Auto Expo 2012: TVS to re-launch 'Victor'; four products in 2012
NEW DELHI: Chennai-based two-wheeler maker TVS Motor Company today announced to re-launch its one of the best selling motorcycles 'Victor' in India in December, besides introducing three more products in 2012.
The company that has earmarked a capex of Rs 125 crore for 2012-13 is also mulling to increase its overall production capacity to about 32 lakh units annually by 2013-14, for which it may invest an additional sum of up to Rs 160 crore.
"Victor is making a comeback. It was good brand for us and its brand equity is still very strong," TVS Motor Company President (Marketing) H S Goindi told reporters at the 11th Auto Expo here.
TVS to re-launch 'Victor'
Auto Expo 2012: TVS to re-launch 'Victor'; four products in 2012
NEW DELHI: Chennai-based two-wheeler maker TVS Motor Company today announced to re-launch its one of the best selling motorcycles 'Victor' in India in December, besides introducing three more products in 2012.
The company that has earmarked a capex of Rs 125 crore for 2012-13 is also mulling to increase its overall production capacity to about 32 lakh units annually by 2013-14, for which it may invest an additional sum of up to Rs 160 crore.
"Victor is making a comeback. It was good brand for us and its brand equity is still very strong," TVS Motor Company President (Marketing) H S Goindi told reporters at the 11th Auto Expo here.
NEW DELHI: Chennai-based two-wheeler maker TVS Motor Company today announced to re-launch its one of the best selling motorcycles 'Victor' in India in December, besides introducing three more products in 2012.
The company that has earmarked a capex of Rs 125 crore for 2012-13 is also mulling to increase its overall production capacity to about 32 lakh units annually by 2013-14, for which it may invest an additional sum of up to Rs 160 crore.
"Victor is making a comeback. It was good brand for us and its brand equity is still very strong," TVS Motor Company President (Marketing) H S Goindi told reporters at the 11th Auto Expo here.
Motor insurance: Rs 10- lakh cap proppsed on third party claims
The Finance Ministry has initiated a Bill to separate motor insurance from The Motor Vehicle Act, 1988. A new law has been a long-pending demand of insurers.
“The administrative control of law relating to road accident compensation and insurance of motorised vehicles shall now be with the Ministry of Finance. Hence, Section 140 to Section 176 of the M V Act, 1988 will be rechristened as The Motor Vehicles Insurance and Compensation Act, 2011 and the same will be taken out of the existing Motor Vehicle Act,1988,” the draft said.
“It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”
The draft put forth by the Finance Ministry, proposes a cap of Rs 10 lakh on third-party compensation or on the liability arising out of death or body injury caused to a third party by any vehicle on road. The draft also says that claims have to be filed within three years of an accident.
Will help curb losses
Experts in the insurance industry say that these measures will help in curbing the losses for insurers. It is also expected to help in speedy settlement of claims by insurers.
“Sixty per cent of losses in the general insurance industry is due to the deficiency of third party premiums. This proposal will limit exposure in line with air travel and rail travel,” said Mr Amarnath Ananthanarayanan, MD and CEO, Bharti Axa General Insurance
“It is a comprehensive draft and it will be beneficial to insurers and consumers as well. It will expedite claims settlement and reduce litigation costs,” said a legal head of a private general insurance company.
Bleeding portfolio
The third party commercial vehicle portfolio is a bleeding portfolio, where the general insurance industry is faced with a loss of Rs 10,000 crore in the current financial year, as the insurance regulator, IRDA, increased the provisioning requirement for the commercial third-party motor pool to 163-213 per cent from 153 per cent.
The claims ratios in this segment is estimated at 150 per cent of the total premiums collected.
Insurers have been demanding a cap in the liability amount and time-limit to solve the problem of high claims-ratio as, at present, there is no such limit.
“The administrative control of law relating to road accident compensation and insurance of motorised vehicles shall now be with the Ministry of Finance. Hence, Section 140 to Section 176 of the M V Act, 1988 will be rechristened as The Motor Vehicles Insurance and Compensation Act, 2011 and the same will be taken out of the existing Motor Vehicle Act,1988,” the draft said.
“It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”
The draft put forth by the Finance Ministry, proposes a cap of Rs 10 lakh on third-party compensation or on the liability arising out of death or body injury caused to a third party by any vehicle on road. The draft also says that claims have to be filed within three years of an accident.
Will help curb losses
Experts in the insurance industry say that these measures will help in curbing the losses for insurers. It is also expected to help in speedy settlement of claims by insurers.
“Sixty per cent of losses in the general insurance industry is due to the deficiency of third party premiums. This proposal will limit exposure in line with air travel and rail travel,” said Mr Amarnath Ananthanarayanan, MD and CEO, Bharti Axa General Insurance
“It is a comprehensive draft and it will be beneficial to insurers and consumers as well. It will expedite claims settlement and reduce litigation costs,” said a legal head of a private general insurance company.
Bleeding portfolio
The third party commercial vehicle portfolio is a bleeding portfolio, where the general insurance industry is faced with a loss of Rs 10,000 crore in the current financial year, as the insurance regulator, IRDA, increased the provisioning requirement for the commercial third-party motor pool to 163-213 per cent from 153 per cent.
The claims ratios in this segment is estimated at 150 per cent of the total premiums collected.
Insurers have been demanding a cap in the liability amount and time-limit to solve the problem of high claims-ratio as, at present, there is no such limit.
Motor insurance: Rs 10- lakh cap proppsed on third party claims
The Finance Ministry has initiated a Bill to separate motor insurance from The Motor Vehicle Act, 1988. A new law has been a long-pending demand of insurers.
“The administrative control of law relating to road accident compensation and insurance of motorised vehicles shall now be with the Ministry of Finance. Hence, Section 140 to Section 176 of the M V Act, 1988 will be rechristened as The Motor Vehicles Insurance and Compensation Act, 2011 and the same will be taken out of the existing Motor Vehicle Act,1988,” the draft said.
“It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”
The draft put forth by the Finance Ministry, proposes a cap of Rs 10 lakh on third-party compensation or on the liability arising out of death or body injury caused to a third party by any vehicle on road. The draft also says that claims have to be filed within three years of an accident.
Will help curb losses
Experts in the insurance industry say that these measures will help in curbing the losses for insurers. It is also expected to help in speedy settlement of claims by insurers.
“Sixty per cent of losses in the general insurance industry is due to the deficiency of third party premiums. This proposal will limit exposure in line with air travel and rail travel,” said Mr Amarnath Ananthanarayanan, MD and CEO, Bharti Axa General Insurance
“It is a comprehensive draft and it will be beneficial to insurers and consumers as well. It will expedite claims settlement and reduce litigation costs,” said a legal head of a private general insurance company.
Bleeding portfolio
The third party commercial vehicle portfolio is a bleeding portfolio, where the general insurance industry is faced with a loss of Rs 10,000 crore in the current financial year, as the insurance regulator, IRDA, increased the provisioning requirement for the commercial third-party motor pool to 163-213 per cent from 153 per cent.
The claims ratios in this segment is estimated at 150 per cent of the total premiums collected.
Insurers have been demanding a cap in the liability amount and time-limit to solve the problem of high claims-ratio as, at present, there is no such limit.
“The administrative control of law relating to road accident compensation and insurance of motorised vehicles shall now be with the Ministry of Finance. Hence, Section 140 to Section 176 of the M V Act, 1988 will be rechristened as The Motor Vehicles Insurance and Compensation Act, 2011 and the same will be taken out of the existing Motor Vehicle Act,1988,” the draft said.
“It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”
The draft put forth by the Finance Ministry, proposes a cap of Rs 10 lakh on third-party compensation or on the liability arising out of death or body injury caused to a third party by any vehicle on road. The draft also says that claims have to be filed within three years of an accident.
Will help curb losses
Experts in the insurance industry say that these measures will help in curbing the losses for insurers. It is also expected to help in speedy settlement of claims by insurers.
“Sixty per cent of losses in the general insurance industry is due to the deficiency of third party premiums. This proposal will limit exposure in line with air travel and rail travel,” said Mr Amarnath Ananthanarayanan, MD and CEO, Bharti Axa General Insurance
“It is a comprehensive draft and it will be beneficial to insurers and consumers as well. It will expedite claims settlement and reduce litigation costs,” said a legal head of a private general insurance company.
Bleeding portfolio
The third party commercial vehicle portfolio is a bleeding portfolio, where the general insurance industry is faced with a loss of Rs 10,000 crore in the current financial year, as the insurance regulator, IRDA, increased the provisioning requirement for the commercial third-party motor pool to 163-213 per cent from 153 per cent.
The claims ratios in this segment is estimated at 150 per cent of the total premiums collected.
Insurers have been demanding a cap in the liability amount and time-limit to solve the problem of high claims-ratio as, at present, there is no such limit.
Bearish bets on Hero Near nine month Month high
Futures traders are the most bearish on Hero Motocorp Ltd. in nine months on concerns sales of India’s largest two-wheeler manufacturer will slow amid competition from overseas rivals.
The futures settled at 1,817 rupees, a 44-point discount to the underlying shares that’s near the widest since April, data compiled by Bloomberg show. Open interest, or the number of outstanding contracts held by traders, totaled 18,217 at 4:19 p.m. in Mumbai, the highest since June, the data show.
Sales of two-wheelers in Asia’s third-biggest economy rose 15 percent in the April-December period, compared with the 28 percent pace a year earlier, as a record run of borrowing-cost increases by the central bank curbed demand, according to the Society of Indian Automobile Manufacturers. Yamaha Motor Co., Suzuki Motor Corp. and Honda Motor Co. have all announced plans to add motorcycle capacity in the country.
“While demand is still looking good, the competitive intensity in the two-wheeler segment is rising with the entry of new players,” Gopal Agrawal, chief investment officer at the Indian unit of South Korea’s Mirae Asset Financial Group, said in Mumbai. “That would lead to a division of market share and pressure profits.”
HMCL, a maker of almost half the motorcycles sold in the country, may say tomorrow net income in the December quarter jumped 45 percent to 6.24 billion rupees ($123 million) from a year earlier, according to the median estimate of 29 analysts in a Bloomberg survey.
Stock Rating
Shares of HMCL still have lowest consensus rating among 30 companies in the Sensex, data compiled by Bloomberg show. The stock is rated “sell” by 26 of the 66 analysts who track it, “hold” by 16 and “buy” by 23 others, giving the New Delhi- based company a score of 2.89 out of a possible 5.Bajaj Auto Ltd., India’s second-biggest motorcycle maker, has a consensus rating of 3.85 and TVS Motor Company Ltd. has a rating of 3.93, the data show.
“Falling share price combined with rising open interest and the discount between the underlying stock and its futures shows an accumulation of bearish bets,” said Indrajit Sen, a derivatives analyst at Fortune Financial Services India Ltd. in Mumbai. He has advised clients to take short positions because he expects the stock to decline 10 percent.
HMCL shares rose 1.8 percent to 1,860 rupees at the 3:30 p.m. close in Mumbai, its third day of gain. The stock fell 4.2 percent last year, its first annual loss in four years.
“The shares are rallying on expectation the company may announce a dividend even though results may not deliver any surprise,” Axis Securities Ltd., a subsidiary of India’s third- biggest non-state lender, said by e-mail today.
HMCL’s has a five-year dividend growth rate of 39 percent, the second highest after Bharat Heavy Electricals Ltd. among the 30 companies in the benchmark BSE India Sensitive Index, data compiled by Bloomberg show.
The futures settled at 1,817 rupees, a 44-point discount to the underlying shares that’s near the widest since April, data compiled by Bloomberg show. Open interest, or the number of outstanding contracts held by traders, totaled 18,217 at 4:19 p.m. in Mumbai, the highest since June, the data show.
