scorpio, the Xylo and the Bolero, by up to 2 per cent last month because of rising raw material costs and certain planned increases.
“Margins have been a concern as raw material costs have been rising. Therefore, we had to raise prices last month by 1.5-2 per cent,” Mahindra & Mahindra (M&M) Senior Vice-President (Marketing - Automotive Sector), Mr Vivek Nayer, told reporters here.
In January this year, M&M had raised vehicle prices by about 1.5 per cent, followed by another upward revision of 1.5-2 per cent in April.
On the sales front, Mr Nayer said: “We are cautiously optimistic. The last two months have been good.”
M&M registered a 31.09 per cent rise in domestic sales at 35,756 units in August compared with the year-ago period. In July, it had witnessed a jump of 41.90 per cent at 37,323 units over the corresponding period last year.
IN BUDDH CIRCUIT
On Monday, the automobile major announced a five-year association with the Buddh International Circuit (BIC). The company will provide 25 Scorpios as the official support vehicles to the BIC, at its facility in Greater Noida. In return, BIC will support the Mahindra ‘Adventure Initiatives' throughout the year, such as The Great Escape and the Monastery Escape rallies.
Speaking at an event, Mr Nayer said that the company had not made any major mechanical changes to the car. But BIC, under guidance of F1 may add some features to the vehicles such as fire-fighting equipment.
“Margins have been a concern as raw material costs have been rising. Therefore, we had to raise prices last month by 1.5-2 per cent,” Mahindra & Mahindra (M&M) Senior Vice-President (Marketing - Automotive Sector), Mr Vivek Nayer, told reporters here.
In January this year, M&M had raised vehicle prices by about 1.5 per cent, followed by another upward revision of 1.5-2 per cent in April.
On the sales front, Mr Nayer said: “We are cautiously optimistic. The last two months have been good.”
M&M registered a 31.09 per cent rise in domestic sales at 35,756 units in August compared with the year-ago period. In July, it had witnessed a jump of 41.90 per cent at 37,323 units over the corresponding period last year.
IN BUDDH CIRCUIT
On Monday, the automobile major announced a five-year association with the Buddh International Circuit (BIC). The company will provide 25 Scorpios as the official support vehicles to the BIC, at its facility in Greater Noida. In return, BIC will support the Mahindra ‘Adventure Initiatives' throughout the year, such as The Great Escape and the Monastery Escape rallies.
Speaking at an event, Mr Nayer said that the company had not made any major mechanical changes to the car. But BIC, under guidance of F1 may add some features to the vehicles such as fire-fighting equipment.
Motorcycle sales up 15.43%, car sales drop 10% in Aug
Domestic passenger car sales declined for the second consecutive month with the automobile industry posting a dip of 10.08 percent in August this year, impacted by high interest rates and production cuts by the country’s BIGGEST CAR-MAKER Maruti Suzuki India.
According to figures released by the Society of Indian Automobile Manufacturers (Siam) today, domestic passenger car sales stood 144,516 units in August, 2011, as against 160,713 units in the same month last year.
“High interest rates continued to be a big problem for the industry and it is impacting the cost of finance for both companies and customers, “Siam director general Vishnu Mathur said.
He said, however, with the onset of the festive season and the good monsoon this year, the industry is hoping that there will be a turnaround in car sales growth.
During August this year, Maruti’s sales declined by 19.21 per cent to 63,296 units from 78,351 units in the same month last year. The company has been facing labour issues at its Manesar plant, where production has been impacted. Similarly, rival Hyundai Motors posted a 7.51 percent decline in sales to 26,451 units in August this year from 28,601 units in the same period last year.
Tata Motors also reported a 39.45 per cent decline in sales to 13,508 units in August this year from 22,312 units in the same period last year.
Domestic passenger car sales had fallen for the first time after 30 months of continuous growth in July, registering a 15.76 percent decline to 1,33,747 units, mainly due to hikes in lending rates and lower production by market leader Maruti Suzuki during the month. Mathur said that sales in September and October will be crucial in determining how much growth the industry will achieve this fiscal.
According to figures released by Siam, motorcycle sales grew by 15.43 per cent during the month to 839,772 units from 727,542 units in the corresponding month last year.Market leader Hero Moto-Corp posted a 19.56 per cent rise in sales to 462,196 units in August this year from 386,574 units in the same period last year.
In contrast, Bajaj Auto saw an 8.10 per cent rise in sales to 226,559 units in August this year from 209,567 units in the same period last year.
TVS Motor Company also posted a 13.2 per cent increase in sales to 56,186 units in August, 2011, from 49,630 units in the corresponding period of the previous year.
The scooter segment grew by 24.84 per cent to 212,750 units in August this year from 170,414 units in the same period last year.
Honda Motorcycle and Scooter India (HMSI) reported a 31.52 per cent rise in sales to 97,860 units in August, 2011, compared to 74,405 units in the corresponding year-ago period.
According to figures released by the Society of Indian Automobile Manufacturers (Siam) today, domestic passenger car sales stood 144,516 units in August, 2011, as against 160,713 units in the same month last year.
“High interest rates continued to be a big problem for the industry and it is impacting the cost of finance for both companies and customers, “Siam director general Vishnu Mathur said.
He said, however, with the onset of the festive season and the good monsoon this year, the industry is hoping that there will be a turnaround in car sales growth.
During August this year, Maruti’s sales declined by 19.21 per cent to 63,296 units from 78,351 units in the same month last year. The company has been facing labour issues at its Manesar plant, where production has been impacted. Similarly, rival Hyundai Motors posted a 7.51 percent decline in sales to 26,451 units in August this year from 28,601 units in the same period last year.