Sales of two-wheelers in Asia’s third-biggest economy rose 15 percent in the April-December period, compared with the 28 percent pace a year earlier, as a record run of borrowing-cost increases by the central bank curbed demand, according to the Society of Indian Automobile Manufacturers. Yamaha Motor Co., Suzuki Motor Corp. and Honda Motor Co. have all announced plans to add motorcycle capacity in the country.
“While demand is still looking good, the competitive intensity in the two-wheeler segment is rising with the entry of new players,” Gopal Agrawal, chief investment officer at the Indian unit of South Korea’s Mirae Asset Financial Group, said in Mumbai. “That would lead to a division of market share and pressure profits.”
HMCL, a maker of almost half the motorcycles sold in the country, may say tomorrow net income in the December quarter jumped 45 percent to 6.24 billion rupees ($123 million) from a year earlier, according to the median estimate of 29 analysts in a Bloomberg survey.
Stock Rating
Shares of HMCL still have lowest consensus rating among 30 companies in the Sensex, data compiled by Bloomberg show. The stock is rated “sell” by 26 of the 66 analysts who track it, “hold” by 16 and “buy” by 23 others, giving the New Delhi- based company a score of 2.89 out of a possible 5.Bajaj Auto Ltd., India’s second-biggest motorcycle maker, has a consensus rating of 3.85 and TVS Motor Company Ltd. has a rating of 3.93, the data show.
“Falling share price combined with rising open interest and the discount between the underlying stock and its futures shows an accumulation of bearish bets,” said Indrajit Sen, a derivatives analyst at Fortune Financial Services India Ltd. in Mumbai. He has advised clients to take short positions because he expects the stock to decline 10 percent.
HMCL shares rose 1.8 percent to 1,860 rupees at the 3:30 p.m. close in Mumbai, its third day of gain. The stock fell 4.2 percent last year, its first annual loss in four years.
“The shares are rallying on expectation the company may announce a dividend even though results may not deliver any surprise,” Axis Securities Ltd., a subsidiary of India’s third- biggest non-state lender, said by e-mail today.
HMCL’s has a five-year dividend growth rate of 39 percent, the second highest after Bharat Heavy Electricals Ltd. among the 30 companies in the benchmark BSE India Sensitive Index, data compiled by Bloomberg show.
Bajaj bets big on new bikes to rev up growth
Bajaj Auto is betting big on new bike launches to keep its growth momentum ticking through 2012-13.
Tuesday, January 24, will see the first KTM offering, the 200 Duke, showcased in New Delhi. Bajaj Auto has a 39 per cent stake in the Austrian motorcycle company and will produce the bike at its Chakan plant near Pune.
“We expect this initiative to bring enormous energy into our system. Customers who visit our showrooms will hopefully be impressed with what they see and overall sentiment will be lifted in the process,” Mr Rajiv Bajaj, Managing Director, told Business Line.
NEW PULSAR RANGE
On January 30, the company will unveil in Mumbai the first of its all-new Pulsar range, which will be part of the mid-sports category.
This will mark 10 years of its launch during which time the brand has emerged the leader in the sports segment.
More importantly, the Pulsar was a game-changer for Bajaj Auto in motorcycles and helped reinforce its decision to exit the scooter business.
“I am confident that the new Pulsar will be the most stunning sports bike in the world. It is also my belief that as much as DTS-i took the market by storm, the new technology in the Pulsar will shake up the market this decade,” Mr Bajaj said.
By June, another all-new product will be launched, albeit more in the volumes space which suggests that it could be part of the Discover family.
At present, the company offers three options (100, 125 and 150cc) and it will be interesting to see how the brand new commuter will grow the (Discover) success story.
The new technology for the Pulsar could also be extended to the Discover range keeping in line with Bajaj Auto's focus on ‘innovation for mass consumption'.
“Our strategy is to be a bike specialist. We have every reason to believe that 2012-13 will be an exciting period where we can produce something special for customers both here and abroad,” Mr Bajaj said.
EXPORT MARKET
This makes sense given that exports already account for 35 per cent of the company's business and this component will only increase in the coming years.
Africa has already been identified as the key growth driver, in addition to Asia, while the KTM association could help Bajaj Auto make inroads into Brazil as part of the bigger Latin America journey.
OUTPUT TARGET
The company hopes to wrap up this fiscal with production of over 4.4 million bikes and three-wheelers and the new launches in 2012-13 are expected to give a fillip to the growth tempo.
The fourth plant may have to wait a while longer since the existing units in Chakan, Waluj and Pantnagar can meet production needs for the moment.
“We have an astute business model with strong front and back-ends. We know that we are a volumes player but this does not have to translate into mediocre profitability.
“As much as it is common to find high profitability with low volumes, we are striving for fairly high profitability with fairly high volumes,” Mr Bajaj said.
Tuesday, January 24, will see the first KTM offering, the 200 Duke, showcased in New Delhi. Bajaj Auto has a 39 per cent stake in the Austrian motorcycle company and will produce the bike at its Chakan plant near Pune.
“We expect this initiative to bring enormous energy into our system. Customers who visit our showrooms will hopefully be impressed with what they see and overall sentiment will be lifted in the process,” Mr Rajiv Bajaj, Managing Director, told Business Line.
NEW PULSAR RANGE
On January 30, the company will unveil in Mumbai the first of its all-new Pulsar range, which will be part of the mid-sports category.
This will mark 10 years of its launch during which time the brand has emerged the leader in the sports segment.
More importantly, the Pulsar was a game-changer for Bajaj Auto in motorcycles and helped reinforce its decision to exit the scooter business.
“I am confident that the new Pulsar will be the most stunning sports bike in the world. It is also my belief that as much as DTS-i took the market by storm, the new technology in the Pulsar will shake up the market this decade,” Mr Bajaj said.
By June, another all-new product will be launched, albeit more in the volumes space which suggests that it could be part of the Discover family.
At present, the company offers three options (100, 125 and 150cc) and it will be interesting to see how the brand new commuter will grow the (Discover) success story.
The new technology for the Pulsar could also be extended to the Discover range keeping in line with Bajaj Auto's focus on ‘innovation for mass consumption'.
“Our strategy is to be a bike specialist. We have every reason to believe that 2012-13 will be an exciting period where we can produce something special for customers both here and abroad,” Mr Bajaj said.
EXPORT MARKET
This makes sense given that exports already account for 35 per cent of the company's business and this component will only increase in the coming years.
Africa has already been identified as the key growth driver, in addition to Asia, while the KTM association could help Bajaj Auto make inroads into Brazil as part of the bigger Latin America journey.
OUTPUT TARGET
The company hopes to wrap up this fiscal with production of over 4.4 million bikes and three-wheelers and the new launches in 2012-13 are expected to give a fillip to the growth tempo.
The fourth plant may have to wait a while longer since the existing units in Chakan, Waluj and Pantnagar can meet production needs for the moment.
“We have an astute business model with strong front and back-ends. We know that we are a volumes player but this does not have to translate into mediocre profitability.
“As much as it is common to find high profitability with low volumes, we are striving for fairly high profitability with fairly high volumes,” Mr Bajaj said.
Rupee, price increases help Bajaj Auto rev up profits
Adjusting for the notional mark-to-market loss of Rs 59 crore on hedging contracts, Bajaj Auto's third quarter profits have grown by a very healthy 28 per cent, year on year. A strong operational performance coupled with flat depreciation charges and lower interest costs have been the major reasons behind this growth.
Rupee fall helps
The operational performance has been aided predominantly by higher export realisations as the company derives 35 per cent of its revenues from exports.
Thanks to the continued depreciation of the rupee against the dollar during this period, exports fetched an average of Rs 49.4 to a dollar against Rs 46.5 in Q1 and Rs 47.8 in Q2.
This, coupled with price hikes, has helped the margins. Through these price hikes, the company was able to shield itself against increase in input costs (due to import content of raw materials) and make up for the reduction in benefit under the DEPB scheme.
Operating margins in the third quarter expanded to 20.9 per cent, compared with the 20.3 per cent in the same period last year.
Volume concerns
However, these factors hide the not-so-strong performance on the volume front. For the third successive quarter, volumes have fallen short of the company's target of 20 per cent growth.
Volumes now have grown only by 13.6 per cent. Domestic motorcycle sales, showing only a 7 per cent year-on-year growth, have been the dampener.
While this may be in tune with the industry growth itself moderating since mid-November, it is too early to predict whether this is a one-off factor or a trend that will continue.
A portion of the tapering off of demand can also be attributed to the lull after the festival season sales; hence, the need to wait and watch.
But the company has scaled down its volume growth target for this fiscal to 16 per cent.
While this may still become difficult to achieve if the moderation witnessed in December continues, a couple of things may help the company.
One, the soon-to-be launched KTM 200 and the upcoming Pulsar upgrade. Two, sustained export performance.
Rupee fall helps
The operational performance has been aided predominantly by higher export realisations as the company derives 35 per cent of its revenues from exports.
Thanks to the continued depreciation of the rupee against the dollar during this period, exports fetched an average of Rs 49.4 to a dollar against Rs 46.5 in Q1 and Rs 47.8 in Q2.
This, coupled with price hikes, has helped the margins. Through these price hikes, the company was able to shield itself against increase in input costs (due to import content of raw materials) and make up for the reduction in benefit under the DEPB scheme.
Operating margins in the third quarter expanded to 20.9 per cent, compared with the 20.3 per cent in the same period last year.
Volume concerns
However, these factors hide the not-so-strong performance on the volume front. For the third successive quarter, volumes have fallen short of the company's target of 20 per cent growth.
Volumes now have grown only by 13.6 per cent. Domestic motorcycle sales, showing only a 7 per cent year-on-year growth, have been the dampener.
While this may be in tune with the industry growth itself moderating since mid-November, it is too early to predict whether this is a one-off factor or a trend that will continue.
A portion of the tapering off of demand can also be attributed to the lull after the festival season sales; hence, the need to wait and watch.
But the company has scaled down its volume growth target for this fiscal to 16 per cent.
While this may still become difficult to achieve if the moderation witnessed in December continues, a couple of things may help the company.
One, the soon-to-be launched KTM 200 and the upcoming Pulsar upgrade. Two, sustained export performance.
Hero Motocorp net rises 43% to Rs 613 crore
Hero MotoCorp has registered a net profit growth of 43 per cent at Rs 613 crore for the reporting quarter on the back of better growth in income from operations, the country’s biggest two-wheeler maker said on Thursday.
The Delhi-based company (formerly Hero Honda Motors), had last year posted a Rs 429-crore net profit during the same quarter. That was when it had set aside a sum of Rs 80 crore in lieu of probable claims arising out of litigation, which was not there this year.
The net profit was largely in line with market analysts tracking the company who expected it to be in the region of Rs 610-620 crore. Its stock closed 2.35 per cent higher at Rs 1900.75 as against its yesterday’s close of Rs 1,857.15.
The company’s net sales grew by 17 per cent to Rs 5,983 crore during the quarter as against Rs 5,118 crore posted in the corresponding quarter last year. The absolute sales grew 11.3 per cent to 1,589,286 units as compared to 1,428,030 units. The company said it was now on course to meet its target of selling six million two-wheelers in the current financial year.
The Delhi-based company (formerly Hero Honda Motors), had last year posted a Rs 429-crore net profit during the same quarter. That was when it had set aside a sum of Rs 80 crore in lieu of probable claims arising out of litigation, which was not there this year.
The net profit was largely in line with market analysts tracking the company who expected it to be in the region of Rs 610-620 crore. Its stock closed 2.35 per cent higher at Rs 1900.75 as against its yesterday’s close of Rs 1,857.15.
The company’s net sales grew by 17 per cent to Rs 5,983 crore during the quarter as against Rs 5,118 crore posted in the corresponding quarter last year. The absolute sales grew 11.3 per cent to 1,589,286 units as compared to 1,428,030 units. The company said it was now on course to meet its target of selling six million two-wheelers in the current financial year.