Tata Motors also reported a 39.45 per cent decline in sales to 13,508 units in August this year from 22,312 units in the same period last year.
Domestic passenger car sales had fallen for the first time after 30 months of continuous growth in July, registering a 15.76 percent decline to 1,33,747 units, mainly due to hikes in lending rates and lower production by market leader Maruti Suzuki during the month. Mathur said that sales in September and October will be crucial in determining how much growth the industry will achieve this fiscal.
According to figures released by Siam, motorcycle sales grew by 15.43 per cent during the month to 839,772 units from 727,542 units in the corresponding month last year.Market leader Hero Moto-Corp posted a 19.56 per cent rise in sales to 462,196 units in August this year from 386,574 units in the same period last year.
In contrast, Bajaj Auto saw an 8.10 per cent rise in sales to 226,559 units in August this year from 209,567 units in the same period last year.
TVS Motor Company also posted a 13.2 per cent increase in sales to 56,186 units in August, 2011, from 49,630 units in the corresponding period of the previous year.
The scooter segment grew by 24.84 per cent to 212,750 units in August this year from 170,414 units in the same period last year.
Honda Motorcycle and Scooter India (HMSI) reported a 31.52 per cent rise in sales to 97,860 units in August, 2011, compared to 74,405 units in the corresponding year-ago period.
India's Detroits : Pune, Gurgaon, Chennai … and now Gujarat?
Back in early 2008, in a discreet corner of his office in Gandhinagar, Gujarat chief minister Narendra Modi and four of his top bureaucrats were huddled giving shape and form to an ambituous plan - to make the state a hub for car manufacturing in the country.
What followed was a typical brownian activity that has become synonimous with the state's development over years. Phone calls were made, meetings set, faxes and emails sent: Gujarat was busy trying to figure out what it takes for a car company to set up a factory.
"The approach was much different from the other states who were trying to lure investments only on the back of incentives," says a senior official with Gujarat Industrial Development Corporation. "We knew a car company is not looking for a 5 or even 10-year timeframe, hence tax breaks do not matter much. It was infrastructure and speed that they wanted and that is what Gujarat provides."
The litmus test of how well the state had understood the sector came barely eight months later when Tata's Nano project fell through in West Bengal. A number of states rushed in to fill the vacuum. The three states that were finally shortlisted were Andhra Pradesh, Gujarat and Maharshtra; experts gave Gujarat only an outside chance of winning the race.
In a fortnight in September 2008 though, Gujarat displayed to Tata its speed of execution, infrastructure and strong governance so well that it over-rode the state's relative lack of a automotive supplier base to grab the Nano plant.
"I would like to thank the chief minister and his colleagues for making this our home so fast, so quickly because urgency was the need of the day," said Ratan Tata, chairman, Tata Motors as the Nano moved from the east to the west. "We lost a lot of time unfortunately."
With the Nano, Gujarat's ambition found the launchpad it was looking for. Within a mere three years, it has attracted two more companies - Ford and Peugeot - to invest in the state. The biggest player, Maruti Suzuki India Ltd (MSIL), is also close to finalising a million-unit car plant in the state.
If that deal goes through, cumulatively, the state would have received an investment of at least R16,000 crore by 2017 from Tata, Ford, Peugeot and Maruti, and the total vehicle production in the state would have shot from just 85,000 units in 2008 to 7,65,000 units by 2014.
"Gujarat made perfect strategic sense for us as we already had a plant in Chennai which can service the southern markets while Gujarat would cater to the northern market," said Joseph Hinrichs, president, Ford Asia Pacific. "Land was also a big criteria as we cannot afford delays at that end. And of course Nano's presence in the state meant the suppliers are already here."
There is however, one factor that may upset the applecart for Gujarat - labour unrest. The sector has seen a spate of labour troubles. Though Modi's governance is some cushion, it is not foolproof. Gujarat still tops the list of states with labour strikes, as exemplified earlier this year at General Motor's Halol factory, Gujarat's oldest car plant.
Back in early 2008, in a discreet corner of his office in Gandhinagar, Gujarat chief minister Narendra Modi and four of his top bureaucrats were huddled giving shape and form to an ambituous plan - to make the state a hub for car manufacturing in the country. What followed was a typical brownian activity that has become synonimous with the state's development over years. Phone calls were made, meetings set, faxes and emails sent: Gujarat was busy trying to figure out what it takes for a car company to set up a factory.
"The approach was much different from the other states who were trying to lure investments only on the back of incentives," says a senior official with Gujarat Industrial Development Corporation. "We knew a car company is not looking for a 5 or even 10-year timeframe, hence tax breaks do not matter much. It was infrastructure and speed that they wanted and that is what Gujarat provides."
The litmus test of how well the state had understood the sector came barely eight months later when Tata's Nano project fell through in West Bengal. A number of states rushed in to fill the vacuum. The three states that were finally shortlisted were Andhra Pradesh, Gujarat and Maharshtra; experts gave Gujarat only an outside chance of winning the race.
In a fortnight in September 2008 though, Gujarat displayed to Tata its speed of execution, infrastructure and strong governance so well that it over-rode the state's relative lack of a automotive supplier base to grab the Nano plant.
"I would like to thank the chief minister and his colleagues for making this our home so fast, so quickly because urgency was the need of the day," said Ratan Tata, chairman, Tata Motors as the Nano moved from the east to the west. "We lost a lot of time unfortunately."
With the Nano, Gujarat's ambition found the launchpad it was looking for. Within a mere three years, it has attracted two more companies - Ford and Peugeot - to invest in the state. The biggest player, Maruti Suzuki India Ltd (MSIL), is also close to finalising a million-unit car plant in the state.