Hero's royalty payment to Honda may rise this fiscal on weak rupee
New Delhi: Hero MotoCorp Ltd, India’s largest two-wheeler company by vehicles sold, will pay more royalty in the year to 31 March to its erstwhile joint venture partner, Honda Motor Co. Ltd, because the rupee has depreciated against the Japanese yen.
The royalty to Honda has risen to Rs. 228 crore in the three months ended 31 December from Rs. 180 crore in the first quarter. Hero MotoCorp estimates its royalty payment in the current quarter will not exceed what it paid in the preceding quarter.
“The rupee has had an unprecedented decline in the last couple of quarters,” Ravi Sud, Hero MotoCorp chief financial officer, said in an investors’ call on Friday. “As a result, our royalty payment has gone up. But we expect the Indian currency to stabilize in the coming fiscal.”
The rupee declined 20% against the dollar in the four months between August and November, making imports costlier for companies that depend on them to build cars. The Indian currency has weakened 22% against the yen in the past five months.
Hero MotoCorp is expected to pay a lump sum of Rs. 2,350 crore, or at least Rs. 180 crore per quarter, as royalty to Honda till June 2014 as a part of a licensing agreement.
The payments will be made in March of 2012, 2013, 2014 and June 2014. These won’t be equal instalments, but as far as a charge to the profit and loss account is concerned, the cost will be spread equally over three-and-a-half years, or 14 quarters, Sud said.
In this fiscal, Hero has already paid Rs. 618 crore in royalty. It will pay a fixed amount of Rs. 180 crore or more in the last quarter subject to currecncy fluctuations.
“The overall royalty payment for the fiscal will definitely go up,” said Jinesh Gandhi, an analyst at Mumbai-based Motilal Oswal Securities Ltd. “This should have some impact on the company’s margins in the coming quarters. However, the company is not hedged and expects the economic conditions to improve in the longer term.”
During the investor call, the New Delhi-based firm also said it is in the process of identifying new dealers in countries where it sells its products through outlets owned by Honda.
“Gradually, we will stop selling our bikes (in) Honda showrooms,” said Anil Dua, senior vice-president, marketing and sales, Hero MotoCorp. “We will either have independent dealerships or outlets with different legal identities.”
However, Hero has deferred its plans to enter other markets till next fiscal. Earlier, it had plans to enter markets such as Latin America, Africa and West Asia by January 2012.
“We are completing our strategy, business model and partners to enter the newer markets,” said Dua. “We should be able to start our operations in the next couple of quarters.”
Contractual commitments with Honda meant Hero MotoCorp had to ignore the lucrative motorcycle exports market.
On the technology front, the company said it has signed some long-term contracts with engine makers and design houses, and is also developing its own research capability.
“To develop our own engine capability is a long-term goal. We are adding talent. We are in the process of some long-term contracts. We have tied up with some international consultants. Later on, maybe we would look at a joint venture and may be acquiring some design house,” Sud said. The company has hired at least 255 engineers at its Gurgaon development centre.
The company said it will be able to develop its own bikes by 2015. “Usually, it takes two to two-and-a-half years to develop a new product. But we should be able to launch our own product in three to three-and-a-half years from the date of separation,” Dua said. Hero also said it will boost its capacity to seven million units in fiscal 2013 from the current 6.4 million.
The royalty to Honda has risen to Rs. 228 crore in the three months ended 31 December from Rs. 180 crore in the first quarter. Hero MotoCorp estimates its royalty payment in the current quarter will not exceed what it paid in the preceding quarter.
“The rupee has had an unprecedented decline in the last couple of quarters,” Ravi Sud, Hero MotoCorp chief financial officer, said in an investors’ call on Friday. “As a result, our royalty payment has gone up. But we expect the Indian currency to stabilize in the coming fiscal.”
The rupee declined 20% against the dollar in the four months between August and November, making imports costlier for companies that depend on them to build cars. The Indian currency has weakened 22% against the yen in the past five months.
Hero MotoCorp is expected to pay a lump sum of Rs. 2,350 crore, or at least Rs. 180 crore per quarter, as royalty to Honda till June 2014 as a part of a licensing agreement.
The payments will be made in March of 2012, 2013, 2014 and June 2014. These won’t be equal instalments, but as far as a charge to the profit and loss account is concerned, the cost will be spread equally over three-and-a-half years, or 14 quarters, Sud said.
In this fiscal, Hero has already paid Rs. 618 crore in royalty. It will pay a fixed amount of Rs. 180 crore or more in the last quarter subject to currecncy fluctuations.
“The overall royalty payment for the fiscal will definitely go up,” said Jinesh Gandhi, an analyst at Mumbai-based Motilal Oswal Securities Ltd. “This should have some impact on the company’s margins in the coming quarters. However, the company is not hedged and expects the economic conditions to improve in the longer term.”
During the investor call, the New Delhi-based firm also said it is in the process of identifying new dealers in countries where it sells its products through outlets owned by Honda.
“Gradually, we will stop selling our bikes (in) Honda showrooms,” said Anil Dua, senior vice-president, marketing and sales, Hero MotoCorp. “We will either have independent dealerships or outlets with different legal identities.”
However, Hero has deferred its plans to enter other markets till next fiscal. Earlier, it had plans to enter markets such as Latin America, Africa and West Asia by January 2012.
“We are completing our strategy, business model and partners to enter the newer markets,” said Dua. “We should be able to start our operations in the next couple of quarters.”
Contractual commitments with Honda meant Hero MotoCorp had to ignore the lucrative motorcycle exports market.
On the technology front, the company said it has signed some long-term contracts with engine makers and design houses, and is also developing its own research capability.
“To develop our own engine capability is a long-term goal. We are adding talent. We are in the process of some long-term contracts. We have tied up with some international consultants. Later on, maybe we would look at a joint venture and may be acquiring some design house,” Sud said. The company has hired at least 255 engineers at its Gurgaon development centre.
The company said it will be able to develop its own bikes by 2015. “Usually, it takes two to two-and-a-half years to develop a new product. But we should be able to launch our own product in three to three-and-a-half years from the date of separation,” Dua said. Hero also said it will boost its capacity to seven million units in fiscal 2013 from the current 6.4 million.
Hero on new tech hunt
Ties up with Austria’s AVL & UK’s Ricardo for independent model development capabilities
After parting ways with Honda, Hero MotoCorp is set to firm up technology alliances with overseas firms like Austria-based AVL and UK-based Ricardo to create independent model development capabilities.
“To develop our own capabilities, we are tying up with some international companies like AVL or Ricardo. We are in the final stages of tying up for new platforms and engines,” Ravi Sud, chief financial officer, Hero MotoCorp, told analysts on a post-earnings call on Friday.
Austria-based AVL (Anstalt für Verbrennung skraftmaschinen List) is one of the largest privately owned firms specialising in powertrain engineering. Britain’s Ricardo, a global provider of product innovation, engineering solutions, clean technology and strategic consulting is publicly listed on the London stock exchange. AVL and Ricardo are both already present in India with head offices in New Delhi.
The world’s largest two-wheeler maker by volumes is open to forming multiple technology alliances or joint ventures for engines and platforms as well as acquiring design houses. Sud revealed that the company has been sprucing up its own research and development (R&D) capabilities this financial year by adding 80 more engineers. Total R&D strength of the company stands at 255 engineers and is set to go up further as it prepares to go solo sans Honda’s help by 2017.
Hero MotoCorp proposes to roll out its first self-developed two-wheeler in the next two to two-and-a-half years. “We are pretty sure that in about three-to-three-and-a-half years from the day we separated, we should be able to launch our own products,” Sud said. Munjals-promoted Hero and Honda Motor parted ways in December 2010.
Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp, pointed out that Hero MotoCorp would continue to improvise its core product portfolio comprising Splendor, Passion, Karizma and Pleasure with new features through its own capabilities after the split. In immediate term, the company plans to raise overall production to seven million units annually by the end of March 2012, Dua said. The company currently has an overall capacity of 6.2 million units at its plants in Gurgaon, Dharuhera and Haridwar.
“We expect our sales to grow 11 to 13 per cent during 2012-13,” Dua said. The company aims to sell in excess of six million units during 2011-12. While the growth is coming from both rural and urban areas for the company, Dua said about a fourth of new two-wheeler purchases taking place in the country were replacement sales. The company plans to grow its distribution network to over 5,000 touch points by end of current fiscal. Dua said ‘most’ of the 5,000 touch points include sales points but all these touch points already have service stations.
As regards exports, the company will start exploring new markets like Africa, North America and South East Asia. “These will be distributor-led markets. A distributor will manage about 100 sales points. These dealerships will sell all other brands for example Honda as well as Hero,” Dua said. Meanwhile, with planned launch of new scooter Impulse, the company has raised scooter production levels to 50,000 per month. Shares of Hero MotoCorp rose three per cent to close at Rs 1,950 at close on Bombay stock exchange on Friday.
After parting ways with Honda, Hero MotoCorp is set to firm up technology alliances with overseas firms like Austria-based AVL and UK-based Ricardo to create independent model development capabilities.
“To develop our own capabilities, we are tying up with some international companies like AVL or Ricardo. We are in the final stages of tying up for new platforms and engines,” Ravi Sud, chief financial officer, Hero MotoCorp, told analysts on a post-earnings call on Friday.
Austria-based AVL (Anstalt für Verbrennung skraftmaschinen List) is one of the largest privately owned firms specialising in powertrain engineering. Britain’s Ricardo, a global provider of product innovation, engineering solutions, clean technology and strategic consulting is publicly listed on the London stock exchange. AVL and Ricardo are both already present in India with head offices in New Delhi.
The world’s largest two-wheeler maker by volumes is open to forming multiple technology alliances or joint ventures for engines and platforms as well as acquiring design houses. Sud revealed that the company has been sprucing up its own research and development (R&D) capabilities this financial year by adding 80 more engineers. Total R&D strength of the company stands at 255 engineers and is set to go up further as it prepares to go solo sans Honda’s help by 2017.
Hero MotoCorp proposes to roll out its first self-developed two-wheeler in the next two to two-and-a-half years. “We are pretty sure that in about three-to-three-and-a-half years from the day we separated, we should be able to launch our own products,” Sud said. Munjals-promoted Hero and Honda Motor parted ways in December 2010.
Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp, pointed out that Hero MotoCorp would continue to improvise its core product portfolio comprising Splendor, Passion, Karizma and Pleasure with new features through its own capabilities after the split. In immediate term, the company plans to raise overall production to seven million units annually by the end of March 2012, Dua said. The company currently has an overall capacity of 6.2 million units at its plants in Gurgaon, Dharuhera and Haridwar.
“We expect our sales to grow 11 to 13 per cent during 2012-13,” Dua said. The company aims to sell in excess of six million units during 2011-12. While the growth is coming from both rural and urban areas for the company, Dua said about a fourth of new two-wheeler purchases taking place in the country were replacement sales. The company plans to grow its distribution network to over 5,000 touch points by end of current fiscal. Dua said ‘most’ of the 5,000 touch points include sales points but all these touch points already have service stations.
As regards exports, the company will start exploring new markets like Africa, North America and South East Asia. “These will be distributor-led markets. A distributor will manage about 100 sales points. These dealerships will sell all other brands for example Honda as well as Hero,” Dua said. Meanwhile, with planned launch of new scooter Impulse, the company has raised scooter production levels to 50,000 per month. Shares of Hero MotoCorp rose three per cent to close at Rs 1,950 at close on Bombay stock exchange on Friday.
Bajaj Auto will debut first KTM bike next month
Bajaj Auto, India’s second-largest two-wheeler maker, will roll out the first KTM bike in India in a few weeks.
The company is positive about the prospects of the Austrian bike maker’s products in the Indian market after their successful run in Europe.
Bajaj Auto holds a 38.09% stake in KTM, and according to reports, was looking to raise it to 49%.