If that deal goes through, cumulatively, the state would have received an investment of at least R16,000 crore by 2017 from Tata, Ford, Peugeot and Maruti, and the total vehicle production in the state would have shot from just 85,000 units in 2008 to 7,65,000 units by 2014.
"Gujarat made perfect strategic sense for us as we already had a plant in Chennai which can service the southern markets while Gujarat would cater to the northern market," said Joseph Hinrichs, president, Ford Asia Pacific. "Land was also a big criteria as we cannot afford delays at that end. And of course Nano's presence in the state meant the suppliers are already here."
There is however, one factor that may upset the applecart for Gujarat - labour unrest. The sector has seen a spate of labour troubles. Though Modi's governance is some cushion, it is not foolproof. Gujarat still tops the list of states with labour strikes, as exemplified earlier this year at General Motor's Halol factory, Gujarat's oldest car plant.
What followed was a typical brownian activity that has become synonimous with the state's development over years. Phone calls were made, meetings set, faxes and emails sent: Gujarat was busy trying to figure out what it takes for a car company to set up a factory.
"The approach was much different from the other states who were trying to lure investments only on the back of incentives," says a senior official with Gujarat Industrial Development Corporation. "We knew a car company is not looking for a 5 or even 10-year timeframe, hence tax breaks do not matter much. It was infrastructure and speed that they wanted and that is what Gujarat provides."
The litmus test of how well the state had understood the sector came barely eight months later when Tata's Nano project fell through in West Bengal. A number of states rushed in to fill the vacuum. The three states that were finally shortlisted were Andhra Pradesh, Gujarat and Maharshtra; experts gave Gujarat only an outside chance of winning the race.
In a fortnight in September 2008 though, Gujarat displayed to Tata its speed of execution, infrastructure and strong governance so well that it over-rode the state's relative lack of a automotive supplier base to grab the Nano plant.
"I would like to thank the chief minister and his colleagues for making this our home so fast, so quickly because urgency was the need of the day," said Ratan Tata, chairman, Tata Motors as the Nano moved from the east to the west. "We lost a lot of time unfortunately."
With the Nano, Gujarat's ambition found the launchpad it was looking for. Within a mere three years, it has attracted two more companies - Ford and Peugeot - to invest in the state. The biggest player, Maruti Suzuki India Ltd (MSIL), is also close to finalising a million-unit car plant in the state.
If that deal goes through, cumulatively, the state would have received an investment of at least R16,000 crore by 2017 from Tata, Ford, Peugeot and Maruti, and the total vehicle production in the state would have shot from just 85,000 units in 2008 to 7,65,000 units by 2014.
"Gujarat made perfect strategic sense for us as we already had a plant in Chennai which can service the southern markets while Gujarat would cater to the northern market," said Joseph Hinrichs, president, Ford Asia Pacific. "Land was also a big criteria as we cannot afford delays at that end. And of course Nano's presence in the state meant the suppliers are already here."
There is however, one factor that may upset the applecart for Gujarat - labour unrest. The sector has seen a spate of labour troubles. Though Modi's governance is some cushion, it is not foolproof. Gujarat still tops the list of states with labour strikes, as exemplified earlier this year at General Motor's Halol factory, Gujarat's oldest car plant.
Back in early 2008, in a discreet corner of his office in Gandhinagar, Gujarat chief minister Narendra Modi and four of his top bureaucrats were huddled giving shape and form to an ambituous plan - to make the state a hub for car manufacturing in the country. What followed was a typical brownian activity that has become synonimous with the state's development over years. Phone calls were made, meetings set, faxes and emails sent: Gujarat was busy trying to figure out what it takes for a car company to set up a factory.
"The approach was much different from the other states who were trying to lure investments only on the back of incentives," says a senior official with Gujarat Industrial Development Corporation. "We knew a car company is not looking for a 5 or even 10-year timeframe, hence tax breaks do not matter much. It was infrastructure and speed that they wanted and that is what Gujarat provides."
The litmus test of how well the state had understood the sector came barely eight months later when Tata's Nano project fell through in West Bengal. A number of states rushed in to fill the vacuum. The three states that were finally shortlisted were Andhra Pradesh, Gujarat and Maharshtra; experts gave Gujarat only an outside chance of winning the race.
In a fortnight in September 2008 though, Gujarat displayed to Tata its speed of execution, infrastructure and strong governance so well that it over-rode the state's relative lack of a automotive supplier base to grab the Nano plant.
"I would like to thank the chief minister and his colleagues for making this our home so fast, so quickly because urgency was the need of the day," said Ratan Tata, chairman, Tata Motors as the Nano moved from the east to the west. "We lost a lot of time unfortunately."
With the Nano, Gujarat's ambition found the launchpad it was looking for. Within a mere three years, it has attracted two more companies - Ford and Peugeot - to invest in the state. The biggest player, Maruti Suzuki India Ltd (MSIL), is also close to finalising a million-unit car plant in the state.
If that deal goes through, cumulatively, the state would have received an investment of at least R16,000 crore by 2017 from Tata, Ford, Peugeot and Maruti, and the total vehicle production in the state would have shot from just 85,000 units in 2008 to 7,65,000 units by 2014.
"Gujarat made perfect strategic sense for us as we already had a plant in Chennai which can service the southern markets while Gujarat would cater to the northern market," said Joseph Hinrichs, president, Ford Asia Pacific. "Land was also a big criteria as we cannot afford delays at that end. And of course Nano's presence in the state meant the suppliers are already here."
There is however, one factor that may upset the applecart for Gujarat - labour unrest. The sector has seen a spate of labour troubles. Though Modi's governance is some cushion, it is not foolproof. Gujarat still tops the list of states with labour strikes, as exemplified earlier this year at General Motor's Halol factory, Gujarat's oldest car plant.
Yamaha launches YZF-R15 version 2.0; Priced ar Rs.1,07,000
Cementing its foothold in the premium segment, India Yamaha Motor today launched the YZF-R15 version 2.0 – a 150cc liquid-cooled four-stroke fuel injected bike. The YZF-R15 version 2.0 is a new model that has been developed under the concept of a 'Graded Up R15.' While maintaining the proven ease of handling of the existing R15, the R15 version 2.0 boasts of spruced up looks and better performance in circuit riding. The design elements are borrowed from the supersport model YZF-R1 that is adapted from YZR-M1 MotoGP race machine. The new bike is priced at Rs 1,07,000 (Ex-showroom, Delhi) and will be available in Racing Blue, Midnight Black and Sunset Red colours.
The R15 version 2.0 has undergone changes as compared to the present YZF-R15 in the specs of the Engine Control unit (ECU), drivetrain unit, a long aluminum swing arm, wider front and rear tires (radial tire for the rear), split seat, LED taillights and new-design middle cowl and tail cowl.
Speaking on the occasion, Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor, said: “Having witnessed the tremendous fan following received by the existing YZF-R15, we are very excited about the launch of the YZF-R15 version 2.0 which promises to deliver greater performance and enhanced features. Seeing the trend, the market for premium bikes in India offers immense scope as this segment consists of people who are looking for performance characteristics.”
“The YZF-R15 version 2.0 is an upgraded version of our flagship bike YZF-R15 and is designed keeping in mind the comfort as well as the thrill of a sports ride. The YZF-R15 has been continuously gaining ranks in the hotly contested premium segment since its launch 3 years ago and we are sure to repeat the same feat for the new version too. With the festive season round the corner, we expect the new model to be an instant hit amongst biking enthusiasts”, he added.
Based on the 'Graded Up R15' concept, the development focused on the two main areas of body styling and sporty performance, and an array of optimum features were adopted throughout the machine to make sure that customers enjoy the thrill of a refined and impressive body styling in the supersport image with the newly designed middle cowl, tail cowl, split seat, LED taillights, new exhaust pipe and silencer specs. The newly designed middle cowl features improved aerodynamic performance at higher speeds - the aerodynamic resistance value is four percent better than that of the existing YZF-R15.
The R15 version 2.0 also sports the first aluminum swing arm in the 150 cc segment in the Indian market and has a truss structure that enables greater rigidity while improving handling in the turns. The new seat design enables a better feeling of seat grip in sporty riding. Also, 'low front, high tail' design enables a riding posture that is well suited to both sporty riding and everyday riding around town.
The new ECU control and drivetrain unit specs ensure that riders enjoy improved off-the-line acceleration and high speed performance. The silencer protector has also been newly designed in a way that adds cadence to overall styling. It adopts a carbon-look pattern on the surface as well as a model nameplate to add to the high-performance image and the feeling of quality. To improve the feeling of clutch operation, a more rigid clutch axle shaft than the existing type has been adopted. Furthermore, the pulley that serves as a medium between the throttle wire and throttle valve has been changed to a perfect circular type to improve the linearity of the throttle action and thereby achieve better response. The wider 130 mm radial rear tyre and 90 mm front tire impart reduced roll resistance, high-speed cornering stability and improved handling performance. A larger 220 mm diameter rear disc brake has been adopted to achieve a better balance with the new rear tyre size and ensure good braking power.
Another interesting aspect of the bike is the mud guard and saree guard attached to the swing arm which enhances the exterior design product value. The new design of five-spoke cast wheels achieves the necessary strength balance while creating a sense of lightness at the same time.
The R15 version 2.0 has undergone changes as compared to the present YZF-R15 in the specs of the Engine Control unit (ECU), drivetrain unit, a long aluminum swing arm, wider front and rear tires (radial tire for the rear), split seat, LED taillights and new-design middle cowl and tail cowl.
Speaking on the occasion, Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor, said: “Having witnessed the tremendous fan following received by the existing YZF-R15, we are very excited about the launch of the YZF-R15 version 2.0 which promises to deliver greater performance and enhanced features. Seeing the trend, the market for premium bikes in India offers immense scope as this segment consists of people who are looking for performance characteristics.”
“The YZF-R15 version 2.0 is an upgraded version of our flagship bike YZF-R15 and is designed keeping in mind the comfort as well as the thrill of a sports ride. The YZF-R15 has been continuously gaining ranks in the hotly contested premium segment since its launch 3 years ago and we are sure to repeat the same feat for the new version too. With the festive season round the corner, we expect the new model to be an instant hit amongst biking enthusiasts”, he added.
Based on the 'Graded Up R15' concept, the development focused on the two main areas of body styling and sporty performance, and an array of optimum features were adopted throughout the machine to make sure that customers enjoy the thrill of a refined and impressive body styling in the supersport image with the newly designed middle cowl, tail cowl, split seat, LED taillights, new exhaust pipe and silencer specs. The newly designed middle cowl features improved aerodynamic performance at higher speeds - the aerodynamic resistance value is four percent better than that of the existing YZF-R15.
The R15 version 2.0 also sports the first aluminum swing arm in the 150 cc segment in the Indian market and has a truss structure that enables greater rigidity while improving handling in the turns. The new seat design enables a better feeling of seat grip in sporty riding. Also, 'low front, high tail' design enables a riding posture that is well suited to both sporty riding and everyday riding around town.