The first bike to debut would be the KTM Duke 200, though it will not be displayed at the Auto Expo in New Delhi next month. The launch was earlier scheduled for the current year-end.
The 200cc Duke will be assembled at Bajaj Auto’s Chakan plant. The company had already started manufacturing these bikes in India for the European market, where KTM 125 was introduced a few months back.
The two companies signed an agreement in 2008 for jointly developing 125cc bikes in India for exports to the European market under the KTM brand.
“The bike is already leading the segment in the European market and we are all geared up for KTM’s entry in India,” said Amit Nandi, business head (KTM) for Bajaj Auto.
He said KTM Duke will be sold through company’s probiking showrooms, which currently sell Kawasaki bikes.
“We are in the process of converting these probiking showrooms into KTM showrooms.” The company currently has 30-35 such showrooms across in India and the Pune showroom has already been converted into KTM one.
Nandi said the Kawasaki bikes will continue to be sold through these showrooms. Currently, probiking contributes around 3,500 vehicles a month to the overall volumes of Bajaj Auto.
The KTM bikes will be offered in the range of Rs1-1.5 lakh and Bajaj Auto will launch more models going ahead.
Bajaj Auto will utilise the digital space for branding the new product.
“These are youthful and edgy bikes. It’s meant for people who are young at heart and will flaunt KTM’s signature colour - orange. The bikes are lightweight and fast, which will appeal to the target customers,” said Nandi.
The company is positive about the prospects of the Austrian bike maker’s products in the Indian market after their successful run in Europe.
Bajaj Auto holds a 38.09% stake in KTM, and according to reports, was looking to raise it to 49%.
The first bike to debut would be the KTM Duke 200, though it will not be displayed at the Auto Expo in New Delhi next month. The launch was earlier scheduled for the current year-end.
The 200cc Duke will be assembled at Bajaj Auto’s Chakan plant. The company had already started manufacturing these bikes in India for the European market, where KTM 125 was introduced a few months back.
The two companies signed an agreement in 2008 for jointly developing 125cc bikes in India for exports to the European market under the KTM brand.
“The bike is already leading the segment in the European market and we are all geared up for KTM’s entry in India,” said Amit Nandi, business head (KTM) for Bajaj Auto.
He said KTM Duke will be sold through company’s probiking showrooms, which currently sell Kawasaki bikes.
“We are in the process of converting these probiking showrooms into KTM showrooms.” The company currently has 30-35 such showrooms across in India and the Pune showroom has already been converted into KTM one.
Nandi said the Kawasaki bikes will continue to be sold through these showrooms. Currently, probiking contributes around 3,500 vehicles a month to the overall volumes of Bajaj Auto.
The KTM bikes will be offered in the range of Rs1-1.5 lakh and Bajaj Auto will launch more models going ahead.
Bajaj Auto will utilise the digital space for branding the new product.
“These are youthful and edgy bikes. It’s meant for people who are young at heart and will flaunt KTM’s signature colour - orange. The bikes are lightweight and fast, which will appeal to the target customers,” said Nandi.
Automakers get socially active before Auto Expo
With hardly a week to go for the nation’s biggest auto show, automobile companies are riding piggyback on social media bandwagon to grab eyeballs to liven up their entries.
Iconic brands gearing up for royal debuts have already created their India-specific websites and fan pages on social media networks such as Facebook. These brands include Mini, Triumph, KTM and Peugeot Citroen.
Steadily rising influence of internet on prospective car buyers, especially the young, is driving companies’ ambitions to give a fillip to brand promotion through social media. BMW’s luxury marque Mini’s fan page created a fortnight ago, is already closing-in on whopping 50,000 followers on facebook, way ahead of established rivals like Volkswagen India who took nearly two years to reach 50,000 fans.
Mini’s official website says ‘Namaste India’ with a running countdown to the launch of Mini Cooper cars scheduled for January 5, 2012. “Mini will debut as a premium brand in India with launch of Mini, Mini countryman and Mini convertible,” a BMW official said. The British brand will be sold under a separate dealership network and the company has devised a strategic team to look after the Mini’s launch activities in India. The Mini cars are expected to cost upwards of Rs 25 lakh.
Another British iconic brand Triumph motorcycles is giving a taste of its motorcycling heritage to fans with videos and photos of its Bonneville Black, Rocket 3 and Speed Triple models on its Facebook page. Bajaj Auto that is bringing Austria’s KTM bikes to India at the Auto Expo, has already put teaser images of Duke 200 motorcycle to be launched at the event.
“Social media is picking up in India and is going to be order of the day as a new tool for companies to highlight their product features,” said Abdul Majeed, auto practice leader, PricewaterhouseCoopers. Unlike expensive mediums such as television, print and public hoardings, social media advertising is a cheap way to grab customer attention.
Peugeot that is making its reentry into India is rolling out online advertisements showing its Accord-competing ‘508’ Saloon. The biannual Auto Expo will be held between January 5 –11 this January.
Iconic brands gearing up for royal debuts have already created their India-specific websites and fan pages on social media networks such as Facebook. These brands include Mini, Triumph, KTM and Peugeot Citroen.
Steadily rising influence of internet on prospective car buyers, especially the young, is driving companies’ ambitions to give a fillip to brand promotion through social media. BMW’s luxury marque Mini’s fan page created a fortnight ago, is already closing-in on whopping 50,000 followers on facebook, way ahead of established rivals like Volkswagen India who took nearly two years to reach 50,000 fans.
Mini’s official website says ‘Namaste India’ with a running countdown to the launch of Mini Cooper cars scheduled for January 5, 2012. “Mini will debut as a premium brand in India with launch of Mini, Mini countryman and Mini convertible,” a BMW official said. The British brand will be sold under a separate dealership network and the company has devised a strategic team to look after the Mini’s launch activities in India. The Mini cars are expected to cost upwards of Rs 25 lakh.
Another British iconic brand Triumph motorcycles is giving a taste of its motorcycling heritage to fans with videos and photos of its Bonneville Black, Rocket 3 and Speed Triple models on its Facebook page. Bajaj Auto that is bringing Austria’s KTM bikes to India at the Auto Expo, has already put teaser images of Duke 200 motorcycle to be launched at the event.
“Social media is picking up in India and is going to be order of the day as a new tool for companies to highlight their product features,” said Abdul Majeed, auto practice leader, PricewaterhouseCoopers. Unlike expensive mediums such as television, print and public hoardings, social media advertising is a cheap way to grab customer attention.
Peugeot that is making its reentry into India is rolling out online advertisements showing its Accord-competing ‘508’ Saloon. The biannual Auto Expo will be held between January 5 –11 this January.
Daughters step into board rooms as SC verdict clears decks
Armed with a recent Supreme Court judgment mandating equal rights on inherited wealth, daughters from family-run businesses gently began pushing their way into company board rooms in 2011. This is a departure from settling for their dues within closed doors as per the wishes of family elders before and after marriage.
“Many female family members have started planning with the right to parents' ancestral wealth,” says Haigreve Khaitan, partner at 101-year old law firm Khaitan and Co.
Consequently, “the trend of daughters getting married into wealthy families and sons to any family have declined.”
A Hindu woman or girl will have equal property rights along with other male relatives for any partition of inherited wealth after September, 2005, the Supreme Court ruled on October 11, 2011.
A bench of justices RM Lodha and Jagdish Singh Khehar said under the Hindu Succession (Amendment) Act, 2005, daughters are entitled to equal inheritance rights along with male siblings, which was not available to them prior to the amendment in 2005.
The apex court said the female inheritors would have not only succession rights, but also the same liabilities attached to the property along with male members.
“Now, Indian businessmen of the Marwari and Gujarati communities take an undertaking from the daughter relinquishing their rights to the family wealth during the marriage,” says an industrialist who runs a R2,500-crore business.” “The new rule may find it difficult for them to give up their rights and equality may evolve over a period of time.”
Business families gift property, money and gold to their daughters during marriage. He or his firm cannot be quoted on sensitive issues.
“We are getting more inquiries from wealthy family business men on wealth planning,” says Khaitan of Khaitan and Co. “What has come to us are primarily women demanding their rights to ancestral wealth.” “Earlier, they were unaware of their rights.”
Female family members armed with prestigious business degrees are now part of many board rooms driven by succession planning. Last week, Priya Agarwal, 22, joined as additional director on the board of oil explorer Cairn Energy India owned by her billionaire father Anil Agarwal.
Priya is a management grad from Warwick School of management, from his immediate family and the youngest member on Cairn, which her father purchased for $12 billion in 2011. “The trend is obviously an extension of highly qualified women managers running successful companies,” says professor Satyajit Majumdar, who teaches management and labour studies at the Tata Institute of Social Studies. “Quality education, changing social norms and acceptance of daughters by business families will have more female members running family businesses.”
More young daughters of businessmen at family businesses are being groomed as successors. In May, 2011, TVS Motor chairman Venu Srinivasan's daughter Lakshmi Venu, 28, took over as vice-president, global business development and strategy at the group's auto component maker Sundram Clayton, as part of grooming her as successor to the country's third-largest two-wheeler maker.
Some business families have unique ways of grooming their children.
Reliance Industries's late founder Dhirubhai Ambani sent elder son Mukesh to a petrochemical plant site after he returned from Stanford School of Management and younger one Anil to learn the art of recruitment with late VV Bhatt, Reliance's human resources executive. Mukesh later built Asia's largest refinery in 19 months and Anil launched India's first 100-year bond issue to raise money.
Some lawyers disagree that Supreme Court rule helps female members a right to family assets and run companies. “I don't see the rule as reason for female members to come on board as rule has right only on ancestral wealth and not on self-made,” says Suhas Tuljapurkar, managing partner at law firm Legasis Partners. “It depends on individual aspirations.”
“Inherited wealth accumulates over a period of time and it is a question of equality,” says Khaitan of Khaitan & Co. “With a focus on the operational aspect of the business, family-owned Indian companies which have been lax in succession planning are changing fast,” says Radhika Vohra, associate director, Control Risk, a global risk consultant specialised in helping organisations manage political, integrity and security risks in complex and hostile environment. “From a corporate governance perspective, gender diversity in management with a focus on experience and expertise rather than familial relationships will result in appreciation of intrinsic shareholder value,” she said.
Gender equality is gaining momentum in small business families too. “Many small family business are keen to include both daughters and daughters-in-law in business now,” says TISS' s Majumdar who is also a consultant to many family-run businesses. “It depends on where the daughter is getting married, acceptance in the husband's family and social norms.”
“Many female family members have started planning with the right to parents' ancestral wealth,” says Haigreve Khaitan, partner at 101-year old law firm Khaitan and Co.
Consequently, “the trend of daughters getting married into wealthy families and sons to any family have declined.”
A Hindu woman or girl will have equal property rights along with other male relatives for any partition of inherited wealth after September, 2005, the Supreme Court ruled on October 11, 2011.
A bench of justices RM Lodha and Jagdish Singh Khehar said under the Hindu Succession (Amendment) Act, 2005, daughters are entitled to equal inheritance rights along with male siblings, which was not available to them prior to the amendment in 2005.
The apex court said the female inheritors would have not only succession rights, but also the same liabilities attached to the property along with male members.
“Now, Indian businessmen of the Marwari and Gujarati communities take an undertaking from the daughter relinquishing their rights to the family wealth during the marriage,” says an industrialist who runs a R2,500-crore business.” “The new rule may find it difficult for them to give up their rights and equality may evolve over a period of time.”
Business families gift property, money and gold to their daughters during marriage. He or his firm cannot be quoted on sensitive issues.
“We are getting more inquiries from wealthy family business men on wealth planning,” says Khaitan of Khaitan and Co. “What has come to us are primarily women demanding their rights to ancestral wealth.” “Earlier, they were unaware of their rights.”
Female family members armed with prestigious business degrees are now part of many board rooms driven by succession planning. Last week, Priya Agarwal, 22, joined as additional director on the board of oil explorer Cairn Energy India owned by her billionaire father Anil Agarwal.