The new ECU control and drivetrain unit specs ensure that riders enjoy improved off-the-line acceleration and high speed performance. The silencer protector has also been newly designed in a way that adds cadence to overall styling. It adopts a carbon-look pattern on the surface as well as a model nameplate to add to the high-performance image and the feeling of quality. To improve the feeling of clutch operation, a more rigid clutch axle shaft than the existing type has been adopted. Furthermore, the pulley that serves as a medium between the throttle wire and throttle valve has been changed to a perfect circular type to improve the linearity of the throttle action and thereby achieve better response. The wider 130 mm radial rear tyre and 90 mm front tire impart reduced roll resistance, high-speed cornering stability and improved handling performance. A larger 220 mm diameter rear disc brake has been adopted to achieve a better balance with the new rear tyre size and ensure good braking power.
Another interesting aspect of the bike is the mud guard and saree guard attached to the swing arm which enhances the exterior design product value. The new design of five-spoke cast wheels achieves the necessary strength balance while creating a sense of lightness at the same time.
Yamaha launches YZF-R15 version 2.0; Priced ar Rs.1,07,000
Cementing its foothold in the premium segment, India Yamaha Motor today launched the YZF-R15 version 2.0 – a 150cc liquid-cooled four-stroke fuel injected bike. The YZF-R15 version 2.0 is a new model that has been developed under the concept of a 'Graded Up R15.' While maintaining the proven ease of handling of the existing R15, the R15 version 2.0 boasts of spruced up looks and better performance in circuit riding. The design elements are borrowed from the supersport model YZF-R1 that is adapted from YZR-M1 MotoGP race machine. The new bike is priced at Rs 1,07,000 (Ex-showroom, Delhi) and will be available in Racing Blue, Midnight Black and Sunset Red colours.
The R15 version 2.0 has undergone changes as compared to the present YZF-R15 in the specs of the Engine Control unit (ECU), drivetrain unit, a long aluminum swing arm, wider front and rear tires (radial tire for the rear), split seat, LED taillights and new-design middle cowl and tail cowl.
Speaking on the occasion, Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor, said: “Having witnessed the tremendous fan following received by the existing YZF-R15, we are very excited about the launch of the YZF-R15 version 2.0 which promises to deliver greater performance and enhanced features. Seeing the trend, the market for premium bikes in India offers immense scope as this segment consists of people who are looking for performance characteristics.”
“The YZF-R15 version 2.0 is an upgraded version of our flagship bike YZF-R15 and is designed keeping in mind the comfort as well as the thrill of a sports ride. The YZF-R15 has been continuously gaining ranks in the hotly contested premium segment since its launch 3 years ago and we are sure to repeat the same feat for the new version too. With the festive season round the corner, we expect the new model to be an instant hit amongst biking enthusiasts”, he added.
Based on the 'Graded Up R15' concept, the development focused on the two main areas of body styling and sporty performance, and an array of optimum features were adopted throughout the machine to make sure that customers enjoy the thrill of a refined and impressive body styling in the supersport image with the newly designed middle cowl, tail cowl, split seat, LED taillights, new exhaust pipe and silencer specs. The newly designed middle cowl features improved aerodynamic performance at higher speeds - the aerodynamic resistance value is four percent better than that of the existing YZF-R15.
The R15 version 2.0 also sports the first aluminum swing arm in the 150 cc segment in the Indian market and has a truss structure that enables greater rigidity while improving handling in the turns. The new seat design enables a better feeling of seat grip in sporty riding. Also, 'low front, high tail' design enables a riding posture that is well suited to both sporty riding and everyday riding around town.
The new ECU control and drivetrain unit specs ensure that riders enjoy improved off-the-line acceleration and high speed performance. The silencer protector has also been newly designed in a way that adds cadence to overall styling. It adopts a carbon-look pattern on the surface as well as a model nameplate to add to the high-performance image and the feeling of quality. To improve the feeling of clutch operation, a more rigid clutch axle shaft than the existing type has been adopted. Furthermore, the pulley that serves as a medium between the throttle wire and throttle valve has been changed to a perfect circular type to improve the linearity of the throttle action and thereby achieve better response. The wider 130 mm radial rear tyre and 90 mm front tire impart reduced roll resistance, high-speed cornering stability and improved handling performance. A larger 220 mm diameter rear disc brake has been adopted to achieve a better balance with the new rear tyre size and ensure good braking power.
Another interesting aspect of the bike is the mud guard and saree guard attached to the swing arm which enhances the exterior design product value. The new design of five-spoke cast wheels achieves the necessary strength balance while creating a sense of lightness at the same time.
The R15 version 2.0 has undergone changes as compared to the present YZF-R15 in the specs of the Engine Control unit (ECU), drivetrain unit, a long aluminum swing arm, wider front and rear tires (radial tire for the rear), split seat, LED taillights and new-design middle cowl and tail cowl.
Speaking on the occasion, Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor, said: “Having witnessed the tremendous fan following received by the existing YZF-R15, we are very excited about the launch of the YZF-R15 version 2.0 which promises to deliver greater performance and enhanced features. Seeing the trend, the market for premium bikes in India offers immense scope as this segment consists of people who are looking for performance characteristics.”
“The YZF-R15 version 2.0 is an upgraded version of our flagship bike YZF-R15 and is designed keeping in mind the comfort as well as the thrill of a sports ride. The YZF-R15 has been continuously gaining ranks in the hotly contested premium segment since its launch 3 years ago and we are sure to repeat the same feat for the new version too. With the festive season round the corner, we expect the new model to be an instant hit amongst biking enthusiasts”, he added.
Based on the 'Graded Up R15' concept, the development focused on the two main areas of body styling and sporty performance, and an array of optimum features were adopted throughout the machine to make sure that customers enjoy the thrill of a refined and impressive body styling in the supersport image with the newly designed middle cowl, tail cowl, split seat, LED taillights, new exhaust pipe and silencer specs. The newly designed middle cowl features improved aerodynamic performance at higher speeds - the aerodynamic resistance value is four percent better than that of the existing YZF-R15.
The R15 version 2.0 also sports the first aluminum swing arm in the 150 cc segment in the Indian market and has a truss structure that enables greater rigidity while improving handling in the turns. The new seat design enables a better feeling of seat grip in sporty riding. Also, 'low front, high tail' design enables a riding posture that is well suited to both sporty riding and everyday riding around town.
The new ECU control and drivetrain unit specs ensure that riders enjoy improved off-the-line acceleration and high speed performance. The silencer protector has also been newly designed in a way that adds cadence to overall styling. It adopts a carbon-look pattern on the surface as well as a model nameplate to add to the high-performance image and the feeling of quality. To improve the feeling of clutch operation, a more rigid clutch axle shaft than the existing type has been adopted. Furthermore, the pulley that serves as a medium between the throttle wire and throttle valve has been changed to a perfect circular type to improve the linearity of the throttle action and thereby achieve better response. The wider 130 mm radial rear tyre and 90 mm front tire impart reduced roll resistance, high-speed cornering stability and improved handling performance. A larger 220 mm diameter rear disc brake has been adopted to achieve a better balance with the new rear tyre size and ensure good braking power.
Another interesting aspect of the bike is the mud guard and saree guard attached to the swing arm which enhances the exterior design product value. The new design of five-spoke cast wheels achieves the necessary strength balance while creating a sense of lightness at the same time.
Honda to launch 100-cc motorcycle
Honda Motorcycle and Scooter India (HMSI) plans to launch a 100-cc motorcycle priced around Rs 45,000 next financial year.
“We will showcase a 100-cc bike at the Auto Expo in January and launch it next fiscal,” HMSI VP-Sales and Marketing, Mr N. K. Rattan told Business Line on the sidelines of the SIAM annual summit here on Wednesday.
The company will also launch a new scooter by the end of this fiscal, Mr Rattan said. The scooter will be 100 per cent localised, though product development will take place in Japan.
At present, HMSI sells motorcycles like Unicorn and Shine and scooters such as Activa, Deo and Aviater.
Besides introducing new products, the company is also ramping up its dealership network. At present, it has 1,220 outlets and plans to add another 300 by next fiscal.
HMSI sold 16.58 lakh units in 2010-11 and is targeting sales of 21 lakh units this fiscal.
“We will showcase a 100-cc bike at the Auto Expo in January and launch it next fiscal,” HMSI VP-Sales and Marketing, Mr N. K. Rattan told Business Line on the sidelines of the SIAM annual summit here on Wednesday.
The company will also launch a new scooter by the end of this fiscal, Mr Rattan said. The scooter will be 100 per cent localised, though product development will take place in Japan.
At present, HMSI sells motorcycles like Unicorn and Shine and scooters such as Activa, Deo and Aviater.
Besides introducing new products, the company is also ramping up its dealership network. At present, it has 1,220 outlets and plans to add another 300 by next fiscal.
HMSI sold 16.58 lakh units in 2010-11 and is targeting sales of 21 lakh units this fiscal.
Hero Group enters hospitality business
The Hero Group of automobile makers on Monday announced its foray into the hospitality sector. Its first property is expected to come up in Gurgaon by the end of 2012. The company is in talks with several international brands to sign a management contract, including Four Seasons, JW Marriott and Conrad.
The company has bought 3.9 acres from Punjab National Bank and will finish the construction work within 12 months, said Pankaj Munjal, managing director, Hero Motors. While the first part of the payment of Rs 105 crore has been made, Munjal did not disclose the entire amount paid for the deal. “We have a land bank all across India, but as of now, our focus is on making this one hotel operational.”
According to industry experts, the sector offers annuity income to the owners, while the asset value continues to appreciate, making it a lucrative business.
The total investment towards development of the Gurgaon property is going to be Rs 650 crore.
The company has bought 3.9 acres from Punjab National Bank and will finish the construction work within 12 months, said Pankaj Munjal, managing director, Hero Motors. While the first part of the payment of Rs 105 crore has been made, Munjal did not disclose the entire amount paid for the deal. “We have a land bank all across India, but as of now, our focus is on making this one hotel operational.”
According to industry experts, the sector offers annuity income to the owners, while the asset value continues to appreciate, making it a lucrative business.
The total investment towards development of the Gurgaon property is going to be Rs 650 crore.
Honda launches new variants of Aviator, CBF Stunner
New Delhi: Honda Motorcycle & Scooter India Sunday launched three new versions of its scooter Aviator and motorcycle CBF Stunner, priced between Rs 45,300 and Rs 54,509 (ex-showroom, Delhi).
"With changing lifestyles, Honda will aggressively expand and meet diversified needs of Indian customers. We are sure that customers will appreciate the refreshing look of new Aviator and CBF Stunner," Honda Motorcycle & Scooter India (HMSI) Vice President (Sales & Marketing) N K Rattan said in a statement.
The company said both the new products will be available in HMSI dealerships across India from end of September, 2011.
The 102 cc New Aviator has been launched in two variants and will be priced at Rs 45,300 and Rs 50,400, respectively.
The new version of the 125 cc CBF Stunner will come for Rs 54,509.
"With changing lifestyles, Honda will aggressively expand and meet diversified needs of Indian customers. We are sure that customers will appreciate the refreshing look of new Aviator and CBF Stunner," Honda Motorcycle & Scooter India (HMSI) Vice President (Sales & Marketing) N K Rattan said in a statement.