Priya is a management grad from Warwick School of management, from his immediate family and the youngest member on Cairn, which her father purchased for $12 billion in 2011. “The trend is obviously an extension of highly qualified women managers running successful companies,” says professor Satyajit Majumdar, who teaches management and labour studies at the Tata Institute of Social Studies. “Quality education, changing social norms and acceptance of daughters by business families will have more female members running family businesses.”
More young daughters of businessmen at family businesses are being groomed as successors. In May, 2011, TVS Motor chairman Venu Srinivasan's daughter Lakshmi Venu, 28, took over as vice-president, global business development and strategy at the group's auto component maker Sundram Clayton, as part of grooming her as successor to the country's third-largest two-wheeler maker.
Some business families have unique ways of grooming their children.
Reliance Industries's late founder Dhirubhai Ambani sent elder son Mukesh to a petrochemical plant site after he returned from Stanford School of Management and younger one Anil to learn the art of recruitment with late VV Bhatt, Reliance's human resources executive. Mukesh later built Asia's largest refinery in 19 months and Anil launched India's first 100-year bond issue to raise money.
Some lawyers disagree that Supreme Court rule helps female members a right to family assets and run companies. “I don't see the rule as reason for female members to come on board as rule has right only on ancestral wealth and not on self-made,” says Suhas Tuljapurkar, managing partner at law firm Legasis Partners. “It depends on individual aspirations.”
“Inherited wealth accumulates over a period of time and it is a question of equality,” says Khaitan of Khaitan & Co. “With a focus on the operational aspect of the business, family-owned Indian companies which have been lax in succession planning are changing fast,” says Radhika Vohra, associate director, Control Risk, a global risk consultant specialised in helping organisations manage political, integrity and security risks in complex and hostile environment. “From a corporate governance perspective, gender diversity in management with a focus on experience and expertise rather than familial relationships will result in appreciation of intrinsic shareholder value,” she said.
Gender equality is gaining momentum in small business families too. “Many small family business are keen to include both daughters and daughters-in-law in business now,” says TISS' s Majumdar who is also a consultant to many family-run businesses. “It depends on where the daughter is getting married, acceptance in the husband's family and social norms.”
Scooters India Stake Sale Proposal may be Reversed
Unable to find a potential buyer for the sick PSU Scooters India Ltd (SIL), the Department of Heavy Industry has taken a U-turn on divesting stake in the company and now plans to seek PMO's approval to revive it.
"The department has decided to reverse the order to disinvest the government's stake in Scooters India, since there are not many buyers for it," an official source said.
The Department of Heavy Industry (DHI) will soon send a proposal to reverse the decision to the Prime Minister Office (PMO), the source added.
After getting clearance from the PMO, DHI will ask the Board for Reconstruction of Public Sector Enterprises (BRPSE) to work out a revival process, the source said.
"The department is looking at reviving the company through financial inclusion," the source said.
Recently, Minister of Heavy Industries and Public Enterprises Praful Patel had said: "We have taken the decision to put disinvestment of SIL on hold and will look at it holistically before we take a final decision".
In May this year, the Cabinet had approved selling of the government's entire 95.38 per cent stake in SIL to private players.
After reacting positively to the decision, private players such as Mahindra & Mahindra and Piaggio later pulled out from the race.
In the wake of the Uttar Pradesh elections in February, Congress leaders in the state were understood to have sought postponement of the SIL sale. The state Congress leaders do not want it to be an election issue.
The company - which has about 1,200 regular employees - has been incurring losses since 2002-03. In March 2009, the company was declared sick.
Incorporated in 1972, SIL initially manufactured scooters under the brand name Vijai Super for the domestic market and Lambretta for overseas markets.
Later, it ventured into the three-wheeler segment with the Vikram brand. In 1997, it stopped two-wheeler production and is now engaged in the manufacture and marketing of only three-wheelers.
SIL's net loss was Rs 18.4 crore during 2010-11. Shares of Scooters India were up 1.6 per cent, trading at Rs 31.5 a piece on the BSE in the late afternoon today.
"The department has decided to reverse the order to disinvest the government's stake in Scooters India, since there are not many buyers for it," an official source said.
The Department of Heavy Industry (DHI) will soon send a proposal to reverse the decision to the Prime Minister Office (PMO), the source added.
After getting clearance from the PMO, DHI will ask the Board for Reconstruction of Public Sector Enterprises (BRPSE) to work out a revival process, the source said.
"The department is looking at reviving the company through financial inclusion," the source said.
Recently, Minister of Heavy Industries and Public Enterprises Praful Patel had said: "We have taken the decision to put disinvestment of SIL on hold and will look at it holistically before we take a final decision".
In May this year, the Cabinet had approved selling of the government's entire 95.38 per cent stake in SIL to private players.
After reacting positively to the decision, private players such as Mahindra & Mahindra and Piaggio later pulled out from the race.
In the wake of the Uttar Pradesh elections in February, Congress leaders in the state were understood to have sought postponement of the SIL sale. The state Congress leaders do not want it to be an election issue.
The company - which has about 1,200 regular employees - has been incurring losses since 2002-03. In March 2009, the company was declared sick.
Incorporated in 1972, SIL initially manufactured scooters under the brand name Vijai Super for the domestic market and Lambretta for overseas markets.
Later, it ventured into the three-wheeler segment with the Vikram brand. In 1997, it stopped two-wheeler production and is now engaged in the manufacture and marketing of only three-wheelers.
SIL's net loss was Rs 18.4 crore during 2010-11. Shares of Scooters India were up 1.6 per cent, trading at Rs 31.5 a piece on the BSE in the late afternoon today.
Tough ride for auto cos on labour strikes, rate hikes
The tide turned against car and bus makers in 2011 as sales dipped and fuel prices and interest rates soared. India’s claim as an export hub was dealt a blow and Suzuki, the owners of India’s largest-selling cars Maruti Suzuki, got a taste of Indian labour laws when strikes hit production.
“The year has been a difficult one for the industry,” says RC Bhargava, chairman, Maruti Suzuki India. “We expect the outlook for the next year to become clearer after the Budget.”
Car sales declined in October to their lowest in 11 years: buyers postponed purchases due to higher EMIs as interest rates rose; car maintenance costs went up as the government hiked petrol prices and companies had to pay more to import parts with rupee falling 18%.”Rising ownership costs, led by high interest rates, rising fuel and vehicle prices have made 2011-12 the worst year in a decade for the industry, especially the cars and UVs segment,” said Sridhar Chandrashekar, head, Crisil Research. The Society of Indian Automobile Manufacturers (Siam) lowered its growth forecast twice for 2011-12.
Analysts say the auto industry has grown less than 8% in CY 2011 to date, less than one-third of the 30% growth in 2010. “After the robust 30.8% increase in sales in 2010, growth in the domestic automobile sales volumes had slackened to a mere 4.6% in 2011 (Jan-Nov),” said Arun Singh, senior economist, Dun & Bradstreet India.
Automobile makers are now producing units according to the demand to lower inventory costs. According to the Siam report released on December 8, the passenger car production was up just 0.76% at 15.73 lakh units during April-November 2011-12 over the same period last year.
Some ventures broke off. Hero Group, India’s largest-selling motorbike maker, parted ways with its Japanese partner, Honda Motor, to build its business on its own. Partners will now turn rivals as the break-up allowed Hero to sell its products across the globe and Honda to push more bikes in India. Germany’s Man Truck and Bus and Pune-based Force Motors called off their venture amicably.
“The break-up of partnerships spoke of foreign companies’ intent to establish a firm base on their own,” said Chandresh Ruparel, MD, Rothschild (India). “One will see a lot more features offered at competitive prices by foreign players in the times to come.”
Buyers switched from petrol to diesel-driven products as oil marketers hiked prices by around 18% during the year. “Sales of petrol-fuelled cars declined by 11%, while diesel cars rose 22% during the first half of FY11,” said Subrata Ray, senior group vice-president at credit rating agency Icra.
Car makers pushed more diesel cars into the market with competitive prices. Maruti launched Swift diesel, Chevrolet Beat and Toyota, Etios and Etios Liva.
Two-wheeeler makers maintained their growth with a slew of fresh models, but an impending slowdown has forced them to push more units overseas.
Hero MotoCorp and Bajaj Auto are eyeing overseas markets like Africa and Latin America for their products. While Bajaj Auto has an early-mover advantage in these markets — it started assembly line in September in Tanzania, and plans to sell bikes in Brazil — its rival Hero MotoCorp is expected to market its largest-selling Indian bike, Splendor, in these markets by mid-2012. According to Singh from Dun & Bradstreet India, “Two-wheeler makers would push exports to emerging markets, including Brazil, Africa, Argentina and Indonesia.”
Moreover, the year saw two-wheeler maker TVS Motor shift two-thirds of its export production to China from its Chennai plant. In 2010, Hyundai Motor India, too, had shifted production of its premium hatchback i20 to Turkey from its plant in Chennai. The reasons were rigid labour laws and withdrawal of key export benefits, say experts.
“While sluggish GDP growth will affect commercial vehicle sales, a high base and saturated urban markets will impact two-wheeler sales growth,” said Crisil’s Chandrashekar.
Buyers will have to pay more as companies hiked vehicle prices after a falling rupee made imports costlier. Maruti Suzuki India, Honda Siel Cars and Toyota Kirloskar Motor hiked prices anywhere between 2% and 5%.
Prospects for 2012 are getting bleaker as a slowing economy may hit domestic sales and euro zone crisis affects exports. “Any adverse macro-economic development, either domestically or globally, can bring down economic activity and adversely impact both passenger and commercial vehicle demand,” says Icra’s Ray. Automakers heaved a sigh of relief as RBI paused on its interest rate-hike spree in December. “A benign interest rate environment is expected to bring in some relief next year to the industry,” he added.
But India’s largest auto companies have challenges from global rivals. Tata Motors and Mahindra & Mahindra will face new challenges in 2012 to guard market share as mutlinational companies launch products with newer and better technologies at affordable prices. Multinational companies have cornered roughly 70% of small car market and multinational truck and bus makers are queuing up to make fresh investments in India.
“Next year, one will see a lot of better products with better technology offered by the companies,” says Maruti Suzuki’s Bhargava. Maruti will have to act fast as new foreign car markers line up to sell small cars.
These players have not just given up, though. They are hiking their R&D spend and developing products for global market. M&M has just developed its XUV 5OO to sell in Australia and Africa and Tata Motors have started selling its iconic JLR in India. Tata Motors turned around the JLR, driven by its marque brands, reporting better than expected consolidated net profit at R9,273.62 crore for the fiscal ended March 31, 2011, but is finding tough to make its dream car Nano a success. In 2011, the Nano sales, after touching 10,000 units in April, saw a steep fall to 6,401 units in November.
Analysts see rising fuel prices, initial issues with the model and the huge choice made available in the market as reasons for the fall in Nano’s charisma. The company has made a few changes in the look and feel of the car called Nano 2012.
Growth in the CV market, too, saw signs of slowdown. The sales of medium and heavy commercial vehicles (M&HCV), led by sluggish bus sales, slowed due to the rise in interest rates in the first part of the year, while lowered industrial growth weighed in the second half.
The GDP slowdown is an indicator in the decelerating growth in the CV market, R Shridhar, MD, Shriram Transport Finance, the largest financier of second-hand trucks. said. Icra expects M&HCV demand to slowdown for the remaining quarters of this financial year with an estimated growth in the segment of 3-4%.
The truck market will get crowded as Daimler India Commercial Vehicles’ Bharat Benz trucks, PSA Peugeot Citroën, Renault, and China-based Beiqi Foton Motor roll out their products.
“The year has been a difficult one for the industry,” says RC Bhargava, chairman, Maruti Suzuki India. “We expect the outlook for the next year to become clearer after the Budget.”
Car sales declined in October to their lowest in 11 years: buyers postponed purchases due to higher EMIs as interest rates rose; car maintenance costs went up as the government hiked petrol prices and companies had to pay more to import parts with rupee falling 18%.”Rising ownership costs, led by high interest rates, rising fuel and vehicle prices have made 2011-12 the worst year in a decade for the industry, especially the cars and UVs segment,” said Sridhar Chandrashekar, head, Crisil Research. The Society of Indian Automobile Manufacturers (Siam) lowered its growth forecast twice for 2011-12.
Analysts say the auto industry has grown less than 8% in CY 2011 to date, less than one-third of the 30% growth in 2010. “After the robust 30.8% increase in sales in 2010, growth in the domestic automobile sales volumes had slackened to a mere 4.6% in 2011 (Jan-Nov),” said Arun Singh, senior economist, Dun & Bradstreet India.
Automobile makers are now producing units according to the demand to lower inventory costs. According to the Siam report released on December 8, the passenger car production was up just 0.76% at 15.73 lakh units during April-November 2011-12 over the same period last year.
Some ventures broke off. Hero Group, India’s largest-selling motorbike maker, parted ways with its Japanese partner, Honda Motor, to build its business on its own. Partners will now turn rivals as the break-up allowed Hero to sell its products across the globe and Honda to push more bikes in India. Germany’s Man Truck and Bus and Pune-based Force Motors called off their venture amicably.
“The break-up of partnerships spoke of foreign companies’ intent to establish a firm base on their own,” said Chandresh Ruparel, MD, Rothschild (India). “One will see a lot more features offered at competitive prices by foreign players in the times to come.”
Buyers switched from petrol to diesel-driven products as oil marketers hiked prices by around 18% during the year. “Sales of petrol-fuelled cars declined by 11%, while diesel cars rose 22% during the first half of FY11,” said Subrata Ray, senior group vice-president at credit rating agency Icra.
Car makers pushed more diesel cars into the market with competitive prices. Maruti launched Swift diesel, Chevrolet Beat and Toyota, Etios and Etios Liva.
Two-wheeeler makers maintained their growth with a slew of fresh models, but an impending slowdown has forced them to push more units overseas.
Hero MotoCorp and Bajaj Auto are eyeing overseas markets like Africa and Latin America for their products. While Bajaj Auto has an early-mover advantage in these markets — it started assembly line in September in Tanzania, and plans to sell bikes in Brazil — its rival Hero MotoCorp is expected to market its largest-selling Indian bike, Splendor, in these markets by mid-2012. According to Singh from Dun & Bradstreet India, “Two-wheeler makers would push exports to emerging markets, including Brazil, Africa, Argentina and Indonesia.”
Moreover, the year saw two-wheeler maker TVS Motor shift two-thirds of its export production to China from its Chennai plant. In 2010, Hyundai Motor India, too, had shifted production of its premium hatchback i20 to Turkey from its plant in Chennai. The reasons were rigid labour laws and withdrawal of key export benefits, say experts.
“While sluggish GDP growth will affect commercial vehicle sales, a high base and saturated urban markets will impact two-wheeler sales growth,” said Crisil’s Chandrashekar.
Buyers will have to pay more as companies hiked vehicle prices after a falling rupee made imports costlier. Maruti Suzuki India, Honda Siel Cars and Toyota Kirloskar Motor hiked prices anywhere between 2% and 5%.
Prospects for 2012 are getting bleaker as a slowing economy may hit domestic sales and euro zone crisis affects exports. “Any adverse macro-economic development, either domestically or globally, can bring down economic activity and adversely impact both passenger and commercial vehicle demand,” says Icra’s Ray. Automakers heaved a sigh of relief as RBI paused on its interest rate-hike spree in December. “A benign interest rate environment is expected to bring in some relief next year to the industry,” he added.
But India’s largest auto companies have challenges from global rivals. Tata Motors and Mahindra & Mahindra will face new challenges in 2012 to guard market share as mutlinational companies launch products with newer and better technologies at affordable prices. Multinational companies have cornered roughly 70% of small car market and multinational truck and bus makers are queuing up to make fresh investments in India.
“Next year, one will see a lot of better products with better technology offered by the companies,” says Maruti Suzuki’s Bhargava. Maruti will have to act fast as new foreign car markers line up to sell small cars.
These players have not just given up, though. They are hiking their R&D spend and developing products for global market. M&M has just developed its XUV 5OO to sell in Australia and Africa and Tata Motors have started selling its iconic JLR in India. Tata Motors turned around the JLR, driven by its marque brands, reporting better than expected consolidated net profit at R9,273.62 crore for the fiscal ended March 31, 2011, but is finding tough to make its dream car Nano a success. In 2011, the Nano sales, after touching 10,000 units in April, saw a steep fall to 6,401 units in November.
Analysts see rising fuel prices, initial issues with the model and the huge choice made available in the market as reasons for the fall in Nano’s charisma. The company has made a few changes in the look and feel of the car called Nano 2012.
Growth in the CV market, too, saw signs of slowdown. The sales of medium and heavy commercial vehicles (M&HCV), led by sluggish bus sales, slowed due to the rise in interest rates in the first part of the year, while lowered industrial growth weighed in the second half.
The GDP slowdown is an indicator in the decelerating growth in the CV market, R Shridhar, MD, Shriram Transport Finance, the largest financier of second-hand trucks. said. Icra expects M&HCV demand to slowdown for the remaining quarters of this financial year with an estimated growth in the segment of 3-4%.
The truck market will get crowded as Daimler India Commercial Vehicles’ Bharat Benz trucks, PSA Peugeot Citroën, Renault, and China-based Beiqi Foton Motor roll out their products.
No slowdown for some cars
Petrol cars like Jazz and diesel variants of Ritz, Swift Dzire and Manza see strong demand.
The recent downturn in car sales does not seem to have affected some variants, especially the diesel versions. The slowdown in sales, says Sundeep Bafna of Fort Point Automotive which sells Maruti Suzuki cars and Hero MotorCorp bikes, is mainly because customers are seeking models which are in short supply. The result: long waiting periods for several car models.
Diesel variants for several Maruti models such as Swift, Swift DZire, Ritz and SX4 are in high demand as the gap between the petrol and diesel prices has widened in recent times. Other mass produced models like the Chevrolet Beat diesel and the Tata Indigo Manza diesel too are enjoying a surge in demand.
Shashank Srivastava, chief general manager, Maruti Suzuki India, said, “We have close to 100,000 bookings for the Swift and 90 per cent of it is for diesel variants. While the petrol Swift is delivered to the consumer within a week, customers have to wait for more than three-four months to accept delivery of the diesel model.”
In spite of the base diesel version costing Rs 5.46 lakh (ex-showroom, Mumbai) – a lakh more than the petrol version – the demand has been consistent. The country’s largest car maker is making efforts to increase production of Swift further from the existing 17,000-18,000 units a month to bring down the waiting period.
But even some petrol cars are continuing to see a surge in demand. Jazz, a premium hatchback from Honda has good seven to eight months waiting period. If you want to own the car, wait till June next year, the company is telling customers. After the Indian subsidiary of Honda announced a price cut of Rs 1.6 lakh on the Jazz, now sold at Rs 5.5 lakh, consumers have been queuing up to buy the car.
Jnaneswar Sen, senior vice president, marketing and sales, Honda Siel Cars India (HSCI) said, “The sluggishness in the car market has not impacted the demand for Jazz and Brio. We had plans to push production to maximum capacity around November but because of the Thai floods we were forced to cut production.”
HSCI relies on its sister company in Thailand for parts. However, last month, Thailand experienced its worst floods in several decades hurting manufacturing plants of many car makers. Honda was the worst hit. “We are making arrangements to source components from China and Japan instead of waiting for Thailand to stand up again,” added Sen.
Mahindra & Mahindra (M&M), the only automotive company to have beaten the slowdown comprehensively with a growth of 21 per cent this year, is busy doubling production of its newly launched model XUV500.
The company was forced to halt bookings for the premium sports utility vehicle after demand from only five cities where it was opened, exceeded its expectations. This is the costliest passenger vehicle by the company priced at Rs 10.8 lakh. Rajesh Jejurikar, chief executive (automotive division), M&M said, “People bought SUVs at Rs 7 lakh and if they wanted to go for something better they had to shell out Rs 15-20 lakh for it. There was nothing in between. We undertook bookings for 9,500 units of the XUV500 and hope to clear the backlog by January.”
M&M, the market leader in the SUV segment, is pushing its component manufacturers to speed up parts supplies so that it can double the production of the model to 4,000 units per month. And it has also deferred bookings since October across the five centres of Mumbai, Pune, Delhi, Bengaluru and Chennai.
Dealers of General Motors and Tata Motors also say that demand for the Beat and Indigo Manza diesel has shot up following increased preference for the diesel variants across many centres.
The rise in demand for the above mentioned models comes at a time when the entire passenger car industry slumped by 3.5 per cent during April-November selling 1.21 million units as against 1.26 million units in the same period last year.
While the general inflation and hike in fuel prices should have put brakes on demand for two-wheelers also, certain scooters and premium India-made bikes are commanding a waiting period as well as a premium.
Honda Activa, India's largest automatic scooter has a demand backlog of 200,000 units. Honda Motorcycle and Scooter India (HMSI), India’s third largest two-wheeler maker, is trying to jack up capacity for the scooter to 100,000 units per month by March.
The company says that it has raised the capacity for Activa from the levels of 55,000 units per month to 80,000 units per month. Still the waiting period on the bike is around 3-4 months. Honda’s brand loyalty is the strongest for a foreign company in India.
Where Honda buyers are willing to wait for months and in some cases even pay a premium to speed up the delivery, buyers lining up to buy the latest Royal Enfield motorcycle are even willing to wait for a whopping 12 months to take the delivery of the Classic range. Venki Padmanabhan, CEO, Royal Enfield, said, “We are helpless as we have squeezed our production unit to the maximum. Matters will ease a lot when our new production unit gets rolling in 2013.”
The recent downturn in car sales does not seem to have affected some variants, especially the diesel versions. The slowdown in sales, says Sundeep Bafna of Fort Point Automotive which sells Maruti Suzuki cars and Hero MotorCorp bikes, is mainly because customers are seeking models which are in short supply. The result: long waiting periods for several car models.
Diesel variants for several Maruti models such as Swift, Swift DZire, Ritz and SX4 are in high demand as the gap between the petrol and diesel prices has widened in recent times. Other mass produced models like the Chevrolet Beat diesel and the Tata Indigo Manza diesel too are enjoying a surge in demand.
Shashank Srivastava, chief general manager, Maruti Suzuki India, said, “We have close to 100,000 bookings for the Swift and 90 per cent of it is for diesel variants. While the petrol Swift is delivered to the consumer within a week, customers have to wait for more than three-four months to accept delivery of the diesel model.”
In spite of the base diesel version costing Rs 5.46 lakh (ex-showroom, Mumbai) – a lakh more than the petrol version – the demand has been consistent. The country’s largest car maker is making efforts to increase production of Swift further from the existing 17,000-18,000 units a month to bring down the waiting period.
But even some petrol cars are continuing to see a surge in demand. Jazz, a premium hatchback from Honda has good seven to eight months waiting period. If you want to own the car, wait till June next year, the company is telling customers. After the Indian subsidiary of Honda announced a price cut of Rs 1.6 lakh on the Jazz, now sold at Rs 5.5 lakh, consumers have been queuing up to buy the car.
Jnaneswar Sen, senior vice president, marketing and sales, Honda Siel Cars India (HSCI) said, “The sluggishness in the car market has not impacted the demand for Jazz and Brio. We had plans to push production to maximum capacity around November but because of the Thai floods we were forced to cut production.”