The company said both the new products will be available in HMSI dealerships across India from end of September, 2011.
The 102 cc New Aviator has been launched in two variants and will be priced at Rs 45,300 and Rs 50,400, respectively.
The new version of the 125 cc CBF Stunner will come for Rs 54,509.
Factory output growth slowest in two years
India’s factory sector expanded at its slowest pace in more than two years in August as export orders shrank amid weakening global demand, a survey of manufacturers in Asia’s third-largest economy showed.
Still, India was one of the few countries to show growth.
Similar surveys released on Thursday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI readings all below the 50 level that demarcates growth from contraction.
The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July’s reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50. “The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds,” said Leif Eskesen, chief economist for India & Asean at HSBC. Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously, the second consecutive month it has contracted, the survey showed.
Cooling order growth suggests the headline PMI is likely to slow further in the months ahead. “It’s very clear that these outside risks are rising,” said D.K. Joshi, principal economist at Crisil in Mumbai. “There are clear downside risks to industrial activity.”
Weakening global demand, rising prices and tighter monetary policy by the central bank have combined to crimp India’s economic growth. Data this week showed the economy grew 7.7% in the three months to June from a year earlier, its slowest pace in six quarters.
India’s manufacturing sector grew 7.2% in April-June from a year earlier, an improvement from the previous quarter but below the 10.6% growth clocked a year earlier, although the services sector continued to perform well and demand from rural consumers remains robust.
Maruti Suzuki, maker of nearly half the cars sold in India, this week posted a 12.7% annual drop in August sales, its third straight monthly decline.
Prospects for the rich-world’s economies look shaky after a US sovereign debt rating downgrade by Standard and Poor’s in early August sent global stock markets into a tailspin, while recent economic releases have pointed to a dire outlook in the months ahead. Hopes that emerging markets will continue to offset weakness in the West are fading as even fast-growing BRIC nations such as China and India lose momentum amid the global downdraft. Brazil surprised financial markets on Wednesday by cutting interest rates, citing the darkening international economic outlook.
India’s economy, which grew 8.5% in the fiscal year that ended in March, is expected to slow significantly in the current fiscal year, with Morgan Stanley forecasting growth of 7.2%.
Worries that the US economy could slip back into recession, heavy selling in global financial markets in August and Europe’s festering debt crisis have soured consumer and corporate confidence. The pace of growth in the US manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.
The US Federal Reserve said last month it expected to leave interest rates on hold at least until mid-2013 and markets are looking ahead to its September meeting for cues on whether there will be a third round of asset purchases or QE3 to prop up the limping economy.
The Reserve Bank of India (RBI) has raised interest rates 11 times since March last year as it struggles to rein in high inflation, with the last hike in July by a greater than expected 50 basis points, taking the repo rate to 8%. Many economists expect another rate increase at RBI’s next meeting on 16 Sep, and believe it will pause thereafter.
The PMI survey showed inflation will likely remain a major concern in India, with growth in factories’ input prices accelerating for the third month running.
“Inflation pressures remain elevated, with input prices accelerating and output prices still trekking up, albeit at a marginally slower pace,” said Eskesen.
Still, India was one of the few countries to show growth.
Similar surveys released on Thursday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI readings all below the 50 level that demarcates growth from contraction.
The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July’s reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50. “The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds,” said Leif Eskesen, chief economist for India & Asean at HSBC. Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously, the second consecutive month it has contracted, the survey showed.
Cooling order growth suggests the headline PMI is likely to slow further in the months ahead. “It’s very clear that these outside risks are rising,” said D.K. Joshi, principal economist at Crisil in Mumbai. “There are clear downside risks to industrial activity.”
Weakening global demand, rising prices and tighter monetary policy by the central bank have combined to crimp India’s economic growth. Data this week showed the economy grew 7.7% in the three months to June from a year earlier, its slowest pace in six quarters.
India’s manufacturing sector grew 7.2% in April-June from a year earlier, an improvement from the previous quarter but below the 10.6% growth clocked a year earlier, although the services sector continued to perform well and demand from rural consumers remains robust.
Maruti Suzuki, maker of nearly half the cars sold in India, this week posted a 12.7% annual drop in August sales, its third straight monthly decline.
Prospects for the rich-world’s economies look shaky after a US sovereign debt rating downgrade by Standard and Poor’s in early August sent global stock markets into a tailspin, while recent economic releases have pointed to a dire outlook in the months ahead. Hopes that emerging markets will continue to offset weakness in the West are fading as even fast-growing BRIC nations such as China and India lose momentum amid the global downdraft. Brazil surprised financial markets on Wednesday by cutting interest rates, citing the darkening international economic outlook.
India’s economy, which grew 8.5% in the fiscal year that ended in March, is expected to slow significantly in the current fiscal year, with Morgan Stanley forecasting growth of 7.2%.
Worries that the US economy could slip back into recession, heavy selling in global financial markets in August and Europe’s festering debt crisis have soured consumer and corporate confidence. The pace of growth in the US manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.
The US Federal Reserve said last month it expected to leave interest rates on hold at least until mid-2013 and markets are looking ahead to its September meeting for cues on whether there will be a third round of asset purchases or QE3 to prop up the limping economy.
The Reserve Bank of India (RBI) has raised interest rates 11 times since March last year as it struggles to rein in high inflation, with the last hike in July by a greater than expected 50 basis points, taking the repo rate to 8%. Many economists expect another rate increase at RBI’s next meeting on 16 Sep, and believe it will pause thereafter.
The PMI survey showed inflation will likely remain a major concern in India, with growth in factories’ input prices accelerating for the third month running.