HSCI relies on its sister company in Thailand for parts. However, last month, Thailand experienced its worst floods in several decades hurting manufacturing plants of many car makers. Honda was the worst hit. “We are making arrangements to source components from China and Japan instead of waiting for Thailand to stand up again,” added Sen.
Mahindra & Mahindra (M&M), the only automotive company to have beaten the slowdown comprehensively with a growth of 21 per cent this year, is busy doubling production of its newly launched model XUV500.
The company was forced to halt bookings for the premium sports utility vehicle after demand from only five cities where it was opened, exceeded its expectations. This is the costliest passenger vehicle by the company priced at Rs 10.8 lakh. Rajesh Jejurikar, chief executive (automotive division), M&M said, “People bought SUVs at Rs 7 lakh and if they wanted to go for something better they had to shell out Rs 15-20 lakh for it. There was nothing in between. We undertook bookings for 9,500 units of the XUV500 and hope to clear the backlog by January.”
M&M, the market leader in the SUV segment, is pushing its component manufacturers to speed up parts supplies so that it can double the production of the model to 4,000 units per month. And it has also deferred bookings since October across the five centres of Mumbai, Pune, Delhi, Bengaluru and Chennai.
Dealers of General Motors and Tata Motors also say that demand for the Beat and Indigo Manza diesel has shot up following increased preference for the diesel variants across many centres.
The rise in demand for the above mentioned models comes at a time when the entire passenger car industry slumped by 3.5 per cent during April-November selling 1.21 million units as against 1.26 million units in the same period last year.
While the general inflation and hike in fuel prices should have put brakes on demand for two-wheelers also, certain scooters and premium India-made bikes are commanding a waiting period as well as a premium.
Honda Activa, India's largest automatic scooter has a demand backlog of 200,000 units. Honda Motorcycle and Scooter India (HMSI), India’s third largest two-wheeler maker, is trying to jack up capacity for the scooter to 100,000 units per month by March.
The company says that it has raised the capacity for Activa from the levels of 55,000 units per month to 80,000 units per month. Still the waiting period on the bike is around 3-4 months. Honda’s brand loyalty is the strongest for a foreign company in India.
Where Honda buyers are willing to wait for months and in some cases even pay a premium to speed up the delivery, buyers lining up to buy the latest Royal Enfield motorcycle are even willing to wait for a whopping 12 months to take the delivery of the Classic range. Venki Padmanabhan, CEO, Royal Enfield, said, “We are helpless as we have squeezed our production unit to the maximum. Matters will ease a lot when our new production unit gets rolling in 2013.”
Infra growth bounces back to 6.8% in November
Stellar show by cement, electricity and refinery sectors
In a development that is bound to bring cheers to the government and industry, industrial growth in key infrastructure areas bounced back to 6.8 per cent in November after touching a five-year low of 0.3 per cent in October.
The positive news from the industrial production side could help in turning around the state of negativity that has surrounded the economic growth and its parameters in the last few months.
The turnaround in industrial production has been possible due to stellar growth in cement, electricity and refinery product segments, the eight infrastructure sectors, which have weightage of 38 per cent in the overall Index of Industrial Production (IIP).
However, due to lagging performance in the previous months, the April-November growth of core industries stood at 4.6 per cent as against 5.6 per cent in the same period last fiscal, according to the data released here on Tuesday. Except for crude oil, natural gas and fertilizers, all other segments registered a healthy growth in November.
The maximum growth was witnessed in cement, which expanded by 16.6 per cent, while there was a contraction of 4.3 per cent in the same period last fiscal.
Electricity and steel output grew by 14.1 per cent and 5.1 per cent against 3.5 per cent and 7.6 per cent, respectively, in the same month last year. Coal and petroleum refinery products growth went up by 4.9 per cent and 11.2 per cent during the month under reference.
However, crude oil and natural gas output contracted by 5.6 per cent and 10.1 per cent from a positive growth of 17 per cent and 5.5 per cent, year-on-year, respectively.
The core sector, in October, registered a dismal growth of 0.3 per cent. This slowdown in the industry output was evident from the Gross Domestic Product (GDP) figures. The economic growth stood at 6.9 per cent (the lowest in the past nine quarters) during the July-September quarter. The economic growth in the first half of the current fiscal slowed down to 7.3 per cent from 8.6 per cent in the year ago period.
In a development that is bound to bring cheers to the government and industry, industrial growth in key infrastructure areas bounced back to 6.8 per cent in November after touching a five-year low of 0.3 per cent in October.
The positive news from the industrial production side could help in turning around the state of negativity that has surrounded the economic growth and its parameters in the last few months.
The turnaround in industrial production has been possible due to stellar growth in cement, electricity and refinery product segments, the eight infrastructure sectors, which have weightage of 38 per cent in the overall Index of Industrial Production (IIP).
However, due to lagging performance in the previous months, the April-November growth of core industries stood at 4.6 per cent as against 5.6 per cent in the same period last fiscal, according to the data released here on Tuesday. Except for crude oil, natural gas and fertilizers, all other segments registered a healthy growth in November.
The maximum growth was witnessed in cement, which expanded by 16.6 per cent, while there was a contraction of 4.3 per cent in the same period last fiscal.
Electricity and steel output grew by 14.1 per cent and 5.1 per cent against 3.5 per cent and 7.6 per cent, respectively, in the same month last year. Coal and petroleum refinery products growth went up by 4.9 per cent and 11.2 per cent during the month under reference.
However, crude oil and natural gas output contracted by 5.6 per cent and 10.1 per cent from a positive growth of 17 per cent and 5.5 per cent, year-on-year, respectively.
The core sector, in October, registered a dismal growth of 0.3 per cent. This slowdown in the industry output was evident from the Gross Domestic Product (GDP) figures. The economic growth stood at 6.9 per cent (the lowest in the past nine quarters) during the July-September quarter. The economic growth in the first half of the current fiscal slowed down to 7.3 per cent from 8.6 per cent in the year ago period.
Motor insurance premiums set to rise in April
Your insurance costs for cars, bikes and trucks are set to rise. They could go up from anywhere between 20 per cent and 70 per cent.
This follows the Insurance Regulatory and Development Authority's (IRDA) move to replace the third party motor pool arrangement. This is being replaced by a ‘declined pool' where premiums are likely to go up because of risk-based pricing.
According to Mr Amarnath Ananthanarayanan, Managing Director and Chief Executive Officer, Bharti Axa General Insurance, “The pool structure would lead to actuarial determination of the pricing of risk. Pricing would go up for bad risks and the good risks would actually benefit from lower pricing. But, overall I would expect the price to go up by 20 per cent.”
Motor insurance in India covers one's own damage and also third party damage to property or life. Customers have the option of choosing between a stand-alone cover and a comprehensive one.
Third party coverage is, however, mandatory by law for both commercial and private vehicles as it provides coverage for any kind of damage to third party's life or property.
The third party pool was created in April 2007 by all general insurers to make available Third Party Insurance to all commercial vehicle owners at reasonable rates.
Till then, such insurance was provided by public sector insurers (at a heavy loss), while private insurers were reluctant to provide the cover.
The third-party motor pool in the current form has a loss ratio of 150 per cent.
The pool, which had earned a premium of around Rs 3,500 crore, has suffered a loss of over Rs 7,000 crore in the first six months of the fiscal
General insurers share the loss arising out of third party liability through this pool. The share of loss is determined by the market share of each general insurer.
Under a declined pool mechanism proposed by IRDA from April 2012, every company will issue policies to all who approach it. Only, the liabilities arising out of a stand-alone third party cover will be shared among general insurers from the pool. For covers having an own damage component, the claims would be serviced by the general insurer who had underwritten the policy in question.
So, pricing will move according to the claims paid by the insurer; and a comprehensive cover will cost more.
Experts, however, think that the new pool structure will bring about a more efficient structure and faster claims settlement.
This is expected to reduce major costs such as litigation for insurers in the long run.
“Efficiency of managing claims was low as earlier everything was going to the pool. Now, overall size will reduce and become equitable." said Mr Gaurav D. Garg, Managinf Director and CEO, Tata AIG General Insurance.
“In the long-term, the new structure will improve efficiency in claims management. Policyholders can look forward to better rates when claims come down,” said Mr Bhargav Dasgupta, Managing Director and Chief Executive Officer, ICICI Lombard GIC.
Mr R.R. Belle, Managing Director and Chief Executive Officer, SBI General Insurance, says, “The declined pool is a medium-term solution. As the industry evolves and the declined pool keeps reducing, the industry will finally move to a system where there will be no pool.”
This follows the Insurance Regulatory and Development Authority's (IRDA) move to replace the third party motor pool arrangement. This is being replaced by a ‘declined pool' where premiums are likely to go up because of risk-based pricing.
According to Mr Amarnath Ananthanarayanan, Managing Director and Chief Executive Officer, Bharti Axa General Insurance, “The pool structure would lead to actuarial determination of the pricing of risk. Pricing would go up for bad risks and the good risks would actually benefit from lower pricing. But, overall I would expect the price to go up by 20 per cent.”
Motor insurance in India covers one's own damage and also third party damage to property or life. Customers have the option of choosing between a stand-alone cover and a comprehensive one.
Third party coverage is, however, mandatory by law for both commercial and private vehicles as it provides coverage for any kind of damage to third party's life or property.
The third party pool was created in April 2007 by all general insurers to make available Third Party Insurance to all commercial vehicle owners at reasonable rates.
Till then, such insurance was provided by public sector insurers (at a heavy loss), while private insurers were reluctant to provide the cover.
The third-party motor pool in the current form has a loss ratio of 150 per cent.
The pool, which had earned a premium of around Rs 3,500 crore, has suffered a loss of over Rs 7,000 crore in the first six months of the fiscal
General insurers share the loss arising out of third party liability through this pool. The share of loss is determined by the market share of each general insurer.
Under a declined pool mechanism proposed by IRDA from April 2012, every company will issue policies to all who approach it. Only, the liabilities arising out of a stand-alone third party cover will be shared among general insurers from the pool. For covers having an own damage component, the claims would be serviced by the general insurer who had underwritten the policy in question.
So, pricing will move according to the claims paid by the insurer; and a comprehensive cover will cost more.
Experts, however, think that the new pool structure will bring about a more efficient structure and faster claims settlement.
This is expected to reduce major costs such as litigation for insurers in the long run.
“Efficiency of managing claims was low as earlier everything was going to the pool. Now, overall size will reduce and become equitable." said Mr Gaurav D. Garg, Managinf Director and CEO, Tata AIG General Insurance.
“In the long-term, the new structure will improve efficiency in claims management. Policyholders can look forward to better rates when claims come down,” said Mr Bhargav Dasgupta, Managing Director and Chief Executive Officer, ICICI Lombard GIC.
Mr R.R. Belle, Managing Director and Chief Executive Officer, SBI General Insurance, says, “The declined pool is a medium-term solution. As the industry evolves and the declined pool keeps reducing, the industry will finally move to a system where there will be no pool.”
India Yamaha Motor Dec sales up 29%
Two-wheeler maker India Yamaha Motor today reported a 29.10% rise in its total sales in December at 44,976 units.
The company had sold 34,839 units in the same month the previous year, India Yamaha Motor said in a statement.
In the domestic market, the company's sales stood at 33,290 units as against 26,567 units in the same month in 2010, up 25.33%.
Exports of India Yamaha rose by 41.27% to 11,686 units from 8,272 units in the year-ago period, it added.
For the entire 2011, the company's sales increased by 31.56% to 4,60,815 units from 3,50,274 units in 2010.
"The year 2011 has indeed been an exceptional year for us as we were able to maintain consistency in our overall growth and the results speak for themselves," India Yamaha Motor CEO and Managing Director Hiroyuki Suzuki said.
The company is buoyant about the future and is looking forward to replicate and further improve upon its achievement in 2012 as well, he added.
As part of expansion plans, the company plans to expand production capacity to one million units in 2012. Besides, it also plans to invest in product development and network expansion, the statement added.
India Yamaha currently has two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and produces motorcycles both for domestic and export markets. It has over 400 dealers across Indi
The company had sold 34,839 units in the same month the previous year, India Yamaha Motor said in a statement.
In the domestic market, the company's sales stood at 33,290 units as against 26,567 units in the same month in 2010, up 25.33%.
Exports of India Yamaha rose by 41.27% to 11,686 units from 8,272 units in the year-ago period, it added.
For the entire 2011, the company's sales increased by 31.56% to 4,60,815 units from 3,50,274 units in 2010.
"The year 2011 has indeed been an exceptional year for us as we were able to maintain consistency in our overall growth and the results speak for themselves," India Yamaha Motor CEO and Managing Director Hiroyuki Suzuki said.
The company is buoyant about the future and is looking forward to replicate and further improve upon its achievement in 2012 as well, he added.
As part of expansion plans, the company plans to expand production capacity to one million units in 2012. Besides, it also plans to invest in product development and network expansion, the statement added.
India Yamaha currently has two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and produces motorcycles both for domestic and export markets. It has over 400 dealers across Indi
Hero Eco to acquire ultra motors
Hero Group company Hero Eco on Wednesday said it was in the process of acquiring U.K.-based Ultra Motors, a move aimed at strengthening its presence globally in the electric vehicle (EV) segment. Hero Eco, the newly formed umbrella entity that will include Hero Electric, Hero Exports, Mediva, Winn and Hero Ecotech, also plans to invest Rs.450 crore in the next five years across businesses to cross a turnover of Rs.1,500 crore. Ultra Motors has operations in the U.K., the U.S., Germany, Taiwan and China and a distribution network in 22 countries, including Switzerland, Benelux, Japan and Australia. The acquisition entails taking over the operations and products, including Pedelecs, folding bikes, e-bikes and e-scooters, under the popular A2B and F4W brands. With this acquisition, Hero Eco hopes to become a company with the largest range of two-wheeler electric vehicles (EV) in the world.
“The acquisition of Ultra Motors is a giant step forward in setting global footprints for the group. This will give us an exposure to all the markets where Ultra Motors were present and will strengthen Hero's brand globally,” Hero Eco Managing Director Naveen Munjal told journalists here. The company also unveiled its new brand identity.
Stating that they were also planning to set up an electric vehicle facility in North America within the next 18 months, Mr. Munjal said: “Ultra Motors has three plants and is present in six countries…all this will come under Hero Eco now.” Earlier, Hero Electric had a tie-up with Ultra Motors for Indian operations, which later fell apart.
Explaining the strategy behind the Ultra Motors deal, Hero Eco Chief Executive Officer Sohinder Gill said the acquisition would not only help the existing businesses of the group to take advantage of the common sourcing and common markets, but would also create a seamless flow of technologies developed in-house and the ones acquired abroad to flow into the each other's products.
“The acquisition of Ultra Motors is a giant step forward in setting global footprints for the group. This will give us an exposure to all the markets where Ultra Motors were present and will strengthen Hero's brand globally,” Hero Eco Managing Director Naveen Munjal told journalists here. The company also unveiled its new brand identity.
Stating that they were also planning to set up an electric vehicle facility in North America within the next 18 months, Mr. Munjal said: “Ultra Motors has three plants and is present in six countries…all this will come under Hero Eco now.” Earlier, Hero Electric had a tie-up with Ultra Motors for Indian operations, which later fell apart.
Explaining the strategy behind the Ultra Motors deal, Hero Eco Chief Executive Officer Sohinder Gill said the acquisition would not only help the existing businesses of the group to take advantage of the common sourcing and common markets, but would also create a seamless flow of technologies developed in-house and the ones acquired abroad to flow into the each other's products.
TVS Motor Company Develops Green Technology Which Enhances Fuel Efficiency
TVS Motor Company today announced the development of a new technology that will enhance fuel efficiency by as much as twenty percent when compared to the conventional technology deployed today.
This new technology, termed 'TVS Automatic Transmission", developed by TVS Motor Company, employs a Automatic Transmission in place of conventional Continuously Variable Transmission Technology (CVT) which changes gears effortlessly through electronic control, automatically selecting the gear ratios for a particular riding condition. This enables the engine to run at its most efficient RPM (revolutions per minute) for a range of vehicle operating conditions, thereby maximizing the engine performance to achieve peak efficiency; overriding the requirement of a clutch.
Commenting on the development, Harne Vinay Chandrakant, President, New Product Development, TVS Motor Company said, "The objective of this technology development is to deliver a compact engine layout, that will deliver enhanced fuel efficiency and which is usable across product forms like scooter, motorcycles and step-thru's. This technology also delivers the lowest CO2 in scooters while providing for low floor board and space for luggage."
This new technology, termed 'TVS Automatic Transmission", developed by TVS Motor Company, employs a Automatic Transmission in place of conventional Continuously Variable Transmission Technology (CVT) which changes gears effortlessly through electronic control, automatically selecting the gear ratios for a particular riding condition. This enables the engine to run at its most efficient RPM (revolutions per minute) for a range of vehicle operating conditions, thereby maximizing the engine performance to achieve peak efficiency; overriding the requirement of a clutch.
Commenting on the development, Harne Vinay Chandrakant, President, New Product Development, TVS Motor Company said, "The objective of this technology development is to deliver a compact engine layout, that will deliver enhanced fuel efficiency and which is usable across product forms like scooter, motorcycles and step-thru's. This technology also delivers the lowest CO2 in scooters while providing for low floor board and space for luggage."
Mahindra to display their new bikes in 2012
Mahindra 2 Wheelers Ltd., a part of the US $14.4 billion Mahindra Group, is all geared up to make a mark at the upcoming Auto Expo 2012.
Speaking on the upcoming Auto Expo, Anoop Mathur, President, Mahindra 2 Wheelers said, “The Delhi Auto Expo is the perfect platform to unveil Mahindra Racing’s new Moto3 challenger, the MPG30 (pronounced three oh). Similarly at Mahindra Two Wheelers, we have significantly enhanced our technological capabilities to introduce high performance two wheelers like the new Mahindra Duro DZ scooter that we have recently launched in South.”
“The Mahindra Duro DZ is a tough and powerful scooter designed specifically for Indian road conditions. The Duro DZ is the result of our R&D team working closely with consumers and extensive testing. The Duro DZ has been reviewed by the leading experts in the industry some of who have termed it the best scooter on Indian roads. We have also created an interesting new marketing campaign with actor Kareena Kapoor which we will be unveiling soon” said Mr. Anoop Mathur, President, Mahindra 2 Wheelers.
Speaking on the upcoming Auto Expo, Ruzbeh Irani – EVP – Corporate Strategy & Chief Brand Officer, Mahindra and Mahindra said, “Mahindra Racing will unveil its new Moto3 challenger, the MGP30 for the first time in India at the Auto Expo. Mahindra was the first Indian company to enter MotoGP in year 2011. Mahindra Racing, ended its debut 2011 season by claiming the last ever 125 class pole position in Valencia and also achieved an impressive third position in the Constructors’ Championship. Our MotoGP participation has also given us a great platform to showcase the Mahindra brand globally and also exhibit our technology skills to a truly global audience”.
Speaking on the upcoming Auto Expo, Anoop Mathur, President, Mahindra 2 Wheelers said, “The Delhi Auto Expo is the perfect platform to unveil Mahindra Racing’s new Moto3 challenger, the MPG30 (pronounced three oh). Similarly at Mahindra Two Wheelers, we have significantly enhanced our technological capabilities to introduce high performance two wheelers like the new Mahindra Duro DZ scooter that we have recently launched in South.”
“The Mahindra Duro DZ is a tough and powerful scooter designed specifically for Indian road conditions. The Duro DZ is the result of our R&D team working closely with consumers and extensive testing. The Duro DZ has been reviewed by the leading experts in the industry some of who have termed it the best scooter on Indian roads. We have also created an interesting new marketing campaign with actor Kareena Kapoor which we will be unveiling soon” said Mr. Anoop Mathur, President, Mahindra 2 Wheelers.
Speaking on the upcoming Auto Expo, Ruzbeh Irani – EVP – Corporate Strategy & Chief Brand Officer, Mahindra and Mahindra said, “Mahindra Racing will unveil its new Moto3 challenger, the MGP30 for the first time in India at the Auto Expo. Mahindra was the first Indian company to enter MotoGP in year 2011. Mahindra Racing, ended its debut 2011 season by claiming the last ever 125 class pole position in Valencia and also achieved an impressive third position in the Constructors’ Championship. Our MotoGP participation has also given us a great platform to showcase the Mahindra brand globally and also exhibit our technology skills to a truly global audience”.
Hero MotoCorp to launch its own bikes ahead of schedule
Within a year of having parted ways with Honda Motor Corporation, Hero MotoCorp plans to launch its own range of two-wheelers before 2014 without its former partner’s help.
Hero promoters, the Munjals, have an agreement for sourcing technology and two-wheeler models from Honda till 2014. While the leader, Hero MotoCorp, has 45 per cent market share of the two-wheeler market, its now rival Honda is the fourth largest player with 13.8 per cent. Top Hero executives said they had tied up with technology providers globally and commenced work on the company’s first product to be developed mainly at its own research and development centre.
Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp, said, “We had been scouting for several potential partners globally and have now started work with some of them. There are collaborations in progress.”
While Hero’s local research and development team has been mandated to evaluate consumer requirements in the domestic market, technical tie-ups have been forged with firms worldwide to source expertise in specific areas. Before the termination of the joint venture, Hero-Honda, Honda supplied it technology while the Munjals-promoted Hero Group marketed the products. “The local R&D team has an interface with the market here. We will put the concept together for all future products and then source the technology required from experts globally for developing synergistic output,” added Dua.
While Dua declined to specify the timeline for the first product to be developed indigenously by Hero, he said the company was working towards attaining all targets to operate self-sufficiently before the licensing agreement with Honda would end in June 2014.
“We have the right to use the Honda brand till June 2014. However, we are not taking a breather. We have already launched our new corporate identity and introduced Impulse, the first product under the Hero brand. We would work faster than has been outlined. The first product developed independently would happen much faster than expected,” said Dua.
The company has finished extensive market surveys and started modifications of products for launch in foreign markets in 2012. Hero has identified 30 countries to scale up its international business. The company expects 10 per cent of its business to come from international operations by the end of the decade
Hero promoters, the Munjals, have an agreement for sourcing technology and two-wheeler models from Honda till 2014. While the leader, Hero MotoCorp, has 45 per cent market share of the two-wheeler market, its now rival Honda is the fourth largest player with 13.8 per cent. Top Hero executives said they had tied up with technology providers globally and commenced work on the company’s first product to be developed mainly at its own research and development centre.
Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp, said, “We had been scouting for several potential partners globally and have now started work with some of them. There are collaborations in progress.”
While Hero’s local research and development team has been mandated to evaluate consumer requirements in the domestic market, technical tie-ups have been forged with firms worldwide to source expertise in specific areas. Before the termination of the joint venture, Hero-Honda, Honda supplied it technology while the Munjals-promoted Hero Group marketed the products. “The local R&D team has an interface with the market here. We will put the concept together for all future products and then source the technology required from experts globally for developing synergistic output,” added Dua.
While Dua declined to specify the timeline for the first product to be developed indigenously by Hero, he said the company was working towards attaining all targets to operate self-sufficiently before the licensing agreement with Honda would end in June 2014.
“We have the right to use the Honda brand till June 2014. However, we are not taking a breather. We have already launched our new corporate identity and introduced Impulse, the first product under the Hero brand. We would work faster than has been outlined. The first product developed independently would happen much faster than expected,” said Dua.
The company has finished extensive market surveys and started modifications of products for launch in foreign markets in 2012. Hero has identified 30 countries to scale up its international business. The company expects 10 per cent of its business to come from international operations by the end of the decade