“Inflation pressures remain elevated, with input prices accelerating and output prices still trekking up, albeit at a marginally slower pace,” said Eskesen.
Factory output growth slowest in two years
India’s factory sector expanded at its slowest pace in more than two years in August as export orders shrank amid weakening global demand, a survey of manufacturers in Asia’s third-largest economy showed.
Still, India was one of the few countries to show growth.
Similar surveys released on Thursday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI readings all below the 50 level that demarcates growth from contraction.
The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July’s reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50. “The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds,” said Leif Eskesen, chief economist for India & Asean at HSBC. Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously, the second consecutive month it has contracted, the survey showed.
Cooling order growth suggests the headline PMI is likely to slow further in the months ahead. “It’s very clear that these outside risks are rising,” said D.K. Joshi, principal economist at Crisil in Mumbai. “There are clear downside risks to industrial activity.”
Weakening global demand, rising prices and tighter monetary policy by the central bank have combined to crimp India’s economic growth. Data this week showed the economy grew 7.7% in the three months to June from a year earlier, its slowest pace in six quarters.
India’s manufacturing sector grew 7.2% in April-June from a year earlier, an improvement from the previous quarter but below the 10.6% growth clocked a year earlier, although the services sector continued to perform well and demand from rural consumers remains robust.
Maruti Suzuki, maker of nearly half the cars sold in India, this week posted a 12.7% annual drop in August sales, its third straight monthly decline.
Prospects for the rich-world’s economies look shaky after a US sovereign debt rating downgrade by Standard and Poor’s in early August sent global stock markets into a tailspin, while recent economic releases have pointed to a dire outlook in the months ahead. Hopes that emerging markets will continue to offset weakness in the West are fading as even fast-growing BRIC nations such as China and India lose momentum amid the global downdraft. Brazil surprised financial markets on Wednesday by cutting interest rates, citing the darkening international economic outlook.
India’s economy, which grew 8.5% in the fiscal year that ended in March, is expected to slow significantly in the current fiscal year, with Morgan Stanley forecasting growth of 7.2%.
Worries that the US economy could slip back into recession, heavy selling in global financial markets in August and Europe’s festering debt crisis have soured consumer and corporate confidence. The pace of growth in the US manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.
The US Federal Reserve said last month it expected to leave interest rates on hold at least until mid-2013 and markets are looking ahead to its September meeting for cues on whether there will be a third round of asset purchases or QE3 to prop up the limping economy.
The Reserve Bank of India (RBI) has raised interest rates 11 times since March last year as it struggles to rein in high inflation, with the last hike in July by a greater than expected 50 basis points, taking the repo rate to 8%. Many economists expect another rate increase at RBI’s next meeting on 16 Sep, and believe it will pause thereafter.
The PMI survey showed inflation will likely remain a major concern in India, with growth in factories’ input prices accelerating for the third month running.
“Inflation pressures remain elevated, with input prices accelerating and output prices still trekking up, albeit at a marginally slower pace,” said Eskesen.
Still, India was one of the few countries to show growth.
Similar surveys released on Thursday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI readings all below the 50 level that demarcates growth from contraction.
The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July’s reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50. “The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds,” said Leif Eskesen, chief economist for India & Asean at HSBC. Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously, the second consecutive month it has contracted, the survey showed.
Cooling order growth suggests the headline PMI is likely to slow further in the months ahead. “It’s very clear that these outside risks are rising,” said D.K. Joshi, principal economist at Crisil in Mumbai. “There are clear downside risks to industrial activity.”
Weakening global demand, rising prices and tighter monetary policy by the central bank have combined to crimp India’s economic growth. Data this week showed the economy grew 7.7% in the three months to June from a year earlier, its slowest pace in six quarters.
India’s manufacturing sector grew 7.2% in April-June from a year earlier, an improvement from the previous quarter but below the 10.6% growth clocked a year earlier, although the services sector continued to perform well and demand from rural consumers remains robust.
Maruti Suzuki, maker of nearly half the cars sold in India, this week posted a 12.7% annual drop in August sales, its third straight monthly decline.
Prospects for the rich-world’s economies look shaky after a US sovereign debt rating downgrade by Standard and Poor’s in early August sent global stock markets into a tailspin, while recent economic releases have pointed to a dire outlook in the months ahead. Hopes that emerging markets will continue to offset weakness in the West are fading as even fast-growing BRIC nations such as China and India lose momentum amid the global downdraft. Brazil surprised financial markets on Wednesday by cutting interest rates, citing the darkening international economic outlook.
India’s economy, which grew 8.5% in the fiscal year that ended in March, is expected to slow significantly in the current fiscal year, with Morgan Stanley forecasting growth of 7.2%.
Worries that the US economy could slip back into recession, heavy selling in global financial markets in August and Europe’s festering debt crisis have soured consumer and corporate confidence. The pace of growth in the US manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.
The US Federal Reserve said last month it expected to leave interest rates on hold at least until mid-2013 and markets are looking ahead to its September meeting for cues on whether there will be a third round of asset purchases or QE3 to prop up the limping economy.
The Reserve Bank of India (RBI) has raised interest rates 11 times since March last year as it struggles to rein in high inflation, with the last hike in July by a greater than expected 50 basis points, taking the repo rate to 8%. Many economists expect another rate increase at RBI’s next meeting on 16 Sep, and believe it will pause thereafter.
The PMI survey showed inflation will likely remain a major concern in India, with growth in factories’ input prices accelerating for the third month running.
“Inflation pressures remain elevated, with input prices accelerating and output prices still trekking up, albeit at a marginally slower pace,” said Eskesen.